The Impact of Declining Fossil Fuels

by Allison A. Bailes III, PhD

Those of us who work in green building, home performance and other fields that promote sustainability know a lot about energy demand and how to reduce it. On the supply side, we understand the problems with fossil fuel pollution, radioactive waste from nuclear plants and the destructiveness of large hydroelectric projects, and we promote renewable energy sources such as photovoltaics and wind turbines. There is one supply side issue, however, that is not so well understood: the impending peak of global oil production and the current peak of natural gas production in North America.

Those of us in the sustainability community would like to see the world transition to lower levels of fossil fuel use. Beyond the issue of sustainability, there’s a lot of talk these days about energy independence and reducing oil imports for economic or national security reasons. Further, the higher prices we pay for oil and natural gas now have begun to reawaken us to the fact that fossil fuels are a finite resource.

That last point demands further scrutiny because we need to understand the transition that will be forced on us. Will it be sooner or later, abrupt or gradual, evolutionary or revolutionary? What are our options? How deep do oil and gas really reach into our lives?

When Will We Run Out of Oil?

We’re about 150 years into the Age of Oil. In that time, we’ve used about a trillion barrels, which is about half of the total amount of recoverable oil that was in the ground when we started. If the production curve for the second half mirrors that for the first half, in another 150 years the second half will be gone. If we were to use the remainder at the same rate at which we’re using oil now (84 million barrels per day), we’d have about another 35 years before it’s all gone.

The question of when we run out is irrelevant, however, because what matters is the rate of production, as well as the total amount available. In twenty years, the rate at which we use oil will be different from what it is today. For example, the US Energy Information Administration says that we’ll be using 119 million barrels per day by then. On the other hand, we could be using far less than we use today.

One reason that many people believe we’ll be using less has to do with geology. M. King Hubbert, a geophysicist with Shell Oil Company, first studied the issue of the rate of oil production in oil fields and oil provinces. In 1956, he predicted that the US would reach a peak in production in the early 1970s. History proved him correct, as we peaked in 1970. Our production rate is now down to about half of what it was at the peak.

On the global scale, many researchers have continued Hubbert’s work and most say that we’re at or near the peak now. The data have been analyzed in many different ways, and the conclusion that we face an imminent decline in production is inescapable. Perhaps the most compelling piece of evidence is the contrast between oil production and discoveries. For more than twenty years now, we’ve been producing more oil than we’ve been finding.

What about Natural Gas?

On the natural gas front, we face a different problem. Because of the expense and difficulty of shipping gas overseas, most gas is used on the continent where it’s produced. Unfortunately, North America has already hit its peak in natural gas production. This is why the price of natural gas has been so high in the past five years, and it’s why we face even higher prices in the future.

To illustrate how dire the natural gas situation is, here are a few supply facts. The decline rates for gas fields in production in the US average 31%. That means that we’re depleting gas fields rapidly. About half of the natural gas we’re using now is from fields developed within the past three years. Even scarier, half of the gas needed to meet demand projected for 2012 hasn’t even been discovered yet.

It’s Time to Get Ready

The implications of declining oil and natural gas supplies are profound. These two resources reach deeply into almost every aspect of our lives. The big sustainability question here is whether we can adapt quickly enough to a world with less oil and gas. The three important variables that will determine the answer to that question are (i) when the oil peak occurs, (ii) how fast the supply declines after the peak, and (iii) when we get serious about making the transition.

How the future unfolds is anyone’s guess—and plenty of people have been doing just that. Some believe that the end of growth in oil supply will rapidly lead to the collapse of human civilization, with the human population reduced by 80% or more. Others believe that peak oil will be a non-event because rising prices will spur innovation, and we’ll all be driving hydrogen fuel cell cars before we even notice what’s happened.

Those are the extreme views, and many of us involved in the issue are somewhere in the very broad middle ground. My view is that peak oil has the potential to be catastrophic, but collapse is not inevitable. We need to embark on a massive effort to retool our society and economy. It won’t be easy, and life in the post-peak world is likely to be very different from what we’ve come to expect.

For the sustainability community, peak oil presents both challenges and opportunities. One challenge is to define sustainability so that it doesn’t rely on the availability of cheap oil and natural gas. Our greatest opportunity is to relearn how to live within the Earth’s solar budget.

Allison A. Bailes III, PhD, is the owner of ab3 energy, a company that makes homes more efficient, comfortable, durable, and healthful. For more information, visit ab3energy.com.

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