Customer Reviews

A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World

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Tertzakian and his book stand as a rare find: a work on a timely topic often argued with little information, written by a man with great expertise in a plain and understandable style. His thesis is sobering. The world currently approaches a tipping point, where growth of demand so out paces growth of supply that a paradigm shift becomes the only way to move forward. Tertzakian offers examples of other such shifts, though none appear as deep as a post fossil fuel age -- whale oil may have stood as a primary lighting source, but it was hardly the basis for the entire economy when demand began outstripping supply.

While some may complain about certain of the works shortcomings, such as its failure to consider climate change, Tertzakian's work stands as primarily an economic text as well as a primer on this key industry. His choice to focus his book, far from a flaw, inures to his credit.

Further to his credit, this author does not pretend that any magic bullet will deal with the situation, nor does he claim to have a crystal ball and map out the future. Instead, he offers a fine primer from which to begin a crucial conversation. For this alone, he has great credit. All of us would do well to read this fine work.

This is the fourth book I have read in the last several weeks since I first became alerted to the peak oil issue.

The others being:

Beyond Oil (Deffeyes)
The Long Emergency (Kuntzler)
The Coming Economic Collapse (Leeb)


One excellent feature of Tertzakian's book is his presentation of the history of the prevailing forms of energy that have been used in human history (whale oil, etc). This is a basis for his "break point" theory, which I'm not sure I absorbed all that fully but involves the process by which the human race switches to new source(s) of energy when the dominant existing source is no longer tenable.


He mentiones the debate regarding "Hubbert's Peak", the hypothesis that we are reaching the peak of oil production in the current century.

At one point he states it as a debate, but I have seen no fundamental disagreement on the issue. There seems to be a widespread agreement that oil, under the narrow definition as the light sweet crude we pump out of the ground, will reach a production peak in this century.

There are, of course, the other large potential sources of oil- coal gasification, Oil Sands, and Oil Shale. These exist in large quantities and if oil were produced in large quantities from these sources, the bell curve for global oil production would likely peak at a considerably later date.

But Deffeyes, who seems to be the most prominent advocate of the Hubbert's Peak theory, makes clear that he is referring to conventional oil production.

So I don't think there is actually any disagreement on this issue, except that there are, no doubt, some cornucopianists who would contend that there is a vast amount more recoverable oil than the Hubbert's Peak curve would claim.

Anyway, moving on from that issue: Tertzakian concludes by painting a possible picture of what the energy future will be 10 or so years from now.

He clearly is relatively optimistic, which is perhaps one reason his book has received a lot of praise from prominent people.

But behind his generally upbeat tone, he is quite forthright in stating that he believes that part of the "rebalancing" process will be some major changes in lifestyle. So he clearly cannot be faulted for holding a "don't worry be happy" outlook regarding the challenges in dealing with peak oil.


Even so, I believe the "rebalancing" is likely to play out quite a bit differently than he envisions. There are a couple of issues I don't think he has given due weight to. First of all, in terms of the nature of the energy sources:

Previous rebalancings, such as that of the 1970s, have primarily involved shifts between different types of fossil fuels. Perhaps the coming one will as well. With the huge resources of the "more difficult" sources of oil, the world could perhaps continue with an energy economy pretty much the way it is now for another century or so.

Eventually, those sources will run out and we will need to switch over to renewables. (although nuclear fusion is a wild card- if it's ready by the time we have exhausted all the various forms of fossil fuels then that may pretty much resolve the energy issue once and for all.

Assuming that we do need to go to renewables, either in the near term (next 10-20 years), or after exhausting the other forms of fossil fuels (80-100 years from now), there will be I think a much bigger disruption to society than what Tertzakian is describing.

One part of the solution he envisions is more economical automobiles and industrial processes. I believe that will help greatly in us being able to deal with the next 20-30 years.

But eventually, once ALL the fossil fuel sources have been depleted, and once MOST of the potential efficiency gains have been squeezed out of the processes that use fossil fuels, we are liable to face a big problem in figuring out how to, for example, continue to produce large quantities of food without heavy use of fossil fuels.

