Peak Oil News

We have already entered peak oil,’ IEA source reportedly claims

2009-11-10T07:52:00.001-08:00

http://rawstory.com/2009/11/we-entered-peak-oil-iea-source-reportedly-claims/
By Stephen C. Webster

Two International Energy Agency whistleblowers have come forward with startling claims about the world's supply of crude oil, according to a report published Tuesday.

"We have [already] entered the 'peak oil' zone," an unnamed former IEA official told British newspaper The Guardian. "I think that the situation is really bad."

A second whistleblower reportedly claimed that the IEA's current figures are inflated due to pressure from the United States and a pervasive fear that the announcement of falling oil output in the future could cause markets to respond with panic.

The claims come on the same day the IEA plans to publish its annual "World Energy Outlook" report for 2009.

"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further," one of the IEA sources reportedly told the paper. "And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources."

The agency reported in its 2008 World Energy Outlook that a field-by-field analysis of production trends revealed "that decline rates are likely to rise significantly in the long term, from an average of 6.7% today to 8.6% in 2030."

The whistleblowers see things differently.

"The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year," one of the sources claimed. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."

In a 2008 interview with Fatih Birol, chief economist at the IEA, Guardian environment writer George Monbiot reported that the IEA had expected peak oil output to be reached in a decade or two.

"In terms of non-Opec [countries outside the big oil producers' cartel]," Birol reportedly said, "we are expecting that in three, four years' time the production of conventional oil will come to a plateau, and start to decline. In terms of the global picture, assuming that Opec will invest in a timely manner, global conventional oil can still continue, but we still expect that it will come around 2020 to a plateau as well, which is, of course, not good news from a global-oil-supply point of view."

The 2008 World Energy Outlook suggested peak oil would be reached in 2030.

The prediction that peak oil production was approaching in 2020 was enough to "scare the pants off" Monbiot, considering the predicted implications of a global energy crunch in just over a decade. However, if the allegations by The Guardian's whistleblowers are indeed true and peak oil has been reached, dark days loom for the global economy.

According to The Wall Street Journal, the agency is not expected to announce the arrival at such a dramatic conclusion. Instead, the 2009 report due out Tuesday will predict slower growth in demand for oil, the Journal reported.

Reuters added: "While the Paris-based IEA has repeatedly warned that a lack of investment could lead to a strain on supply, it maintains that there is enough oil in the ground."

The End Of Fossil Fuel

2009-08-06T08:09:00.001-07:00

forbes.com

By Chris Nelder, 07.24.09, 03:00 PM EDT

Prepare for a radically different lifestyle as global crude oil production peaks and begins to decline.

You will never see cheap gasoline again. You will probably never see cheap energy again. Oil, natural gas and coal are set to peak and go into decline within the next decade, and no technology can change that.

Peaking is a simple concept. We generally exploit natural resources in a bell-shaped curve, with the rate of extraction increasing over time until we reach a peak and then gradually slowing down until we stop using them.

Peak oil is not about "running out of oil"; it's about reaching the peak rate of oil production. It's not the size of the tank that matters, but the size of the tap.

The peak is usually reached when resources become too difficult to extract, or too expensive, or they are replaced by something cheaper, better or more plentiful. Unfortunately, we have no substitutes for oil that are cheaper or better.

According to the best available data, we are now at the peak rate of oil production. After over a century of continual growth, global conventional crude oil production topped out in 2005 at just over 74 million barrels per day (mbpd) and has remained at that level ever since.

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The additional "oil" that brings the oft-cited world total to 84 mbpd today (down from 87 mbpd last year; according to U.S. government data) isn't conventional crude, but, rather, unconventional hydrocarbons, including natural gas liquids, "extra heavy" oil, synthetic oil made from Canadian tar sands, refinery gains, liquids produced from the conversion of coal and natural gas, and biofuels.

Oil production is expected to go into terminal decline around 2012. The principal reason is that the largest and most productive fields are becoming depleted while new discoveries have been progressively smaller and of lesser quality. Discovery of new oil peaked over 40 years ago and has been declining ever since despite furious drilling and unprecedentedly high prices.

When it begins to decline, rate of crude production is projected to fall at 5%, or over four mbpd, per year--roughly equivalent to losing the entire production of Latin America or Europe every year. The decline rate will likely accelerate to over 10% per year by 2030.

The Paris-based International Energy Agency estimates that the world would need to add the equivalent of six new Saudi Arabias by 2030 in order to meet declining production and growing demand. Obviously, there aren't another six Saudi Arabias waiting to be discovered, and unconventional liquid fuels simply cannot fill such a yawning gap.

Natural gas is likewise expected to peak some time around 2010-2020, and coal around 2020-2030. Oil, natural gas and coal together provide 86% of the world's primary energy.

By the end of this century, nearly all of the economically recoverable fossil fuels will be gone. From now until then, what remains will be rationed by price. There will be shortages.

Renewable energy--solar, wind, geothermal--currently makes up less than 2% of the world's primary energy supply, and although growing very rapidly, it is not on course to fill the fossil fuel gap, either.

As fossil fuels peak and then decline, the world's economies will be forced for the first time to live within a shrinking, not expanding, energy budget. They will adapt to this new reality by repeating the cycle we saw over the last 18 months: commodity price spikes, leading to economic destruction, leading to supply destruction, leading back to price spikes. Only in recessionary periods, like now, will there be excess supply.

How this will affect the global economy, and our lifestyles, cannot be overstated. Former chief economist for Canadian Imperial Bank of Commerce World Markets, Jeff Rubin, and oil investment banker Matthew Simmons have concluded that it means no less than the end of globalization.

Americans, who constitute 4% of the world population but consume 25% of its energy, will have radically different lifestyles. Production of everything will have to be re-localized. Instead of our food traveling an average 1,500 miles before it reaches us, it will have to come from nearby and use organic methods instead of requiring 10 calories of fossil fuel inputs for every calorie of food we eat.

Rather than shipping ore to China and shipping it back to the U.S. as steel, we'll need to revive our domestic steel industry. "Bedroom communities" will die and ideally be reborn as fully functional independent communities. It means the end of long commutes.

The coming energy shortage is the most serious crisis the world has ever faced, but it could have a very positive outcome. In theory, the Earth's wind, solar, geothermal and marine resources could each provide more than the total energy the world consumes every day, if we had the ability to harvest them.

As fossil fuel prices rise, the price of renewably generated electricity will continue to fall. If we are wise and lucky, we will rapidly improve the efficiency of our built environment, deploy renewable capacity and convert to an all-electric infrastructure that runs on it. Fortunately, political momentum is now leaning strongly in this direction.

If we move fast to re-localize production and proceed with the renewable revolution, we could end the 21st century with a largely carbon-free economy, putting an end to climate change and averting resource wars. We would have healthier food and a safer, more resilient and equitable world.

Chris Nelder is the author of Profit from the Peak--The End of Oil and the Greatest Investment Event of the Century and the coauthor of Investing in Renewable Energy. He blogs on GetRealList.

'$20 Per Gallon' by Christopher Steiner

2009-07-28T10:40:00.001-07:00

Los Angeles Times

Christopher Steiner looks ahead and projects, $2 at a time, how rising gasoline prices will transform civilization.

By Matthew DeBord

Amazon.com - $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better

During the summer of 2008, Americans found out just how much was too much to pay for gas. On July 11, a barrel of oil hit $147.27, which translated into $4.11 for a gallon of regular gas at the pump -- the highest price ever reached in the U.S. And that was just the average. In some places, the price got close to $5 a gallon. It was the Summer of Pain.

Many people who'd never heard of "peak oil," or who'd been trading in one SUV for another, or who'd scoffed at the idea that Americans would ever drive less, suddenly learned that when the price of a finite commodity spikes, even cherished habits change. And it's not just about driving: Our entire American way of life, in fact much of the global economy, has been built over decades on cheap oil: Seafood and plastic toys from China can flow freely around the world. The price of bread and milk stays low. Airlines can engage in price wars.

But when the price of oil rises dramatically, inflation can kick in, scarcity can become the order of the day, freeways empty, General Motors and Chrysler slide into bankruptcy, and the American way of life grinds to a halt. Of course, after the price of oil crested in 2008, it quickly collapsed, leading some observers to speculate that the Summer of Pain was a blip on the radar.

But for the first six months of this year, the price was steadily rising. Though it has stabilized and even fallen in recent weeks, it may begin a slow, undulant march until gas literally costs too much for anyone.

This is the altered state of petroleum consciousness that Christopher Steiner, a trained engineer and writer for Forbes, envisions. And it's happening quickly, he points out. "As the middle class continues to explode in China, India, and scores of other spots circling the earth, hundreds of millions of additional cars will hit the roads," he writes. Many of those cars will be like the $2,200 Tata Nano, a "people's car" created for Indian consumers who've been riding bicycles and motor scooters for generations. "People want what Americans have had for decades: easy cars and an easy life. These people will get what they want, but in the process they will catalyze a global economic reformation on a scale never seen. . . . " Even the tattered remnants of the Detroit Big Three want a piece of this market: As General Motors left bankruptcy at home, it was selling more cars than ever in China.

Steiner has adopted a nicely readable structure for the book. Starting at $4 a gallon, each chapter tracks what will happen when gas hits a particular price, escalating by $2 until he gets to $20. He visits an airplane graveyard in order to explain how $8-a-gallon gas will crush the airline industry. At $14, he checks out an abandoned Wal-Mart "ghost box" and imagines a grim end to the car-dominated exurb. "Stores will return to the downtowns of yore as small towns' populations . . . return to the small-town infrastructures that their grandparents and great-grandparents built."

By $18 a gallon, high-speed railroads serve our travel needs, and by $20 a gallon, we just can't do oil anymore. And like a lot of people who've studied our post-oil energy options, he comes down on the side of nuclear. Eventually, he's replaced transatlantic flights with leisurely ocean passages akin to the grand liners of yesteryear. Except these new Queen Marys will run on nuclear reactors. Personal cars will be a thing of the past. Citizens of the future will wonder why we ever thought we needed them.

By now, you may have noticed a great bifurcation here, typical of newbies to the study of spiking oil prices. We Americans will find our existence irrevocably altered to the point where we are forced to inhabit a downmarket green fantasy, harvesting power from wind and ocean currents, breaking our addiction to automobiles and generally living with less. Meanwhile, the developing world will have become the new first world, with a middle class with disposable income that Americans lack filling China, India and other rapidly growing countries with roads, cars and petroleum products. At least until all the oil runs out and they, too, must convert to lives of noble deprivation.

Some of Steiner's speculations will happen. In particular, rising global energy demand could have a disastrous impact on food cultivation, which at the industrial scale needed to feed a populous planet requires fertilizers synthesized from natural gas. Nuclear power will be an obvious alternative-energy choice when gas settles into double-digit per gallon prices.

Personal mobility could be another story, however, and here Steiner gets into tricky territory when he latches onto start-up electric car companies and gee-whiz mobility providers. In fact, good old internal-combustion engines running on gas may be with us for much longer than he thinks. Even $10 per gallon gas would be acceptable if efficient gas and hybrid engines can achieve significantly higher mileage, which is technologically feasible. Widespread electrification of transportation will come, but we could have to wait until the middle of the century, or even longer. The romance of the personal automobile won't fade so fast in the U.S., especially if it increases its hold elsewhere.

There's also a glaring omission in "$20 Per Gallon" that should be addressed. Much of the ground that Steiner covers, with a certain boyish, gearhead utopianism, was traversed in much more apocalyptic fashion by James Howard Kunstler in his 2005 book, "The Long Emergency." Kunstler's arguments, which are actually more ecological than economic, are well known and widely debated. So it seems remarkable that Steiner, who comes to many of the same conclusions, fails to acknowledge a book that's been around for four years and actually anticipated the 2008 gas mini-crisis. "$20 Per Gallon" also reads at times as if it were hurriedly written. Still, Steiner has served up a terrific speculative primer on a future of much pricier energy and all that it may entail.

