The Big Crunch: End of the Oil Age

This, and the follow-up article, "Oil Alternatives" were published in American Survival Guide Magazine in the year 2000. Since then many of the predictions made have come true; some are in the process of coming true. Still, very little is being done to remedy problems: and the clock keeps on ticking.

THE BIG CRUNCH: END OF THE OIL AGE


All the scientists, politicians, writers, and business analysts who have been recently asked to reflect on what will happen in the next century are optimistic about the future and speculate that many great things will happen in the areas of space, medicine, and technology. Not one it seems anticipates that there is the remotest possibility that our great technological world society is facing a collapse because of a critical dwindling natural resource. That resource is oil.

It is not just the fact that we are running out of oil that is the danger but it is the fact that we are ignoring the fact that we are running out of oil that is the danger. We cannot solve a problem without first realizing that one exits. The word "problem" hardly defines what the consequences of using up our oil will mean.

It is uncertain when the beginning of the end will happen, an end brought about by a second Great Depression, from which there will be no reprieve once it begins. This lack of reprieve is what is so dangerous to us.

There will be no reprieve because oil is what has made our society great. It is the foundation on which our technological society is built. Remove that foundation and there is nothing else available that is able to energize our society.

Our dependency on oil developed quickly. From the first automobiles came trucks, and then farm machinery, which allowed us to farm huge tracts of land and transport produce all over the world. It has allowed us to fight wars on a global scale and ultimately to escape the gravity of earth and begin to explore the Cosmos. Oil supplies us with the building blocks to make thousands of products.

We laud ourselves for our achievements and describe in glowing terms the future before us, but in reality it is a tenuous position, which can and will come crashing around our ears. It is unlikely to happen today, tomorrow, but it will happen someday soon.

To say we will be running out of oil and will suffer a great depression during a time when we are experiencing one of the greatest economic booms in recent history seems fool hardy. But there are trends and statistics that indicate our economic boom, and our way of life, will not last.

Oil depletion is not a "might-be" statistical possibility. It is an event that will happen and is in the process happening at the moment. The big question is not "if" it will happen, but "when" it will happen. Some avoid the possibility entirely by pushing its eventuality far into the future and thus beyond our immediate concern. However, putting off the problem is irresponsible because of the thirty to fifty year lag time that is required to do research and implement an oil substitute.

Oil depletion and its consequences is a difficult subject to sell for in the past there has been "Chicken Littles" and "Cry Wolf" warnings that have not materialized; but in time things do fall from the sky and sheep get eaten by wolves.

I will show in this article that the world's oil supply is not as substantive as everyone believes and that it is not a secure resource we can always depend on.

When I refer to oil I mean not only crude oil but also all those things that are made from it; such as gasoline, kerosene, diesel, lubricants, solvents, medicines, fertilizers, perfumes, explosives, and thousands of other products we find it impossible to live without.

Crude oil is not just a black liquid that comes out of the ground that we use to make gasoline out of. It comes in many forms; from a bituminous, thick almost solid substance, to very light grades that needs little refining.

The thick heavy grades of oil are hard to pump out of the ground and require heavy refining to get it the oil to a usable state. This heavy processing requires large complex refineries costing billions of dollars to design and build. To make more profit the oil producers will pump out the lighter grade oils first, if available, leaving the heavier grades for later. In time they are left with the heavier grades of oil, higher costs, and lower production rates. To compensate for the higher production costs the price of the oil products increases.

The economics of oil plays an important part in the availability of oil. Oil companies produce oil to make lots of money; not to supply the world with oil for altruistic reasons.

The arbitrary raising of the price of oil causes several things to happen; it causes inflation and the higher prices oil prices causes people to buy less gasoline. This causes problems for the producers because inflation in turn increases operation costs by raising the prices of equipment and salaries and the slower gasoline sales means lost revenues and profits. The oil companies end up worse off than before.

This the reason OPEC has been careful, since the 70's and 80's, not to raise oil prices too drastically and why the real price of oil is actually lower. The oil producers make more money in the long run by selling the oil cheap during non-inflationary cycles. The profits of oil are derived by the volume of oil sold rather than a higher price for it. The next important part of the oil picture is who has the oil, and who doesn't.