In summary, our course for the future looks very unclear; I clearly am very conflicted on what it might look like. I'm not sure much of what Tertzakian envisions will prove to be very accurate, but then he does seem to acknowledge that he is just throwing out ideas and that the future is liable to be considerably different than any of us can currently project.

It feels appropriate to review this book as crude oil futures hit all-time contract highs... The 1980 inflation-adjusted highs for crude (roughly $100 per barrel in today's money) are just around the corner in geopolitical terms.

In the book's title, "A Thousand Barrels a Second" refers to the point at which world oil demand exceeds 86 million barrels per day. (86.4 to be exact--there are 86,400 seconds in one day). The International Energy Agency (IEA) believes the 86 million threshold could be crossed this year.

The "Coming Oil Break Point" refers to the aftermath of crisis and inevitable forced change. Tertzakian explains:

"...the history of energy shows that a time of crisis is always followed by a defining break point, after which government policies, and social and technological forces, begin to rebalance the structure of the world's vast energy complex. Break points are crucial junctures marked by dramatic changes in the way energy is used."

During the break point and the rebalancing phase that follows (which can last for 10 to 20 years), nations struggle for answers, consumers suffer and complain, the economy adapts, and science surges with innovation and discovery. In the era that emerges, lifestyles change, businesses are born, and fortunes are made.

I read the entire book on one leg of a coast-to-coast plane trip, a feat made possible by the clarity and lucidity of Tertzakian's writing. He excels at laying out detailed concepts in ways that are easy for the reader to grasp and understand, and paints a convincing picture of the significant challenges we face.

Tertzakian firmly grounds his argument in history, explaining what he calls the "evolutionary energy cycle" through the lens of past transitions. At one point we journeyed to the ends of the earth for whale oil, just as we do for "rock oil" (the literal meaning of petroleum) today. In the switch from wood to coal, tallow to whale oil, whale oil to kerosene, and so on, predictable aspects of the evolutionary energy cycle begin to emerge.

In addition to outlining the situation we're in, Tertzakian gives a fascinating, though brief, history of the oil industry. He covers the rise of Rockefeller's Standard Oil, its eventual breakup, the curious origins of Saudi Aramco, the British Navy's fateful switch from coal to oil, energy's role in respect to railroads and WWII, and more.

In my opinion, Tertzakian can be classified as an Urgent Simonist.* The word "Urgent" is meant to distinguish from the "Pollyanna" Simonists--those who believe technology will magically solve our energy problems with no real pain or discomfort.

On the emotional subject of peak oil, there are two extremes of debate. At one end you have those who think civilization is doomed no matter what (the viewpoint of cheery websites like dieoff.org). At the other end, you have those who think peak oil will be shaken off like a mild head cold.

Tertzakian helps bridge the gap between these extremes by explaining that yes, the challenge is serious, and gut-wrenching times are ahead... but we will ultimately see our way through. He is "urgent" in pointing out that the sooner we act the better, and pulls no punches in terms of what's at stake.

Perhaps the real power of "A Thousand Barrels A Second" is in showing readers how to think about the big picture, orienting them to the mind-boggling mechanics of energy supply chains.

There are so many steps and processes involved in the discovery, extraction, and distribution of energy that supply chains generally evolve at a glacial pace. Major energy transitions are measured in decades, not years; the scale and scope of the task is breathtaking to behold. Without taking a closer look behind the scenes, it's hard to get an intuitive sense of the time frames and logistical complexities involved. Tertzakian helps readers do that.

In sum, if you truly want to understand the energy issues we face--or at least get a handle on the key elements--I strongly recommend this book. It could also make an excellent gift for those friends and colleagues locked in one of the "extreme" camps, i.e. "what me worry" vs. "we're all going to die." (The book might not change their mind, but it will certainly make them think.)

I too consider myself an Urgent Simonist--we'll make it through, but only with serious pain--and believe that Tertzakian succeeds in his goal of providing "a highly researched and balanced assessment of our energy situation."

