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This is not a blog which opinionates on current events. It rather uses incidents, books (old and new), links and papers to muse about our social endeavours.
So old posts are as good as new! And lots of useful links!

The Bucegi mountains - the range I see from the front balcony of my mountain house - are almost 120 kms from Bucharest and cannot normally be seen from the capital but some extraordinary weather conditions allowed this pic to be taken from the top of the Intercontinental Hotel in late Feb 2020

Wednesday, October 21, 2020

Whatever Happened to “Peak Oil”?

It was almost 50 years ago we first heard the notion of there being “Limits to Growth” and the idea of oil supply – the basic source of modern civilisation – reaching a peak was developed by a geophysicist a decade earlier.

It was, however, Dmitry Orlov’s Reinventing Collapse – the soviet experience and American prospects and J Michael Greer’s The Long Descent – a user’s guide to the end of the industrial age” (both 2008) which first made me aware of the dramatic changes we would need to make in our life styles - if these predictions proved true. These, of course, were the days when the reality of global warming had not really struck home – although there had been no shortage of warning voices in earlier years eg Bill McKibben whose “The End of Nature” was published in 1989.                 

The rise and fall of civilisations had, of course, been a popular theme at both the beginning and the middle of the 20th Century in the writings of Oswald Spengler and Arnold Toynbee but, by the 1960s, we had become so enthralled with the notion of technical progress that such writing was seen as “old wives’ tales”. Paul Kennedy’s The Rise and Fall of Great Powers (1987) may have been a warning shot but, coming a mere 2 years before the collapse of the Soviet Empire, served only to boost the celebrationism of the time.  And Joseph Tainter’s The Collapse of Complex Societies (1988) was too narrowly conceived – with this critical review lambasting it,

Jared Diamond tried to jolt us back to our senses with his “Collapse – how societies choose to fail or succeed” (2005) - but it took the global financial crash of 2008 to make us begin to question our direction with any seriousness.

Right-wing historian Niall Fergusson’s 2010 article in “Foreign Affairs” reflects that new mood of sober realism.

And it was that same global financial crash that brought oil prices down and made investment in renewable energy once again a “yessable” proposition – as Greer anticipates in “The Long Descent”. Covid19 is having the same effect…  

I read Orlov’s book some years ago and followed Greer’s blog until it ended a couple of years ago. But I have just been able to download “The Long Descent” from Zlibrary (https://1lib.eu/) and found this recent post by Michael Greer a useful summary of his position -

Since some of my current readers weren’t yet reading me when I last discussed these issues – in “The Long Descent” (2008), I’ll start with some general points and go from there.

One of the great mental blind spots of our society is the notion that there are only two possible futures: on the one hand, business as usual stretching endlessly into the future, with a side order of technological progress dished up at intervals; on the other, sudden apocalyptic mass death, with or without a small band of plucky survivors sitting around a campfire as the final credits roll. An astonishing number of people these days literally won’t let themselves think about any other possible future, and will either change the subject or get furiously angry at you if you should be so bold as to suggest one.


The evasion and the anger come from the same source, which is that those imaginary futures are the ways most of us distract ourselves from the future we’re actually getting: a future of decline.

·         We all know this. If you’re old enough to be out of elementary school, you’ve already seen ongoing declines in standards of living, public health, public order, the quality of education, the condition of our infrastructure, and much more.

·         Those trends define our future. They also defined the future of every past civilization, because that’s how civilizations end, and it’s how ours will end, 100 to 300 years from now.

·         Again, at some level, all of us know this, but it’s taboo to discuss the matter or even think about it, which is why so many people bury their heads in shopworn fantasies of perpetual progress or overnight cataclysm.


One other thing. Technology will not save us from the Long Descent, because technology is the main factor driving the Long Descent. The more technology you have, the more energy and resources of every kind you need to build, maintain, repair, replace, and dispose of it, and the mismatch between endlessly rising resource costs and the hard limits of a finite planet is one of the main factors bringing about the declines I’ve just described. Nor does technology allow one energy resource to be replaced with another, except in small and irrelevant ways.


The world now burns more coal than it did at the peak of the Coal Age, for example, and more wood than it did when firewood was the main source of heating fuel worldwide. As renewable power sources got added to the mix, furthermore, the amount of fossil fuels being burnt didn’t go down -- it went up. (That’s caused by a widely recognized law of energy economics, by the way; look up Jevons’ Paradox sometime.) If progress is the problem, more progress is not the solution -- but here again, that’s utterly unthinkable these days. Faith in progress is the most popular idolatry of our time, and a vast number of people who claim to belong to other religions or to no religion at all are devout worshipers at the shrine of the golden calf named Progress.


