by Val Germann
Now that petroleum prices have fallen back to only $50.00 per barrel, a mere 200-percent of what they were a short time ago, it might be well to calmly consider the coming world peak in petroleum production from the perspective of a country that’s already had one — the United States. Yes, it’s true, the U.S. has already had it’s Peak Oil episode, one that followed decades of official denial. No matter, our country hit its petroleum production peak in about 1970 and for most Americans it’s been a bumpy ride down the economic hill ever since.
As the 1960’s unwound and Civil Rights and the Vietnam War held everyone’s attention, the United States went from being the world’s largest producer and consumer of petroleum to being merely the world’s largest consumer, which was a problem. Yet no one noticed, for a while, until the First Oil Shock in 1973.
But what did the peak in U.S. petroleum production mean for Americans? What did it mean for the world? How did we handle the problems the peak caused and will the methods we used then work for the whole world now? These are important questions and will be addressed in Part II.
The Hubbert Peak in U.S. Petroleum Production
Let’s begin with the graph below, from the United States Department of Energy. The green line depicts U.S. conventional oil production in the 48 contiguous states, from about 1953 until the advent of the current millennium. Note the very definite peak, in about 1970, one that had been predicted in the late 1940s by the famous M.K. Hubbert, an oil geologist then working for Shell Oil.
It is worth noting that Hubbert’s predictions were ridiculed or ignored for about two decades, until the peak arrived. The public at large was never informed of this looming problem and neither were most U.S. government officials.
The peak was one of those “open secrets” in an open society, something that no one in the oil business chose to either deal with or even discuss. So it was that the dire effects of our sudden domestic peak were not anticipated and nothing offically was done to prepare for them. But the ill effects of the peak were not long in becoming known even as it became evident that it was too late to do anything effective about them. We might keep this in mind as we proceed though our discussion, one taking place as the entire planet speeds towards its inevitable petroleum peak.
What is being graphed above with the green line is conventional oil, taken from land-based wells that were not very deep nor hard to drill. Those wells contained what was at one time the only material even thought of as “oil,” because as long as it was easy to get there was no need for anything else. That’s right, until that Hubbert Peak approached there was no crying need for “natural gas liquids” or off-shore oil, or Alaska oil, or oil from Central Asia. And no way was there any interest in “oil” from shale or tar deposits, anywhere. Those were considered, rightly, as worthless because they were worthless as long as “real oil” (from the left side of the Hubbert curve) remained easily available here at home.
Ah, yes, “real oil,” the liquid gold that may be smelly and gooey but nevertheless is easy to drill for and then easy to pump to the surface. In fact, “real oil” sometimes pumps itself to the surface and all you have to do is put a valve on the well head! How great is that? And “real oil” is easy to load into a railroad tank car and easy to transport to a refinery, a refinery that need not be very complicated because its feed stock is so good.
Yes, that’s “real oil,” the material that can produce large quantities of inexpensive gasoline because it’s so light (already partly refined) and sweet (very few contaminants) as it comes out of the ground. Compared to that, everything else is petroleum swill.
Hubbert’s Peak and the Energy Profit Ratio
Let us divide this conventional oil into two halves, a pre-peak half and post-peak half. How do they differ and what difference does it make?
In general, for U.S. pre-peak oil, very little energy was needed to drill it and refine it compared to the energy contained in the oil itself. This is because the pre-peak half is almost all “real oil,” and the best of the best. With this wonderful product the “Energy Profit Ratio” was as high as 100-1, say for the incredible East Texas Crude from fields like Spindletop. That is, the U.S. as a society and economy got about 100-times as much energy out of that oil as was put into producing it, even as a final product like gasoline.
That oil flew out of the ground almost by itself and came from a place so convenient that a rail line could be built, across very flat land, straight from the well head to St. Louis or Chicago. So profitable was that oil, energy-wise, that it helped power the United States to the economic and political leadership of the whole world. The U.S. had an ocean of incredibly cheap, high-grade oil, at home, totally secure and under its total control. No one else had anything like it, anywhere on the planet.
End, Part I