I’ve been writing about the implications of Peak Oil here for a number of years. (If you’re a new reader, Peak Oil is the idea that eventually we will have accessed all the cheap oil that remains in the ground, there will still be additional oil, but the prices will rise.) I’ve been particularly concerned about the effect that a steep rise in energy prices would have on the life of a local congregation.
Over the past month there’s been a number of reports online that indicate that while we’re coming close to exhausting the major easily accessible oil fields globally, the situation is changing. The BBC has a good piece with lots of background that cuts to the chase thusly:
“Supply has been boosted by unconventional oil extracted from rocks which were previously uneconomic to exploit – like oil shales and tar sands. It takes much more energy and water to separate the oil from these rocks than conventional oil drilling so it’s much worse for the environment.
But your car doesn’t know or care whether it’s running on conventional oil or tar sand oil.
Fears over ‘peak oil’ haven’t evaporated, but the advent of unconventional oils has driven the peak further into the distance.
There’s also a boom in unconventional gas production that’s made the Americans relax about energy security. Gas can be turned into diesel – at a cost – pushing peak oil further into the distance. If things get really bad we can also turn coal into diesel.”
There’s a longish white paper (with a convenient executive summary) that you can read as well. The paper says that the big issue at the moment isn’t a decline in oil reserves but that the recent investment in oil production methods has had the effect of massively increasing our ability to pump more oil.
So… does this mean the Peak Oil concern is dead? Well, it’s not as big a deal as it was five years ago, that seems certain.
One of the key parts of the idea was that sans some sort of technological breakthrough we were going to have the global economy stymied because of rising energy costs. What appears to have happened is we were able to find that technological breakthrough – in the form of new drilling methods that have allowed us to get access to previously unexplainable reserves.
But there is a bit of a catch – the actual cost of extracting the oil is rising. The new tech is more expensive than the previous tech. But since about 80% of the cost of a barrel of oil at the moment is due to speculators on the commodity market driving up prices, there’s plenty of give in the present price. If you double the cost of extraction (a reasonable estimate) you still have oil at today’s price, with 60% of the cost per bbl due to speculation.
Which means the free market setting the oil price still has a lot of elasticity, and we shouldn’t expect a major run-up in prices anytime soon. In fact the concern is the opposite, that prices might fall precipitously and the resultant decline in revenues would destabilize OPEC national economies.
I imagine there are still implications for the Church, but I think they’re second order effects, and we’ll need to think a bit about what they might be. But in the short term, people are going to be able to afford to drive their cars to worship. The trend toward young people moving to the city cores again will probably continue, but I don’t imagine it will be accelerated by people worried about energy costs. The other thing is that I don’t imagine energy prices will fall in a major way from where they are now – at least not in the long term. That means a large, but hopefully stable, portion of a congregation’s budget will be dedicated to HVAC energy expenditures. It’s still probably worth trying to find conservation methods to lower that cost.
Any thing else that you can think of?