When considering the role of oil in the production of modern technology, remember that most alternative systems of energy — including solar panels/solar-nanotechnology, windmills, hydrogen fuel cells, biodiesel production facilities, nuclear power plants, etc. — rely on sophisticated technology.

In fact, all electrical devices make use of silver, copper, and/or platinum, each of which is discovered, extracted, transported, and fashioned using oil-powered machinery. For instance, in his book, The Lean Years: Politics of Scarcity, author Richard J. Barnet writes:

To produce a ton of copper requires 112 million BTU's or the
equivalent of 17.8 barrels of oil. The energy cost component
of aluminum is twenty times higher.

Nuclear energy requires uranium, which is also discovered, extracted, and transported using oil-powered machinery.

Most of the feedstock (soybeans, corn) for biofuels such as biodiesel and ethanol are grown using the high-tech, oil-powered industrial methods of agriculture described above.

In short, the so called "alternatives" to oil are actually "derivatives" of oil. Without an abundant and reliable supply of oil, we have no way of scaling these alternatives to the degree necessary to power the modern world.

Global oil discovery peaked in 1962 and has declined to virtually nothing in the past few years. We now consume 6 barrels of oil for every barrel we find.

Few people realize how much energy is concentrated in even a small amount of oil or gas. A barrel of oil contains the energy-equivalent of almost 25,000 hours of human labor. A single gallon of gasoline contains the energy-equivalent of 500 hours of human labor. Most people are stunned to find this out, even after confirming the accuracy of the numbers for themselves, but it makes sense when you think about it. It only takes one gallon of gasoline to propel a three ton SUV 10 miles in 10 minutes. How long would it take you to push a three ton SUV 10 miles?

While the energy-density of oil and gas give them rates of return comparable to a lottery ticket or marriage to a ketchup fortune heiress, the energy-density of solar and wind give them returns comparable to minimum wage jobs. A few examples should help illustrate this point more vividly:

1. It would take all of California's 13,000 wind turbines to
generate as much electricity as a single 555-megawatt
natural gas fired power plant.

2. On page 191 of his book The End of Oil: On the Edge of a
Perilous New World, author Paul Roberts tells us that:

" . . . if you add up all the solar photovoltaic cells now
running worldwide (2004), the combined output -
around 2,000 megawatts - barely rivals the output of
two coal-fired power plants."

3. It would take 4 Manhattan size city blocks of solar
equipment to produce the amount of energy distributed
by a single gas station in one day. With 17,000 gas
stations just in the United States, you don't need to be a
mathematician to realize that solar power is incapable of
meeting our urgent need for a new energy source that -
like oil - is dense, affordable, and transportable.

4. It would take close to 220,000 square kilometers of solar
panels to power the global economy via solar power.
This may sound like a marginally manageable number
until you realize that the total acreage covered by solar
panels in the entire world right now is a paltry 10 square
miles (about 17 kilometers).

5. To replace the amount of energy produced by a single
offshore drilling platform that pumps only 12,000 barrels
of oil per day, you would need either a 36 square mile
solar panel or 10,000 wind turbines.

Unfortunately, the odds of us upscaling our use of solar and wind to the point where they provide even just 2-3 percent of our total energy supply are about the same as the odds of Michael Moore and Dick Cheney teaming up to win a 5K relay race. Despite jaw-dropping levels of growth in these industries, coupled with practically miraculous drops in price per kilowatt hour (95% drop in two decades), along with increased interest from the public in alternative energies, the percentage of our total energy supply derived from solar and wind is projected to grow by only 10 percent per year.

Since we are starting with only one-sixth of one percent of our energy coming from solar and wind, a growth rate of 10 percent per year isn't going to do much to soften a national economic meltdown. Twenty-five years from now, we will be lucky if solar and wind account for one percent of our total energy supply.

While other alternative energy sources, such as wave and geothermal power, are fantastic sources of energy in and of themselves, they are incapable of replacing more than a fraction of our petroleum usage for the same reasons as solar and wind: they are nowhere near as energy dense as petroleum and they are inappropriate as transportation fuels. In addition, they are also limited by geography - wave power is only technically viable in coastal locations. Only a handful of nations, such as Iceland, have access to enough geothermal power to make up for much of their petroleum consumption.

This is by no means reason not to invest in these alternatives. We simply have to be realistic about what they can and can't do. On a household or village scale, they are certainly worthy investments. But to hope/expect they are going to power more than a small fraction of our forty-five trillion dollar per year (and growing) global industrial economy is woefully unrealistic.

Consequently, a declining supply of oil must be accompanied by either a declining supply of money or by hyperinflation. In either case, the result for the global banking system is the same: total collapse.

This financial collapse will, in turn, further devastate our ability to implement alternative systems of energy. Any crash program to develop new sources of energy will require a tremendous amount of capital, which is exactly what will not be available once the global monetary system has collapsed.

Thus, the aftermath of Peak Oil will extend far beyond what you can imagine. If you are focusing solely on the more fuel-efficient forms of transportation, or alternative sources of energy, you aren’t seeing the bigger picture.

If you've been wondering why the Bush administration has been spending money, cutting social programs, and starting wars like there's no tomorrow, now you have your answer: as far as they are concerned, there is no tomorrow.

Within a few months of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, you can expect traders on Wall Street to quickly bid the price up to, and possibly over, the $200 per barrel range as they realize the world is now in an era of permanent oil scarcity.

With oil at or above $200 per barrel, gas prices will reach $10 per gallon inside of a few weeks. This will cause a rapid breakdown of trucking industries and transportation networks. Importation and distribution of food, medicine, and consumer goods will grind to a halt.

The effects of this will be frightening. As former oil industry insider Jan Lundberg recently pointed out:

The scenario I foresee is that market-based panic will,
within a few days, drive prices up skyward. And as supplies
can no longer slake daily world demand of over 80 million
barrels a day, the market will become paralyzed at prices
too high for the wheels of commerce and even daily living in
"advanced" societies. There may be an event that appears
to trigger this final energy crash, but the overall cause will
be the huge consumption on a finite planet.

The trucks will no longer pull into Wal-Mart. Or Safeway or
other food stores. The freighters bringing packaged techno
-toys and whatnot from China will have no fuel. There will be
fuel in many places, but hoarding and uncertainty will trigger
outages, violence and chaos. For only a short time will the
police and military be able to maintain order, if at all.

The collapse will be hastened by the fact that the US national debt will become completely unsustainable once the price of oil gets into the $100 range. Once this mark is passed, the nations of the world will have no choice but to pull their investments out of the US while simultaneously switching from the dollar to the euro as the reserve currency for oil transactions. Along with the breakdown of domestic transportation networks, the global financial shift away from the dollar will wholly shatter the US economy.

If you're wondering why the mainstream media is not covering an issue of this magnitude 24/7, now you know. Once the seriousness of situation is generally acknowledged, a panic will spread on the markets and bring down the entire house of cards even if production hasn't actually peaked.

In summary, we are a prisoners of our own making.


jools