* Who is M. King Hubbert? And why should I care?

Bill Sepmeier (c) 2009

So, who is King Hubbert?

When I was two years old in 1956, the age my youngest daughter is today, a fellow who was then about my age now named Marion King Hubbert made a discovery that could have saved modern civilization, had it been heeded.

King Hubbert, as he was called, was born in the oil patch that was early 20^th century Texas. He attended the University of Chicago, where he received his B.S. in 1926, his M.S. in 1928, and his PhD in 1937, studying geology, mathematics, and physics. He worked as an assistant geologist for the Amerada Petroleum Company for two years while pursuing his Ph.D. He joined the Shell Oil Company in 1943, and by 1956 King Hubbert was a geoscientist working for Shell in Houston.

That year, back in 1956, Hubbert published a paper in which he predicted that, for any given geographical area, from an individual oil field to the planet as a whole, the rate of petroleum production of the reserve over time would resemble a bell curve. Based on his theory, he presented a paper to the 1956 meeting of the American Petroleum Institute in San Antonio, Texas, which predicted that overall petroleum production would peak in the United States between the late 1960s and the early 1970s.

As you might expect, his prediction received much criticism.

Hubbert became somewhat famous when this prediction proved correct 24 years later in 1970. Probably a bit more accurately, King Hubbert achieved fame a few years after America’s Peak Oil year, since it’s not possible to know you’ve hit your peak until it has passed.

Hubbert kept up his research and in 1974 he projected that global oil production would peak in 1995 at 40-GB/yr "if current trends continue". Various subsequent predictions have been made by others as trends have fluctuated in the intervening years. Hubbert's theory and its implications for the world’s economy remain the only factual proof about the case. Obviously, 1995 has come and gone, and 1974’s ‘trends’ fluctuated over time.

Unfortunately for the oil addicted world of today, recent events seem to provide the evidence in hindsight that Mr. Hubbert was correct again.

For example, when crude oil costs were bid up to record highs of $140 per barrel last year, George Bush, a personal friend of the al Saud ruling family which controls the world’s largest producing oil fields, implored for more production to lower prices. The Saudi’s, for the first time in decades, could not increase production. This inability to control pricing via production is a strong indicator that in Saudi Arabia, as it was in the USA in the 1970’s, oil producers have met or passed their own peak production capability.

Second, the vast reserves on Alaska’s north slope and in the British/Norwegian North Sea are producing about half as much oil per day now as they did when they came online in the 1980’s and geologists expect the decline to continue rapidly over the next few years. These two fields provided the last 20 years of stability in energy pricing, coming online as they did just when needed to counter the OPEC and Iranian upheavals of the 1970’s, following America’s loss of its status as the world’s largest oil reserve.

Until the 70's, the US had the capability to vary production as needed to control oil prices. Until last year, the Saudis controlled global prices. Since everyone seems to be past peak, costs are driven by speculation now and predictable costs of energy are fading into the past. Without predictible medium to long term cost models and estimates, business cannot function. Since all business depends on oil, this presents a problem.

If you didn’t know, global oil reserve discovery actually peaked between 1965 and 1969 - with the Alaska and North Sea reserve discoveries. Every discovery since that year has been smaller than prior to 1965 and perhaps more notably, in locations which will require far more hardship and expense to recover (and Alaska's north slope and the North Sea weren't easy). Brazil’s latest oil discoveries, heralded last year as massive, actually lie over 100 miles off their coast in the deep waters of the Atlantic Ocean, under more than 9,000 feet of seawater and beneath another 7,000 to 9,000 feet of sea floor. Brazil's PetraBras recently announced multi-year delays in production due to technological challenges in recovery and now estimates bringing the first wells online by around 2015.

This increase in diminishing returns, where it costs almost as much in oil energy to obtain new oil as one receives from the new oil (compared to a 20:1 or more positive ratio in east Texas and Saudi Arabia during the last century) is part of the equation Hubbert used in forecasting the global production peak – a global peak which has evidently occurred.

In the brief past history of the oil age, when a nation based on cheap oil energy such as the USA reached peak production and was no longer able to fuel its exploding economy it simply imported the oil needed to continue growth from other countries who’s production was less mature. This capability itself was based on cheap oil's ability to extend its own supply lines up to 12,000 miles. Once the entire planet’s production capability is reached, further imports at stable costs become impossible.

