US Government (GAO): Peak Oil by 2040

As I begin this blog, gasoline prices have reached $3.00 a gallon or more in some parts of the United States, with a ten-cent rise in the past week. Oil is running about $64.50 per barrel.

Meanwhile, most oil fields throughout the world have peaked, outside of the Middle East. United States oil fields peaked in 1971.

Last week, the Government Accountability Office of the United States Government released a report ("CRUDE OIL: Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production") detailing projections for the peak and decline of oil production worldwide. The highlights include:

The situation, as GAO sees it:

The U.S. economy depends heavily on oil, particularly in the transportation sector. World oil production has been running at near capacity to meet demand, pushing prices upward. Concerns about meeting increasing demand with finite resources have renewed interest in an old question:

What question? This is the question framed by GAO:

How long can the oil supply expand before reaching a maximum level of production—a peak—from which it can only decline?

The answer GAO arrived at:

. . . oil production will peak sometime between now and 2040.

Ah, that's specific. Thanks. GAO continues:

This range of estimates is wide . . . how quickly the oil remaining in the ground is used [depends upon] the amount of oil still in the ground; how much of that oil can ultimately be produced given technological, cost, and environmental challenges as well as potentially unfavorable political and investment conditions in some countries where oil is located; and future global demand for oil. Demand for oil will, in turn, be influenced by global economic growth and may be affected by government policies on the environment and climate change and consumer choices about conservation.

What does that mean for us in the US (and other industrialized nations)?

In the United States, alternative fuels and transportation technologies face challenges that could impede their ability to mitigate the consequences
of a peak and decline in oil production, unless sufficient time and effort are brought to bear.

For example, although corn ethanol production is technically feasible, it is more expensive to produce than gasoline and will require costly investments in infrastructure, such as pipelines and storage tanks, before it can become widely available as a primary fuel.

Key alternative technologies currently supply the equivalent of only about 1 percent of U.S. consumption of petroleum products, and the Department of Energy (DOE) projects that even by 2015, they could displace only the equivalent of 4 percent of projected U.S. annual consumption. In such circumstances, an imminent peak and sharp decline in oil production could cause a worldwide recession.

If the peak is delayed, however, these technologies have a greater potential to mitigate the consequences. DOE projects that the technologies could displace up to 34 percent of U.S. consumption in the 2025 through 2030 time frame, if the challenges are met. The level of effort dedicated to overcoming challenges will depend in part on sustained high oil prices to encourage sufficient investment in and demand for alternatives. [Emphasis added.]

So what does that mean? According to the GAO report, the decline in oil production will begin in earnest any time in the next 33 years. "Any time" includes next week. If we really work hard, we in the US can replace 34 % of our current energy consumption by 2030, or in the next 23 years! And that's only with both political will and massive investments in new infrastructure and deployment of technology.

Oh, happy day, the government will save us! Or at least cushion the blow.

GAO continues:

However, there is no coordinated federal strategy for reducing uncertainty about the peak’s timing or mitigating its consequences.

Oops. Maybe not.

What does GAO recommend?

To better prepare for a peak in oil production, GAO recommends that the Secretary of Energy work with other agencies to establish a strategy to coordinate and prioritize federal agency efforts to reduce uncertainty about the likely timing of a peak and to advise Congress on how best to mitigate consequences. In commenting on a draft of the report, the Departments of Energy and the Interior generally agreed with the report and recommendations.

GAO recommends . . . another study.

Here's a more extensive review of the GAO study, if you don't feel like reading the whole thing!

Perhaps some more concrete recommendations would be useful. Things coming to mind here?

• Immediately raise CAFE standards. We have the technology for cars to get far better mileage on average, yet still produce cars getting less than 20 mpg. WHY?

• Institute a new gas tax. WHAT? Yes. A tax on consumer gasoline, with all funds earmarked toward public transportation and development/deployment of alternative energy generation. This would serve multiple goals: encourage more efficient use of existing autos by consumers; increase demand for more efficient vehicles; encourage a transition to public transportation or location closer to resources (employment, shopping); and raise funds for large-scale subsidized deployment of solar arrays and mass-transit projects, along with other retrofit projects.

• Phase out the incandescent light bulb. Only 5% of the energy used by such a bulb creates light; the rest creates heat. By contrast, 15-30% of the energy used by a compact fluorescent (which currently costs about $2) creates light. They also require less frequent replacement, lasting 10,000 hours instead of an incandescent's 1,000. California has already introduced legislation to phase out incandescents by 2012. From the article:

In the US, there are around 4 billion incandescent light bulb sockets, says Dutch company Philips, which launched a campaign in Washington DC on 14 March to scrap all inefficient lighting in North America by 2016. Replacing incandescent bulbs with energy-efficient ones would cut the US's annual electricity bill by $18 billion, and cut CO2 emissions by 158 million tonnes, the company says.

Europe uses almost as many incandescent bulbs - 3.9 billion - and so could make similar savings. "If everyone changed over from incandescent bulbs, we could save the energy equivalent to 10 million households," says a spokeswoman for the European Commission, which in May will consider legislation to dump the bulb.

More to come . . .