If a person were to listen to Energy Secretary Steven Chu or National Geographic's Aftermath: World Without Oil, one might think that our energy problems are fairly minor and distant. We can easily add sufficiently renewable energy to substitute for fossil fuels in a fairly short time frame. All we need to do is put our minds (and pocketbooks) to it.

But if one looks at the situation more closely, one discovers that the situation is quite different. Our energy problems are close at hand, and solutions using what are optimistically called "renewables" are distant and may very well sink the country further into recession.

US energy consumption is already down quite a bit--some might say due to recession, but it seems even more likely that the result is the other way around--high energy prices squeezed the financial system. This in turn caused credit availability to drop and demand for oil, gas, and coal to drop. We have put a huge amount of effort and subsidies into wind and solar, but they hardly show up on the chart. Ethanol isn't shown separately in the chart this data was taken from--instead it is combined with wood and with other biofuels in a category called "biomass" in the EIA data. The biomass line has thickened a bit, but it is still pretty insignificant.

I decided to write another rather basic level article because there are so many people I meet who have heard a bit about the oil situation, and it is hard to point to one single article to give an overview of some of the current issues. Regular readers will find many repeats of graphs. There are some new ones, as well, from the Denver ASPO-USA conference. Because there is so much to tell, the story gets a little long.

We live in a finite world. It is clear that at some point, we will eventually start hitting limits—we won’t be able to extract as much oil, or we won’t be able to mine as much silver or platinum, or fresh-water aquifers that have built up over millions of years will run dry.

We are reaching limits in several areas, but the one I would like to talk about here is oil production. Oil is essential, because nearly all transportation depends on oil, and because a huge number of goods use oil in their manufacture (including textiles, pharmaceuticals, pesticides, asphalt, plastics, lubricating oils, and computers). Oil is also essential for our current agricultural system--growing food and transporting it to market.

Nearly all of the economic analyses we see today have as their basic premise a view that the current financial crisis is a temporary aberration. We will have a V or U shaped recovery, especially if enough stimulus is applied, and the economy will soon be back to Business as Usual.

I believe this assumption is basically incorrect. The current financial crisis is a direct result of peak oil. There may be oscillations in the economic situation, but generally, we can't expect things to get much better. In fact, there is a very distinct possibility that things may get very much worse in the next few years.

In this post, I will put together some of the pieces I see. This post is based on a presentation, so includes more than the usual amount of graphics. The post repeats many things I have said before, but I wanted to bring more of the pieces together into more of an overview article. This is a link to a PDF version of the presentation. This is a link to the Powerpoint version.

Ed note: This is a repost of Gail's Peak Oil Overview with a new comment thread and node. It originally ran Mar 2008. We appreciate you spreading this around to anyone who needs to learn more about this topic.

Preliminary data regarding oil production through December 2007 is now available from the US Energy Information Administration, so it is a good time to put together an updated summary of where we are now with respect to peak oil. The major themes of this presentation are

• The US oil story
• The world oil story
• Five myths

I have put this summary together in the format of a PowerPoint presentation plus notes. In this format, it is a multi-purpose document. You can

1. Read the post yourself, with or without my comments.

2. Use the presentation (PDF) as a handout, to give to one or two of your friends. My comments are intended to give you some more background, so you can better explain the presentation and answer questions.

3. Use the presentation for a group, using the PowerPoint format.