The behavior of an economy dependent upon a stable, inexpensive supply of one source of energy suddenly losing access to this underpinning is predictable. (Many of the symptoms predicted can be found in this blog, simply by scrolling down through the articles following this post, and in today's financial section of your paper - if it is still being published!)

Needless to say, everything involved in the development and operation of our post-WW II global economy has been based upon cheap oil energy and as such, adaptation to a loss of this foundation will not be easy.

It may not even be possible.

M. King Hubbert believed a conversion to solar power would replace fossil fuels, but such a conversion, at the massive scales required today, may not be practical given both a post-peak decline the quantity and already unstable cost environment of the fossil energy needed to manufacture and deploy new solar technology.

The leading manufacturers of solar modules (invented in the USA) are Japan and recently, China. Simply getting the millions of modules required to support a portion of the country's present electric economy shipped across the planet - which effectively expands in size as easy fossil fuel contracts - might not be practical, even if political stability is maintained to allow such trade.

President Carter declared “the moral equivalent of war” towards renewable energy implementation over 30 years ago, a war that was canceled immediately upon the election of his successor, when new oil from the North Sea and Alaska ended OPEC’s brief control of world oil pricing. Given a 30 year transition, peak oil’s arrival would not have been as big an event as it will be now, with virtually no preparation, and that is even if renewable energy could support the world of today, which is highly doubtful.

Mankind lived with renewable solar energy from the dawn of time until the beginning of the industrial age in 1750. Human population of the planet during that time never exceeded about 500 million people – this was the carrying capacity of a solar powered world.

Today renewable energy, used in vastly larger amounts than ever before in history, since we use large hydroelectric dams and generation today, accounts for only about 8% of global energy input, with our large hydro electric systems accounting for 80% of that figure.

Total energy input globally is today many orders of magnitude larger than it was before the oil age began in 1860 – close to 10,000,000,000 tons of petroleum equivalent per year, and if this could continue, is projected to double by 2050. Two thirds of that input comes from liquid fuels - oil.

Oil has allowed human population to exceed 6 billion, far greater than a solar-powered, green, renewable energy planet could take care of. Now that we’re close to or past oil’s peak production, there will be less and less each year available.

The decline will not be smooth.

We are already well invested and engaged in energy wars (Iraq, Afghanistan and soon, Africa). Politicians will not discuss the reality in public, since there are no alternatives to the decline of our oil-based civilization, but the reality is obvious.

How many new US refineries have been built since Hubbert’s global peak prediction? Zero. If there was a lot of undeveloped oil reserve capacity, a growing economy and a growing population, why are oil companies selling refineries rather than building more?

Why was the last administrations energy plan classified? Because it was simply a plan to invade and police the near and middle east oil producing regions – a plan well underway and continuing with the present administration.

The present administration seems to be trying to salvage the suburban home and strip mall economy that is America, an economy that depends entirely upon highways, truck and automobile transportation. Grants and loans have been made available to develop an electric vehicle replacement for internal combustion, which underlies all that America has invested in over 60 years.

Many people assume someone, "they," will "come up with a replacement" as cost and price models meet demand. Human genius has always found a way around problems, after all, "we didn't replace horses because of a shortage of hay." But never in history has something as compact, portable and easy to store or ship at room temperature - the 42 gallons of gasoline in a barrel - been able to provide the energy in this mass. One barrel of oil's gas, 42 gallons - an SUV tankful - equals a staff of twelve full time servants working for one year. Nothing beats this but uranium, and best estimates show the world sitting on less than a 50 year supply of that, if it could all be mined!

Unfortunately, innovation and genius are no substitute for the 100 year long total exploitation of eons of distilled solar energy that was the cheap oil age which, by itself, allowed for all of the innovation of the same 100 years to be produced into products, suburbs, roadways, men on the moon, computers and everything else we take for granted as some form of entitlement today.

The raw underlying energy needed to try to sustain or better, build a replacement for the oil-fired suburban economy has to come from oil, which is in decline.

We’re simply waking up too late in Hubbert’s bell curve to be able to implement the miracle that would be needed to get around the basic laws of thermodynamics needed to provide the BTUs and kilowatts required to sustain the economy we’ve constructed by burning millions of years of stored energy in a century.

If we hadn’t thrown away the culture of a solar powered planet over our past three generations it might be easier to transition back to a renewable energy world such as the one we left in 1750. Sadly, with few exceptions, such as the Amish culture, most people have no “Plan B” for a post peak oil life.

It’s time we got to work on one. In the next post in this series we'll look at a few options.