The United States used to have lots of oil, but after pumping out more than 176 billion barrels of the black stuff it is now down to a mere 22 billion in "proven" reserves. (A figure which strangely hasn't changed since the year 2000; the U.S. consumes 7 billion barrels of oil per year.) The only reason we have any oil left is because we are now importing nearly 60% of the crude oil we consume each year. We are still finding oil, but it is a mopping up process from old oil fields passed over from previous explorations.

The U.S. production is declining each year by 2% and continues to decline each year. (Strangely production has ceased to decline and is actually increasing each year. Someones figures are wrong, it goes against logic) Oil refinery after oil refinery have been closing down for decades. The major oil companies have given up exploring for oil in the United States and are now hoping to find major oil discoveries in places like Russia and Azerbaijan, in the Caspian Sea area.

Unfortunately this has removed the more advanced exploration technology needed to find the more elusive pockets of oil in the U.S., which costs us in the long run. An important part of the picture is who is supplying the oil imported into the U.S.

Mexico is one of the suppliers of oil to the U.S. and it has 40 billion barrels in proven reserves and uses 6 of the 10 barrels of oil it produces. This means that the U.S. can get at most 16 billion barrels from that source. We are importing 511 million barrels from Mexico each year.

Much of Mexico's oil is production-rated--meaning that the oil can only be pumped from the ground at a certain rate. If the rate were exceeded water would be sucked into the reservoir and ruin it.

Venezuela is our major supplier of oil, exporting to us 620.5 million barrels a year. Venezuela has the largest oil reserves left in the western hemisphere with over 65 billion proven barrels of oil. Only 28% of its reserves are light to medium density oil; the rest is 20% API or less. API is a density designator; the heavier the density the lower the number. A light density oil would be in the 30 API range and higher.

Over half of Venezuela's revenues are spent keeping oil production at optimum. Venezuela's oil contains a high percentage of sulfur, which requires processing to extract. As time goes on more and more of Venezuela's revenues will be diverted to maintaining and upgrading its oil facilities and its oil production, which may burden its already taxed economy. All of these things may spell trouble for Venezuela's oil industry and to our future oil supplies.

Canada supplies the U.S. with a surprisingly large amount of oil considering that its proven reserves are only about 6.9 billion barrels. It exports to the U.S. 547.5 million barrels a year. Canada has large unproven reserves of tar sands and bituminous oil locked away. Attempts are being made to unlock these reserves by steam assisted gravity methods using horizontal drilling techniques.

Saudi Arabia supplies the U.S. with about 511 million barrels of oil per year. We'll discuss Saudi Arabia and its resources a little later.

The western hemisphere has combined proven proven reserves of over 132 billion barrels. A lot of oil, but not all of it will be available on demand--when we want it, or need it--because as oil fields mature more effort and money is needed to get the oil out of the ground.

To better understand what the numbers relating to oil mean I will describe briefly how oil is produced. I've used the word "produced" a number of times and the word means generally the combined processes of exploring for, drilling, pumping, refining, and delivering oil to consumers.

Oil is found only in sedimentary rock and oil requires certain conditions in the rock formations for it to exist. When a well is first opened the oil is under great pressure, caused by gas build up and layers of rock pressing down on the reservoir rock. The oil comes out, mixed with natural gas, like water out of a seltzer bottle. "Reservoir rock" is any layer of porous rock that will hold oil and that has pathways for the oil to flow to a well.

In time the gas and pressure is exhausted by production and from then on pumps are needed to produce the oil. Most everyone has seen pictures of huge "grasshoppers" bobbing up and down pumping oil. In time other physical forces begins to work against the pumping forces and the slows to a trickle--especially in fields where the oil is thick and normally flows slowly.

Adhesion and capillary forces captures the oil in reservoir rock and this is the reason why only about one-third of the oil can be gotten out of the ground. Think of the oil being contained in rock similar to a concrete block five thousand feet under ground.

