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The Imminent Crash of Oil Supply: Why national and local government needs to start planning now for a Steady State Economy

The supply of the world's most essential energy source is going off a cliff. Not in the distant future, but within two years. Production of all liquid fuels, including oil, will drop within 20 years to half what it is today. And the difference needs to be made up with "unidentified projects" – in other words, we face a potential ‘rank shortage’. According to this graph, we stand on the edge of a precipice, with no prior warning from either the industry or governments, which ostensibly protect the public interest.

Edited and extrapolated from an article by Nicholas C. Arguimbau, 23 April, 2010.
Additional material compiled by Brian McGavin, writer and analyst.

Look at the graph below and worry. It was drawn by the United States Department of Energy (Energy Information Administration) in 2009.

What does it imply? The supply of the world's most essential energy source is going off a cliff. Not in the distant future, but within two years. Production of all liquid fuels, including oil, will drop within 20 years to half what it is today. And the difference needs to be made up with "unidentified projects" – in other words, we face a potential ‘rank shortage’. According to this graph, we stand on the edge of a precipice, with no prior warning from either the industry or governments, which ostensibly protect the public interest.

The original graph is available at:
The graph was prepared for a US Department of Energy meeting in spring, 2009.

Take a good look at what it says:

• We are past the peak of oil production. Conventional oil will be substantially gone in 20 years, and there is nothing secure to replace it;

• Total petroleum production from all presently known sources, conventional and unconventional, will remain "flat" at approximately 83 mbpd for the next two years and then will proceed to drop, at first slowly but by 4% per year after 2015.

• Demand will begin to outstrip supply in 2012, and will already be 10 million barrels per day above supply in only five years. The United States Joint Forces Command concurs with these findings.
• 10 million bpd is equivalent to half the United States' entire consumption. To make up the difference, the world would have to find another Saudi Arabia and get it into full production in five years, an impossibility. See The Oil Drum,

The shortfall, labelled "unidentified projects," that needs to be filled in 18 years is 60 million barrels per day, equivalent to 3/4 of today's total production, on the basis of a very conservative estimate of only 1% annual growth in global energy demand. Yet the rate of discovery of new conventional oil has been steadily dropping now for FORTY years despite evermore searching with more sophisticated technology.

The curve is virtually identical to one produced by geologists Colin Campbell and Jean Laherrere, published in "The End of Cheap Oil," in Scientific American, March, 1998. They projected that production of petroleum from conventional sources would drop from 74 mbpd in 2003 (as compared to 84 mbpd in 2008 in the DOE graph) and drop to 39 mbpd by 2030 (the same as the DOE).

The world was completely transformed by oil for the duration of the twentieth century, but if the graph is right, within 20 years it will be vastly depleted as we face rising demand and trying to support over 4 billion more people in just 40 years. Here are just some of the issues:

• zero time to plan for the replacement of oil in its essential role in EVERY industry;
• zero time to plan how to replace cars and transport in our daily lives, and distribute agricultural produce and manufactured goods;
• zero time to manufacture and install millions of home energy installations to replace fossil fuel-sourced heating;
• zero time to plan for replacement of the largest military establishment in history, almost completely dependent upon oil;
• zero time to plan for supporting a global population that, at currently fertility rates, is heading for over 11 billion people by 2050 - without the "green agricultural revolution," made possible by the age of oil and where over two billion are already suffering from malnutrition;
• zero time to plan how to re-power tractors essential to producing food on a large scale;
• imperilled water pumping and sewage plants, dependent on fossil fuel energy to work.

In a world without oil that will hit us hard in less than twenty years, there will be few oil-burning ships transporting grain and other goods to the billions now dependent on them, or oil-burning airlines serving the world's major cities and the vital global tourist economy. Yet in September 2011 the Airbus Company predicts that the global passenger plane fleet will more than double by 2030. They are in dreamland. We are heading rapidly towards a minefield of lethal limits with little thought for the future.

