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Peak Oil and Alternative Energy


The world is beginning to wake up to the fact that peak oil is real. Various financial institutions, as well as oil companies, independent geologists, the U.S. Army Corps of Engineers and a range of corporations eager to cash in on alternative energy sources have stressed its importance. Sweden and Norway have both initiated plans to be essentially free of fossil fuels by 2020, and a small number of municipalities are beginning to incorporate energy consumption and production into their core planning activities. In other words, plans are already underway to prepare for an energy future that no longer relies on cheap energy.

Peak oil, of course, does not mean the world is about to run out of oil, but only that we are about to reach the level of maximum production of conventional oil – the half-way point, so to speak. The implications of this geological fact are profound precisely because conventional oil is such a unique resource, and because we rely so heavily on it to fuel not only our transportation services globally, but our economy, as well.

The Advantages of Conventional Oil

What is so unique about conventional oil is that it has such a high energy content and is relatively easy to extract from the ground. In addition, oil is easily transported at ambient temperatures, and is relatively safe to handle. It also has many other uses besides producing energy – plastics, pesticides and fertilizers, and pharmaceuticals.

For all its unique properties, the feature of conventional oil that is most important is its high net energy – the amount of useable energy left to do work after we subtract the energy we put into extracting and processing it. And this is the crunch issue when we look for alternatives to conventional oil.


Conventional oil is a geological deposit of fossil remains that is mixed with natural gas. Once a hole is drilled to reach it, the gas helps push the oil out of the ground, where it can be collected and processed for use as a fuel. As a well is depleted, however, the gas is also diminished. At a certain point, it is no longer able to push the remaining oil out of the ground. The engineering solution to this phenomenon is to pump natural gas, carbon dioxide, or water back into the ground to force out the remaining oil. It works, but there is a cost – and the cost is not simply financial. It takes energy to pump water or gas into the well to extract more oil; consequently, the net energy (what is available to do later work) is lowered.

This reduction in net energy over time is a known characteristic of all conventional oil wells. We now know that individual wells, oil fields and, indeed, entire national oil reserves, exhibit this phenomenon. As the well or field matures, two things happen: the amount of oil that can be extracted from the source declines in volume, and it takes more energy to extract the remaining amounts.

Some two thirds of major oil-producing nations are known to have peaked – reached the half-way point of depleting their oil reserves. What is less well known is that, as this peaking of individual national oil reserves occurs, the net energy available from these sources also declines. The world ends up using more energy simply to extract more energy. Net energy from oil has declined from 100:1 early in the twentieth century, to less than 20:1 today; and it will continue to decline as more oil producing nations, especially that large producers in the Middle East, reach their peaks. When the global peak occurs, the amount of oil extracted will decline, and so will the net energy of that oil.

A New Meaning to “TINA”: There is No Alternative to Conventional Oil

Maggie Thatcher’s famous quote that “there is no alternative” to capitalism can also be applied to conventional oil. There is no alternative to conventional oil in terms of net energy, and it is net energy that drives the global economy.

Coal and natural gas have net-energy ratios almost as high as conventional oil. But coal is the dirtiest of the fossil fuels, and natural gas will peak not long after conventional oil peaks. So, both of these energy sources are problematic in terms of replacing the energy that will be lost when peak oil hits. For their part, wind power, solar power and hydroelectric power have net-energy ratios of about 10:1 (although in near-ideal conditions both wind power and hydroelectric power can both be as high as 30:1). Geothermal power can be used to generate electricity at 12:1. Nuclear energy is somewhere between 5:1 and 12:1. The problems with nuclear energy are well known: costs, radioactive waste, terrorist targets. Nuclear energy also relies on non-renewable resources. In addition, a lot of fossil fuels would be used both in building the reactors and mining the uranium, so they are hardly “climate-friendly.”

The net energy from hydrogen depends upon how the hydrogen is produced, but because hydrogen is a storage medium and not an energy source, all currently known methods get less energy out than they put in. So, if there were a more direct way to use the input energy – say, electricity – it would be more efficient simply to use the electricity directly.

Ethanol is also of questionable value. Various studies debate whether the net energy from ethanol is even positive. Ethanol from corn is very energy-intensive, and, even when the equations look positive, they are only slightly positive, bringing into question whether corn-based ethanol makes any sense in energy terms. Ethanol from sugar cane as developed in Brazil has a higher net energy (about 7:1 or 8:1), because it is less energy-intensive to grow sugar cane than corn. But the extensive use of cane-based ethanol in Brazil is causing massive social upheaval, as indigenous people are displaced to enlarge the cane fields.

Biofuels may play a role in a sustainable energy future, but their low net energy is only one of their drawbacks. Agricultural land-for-fuel is already competing in some areas with land-for-food. As petroleum-based fertilizers are less available after peak oil, crop yields could decline, requiring more land to feed the same number of people. An increasing population will present even greater challenges.

In addition to these and other environmental costs of the various energy alternatives, there is also the issue of equitable access to energy to meet basic human needs. While we in North America consume at least twice the amount of energy we need for a high level of wellbeing, some two billion people do not have access to electricity. Such inequities are not sustainable.

Will the environmental and social concerns of various energy alternatives be considered in how the world deals with peak oil? It seems unlikely, for there are enormous profits to be made in developing undesirable alternatives to conventional oil.

One of the fundamental mistakes being made by policy makers at very high levels is their unchallenged assumption that the energy loss with peak oil has to be replaced. Energy makes the global economy grow, and without energy it will decline. Most leaders see this as unthinkable. From an ecological perspective, however, it is a likely necessity.

A Framework for a Sustainable Energy Future

What the world needs now even more than energy is a framework in which to think about energy. The most basic questions of such a framework might be: For what do we require energy? How much energy do we need for a comfortable level of human well being? How do we ensure that scaling up energy alternatives will not push any critical ecosystems beyond a tipping point, whereafter those ecosystems no longer provide the services we rely on for our well-being? How do we set a priority to ensure all people have access to their basic energy needs?

The current framework assumes we need energy for economic growth, which is required for human wellbeing. It also assumes that any environmental or social costs will be accounted for in the alternatives that are brought to market. Such a framework is likely to destroy more ecosystems, create greater inequities and likely also generate more violent conflict. It will also make some people very rich.

An alternative framework would focus on the use of energy to meet basic human needs, and would clearly differentiate between economic growth and wellbeing. There are many reasons why economic growth per se is not only an inadequate indicator of human wellbeing, but actually a dangerous and misleading indicator. There are too many “negatives” in terms of environmental and social wellbeing that are considered “positives” from a simple economic perspective (e.g. more cancer cases and auto accidents, both of which contribute to economic growth).

There is also evidence that important wellbeing issues like levels of infant survival, female longevity, access to nutritional food and educational opportunities can be achieved with much less than half the current energy consumption of the average North American.

All of us need to pay more attention to the cumulative environmental impact of our collective energy production and consumption, and ensure that environmental tipping points are not exceeded. If the several billion people on this planet are to approach a sustainable equilibrium with the biosphere that contains and sustains us, frugality needs to become one of our highest virtues.

This article appeared in the July/August 2006 issue of Canadian Dimension (Oil Sucks!).


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