So where are we headed?  That hasn’t changed one iota since the last time I discussed these issues. “The Limits to Growth”, the most thoughtful (and thus inevitably the most savagely denounced) of the Seventies-era books that explored the landscape ahead of us, traced the arc of our future in a convenient graph. Between 1972 and the present, its predictions have proven much more accurate than those of the book’s critics -- another reason why it’s been assailed in such shrill language for all these years. Here’s the graph: (sorry it doesn't show in this text - please consult Greer's post)


I’d encourage my readers to pay attention to two things about the graph. The first, which should be obvious at a glance but has been ignored astonishingly often, is that it doesn’t show any kind of sudden apocalyptic event. What it shows is a long and relatively smooth transition from a world of abundant resources and sustained economic growth to a world of scarce resources and sustained economic contraction. Population doesn’t fall off a cliff, it rises, crests, and declines. Pollution doesn’t up and kill everybody; it rises, helps drive declines in food and population, and then declines in turn as industrial output falls off.


The second thing about the graph I’d like readers to notice is subtler, and you may need to read the book to grasp it: the limits to growth are economic limits, not technical ones. What happens, in brief, is that the costs of growth rise faster than the benefits, until finally they overwhelm growth itself and force the global economy to its knees. What this means, in turn, is that proposed solutions have to be economically viable, not just technically feasible. 

As you can see, Greer writes very well. And he’s not just good on theory but on practice. Chapter 4 of his book has 4 bits of advice –

- reduce your energy use (by half id possible – restrict use of the car;praxtice coping with blackout)

- DIY health

- community networking

- choose a viable profession (market gardening; clothes repair) 

A Peak Oil resource

Prosper – how to prepare for the future and a world worth inheriting; Chris Martensen and Adam Taggart (2017). The vast majority of books on peak oil (let alone global warming) are written by leftists. This is a rare, exuberant and remarkably easy read; aimed at those who want to be ahead of the curve; takes the question of collapse for granted; and looks at how we should be preparing for it – using the concepts of time and 6 forms of capital (social, intellectual, material etc). 

“The first step toward achieving long-term sustainable prosperity is, of course, to adopt a better narrative - a narrative of living within our means, of resource stewardship, and of finding happiness in a life of purpose, not of possessions. If the old narrative was extractive and isolating, the new narrative needs to be regenerative and relational”. 

A presentation by Chris Martenson about his Crash Course here

 Some of Greer’s writings can still be found in the Counter Currents website eg  https://www.countercurrents.org/greer290511A.htm; and   https://www.countercurrents.org/greer241111.htm. Just type J Michael Greer in the search engine

-       The Five Stages of Collapse – survivor’s toolkit; Dmitry Orlov (2013) I’ve just been able to download this more recent book by Orlov. The guy has a great sense of humour.

-       https://www.resilience.org/ One of the movement’s main mags


  1. Peak Oil never actually meant that there was no more oil to be found, as some have interpreted it, but that the amount of new reserves would increase at a diminishing rate, and new fields would be smaller on average. Of course, in itself, it said nothing about the countervailing factor of rising productivity due to technology, so that even within a Peak Oil scenario, greater proportions of existing reserves could be accessed, and often at lower cost.

    For example, the existence of Deep Sea oil reserves had been known for some time, but were not explored, because existing technology made it too costly to drill. Existence of shale oil was known, but again the technology was not available to extract it at costs that would compete with Gulf Oil etc.

    In short, it was not the Peak Oil thesis itself that was to blame, here, but the Malthusian interpretation that were put on it. They made exactly the same mistakes that Malthus and his followers made in the 19th century, including Ricardo, who derived he theory of diminishing returns. They ignored the fact that existing production may not be the most efficient or fertile, and that in place of diminishing returns, production on an expanded scale nearly always results in increasing returns and economies of scale. Some more fertile lands - US prairies - are only cultivated when demand reaches a high level, and economic development and technology makes it possible to open them up, and transport to and from them. Some lands are more naturally fertile, but require large amounts of capital to clear them, provide drainage and so on. So, as Anderson had shown, there was no reason that productivity could not continue to rise, and output rise by more than was required to meet demand, which indeed is what agriculture, and all primary production has shown over the last 200 years.

    But, the other side of that Malthusian interpretation made he other error of Malthus and his followers. It assumed an exponential rise in demand, when all history shows that such exponential growth does not occur. First of all Malthus population theory was bunk, and population itself does not rise exponentially. As living standards rise, everywhere, family sizes have shrunk. Also, people spend more of their income on things other than food, and as Ricardo noted, the rise in productivity in industry is more than enough to increase these goods faster than demand.

    So, if we look at oil consumption, it has risen by only a seventh of the rise in global GDP since the 1980's. Why, because income gets spent on things other than cars, or other goods and services requiring oil, but also because technology means that efficiency in the use of oil has also risen significantly, producing more energy for less oil. So, as with agriculture and other primary products, these two factors means that oil demand has risen slower than oil supply, so that oil is cheaper in real terms today than it was 40 years ago.