DeBord writes the Shifting Gears blog for Slate's the Big Money and has written widely on the automobile industry and the future of mobility.

‘Peak oil’ debate is no longer on hold

2009-07-21T10:57:00.001-07:00

BusinessDay

Put a group of oil experts under one roof for a while and their discussion is likely to drift to the subject of peak oil — a point in time when maximum oil production is reached, after which it goes into permanent decline.

The advent of peak oil has long been brushed aside by some because it seems like a far-fetched, if not a ridiculous, idea concocted by alarmists. This is despite deafening cries that it is a real and serious threat.

Even among those who agree that it will happen, views differ sharply on the date . Some, like author David Strahan, say it could be as soon as 2017.

Recent data show that the debate can no longer be dismissed as a figment of the imagination among peak oil “enthusiasts”.

According to the Washington, US-based Worldwatch Institute, oil production is in decline in 33 of the 48 largest oil-producing countries. The research organisation says most of these countries are past their oil production peaks. Iran peaked in 1974, Nigeria in 1979, Venezuela in 1970 and Mexico in 2004.

Saudi Arabia, the world’s largest oil exporter, is expected to reach its peak in 2014, while in Iraq this is estimated in 2018.

Last year’s study by professional services group Ernst & Young showed that in the period between 2003-07, oil production in the US remained flat at about 1,2-million barrels a day.

Oil companies had difficulty in finding investment and production opportunities, say Ernst & Young.

But not everyone is convinced about peak oil. BP chief economist Christof Rühl says the argument for peak oil is baseless. “Peak oil has been predicted for 150 years. It has never happened, and will stay this way,” Rühl has reportedly said. He says oil is about price and not about availability.

Economist Tony Twine of consultants Econometrix echoes the view that price is everything.

“All energy — gas, oil and coal — is exploitable at a given price. If the price falls below a particular price it becomes worthless to produce. That is why I say many of the peak oil arguments are not well based.

“They all assume an oil price at 30, 60 or 200 a barrel,” he says. What is known as “oil availability” differs at different oil prices, Twine says.

“The projections that are being made about peak oil are sensible in particular contexts. But whether they are universally true is another matter,” he says.

Even in 30-50 years’ time, if oil demand is greater than supply, oil prices will rise “and currently unexploitable deposits will become viable to exploit”, Twine says. O il wells now considered marginal will become profitable .

Twine says there is a tendency to look at oil in terms of its energy content. “But there is a range of products that come out of a barrel of oil — from fertiliser to solvents that end up in paints, washing powder and synthetic fibres. Almost anything that you can see and feel has a little bit of oil in it.

“As oil becomes scarce and more expensive, its use as a source of energy will diminish. But its use as a feedstock for the chemicals industry will take longer to disappear,” Twine says.

Richard Worthington, climate change programme manager for the World Wildlife Fund in SA, says the advent of peak oil should influence how hydrocarbons are used. “It highlights the need for greater efficiency,” he says. C limate change considerations have supers eded peak oil discussions.

Worthington says fears of peak oil should not be the main driver of the move away from fossil- based energy sources. At some stage fossils will be depleted, he says. “Now there is talk of peak oil, then it will be peak energy and then peak coal,” he says.

Indeed, depletion of gas and coal reserves is a double whammy. National oil and gas company PetroSA’s Mossel Bay gas-to- liquids refinery is set to run out of natural gas by 2011.

The offshore fields south of Mossel Bay will not be able to keep up the supply of 36000 barrels a day the refinery needs.

The dwindling gas reserves are to be expected, says Twine.

“Gas and oil fields in SA and Mozambique have always been known to be constrained in terms of reserves. They have always been marginal in terms of big investment spending,” Twine says.

H owever, he believes that the Mozambique gas fields will have a longer life span and are likely to fuel petrochemicals group Sasol for a longer time. Sasol’s synfuels plant in Secunda gets natural gas from Mozambique through an 865km-long pipeline.

njobenis@bdfm.co.za

Could $20-Per-Gallon Gasoline Make Us Happier?

2009-07-16T12:18:00.001-07:00

NPR

Listen – mp3

When it's time to fill up the gas tank, many fear the price of gas will return to the $4-a-gallon days of last summer. But according to author Chris Steiner, our lives would be a lot happier and healthier if gas prices rose into the double digits. Steiner explains himself, and the title of his book: $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better.

Amazon.com Review
Imagine an everyday world in which the price of gasoline (and oil) continues to go up, and up, and up. Think about the immediate impact that would have on our lives. Of course, everybody already knows how about gasoline has affected our driving habits. People can't wait to junk their gas-guzzling SUVs for a new Prius. But there are more, not-so-obvious changes on the horizon that Chris Steiner tracks brilliantly in this provocative work. Consider the following societal changes: people who own homes in far-off suburbs will soon realize that there's no longer any market for their houses (reason: nobody wants to live too far away because it's too expensive to commute to work). Telecommuting will begin to expand rapidly. Trains will become the mode of national transportation (as it used to be) as the price of flying becomes prohibitive. Families will begin to migrate southward as the price of heating northern homes in the winter is too pricey. Cheap everyday items that are comprised of plastic will go away because of the rising price to produce them (plastic is derived from oil). And this is just the beginning of a huge and overwhelming domino effect that our way of life will undergo in the years to come. Steiner, an engineer by training before turning to journalism, sees how this simple but constant rise in oil and gas prices will totally re-structure our lifestyle. But what may be surprising to readers is that all of these changes may not be negative--but actually will usher in some new and very promising aspects of our society. Steiner will probe how the liberation of technology and innovation, triggered by climbing gas prices, will change our lives. The book may start as an alarmist's exercise.... but don't be misled. The future will be exhilarating.

Amazon.com Review
Q&A with Christoper Steiner, the author of $20 per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better

Steiner, an engineer-turn-journalist, explains how the simple but constant rise in oil and gas prices will change our lifestyle, but not necessarily for the worse. Read this Q&A to find out more about this revolutionary theory.

Gas prices are going up again this summer, but are you really suggesting prices might rise to $20 a gallon?

That figure lies far ahead in the future; it's hardly an imminent thing. But most people don't require much convincing to know that $2 gas isn't sustainable for the long term. Oil is a finite resource that the whole world demands--a world that grows more gasoline consumers every day. It's important to understand that this book isn't about oil statistics, it's about our lives and the ways in which we live will change.

What do you hope readers will gain from reading your book?

Readers should gain an appreciation for the kind of change that lies behind the growing price of gas. Weaning ourselves from gasoline isn't a scary thing, it's an exciting thing. We're talking about cleaner environments, more walkable lives, better public transportation and more vibrant cities.

What are some of the surprising ways you think rising gas prices will change our everyday lives?

I don't think people realize how close our airline industry is to an all-out collapse. The book details a massive airline extinction at $8 per gallon, and in fact, serious change could take place even before then. It's certainly not something that should be celebrated, but the collapse of that industry will open the door to new ones, such as widespread high-speed trains in America, a phenomenon that won't take serious root until plane tickets become luxuries rather than conveniences. Beyond the airlines, I think people might be surprised to think that their future may not include Wal-Mart, and that their food world may condense, ruling out things such as sushi, but introducing things such as local organic fruit, vegetables and meat.

Is this pure speculation and fantasy or what kind of research did you do?

I consulted experts in a bevy of industries throughout the whole book, so this is not a random exercise, far from it. That said, it can be hard to forecast exactly at what gas price each change will happen. There are many unforeseen factors that can accelerate or forestall a certain change, such as government involvement in building high-speed train networks. If the government funds trains aggressively, change will be effected quicker, obviously. But I do feel that all of the changes represented in the book will happen eventually, whether they take place at gas prices of $10 per gallon or $12 per gallon.

So how scared should we be of the changes to come?

There is little to be scared of. The rising price of gas will unlock countless doors to innovation, opportunity and change.

Why does your book's subtitle say rising gas prices will change our lives "for the better"? How so?

We've grown used to engorging ourselves on the back of cheap oil and it has lead to all manners of problems. As the price of gas goes up, we'll live closer to work, school, eat healthier foods and even be skinnier and safer. The book profiles research that connects cheap oil to America's obesity rate and to the daunting numbers of people that die on our roadways. As the price of gas goes up to, say, $6, we'll save more than $30 billion on obesity-related diseases, 10,000 fewer people will die in car crashes and thousands of people will be spared heart attack deaths related to air pollution. Those kinds of effects will only be magnified as the price of gas rises further. And that's just a sampling of the benefits.

In what ways will rising gas prices improve our economy and job market?

America has lost much of its manufacturing mojo during the last 20 years. A green revolution, fueled by a search for alternative energies and technologies, could change that. Not only will there be need to produce things such as solar panels, electric cars, and new city infrastructure, but the power of globalization will be blunted by higher gasoline prices. The advantages of, say, making a computer in China decrease as the cost of fuel increases and the cost of transporting things all over the earth rises-that will lead to manufacturing jobs returning here, to home soil.

In what ways will the rising cost of gasoline boost innovation?

The innovation game is one that many people anticipate as oil's grip on the world ebbs. New technologies will be needed in all arenas that oil touches, including cars, trains, our homes, the plastic we use and the roads we drive on-and those are just a few examples. The opportunities for inventors in a world with less oil will be prolific.

What kind of places did you visit for your research and why was it necessary to visit them?

Good books need good stories, and it's hard to tell a good story from just talking to people over the phone, so I got out there and did things. I worked on an electric UPS truck in Manhattan for a day; I spent some time on a fishing boat hauling in Asian carp; I descended into one of New York's new train tunnels currently under construction; I rode our nation's fastest train to meet the Amtrak CEO in Washington. I'm not anointing my book or my stories as good--that's up to the reader--but creating an enriching storyline within a nonfiction book was my goal, so I'm hopeful I did that.

So now that we know this, what should we do in the here and now?

Preparing for the future isn't about buying the latest gadgets or the car with the best mileage. Those things help, of course, but they're mere pings in a coming cacophony. People who will do the least amount of adjusting in the future are those who already live more sustainable lives. Where you live largely determines how you live. Buying solar panels for a house at the far edge of the suburbs, for instance, won't alter how the future affects you. Moving to a walkable neighborhood where groceries, your kids' schools, your office or a train are all within several blocks-that's a change you'll profit from and a place where the future will be kinder.

Peak Oil Day

2009-07-13T17:15:00.001-07:00

Richard Heinberg's Museletter

By Richard Heinberg

On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.

For years prior to this, a growing legion of analysts had been arguing that world oil production would max out around the year 2010 and begin to decline for reasons having to do with geology (we have found and picked the world’s “low-hanging fruit” in terms of giant oilfields), as well as lack of drilling rigs and trained exploration geologists and engineers. “Peak Oil,” they insisted, would mark the end of the growth phase of industrial civilization, because economic expansion requires increasing amounts of high-quality energy.

During the period from 2005 to 2008, as oil’s price steadily rose, production remained stagnant. Though new sources of oil were coming on line, they barely made up for production declines in existing fields due to depletion. By mid-2008, as oil prices wafted to the stratosphere, every petroleum producer responded to the obvious incentive to pump every possible barrel. Production rates nudged upward for a couple of months, but then both prices and production fell as demand for oil collapsed.

