Conclusions from Hirsch Report on Peak Oil
Conclusions from Hirsch Report on Peak Oil
Full Hirsch Report on Peak Oil HERE (PDF) Peak Oil Resource Page More on Bush and Oil
XI. SUMMARY AND CONCLUDING REMARKS
Our analysis leads to the following conclusions and final thoughts.
1. World Oil Peaking is Going to Happen
World production of conventional oil will reach a maximum and decline
thereafter. That maximum is called the peak. A number of competent forecasters
project peaking within a decade; others contend it will occur later. Prediction
of the peaking is extremely difficult because of geological complexities,
measurement problems, pricing variations, demand elasticity, and political
influences. Peaking will happen, but the timing is uncertain.
2. Oil Peaking Could Cost the U.S. Economy Dearly
Over the past century the development of the U.S. economy and lifestyle has
been fundamentally shaped by the availability of abundant, low-cost oil.
Oil scarcity and several-fold oil price increases due to world oil production
peaking could have dramatic impacts. The decade after the onset of world oil
peaking may resemble the period after the 1973-74 oil embargo, and the economic
loss to the United States could be measured on a trillion-dollar scale.
Aggressive, appropriately timed fuel efficiency and substitute fuel production
could provide substantial mitigation.
3. Oil Peaking Presents a Unique Challenge
The world has never faced a problem like this. Without massive mitigation
more than a decade before the fact, the problem will be pervasive and will not
be temporary. Previous energy transitions (wood to coal and coal to oil) were
gradual and evolutionary; oil peaking will be abrupt and revolutionary.
4. The Problem is Liquid Fuels
Under business-as-usual conditions, world oil demand will continue to grow,
increasing approximately two percent per year for the next few decades. This
growth will be driven primarily by the transportation sector. The economic
and physical lifetimes of existing transportation equipment are measured on
decade time-scales. Since turnover rates are low, rapid
changeover in transportation end-use equipment is inherently impossible.
Oil peaking represents a liquid fuels problem, not an “energy crisis” in the
sense that term has been used. Motor vehicles, aircraft, trains, and ships
simply have no ready alternative to liquid fuels. Non-hydrocarbon-based energy
sources, such as solar, wind, photovoltaics, nuclear power,
geothermal, fusion, etc. produce electricity, not liquid fuels, so their
widespread use in transportation is at best decades away. Accordingly,
mitigation of declining world oil production must be narrowly focused.
5. Mitigation Efforts Will Require Substantial Time
Mitigation will require an intense effort over decades. This inescapable
conclusion is based on the time required to replace vast numbers of liquid fuel
consuming vehicles and the time required to build a substantial number of
substitute fuel production facilities. Our scenarios analysis shows:
The obvious conclusion from this analysis is that with adequate, timely mitigation, the economic costs to the world can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship. There will be no quick fixes. Even crash programs will require more than a decade to yield substantial relief.
6. Both Supply and Demand Will Require Attention
Sustained high oil prices will stimulate some level of forced demand
reduction. Stricter end-use efficiency requirements can further reduce embedded
demand, but substantial, world-scale change will require a decade or more.
Production of large amounts of substitute liquid fuels can and must be provided.
A number of commercial or near-commercial substitute fuel production
technologies are currently available, so the production of large amounts of
substitute liquid fuels is technically and economically feasible, albeit
time-consuming and expensive.
7. It Is a Matter of Risk Management
The peaking of world conventional oil production presents a classic risk
management problem:
Prudent risk management requires the planning and implementation of mitigation well before peaking. Early mitigation will almost certainly be less expensive and less damaging to the world’s economies than delayed mitigation.
8. Government Intervention Will be Required
I ntervention by governments will be required, because the economic and
social implications of oil peaking would otherwise be chaotic. The experiences
of the 1970s and 1980s offer important lessons and guidance as to government
actions that might be more or less desirable. But the process will not be easy.
Expediency may require major changes to existing administrative and regulatory
procedures such as lengthy environmental reviews and lengthy public involvement.
9. Economic Upheaval is Not Inevitable
Without mitigation, the peaking of world oil production will almost
certainly cause major economic upheaval. However, given enough lead-time, the
problems are soluble with existing technologies. New technologies are certain to
help but on a longer time scale. Appropriately executed risk management could
dramatically minimize the damages that might otherwise
occur.
10. More Information is Needed
The most effective action to combat the peaking of world oil production
requires better understanding of a number of issues. Is it possible to have
relatively clear signals as to when peaking might occur? It would be desirable
to have potential mitigation actions better defined with respect to cost,
potential capacity, timing, etc. Various risks and possible benefits of
possible mitigation actions need to be examined. (See Appendix V for a list of
possible follow-on studies). The purpose of this analysis was to identify
the critical issues surrounding the occurrence and mitigation of world oil
production peaking.
We simplified many of the complexities in an effort to provide a transparent
analysis. Nevertheless, our study is neither simple nor brief. We recognize that
when oil prices escalate dramatically, there will be demand and economic impacts
that will alter our simplified analysis. Consideration of those feedbacks will
be a daunting task but one that should be undertaken. Our study required
that we make a number of assumptions and estimates. We well recognize that
in-depth analyses may yield different numbers. Nevertheless, this analysis
clearly demonstrates that the key to mitigation of world oil
production peaking will be the construction a large number of substitute fuel
production facilities, coupled to significant increases in transportation fuel
efficiency. The time required to mitigate world oil production peaking is
measured on a decade time-scale, and related production facility size is large
and capital intensive. How and when governments decide to address these
challenges is yet to be determined.
Our focus on existing commercial and near-commercial mitigation technologies illustrates that a number of technologies are currently ready for immediate and extensive implementation. Our analysis was not meant to be limiting. We believe that future research will provide additional mitigation options, some possibly superior to those we considered. Indeed, it would be appropriate to greatly accelerate public and private oil peaking mitigation research. However, the reader must recognize that doing the research required to bring new technologies to commercial readiness takes time under the best of circumstances. Thereafter, more than a decade of intense implementation will be required for world scale impact, because of the inherently large scale of world oil consumption.
ACKNOWLEDGEMENTS
This work was sponsored by the National Energy Technology Laboratory of the
Department of Energy, under Contracts No. DE-AM26-99FT40575, Task 21006W and
Subcontract Agreement number 7010001197 with Energy and
Environmental Solutions, LLC. The authors are indebted to NETL management for
their encouragement and support.
Read the Full Hirsch Report HERE (PDF).