What Would Happen When/If Oil Ran Out?

This is the point where the peak oil theory many times diverges into something entirely different and if one is not careful can come off as a conspiracy theorist. I will try to tread carefully while still providing all the facts possible. A lot of the predictions of what will happen after peak oil peaks are entirely speculative so readers are advised to take or leave as much as they want. But many of the predictions are based off of current crude oil usages and what will happen if that crude oil is no longer there. Oil is in practically every aspect of our lives so if population and consumption continues like it has than we are in store for a very turbulent future. The following video by National Geographic provides a telescope into a possible future without oil.

Worst Case Scenario:

Although this video is obviously a dramatization, it brings up very probable realities. Oil, after all is the entire foundation for our economy and society as we know it. Although I am sure in the resilience of the human species and do not argue that the end of oil equates to the end of human beings, it will mean the end of life as we know it. To understand why, lets shrink the scale the peak oil theory; if a country is faced with declining supplies, it was two short term choices, either import oil from another country or face economic collapse. Since planet earth obviously can not import oil from another planet once global production begins to decline, we have no other option but to face something similar to societal apocalypse, if no preparation is taken beforehand.

It turns out that in an industrialized economy like our own, a drop in oil supply levels precipitates a proportional drop in overall economic output. Oil is the liquid foundation our capitalist society runs on. It is the feedstock used to make the vast majority of transportation fuels, which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled (Orlov). Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. Also, in order for our economy to continue running there has to be a constant replacing of numerous goods. In the manufacturing sector there are all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much that the financial assumptions on which it is based are rejected, making it impossible to continue importing oil on credit (Phillips, pgs. 179-183).


The following chain of events, once it starts will be practically impossible to stop and the initial shortage of transportation fuels although small will set in motion a number of economically destructive feedback loops. Outlined by Dimitry Orlov in his article Peak Oil is History, the following 
socioeconomic consequences will only further the crisis.

First: Optimistic peak oil global production predictions are based on reserve amounts that have been greatly exaggerated, many of which were released during OPEC's 1980 "quota wars".

Second: Export Land Effect: when the production amounts of oil exporting countries begins to decline they will only further begin to decrease their oil exports, preferring to cut exports instead cutting into their reserve amounts thats supposed to be for domestic use.

Third: Although oil production is said to have peaked in 2005 solely because of the fact that production levels were increasing until then, they really peaked earlier, in terms of usable energy derived. "Energy Returned on Energy Invested (EROEI) went from 100:1 at the dawn of the oil age, when some strong-backed lads could dig you an oil well using picks and shovels, to an average of 10:1, now that oil production requires deepwater platforms (that sometimes blow up and poison entire ecosystems), horizontal drilling and fracturing technology, secondary and tertiary recovery using water and nitrogen injection, oil/water separation plants, and all sorts of other technical complexities which consume more and more of the energy they produce" (Orlov). As EROEI continues its trend toward 1:1 oil will no longer continue to be produced as it will become more expensive to transport it and refine it than any possible profits can pay for.

Fourth: We must take into consideration that globalization has made our world increasingly integrated where parts for any one machinery, clothing article, food, or basically any finished product comes from many different parts of the world.

When these four factors are taken into consideration it is difficult to imagine how the global economy can possibly continue functioning as it does now. If you think I've painted a bleak picture so far, I haven't even began to outline the socioeconomic effects of peak oil. Interrelated with the economic effects is the fact that increasing scarcity of oil will lead to "peak everything", a situation where the end of cheap oil and increasing population will lead to food, clothing and the shortage of other goods. Our entire food production relies on petroleum derived products. Everything from the pesticides, fertilizer and transportation of food relies on the existence of cheap oil. Scarcity of food will lead to famines, rampant food riots and looting. The era of driving cars anywhere and anytime we wanted would be far from over. Electricity shortages will be common, not because it plays a significant role in electricity production but because, coal which does play a major role in electricity production, is transported by gasoline powered vehicles. Frankly, anything transported by train, tankers, airplane, or truck will be in short supply.

Reduced mobility for most people and merchandises, will directly damage the activities and industries more dependent on fuel prices. These include agriculture, fisheries, activities related to tourism or traveling, the auto industry, road transpiration, etc. This will lead to the highest unemployment levels in recent times.

Although many of these predictions are based on circumstance, history, particularly the oil crisis of the 1970s, shows us how society would react to huge increases in oil prices. If governments learned anything from history and have been preparing for the day oil runs out than the worst case scenario will never become reality, but for some reason I highly doubt that. Matthew Simmons, a commitee member who served on Vice President Richard Cheney's top-priority energy task force in 2001 had this to say about the US government's energy plan,

"As far as I know, there is not a single contingency plan in place or currently being written by any of the think tanks of the world that sets out a model illustrating how the world can continue to function smoothly once it is clear that Saudi Arabian oil has peaked. In a nutshell, it is this total lack of any 'alternative scenario thinking' that makes this unavoidable event so alarming"

- Kevin Phillips, Bad Money  

  

Best Case Scenario:

The best case scenario is more of a long-term effect of peak oil but nonetheless it is a possible outcome with the right preparation. That preparation although has to mostly come from the government. Considering the fact that the government, to date, has yet to make any significant strides in diminishing the impact of peak oil or reliance on crude oil, this outcome with ever passing day becomes less and less probable.

Many peak oil alarmist forget the fact that the rate of crude oil production is going to decrease gradually and prices are also going to increase at a gradual rate. Oil wells don't go from producing oil one day to being dry the next. This time frame can last anywhere from months to years and gives us enough time to come up with the necessary innovations to remove ourselves from a petroleum based economy. There's something about us humans that makes it hard for most of us to respond to implicit cost or far distant consequences to today's actions. So maybe after oil's prices have reached a level unaffordable to most people, innovations to distance us from our oil dependence will be made and greener, more efficient energy source will be found. Whether it be solar, wind, geothermal, hydroelectric, tidal, nuclear, or an all of the above approach. Peak oil will have the unintended consequence of curbing our addiction to oil and quite possibly even solving climate change. Considering that the majority of our greenhouse gas emissions come from the burning of fossil fuels for electricity production and secondly for transportation. 2,258.4 million metric tons of carbon dioxide were released in 2010 from the transportation sector alone (EPA). Now that that gasoline will no longer be readily available after peak oil, that much carbon dioxide and many other greenhouse gases will no longer pollute the air.