Since then, with oil prices much lower, and with credit tight to unavailable, up to $150 billion of investments in the development of future petroleum production capacity have evaporated. This means that if a new record production level is to be achieved, further declines in production from existing fields have to be overcome, meaning that all of those canceled production projects, and many more in addition, will have to be quickly brought on-stream. It may not be physically possible to turn the tide at this point, given the fact that the new “plays” are technically demanding and therefore expensive to develop, and have limited productive potential.

On May 4 of this year, Raymond James Associates, a prominent brokerage specializing in energy investments, issued a report stating, “With OPEC oil production apparently having peaked in 1Q08, and non-OPEC even earlier in 2007, peak oil on a worldwide basis seems to have taken place in early 2008.” This conclusion is being echoed by a cadre of other analysts.

Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.

We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.

It is too late to prepare for Peak Oil–a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.

It is impossible to say what will happen in the future with regard to oil prices. Clearly, very high prices kill demand by undercutting economic activity. Thus it is possible that the barrel price of petroleum may never break last year’s record. On the other hand, if the value of the dollar were to collapse, then the sky’s the limit for prices in dollars per barrel.

It is easier to forecast the oil supply trend: though we’ll see level-to-rising production temporarily from time to time, in general it’s down, down, downhill from now on.

Even though Peak Oil is now in the past, its annual commemoration on Peak Oil Day may serve an important purpose by reminding us why our economy is shrinking, and by focusing our thoughts on ways to facilitate the transition to a post-petroleum world.

What are some appropriate ways to commemorate
Mark your calendar. What will you be doing on July 11?

Help us “celebrate” Peak Oil Day by signing our petition.

Spectre of peak oil prices loom

2009-07-12T07:41:00.001-07:00

canada.com

By Barbara Yaffe

Oil at $200 a barrel is not far off and with it a new world order that will see the demise of globalization.

That prediction is put forward in a new book by well-known Canadian economist Jeff Rubin: Why Your World Is About To Get A Whole Lot Smaller.

Money, of course, makes the world go round and when transportation costs become punishing people start looking to buy local.

The author reasons that the price advantage currently held by low-wage countries will simply disappear.

And Rubin cites a second factor that substantiates his theory -- the introduction of carbon pricing.

The U.S. -- and Canada and presumably other developed countries -- soon will mandate a cap-and-trade scheme that would impose tariffs on goods deriving from nations that don't similarly restrict carbon emissions.

What this would mean is extra duties, or a pollution tax, on imports coming from places like China. Such tariffs again would negate the cost advantage of imports from low-wage countries.

All of which explains why North American labour unions are starting to find common cause with environmentalists, one example being the Blue Green Alliance, bringing together the Sierra Club and the United Steelworkers of America.

Here's the sort of calculation that's not lost on the three-year-old alliance: Higher transport costs flowing from $200-a-barrel oil would impose the equivalent of a 25 per cent tariff on Chinese imports, while a carbon tariff would be about 17 per cent. Presto -- a 42 per cent duty on Chinese goods.

The result? The potential revitalization of industrial sectors in Western countries that in recent years have bled jobs to foreign lands. Don't write off the American Rust Belt quite yet.

"At the same time as North American and European markets return to local sourcing," writes Rubin, "they will sever their trade links with the developing world and force that world to find another way to grow.

"As our world becomes smaller, their world becomes poorer."

This will cause economic havoc in the developing world, a situation that, predicts Rubin, will be further aggravated by the shutting off of a critical safety valve, migration.

Higher oil prices, after all, will mean more unemployment and fewer job openings in the developed world.

These predictions may seem a bit fanciful with oil at $60 a barrel, as it is now.

But Rubin, and most others, believe recent low oil prices are directly related to the ongoing recession and will surge again once economies start bouncing back.

The book, besides predicting a return of robust manufacturing and agricultural sectors in the developed world, is not a bearer of much good news.

The economist believes we are in for an era of repeated recessions, caused by ballooning oil prices that are inevitable given that oil reserves are in decline.

The only way to avoid such a fate is to wean ourselves off our debilitating addiction to petroleum.

Rubin's is one of a raft of books published in recent years warning of crisis and devastation if we fail to adapt to the fact that the aggressive burning of fossil fuels no longer is viable.

In view of all these dire warnings, citizens would be correct to wonder what exactly is on the reading lists of their politicians, who in their legislative priorities seem all but oblivious to the pending doom.

byaffe@vancouversun.com

Spectre of peak oil prices loom

2009-07-12T07:40:00.001-07:00

canada.com

Book Review: Blackout

2009-07-05T12:11:00.001-07:00

Domestic Fuel

By Joanna Schroeder

Under the surface we seem to have a lot of it. It’s fairly inexpensive but this is changing as demand rises to meet increased energy needs especially in countries like China. So we have a lot, its cheap, let’s use it, what’s the problem? Right? Wrong!

Author Richard Heinberg writes in Blackout: Coal, Climate and the Last Energy Crisis, “In short: two of the defining trends of the emerging century–the development of the Asian economies and climate change–both center on coal. But coal is finite non-renewable resource. Thus, a discussion of the future of coal must also intersect with a third great trend of the new century: resource depletion.”

In the first part of the book, Heinberg takes the reader through a deep analysis of just how much coal is available throughout the world. Keep in mind, forecasts assume that current energy use stays the same, but it is increasing each year, making coal available for a shorter amount of time. Best estimates are that the world will see Peak Coal by 2025 and many believe that the world has already witnessed Peak Oil.

Now, you’re just waiting for me to say there is no such thing as clean coal. So there, it’s out in the open. In the second section of the book, Heinberg talks about the link between coal and greenhouse gas emissions and discusses the technologies to create “clean coal”. They are all challenged to say the least.

At the end of Blackout, Heinberg details three scenarios that involve coal, climate and energy. They are all very disturbing, but Heinberg has a way of tackling issues head on.

“For strategic purposes, it is important to understand our human tendency to discount future problems. We must assess which threats will come soonest, and make sure that out sometimes frantic efforts to respond to these immediate necessities do not exacerbate problems that will show up later. Peak Oil is clearly the most immediate energy and resource supply threat the policy makers must deal with….”

He continues, “If energy scarcity forces policy changes before climate fears can do so, then perhaps world leaders will find that it makes more sense to ration fuel themselves, rather than the emissions they produce.”

rhshovelHeinberg continues by warning if we don’t get a grip on the real amount of fossil fuels supplies we have left as well as a deeper understanding of the environmental and economic consequences of burning fossil fuels..hello Blackout.

Wow, conservation…what a novel concept…good thing the fuel economy standards (aka CAFE standards) were finally improved.

“…Otherwise, the policies pursued are likely to be ineffective, counterproductive, and inconsistent.” Can you say proposed Climate Bill?

I’m a huge fan of Heinberg and he doesn’t disappoint with Blackout. You can buy this book or any book I review by clicking here.

BTW - Richard Heinberg is going to be a guest on the premier of national radio program Pure Energy, hosted by Sean O’Hanlon. The show debuts on July 13, 2009 at 6:00 p.m. EST on 880 The Biz and can also be heard live on www.PureEnergyShow.com.

Peak Oil Blues

2009-06-26T16:54:00.001-07:00

Peak Oil Blues

Are you 'coping' or 'freaking out' about Peak Oil?

What's a 'normal' reaction to learning about a post-oil world?

Fear? Anxiety? Shock? Depression?

No one really knows.

Many people say preparation is "90% mental," but how do you separate out what's "mental preparation" from what's just "acting mental?"

Here we explore what we've learned about various emotional reactions.

Our goal is to help you build the kind of world you want to live in. Sanely.

The Peak Oil Crisis: Stifling a Rebound

2009-06-26T07:36:00.001-07:00

Falls Church News-Press Online

By Tom Whipple

Since the beginning of the economic troubles some 18 months ago, the question on nearly everyone's mind was; "When will the recovery begin?"

A lot of water has gone over the dam in the last 18 months. An official recession has been declared, millions have lost their jobs, much of Detroit has gone bankrupt and the government has spent trillions on bailouts and stimuli. Three months ago the collective wisdom of investors concluded that the recession was nearly over. This resulted in one of the faster rebounds the stock markets have ever known --- based on the flimsiest of evidence and much wishful thinking.

In the last six months the demand for oil has fallen and stockpiles grew while, oddly enough, prices rose. Part of this increase was caused by speculators hedging against the falling dollar, and part was caused by still more wishful thinking that the demand for oil would soon recover.

A year ago prices rose to the previously unimaginable high of almost $150 a barrel. Oil producers made one last effort to keep up with demand and in doing so may have pushed world oil production to an all time high - the "peak" in peak oil. While it took six years for oil prices to climb, it only took six months for them to plunge into the $30's causing panic amongst the exporters of OPEC.

This led to a series of OPEC production cutbacks which were supposed to reach 4.2 million barrels a day (b/d) but petered out around 3 million due to quota-cheating by several of the more desperate and less honorable OPEC members. In the world outside of OPEC oil production has been steady in the last year with some notable drops in production. In Mexico, output from its largest oil field has been dropping much faster than expected due to depletion. In Nigeria insurgent attacks on oil facilities have brought production down to about 1 million b/d when the country should be producing closer to 3 million. In Venezuela, President Chavez has been busy expropriating the remaining pieces of the oil industry still owned by foreigners. Drops in production can be expected soon.

The net result of all these voluntary and involuntary cuts is that world oil production has dropped significantly since reaching an all-time high last year. This drop in production when coupled with the normal declines in output from aging oil fields and the prospects that less oil will be coming into production from new fields than expected, has led many to declare that the all time peak in world oil production took place last year. While it will take several years to verify that this was indeed the case, inability of the world's oil industries to ever again increase production has unfathomable implications which are not as yet widely recognized.

A corollary of the low oil prices and the lack of easy credit have led to a slowdown in the investment going into new oil production projects. While this has little immediate impact on the availability of oil, some years down the line it means that all of the new oil needed to offset depletion will simply not be there and that world production will decline faster than expected.

One can conjure up numerous scenarios of how oil, which at least currently is indispensible for economic growth, may or may not play a part in an economic rebound.

One scenario could be that the credit and financial markets are so far beyond redemption that the world economy will continue to decline indefinitely without reference to how much oil is available. The demand for oil would continue to decline and prices would remain relatively low so that there will continue to be sufficient oil available to support the deteriorating world economy. This scenario, of course, is one that few are willing to entertain, especially in light of the trillions being spent by governments all over the world to revive their economies.

While the notion of a quick recovery this year or early next year seems to be fading, most now believe that while a recovery may be slower than we would like, it will come eventually - it always has, particularly in the experiences of most living today.

The latest estimates from the International Monetary Fund say that world-wide GDP will be down about 2.7 percent this year. The world's spare oil production capacity currently is around six million b/d. This, however, is not a static number as the world's capacity to produce oil from existing sources is withering away at 3 or 4 million b/d each year and unless this much new supply is opened, then total world supply must inevitably shrink.

Now there is no question that very high oil prices would quickly choke off economic growth. Every dollar per gallon increase in the price of oil products drains about $800 million each day from the pockets of consumers in America. Worldwide it drains about $3.5 billion each day. Most observers believe that as soon as worldwide demand for oil gets ahead of supply there will be multi-dollar per gallon increases in the prices of oil products.

There seems to be little doubt that over the next few years, the world's oil supply will be forced into irretrievable decline from a combination of geologic and geopolitical reasons coupled with a lack of adequate investment. Should the demand for oil increase in the next year or so, there will still be some room for increased production without unacceptable prices increases for a while. The longer a recovery is delayed, however, the better the chances that oil prices will quickly surge to recovery-choking levels. While there are long-term solutions to this problem they will take decades to implement.

At last some governments are worried about the slowly emerging situation. Last week the British Prime Minister ordered his cabinet to start working on emergency plans to prevent rising oil prices from destroying the prospects that there will ever be an economic recovery.

