**5.1 Oil**

Global production of oil reached a plateau in about 2005 and did not increase even during the extreme price rise in 2007 and 2008. Hamilton (2009) has analyzed the price spike and concluded that it resulted primarily from growing demand and inelasticity in oil supplies. Some analysts and even oil executives have asserted that the production plateau indicates the arrival of Peak Oil, the time when the global production of this finite resource reaches its maximum value (Post Carbon, 2011). Although roughly half of the global recoverable resource remains available, ability to accommodate increased demand is limited at best. Consequently, continuously escalating demand from the rapidly developing economies, especially those of China and India, which represent roughly 1/3 of humanity, promises higher prices. The oil price rise early in 2011 surely had political roots in "Arab Spring," especially the revolution and civil war in Libya, but constrained supplies already had caused rising prices before the political events unfolded (Hargreaves, 2011).

Strong differences of opinion exist about the probable timing of Peak Oil. Prominent oil analysts such as Daniel Yergin (Smil, 2011) and Vaclav Smil (2003) remain very skeptical that Peak Oil will occur in the near future. On the other hand, Fatih Birol, chief economist for the International Energy Agency (IEA) has stated, "[I]t will be very challenging to see an increase in the production to meet the growth in the demand, and as a result of that one of the major conclusions we have from our recent work in the energy outlook is that the age of cheap oil is over. We all have to prepare ourselves, as governments, as industry, or as a private car driver, for higher oil prices" (Williams, 2011). Also, military establishments have begun to include Peak Oil in their contingency planning (e.g., Bundeswehr, 2010).

The great abundance of easily accessed fossil fuels and the correspondingly low price of energy that fueled the Green Revolution were temporary phenomena. Consequently, impending maxima in production of oil and coal, and eventually natural gas, combined with the dependence of global food production on fossil fuels and novel demands for

Agriculture around the world depends to varying degrees on gasoline and diesel for mechanized farm machinery, for transportation of supplies to farm and ranch and deliveries of products to market, and for off-grid energy to power irrigation pumps. It depends critically on natural gas to create ammonia-based nitrogen fertilizers. In many areas, especially in developed countries, agriculture depends on coal-fired electricity for irrigation, food processing, preservation, and cooking (see sector for "Other Input" in developed countries in Figure 5). In addition, fossil fuel inputs also contribute to energyintensive mining of phosphorus, a critical nutrient with limited mineable resources (Elser & Bennett, 2011). The fossil oil, natural gas, and coal that power modern society, in particular contemporary global agriculture, were deposited by geological processes over millions of years. Large-scale human exploitation of coal has occurred for little more than 200 years; for oil and gas the timescale is little more than 100 years. Evidence is accumulating that production of these non-renewable resources will reach a maximum in the coming decades during which humankind must meet the challenge of food security.

Global production of oil reached a plateau in about 2005 and did not increase even during the extreme price rise in 2007 and 2008. Hamilton (2009) has analyzed the price spike and concluded that it resulted primarily from growing demand and inelasticity in oil supplies. Some analysts and even oil executives have asserted that the production plateau indicates the arrival of Peak Oil, the time when the global production of this finite resource reaches its maximum value (Post Carbon, 2011). Although roughly half of the global recoverable resource remains available, ability to accommodate increased demand is limited at best. Consequently, continuously escalating demand from the rapidly developing economies, especially those of China and India, which represent roughly 1/3 of humanity, promises higher prices. The oil price rise early in 2011 surely had political roots in "Arab Spring," especially the revolution and civil war in Libya, but constrained supplies already had

Strong differences of opinion exist about the probable timing of Peak Oil. Prominent oil analysts such as Daniel Yergin (Smil, 2011) and Vaclav Smil (2003) remain very skeptical that Peak Oil will occur in the near future. On the other hand, Fatih Birol, chief economist for the International Energy Agency (IEA) has stated, "[I]t will be very challenging to see an increase in the production to meet the growth in the demand, and as a result of that one of the major conclusions we have from our recent work in the energy outlook is that the age of cheap oil is over. We all have to prepare ourselves, as governments, as industry, or as a private car driver, for higher oil prices" (Williams, 2011). Also, military establishments have

caused rising prices before the political events unfolded (Hargreaves, 2011).

begun to include Peak Oil in their contingency planning (e.g., Bundeswehr, 2010).

agricultural production of biofuels, pose a daunting challenge for food security.

**5. Peak hydrocarbons** 

Peak production could come much sooner.

**5.1 Oil** 

The 2010 IEA World Energy Outlook projects slowly increasing oil production (less than 1% per year) to about 96 million barrels per day (Mb/d) in 2035, with falling production in producing fields compensated by oil fields yet to be developed and others yet to be found (Figure 9). The projected growth is insufficient to meet escalating demand from developing countries, especially China and India. Furthermore, successive IEA projections have been declining: 121 Mb/d in 2004, 116 Mb/d in 2006, 102 Mb/d in 2008, and 96 Mb/d in 2010. Moreover, IEA projections have been criticized by the Association for the Study of Peak Oil and Gas. For example, Aleklett et al. (2010) project just 76 Mb/d in 2030, 26 Mb/d less than the 2008 IEA projection for 2030.

Fig. 9. Oil production by type in the IEA preferred New Policies scenario (IEA, 2010).

A major issue here is the lack of transparency about oil reserves by national oil companies, especially in Saudi Arabia. To what extent does excess capacity exist to stabilize oil prices in the coming decades? Beyond that, to what extent can unconventional sources, such as deep water fields, tar sands and shale oil raise future production and defer sharp price increases and limit volatility? One characteristic of these resources is that they yield less energy returned in sale product for the energy invested in discovery and production (Guilford et al., 2011). Consequently, they require greater energy investment and therefore greater capital investment to produce. As a result, the future even the relatively near future—will hold higher oil prices. Besides direct impact on the cost of agricultural production, higher oil prices will increase pressure to divert cropland from food to biofuel production, raising food prices even more. Both trends will exacerbate difficulties for the poor to maintain food access.
