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The Peak Resources Scenario |
The basic premise is that humankind has already burned up most of the easy-to-acquire oil and natural gas in the world -- the stuff that we can easily pump right out of the ground. Everything else costs more energy to get out than before, causing a spiral in costs and availability. The question is when we hit the tipping point. When we hit the peak (and many say that happened in 2006), then the cost of energy begins to inevitably rise dramatically and rapidly. For modern society, when oil hits $120/barrel to $200/barrel (or $5-$15/gallon), then all sorts of things begin to go awry.
The same premise can be applied to nearly all our fundamental resources. Aquifirs have been drained for agricultural irrigation. Obvious rivers have been already been dammed. The easiest-to-get copper, magnesium, iron, and other minerals vital for modern life has already been harvested -- when energy was cheap! Natural gas is getting harder to find. Gold, platinum, silver, and titanium are all oversubscribed. Energy-intensive fertilization and monocrops have made even most topsoil a depleted resource, unable to grow much without pumping energy-expensive fertilizer upon it.
We are hypothesizing a 20% per year increase in energy and material costs over the next ten years (note: oil was $50 a barrel two years ago, and is currently near $100), and for most resource commodities because of it:
This Scenario promises a slow-motion, economically grinding spiral down into a worldwide, desperate depression. Even those lucky few with farms and fields will suffer, though perhaps not as dramatically as those in mostly urban landscapes.
| from TheDay (CT), 01/09/08 Cheap Oil is So Yesterday. Time to Start Writing Expensive Oil into Our Plans? "Competition for scarce resources will drive up the future price of raw materials: The building blocks of progress -- fossil fuel energy, metals, land - are more abundant and cheaper now than they will be in the future. Resource nationalism means that certain strategic materials may not be available for import -- at any price -- in the not-too-distant future. We should reconsider the future value of energy, raw materials, farmland and water." | |
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| from AP Business News, 01/02/08 Oil futures rise to $100 a barrel "Crude oil prices briefly soared to $100 a barrel Wednesday for the first time, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will outstrip supplies." | |
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| from National Post (Canada), 01/03/08 Peak Gold? Production from the world's biggest producer, South Africa, has sunk to levels not seen since the 1930s, he said, and despite a long-standing bull run for the price of gold, a finite supply of the precious metal means not enough is being produced to meet demand. "Demand is driving this inexorably," Mr. Norman said. "People talk about peak oil, but peak gold should also be a feature of discussion in 2008." | |
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| from The Economist (UK), 01/13/08 Christophe de Margerie, the boss of Total, thinks that the world's oil production may be nearing its peak "Mr de Margerie is careful to point out that he is not predicting "peak oil" in a geological sense. His definition of peak oil is "when supply cannot meet demand". He believes that the fuel that the world needs to keep its cars and factories running may well be out there, somewhere. It is just getting harder and harder to extract, for technical as well as political reasons. For one thing, he points out, the output of existing fields is declining by 5m-6m b/d every year. That means that oil firms have to find lots of new fields just to keep production at today's levels. Moreover, the sorts of fields that Western oil firms are starting to develop, in very deep water, or of nearly solid, tar-like oil, are ever more technically challenging. There is not enough skilled labour and fancy equipment in the world, he believes, to ramp up production as quickly as people hope." | |
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| from Durango Herald (US), 01/13/08 Oil shale rises again in Western Colorado Chevron officials look at the size of tomorrow's market. Six billion people live on Earth, and there might be 9 billion by the middle of the century. "We're probably going to need every molecule of energy going forward that we can get to meet the needs of that growing population," Johnson said. That's what brings Chevron back to Colorado's notoriously difficult oil-shale deposits. "The easy oil, we pretty much have used up," he said. | |
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| from Guardian (UK), 01/22/08 Is this the end of cheap food? "Walton ... forecasts two further years of similar increases, at least. All the indicators, the prices of every food staple, are on the up - wheat doubled in price at one point last year. 'It's something the industry has expected and is thus, hopefully, a manageable cycle,' he says. 'No hunger riots. But we have enjoyed food prosperity for a long time, and we're seeing the end of that.' Others offer an even more bleak assessment. Jacques Diouf, head of the UN's Food and Agriculture Organisation, spoke recently of a 'very serious crisis' brought about by the rise in food prices and the rise in the oil price. Various global economic bodies are forecasting rises of between 10 per cent and 50 per cent over the next decade." | |