The most frequently discussed source of unexploited petroleum is the tar sands of Alberta, Canada, but as a high percentage of their energy value has to be used in their extraction, the quantity of reserves is misleading. Two independent researchers have estimated that production from the tar sands by 2020 may be around 3.3 million bpd to 4 million bpd. Consequently, the likelihood of tar sands making a significant contribution to the world's petroleum demand is low. (Phil Hart and Chris Skrebowski, "Peak oil: A detailed and transparent analysis”. ) Tar sand extraction is also very polluting.

Renewable energy. No substitutes for oil have been developed on anything like the scale required, and most are very poor net energy performers. Despite potential, renewable sources (other than hydropower or traditional wood) currently provide less than 1 per cent of the energy used in the world and the annual increase in the use of most fossil fuels is much greater than the total production in electricity from wind turbines and photovoltaics. Oil consumption is now outpacing new discoveries by a rate of around 3:1. (Professor Charles Hall)

So is nuclear power, with its potentially critical contamination risks, the great hope? Nuclear fission generates around 20 per cent of electrical energy needs in many industrial countries – much less in developing countries. Most uranium deposits are found in concentrations of 2% or less. Even a potential doubling in number of fission reactors across the world could see commercially extractable uranium ore run out in just 20 to 30 years.
(David Fleming, nuclear energy analyst)

A transition to genuinely sustainable living and the role of government

The current economic crisis in many developed nations has revealed the fragile inter-dependence of the globalised economy, where many countries can be involved in the supply chain to produce a single component manufactured in one of them. Once plentiful oil supplies are running down rapidly, the 'globalised' economy this has supported will have to rethink completely.

Though the economy and GDP is growing in some places, most of us are no longer getting wealthier and in many countries performance has collapsed. The average wage in the US is less now, in real terms than it was 30 years ago. It is GDP per person that is important. More than 60 countries around the world have seen incomes per person fall in the past decade.

Where is the strategic thinking to build a genuinely sustainable economy in a sustainable environment? We have to recognise that the endless “growth is good” mantra facing a future of rapidly diminishing natural resources no longer serves our future well being. We have to rethink economic growth and the excesses of our globalised economy and manage a transition to a qualitative self-supporting economy that satisfies our needs and works reasonably well without continual growth, with goods lasting as long as possible

A ‘dynamic, steady-state economy’ neither grows nor contracts. The door is open for investments, but they are directed toward activities that promote development over growth. “We need to start measuring exactly what we want to maximise or optimise, and plan for resilience and sustainability.” (Rob Dietz, executive director, CASSE

Ways forward?

There is a vast amount that could be done at the micro and macro scale without impacting on our lives, which would lessen the shock of survival in an energy-scarce world. Alongside the need to stabilise and gradually reduce global birth rates and huge associated infrastructure costs to a sustainable level, we can cut back on so much unnecessary production and product obsolescence. Some reductions many people would welcome. To name just a few:

• less road lighting in the country and reduced but better optics lighting in our towns to preserve the night sky; as well as cutting lighting at night in offices;
• cutting TV advertising screens in supermarkets;
• cutting back multiple TVs installed in bars;
• cutting back the multiple, unsolicited mail-shots falling out of papers and through our doors;
• cutting multiple daily flights on short-haul domestic routes, by using high-speed trains;
• banning further production of gas-guzzling performance vehicles.

Still we carry on with our head in the sands, wasting resources on an epic scale. There has been little forewarning and planning. It is time for communities to prepare for community energy independence, food security – not more office blocks on prime agricultural land, and less growth, not more. Every local and national authority needs to start now to address these huge challenges seriously. Our children won’t thank us for inheriting a world taken to an abyss.


Tony Boys's picture

Brian, I cannot find much to criticise in your article. Nuclear power is not a great substitute for liquid fuels and the food problem associated with reduced availability of fossil fuels is going to be very grave, I think. That's about it. The real problem here is that people like you and I (Campbell, LaHerrere and a few dozen others) have been saying it in one way or another since the early 90s - at least 15 years now. Has it made a great deal of difference? No, I don't think so. Governments ("politicians"), bureaucracies and the world of big business (probably the former two in the pocket of the latter) have most studiously ignored all the forecasts made by honest and conscientious (I believe) people in favour of those who have told them what they wanted to hear. And money talks, doesn't it? Money occupies large areas of newsprint and hogs the time on TV, while other issues are shunted aside as if they were of lesser 'worth,' but the 'reality' is that money is a figment of our imagination and resources + human labour is what are needed to run the real economy. We know the problem. We know most of the 'solutions.' We just can't get by those people who don't want to know because it affects their (personal or corporate) bottom line. Do you think only "the inevitable crash" is going to make these people wake up?