*Julian Simon, an influential economist, wrote a book in 1981 called The Ultimate Resource, in which he argued that technology and human ingenuity would always ensure an abundance of raw materials. In 1980, he also made a famous wager that a basket of base metals would fall in price, rather than rise, over a significant period of time. He won the bet. Ever since, those who believe in the power of innovation to overcome doomsday scarcity predictions have been dubbed "Simonists."

By now, the issues concerning oil depletion have become generally well known; at least to anyone paying attention. By nature and experience, I tend to discount the "sky is falling" arguments from people like Deffeyes and Simmons even though both provide well researched arguments rich in facts. Concurrently, I reject the omnipotent cabal argument from such people as Learsey and his incredibly silly contentions in "Over A Barrel". [Pick your favorite villain: Arab Sheiks, George Bush, Aliens, the Trilateral Commission, ...whatever.]

Finally, a book has arrived that takes known and reasonably conjectured facts, and then applies logical economic laws, not pedantic textbook economic dogma. This book does not refer to the supply-and-demand arguments so often espoused that presupposes adequate, if not infinite, supply. Instead, Tertzakian applies the more rational and historical laws of substitution that occur once an economic breaking point has been reached. We may indeed be reaching this breaking point very soon.

Now for the rub: in the long term, the author makes very plausible suggestions for the next era of fuel. Unfortunately (or fortunately, I suppose, depending upon your point of view), great fortunes are made and lost in times of disequilibrium. Since both citizens and law makers have ignored the approaching peak oil dilemma for 25 years, disequilibrium could last a good deal longer than it did when whales began to die out, robbing the world of the blubber needed to light its lamps.

Still, Tertzakiam's arguments make a great deal of sense. When oil reaches a breaking point, we will move rapidly toward an efficient substitute, not toward economic Armageddon. But, to quote Keynes, "in the long term, we're all dead." I hope that the move toward long-term substitutes occurs a great deal faster than Mr. Tertzakian posits, or the next decade may not be all that fun. Regardless, this is a cogent, fact-laced book that lays out what we will probably encounter in the next decade or two.

Peter Tertzakian is a rare find -- an expert with credentials who can talk directly to his reader, no matter what level of sophistication that reader posesses. I came to this book with only an avid lay interest in the subject and a preference for timely, well-written nonfiction from people like Gladwell, Zakaria, Shorto -- like that.
This book taught me more about energy issues and all the elements at play than I ever realized, and I LOVED IT! Great writing goes a long way. No matter what your background, if you're interested in the subject of oil, you owe it to yourself to read this one.

Peter Tertzakian used to work as a field geologist for a major oil company. Today he makes his living consulting for companies that explore and drill for oil and gas. Peter's thesis is that there's plenty of oil, and we're not running out, but the easy-to-get, low-sulfur oil will become a thing of the past. We still have plenty of the heavier, harder-to-extract oil to keep us going for decades, though, even at today's ferocious world-wide rate of 1000 barrels a second.

Since the heavier stuff is harder to get and process, the price is going to keep going up. This increase in price will precipitate a break point after which there will be an energy rebalancing. The rebalancing will leave us less dependent on oil and able to grow our economies without increasing our consumption of petrol. He paints a difficult but overall optimistic view of the future - one in which other fuels gradually begin to take the place of oil, as oil becomes more and more costly.

According to Tertzakian there are no silver bullets. It won't be like the days when we discovered crude oil just as whales neared extinction, and whale oil ran out. To balance our energy use we'll use more coal, more nuclear energy, and more liquid natural gas. He also admits that we'll use a bit more renewable sources. Most importantly, we'll have to be a lot more efficient, if for no other reason than the fact that energy's going to get a lot more expensive. We'll drive smaller, more efficient cars; will use energy more in line with the way Europeans use it today.

It left me wondering why Americans don't do that already, and then I remembered that 30 years ago we had a visionary President named Jimmy Carter who set America on a path toward energy independence, only to be replaced by a generation of Republican administrations that systematically undid much of what Carter started. Tertzakian is disingenuous with his frequent accolades for George W. Bush (which are undeserved, given President Bush's irresponsible approach to energy policy), and his relative silence regarding Carter's vision of an energy-independent America.