Do you believe in 'peak oil'?

2009-06-25T08:24:00.001-07:00

Investors Chronicle

By Jonathan Eley

Debate has raged about 'peak oil' ever since Shell geologist M. King Hubbert first outlined the theory in 1956. It's the idea that once around half the world's reserves of oil have been extracted, production enters a slow and inevitable decline that no amount of investment can reverse. Believers in peak oil argue that once it becomes apparent that the peak is near, or even past, prices will rise sharply, and permanently. Detractors say the theory ignores geology and technological progress.

YES, says Matthew R. Simmons, founder of Simmons International:

"Many supposed energy experts refute peak oil, and mistakenly think the term means that we are running out of oil. Peak Oil does not mean "running out of oil". The world will likely never run out of oil, but the flow of usable oil has almost certainly already passed its high-water mark. Over the next five to ten years, our current oil supply will likely decline by as much as 15 to 25 per cent. In the meantime, despite the recent recession fears, the world's planned use of more oil is staggering.

The factors propelling growth in world demand for oil are simple. We have an expanding global population. There is no logical reason to assume that oil demand has peaked, or is even slowing down.

Oil consumption can never exceed available supply. So if supply dwindles, then demand must also stop growing, a task not easy to even contemplate. If demand grows while supply shrinks, shortages will occur. Human nature will create hoarding and oil consumers will begin "topping off their tanks". The risk of this occurring is far higher than most think.

The data proving that oil supply peaked in 2005 is not perfect, but it is solid enough for a jury to "convict with reasonable certainty." Just look at just the production declines from key producing countries like Mexico, Norway, the UK, Indonesia, Argentina, and many others in the past four years.

All that is needed to end the Peak Oil debate once and for all is an independent audit of the world's 300 largest producing oil fields. Sadly, too many of these fields, owned primarily by Opec countries, still guard their production and reserve numbers as "state secret." But the time is fast approaching when world leaders will demand honest facts about the flow rates of these key fields. When this happens, the proof that oil has already peaked will be air-tight. "

Simmons is an US investment bank specialising in services to energy companies. www.simmonsco-intl.com

NO, says Peter Odell, professor-emeritus of international energy studies, Erasmus University:

"Claimants for a near future peak in global oil production fail to recognise the processes whereby reserves and production evolve. They equally avoid the central role played by both economics and politics in equilibriating the markets.

The world's currently proven and potential reserves of oil - both conventional and non-conventional - eliminate any significant up-side restraints on the growth of production . On the contrary, near future constraints on oil supplies will be imposed by slow demand growth (of no more than 1.5% per annum).Thereafter, the eventual continuation of a steadily increasing supply of oil for global use will be based on the present creation and future maintenance of a 40-plus years' reserves-to-production ratio.

Peak-oilers, however, argue that annual additions to reserves which comprise both new discoveries and reserves' appreciation in previously-discovered fields should not be taken to indicate the replacement or replenishment of reserves' stock. Additions to reserves in previously found fields must be dated back to the year of initial discovery.

Backdating reserves with hindsight - in the context of newly developed technologies of reserves' assessments and recoverability - is simply inappropriate to the continuing economic evaluation of oil exploitation. It makes the past look more attractive than it really was, while the present is unjustly made to appear inadequate.

The current declaration of proven reserves of 1400 billion barrels will likely rise to 1750 billion barrels or more by 2020 so providing continuity for the future of the oil industry for decades ahead.

Even without any further discoveries peak oil production will not occur over this period. Unless, that is, the price of oil collapses so undermining profitable investments in the industry. Or as a consequence of a consistent fall in demand because of renewable energies' expansion. Only then, will peak global oil production necessarily occur."

The Coming Oil Crisis

2009-06-20T22:43:00.001-07:00

Newsweek.com

By Mohammed J. Herzallah

Canadian economist Jeff Rubin has a somewhat oracular reputation. Since 2000, he has predicted a massive oil-price spike, and he was among the first in 2007 to prophesy that oil would soar over $100 per barrel (a few months later, he said $150 a barrel and was basically proved right again). Now, even though oil has dropped considerably from its peak, Rubin warns that it's bound to skyrocket once more and cause another, even greater economic crisis. In his new book, Why Your World Is About to Get a Whole Lot Smaller, he lays out how this energy crunch will occur—and why it will spell the end of globalization.

The scenario goes something like this: the ongoing depletion of the world's oil resources, coupled with soaring demand from emerging economies like India and China, will send the price of crude through the roof, Rubin says. This will seriously escalate transportation costs, which in turn will cripple international trade, reverse commercial interdependence and disable the global economy. The resulting age will be one in which nations are isolated, technological progress is sluggish and travel is infrequent. The Middle East will be less relevant than it is today, and food scarcity will emerge as the foremost international problem. Countries with a shortage of arable land will scramble and compete to buy agricultural real estate from other nations (for example, as Saudi Arabia is already now doing in Sudan) to alleviate their ever-worsening food crises.

Rubin's future isn't all bad. To offset the effects of the energy crisis, governments will have to invest heavily in national infrastructure (especially public-transportation systems); national industries once hurt by outsourcing and foreign competition will thrive; and the environment will become cleaner as people are forced to use less fossil fuel and as cars disappear from the streets. But Rubin warns that governments can do only so much—successful adaptation to an energy-starved world will largely depend on individuals altering their energy-consumption norms. Still, he is willing to bet that people will make the right choices. All in all, he says, "don't be surprised if the new, smaller world that emerges isn't a lot more liveable and enjoyable than the one we are about to leave behind."

Rubin's argument is powerful. There's no denying that the international economy has become critically dependent on oil as its main source for energy. Yet, like other believers in the "peak oil" theory, he falls into the trap of underestimating society's capacity to meet future fuel challenges through innovation and conservation. The story of energy over the past century has been one of breakthroughs, not retreat—so although the energy problems we face today should be a cause for concern, global integration will continue to deepen and the world is not likely to get smaller any time soon.

The Peak Oil Crisis: A Letter From Baghdad

2009-06-16T09:23:00.001-07:00

Falls Church News-Press Online

By Tom Whipple

A couple of weeks back the peak oil community received a letter from an officer serving with our forces in Iraq.

Despite numerous distractions in Iraq these days, this officer is so concerned that peaking world oil production will soon become a serious problem that he began discussing the future of America's energy supply with soldiers in his unit. What he concluded has a message for us all.

He found that most people have no trouble accepting the premises of peak oil- that there is a finite amount of crude underground, that the easy and cheap to extract oil is nearly gone and that world production will go into an unstoppable decline. The disconnect from reality, however, comes when contemplating the consequences of this event, for nearly all believe there are many obvious alternatives to oil. We know what they are: nuclear, solar, wind, waves, tides, shale, oil sands, coal-to-liquid, biomass, etc., etc. In the mind of most, it is a rather simple matter of switching from oil to any or all of the alternatives so that life-as-we-know-it can continue without missing a beat.

The more likely consequence, that peaking of world oil production will cause severe economic hardships that will take decades to mitigate is simply not a future that most are willing to entertain. Arguments that oil consumption has grown so large in the last 100 years that once depletion starts the development of similar amounts of alternative energy will take a very long time are simply not believed. This micro-survey makes an important point because it mirrors the common sentiment across the land as reflected by the media and political leaders. Even if oil should go into depletion someday --- there is simply not a problem.

Our letter-writer believes the reason for this commonly held opinion is the saturation of TV and the print media with the message that our oil companies are hard at work getting ready for the next generation of energy sources. Should we ever need alternatives to oil, all will be in readiness. Millions are spent on a continual drumbeat of such ads each month. They are impossible to avoid and have left most with the impression that all will be well - your oil industry is on the job.

This all-will-be-well message is always bereft of detail. Nowhere is there mention, of the vast amount of oil being consumed around the world each day, anticipated rates of depletion from existing oil fields, nor of the trillions of dollars that will be required to finance the next round of exploiting increasingly more difficult to recover oil. From time to time, the message is punctuated with the word "technology". Not any particular technology, just the implication that the technology which has brought our civilization this far will be there when we need it.

It comes as no great surprise to discover that American's perceptions are shaped by advertising and the mainstream media. In most cases, no great harm is done. A lot of advertising may elect a less than optimal candidate to public office or convince people that they really need to buy something. Usually, there is little harm done although from time to time concerted, successful efforts to set public opinion can have lasting and serious repercussions.

The current issue of the Columbia Review of Journalism contains a post mortem of how well the financial press covered the mortgage meltdown which triggered what could be turn out to be a very memorable recession. After reviewing 730 stories written between 2000 and 2007 pertaining to the mortgage industry, the authors concluded that in the main the financial press missed the run-up to the meltdown until it was too late. This left government convinced that it had to step in with trillions of dollars to stem a complete breakdown of the financial system. Although a few lonesome voices saw what was coming, as a society we were clueless until the banks started going under.

Just as millions were lulled by ever increasing home values that could make people rich, the same millions are being lulled by perceptions of a seemingly endless supply of cheap energy that will continue in some form so far into the future that we need not worry.

The heart of the peak oil question today is not whether oil is going to peak sometime soon - it probably already has. The issue is how soon people and their governments recognize that we are going to have to make substantial changes in our lifestyles and bear unprecedented costs in order to hold our civilization together in some recognizable fashion. Changes of this magnitude do not come easily.

Some hint of what is to come was seen last summer when a combination of factors drove gasoline prices in the U.S. to $4-5 a gallon. The initial political reaction was to denounce scapegoats - Arab oil producers, speculators, environmentalists. Fortunately or not our global recession intervened, forcing the demand for oil down by several million barrels per day taking the pressure off prices and delaying important decisions to another day.

For now, the matter rests. The new U.S. administration and congressional majority clearly is dedicated to reducing carbon emissions in a timely fashion and is taking many other steps that eventually could have an impact on oil consumption. However, there is still no official acknowledgement that adequate oil supplies are going to be a major problem in the near future and that hopes for a smooth transition to alternative forms of energy without sacrifices and expense is simply not going to happen.

Like the soldiers surveyed in Baghdad, a critical mass of Americans and their political leaders are simply not ready to accept the consequences of what is about to befall us. We were a lot closer to understanding during the price spike last summer. Now It seems clear that it is going to take much higher energy prices before we as a nation understand the consequences of peak oil.

It's Official -- The Era of Cheap Oil Is Over

2009-06-12T19:30:00.001-07:00

tomdispatch.com

By Michael T. Klare

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) -- a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America's Kremlin watchers with insights into changes in the Soviet Union's top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called "unconventional fuels" -- oil sands, ultra-deep oil, shale oil, and biofuels.

So here's the headline for you: For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close. Almost as notable, when it comes to news, the 2009 report highlights Asia's insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world's number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us.

Peak Oil Becomes the New Norm

As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day -- in future-output terms, an eye-popping decline of 14.1 million expected barrels per day.

Even when you add in the 2009 report's projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO's soaring 2007 projected figures). What does this decline signify -- other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids?

Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level -- a peak -- and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil's actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline.

Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon. "[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century," the 2004 IEO report stated emphatically.

Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day. This was about as close to an explicit rejection of peak oil that you could get from the EIA's experts.

Where Did All the Oil Go?

Now, let's turn back to the 2009 edition. In 2025, according to this new report, world liquids output, conventional and unconventional, will reach only a relatively dismal 101.1 million barrels per day. Worse yet, conventional oil output will be just 89.6 million barrels per day. In EIA terms, this is pure gloom and doom, about as deeply pessimistic when it comes to the world's future oil output capacity as you're likely to get.

