Peak Cheap Oil Passed.

Expensive Oil Means No Oil.

January 1, 2012

By Patrice Ayme

In nature, for reasons not clear to me, distribution laws often follow “Normal Distributions” (aka “Bell Curves“, because they look like bells cut in half). Henri Poincare’ himself, admitted that he found Normal Distributions mysterious, and that experimentalists believed theorists had established them, whereas theorists believed experimentalists had done so… Poincare’ contributed to probability theory as he did in so many subjects, with his characteristic honesty.

This, (pre-)supposing Normal Distributions, allows to make predictions of a “scientific” character:

  1. Suppose the phenomenon at hand satisfies a Bell Curve distribution law.
  2. Identify, from know data, the inception of said curve, hence the curve itself.
  3. Read out on the graph its extent and peak.

Thus geologist Marion King Hubbert predicted in the 1950s that the US oil production would peak out around 1970. His prediction was verified. He applied his model to world oil production. The model predicted peak oil around 1995.

Due to deep off shores discoveries, a new technology, the peak was displaced to 2005 (as it turned out). However, as the cheap oil was depleted oil prices went up, making it economic, in appearance, to get oil from tar sands, and ever deeper underwater drilling. The cost to the companies did not reflect the true cost to the economy of society at large.

Hydraulic fracking was also used increasingly in the USA as Western oil companies got chased out of the developing world (to be replaced by national oil companies). Texas, and the Bakken formation of North Dakota became targets of extensive fracking.

Fracking in the USA for gas and oil is changing quickly the energy balance of the USA. It has been immensely profitable, for now, for the companies indulging in it, and the production of fossil fuels in the USA has augmented enormously.

Fracking, in the present state of technology, consists into injecting enormous quantities of water charged with various poisons and rock devouring bleach or acid. The poisonous water is injected again and again to break the rock, releasing gas, or oil. And also countless poisons held by Pluto down below, such as radioactive materials (checking for workers for radioactivity is standard when fracking).

Thanks to the personal intervention of Vice President Cheney, CEO and shareholder of Halliburton, in 2005 hydraulic fracturing was exempted by US Congress from any regulation under the Safe Drinking Water Act.

During the period November 2001 to November 2011, the general government inflation index in the USA, CPI-U, grew from 176.7 to 226.23, an increase of about 28%. But, during the same period, the CPI motor fuels index went from 96.1 to 294.049. The same volume of gasoline roughly tripled in price over the last decade. (In Europe, because of enormous energy taxes, and cheaper oil close at hand, the effect has been attenuated; whereas in the USA, my interpretation is that the oil spike played a role in the subprime crisis!)

People have debated whether we passed Peak Oil or not. Maybe not. Why not? Because we have cheated. The enormous exploitation philosophy in the USA, overruling anything else, such as, for example, common sense, has allowed to cheat, by going into fracking and tar sands.

It is likely that the cost of fracking on the environment is going to be catastrophic. It causes even earthquakes. Meanwhile, fossil fuel companies will make lots of money, and give off many campaign contributions to their pet politicians, in the country where these corrupt practices are legal, namely the USA.

France, followed now by South Africa, and Russia, has outlawed fracking in its present state of technology, as they fear for their water table. We can have life without gas and oil, but not without water. At least so think the silly French, who should go back to drinking wine, so that they can reason like real Americans.

In any case, Canadian fossil fuel interests are firmly determined to frack and to heat up sands full of tar, to extract fuel. The cost in terms of CO2 pollution and energy is enormous. And it will get bigger: Canada has sold its soul to the fossil fuel burning Satan. But, when one has started with an ethnic cleansing of the French (!) and the Indian natives, one may be forgiven, to stupidly hope, to do the same to the entire planet…

The real currency of economy ought to be energy. As it was in prehistory. Peak CHEAP oil means that it costs more and more to extract fossil fuels, in terms of the only currency which really counts, energy (every word in this sentence was carefully considered).

Actually there is such a notion as EROEI (Energy Return On Energy Invested). An energy source is exploitable when the EROEI is well above 1. Nuclear energy gets a very positive EROEI (even with any waste disposal!) because its energy density is a million times higher than that of fossil fuels.

Oil production is meeting a ceiling. The most recent graph from the USA government, which I have been unable to copy, as my computer system plus WordPress refuses now to copy any picture (!), and will erase my posts if i try (!!!) shows a pronounced production dip.

