Twilight of the Oil Economy

Could you outline the concept of Peak Oil?

The phenomenon of oil extraction reaching a maximum and starting to decline (Peak Oil) has been observed in individual oil fields, in the US as a whole (1970), and in many other nations (roughly 30 out of 45 producing countries). Nearly everyone agrees that global oil production will peak at some point in the next couple of decades, but there is some controversy over whether that will happen sooner (before 2010) or later (after 2020). There is also controversy over whether resulting high oil prices will simply encourage conservation and the development of alternatives, resulting in a gentle and painless transition to a different energy regime, or cause worldwide economic chaos. I have been studying the matter closely for seven years, and have concluded that a near-term peak is far more likely than a later one, and that a smooth transition is extremely unlikely because price signals will arrive at least a decade too late to be of any use. Most of the available strategies to spur conservation and to develop alternative energy sources will require heavy investment and a lead time of ten to twenty years. I think the Hirsch Report, ‘Peaking of World Oil Production: Impacts, Mitigation and Risk Management’, which was prepared for the US Department of Energy in 2005, gets it just right when it says that this is a problem that is unprecedented in scope and one that will pose an enormous challenge for modern industrial societies.

2005 saw the first real Peak Oil blips on the radar of the mainstream media. Assuming what you and the DoE have said is correct, its still a pitiful trickle of awareness, when stood in relation to the import of the issue. And yet many Peak Oil sceptics I’ve read seem to attack the theory as if they’re debunking some dubious orthodoxy. Could you give your impressions of the informed sceptics — the people who’ve done their own research and concluded that its a non-issue? Why is Peak Oil frequently associated (albeit in non-mainstream media) with words like hoax and scam?

There is no honest way to call Peak Oil a hoax or a scam. There is a certain segment of the population composed of people who have learned that the official version of reality (regarding 9/11, the Kennedy and MLK Assassinations, on and on) is bogus, and these people have become so cynical that they are inclined to question any statement about reality issuing from an official source. If Peak Oil (which, a year or two ago, was an extremely fringe idea) is now being seriously discussed by international organizations, a few politicians, and even a few corporation spokespeople, then, obviously, it must be a hoax. That isn’t reasoning; it isnt critical thinking; its just leaping to a conclusion based on what feels good.

Some of these folks are using the abiotic oil theory1 as conceptual ammunition for their attacks. Ive written a fairly extensive article on abiotic oil,2 and there are a number of other excellent critical articles on it that have come out more recently. Bottom line: even if some of the science behind abiotic theory holds up, it makes absolutely no practical difference to the observed fact of Peak Oil, as it is occurring in oil field after oil field, producing country after producing country. The global oil industry didn’t pursue exploration on the basis of biotic theory; they started out looking just about everywhere, and they found oil almost exclusively in sedimentary basins — exactly where biotic theory says it should be.

I cant really discuss all of the evidence and arguments here — even my 4,000-word essay is just a very brief overview. Suffice it to say that, if Peak Oil were a conspiracy, it would have to involve countries that don’t like even to talk to one another (like the US, Iran, Venezuela, China, Russia, and so on); untold numbers of retired and independent petroleum engineers, geologists, and analysts, as well as ones currently employed by government and industry; and people from all segments of the political spectrum. Data would have to be fabricated and agreed upon by parties that have no apparent interests in common. I don’t think so.

You’ve said that you think market economics are far too short-sighted to be of use in the development of alternatives to oil. What about the possibility of pro-active (grassroots or government-led) development? What are the alternatives? Nuclear power is often cited, and even Stewart Brand3 has come out in support of its viability. Renewable sources such as wind and solar power are also on the rise. Couldn’t a patchwork of alternative energy sources (obviously none are equal to oil in themselves) arise out of necessity to enable a transition away from fossil fuels? For that matter, what about the relatively plentiful reserves of the other key fossil fuel, natural gas?

Well, of course pro-active efforts will be far more productive, whether led by government, corporations, or private citizens. Such efforts need to be encouraged. If we wait for the crisis to hit, our options will be few and unpalatable. Without government leadership, though, it is unlikely that we will see enough proactive development of alternatives to make much of a difference.