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| from Globe and Mail (Canada), 01/29/08 Commodities continue to rack up double digit gains "In five of the last six years commodity prices have posted double-digit increases. And the indications are that the index, which tracks price trends in 32 of Canada's major exports, has started the year with another increase, aided by gold, oil, potash, sulphur and wheat prices, all of which reached record highs so far this month." | |
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| from Discover, 02/02/08 Unsustainable Soil Use Can Cause Civilizations to Collapse "Earth is running out of soil. At least that's the conclusion of a new study supporting the long-held belief that current farming practices are causing soil to erode more quickly than new soil can be produced." | |
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| from India News, 02/06/08 Two billion face water famine as Himalayan glaciers melt "New Delhi: Two billion people face acute water shortage this century as Himalayan glaciers melt due to global warming. [Sayed I. Hasnain of the Centre for Policy Research] said the little work that had been done predicted that there would be a 20-30 percent increase in the water flow of the Ganges in the next four decades as the glaciers feeding the river melted, followed by a severe water shortage." | |
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| from National Geographic, 02/09/08 Human Activities Triggering "Global Soil Change" "Earth's climate and biodiversity aren't the only things being dramatically affected by humans—the world's soils are also shifting beneath our feet, a new report says....This new era will be defined by the pervasiveness of human environmental impacts, including changes to Earth's soils and surface geology...Earth's soils already show a reduced capacity to support biodiversity and agricultural production." | |
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| from Cape Argus, 02/14/08 'SA's water could run out by 2025' "The government is now being warned about a looming water crisis for South Africa in the same way that it was warned a decade ago about the present energy crisis, one of the country's top environmental organisations says. The warning from World Wide Fund for Nature - South Africa (WWF-SA) is that 98 percent of available water resources are already fully utilised and the country could run out of water by 2025. "This doesn't mean the taps will run dry, but that water-intensive industries won't be able to continue working as before and there may be water rationing," chief executive of WWF-SA Morne du Plessis told a media briefing at the Waterfront on Wednesday." | |
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| from Associated Press, 02/19/08 Oil jumps above $100 on refinery outage "NEW YORK - Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gas prices rose further above $3 a gallon. There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela. The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values." | |
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| from The International News (Pakistan), 02/23/08 Palm at new peak on record soy oil "Malaysian palm oil futures jumped more than 2 per cent to a new peak for the sixth straight session on Thursday on tight global vegetable oil supplies and crude oil’s record over $101.... Palm oil has climbed nearly 21 per cent this year, driven by increased Chinese and European demand, a flood of funds into commodity markets and Jakarta’s plans to hike export taxes for palm oil." | |
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| from Market Oracle (UK), 02/24/08 A Very Alarming Picture in Energy Sector Peak Oil Trends "If you think that at the moment the world is consuming 30-plus billion barrels a year of oil and is finding seven or eight billion barrels a year, and this state of affairs has been going on now for 20 or more years... It's obviously unsustainable." ... Dr. Buckee says the cost of a barrel of oil could reach as high as $200 by the third or fourth quarters of this year, and that prices would have to get that high before it would have any particular impact on demand. | |
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| from Financial Post, 02/25/08 Global shortage of metals looming "Peak oil has lots of press, but what about peak copper? Peak zinc? Peak gold? Sounds preposterous, but maybe it's not so far-fetched. Nearly every commodity is experiencing some supply issues, for a host of reasons. Add it all up, and it means potential supply shortages in the future. Demand may slacken this year, but in the next 10 years today's high commodity prices may actually look like a bargain." | |
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| from Guardian (UK), 02/26/08 Food riots and the UN World Food Program "WFP officials say the extraordinary increases in the global price of basic foods were caused by a "perfect storm" of factors: a rise in demand for animal feed from increasingly prosperous populations in India and China, the use of more land and agricultural produce for biofuels, and climate change.... Food riots have broken out in Morocco, Yemen, Mexico, Guinea, Mauritania, Senegal and Uzbekistan. Pakistan has reintroduced rationing for the first time in two decades. Russia has frozen the price of milk, bread, eggs and cooking oil for six months. Thailand is also planning a freeze on food staples. After protests around Indonesia, Jakarta has increased public food subsidies. India has banned the export of rice except the high-quality basmati variety." | |