It is found in the Nature article (published weeks after the initial version of this essay): Climate policy: Oil’s tipping point has passed: There is less fossil-fuel production available to us than many people believe. From 2005 onwards, conventional crude-oil production has not risen to match increasing demand. We argue that the oil market has tipped into a new state, similar to a phase transition in physics: production is now ‘inelastic’, unable to respond to rising demand, and this is leading to wild price swings. Other fossil-fuel resources don’t seem capable of making up the difference.”

The reason for this is that fracking’s production falls off quickly, so it’s no long term solution, just a flash in the pan..

The exploitation philosophy has been the ruling philosophy in many Anglo-Saxon lands, ever since it got pushed by the “West Country Men” (circa 1600, the Elizabethan Age) ). Historically the Anglo-Saxon colonies deeply believed that no exploitation of the land, or the peoples, was harsh enough. The assault of the USA against Afghanistan, since July 3, 1979, to jump on the gigantic minerals reserves found by the French there, is an example of this avoir plus grand yeux que grand ventre philosophy (having bigger eyes than stomach philosophy: in Afghanistan, the USA tried to swallow more than it could chew).

One can compare Australia with French held, nickel rich New Caledonia next door: the dumb French forgot to massacre the natives to the exacting Anglo-Saxon standards. Thus, they have had to face an independence movement.

The French ruled New Caledonia archipelago is made of half aboriginal descendants, while the natives were essentially extinguished from Australia. In Australia, up to the 1960s, methods now classified by the United nations as genocide were used.

In any case, the mentality that no exploitation of natural resources is harsh enough has to be thrown into the garbage of history, or reserved to the outer planets. It’s important to be able to diagnose all its ramifications.

In the case of the energy policies of the USA, that country, and the entire planet, is led into a trap. Subsidies to expensive fossil fuels make continuing with a very dangerous form of energy possible. What’s more dangerous than destroying the air we breathe, and the oceans we rule? When the subsidies will run out, the real cost of fossil fuels will show itself to be unbearable. But then new forms of energy will not have been deployed in a timely manner. The rats will be many, but the food short, the air unbreathable…

Historically, it has taken 50 years to fully deploy new energy systems. It is true that going all electric would spare a lot of energy (electric engines are much more efficient, as they do not depend upon a flow between a hot source and a cold sink). Making fossil fuels pay their true cost is another must. Some of the cost is to maintain enormous, and enormously expensive British, French and American military forces to be ready to keep forcefully open the Strait of Ormuz (say). 35% of the world oil passes below the noses of gasoline starved Iranians (don’t ask).

Another example:  Since ever and ever, fossil fuels for air transportation have not been taxed, worldwide. The European Union has decided to fix that, and its new taxation policy for air transportation is going into effect today, January 1, 2012, for all flights flying into Europe.

The USA has protested loudly, threatening economic sanctions. The USA, through Hilary Clinton’s voice box, called the correct pricing of air transportation an attack against the free market.

Apparently we are far from having reached peak impudence!


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10 Responses to “Peak Cheap Oil Passed.”

  1. Mike Says:

    Michael Ruppert made a similar case in his talking-head documentary, “Collapse” — which is well worth seeing, if you haven’t already.

    I would like to contact you directly to ask your permission to republish this article on, with full attribution and a link back to your site.

    Please let me know by responding to me via email.




    • Patrice Ayme Says:

      Dear Mike:
      I did not see the Michael Ruppert documentary, but I called attention many times over the years upon the various points in my essay. (I will search for “Collapse”.) I just felt it would be good to assemble some of these remarks in one article.

      You are more than welcome to republish my article in, as you said (I would like to augment traffic to my site, especially from the best places!) As it turns out my spouse is (perhaps) the oldest friend our dear president made in Punahou… And we have kept close in spirits. I was myself raised in Africa, and I was more than impressed to find myself back home in many ways in your tropical paradise. Being close to nature is being close to reality: something city dwellers forget all to readily, but that no one can forget in a place such as Hawai’i…


      • Mike Says:

        Thanks, Patrice:

        I believe “Collapse” is available on netflix. You can read about it here:

        Best regards,



        • Patrice Ayme Says:

          Thanks Mike!
          I had never heard of that particular “collapse”, although I know, have read, and own Jared Diamond’s book Collapse. We have to be very careful with the diverse “collapses” possible. The Mayas, and many an island, collapsed ecologically. But Egypt survived desertification, and only fell, 4,000 years later, to foreign plutocrats.

          Western European states have proven very hard to collapse: the center around Francia has held always. Even the Mongols feared them (for very good reasons: although the steppe extended to Hungary, the Huns and their successors were military crushed beyond; however, not so in Asia, where they penetrated all the way to Japan and Indonesia).

