Did oil production peaked in 2008 ?

First up, I would say that if the peak was only last year, then it’d be very hard to know for sure it was then. We need a few years to be sure.

Secondly, I note that the article actually tells us what I said the other day, that conventional oil supplies peaked in 2005 – the small increase in total liquids since then has come from,

– tar sands, which use lots of natural gas to extract
– natural gas liquids; as natural gas production has risen, so too has the production of NGL
– biofuels, the growing of which causes deforestation and requires large inputs of artificial fertiliser – made with natural gas

Thus, actual peak oil already happened in 2005, we’ve only been able to squeeze out a bit more stuff to burn by turning to a second fossil fuel and drawing on renewable resources (plants) in a non-renewable way (cut down forests, grow things with gas).

In this way, to offset peak oil we bring peak natural gas closer. In future years we can expect to see more coal-to-liquids plants, too – making oil from coal. This will bring peak coal closer.

By drawing on fossil fuels to each substitute for the other, and on plants and soil to substitute for all three, we mitigate our problems today at the expense of worse problems in the future. My general view of peak oil is in Peak Oil, Mad Max and Me, but a sketch of future scenarios for the world as a whole is in What about the Third World?, and for the West in particular in The Oily Smudge on the Future of the City-State.

What it boils down to is that I expect us to see a period of energy and climate crisis in 2015-25 – this could be put off by a global recession since that’ll reduce our consumption – and then we’ll settle down into vile poverty haunted by insane weather and desertification for the Third World, and gated ecoptian cities in the western EU and Japan, and perhaps the US and East Asia, surrounded by slums of people with no services. What I’d like to see is of course something much nicer…

“With the current economic downturn, the demand decreased, which explains why the supply decreases as well.”

Another possibility is this: supply was unable to meet rising demand in early 2008, which was why oil rose to near $150/bbl; such a rapid price rise does indicate that potential supply was very high.

The entire West except for I think just Norway are net importers of oil, and very large amounts, too; some 15% of the world population uses 50% of its oil (figure off the top of my head, not to be quoted without checking!) Also, the price of oil flows through to the price of other things – so that if their economy is already balanced on the edge of growth or recession, the rising or falling price of oil can tip them either way.

It’s also worth remembering that international commerce is carried out with credit. I mean, when the US buys oil from Venezuela they don’t send a boat with $100 bills in it. So that if the price of a major commodity rises very quickly, this puts a strain on the credit markets.

I am not saying that it was solely the price of oil which caused our economic crisis, just that it didn’t help. Economies have lots of positive feedbacks, like a man who feels himself a failure takes to drink, then because he has taken to drink feels himself more of a failure.

These positive feedbacks give us both booms and busts. Now really the boom is just as much a sign of trouble as a bust, but nobody minds a boom. It’s rather the way a manic-depressive, the mania harms the person’s life as much as the depression (working long hours away from family, being obsessed by a hobby, never giving a spouse time to themselves, etc), but the mania feels a lot better, and hasn’t the social stigma. So when offered drugs to stabilise their mood, the manic-depressive often stops taking them – they miss the mania!

So I think it’s impossible to pick any single cause of our crisis, since crises come about from several problems interacting to make a big fuck-up.