Nuclear has a number of drawbacks — waste storage problems, high initial cost, nuclear weapons proliferation, and widespread political opposition. Nevertheless, a few states are moving ahead on new plants. This will make little difference over the short- to medium-term: nuclear produces electricity, but oil is primarily a transportation fuel. We just don’t have significant numbers of electric cars or trucks, and no electric airplanes are even contemplated. Changing out the current car and truck fleet is a 20-year project. This is a problem for solar and wind, too: they make electricity. With absolutely vast amounts of extra electricity we could make hydrogen and run our cars on that, but again this would require significant retooling, more than 20 years of lead time, and trillions of dollars in investment.

Natural gas is plentiful in some parts of the world, but not here in North America: we are facing a supply crisis over the next few years. And this poses a problem of its own: most of the new electrical generating plants built over the past few years are gas-fired. As gas becomes more scarce and expensive (even accounting for more LNG4 terminals), well have to run fast to install more renewable (or nuclear, even if its a bad idea for the reasons cited, or coal, for that matter) generating infrastructure just to keep the lights burning — it will be very difficult to get out ahead and create extra generating capacity to make hydrogen for use in transportation.

That’s why we need to look primarily to demand restraint as a first-tier response. Yes, we should be investing in alternative supply, and what emerges will inevitably be a patchwork of everything from tidal power to biofuels. But all of those put together will still leave us significantly short of where we would like to be, in terms of supply with which to meet the demand that would ordinarily be there. So we have to look to ways of significantly reducing the need for transportation fuels, home heating fuels, and electricity, and using what we must as efficiently as possible.

In Tony Blair’s speech to the World Economic Forum early in 2005, he made a comment that seemed to be unusually candid in its admission of our collective denial: ‘My view is that if we put forward, as a solution to climate change, something which involves drastic cuts in growth or standards of living, it matters not how justified it is, it simply wont be agreed to.’ (my emphasis) He goes on to state that thankfully, cuts in growth wont be necessary as science and technology will turn the challenges posed by climate change into new business opportunities.

Unfortunately for Mr. Blair, drastic cuts in growth and standards of living will occur, whether we agree to them or not. The question really is only whether we plan for such cuts and make them in an orderly way, or watch as all hell breaks loose. If were to do this the cooperative, orderly way, it will require government to rally the citizenry, as in wartime, to make voluntary sacrifices, learn new skills, and give up comforts. Nobody believes that will be easy. There are serious questions as to whether it is even possible in the context of a democratic governance system.

I don’t like the scenarios and options that are unfolding any better than anyone else does, but I think we have to be realistic about what they are and choose well and soon, because the longer we wait, the fewer and worse those options will be. There will certainly be new business opportunities, as Blair hopes, but we shouldn’t kid ourselves: there will also be a lot of suffering. But thats the consequence of any major social change; look at all of the suffering created during the industrial revolution (and that’s ongoing). The challenge will be to minimize that suffering. And I don’t think we can do that simply by wishing it away and hoping that science and technology will magically come to the rescue, enabling us to grow our economies even larger, so that our ecological footprint expands from — whatever it is now — three Earths worth of consumption of yearly renewable resources to five or ten. Science and technology cannot take the place of good judgment and moral courage.

What do you see as the most appropriate responses to the reality of Peak Oil? Personally, psychologically, practically, socially and politically?

There is a range of promising responses to the challenge of Peak Oil. Individuals should of course evaluate their personal dependence on oil. The strategies for reducing that are fairly obvious: arrange your life so you are less car-dependent, grow more of your own food, get to know your neighbours. Many cities in the US and elsewhere are starting to study their oil vulnerability and make plans to reduce it; these range from Portland to San Francisco to Denver, all the way to little towns like Willits, CA, Burnaby, BC, and Kinsale, Ireland.

From a psychological point of view, it is important to be patient with oneself. Inevitably, there will be a period of adjustment to the news that our modern world is about to hit the wall. Elizabeth Kübler-Ross defined the stages well many years ago (in relation to grief): denial, anger, bargaining, depression, and acceptance. With acceptance comes strategic work to mitigate the impacts for oneself, ones family, and ones community.