          Rome collapsed in many senses, and transmogrified itself otherwise. Transmogrification through plutocracy is the recurrent theme of collapse. This is the implosion which affected the Islam of the Middle East.

          Now we are facing the ultimate civilizational storm. That’s why Pinker’s book on how smart and good we have become tickles me pink…


  2. Celina Says:

    Normal distribution laws are old hat, they have been supplanted and added to by so-called ‘power laws’ which as you know have very different ‘tails’ and predict much higher probability for ‘off the normal curve’ or, if one needs to quote opportunistic journalists, “black swan” events — a nauseatingly revealing term, as you know, and hardly by the way.

    I for one, though a great admirer, think you’d do better to explain, given your intellect, to explain carefully the illusions induced by appeal to the pseudo-science of ‘normal curves’ where they are in-applicably but opportunistically applied for the sake of overwhelming so-called run of the mill and daily sufferers with garbage disguised as science.

    Thing is, you often do precisely what I recommend, though, if I may say, I think you must learn by now at least, not to set your sights so high that your lessons cannot be absorbed at one go by the large mass of people out there.

    In short, as my friends in the Navy used to remind me: “KISS.”

    “Keep It Simple, Stupid.”


    • Patrice Ayme Says:

      Dear Celina: Good points all those you made. I tried to be careful to say that, although “normal distributions” are found in existence, they are most often not justified. That is why I put “scientific” between quotation marks. Now a lot of science is actually using a lot of arbitrary arguments (even physics, even mathematics)… So I view as fair to use “scientific” or pseudo scientific arguments, as long as it is understood they are such. The Peak Oil Theory beeing a blatant example…. Although it could probably be demonstrated from basic principles there, using everything, from human psychology to geophysics…

      True power law distributions reflect better some natural phenomena, and implies rare events, which are, after all, the norm…

      I myself do not hesitate to use the KISS method. I have a great respect for the U.S. Navy, especially the Navy during WWII, fighting the Japs (for want of a better word…), and the KISS method played a great role. It takes a lot of smart to KISS, indeed…
      But we cannot stay prisoners of it either.
      For example, I believe that Quantum Physics is rather simple. However, to get from our present erroneous view of the world to that simplicity, will be rather complex. Another example: It’s complicated to go from striking stones to make fire, to modern thermodynamics… Although the latter is simple: the heat inside an object is the motion of the smallest (free) constituents of that object.


  3. Celina Says:

    Yes, well, the thing is fire exists somehow or other, beforehand and whether or not anyone understands much about it, era of Quantum thermodynamics, witch-burning or stone-clashed sparks into dry grass tinder. Such eras coexist and overlap. Churchill caused the British Navy to switch to oil power from coal before WW I, or did he really … would it have happened anyway — wasn’t it inevitable? Is there a case we know of in the historical record where a decision such as that wasn’t made? Arbitrary and inconsistent calibers of Spanish naval cannons sailing on to fight Drake and company? Or was it bad weather?

    Anyway, cheers and Happy New Year to all and family.


    • Patrice Ayme Says:

      Dear Celina:
      Sometimes heroes can overwhelm old systems of thought. An example is when Thuccidices persuaded the Athenian assembly to enter a complex scheme to finance a large Navy to fight the Persians who he believed would attack. Or when Abelard fought Saint Bernard. Whereas Charlemagne, however admirable as an individual, was more the final point of 5 centuries of the Frankish system of thought.

      The switch to oil was unavoidable: hundreds, if not thousands, of the top naval engineers had deduced it was the way to go. In general Churchill was friendly to the Nazis until 1929. Later he was wrong on the Royal Air Force built-up, and PM Chamberlain was right (wait for the new planes).

      For Drake and company, they were gifted, bold, but also got very lucky. If the Armada had allowed the Spanish army to cross, the latter would have won (only the French army was powerful enough to take on the Spaniards, something that happened every time they cracked gown on their rebellious Netherland provinces).

      Good points all you made, though: many are the factors, many the possible histories, many the possible heroes… that’s why it’s important to debunk those who do not deserve it: Saint Bernard, Saint Louis, Luther, and, more subtly, Locke, Kant, etc.


  4. Some of Patrice Ayme’s Thoughts Says:

    […] are the fossil plutocrats hysterical? Well we are past Peak Cheap Oil. Moreover, the “majors“, the world’s largest oil companies, have been pushed out […]


  5. Questions are never stupid! « Learning from Dogs Says:

    […] are the fossil plutocrats hysterical? Well we are past Peak Cheap Oil. Moreover, the “majors“, the world’s largest oil companies, have been pushed out of more and […]


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