Could things be worse than what we doomers thought?

I started counting myself among the "doomers" about nine months ago as I read more and more about peak oil. I judged the chances of a peak oil economic crash to be 100%, maybe in my lifetime. I am 70 and retired, so to be in my lifetime means major problems might develop within about ten years.

Then my latest readings exposed a situation that could make things worse.

Jeffrey J. Brown's post entitled Net Oil Exports and the "Iron Triangle" on The Oil Drum makes reference to ELM, the Export Land Model. This concept, introduced a year and a half ago, is that the populace of the oil and gas producing countries will use more and more of their country's production, even as production peaks and then falls. The effect is that the production available for export to other countries can go to zero after a few years, even though the country is still producing oil.

Jeff made an interesting point in a recent email. The US reached the point where it ceased to be an oil exporter in 1950, twenty years before its production peaked in 1970. So this effect has happened before.

Then there was the news report last fall that Iran, location of the second largest reserves of oil in the world, would cease to be an exporter of oil within 10 years. The Iranian government has been subsidizing the price of fuel for its citizens for years, and as a result, the internal usage has grown exponentially over time. In 10 years they are expected to be using everything they can pump out of the ground.

Mexico is nearing the point where their exports will fall to zero as the Cantarell field is depleted and lesser fields cannot make up the difference. The US will feel that point as a major supplier goes away.

Argentina is nearing a state of collapse as its energy crisis deepens after years of 8% growth fed by subsidized fuels. They are begging fuel from Brazil and have cut off gas exports to Chili. Russia is on a splurge of buying new, big cars. The sheikdoms of the Middle East are using more and more of the oil they pump for extravagant lifestyles.

National oil companies control 90% of the world's reserves. Each country has citizens who want a growing share of the production pie, and each is faced with an export rate falling faster than their production rate is falling.

The US is among the group of countries who must import oil. But too many of us doomers have looked at the world oil production curve and assumed there would be a peak soon, but oil would flow for decades. Yes, there would be less, but there would be some.

But consider what happens if the countries with the oil use all they produce? Then there is nothing to export. Then the US does not have less over time; it has nothing to import. In that case, we must live entirely on what we can produce ourselves, whether it be homeland oil and gas, coal, biofuels, wind, solar, fission, or whatever. And how soon might this happen? Early indications (like Mexico) are we could be seeing the effects in less than five years.

When you add up what we can produce here in the US, it comes to much less than what we are using now. Something has to give, and give sooner than later. Yes, things are worse than some of us doomers had assumed.

Sam Penny
the Prudent RVer

Comments

[Kevin in Boston]

Kudos to Jeffrey Brown for pointing out an important point that the rest of us were missing.
I agree that it spells trouble, but disagree that exports in these countries will completely terminate within a decade. I am wary of any study that assumes a constant rate of increase or decrease into the future (except for the oil depletion part!).
I think it's true perhaps for some nations such as Mexico, but as less and less crude is available to the market, the price of crude would surpass $100 and probably $150, at which point it would be more beneficial for a citizen of one of these countries to sell it on the market than to use it.
Another way to look at it is that as a country's exports decrease but the price of crude (presumably) increases, at some point they face what I'll call "peak oil income". After that peak, income falls, and their internal rate of consumption should either level off or even fall.

[Tom R]

A fun doomer fear, but risks seems overstated. Oil exporting governments get seduced by their wealth into importing luxury goods they can't produce themselves, which means they have to find a way to keep their exports up to have the income.

As scary as it is to be a consumer, being a producer seems to hold much more risk, risks of corruption of government, risks of citizen entitlements that are not sustainable, risks of population explosions and infrastructure costs, risks of trying to find investments that will protect their wealth, risks of global recession knocking out the demand for oil and prices, risks that higher prices will promote new production and lead to a short term glut, risks of alternative technology cutting into their market.

I'm not judging these risks except as real worries for such exporters, except to offer my sympathy for every economy dependent upon a resource we someday won't have as we do now.