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I had an interesting, if brief, conversation today with someone whose job it is to perform economic analyses for the DOE. Essentially he’s scared shitless about “Peak Oil” – the idea that the world has, or soon will, stop its net increase in oil production. The ensuing scenario, as envisioned by yours truly, goes something like this:

  • 2005 World oil production reaches peak.
  • 2006-07 Facing political and economic pressure, OPEC countries are forced to revise “proven reserves” to match actual supplies. As oil production declines and investor confidence erodes, prices reach $100/barrel.
  • 2008-10 Faced with steady decline in the US Dollar and an increased need for outside investment, Russian oil sales begin to be valued in Euros. OPEC, its margins slashed by dependence on the “petrodollar”, follows suit, causing a free fall in the US Dollar.
  • 2011-15 With no currency to back foreign oil purchases, US initiates a crash program in alternative energy. Manufacturing capabilities are compromised as oil prices reach $200/barrel. Unemployment reaches record highs. Compulsory draft is reinstated, with soldiers being paid in long-term Treasury bonds, floated on the devalued Dollar. China attacks Russian oil fields.
  • 2015-25 US, China, European Union, and India vie for Middle Eastern oil fields. This conflict would almost certainly be military and could conceivably be nuclear.
  • 2025-50 50-90% of population dies off as food and water production return to 19th Century levels.

This is something of a worst-case scenario, although the real pessimists expect it to happen much sooner. So, pretend you’re the US government. What do you do?

Short term, invest heavily in nuclear energy research and construction. Triple the installed nuclear capacity in the next ten years, and move to a fast reactor fuel cycle based on decommissioned weapons materials to stretch uranium resources.

Medium term, continue nuclear construction to supply electricity needs while using diminishing oil resources to construct a new energy infrastructure based on wind, solar, and/or geothermal power plants. Simultaneously, accelerate adoption of fuel cells. Use reactor-produced hydrogen for all transportation needs by 2025. As US transitions to a net energy producer, reinvest foreign capital in research into renewable energy sources and petroleum replacements.

Long term, retire nuclear power plants by 2075. Use synthetic petroleum products to maintain wind/solar/geothermal plants while continuing research into renewable energy resources like fusion.

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