Monday, May 04, 2009

"peak oil" or "limits to growth"

The Oil Drum | There is a good deal of evidence that we are now a little past "peak oil". Many of us find it doesn't feel quite like we had imagined.

A lot of us had expected that peak oil would be basically a liquids fuels crisis, caused by geological limits. We expected that the solutions of the Department of Energy's Hirsch Report would be sufficient to forestall a crisis, especially if we had started 20 years ago, instead of now. These solutions included things like more oil from tar sands, improving automobile efficiency, and electrification of transport.

Now, when we seem to be at peak oil, we find the current situation feels a lot more like a "box" caused by limits to growth, rather than a liquid fuels crisis. The limits are of many forms--not just geological limits relating to oil--but other resource limits as well, such as fresh water, and concerns about climate change and the environment. The financial system is even behaving strangely.

The fact that the financial system is also in distress is a surprise to many people. There is good theoretical reason to expect that once growth in underlying resources slows, a financial system based on compound growth will run into difficulty. This was predicted by M. King Hubbert and many others. The connection is not easy to see, though, and it is understandable that many would believe that the financial system would have had problems, even apart from limits to growth.

The fact that so many limits are involved makes it difficult to substitute one resource, such as biofuels, for another, such as petroleum products.

The fact that so many limits are involved also means that it is not just liquid fuels that are being constrained by the limits to growth box. In the diagram above, I show electricity, the credit system, the industrial system, and the agricultural system as being fenced in by limits, in addition to liquid fuels. I could probably have included many other systems as well, such as the international trade system, governmental systems, and long term promises, such as pensions and social security systems.

The world is finite, so it should not come as a great surprise that the various limits are being reached, to varying degrees, simultaneously. Systems such as the electrical system, the credit system, and the agricultural system all depend on availability of finite resources, so are affected as we start reaching limits of various kinds.