Secondary methods can produce more oil. Secondary methods such as water flooding, steam injection, acid treatment, micro foam, horizontal drilling, chemicals, and even someday bacteria specifically designed to generate gas and thus pressure.

All of these treatments add to the expense and time that it takes to produce oil. When it costs as much to produce a barrel of oil than what people will or can pay for it you have reached what is known as economic oil depletion.

Much of the oil statistics being tossed out for public consumption incorporates oil that is not economically producible or beyond our present abilities to produce. It is a hard concept for some people to comprehend; that there can be many billions of barrels of oil in the ground yet be "out of oil". For most of us "oil" has always been in their lives.

Raising prices on oil does not help produce more oil. In fact, as was previously shown, raising prices acts to inhibit oil production in the long run by decreasing consumption. This takes away the profits that could be used to explore for more oil and for developing better methods of producing oil. (Of course a government run by oil men, for oil men some theories are hard to prove out!)

People have heard that the oil companies over the years have been shutting down wells because of low oil prices and will open them again when the oil prices go back up. This is partly true as some marginal wells may be opened back up, but the majority of them will be shut down forever, because there is no profit to be made by reopening them. It costs more to produce oil from them than what they can charge for it. Now to has the oil and who doesn't.

Again, in our hemisphere, the major players in oil production is the U.S. with 22 billion barrels, Mexico 40 billion, Venezuela with 65 billion, and Canada 6.9 billion.

Western Europe has very little oil; with the UK reserves at about 4.5 billion and Norway's at 11.2 billion.

The USSR region has from 57 to 189 billion barrels. The larger number probably reflecting optimism rather than reality.

China is reported to have from 24 to 31 billion barrels. Africa has three major oil producers; Algeria with 9.2 billion, Libya 29.5, and Nigeria 15.5 billion barrels.

The Middle East region holds the greatest reserves of oil in the world; with Iran's reserve at 57 to 88 million barrels, Iraq 100, Kuwait 96, United Emerites from 63 to 98 billion barrels, and lastly Saudi Arabia with a walloping 261 billion barrels.

The numbers, in the case of the OPEC countries, are suspect however, because their production quotas are based on how much oil they report for their reserves. The larger the reserve they have the more oil they are able to produce to sell. These quota requirements may be the reason that in 1985 Kuwait increased their reserve numbers by 41%, and in 1988 Abu Dhabi and Dhabi tripled their reserve numbers and Iran, Iraq, and Venezuela doubled their oil reserve estimates. In 1990 Saudi Arabia increased their reserve estimates by 50%.

You can see by the numbers that most of the world's oil is located in the Middle East and after the Western Hemisphere's oil is depleted the Middle East will be in a position to dictate to the rest of the world.

It is ironic that the most important commodity in the world is produced in the most unstable region in the world. Political and religious instability in the area is likely to cause an upheaval that will cause a premature and artificial depletion of oil. The most dangerous growing danger is Muslim fundamentalism.

The Saudi ruling class is Sunni Muslim and the bulk of the Arabs in the region are Shiite. Ninety-five percent of Iran's population is Shiite and sixty-three percent of Iraq's are Shiite, conversely only 15% of the Saudis are of the Shiite sect.

Muslim fundamentalism, mostly based in the Shiite sect, is growing and becoming more militant as it fights against the advance of Western culture.

As the oil production becomes more centralized and focused in the Middle East Arab confidence in their omnipotence will grow and a take over of the oil from the Saudis is almost a certainty--for what better weapon against the West is there than oil? There would be little the West could do if the fundamentalists gained control of the region. Using force against them would be impossible as illustrated by the fact that it took months to shuttle in troops and equipment to deal with Saddam Hussein, and that was when we had the advantage of Arab backing and their land to muster troops and equipment on. In the length of time that it took for us to build up our forces during "Desert Storm" trillions of dollars worth of oil infrastructure could be plastered with explosives and held hostage as a means of preventing an attack. The West would have to capitulate to whatever demands were made because the blowing up of the infrastructure--refineries, pipelines, storage facilities, loading facilities, gas-oil separators--would leave the world without oil for a very long time, maybe permanently. The West, without oil, would lack the means to repair the damage, and in fact would be undergoing total disintegration.