The agency's experts claim, however, that this will not prove quite the challenge it might seem, because they have also revised downward their projections of future energy demand. Back in 2005, they were projecting world oil consumption in 2025 at 119.2 million barrels per day, just below anticipated output at that time. This year -- and we should all theoretically breathe a deep sigh of relief -- the report projects that 2025 figure at only 101.1 million barrels per day, conveniently just what the world is expected to produce at that time. If this actually proves the case, then oil prices will presumably remain within a manageable range.

In fact, however, the consumption part of this equation seems like the less reliable calculation, especially if economic growth continues at anything like its recent pace in China and India. Indeed, all evidence suggests that growth in these countries will resume its pre-crisis pace by the end of 2009 or early 2010. Under those circumstances, global oil demand will eventually outpace supply, driving up prices again and threatening recurring and potentially disastrous economic disorders -- possibly on the scale of the present global economic meltdown.

To have the slightest chance of averting such disasters means seeing a sharp rise in unconventional fuel output. Such fuels include Canadian oil sands, Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from coal (coal-to-liquids or CTL), and biofuels. At present, these cumulatively constitute only about 4% of the world's liquid fuel supply but are expected to reach nearly 13% by 2030. All told, according to estimates in the new IEO report, unconventional liquid production will reach an estimated 13.4 million barrels per day in 2030, up from a projected 9.7 million barrels in the 2008 edition.

But for an expansion on this scale to occur, whole new industries will have to be created to manufacture such fuels at a cost of several trillion dollars. This undertaking, in turn, is provoking a wide-ranging debate over the environmental consequences of producing such fuels.

For example, any significant increase in biofuels use -- assuming such fuels were produced by chemical means rather than, as now, by cooking -- could substantially reduce emissions of carbon dioxide and other greenhouse gases, actually slowing the tempo of future climate change. On the other hand, any increase in the production of Canadian oil sands, Venezuelan extra-heavy oil, and Rocky Mountain shale oil will entail energy-intensive activities at staggering levels, sure to emit vast amounts of CO2, which might more than cancel out any gains from the biofuels.

In addition, increased biofuels production risks the diversion of vast tracts of arable land from the crucial cultivation of basic food staples to the manufacture of transportation fuel. If, as is likely, oil prices continue to rise, expect it to be ever more attractive for farmers to grow more corn and other crops for eventual conversion to transportation fuels, which means rises in food costs that could price basics out of the range of the very poor, while stretching working families to the limit. As in May and June of 2008, when food riots spread across the planet in response to high food prices -- caused, in part, by the diversion of vast amounts of corn acreage to biofuel production -- this could well lead to mass unrest and mass starvation.

A Heavy Energy Footprint on the Planet

The geopolitical implications of this transformation could well be striking. Among other developments, the global clout of Canada, Venezuela, and Brazil -- all key producers of unconventional fuels -- is bound to be strengthened.

Canada is becoming increasingly important as the world's leading producer of oil sands, or bitumen -- a thick, gooey, viscous material that must be dug out of the ground and treated in various energy-intensive ways before it can be converted into synthetic petroleum fuel (synfuel). According to the IEO report, oil sands production, now at 1.3 million barrels a day and barely profitable, could hit the 4.4 million barrel mark (or even, according to the most optimistic scenarios, 6.5 million barrels) by 2030.

Given the IEA's new projections, this would represent an extraordinary addition to global energy supplies just when key sources of conventional oil in places like Mexico and the North Sea are expected to suffer severe declines. The extraction of oil sands, however, could prove a pollution disaster of the first order. For one thing, remarkable infusions of old-style energy are needed to extract this new energy, huge forest tracts would have to be cleared, and vast quantities of water used for the steam necessary to dislodge the buried goo (just as the equivalent of "peak water" may be arriving).

What this means is that the accelerated production of oil sands is sure to be linked to environmental despoliation, pollution, and global warming. There is considerable doubt that Canadian officials and the general public will, in the end, be willing to pay the economic and environmental price involved. In other words, whatever the IEA may project now, no one can know whether synfuels will really be available in the necessary quantities 15 or 20 years down the road.

Venezuela has long been an important source of crude oil for the United States, generating much of the revenue used by President Hugo Chávez to sustain his social experiments at home and an ambitious anti-American political agenda abroad. In the coming years, however, its production of conventional petroleum is expected to fall, leaving the country increasingly reliant on the exploitation of large deposits of bitumen in the eastern Orinoco River basin. Just to develop these "extra-heavy oil" deposits will require significant financial and energy investments and, as with Canadian oil sands, the environmental impact could be devastating. Nevertheless, successful development of these deposits could prove an economic bonanza for Venezuela.

The big winner in these grim energy sweepstakes, however, is likely to be Brazil. Already a major producer of ethanol, it is expected to see a huge increase in unconventional oil output once its new ultra-deep fields in the "subsalt" Campos and Santos basins come on-line. These are massive offshore oil deposits buried beneath thick layers of salt some 100 miles off the coast of Rio de Janeiro and several miles beneath the ocean's surface.

When the substantial technical challenges to exploiting these undersea fields are overcome, Brazil's output could soar by as much as three million barrels per day. By 2030, Brazil should be a major player in the world energy equation, having succeeded Venezuela as South America's leading petroleum producer.

New Powers, New Problems

The IEO report hints at other geopolitical changes occurring in the global energy landscape, especially an expected stunning increase in the share of the global energy supply consumed in Asia and a corresponding decline by the United States, Japan, and other "First World" powers. In 1990, the developing nations of Asia and the Middle East accounted for only 17% of world energy consumption; by 2030, that number, the report suggests, should reach 41%, matching that of the major First World powers.

All recent editions of the report have predicted that China would eventually overtake the United States as number one energy consumer. What's notable is how quickly the 2009 edition expects that to happen. The 2006 report had China assuming the leadership position in a 2026-2030 timeframe; in 2007, it was 2021-2024; in 2008, it was 2016-2020. This year, the EIA is projecting that China will overtake the United States between 2010 and 2014.

It's easy enough to overlook these shifting estimates, since the reports don't emphasize how they have changed from year to year. What they suggest, however, is that the United States will face ever fiercer competition from China in the global struggle to secure adequate supplies of energy to meet national needs.

Given what we have learned about the dwindling prospects for adequate future oil supplies, we are sure to face increased geopolitical competition and strife between the two countries in those few areas that are capable of producing additional quantities of oil (and undoubtedly genuine desperation among many other countries with far less resources and power).

And much else follows: As the world's leading energy consumer, Beijing will undoubtedly play a far more critical role in setting international energy policies and prices, undercutting the pivotal role long played by Washington. It is not hard to imagine, then, that major oil producers in the Middle East and Africa will see it as in their interest to deepen political and economic ties with China at the expense of the United States. China can also be expected to maintain close ties with oil providers like Iran and Sudan, no matter how this clashes with American foreign policy objectives.

At first glance, the International Energy Outlook for 2009 hardly looks different from previous editions: a tedious compendium of tables and text on global energy trends. Looked at another way, however, it trumpets the headlines of the future -- and their news is not comforting.

The global energy equation is changing rapidly, and with it is likely to come great power competition, economic peril, rising starvation, growing unrest, environmental disaster, and shrinking energy supplies, no matter what steps are taken. No doubt the 2010 edition of the report and those that follow will reveal far more, but the new trends in energy on the planet are already increasingly evident -- and unsettling.

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Massachusetts, and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Henry Holt). A DVD of the documentary film based on his previous book, Blood and Oil, is available by clicking here.

The Peak Oil Crisis: Watching a Mega-Crisis

2009-06-09T09:34:00.001-07:00

Falls Church News-Press Online

By Tom Whipple

In the last few weeks there have been a number of developments that may provide an insight into the next few years - but first let's review.

We, in America, are deep in the midst of a four-sided crisis. The first side is an economic slump; second, surprisingly, is our government's panicky efforts to stabilize the situation; third, the imminent peaking of fossil fuels and numerous other resources that seems to be in abeyance for the moment; and fourth, global warming which in the long run could overshadow the other three by a wide margin and is attracting considerable amounts of government and Congressional attention.

The important point is that the four aspects of what could easily turn out to be the mega-crisis of the century are all interrelated. Developments in any of the four will cause perturbations for better or worse in the others.

Most believe our current economic problem was caused by the extension of too much credit, too freely, and to the wrong people, over the last 30-40 years. Some, however, are suspicious that the many-fold run-up in oil prices from their historic $10 or $20 a barrel that sopped up so much consumer purchasing power may have had more than a little to do with our current economic problems.

While the consequences of the economic downturn are well understood, we are just starting to appreciate that the massive governmental effort to keep a recession from turning into a depression is threatening unprecedented repercussions of its own. In the last 10 months, the U.S. government and its central bank have spent or issued guarantees approaching $12 trillion in efforts to boost the economy. During the current fiscal year, the US will sell $3.25 trillion in new securities vs. $892 billion worth last fiscal year. Some are already calling this phenomenon the "bailout bubble" and are worried that deficit financing on this scale could destroy the dollar and take much of the U.S. economy with it.

People who claim to understand such things continue to assure us that additional trillions in deficit financing will not be a problem and that anything is better than allowing our economy to slip into another great depression. Despite the government's best efforts, however, interest rates have begun to rise and last week took a rather substantial jump. This in turn could hamper a recovery in the housing market. The recent fall of the U.S. dollar is a companion signal that all is not well. Whether the falling dollar and the increase in interest rates will continue much longer is anybody's guess, but it won't take much more of a move before prospects for an early economic recovery are seriously harmed.

While many different natural resources - fossil fuels, minerals, fresh water - are in danger of running short within next few decades, oil production which probably has already passed its all-time peak looks like the best bet to interfere with, and eventually stymie, an economic recovery. Crude oil prices have doubled since the end of January and may go higher on expectations that an economic recovery is underway. While crude prices are still less than half the $147 a barrel they reached last July, it is getting close to the level where economic damage could be inflicted. While the demand for commercial fuels for trucks and jet planes is down, gasoline demand has not fallen much as prices have edged up.

While the interaction among the four major factors that will have much to do with our economic future - the recession, the bailout, peak oil, and global warming - is easy to understand, the timing and nature of all the possible interactions are difficult to comprehend. Oil supply and demand are relatively easy to track, but no one as yet seems to have a firm insight into whether, when, and how fast massive deficit spending is going to lead to serious trouble.

Any increase in demand from a revitalized economy is almost certain to drive oil prices higher. In the last eight months, OPEC has reduced its oil production by about three million b/d which has kept production closer to demand for the time being. Although a few members of OPEC currently have surplus production capacity that could be turned into increased production, every year we are extracting some 30 billion barrels of mostly easy and cheap-to-produce oil. The simple message is that in three to four years excess production capacity is likely to be eaten up by depletion. After that increased oil production will become very expensive and take considerable effort. Much higher prices and considerable economic damage are virtually certain.

To summarize our situation: If and when the U.S. and world economy rebounds significantly, the increased demand for oil will quickly lead to higher prices which in turn is likely to choke off the rebound; if the U.S. and world economy continues to contract, demand for oil and oil prices will fall for a while, but the economy will be approaching depression levels; if the massive deficit-financed bailouts lead to lack of interest in U.S. government securities and a weaker dollar, interest rates will soar and choke off economic growth; if the U.S. and other governments seriously clamp down on carbon emissions to control global warming, higher energy prices are likely. Our economy and future stand at a crossroad.

No one can claim to have much insight into the likelihood and timing of the many possible developments that could spring from our multi-sided crisis. The one thing we can be sure of, however, is that the four sides of our mega-crisis are inextricably connected. Any change, either for good or ill, sooner or later will cause changes in one or more of the others.
None of this bodes well for a return to life as we knew it only a few years ago.

