Editor’s Note: This paper, exclusively available to AlterNet, was presented
at a Reception with Their Royal Highnesses The Prince of Wales and the Duchess
of Cornwall, at the California Leaders Round Table Dialogue on Peak Oil, Climate
Change and Business Action; November 7, 2005 in San Francisco.
The subject I teach -- human ecology -- is a discipline that largely
concerns population and resources. Over the past few years I have chosen to
study oil, because it is the most important energy resource of the modern world.
Only 150 years ago, 85 percent of all work being accomplished in the U.S.
economy was done by muscle power -- most of that by animal muscle, about a
quarter of it by human muscle. Today, that percentage is effectively zero;
virtually all of the physical work supporting our economy is done by fuel-fed
machines. What caused this transformation? Quite simply, it was oil's
comparative cheapness and versatility. Perhaps you have had the experience of
running out of gas and having to push your car a few feet to get it off the
road. That's hard work. Now imagine pushing your car 20 or 30 miles. That is the
service performed for us by a single gallon of gasoline, for which we currently
pay $2.65. That gallon of fuel is the energy equivalent of roughly six weeks of
hard human labor.
It was inevitable that we would become addicted to this stuff, once we had
developed a few tools for using it and for extracting it. Today petroleum
provides 97 percent of our transportation fuel, and is also a feedstock for
chemicals and plastics.
It is no exaggeration to say that we live in a world that runs on
However, oil is a finite resource. Therefore the peaking and decline of
world oil production are inevitable events -- and on that there is scarcely any
debate; only the timing is uncertain. Forecast dates for the peak range from
this year to 2035.
The peaking phenomenon itself has been observed again and again in
individual oil fields and in entire producing nations. One of the first
countries to hit its peak was the U.S.. During the 1930s and '40s, half the
world’s production of petroleum came from Texas and Oklahoma. However, U.S.
production reached its all-time maximum in 1970 and has been declining ever
since. Currently the U.S. imports 60 percent of its oil.
Concern over the likelihood of an impending world peak has increased
markedly in recent months as global spare production capacity has dwindled and
as prices have achieved what seems to be a new baseline of over $50 per
Evidence that we are approaching peak includes the following:
ExxonMobil documents that global oil discoveries peaked in 1964. Declining
rates of discovery are therefore a long-established trend.
Chevron notes in recent advertisements that 33 of 48 nations are in
decline. We have thus seen the peaking of production in a majority of individual
nations, including some important producers such as Indonesia, Norway, Great
Britain, and Venezuela. Mexico will reach its peak within the next two
As noted by the International Energy Agency, there is evidence that a
substantial amount of "proven reserves" in OPEC countries are illusory, the
result of a scramble for market share within a cartel that allocates export
quotas based on stated reserves.
With regard to this last point it should be noted that reserves figures,
even when accurate, have historically given little warning of peaking. The U.S.
instance is once again emblematic: in 1970, U.S. oil reserves were higher than
ever; so were production rates. But only a year later, American production began
its terminal decline. The study of discovery rates and depletion rates gives us
a much better idea of when the global peak is likely to occur.
Optimistic estimates of future discovery and production issued by Cambridge
Energy Research Associates and the U.S. Geological Survey have been criticized
by several analysts. The optimists have generally failed to anticipate peaks,
first in the U.S. and repeatedly in the case of other nations around the
This morning the International Energy Agency (IEA) issued a statement
saying that the world will have sufficient energy supplies for the next quarter
century. However, the statement noted the necessity of the investment of $17
trillion in the supply train in order to maintain sufficiency for so long. Also,
the IEA anticipates Saudi Arabian production expanding to 18 million barrels per
day by 2030—a figure considerably higher than the maximum possible rate of
production from that country cited not long ago by Sadad al Husseini, the
recently retired head of exploration for Saudi Aramco.
Expressions of concern have been voiced by corporations, prominent
organizations, and knowledgeable individuals, including ChevronTexaco, the Royal
Swedish Academy of Sciences, Volvo, Ford Motor Company Executive Vice President
Mark Fields, the Chinese Offshore Oil Corporation’s chief economist, and
numerous petroleum scientists and oil industry analysts.
The question immediately arises: Will alternative sources be able to make
up the difference?
Alternative sources often discussed include oil sands from Canada, shale
oil in Colorado, coal-to-liquids, gas-to-liquids, nuclear, and renewables such
as solar and wind. Each of these will require immense investment and well over a
decade of intense effort in order to produce substantial quantities of energy to
offset declines from fossil fuels. And in most cases, rates of production are
and will be constrained by non-economic factors. Take the oil sands, for
example. Currently Canada produces one million barrels of synthetic crude per
day from that source. There is expectation of two mb/d by 2010, and perhaps as
much as four mb/d by 2025. We are unlikely to see higher numbers than that even
with extraordinary capital investment, because the production process requires
large amounts of natural gas and fresh water, both in short supply in Alberta.