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| from Jackson Hole Star Tribune, 02/26/08 Embattled ag undersecretary makes no apologies for timber policies "He overhauled federal forest policy to cut more trees -- and became a lightning rod for environmentalists who say he is intent on logging every tree in his reach. After nearly seven years in office, Agriculture Undersecretary Mark Rey still has a long to-do list. Near the top: Persuade a federal judge to keep him out of jail ... A Montana judge, accusing Rey of deliberately skirting the law so the Forest Service can keep fighting wildfires with a flame retardant that kills fish, has threatened to put him behind bars." | |
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| from Associated Press, 02/28/08 Olympics highlight Beijing water woes "BEIJING -- When 16,000 athletes and officials show up this summer, they will be able to turn the taps and get drinkable water - something few Beijing residents ever have enjoyed. But to keep those taps flowing for the Olympics, the city is draining surrounding regions, depriving poor farmers of water. Though the Chinese capital's filthy air makes headlines, water may be its most desperate environmental challenge. Explosive growth combined with a persistent drought mean the city of 17 million people is fast running out of water." | |
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| from Naples News Daily (FL), 03/03/08 Collier county wants right to withdraw more aquifer water; district reluctant "The county wants more fresh water because it is less expensive to treat than brackish water and can be treated with existing water plant capacity, delaying the need to build new plants, county Water Director Paul Mattausch said.... More than half of the county's water supply comes from alternative water supplies, either highly treated reclaimed water from the county's sewage treatment plants or brackish water from deeper underground." | |
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| from Reuters, 03/03/08 Yemen Sleepwalks Into Water Nightmare "BEIT HUJAIRA - Black-clad women trudge across a stony plateau in the Yemeni highlands to haul water in yellow plastic cans from wells that will soon dry up... These women are at the sharp end of what Yemen's water and environment minister describes as a collapse of national water resources so severe it cannot be reversed, only delayed at best...Yemen relies on groundwater, which nature cannot recharge fast enough to keep pace with a population of 22.4 million expanding by more than 3 percent a year. | |
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| from Globe and Mail (Canada), 03/07/08 Life after the oil crash The grab-your-gun-and-head-for-the-hills scenario goes something like this: In the next year or so, world oil production will peak and then promptly plummet, forced down by sinking reserves. While supply crashes, demand will grow. Virtually overnight, fuel will become so dear that farm tractors will go idle, people will go hungry and homes will go cold. Financial markets will collapse and social chaos will follow.... These "doomers," as they're called among the peaknik community, congregate online at DieOff.org, AnthroPik.com and dozens of other apocalyptic sites dedicated to discussing when the sky will fall and what to do afterward. | |
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| from Financial Times (UK), 03/07/08 Twin shocks of finance and resources facing global economy The global economy is facing twin shocks. Natural resource markets are delivering a supply shock of 1970s dimensions, while the financial system is delivering a shock comparable to the bank and thrift crises of the 1988-1993 period. The magnitude of each shock is very different. The financial markets require a recapitalisation of the banking system, with estimates ranging from $300bn to $1,000bn.... The broad story is of depletion. Most of the easily obtainable resource deposits have already been exploited and most usable agricultural land is already in production. Natural resource discoveries, where they continue to occur, tend to be of a lower quality and are more costly to extract. Meanwhile, the dwindling supply of unutilised land faces competing demands from biodiversity, biofuels and food production. | |
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| from Guardian (UK), 03/08/08 Food crisis will take hold before climate change, warns chief scientist Food security and the rapid rise in food prices make up the "elephant in the room" that politicians must face up to quickly, according to the government's new chief scientific adviser. In his first major speech since taking over, Professor John Beddington said the global rush to grow biofuels was compounding the problem, and cutting down rainforest to produce biofuel crops was "profoundly stupid". | |
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| from Nature, 03/14/08 The energy-water nexus: deja-vu all over again? "With US policymakers struggling to contemplate a future where oil pipelines sputter and water wells come up empty, panellists at the recently concluded American Association for the Advancement of Science meeting in Boston urged a rethink of the connection between these two crucial resources....Energy and water are closely linked. We use a lot of water to produce energy, especially fossil fuel energy. And we use a lot of energy to produce water — for food, to treat water, to capture and treat wastewater", says [Peter] Gleick, [director of the Pacific Institute for Studies in Development, Environment, and Security in Oakland, California]. "Energy constraints are beginning to affect water policy, and water policy is beginning to affect our energy choices. And yet, almost never do we integrate these two policies."...Now, the 2009 budget contains US$8 million earmarked to help fund a Department of the Interior census of domestic water supplies — the first in 30 years. | |
