25 Feb 2010 – Chris Martenson at the House of Commons on “Peak Oil and Economic Growth”

This was a talk for the All Party Parliamentary Group on Peak Oil and Gas (APPGOPO). Chris Martenson presented a 40 minute condensed version of his 3 hour “Crash Course”. The talk was followed by about 45 minutes of questions and answers. This link has a recording of both the talk and the Q&A session, and also a pdf of his presentation. There were many good questions in the Q&A session, which covered additional ground. The Grand Committee room was full, with many people standing at the back, the biggest audience so far for an APPGOPO talk.

Below I just give a few key points from both the talk and the Q&A session:

The 3 E’s – Economy, Energy and the Environment

  • These 3 elements are interrelated, to understand 1 we must understand the others.
  • We are at a sharp corner in our history. People tend to look at the past and project into the future. That method of forecasting will not work in today’s world. The next 20 years will completely unlike the last 20 years.

Exponential Growth

  • Perpetual growth is a requirement of modern banking. It is a requirement of our economic system. Our economy and our money system doesn’t have to be based on growth, there are other models. But our current economic system does happen to depend on growth for its normal functioning. Up to recently this system has served us well.
  • A chart of a value growing exponentially (with time as the x-axis and the quantity plotted on the y-axis) can be portrayed as a hockey stick. A long period which looks almost horizontal, then the line “turns the corner” and the most recent period shows almost vertical growth.
  • If there are no limits to growth, then this view is an artefact of the scale. For example, replotting with larger values on the y-axis would show the entire history as being near horizontal.
  • However, if there are limits and those limits are near at hand, then it is legitimate to portray the exponential growth as a hockey stick, with horizontal and vertical parts. The speed of change as the as the value nears the limit will be much faster than the speed when the quantity is still small.
  • A feel for exponential growth as limits are approached can be obtained by taking two magnets and trying to bring them together at a constant rate. It is very difficult because the attractive force between them grows much larger when they’re close together, and they tend to accelerate and snap together.
  • A real life example. It took all of human history until 1960 for World population to reach 3 billion. To add another 3 billion took 40 years.
  • If someone is 22 years old, then the oil burnt during their lifetime is half the oil that has ever been burnt.
  • There was a time lag of 30 years between oil shock 1 (1970’s) and oil shock 2 (2000’s). We should not assume that there will be another 30 year time lag between oil shocks 2 and 3.

The date of Peak Oil

  • Chris recommended the report of the UK Peak Oil Task Force which was published on 10th February.  This report estimates that the maximum flow rate of global oil supply to occur some time during the period 2011 to 2013.

Definition of a Problem versus a Predicament

  • A rock climber stuck on a cliff face has a problem. He has multiple options, try to climb up, try to climb down, call for help, wait for rescue. There could be any one of multiple outcomes. A person in mid-air who has just jumped off a sea-cliff has a predicament. One part of the outcome is already certain – he will get wet. Some things remain uncertain – e.g. whether he’ll belly flop or land feet first. Treating a predicament as if it is a problem is a big mistake, because time and effort can be wasted in trying to head towards outcomes which are not possible.
  • In order for the United States to replace the energy provided by its oil imports with renewable energy sources, it would have to multiply its renewable energy supply by 2000 times. Oil depletion is a predicament rather than a problem, scaling up renewable energy cannot occur quickly enough to allow business as usual to continue.
  • Returning to the 3 E’s, our current situation is that the Economy must grow, our Energy supply can’t grow, and our Environment is depleting. Something has to give. There are models for a non-growth based economic system, these need to be tried now.

Energy Return on Energy Invested (EROEI)

  • Every barrel of oil extracted takes energy to get it out of the ground and processed into finished fuels. To drill, to pump the oil out, to make the steel for the rigs and so on. The ratio of energy used to extract the oil versus energy available from the oil produced is called the EROEI. In the early days of oil production the ratio was very high, up to 100:1, because in the early wells oil gushed out of the ground with no pumping required. EROEI has been steadily dropping. Therefore, the volume of reserves left in the ground only tells part of the story. What is important to us is the amount of energy that will be available for final uses.
  • If he could do one thing then it would be to establish a National EROEI commission. Is the most energy efficient course of action to insulate houses or build a gas pipeline? Build a new rail line or build smaller vehicles? It is hard to calculate the EROEI because you have to factor in so many elements. However, it’s necessary to do this in order to determine what is the best course of action.

Market Signals

  • People often refer to markets and say that they will get us out of this problem, because as energy costs rise markets will direct investment into alternative fuels. Chris’s view is that markets can be great powerful tools for many things. However, the price signal comes at the wrong end of the chain, when it is too late to prepare properly. The oil price ran up to $147 per barrel which gave one signal, but then it dropped back giving another signal.
  • The change between the perception of abundance and scarcity can happen virtually overnight. In December 2007 there was no perception of any problem in global food supply. In February 2008 there were food riots, countries stopped exporting rice and took emergency measures. The perception flipped from abundance to scarcity in 2 months.

Inflation versus Deflation – which is more likely?

  • Up until now, inflation and hyperinflation have always been cross-border events. There has always been somewhere else for wealth to flow towards. This time is different because there is nowhere that will be unaffected. The outcome of inflation or deflation will depend on how governments deal with excess debt. If they choose to pay down debt they will need an austerity programme to save money. The alternative is to print money, which will cause inflation and lessen the value of fixed interest debt. There is no historical example of a government choosing an austerity programme.

What is the best way to get the message across psychologically?

  • Chris said that in his now extensive experience of getting his message across, he found that his role is not in sharing information. It is in challenging beliefs. Information does not change what people do. If 40 charts on peak oil won’t change someone’s mind, another 40 won’t make any difference. One of the best speeches on energy was made by a very senior military man, Admiral Hyman Rickover, in 1957! (The speech is “Energy resources and our future”). Almost everything in the presentation is in that speech, made over 50 years ago.
  • This information can be hard to take emotionally. Be kind to people who are new to this, give them
    time to take it in.
  • It is necessary to get the story right, change the paradigm. To do this you have to paint a vision.

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