We're in for a shock

2009-06-02T21:20:00.001-07:00

baltimoresun.com

Vaunted cap-and-trade bill does nothing about oil dependence

By Gal Luft

Now, when the first signs of economic recovery may be in sight, it's time to ponder what kind of recovery we are likely to witness. Will it be the traditional V-shaped recovery in which economic growth bounces back from a slump, or will it be a W-shaped, double-dipped one in which one crisis follows the other for several years to come? Much of this depends on the price of oil.

Nearly a year ago, oil prices hit their near $150 peak. This price shock, according to some economists, contributed materially to the recession that a few months later caused prices to collapse by nearly $100 a barrel. The global recession shrank demand for crude. But all of this is going to change once growth resumes, and the oil market is far from ready to absorb the resurgence in demand.

The International Energy Agency (IEA) recently concluded that even with the current recession, by 2030 global demand for oil could increase by 25 percent. The agency found that at expected rates of oilfield depletion, to meet future demand for oil, four new Saudi Arabias will have to be added to the global oil market between now and 2030. But the current economic conditions have thwarted the much-needed investment in new production. The IEA predicted that investment in oil and gas exploration will fall by 20 percent in 2009, and the Saudi oil minister is predicting a "catastrophic" shortfall in petroleum production.

For the U.S, such an oil shock would come at a terrible time as hundreds of billions of dollars of taxpayer-funded governmental stimulus and bailouts percolate into the economy, leading to inflationary pressure and devaluing the dollar. This would force OPEC members which conduct their oil transactions in dollars to keep prices high in order to ensure sufficient government revenues.

While the next oil crisis is staring us in the face, Congress prefers to lower its eyes. What seems to be the signature energy legislation of the 111th Congress, the American Clean Energy and Security Act, (also known as the Waxman-Markey cap and trade bill) does virtually nothing to shield the economy from the devastation the coming oil crisis would no doubt cause. The bill's renewable electricity mandate, which requires utilities to get 20 percent of their electricity from renewable sources by 2020, would discourage the use of coal and natural gas, but since only 2 percent of U.S. electricity is made from petroleum it will do nothing to address our oil dependence problem. The bill's "cash for clunkers" program may help drive stockpiles of unsold Detroit cars off the lots, but in terms of oil dependence it is equally meaningless.

Even the provisions to encourage deployment of electric and plug-in hybrids, while important and useful, will not affect our near-term energy security, at least until battery costs are significantly reduced.

Sadly, the one provision that could have made a difference, an Open Fuel Standard to ensure 50 percent of new cars are flexible-fueled - capable of running on any blend of alcohol and gasoline - was watered down to meaninglessness by the House Energy and Commerce Committee. Such a standard, which adds less than $100 to the cost of a new car, could have enabled consumers to choose a fuel alternative at the pump if and when gasoline prices rise to $5 a gallon.

Devoid of any provision that could help strip oil of the strategic status derived from its virtual monopoly over transportation fuel, the Waxman-Markey bill is sowing the seeds for the next oil shock.

A better course would include not only an Open Fuel Standard but the removal of trade barriers affecting alternative fuels, such as the 54-cent tariff on imported ethanol. With a significant portion of our fleet capable of running on alternative liquid fuels and with free trade in alternative fuels allowing scores of developing countries to export billions of gallons of sugarcane ethanol to the U.S., we could withstand the next oil crisis with relatively little pain.

Congress and the Obama administration should ensure that any energy bill includes provisions that address not only the long-term implications of greenhouse gas emissions but the much nearer adversity coming to a gas station near you.

Gal Luft is executive director of the Institute for the Analysis of Global Security in Potomac. His e-mail is luft@iags.org.

An Inconvenient Talk

2009-05-31T08:11:00.001-07:00

The Walrus

Dave Hughes’s guide to the end of the fossil fuel age

By Chris Turner

Dave Hughes is driving north on Highway 2. Headed out of Calgary, where he worked for thirty-two years at the Geological Survey of Canada, mapping the nation’s coal reserves. Bound for Edmonton, where he grew up and earned two degrees in geology. It’s not yet dawn, the sky deep black and the windows of his pickup truck like mirrors, the southbound lanes a line of smeared headlights as long-haul commuters make the trek the other way into the capital of the oil patch. Hughes sips coffee from a reusable mug, fighting back sleepiness. Just another commuter trailing a cloud of burnt dinosaur bones on his way to work.

Dave had to start out fifteen minutes earlier than the requisite ungodly hour so he could pick you up at your house. So you wouldn’t drive yourself. Save a few hydrocarbons, he’d joked. He’s a coal man, a geologist, and he always refers to the holy trinity of fossil fuels whose flames have stoked the past 200 years of industrial growth — coal, natural gas, and especially oil — in that same semi-technical way: hydrocarbons. Dave Hughes has a lot to say about hydrocarbons, mainly how there’s no possible way to keep running the engine of a modern global economy for much longer at the pace we’re burning them. Which is why you felt compelled to join him in the black chill of this late-autumn morning. Because that seems like a pretty big deal.

Dave came right to the curb out in front of your house, your personal chauffeur, because you said you were interested in hearing his talk a second time, and he’ll do his level best to bring his talk to just about anyone who asks. The Talk, he usually calls it, and you can tell it has been a proper noun in his head for a good long while now. Somewhere between that first lecture back in 2002 at the University of Calgary and the 155th, the one he’ll give later today at a Natural Resources Canada research facility outside Edmonton, it became his passion, his quiet crusade, his data-freighted inconvenient truth. The Talk. One hundred fifty-four times. Geoscience symposia and energy industry summits and sustainability conferences. The Greater Vancouver Regional District and the Nova Scotia chambers of commerce. A petroleum trade show in Inuvik and a renewable energy confab in Flagstaff, Arizona. The Canadian Institute’s Coalbed Methane Symposium and the annual conference of the Association for the Study of Peak Oil and Gas. The audiences vary, but The Talk only tightens, takes on layers, attains a porous firmness like sedimentary stone. It is crowded with hard facts, and it is intended to overwhelm audiences with its certainty. It’s a reality check, a doozy of a reality check, and Dave doesn’t have much time these days for anyone who won’t face this reality.

Talk No. 147 took place at an urban sustainability forum at the Westin Hotel in Calgary. That’s where you first saw it. The title slide read “The Energy Sustainability Dilemma: Powering the Future in a Finite World,” and identified its presenter as J. David Hughes. Since then, you, too, have come to think of it as The Talk, and its author simply as Dave. Dave was on the bill that day with such dignitaries as the mayor of Calgary and the premier of Alberta. The officials talked about how to turn this boom town into a place that was “all things energy,” but nothing they said had any real resonance after The Talk. When the provincial sustainable resources minister came up to congratulate himself for setting aside some new provincial parkland on the edge of the city, it was as if he’d just awakened from cryogenic freezing, blipped in from some ancient time long before the existence of the world described in The Talk.

The Talk is in essence a constantly updated survey of the state of the planet through a hydrocarbon geologist’s eyes. It plows methodically through reams of energy-geek data. World Conventional Oil and Oil Sands Reserves, 1980–2007. Energy Profit Ratio for Liquid Hydrocarbons. Canadian Gas Deliverability Scenarios from All Sources. The small-font notes at the bottom of each PowerPoint slide enumerate sources that read like a general anaesthetic in print form: BP Statistical Review of World Energy, Proceedings of the National Academy of Sciences, EIA International Energy Outlook. Pie charts and bar graphs with several rainbows’ worth of colour and an overabundance of italicized and all-capped words: “The absolute first priority,” that kind of thing. (By the way, it should be “to reduce energy consumption as soon as possible.”)

The Talk is all kinds of policy-wonky. Your eyes could glaze over. You could even miss the two slides Dave always says are the only ones you must remember. The first is a single-line graph depicting “World Per Capita Annual Primary Energy Consumption by Fuel 1850–2007,” which climbs by 761 percent over its 157-year timeline and flips from 82 percent renewable biomass (mostly wood) at the 1850 end to 89 percent non-renewables (almost entirely fossil fuels) at the 2007 end. The second critical slide has three line graphs in horizontal sequence, all tracking curves that begin in 1850, around the time humanity started drilling for oil in a serious way, and then spiking impossibly high at the right-hand, 2007 termini of their X axes. Global population today: 5.3 times global population in 1850. Per capita energy consumption today: 8.6 times that of 1850. Total energy consumption today: 45 times 1850’s.

You could also miss the way these figures resonate with The Talk’s voluminous data on oil and natural gas and coal reserves. You could miss how our current trajectory obliges us to rely on hydrocarbons for 86 percent of our projected primary energy needs in 2030, and how that fits with the strong case Hughes makes that the global hydrocarbon peak (the point at which global energy supply will begin an irrevocable decline, making the energy price shocks of the past couple of years start to look like the good old days) is estimated to occur nine years before that date.

Here’s the upshot: if you plan to drive a car or heat a house or light a room in 2030, The Talk is telling you your options will be limited, to say the least. Even if you’re convinced climate change is UN-sponsored hysteria or every last puff of greenhouse gas will soon be buried forever a mile underground or ducks look their best choking on tar sands tailings, Dave Hughes is saying your way of life is over. Not because of the clouds of smoke, you understand, but because we’re running out of what makes them.

Click to Continue…

Brain power can meet the energy crisis

2009-05-19T07:24:00.001-07:00

The Guardian

By Larry Elliott

Back in the 1970s, North Sea oil was seen as the saviour of the British economy. The money would be spent modernising industry so that it could play in the big league with the Germans, the Japanese and the Americans. Instead, we spent the money on unemployment benefit and tax cuts. The industrial renaissance never happened.

By the time the oil started to run out, financial services were the next big thing. The City would be Britain's unique selling point, we would pay our way in the world through banking, insurance, arranging bids and deals and by being better speculators than our rivals. With the banks bust and the financial sector in a state of petrification, we are now going to find out what life is like without artificial stimulants.

Dreamland

It won't be nearly as much fun as the years of living in a dreamland, but stripping away the pretence that there is some easy, painless solution to Britain's long-standing problems represents the first stage to recovery.

Britain has no shortage of talented people. There is plenty of creativity and always has been; the problem is that it has not always been channelled in the right directions. If ever there was a moment to remedy that systemic failure, it is now, because this crisis has only just begun. The first phase involved banks; the second phase will be energy.

Oil prices nudged above $60 a barrel briefly last week before falling back on news that inventories are high and that demand for crude is set for its biggest fall this year since 1981. An oil price at these levels looks suspiciously high amid the first fall in global gross domestic product since the second world war, although there are possible explanations. One is that commodity traders believe there will be a more rapid recovery in the global economy than anybody is expecting. A second is that the money central banks are pumping into financial markets through quantitative easing is spilling over into speculation. Third, and most worrying, the days of cheap oil may be a thing of the past. If this is the true explanation, there will be serious consequences.

In the post-war years, there has been a clear link between oil prices and global growth: the long boom of the 1950s and 1960s was an era when crude was dirt cheap; all four major recessions (1974-75, 1980-82, 1990-92 and 2007 to now) followed a spike in oil prices.

The last trough in oil prices occurred at the end of the 1990s, coinciding with the dotcom bubble and talk in the US of the new paradigm economy. Since then, the trend has been inexorably up, with supply struggling to keep up with strong demand from the mature markets of the developed world and the big emerging economies such as China and India.

Chris Sanders, of Sanders Research Associates, traces the origins of the current crisis back to the turn of the millennium, when the fall in production from the big finds of the late 1970s – Alaska, deepwater Mexico and the North Sea – ended the era of cheap oil.

