to tell the story that the United States used ingenuity and technology to surpass Saudi Arabia and Russia to become the world’s largest oil producer; that we are energy independent, and there are no energy shortages on the foreseeable horizon. Indeed we will become an important energy exporter. The (same) graph on the right tells a different story. The conventional crude oil in the lower 48 states peaked in 1970. We supplemented that by adding oil from the North Slope of Alaska and then drilled under the ocean in the Gulf of Mexico. All those provinces are well past peak and into decline – so we recently used drilled horizontal wells and fracturing technology to access the source rock (from which all other oil originated), shown in the red as tight oil in the shale formations. This oil depletes rapidly, up to 90% in the first three years after a well is drilled, leading to the Red Queen phenomenon. Fur thermore, we wouldn’t have been able to access this costly resource without large additions of debt – both the shale companies themselves accessing Wall Street debt markets, and society as a whole leaning on central banks to lower interest rates and lubricate credit markets. From a biophysical perspective however, using credit doesn’t create (much) new energy resource, but functions as a larger straw, pulling resource consumption forward in time.
This graph 178 conceptually shows how a normal resource pool e.g. oil – with various quality tranches in shades of gray – might change when we can borrow money to spend on complicated technology to access more of the resource. It DOES increase the total size of resource (a new tranche of oil shown in black in the right panel) but also increases the rate at which it depletes after it begins to decline. In effect, both debt – and in the case of oil – technology act as a larger straw. The amount of resource mostly remains the same but we’re able to access more of it at one time, leaving
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