Ultimately we have to work on the world as a whole, because if there is no coordinated response to Peak Oil globally, then local efforts may be overwhelmed by the general tide of chaos. The best global response that I know of is the Oil Depletion Protocol, which is the topic of my new book by that title.

The Oil Depletion Protocol is perhaps the simplest and most straightforward agreement imaginable to help nations, and the world as whole, reduce oil dependency. It calls for a reduction in both extraction and imports of oil, with the rate of reduction tied to the rate of depletion. The world depletion rate for conventional oil is currently approximately 2.6 percent per year (this is simply the amount being extracted yearly divided into the amount left to extract). The Protocol essentially calls upon signatory nations to reduce their petroleum consumption by that amount annually.

This would provide a target, a gauge of progress, and a cooperative framework for a task that will require many years of sustained effort. The Protocol itself need not specify how nations would make the transition away from oil. Presumably they would rely on some combination of two strategies: developing supplies of alternative fuels, and conservation in their use of petroleum and its products. But because each nation has a unique pattern of consumption and a unique alternative-energy resource base, it would not be helpful to mandate a single set of practices or priorities to be implemented universally.

The terms of a draft Oil Depletion Protocol were initially suggested by petroleum geologist Dr. Colin Campbell, founder of the Association for the Study of Peak Oil (ASPO), in 1996. They include, principally:

• Reduction in extraction by each producing country according to its depletion rate;
• Reduction in imports by each importing country according to the world depletion rate;
• The creation of a Secretariat to monitor reserves, production, and imports, and to calculate depletion rates.

Under the terms of this draft Protocol, production and import restrictions would apply only to regular conventional oil, a category that excludes deepwater oil (defined as greater than 500 meters depth); heavy oil (with a cutoff of 17.5 API); natural gas liquids; synthetic oils from tar sands, oil shale, coal, and natural gas; and biofuels such as ethanol and biodiesel.

Oil-producing nations would agree, upon adoption of the Protocol, to submit to an independent audit of their reserves and an ongoing monitoring of production. Importing nations would submit to an ongoing monitoring of imports.

Some of the terms of this draft agreement are debatable (it may be preferable, for example, to include deepwater oil in the definition of conventional oil, rather than excluding it). And further terms may be necessary, for instance, to specify economic penalties for cheating on production or imports. However, the essence of the draft agreement is clear, simple, and non-arbitrary, and is thus likely to be preserved in any accord actually implemented.

The Protocol can be enacted by nations, but also by businesses, municipalities, and individuals. Just evaluate how much oil is being consumed, then plan to consume 2.6 to 3 percent less with each succeeding year. If we do this, we will be well on the way to creating a coordinated, peaceful energy transition. Sweden has already pledged to reduce oil dependence to zero by 2020; other nations are already in de facto compliance with the Protocol.

The next few years may offer humankind its last, best opportunity to avert resource wars, terrorism, and economic collapse as it enters the second half of the Age of Oil. If we grasp that opportunity and succeed, we could set a precedent for cooperative, peaceful approaches to all of the resource problems we are likely to encounter during the coming century. The choice we face is between competition and conflict on one hand, and voluntary moderation and mutual assistance on the other. The first steps toward the latter can be readily taken by endorsing and adopting this simple agreement.

Further reading

• Deffeyes, Kenneth, Beyond Oil: The View from Hubbert’s Peak. Hill & Wang, 2005.
• Heinberg, Richard & Fridley, David, Our Renewable Future: Laying the Path for One Hundred Percent Clean Energy. Island Press, 2016. Full book available for free online.
• Heinberg, Richard, The Partys Over: Oil, War & the Fate of Industrial Societies. Clairview Books, 2003.
• —PowerDown: Options & Actions for a Post-Carbon World. Clairview Books, 2004.
• —The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism & Economic Collapse. New Society, 2006.
• Kunstler, James Howard, The Long Emergency: Surviving the Converging Catastrophes of the Twenty-first Century. Atlantic Books, 2005.
• Simmons, Matthew R., Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. John Wiley & Sons, 2005.

On the web

• Post Carbon Institute
• Richard Heinberg
• Rob Newman’s History of Oil – For anyone who wants a spoonful of comedic sugar to help sweeten the bad news, a hilarious bike-powered vaudevillian rush through the story of petroleum.