Even without a hostile takeover of the oil the world is faced with an oil monopoly from an area and people not sympathetic to the West.

As the Middle East begins to deplete its oil there will be nowhere and no one else to supply oil. Without alternative energy to replace oil an energy vacuum will exist. What will happen then is hard to predict.

The super depression, which I call "The Big Crunch", would result in a destruction of our way of life, back to Square One. A hunting and gathering way of life is not the best way to survive--that is why man took up farming. Without lots of food set aside very few people could survive The Big Crunch.

A year's supply of food wouldn't get you by because the first year of the Crunch would be spent avoiding the many thousands of desperate people wandering about trying to find food, water, and shelter. By the time the next growing season rolled around most of those unprepared and unlucky, possibly 80 to 90 percent (or more) of the population will have died from starvation, exposure, disease, and human interaction. The land will have to be barren of people before it would be safe enough to begin any type of agriculture. It takes 100 to 120 days for most crops to mature and gardening is a full time occupation. A person needs food to live on until harvest time. Agriculture is also risky because there is always the chance of blight or drought happening that could wipe out a crop and that would mean no food produced that year.

Besides the hardships mentioned there are those diseases that we have been incubating over the years, such as AIDS, viruses, incurable tuberculosis, flesh-eating bacteria, as well as the usual plagues that have always been with humanity. There will be no way of testing for these diseases or the means to treat them once they were diagnosed. These diseases would have an opportunity to spread throughout a surviving population because malnutrition and the elements had weakened it.

The big question the reader may be asking by now is; "when is all this going to take place?" To answer that question I have first tell how I came to the conclusion that I did.

For the last three years I have been gathering data--mostly from the Energy Information Agency of the Department of Energy and supplemented by my own textbooks on civil and oil engineering.

New oil discoveries are taking place at about a 1:4 ratio, relative to consumption. (Actually this equates to 1 barrel proven for every 9 barrels consumed)

That ratio increases in spread at some rate each year--I place it at 1.5%; in other words we are finding 1.5% less oil each year. (Some years are better than others so this is an average)

Our consumption rate increases from 1 to 2 percent each year--1.5% being the most quoted figure. The world now consumes a little over 24 billion barrels each year and its reserves are from 980 to 1,000 billion barrels (proven estimates).

To help me analyze the data I wrote a computer program in BASIC. The input assumed reserves at 1,000 billion barrels, oil discovery beginning at a ratio of 1:4 and spreading at 1.5%; initial world consumption at 24 billion barrels, increasing at population growth estimated as being 1.25%. The program of course calculates oil to total depletion but in reality oil will never be depleted to a zero figure. That is the problem in the debate. At some point depletion will cause a shortfall of production to demand and the economy will suffer. Will it be 10% shortfall, 25%?

The significance of these percentages becomes clear when you consider that oil production shortfalls cause inflation, recessions, and even depressions. We have some historical examples of economic hard times that are based on reductions in employment and the Gross National Product (GNP). A 25% reduction in oil would have a serious effect on our economy. We know that recessions are brought on by an increase in unemployment from a normal 5% unemployment rate to a 6% to 7% and a reduction of GNP of 5 to 10%.

A serious depression, such as the Crash of 29 represented an unemployment rate of 14 to 25% and a shrinking GNP of 40 percent.

In 1973 the panic and subsequent recession was caused by a 5 to 10 percent reduction in oil. A reduction in oil of 25% short of demand could mean that our economy would suffer a depression as great as the Depression of 29 and maybe even greater.

The results of my computer analysis calculated that 13 years past peak oil for the 25% point less demand, 22 years for the 50% depletion point, 29 years for the minus 75% point, and 36 years for the theoretical total depletion point. The big question is then when will the world oil production peak occur?

The Scientific American article of March 1998 stated that the peak production would occur around the year 2008.

Based on the behavior of past oil fields the reported oil reserves, and particularly the lack of major new oil discoveries, world oil production will soon reach maximum peak production.