A serious recession in the wake of the dotcom bubble was only averted because policymakers – Alan Greenspan in particular – manipulated interest rates to create another unsustainable boom. This did not mean the problem had been solved; indeed, putting it off for another day simply meant the problem grew bigger. Seen from this perspective, what we are witnessing is not the early stages of a new bull market, but a temporary lull in a much longer crisis that will see recovery hampered by high and volatile energy prices. Indeed, the volatility of crude over the coming years is likely to be as damaging as the fact that fuel will be becoming steadily more expensive.

To envisage this scenario, you don't have to accept that we are at – or close to – peak oil. There are many oil experts who have deep reservations about the notion that the moment of maximum petroleum extraction is at hand; they argue that rising prices will encourage exploration and make it viable for oil companies to extract crude from parts of the globe that were uneconomic at a price of $20-$30 a barrel. New and better technologies will be deployed to keep oil supply in tandem with demand.

Price signals

There is no doubting the economic validity of this case. Price signals do matter, and oil companies are far more likely to beef up their spending on exploration and new refineries if the oil price is $100 a barrel than if it is $10 a barrel. That's the good news.

The bad news is that even if the peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic, Canada's tar sands or Central Asia, it is going to be more expensive to extract it. Oil has been critical to the development of industrial societies but energy firms, unsurprisingly, went for the oil that was easiest to get at and of the highest quality, since that meant low extraction costs and high profits.

In other words, the energy required to get fuel out of the ground was small; the energy return on energy investment (EROI) was high. But as companies have moved to tougher environments, the EROI on oil and gas production has fallen – one estimate is from 33:1 in 1999 to 19:1 in 2005. This global trend mirrors what happened in the US, where oil is still produced in large quantities but much less efficiently than it was 75 years ago. From an estimated 100:1 in 1939, the EROI for American oil production dropped to 30:1 by 1970 and 11:1 in 2000.

As Sanders puts it: "Today we are attempting to extract oil and gas in commercially viable quantities from offshore deposits that lie under more than 25,000 feet of water, rock and hot salt. It may well be possible to do so, but what is highly unlikely is that it will be possible to do so in sufficiently large flows to make a material difference to general prosperity. Another way of putting this is that economic growth rates are going to have to slow."

On the basis of what has happened in the recent past, we are likely to see oil prices on an upward trend but with wild gyrations. Frequent oil spikes when the global economy appears to be on the mend will be followed by a crash in prices as the impact of dearer energy raises business costs and bites into consumer spending power.

There is a silver lining to this cloud. Another half century of global growth at 5% a year powered by cheap fossil fuels would almost certainly be the death of the planet as we know it. But we are as ill prepared for the post-fossil fuel age as we were for war in 1939.

But we are at our best when we have our backs to the wall: let's establish a Bletchley Park for renewable energy schemes, where the best scientists work out how Britain will survive when the oil runs out. And let's do it now.

larry.elliott@guardian.co.uk

Moscow warns of future energy wars

2009-05-15T06:25:00.001-07:00

Al Jazeera

Russia has warned that military conflicts over energy resources could erupt along its borders in the near future, as the race to secure oil and gas reserves gains momentum.

A Kremlin policy paper, which maps out Russia's main challenges to national security for the next decade, said "problems that involve the use of military force cannot be excluded" in competition for resources.

The National Security Strategy's release coincides with a deadline for countries around the world to submit sea bed ownership claims to a United Nations commission, including for the resource-rich Arctic.

The paper, signed off by Dmitry Medvedev, Russia's president, says international relations in the next 10 years will be shaped by battles over energy reserves.

"The attention of international politics in the long-term perspective will be concentrated on the acquisition of energy resources," it said.

"Amid competitive struggle for resources, attempts to use military force to solve emerging problems can't be excluded.

"The existing balance of forces near the borders of the Russian Federation and its allies can be violated," it added.

The document said regions including the Middle East, the Barents Sea, the Arctic, the Caspian Sea and Central Asia could all be at the centre of competing claims for resources.

Russia, the world's biggest natural gas producer, has already accused the United States, with which it shares a small sea border, of coveting its mineral wealth.

But Moscow is also finding its control over natural gas exports under threat, as the European Union seeks alternative supply routes that would bypass Russia and the Ukraine.

The country is also embroiled in a territorial dispute with Norway over claims to the Arctic sea bed, where around 25 per cent of the world's untapped reserves are believed to lie underneath the ice.

Global security threats

The National Security Strategy also pointed to the US and Nato as major threats to global security.

It criticised a US plan to deploy a global missile shield in Eastern Europe, which has already infuriated Russia.

"The opportunity to uphold global and regional security will substantially narrow if elements of the US worldwide missile defence system are deployed in Europe," the document said.

But it added Russia would pursue a "rational and pragmatic" foreign policy and avoid a new arms race.

The document said Moscow would seek an "equal and full-fledged strategic partnership" with Washington "on the basis on coinciding interests".

How Much Oil Have We Used?

2009-05-08T18:32:00.001-07:00

sciencedaily.com

Estimates of how much crude oil we have extracted from the planet vary wildly. Now, UK researchers have published a new estimate in the International Journal of Oil, Gas and Coal Technology that suggests we may have used more than we think.

The idea that we are running out of oil is not a new one, but do we even know how much oil we have extracted from since the first commercial oil wells were sunk in the middle of the nineteenth century? In 2008, chemists Istvan Lakatos and Julianna Lakatos-Szabo of the Hungarian Academy of Sciences theorised that less than 100 billion tonne of crude oil has been produced since 1850 and that the average annual production rate is less than 700 million barrels per year.

They compared proven reserves and estimates of yet-to-find (YTF) resources and echoed the sentiment that we will soon face oil shortages even though a substantial part of those reserves remain in the ground untapped.

Now, John Jones in the School of Engineering, at the University of Aberdeen, UK, suggests that the figures cited by Istvan Lakatos and Julianna Lakatos-Szabo for which they give no references grossly underestimates how much oil we have used already. Jones says that we have used at least 135 billion barrels of oil since 1870, the period during which J.D. Rockefeller established The Standard Oil Company and began drilling in earnest.

The oil industry now spans several generations, says Jones, and has historically been as uninterested in how much oil has been drawn as were economists, day-to-day and annual figures being of much greater concern. However, in 2005, The Oil Depletion Analysis Centre (ODAC) in London provided a total figure of almost 1 trillion barrels of crude oil (944 billion barrels) since commercial drilling began. Even that figure does not add up, Jones explains.

He has calculated a better estimate by using the volume of a barrel (42 US gallons, or 0.16 cubic metres) and a crude oil density of 0.9 tonnes per cubic metre. ODAC's 944 billion barrels is thus the equivalent of 135 billion tonnes.

Jones explains that this figure is of the same order of magnitude as the estimate offered by Lakatos and Lakatos-Szabo, but is nevertheless 35% higher than ODAC's figure. "Their assertion that less than 100 billion tonnes has been produced is significantly inconsistent with the ODAC," says Jones. The implication is that either ODAC or the Hungarian team are incorrect in their estimates, and suggests that clarification of this important figure is now needed.

Journal references:

1. Jones et al. Total amounts of oil produced over the history of the industry. International Journal of Oil Gas and Coal Technology, 2009; 2 (2): 199 DOI: 10.1504/IJOGCT.2009.024887
2. Lakatos et al. Global oil demand and role of chemical EOR methods in the 21st century. International Journal of Oil Gas and Coal Technology, 2008; 1 (1/2): 46 DOI: 10.1504/IJOGCT.2008.016731

Adapted from materials provided by Inderscience, via AlphaGalileo.

The Bottom

2009-05-07T08:58:00.001-07:00

jameshowardkunstler.typepad.com

By Jim Kunstler

Euphoria managed to out-run swine flu last week as the epidemic-du-jour, with "consumer" confidence jumping and the big bank stocks nudging up. The H1N1 virus fizzled for now, at least in terms of kill ratio, though we're warned it might boomerang in the fall with a vengeance. No one was surprised to see Chrysler roll over like a possum on a county highway, but the memory of their muscle cars will linger on like a California surfing song. Here in the northeast, where Sundays are not spent at the Nascar oval, the spring foliage reached the tenderly explosive stage and it was hard to feel bad about anything.

For now, the "bottom" is in -- that is, the bottom of this society's ability to process reality. It may continue for a month of so, even after the "stress test" for banks is finally let out of the massage parlor with a "happy ending." But events are underway that are beyond the command of personalities. We're done "doing business" in all the ways that we've been used to, but we just can't get with the new program. Let's count the ways:

1. The revolving credit economy is over. It's over because we can't increase energy inputs to the system, which is one way of saying "peak oil." Of course hardly anybody believes this right now because the price of oil crashed nine months ago, along with global manufacturing and trade. But nothing has changed on the peak oil scene -- except perhaps that ever more new oil projects have been cancelled for lack of financing, which will boomerang on us (even if swine flu doesn't) in the form of much lower future oil production. In any case, the credit fiesta is over, and the "consumer" economy with it, because industrial growth as we have known it is over. It's over globally, too, though all regions of the world will not experience its demise the same way at the same rate.

The Asian nations may swap things around a while longer but China is basically screwed. They have less oil left than we have (which is saying, not much at all) and they won't corner the rest of the global oil market without starting World War Three. Meanwhile, they're running out of water and food. Good luck becoming the next global hegemon. Oh, and Japan imports 90 percent of its energy; India over 80 percent. Fuggeddabowdit.

Credit will not vanish everywhere overnight -- even in the USA -- because it is not distributed equally everywhere. But it will vanish in layers, and here in the USA a very broad layer of the lower and middle classes are now losing their access to it in one way or another -- personally, in small business -- and they will never get it back. Anyone who intends to thrive in the years just ahead had better plan on doing it on the basis of accounts receivable -- and what they receive might not even necessarily come in the form of US dollars. It may come in the form of gold or silver or in the promise of reciprocal services rendered.

This has enormous implications for two of the items in which our credit-dispensing operations are most deeply vested: houses and cars. Unfortunately, these are exactly the things that economic life has been based on for decades in our nation, which leads to the next categories:

2. The suburban living arrangement is over, along with all its accessories and furnishings. Taken as "all of a piece," the suburban expansion was one sixty-year-long orgasm of hypertrophy. We did it because we could. We won a world war and threw a party. We had lots of cheap land and cheap oil. It made lots of people lots of money and all its usufructs have become embedded in our national identity to the dangerous degree that the loss of them will provoke a kind of national psychotic breakdown. In fact, it already has. The completely unrealistic expectation that we can resume this way of life is proof of it.

The immediate problem is that we can't build anymore of it. The next problem will be the failure of the stuff that already exists. The first stage of that is now palpable in the mortgage foreclosure fiasco and, just beginning now, the tanking of malls, strip centers, office parks and other commercial property investments. The latter will accelerate and become visible very quickly as retail tenants bug out and weeds start growing where the Chryslers and Pontiacs once parked. The next stage, which involves large demographic shifts in how we inhabit the landscape, has not quite gotten underway.

3. The Happy Motoring fiesta is over. You'd think that with Chrysler crawling into the bankruptcy court, and GM just weeks away from the same terminal ceremony, the news media would begin to suspect that the foundation of everyday life in this country was cracking. Instead, all we hear is blather about "market share" shifting to Toyota. News flash: not only will we make fewer automobiles in the USA, but Americans will buy far fewer cars made anywhere. We'll keep the current fleet moving a while longer, but when it's too beat to repair, we won't be changing it out for a new fleet -- despite all the fantasies about hybrids, plug-and-drive electrics, and so on. The masses will be too broke to buy these things. What's more, they will be very resentful of the shrinking economic "elite" who can afford them. And, anyway, our roads and highways are destined to fall apart very quickly because there is no way we can sustain the necessary rate of normal maintenance. Meanwhile, we remain completely un-serious about public transit -- even about fixing the vestiges that still exist. The airline industry, of course, will be toast inside of five years.