Moreover, according to the IEA, the world needs six mb/d of new production
capacity each year (and that number is growing) to meet new demand and to offset
depletion from existing fields.
How about increased efficiency -- surely that can offset any potential oil
supply problems. In principle, yes, but most efficiency strategies will likewise
require significant lead times. For example, we have the technology now to
enable all of us who own cars to be driving ones that get up to 100 miles per
gallon. If we were, that would obviously save an enormous amount of fuel. But
how long would it take to implement that strategy? It would certainly take four
or five years for Detroit to begin producing such high-efficiency cars in large
Then, not everyone buys a new car every year. In fact, it takes about 15
years to change out nearly the entire U.S. car and truck fleet. So, altogether,
it would take about 20 years to fully implement this particular efficiency
Will the market be able to respond quickly enough to forestall serious
economic, social, and political impacts? It is often said that the Stone Age did
not end for lack of stones, nor will the Oil Age end because we run out of
petroleum -- but instead because we find a cheaper source of energy. However, as
we have just seen, that cheaper source of energy has yet to be identified.
Early this year a report was released, prepared for the U.S. Department of
Energy by a team led by Robert L. Hirsch, who has a distinguished background in
the oil industry and is a senior energy analyst at SAIC and the Rand
Corporation. The Hirsch Report (titled "Peaking of World Oil Production:
Impacts, Mitigation and Risk Management") concludes that price signals will
arrive at least ten years too late to enable a gentle, market-led transition
away from oil to other energy sources. The report describes Peak Oil as an
"unprecedented" challenge for modern societies, and describes economic, social,
and political risks if preparation is not undertaken soon enough, or on adequate
Let me read you a few sentences from the Hirsch Report:
The problems associated with world oil production peaking will not be
temporary, and past "energy crisis" experience will provide relatively little
guidance. The challenge of oil peaking deserves immediate, serious attention, if
risks are to be fully understood and mitigation begun on a timely basis.
Mitigation will require a minimum of a decade of intense, expensive effort,
because the scale of liquid fuels mitigation is inherently extremely large.
Intervention by governments will be required, because the economic and social
implications of oil peaking would otherwise be chaotic.
The report also concludes that the costs of preparing too late for global
oil peak would far outweigh those of preparing too early.
The worst-case scenario for the impact of global production peak is very
bad indeed. As I mentioned earlier, we are extremely dependent on oil for
transportation, agriculture, plastics, and chemicals. In each area, we are
already seeing serious impacts resulting from current prices in the
$60-per-barrel range. For example,
Currently tens of thousands of farmers are agonizing over whether they can
afford to plant next year’s crop, given high fuel and fertilizer costs.
Chemicals and plastics industries are already hard hit: In the chemistry
industry alone, more than 100 plants have closed and more than 100,000 jobs have
been lost just this year.
In the airline industry, 40 percent of revenues go to pay for jet fuel;
most U.S. air carriers are already in bankruptcy or nearing that
Home heating costs are projected to be 40-50% higher this winter than
As prices go even higher, and with actual scarcities of fuel, people will
experience difficulties commuting, and the maintenance of our far-flung food
distribution systems may become problematic.
On top of all this, oil is a strategic resource: as supplies become scarce,
there is increasing likelihood of international conflict.
To avoid the worst-case scenario we must begin today to reduce our
dependence on oil. The effort must have top priority. It must focus primarily on
reducing demand, and only secondarily on producing large quantities of
alternative transportation fuels.
A global Oil Depletion Protocol would reduce price volatility and
competition for remaining supplies, while encouraging nations to move quickly to
wean themselves from petroleum. In essence, the Protocol would be an agreement
whereby producing nations would plan to produce less oil with each passing year
(and that will not be so difficult, because few are still capable of maintaining
their current rates in any case); and importing nations would agree to import
less each year. That may seem a bitter pill to swallow.
However, without a Protocol -- essentially a system for global oil
rationing -- we will see extremely volatile prices that will undermine the
economies of all nations, and all industries and businesses. We will also see
increasing international competition for oil likely leading to conflict; and if
a general oil war were to break out, everyone would lose. Given the
alternatives, the Protocol clearly seems preferable.
National governments, local municipalities, corporations, and private
individuals will all need to contribute to the effort to wean ourselves from
oil, an effort that must quickly expand to include a reduction in dependence on
other fossil fuels as well.
All of this will constitute an immense challenge for our species in the
coming century. We will meet that challenge successfully only if we begin
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