The view from further down the oil supply pyramid – de-growth probable
A transcript of our interview with Gail Tverberg on Extraenvironmentalist #55 by Nathan Surendran
Editor’s note: Our thanks goes out to Nathan for providing the transcription work of this video with Gail. If you’d prefer to view the video interview that this excerpt is based on, you can watch it here: http://bit.ly/ZekRDz. Nathan has been donating his time to transcribe the other interviews from this 2013 ‘degrowth’ episode – following on from the 2014 degrowth conference in Leipzig, to keep the buzz going, and stimulate further conversation. For a playlist of the video recordings from the live sessions from Degrowth Conference 2014, click here: bit.ly/degrowth2014_sessionsplaylist_ee.
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Gail: The way I describe [peak oil] is in terms of a triangle of resources. The way I see things is that we start at the top of that triangle, and the resources at the top of the triangle are the easy-to-extract, cheap oil. We started there a long time ago, and most of those are already extracted. Then we have to move down and we get to the little bit more expensive, little harder to extract oil, or maybe a little farther away, or maybe not quite as good a country that’s got a good political system.
We keep going down the triangle, and there always looks like there’s lots more oil there, but what happens is the more oil that’s there, it’s harder to extract. It’s more expensive to extract and it disrupts the economy. It’s not the cheap oil that our economy started with when the economy was first set up. So it tends to lead to recession.This was never factored in.
People who are looking at the situation just look at the big triangle and say, “My! There’s lots and lots of oil down there.” Yeah, there is lots and lots of oil down there, and that oil may permanently stay in the ground because it’s so expensive to extract and it causes so many economic problems. When we do extract it, we really can’t afford to extract it.
Well, I think what happens is that the oil prices don’t necessarily go up all that high. In fact, I think what we’ve been seeing is exactly what happens. The price goes up a little, but what happens is that you start getting debt defaults. It goes up and you start seeing the situation like we had in Europe.
Oil and Gas Resource Volume Versus Resource Quality. This graphic illustrates the relationship of in situ resource volumes to the distribution of conventional and unconventional accumulations, and the generally declining net energy and increasing difficulty of extraction as volumes increase lower in the pyramid.
Source: “Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future” – Chapter 2, ‘Technology to the Rescue’ – Richard Heinberg.
Europe is a little bit different than the United States because in the United States, we’ve got cheap natural gas which is kind of helping us along to kind of offset the high price of oil. But in Europe, they don’t. They’ve got high-priced natural gas besides high-priced oil, and they’re the ones that are going to be hit worst by the debt defaults. But I think that the way this all evolves is through debt defaults from the high price of oil, and we’re going to see Greece and maybe we’ll see Spain – I think we’re also going to see some kinds of situations in some of the oil-producing countries, for instance Egypt, the countries that find that they’re out of balance as well. And we’re going to see bad financial situations there too. It’s not just in Europe, but the way this all plays out as peak oil, what it looks like is financial collapse.
I think a big piece of the reason why the economies of Greece and some of these other countries are falling apart is because they are such big oil importers, such big users of – they’re so dependent on fossil fuels. I think Greece is actually coal that they’re using a lot of, but what happens is that as the prices increase, the tourists, for example, are not able to travel as much, so it cuts back on the tourist packages that they were selling. And so things don’t go as well. They lay people off of work, and you start seeing the recession that we see, and the taxes aren’t high enough to pay the benefits that they’ve promised the laid off workers, and you start seeing the pattern that we see today.
I think what we’re going to see coming ahead from what is being called peak oil, but I guess it’s really the high oil prices is we’re going to see more and more of what people will think of as financial collapse. And that’s going to be happening around the world. It probably will start in Europe, but it’s going to spread to the United States. It may very well spread to China. It is going to have an impact on places like even Africa too, because they are depending on us for some of the exports that we send them as well.
It’s hard to see a good solution to the problems that we’re coming to right now. I mean maybe there are few mitigating things, you know, that we can have our gardens and we can try to make things better, and not plan for a new bigger car and a new bigger house, and a new bigger all of these things, but I think a lot of it is a question of how long it takes for the whole situation to play out. We don’t have a whole lot of control over it. If it plays out over a long enough period, it may very well be that some of those mitigating things that we do will actually be a reasonably good help for some people…
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Note: This transcript was originally prepared for Nathan’s blog, Southern Energy and Resilience. He also put a a Southland, NZ spin on this which you can read on his blog.