Adverse effects will soon begin to be felt after the production peak occurs. The reduction in oil will increasingly stifle the production of goods, cause increases in unemployment, and reduce the mobility of goods and of people. Mobility is our greatest need.

We can derive energy from many sources for utilities but for transport vehicles we have only one source of energy and that is oil.

The methods used by the oil industry to "prove" their reserves are by drilling holes to find the oil, core samples from test holes, seismic studies, and experience based on the behavior of adjacent oil formations.

After the information is gathered the oil reservoir is mapped and the oil quantities are determined from the thickness of the reservoir rock, the oil content of the rock, and the boundaries of the reservoir. Even though much information is collected and analyzed estimates are still part gut instinct. There are very few absolutes about oil.

Myths about oil abound. The most common myth is the "super carburetor" that was bought up years ago by some oil company because it used far less gasoline. Physics is physics and we are at the moment squeezing about as much energy we can out of gasoline. In other words there are no super carburetors. Another energy myth is running everything on solar power. Imagine running an eighty thousand pound eighteen-wheeler on batteries and solar panels, or running a farm tractor on solar power. Most of the alternatives you have heard about are costly, bulky, and totally inappropriate for heavy transport use.

Hydrogen as a fuel is another one of those utopian dreams that seems to be the answer to everything. The problem with hydrogen is that it takes a lot of energy to break the bond that exists in water between hydrogen and oxygen molecules. Hydrogen also requires special handling. It has to be kept pressurized at very low temperatures in order to keep it liquefied.

Coal is the only option we have at the moment as an alternative for oil but coal has many drawbacks. It is extremely dirty, contaminated with heavy metals; such as uranium, arsenic, sulfur, iron, and others. It has rock and other materials that need to be removed.

To make synthetic oil out of coal hydrogen must be added. Coal on average contains about 5 percent hydrogen, compared to about 12 percent for oil. The process of adding hydrogen is referred to as hydrogenation or liquefaction. The coal is pulverized and hydrogen gas is added to it under high temperatures and pressures. The hydrogen gas gradually combines with the carbon in the coal to produce a liquid. At the moment the process costs $35 to $40 a barrel. About 4 to 5 barrels of synthetic oil can be produced from one ton of coal.

A process efficient enough to produce oil in the quantities we need is a long way off and research and implementation of a synthetic oil program will take many years and cost trillions of dollars.

It is unlikely that anything will be done soon enough to prevent "The Big Crunch". The politicians are notorious for being shortsighted in dealing with problems. It would be political suicide to advocate spending billions and possibly trillions of dollars on a problem that no one at the moment is even recognizing as a problem. The oil companies are not going to promote a program that is likely to take money out of their pockets and scientists and technologists are conservative and generally involved in their own areas of expertise. Without solutions the only answer then is survival.

Not your garden variety of survival, where you plan on surviving for days or weeks, while you make your way to civilization, or wait it out to be rescued, but survival that lasts a lifetime.

No longer will there be communications, mechanical transportation, agriculture, utilities, or anything else technological. Those cultures that do not depend heavily on technology will be better able to survive, but we who live by technology will be ill prepared, physically or psychologically. Without our precious oil we cannot grow crops, get to work, run utilities and services, or keep our government functional.

Cities will quickly become unliveable as food and water and other necessities become depleted. Since eighty percent of a country's population resides in cities and towns people will have to migrate in large numbers to rural areas in search for food, water, and shelter.

By the time "The Big Crunch" occurs the U.S. will have a population of over 300 million. Time is often benefactor but if nothing is done about energy time will not be our friend, for those extra numbers will exacerbate the effects of The Big Crunch.

The best means of surving The Big C is by preventing it from happening and the only way towards doing that is by being aware of the possibility of it happening.

To summarize; "The Big Crunch" is not only a case of shortages and high prices. Our economy is oil-based. We are in an "Oil Age". All the technologies we have developed in the 20th Century have been made possible because of oil. Without it we are afoot. Our technological culture cannot grow and sustain itself without an ever increasing supply of oil. Our way of life will decline once our world oil production begins to decline. The importance of oil has been grossly underrated, we take it for granted, and if don't realize its importance we will pay dearly by overlooking that fact.