written 31 March 2024
published 7 April 2024
Everything we take for granted in society is the result of abundant affordable energy. Over the last century, that has primarily been oil.
Beginning from nothing in 1900, US production grew to 4 million barrels per day (mb/d) by the end of WW2. At that time, the US produced about half the global oil, all from the lower 48 states. Since oil is more energy dense and versatile than the coal which had powered the British Empire, US oil powered the explosion of post war economic growth.
But oil is a finite resource. In 1950, a typical well would produce 200,000 barrels per day. Twenty years later, the average well produced only 1/10 that amount. US domestic production, called conventional oil, peaked in 1972 at 8mb/d, and the US lost control of the price of oil, which produced a decade of extreme domestic inflation. Conventional US oil production declined to 3mb/d in 2000, and is now about 2mb/d.
In an effort to replace lost US production, new reserves were developed in Alaska and offshore in the Gulf of Mexico. But both these sources were more expensive to produce. Alaskan oil peaked in 1985 at about 2mb/d, and has now declined almost to nothing. Offshore oil still produces about 2mb/d, but as individual wells deplete, drilling moves into much deeper water, and becomes more expensive yet.
In 2005, global production of conventional oil peaked, spiking the price of oil, which helped crash the global economy in 2008. At that point, US production was 5mb/d, but the increased value of oil spurred massive investment in tight oil (fracking shale oil), which grew from .5mb/d to 9mb/d, and is now 69 percent of US production. In 2023, US oil production was 12.9mb/d, 16 percent of the global total, the most of any country.
Hydraulic fracking uses great pressure to split the rock, and injected sand to keep the rock open, allowing recovery of very small reserves of oil. But well production declines 80 percent in three years, so the expensive process has to be continually repeated. The fracking industry lost billions of dollars since 2005. In addition, seven of the eight most productive U.S. shale basins are already past their peak.
Furthermore, fracked oil has a high percentage of light hydrocarbons, with significantly less energy content than conventional crude, which can't be refined into diesel. Global diesel production peaked in 2015, which is why diesel is now more expensive that premium gasoline. Global oil production of any kind peaked in 2018.
As oil becomes scarcer, and more expensive, it makes the rest of life more unaffordable. But price is only one way of evaluating energy. To produce energy, it takes energy, so we can look at the "energy returned on energy invested" (EROEI). Average conventional oil well used to produce 40 units of energy for each energy unit expended, giving an EROEI of 40. Our technological society needs an EROEI of at least 10, in order to have sufficient energy available to power all the rest of our infrastructure.
Global EROEI for new conventional oil is now 17 and declining, wind is 20, solar is 12, deep water oil is less than 10, tight oil is less than 5 (the same as using animal labor), and human labor is 3. As reserves continue to deplete, it is estimated oil production EROEI will be 2 by 2050. Oil will be around for decades, but it may not be affordable for long, or energetically relevant. This is being referred to as the "energy cliff".
This isn't a problem that "drill, baby, drill" can solve, any more than politics can bring back old growth redwoods, the historic economic foundation of our local economy. The oil industry knows this, which is why they are using current profits to enrich stockholders with buybacks, rather than funding exploration.
The energy cliff issue, independent of the growing climate crisis, is a consequence of explosive population growth and depleting finite resources, amplified by the consumptive economic concept that the winner is "one who dies with the most broken toys".
Our species is at a cross roads, demanding an evolution to a completely new way of doing business, if we want a sustaining civilization and a habitable planet for our descendants. I am still optimistic, and believe we have yet to explore the full capacity of what it means to be human.