I liked the way Tertzakian covers the history of energy development, describing curious anecdotes about the development of fuels from wood, coal, whale oil and petroleum. I particularly like his discussion of Britain's decision to switch their navy from coal to oil, and the way Britain dominated, and really screwed up, the Middle East after World War II.

Conspicuously absent was the history of wind power. Though wind power drove mills, water pumps, and the world's greatest navies, he has virtually nothing to say about it from a historical standpoint, and treats it only parenthetically as a viable alternative source of energy today. He goes out of his way, for example, to point out that thousands of windmills are needed to replace a single nuclear power plant, but fails to note that those thousands of windmills can be made in a factory assembly line for less cost than a nuclear power plant, and the energy (wind) is free.

Reading this book helped me understand why Vice President Cheney's secret energy panel is such a disaster - it was stacked by oil men. Like the carpenter who sees every problem as a nail, and every solution as a hammer, oil men see only what they've learned to see, and tend not to have the broader vision of what's necessary for energy independence in an oil-free world.

The biggest problem with Tertzakian is that he's really an old-school oil man. For him, energy is something you take out of the ground, distribute in pipes or tankers, and buy at a fueling station. He seems largely oblivious to the other major energy distribution network in America - electrical power lines. For example, according to Tertzakian:

"you can't shovel coal into your fuel tank anymore than you can put in a uranium fuel rod or strap on a windmill" [page 79-80].

But we could, if we ran our cars off electricity that was generated with nuclear/wind/coal power. And, though hydrogen is not an energy source, it can be generated on site (who says you have to buy it at a pumping station?) using coal-generated electricity.

Electrical energy can also supply mass transit, as it does in Europe and Japan. Yet, amazingly, Tertzakian describes mass transit as "prohibitively expensive" even though a wide-ranging mass transit system wouldn't cost much more than the Iraqi war-for-oil that Bush lied us into.

Charts are an important feature of this book. For example, figure 4.14 displays a bar plot showing the yearly world-wide discoveries of new oil. The distribution is roughly Gaussian, with peak oil discoveries around 1965 and a standard deviation of 30-40 years. Today the world finds about 10 billion barrels of new oil reserves each year (it was about 60 billion barrels of oil at the peak). At the current rate of consumption, the world uses over 30 billion barrels of oil per year, so we are depleting our known oil reserves at the rate of 20 billion barrels each year.

Yet, amazingly, Tertzakian says:

"The intuitive angle is that we are indeed running out of reserves, but that is simply not the case. There are billions of barrels of oil reserves remaining on the planet."

This was a flabbergasting comment. A billion barrels of oil supplies the planet for less than 2 weeks (about 11 days) so having "billions of barrels of oil reserves" means almost nothing. We need *trillions* of barrels of oil reserves to last us more than a few decades. In spite of Tertzakian's assertions to the contrary, we are depleting our known reserves at the rate of about 20 billion barrels each year.

Tertzakian's book helps to frame the problem we must solve, but it only frames a small part of the solution. Though it was interesting - even gripping - reading, it was, in the end, a disappointment.

This is an interesting book - well researched and compelling, until it comes time at the end for the author to present his vision of the most probable solutions to America's addiction to cheap oil.

At that point, with half a dozen well-written chapters of relevant history and fossil fuel alternatives behind him, Peter Tertzakian, a leading authority on the subject of oil and energy, blinks and the book wanders off into some fantasy world of his dreams. Having lost the bubble, the author never quite regains it.

Tertzakian makes it clear that America is headed for a fuel crisis of enormous magnitude that will last many years, dislocating this nation's (and the world's) economy. The author's argument that politicians will soon wise up and step up to the plate rings hollow, however, as does his assertion that the American people will force their elected leaders to switch to alternative energy sources. Both are unlikely to happen until the crisis engulfs us.

Still, those first six chapters are a terrific read and well worth the price of this book!

This a good basic analysis of the economics of the current energy situation. He gives an interesting historical perspective of energy use starting with whale oil. This helps set the stage for today by showing that current energy situation is just another evolutionary phase of our relationship with energy.

The chapter that basically addresses the supply and demand for energy is very good. It explains the relationship between energy use and economic growth, how China is a large contributor for the current price increases, the energy issues for the period 1972 - 1986, the similarities to 2006, and how the current situation is fundamentally different from 25 years ago.

