The Impending World Oil Shortage
In a book called Hubbert's Peak: The Impending World Oil Shortage, Princeton professor Kenneth Deffeyes predicts that global oil production will peak between 2004 and 2008 and begin to slowly decline after that. Such gloomy predictions have been made before, for instance, in the 1970s book by the Club of Rome called The Limits to Growth, and they were wrong. So why should we believe this one? Because Professor Deffeyes uses the same techniques as M. King Hubbert, a Shell geologist who in 1956 predicted that US oil production would peak in the 1970s and forever after decline. He was absolutely right. Hubbert knew that the oil production in any particular field follows a Bell curve. He also knew that when the rate of new discoveries does not keep up with the growth of oil production, the amount remaining underground begins to fall. Globally, there have been no new fields discovered since the 1970s, despite the heroic efforts of geologists to look everywhere.
A second problem is that the supply and demand curves for oil are like those for food; they are inelastic. Let me explain. If we plot the supply vs price curve for any commodity, it is generally true that the higher the price, the higher the supply. It is also generally true that if we plot the demand vs price curve for that same commodity, the higher the price, the less the demand. The point at which these two curves cross sets both the market price, and the production level. In the short run at least, the supply and demand curves are pretty flat, both for food and for gasoline. People who have no alternative to cars for getting to work or to go shopping will buy about the same amount of gasoline whatever the price. The demand declines slowly with price. Similarly, the availability of gasoline does not go up instantly when the price goes up. The supply curve increases slowly with price. The result is price volatility, which we have seen in 2001. Small shortages led to huge increases in the price of gasoline. Small declines in demand led to an equally dramatic fall in the price of gasoline.
What we must consider is a time not far off when no increase in price will increase the supply of crude oil. Only the richest nations will be able to afford crude oil at all. And as time goes on, even the demand of rich nations can no longer be met, and in one way or another, supply will be rationed. It is hard to believe that we are close to such a time, but according to the Hubbert analysis, expect it by the end of this decade or soon after. The Century of Oil will have come to an end.
If we assume that this Cassandra warning by Professor Deffeyes is ignored, and no efforts are made to create alternatives, then a global economic depression in the 2010s can be expected. Assuming world leaders were not distracted by the war on terrorists and decided to create alternatives, we must start now.
In the long run, we must have the Solar-Hydrogen economy, and we must have mass transit, run on electricity. But there are still some technological hurdles to be overcome to make that practical. It would be nice if water could be separated into hydrogen and oxygen by pure sunlight in the presence of a catalyst. Both the hydrogen and the oxygen would be shipped in pipelines and stored in vast tanks. It would be nice if we had affordable fuel cells to use that stored hydrogen and oxygen and convert it to electricity, in an efficient manner which only has water as its final product. No pollution of any kind. The final part of that equation would be mass transit and freight trains drawing electrical power from overhead wires, while some personal transportation of people and goods would operate on batteries.
If Al Gore had been elected President in the year 2000, perhaps a major technological effort would have been mounted to create the Solar-Hydrogen economy, with electrical mass transit and electrical trains. It is more likely, I think, that nothing will be done until the price of oil becomes astronomical, and it finally becomes clear to everyone that we are finally going to run out of it.
Assuming the US supply of natural gas holds up for awhile, it would be fairly easy to convert vehicles to run on Liquified Natural Gas, or LNG. Modest pressures suffice to liquify it. It would take up all of the trunk space on a car, but I suspect that a rapid conversion to Natural Gas and to LNG would be the first response. People who rely on oil fired furnaces for winter heating would have to convert to natural gas or to a large tank of LNG. However, the supply of natural gas is also finite. I have not seen a Hubbert analysis of natural gas, but I think this would only postpone the inevitable by a few decades.
Many countries, including China and the US, have vast deposits of coal. If a way could be found to use coal without polluting the atmosphere, that is likely to be the next option. I suspect that nuclear power will come back into favor as well, and I am confident that we now know how to avoid incidents like Chernobyl or Three Mile Island. Of course, a great deal of our coal will probably be exported to Japan, which has none. Even LNG may be exported to Japan, because they have no natural gas deposits either. Undoubtedly, Japan will increasingly resort to nuclear power.
In the long run, over the course of this millennium, first uranium, then coal will run out. The supply may be large, but it is not infinite. And both are non-renewable resources. Those countries that convert earliest to Solar-Hydrogen and electrical mass transit will have the fewest bumps in its path. Eventually, all must do so.
Copyright © Dr.H 2003
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