Maribyrnong City Council is the only one in Australia that has a peak oil contingency plan.

See Maribyrnong Oeak Oil Contingency Plan

"Our team worked closely with council staff to assess council’s operations and vulnerability to oil supply constraints. This process led to the identification of ten service areas considered most vulnerable to either a short or long term reduction in available fuel supplies".

With local councils being forced to accommodate population growth rather that any real future planning, they are preoccupied with ensuring profits for developers and bankers, not with the "inconvenience truths" of reality.

On a Federal level, there is more concern about "skills shortages" than food, fertilizer and oil shortages. Releasing land for housing, over fertile land in the driest continent on the planet, is being given priority.

The Occupy Wall Street movement is also part of the great denialist movement. Businesses and corporations are running our government, for ransom. The warped and fatalistic policies and ignorance coming from our governments is mind-boggling and they are prepared to sacrifice our long term welfare for short-term profits and economic benefits.

UK-based writer and environmental analyst

Some excellent and very useable comments Nimby. Thanks for sending the info about Maribyrnong City Councilbeing the only one in Australia that has a peak oil contingency plan. Even so I wonder if they are committed to really capping growth at local level and understanding the need to transition to a steady state economy for genuine sustainability? There are quite a number of urban areas around the world that have signed up to the idea of 'Transition towns' - You can Google more info on this. Again, I doubt they are making a really thorough audit of what needs to be done. CASSE in the US has done some good work on this as well as the now disbanded UK Sustainable Development Commission's 2009 reprt 'Prosperity Without Growth'. Worth downloading the material. With the banker-gambler driven economic crisis in Eurpoe and the US, politicians everywhere are obsessed on reviving 'healthy growth' and look increasingly feeble when it fails to emerge. It should be a good time to promote the alternative dynamic steady state economy that has to be our future, yet little seems to be happening at the moment. The article I posted on the Imminent Crash of oil supply and government lack of attention is a potentially powerful tool to wake up and challenge local governments at local level. If people network and send the issues in to their own local governments it should build a good story. Are you a member of Sustainable Population Australia btw? I am a member of the UK-based Population Matters. Send me an email if you like. I don't know if the protocol should be through the Candobetter site managers though. Ask Sheila Newman.
Brian McGavin

I've had something to do with my local "transition town" movement and they refuse not only to discuss the root cause of the problems they are trying to face - food production, traffic congestion and climate change caused by population growth - but the leaders are actually supportive of growth! They are bound by "political correctness" and thus nullify their credibility. Yes, it doesn't make logical sense, and what they are trying to do depends on growing food in back yards and nature strips, even though higher density/high-rise living is eradicating back yards and causing more traffic congestion. They are bleeding-heart green-hypocrites!

Hi Nimby,

More likely your local movement has been captured by members of the growth lobby - probably professionals - architects, planners etc. There was someone like that running for the Greens in my electorate last year.

Anyone can call themselves 'Transition Town activist' or 'Green' or 'Socialist', but the test lies in the way they act and what they stand for.

To call people who misrepresent and pose obstacles to the movement they claim to represent, 'hypocrites' is too kind. Do they have any justification for their stance? Do they pretend that high rise livers will have public land allocated for community gardens? Do they have any figures or sums to indicate how they would deal with the logistics?

The "growth lobby" (property developers, business leaders, etc.) don't believe that the supply of energy will ever peak. The all believe, with a religious faith, in the neo-classical doctrine of infinite natural resources. If and when serious energy shortages hit we will all suffer, but they will be completely taken by surprise. They just can't conceive that the growth will ever end.