With regard to the future the author cuts a middle path between those authors that think that the world as we know is ending and those that think there is no energy crisis. He is marginally optimistic about the next 2 decades, all the while admitting that the rebalancing that will take place after oil prices reach their "break point" will take 10-20 years. The author speaks in terms of years at a relatively high level, but unfortunately life is lived at ground level with monthly bills. The author does not marginalize the problems, he just does not rub our noses in them as others authors have done.

World oil consumption will exceed one thousand barrels a second in 2006, according to Tertzakian, who then uses that fact as the title for the book. On the other hand, the significance of this happenstance is never explained, leaving the reader with the question: "What does that mean?"

Tertzakian also believes we are on the verge of a tipping point - while we are not running out of oil (many decades' worth is left), we are running out of cheap oil.

A new field with a few hundred million barrels is big news today, but would be drained in days if used exclusively. Further, these new finds are generally located in politically and geographically inhospitable regions. Meanwhile, the average global decline rate for existing wells is somewhere between 5 - 8%, creating an annual decline about 2.5 times that of Iraq's current production. (Unfortunately, Iraq's oil production now is quite problematic, so I'm not certain what this implies. The author does add that data on available reserves, for OPEC in particular, and for economic growth, especially China, are sparse.) Meanwhile, demand is growing about 2%/year.

Solutions: Tertzakian believes that fuel cells are 10 - 20 years down the road, will require massive amounts of new electric power to release the hydrogen needed, and will be further hampered by the difficulty transporting and storing hydrogen. He also suggests that improving efficiency of today's engines may be more productive - only 17% of energy in oil makes it to the tires. Diesel engines are considerably more efficient than gasoline - thus, suggesting another fruitful avenue.

Taking 1,500 lbs. of weight off today's trucks and SUVs could provide an 8.1 mpg improvement - another significant opportunity. Limiting highway speeds to 55 mph would offer 17% improvement vs. 75 mph, and hybrids could improve economy 25% in city driving.

Ethanol is greatly (over)hyped, forgetting that doubling current production would only displace 3.5% of America's transportation oil use.

Finally, Tertzakian is not sanguine about voluntary conservation, pointing out that someone able to pay about $12,000 MORE for an average SUV will not likely be influenced by the gas savings offered by smaller models. Thus, government action will be required.

"A Thousand Barrels A Second's" major contribution is pointing out that V.P, Dick Cheney was right when he said that voluntary conservation would not achieve the savings required. At the same time, it also makes a good case for strong governmental intervention - something Cheney is not likely to endorse.

I would have loved to give this book 5 *, but felt that a more compelling "debate" could have been put together with no increase in page number or technical level. Also, Tertzakian gives some strange credits to President Bush as being an enlightened energy man. My view is quite the opposite. Bush has done nothing when compared to Reagan's efforts in the second US oil crisis (79 - 83), as is clear in the book!

The author does a nice job of outlining the economic impact of high oil prices (gas for cars) on GDP, but fails to take his discussion far enough. It appears, from the book that Europe has responded much better to the "value" of a non-renewable resource. And they have a high standard of living and I think drive a similar mileage to that of the US. On several occasions the book tells me the average US annual mileage, but never a mention of the European or Japanese! If the only book you ever read on crude oil supply was this, you would conclude that the US must stop driving large tones of steel "today" and not "tomorrow". We must stop listening to the "cry babies" who drive empty trucks or build them.

When it comes to solutions to the impending crude oil supply crisis, the author appears to just expect market forces to wean us off consumption. I am sure they will, but is this the smart way to live? And as an after thought, that nuclear fusion will become technically feasible just in the nick of time! This will save us, so don't worry about it all.

And then of course the author never mentions the most fundamental of all problems in the crude all usage saga. There are too many consumers. The world cannot sustain the population that there is at this very moment. All the world material reserves are being consumed at an alarming rate. But with a bit of luck I may just miss the crisis (come to the end of my allotted life span).

This is a book that could have been outstanding, but fell short on data and not having a more forthright conclusion.