Peak Oil History 101: Causes of the situation

The California Aggie

By Dan McMenamin
Jun 1, 2005

Doubters have dismissed peak oil — the theory that production of the world’s oil supply will reach its midway point and then decline — as another crisis that, like the Y2K craze leading up to 2000, will ultimately cause more hype than harm.

Yet this view ignores the long history of oil in America, how dependent on fossil fuels our nation has become and what has happened in the past when the U.S. faced a shortage of oil.

The story of peak oil begins millions of years ago, when fossil fuels began to form underground. Oil, along with coal and natural gases like methane, are referred to as fossil fuels because they are the byproducts of prehistoric ancient plant and animal life.

Eldridge Moores, one of the most distinguished professors on the UC Davis campus, got his Ph.D. in geology from Princeton University and is well versed in the complicated science of oil.

He described fossil fuels as sediments that are laid down and buried with organic life. They then get cooked by the interior of the earth and are broken down into complex organic molecules, and pressure and time turns them into hydrocarbon liquid, or oil.

According to Moores, the oil then gathers in underground pockets of space between layers of rock in the earth, where most of it has stayed for millions of years.

This started to change, though, when widespread use of petroleum products began in the mid 1800s. Kerosene, a byproduct of crude oil, was developed as an alternative lamp fuel to whale oil, which was becoming increasingly expensive and hard to find.

At this point, businessmen began to see the possibility for profit from oil, and started to search for it. In 1859 Edwin L. Drake was paid to drill for oil in Pennsylvania and found it, creating the first oil well in the United States.

Half a century later, Henry Ford introduced the Model T, an automobile that was wildly popular throughout the country. It brought heavy demand for gasoline, another byproduct of crude oil, which powered its internal combustion engine.

In the next few decades, several new uses would be found for the hydrocarbons in oil, including the development of plastics and agricultural products such as pesticides and fertilizers that we still use today.
However, it was only after World War II that oil production really took off. The post-war baby boomer generation migrated to suburbia in droves, and easy transportation by car or plane became a necessity rather than the luxury that it had been to previous generations.

Before WWII, many Americans felt that their oil supply was unlimited. But M. King Hubbert, a Shell Oil geologist who had studied the U.S. oil supply, warned that the domestic supply would peak and start declining in the 1970s, and that we would have to rely heavily on fuel from overseas. Despite this, people continued buying more and more cars.

Growing demand for oil caused the Organization of Petroleum Exporting Countries to form in 1960, consisting mostly of Middle Eastern countries. OPEC sought to protect each country’s interests in dealing with oil companies from energy-hungry Western countries.

But in October 1973, an oil crisis temporarily slowed down the feeding frenzy and provided an important example of what could happen when oil supplies dwindle in the future.

OPEC countries like Saudi Arabia stopped shipping oil to the U.S. and other Western countries for several months as a protest of their support of Israel in the Yom Kippur War with Egypt and Syria.

The effects of the embargo on the U.S. were immediate and drastic. Oil prices quadrupled and the country went into its worst recession since before World War II.

The American government responded to the crisis in many different ways. It forced car owners with odd- and even-numbered license plates to fill up their tanks on separate days to alleviate hours-long lines at gas stations, and enforced a national speed limit of 55 mph. For a time, the government even instituted a year-’round daylight savings time to try to conserve energy.

However, when the oil embargo was lifted in 1974, memories of the crisis faded away and Americans continued consuming more oil than ever before.

“We’ve changed a lot since then,” said UCD agricultural and resource economics professor Hossein Farzin. “If prices go up we won’t be as unprepared as we were back then, but the problem is that per-house consumption of oil has gone much higher because of new developments like SUVs.”

The U.S. especially started accelerating towards the peak in the 1990s and early 2000s, thanks in part to the popularity of gas-guzzling sport utility vehicles.

However, the past five years have brought many bad omens for the future of fossil fuels.

On Sept. 11, 2001, jumbo jets piloted by terrorists smashed into the twin towers of the World Trade Center and the Pentagon. Al-Qaida and other terrorist groups had long seen these buildings as symbols of U.S.
economic and military might, and had already set off a bomb at the World Trade Center in 1993.

The horrible irony of the 2001 attacks, though, since oil had done so much to build up the U.S. way of life, was how the towers collapsed.

The airliners that toppled New York’s tallest buildings had just departed from airports in Newark, N.J. and Boston and still had full tanks. The large amounts of jet fuel fed the fires and eventually caused the internal structure of the buildings to melt. Less than two hours after the first impact, both towers collapsed and left almost 3,000 people dead.

The issue of oil has played a major factor in the rise of groups like al-Qaida. Osama bin Laden, in a recent videotape, spoke of the policy of “bleeding America to the point of bankruptcy” through attacks that would weaken the relationship between the U.S. and Saudi Arabia, the most oil-rich country in the world.

Fears of an oil shortage, instability in the Middle East and collusion between uncompetitive oil companies have led to the recent increase in oil prices. Another worry, especially if the peak of production is imminent, is that Americans will have to deal with rising demand for oil in emerging countries like China and India.

As gas prices have climbed to over $2 per gallon, or even $3 in some areas of California, some SUV owners have had to pay almost $100 to fill up their tanks. Many of these customers have started trading in these cars for more fuel-efficient vehicles, leading to a nationwide 13.5 percent decrease in SUV sales for the first quarter of 2005.

These problems bring up the question of how the U.S. economy will maintain the level of oil consumption it needs to function in the future. The country currently consumes 25 percent of the world’s daily production of fossil fuels, despite constituting less than 5 percent of the global population.

The foreboding signs all inevitably point to a crossroads that is quickly approaching for Americans: now or later?

“We have a choice. We can pay now to cut consumption and find alternatives, or get lax and pay much more later on,” Farzin said.

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