  2. Cont'd

    The other factor of course is that technological development means that we have other forms of energy replacing oil. Renewable energy is now cheaper than most fossil fuel energy in the production of electricity, and that can only accelerate. The move to electric cars - and possible hydrogen fuel cells - will quickly replace existing petrol driven vehicles.

    It wasn't a shortage of stones that brought the Stone Age to an end, nor a shortage of wood that resulted in the shift to coal. It is not a shortage of oil resulting in the shift to nuclear, solar and other renewable forms of energy. That is why those like Paul Mason that have adopted this Malthusian catastrophist standpoint are wrong. And, Paul's view that there will be resistance to shifting away from oil, because it represents a large amount of wealth that would be lost for the oil companies is also wrong.

    Moving from wood burning to coal burning did not end demand for wood and forestry. More wood is produced and used today than ever, but its used to make furniture, paper, and a whole range of other higher value uses than just burning it! Similarly, oil is far more valuable as raw material in the production of petrochemicals, including all of those new materials that material science is developing, of new polymers and so on required for 3-D printing and so on than it is to just burn it! The same with coal, it is far more useful, and ultimately valuable to use to produce graphene than it is as an energy source.

  3. thanks Boffy - I can awlays rely on you to add a missing perspective. Clearly I rely too much on people like Greer and I readily admit my lack of understanding of energy issues. But here do I go for a clearly-written briefing on such matters? I've just downloaded Vaclav Smil's "Energy and Civilisation - a history" and, for me, it's impossibly complex.....

  4. A good question, indeed. I start from my Marxist methodology, and framework. That enables me to look at current events within a historical perspective. That perspective tells me that all of the Malthusian projections are inevitably wrong. But, what does inevitably wrong mean? Something can be wrong in the short-term, but right in he longer-term, and vice versa. So, there can be short-term shortages of some things. Power cuts are not unknown, for example.

    But, I also, therefore, assume that even though in a haphazard and crisis ridden manner, capital responds to these situations, by developing technology and productivity to deal with such situations, in the same way that when capital is overproduced relative to labour causing wages to rise and profits to fall, capital introduces new labour-saving technology. It does the same with means of production, energy and materials.

    In that framework, its necessary to then look at the data for each area, which Google now facilitates, to look at what is happening in the short-term, and what is likely for the longer-term. For example, when oil and other primary product prices fell sharply in 2014, a look at the figures for supply and demand, showed that demand for hem continued to increase, by around 2.5% p.a. The fall in price came from continued increase in supply, which itself stemmed from all the additional capital investment and new technology introduced after 1999, in new fields, mines, farms, quarries etc. On energy looking at IEA reports is the basic source of facts, but you need a framework for interpretation.

  5. I noticed that the Limits to Growth has been making a bit of a comeback, and people are noting that its forecasts have held up very well.

    Malthus didn't consider the way improved technology could change his analysis. You tend to get peaking behavior in just about any technology if you track a single branch. Whale oil peaked and fell a long time ago. Shallow oil drilling technology followed a similar pattern, but deep oil drilling technology took over, then fracking. Each of these exploits a particular resource and follows a similar pattern. Look at offshore drilling, first for oil, now for natural gas.

    We tend to do the easy stuff first. When the resources that support it thin out, we do the harder stuff. Of course, it isn't quite as hard since we are farther along the learning curve.

    The Limits to Growth report was surprisingly close to the mark. There are limits, and we are fairly good at extending one set of limits and then addressing the next set of limits. I suppose we could support a world population in the hundreds of billions, but we'd have to more or less completely turn the planet into a machine for human life support. We could use up all existing energy resources and still have the sun and fusion power. Whether we want to do this, however, is another issue.

    P.S. Haldane suggested tidal power, at least until the moon phase latched in orbit. He was a Marxist biologist writing in the 1920s.

  6. I’m grateful for these two last replies. Blair Fix has just published this interesting piece on his blog (https://economicsfromthetopdown.com/2020/12/03/as-we-exhaust-our-oil-it-will-get-cheaper-but-less-affordable/) which argues that “the switch from physical scarcity to prices is one of economists’ favorite tricks for dispelling concerns about sustainability”.
    His post suggests that the key is to realize that resources can get cheaper at the same time that they get less affordable – we tend to be fixated by short-term price fluctuations and forget that the issue is how this relates to more long-term income (which has, for past decade, been in decline).
    He refres to a fascinating blog by Gail Tverberg called “Our Finite World – exploring how oil limits affect the economy” (https://ourfiniteworld.com/) and to a book which has, at first glance, exactly the style of writing a simpleton like me needs “The Bet – Paul Ehrlich, Julian Simons and our gamble over earth’s future”; Paul Sabin (2013) https://1lib.eu/book/2329631/5eb293