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| from The Fiji Times Online, 03/17/08 Near-empty dam causes supply disruptions The dam was yesterday alarmingly three-quarters empty, with the two streams running dry. Water from the Waimanu River was being pumped into the dam yesterday to make up for the shortfall. Mr Yanuyanurua said as a result of the dry spell Fiji had been experiencing over the past few days, the water level had dropped dangerously.... Interim Local Government Lekh Ram Vayeshnoi said the water department should explain why this had happened. | |
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| from USA Today, 03/18/08 Drought eases, water wars persist "It's raining again in the Southeast. Much of the drought-parched region has been deluged recently by winter downpours, including weekend storms that battered the downtown business district and a swath of north Georgia. The drought has not ended, but it has eased across most of the region, according to the U.S. Drought Monitor and the National Weather Service.... Now comes a tougher challenge: resolving new and long-standing disputes over water that some experts say could hamper the region's emergence as an economic and population powerhouse. In a part of the nation where water shortages have not traditionally been an issue, it's difficult to tell whether even a historic drought has made a lasting difference, some scholars say. "The Southeast has not yet come to grips with the fact that it has a water problem, that it needs to plan for its water usage, that it can't take for granted that all the water it needs will always be there," says Robin Craig, a law professor and water expert at Florida State University's College of Law. | |
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| from Reuters, 03/19/08 Investors warm to water as shortages mount " LONDON (Reuters) - As liquidity is drained from credit and money markets and pours into oil and gold, another asset class that could offer long-term returns to the discerning investor is water. Water shortages are on the rise -- stemming from soaring demand, growing populations, rising living standards and changing diets. A lack of supply is compounded by pollution and climate change. Investors are mobilizing funds to buy the assets that control water and improve supplies, especially in developing countries such as China where urban populations are booming, further tightening supply." | |
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| from London Independent, 03/22/08 Water will be source of war unless world acts now, warns minister "The world faces a future of "water wars", unless action is taken to prevent international water shortages and sanitation issues escalating into conflicts, according to Gareth Thomas, the International Development minister. The minister's warning came as a coalition of 27 international charities marked World Water Day, by writing to Gordon Brown demanding action to give fresh water to 1.1 billion people with poor supplies. "If we do not act, the reality is that water supplies may become the subject of international conflict in the years ahead," said Mr Thomas. "We need to invest now to prevent us having to pay that price in the future." His department warned that two-thirds of the world's population will live in water-stressed countries by 2025. The stark prediction comes after the Prime Minister said in his national security strategy that pressure on water was one of the factors that could help countries "tip into instability, state failure or conflict". | |
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| from Daily Reckoning (UK), 03/26/08 How Food Shortages Provoke Economic Nationalism "Half the world's population depends on rice, but stocks are at their lowest level since the 1970s. Securing adequate food supplies is policy priority number one for many developing countries. This political dimension means that there is plenty of mileage in the current food price boom.... The link between food shortages and civil unrest is well known. In the year 2000 around 15m tonnes of America's maize crop was turned into ethanol, in 2007 that quantity was almost 85m tonnes, output that would normally be earmarked for food consumption. The rise in global maize prices caused 'tortilla riots' in Mexico in January last year. There have also been food riots in Morocco, Uzbekistan, Yemen and West Africa." | |
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| from Natural Resources Defense Council, 03/30/08 American West Heating Nearly Twice As Fast As Rest Of World "The American West is heating up more rapidly than the rest of the world, according to a new analysis of the most recent federal government temperature figures. The news is especially bad for some of the nation’s fastest growing cities, which receive water from the drought-stricken Colorado River. The average temperature rise in the Southwest’s largest river basin was more than double the average global increase, likely spelling even more parched conditions." | |
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| from The Guardian, 03/31/08 Tensions rise as world faces short rations "Food prices are soaring, a wealthier Asia is demanding better food and farmers can't keep up. In short, the world faces a food crisis and in some places it is already boiling over. Around the globe, people are protesting and governments are responding with often counterproductive controls on prices and exports -- a new politics of scarcity in which ensuring food supplies is becoming a major challenge for the 21st century...Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65 percent." | |
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