4. Our food production system is approaching crisis. There's no way we can continue the petro-agriculture system of farming and the Cheez Doodle and Pepsi Cola diet that it services. The public is absolutely zombified in the face of this problem -- perhaps a result of the diet itself. President Obama and Ag Secretary Vilsack have not given a hint that they understand the gravity of the situation. It is probably one of those unfortunate events of history that can only impress a society in the form of a crisis. It also happens to be one of the few problems we face that public policy could affect sharply and broadly -- if we underwrote the reactivation of smaller, local farm operations instead of shoveling money to giant "agribusiness" (or Citibank, or Goldman Sachs, or AIG...). I maintain that this may be the year that the crisis gets our attention, because capital is suddenly harder to get than fossil-fuel-based fertilizer.

All these epochal discontinuities present themselves, for the moment, as a season of muted "hope" and general apathy. The days are suddenly mild. We've resumed old and happy habits of grilling meat outdoors and motoring to those remaining places that were not blanketed with franchised food huts and discount malls. We have a new, charming president with an appealing family. Newly-minted dollars are flowing to the "shovel-ready." The new bad news is less bad than the old bad news (or seems to be). And the year just past has been such a bummer that our hard-wired human nature tells us that good things must be just around the corner.

Personally, I think a lot of good things await us, but not the ones we're expecting -- not a return to buying slurpees on credit cards. It will be very salutary to leave behind the junk empire we've accumulated and move into an epoch of quality and purpose. For the moment, though, our hopes reside elsewhere.
____________________________________

My 2008 novel of the post-oil future, World Made By Hand, is available in paperback at all booksellers.

The return of Peak Oil

2009-05-07T08:52:00.001-07:00

Investors Chronicle

By Daniel O'Sullivan

If you thought that the slump in crude prices from their $147 per barrel zenith last July spelled the end of 'peak oil' theories, think again. One US brokerage thinks that, far from approaching the mythical peak, we are in fact already past it.

Peak oil is the notion that the rate of global oil extraction is nearing the absolute limit of what its geology can support, and that declining production is inevitable thereafter. The inference is that new demand from the likes of China and India spells rationing through permanently sky-high prices.

But Marshall Adkins, analyst at Raymond James, thinks the peak was last summer. He cites the behaviour of Saudi Arabia as evidence. The kingdom, which dominates Opec, can usually be relied upon to open the spigots in response to soaring oil prices, as it did in 2005, when oil hit $70 per barrel.

Yet last summer, Saudi Arabian output never exceeded 9.6m barrels per day, the same ceiling it reached in 2005. With massive economic and political incentive to pump as much as it could, the implication is this is actually the limit of what Saudi Arabia can supply to the world market.

There isn't much slack elsewhere. The US, Russia and North Sea producers already pump as much as they can, yet non-Opec production has still declined since 2007. Other Opec members were also pumping as much as possible last summer.

So, if everyone, including the Saudis, was flat out last summer, we have unwittingly already seen the current industry configuration operating at full capacity. And, as Mr Adkins agrees that fresh discoveries will not come onstream fast enough to offset decline rates at existing fields, we are therefore past the historical peak of daily oil supply.

If true, the realisation is too late for many speculators who went long of oil above $100 but have subsequently unwound those positions. Andy Awad of Greenwich Associates says a major contributor to surprisingly strong first-quarter profits from some large US and European banks was financial investors 'restructuring' commodity derivative positions - stumping up losses to date plus 'break fees' to buy themselves out of bets on sky-high prices for commodities, particularly oil.

Earth Angels

2009-04-23T18:39:00.001-07:00

Willamette Week Online

Happy Earth Day! Bet you’re not as committed to “sustainable living” as these 22 Portlanders.

By Adrienne So

It’s 9 am on a Thursday, and the thermostat in my 1999 Volkswagen Bug registers 36 degrees. If I were going to work, I’d be shivering inside my parka and heels.

But this April morning, I’m snugly layered in thermals, flannel and fleece.

I lace my boots around two pairs of hiking socks as I get out of my car. Then I sling my pack on my back and start down the broad, winding trail toward Tryon Life Community Farm, where boots and flannels are pretty much everyday attire.

I’m here at the edge of Tryon Creek State Park in Southwest Portland to visit the 7-acre farm, a nonprofit that offers youth programs in the summer and holds other events year-round. I want to learn what life is like for the farm’s residential worker collective, known as Cedar Moon—16 adults and six children ages 3 to 9 who live in two buildings directly off a long, pothole-speckled driveway.

Approached by car, the two buildings appear low-slung and nondescript, nestled under layers of verdant foliage. Ten residents live in one building, which has single rooms for them as well as a rec room and kitchen for the community. The other 12 live in a second building, which has been quartered into mini-apartments, complete with tiny kitchenettes.

Descending the wood-chip-carpeted trail into the farm, however, reveals a collection of small structures—a sauna, an outdoor stage, a composting toilet (don’t worry; it doesn’t smell) and something called the “T-Whale,” where residents sip tea in the summer—clustered around an open pavilion, next to the skeleton of a huge outdoor kitchen that’s under construction.

Elsewhere, partially shrouded by a gigantic blooming star magnolia, tidy trails wind through gardens, where bees buzz, chickens scratch and an occasional volunteer hoes the beds. Beyond the gardens, a pair of dog-sized sheep in a wire pen demand to have their chins scratched. A flock of 20 chickens fusses. Farther down the trail, there’s a barn for goats, which shriek like children when hungry. On the farm, the sound of minivans whooshing by on Southwest Boones Ferry Road vanishes behind the the surrounding trees.

Each adult in this little piece of heaven pays for rent and food, most with money from their day jobs in Portland. They also share chores, like cooking, cleaning and tending community gardens, which grow everything from staples like leeks to rarer fare like exotic Asian greens.

Taken separately, each part of this setup is unlikely to turn heads. Many students and professionals live in shared housing. And many farms have residential workers.

Conspicuously absent, however, are commercial motives or convenience. People don’t live at Cedar Moon because they answered a Craigslist ad. Moving here is akin to taking a second job, one in which your roommates are your best friends and also your co-workers.

It’s an ancient idea, but one so modest it’s practically un-American—that with effort, you can live with less, and be happier and healthier at the same time.

In the face of so much going awry on the planet—ice caps are melting, irreversible climate change is looming, and buying compact fluorescent light bulbs doesn’t feel so empowering anymore—coming here is like the beginning of a religious conversion. There’s got to be a better way to mark Earth Day each April than holding hands and singing songs.

Brenna Bell, co-president of TLC Farm’s board of directors and spokeswoman for the farm and collective, says I’m not the only one with a sneaking suspicion that a better way can be found on the farm.

“The intersection of economic and environmental crises has led to more people actively questioning how they live their lives,” says Bell, a 34-year-old environmental lawyer with slim glasses and coveralls over a hugely pregnant belly (her first daughter was born four years ago with a midwife’s help in a maple grove on the farm, and Bell hopes to re-create that experience with this child when it’s born in June).

Hmm. Is going off the grid indeed a workable model? To answer these questions, the community graciously allowed me to hang around for a few days. Here is what I learned about what the farm residents call their “intentional living” lifestyle:

Intentional living is sharing.

Before John Brush—a lean 33-year-old with a goatee and glasses—came to the farm five years ago, he worked in youth social services. Now he is a mediation and organizational consultant, as well as one of the farm’s prominent resident nerds.

Brush says sharing is something most people learned in kindergarten and soon forgot. Sharing is the key to why the farm and collective works: By splitting up chores and food, residents can save both time and money.

Chad Dermann, who manages a farmers market in Portland, buys food for the community.

By buying in bulk and eating organic produce residents grow themselves, Dermann says they can serve meals more cheaply.

Residents also save money on child care. New mothers on the farm can go back to work as teachers, lawyers or accountants, while their children dig for worms or pick nettles under the watchful eyes of other farm residents.

The shared expertise of these 16 adults also means never having to go to a computer store or bike-repair shop again. Someone is bound to know how to troubleshoot a computer bug or change a flat.

And shared resources let the community slash its carbon footprint. None of the buildings has central heating, and the residents operate only one kitchen and one washer and dryer.

But here’s what no one can admit without feeling like a horrible person: Sharing is hard, psychologically as well as logistically. In order to maintain large common areas, personal space is sacrificed.

Bell estimates each farm resident has an average of 265 square feet of personal space, less than one-third the national average of about 845 square feet, according to the U.S. Energy Information Administration. Navigating the farm’s common spaces requires exceptional conflict management skills, and conflict can range anywhere from annoying to agonizing.

For example, 22 people—including toddlers—place a huge burden on one washing machine. “People weren’t putting other people’s loads into the dryer in winter,” Bell says. “So, we created a series of signs indicating whether something should be spun-dried. And we set up specific mornings that were diaper-priority times.”

Relationship skills are just that—skills. You must learn them.

Resident Jenny Leis—a small, sprightly woman with thick gray hair and an animated face—has a habit of occasionally wiggling her fingers at me, a sort of small-scale jazz hands. I incorrectly attribute this finger-wiggling to a past life as a concert pianist. “Oh, whoops,” she says. “That’s how we signify agreement in meetings without disturbing your flow. Like, ‘I agree!’” she sings, wiggling her fingers once more.

I do not think I will pick up this habit.

Another point about sharing: The farm is within the urban growth boundary to provide an accessible demonstration of sustainable living. Before being accepted into the collective, community members must acknowledge their willingness to teach any outsider the intricacies of everyday life at the farm. That means even more communication. I consider myself a voluble person. But if talking were baseball, I am barely a decent community-league pitcher compared to these folks, who could pitch Game 7 in the World Series of Talk.

After the goats have been milked and the chickens tended at 8:30 Saturday morning, one of these teaching sessions starts when volunteers begin arriving for the weekly work party to renovate the barn, part of which is slated to become a public space and office. I take my turn sifting clay and sand for plaster, while Brush explains earthen building techniques. It involves electron strength. I think.

I then head straight to Leis’ farm tour, which today has about a dozen visitors—a mixture of students, curious older women, and one visitor from a similar community in Oaxaca, Mexico. Then there’s a mushroom workshop and a wild foraging expedition, and more talking, more demonstrating and more learning. By 5 pm on Saturday, I am a beaten woman. I can’t process another word.

But as exhausting as the constant sharing and learning and communicating is, the benefits are worth the effort. As much as my cynical, dried-up heart would like for me to stop talking RIGHT NOW, I do conclude after my three-day stay that caring for the earth means first caring about each other.

Here’s an example: Earlier in my visit, I helped Bernhard Bach prepare dinner on a Thursday afternoon. A barrel-chested, stern-looking German man, Bach didn’t fit the profile of a typical farm resident, most of whom are in their 20s and 30s with an academic background in sustainability. Bach is 49 and works as a nurse in Portland. While I peeled and cut up Jerusalem artichokes, he chopped and sautéed leeks we had dug up from the garden.

I asked what had drawn him to the community a year and a half ago. “I went through de-WAHRS,” he said.

“The wars?” I asked. “You were in the military?”

“No, de-WAHRS. You know, after marriage.”

“Oh, divorce!”

“It’s different in Germany,” he said. “In a small village, you can’t escape everyone’s expectations. It’s difficult for you to become better than people expect you to be. Here in America, you can become anything you want to be. I believed in that, and I liked it.... Then my wife left me after 20 years.

“I was alone, and I realized this American way of life is not everything I expected it to be,’’ he continued. “I started looking for a village. I came here and volunteered a few times, and I liked it. When I applied, you know, I was not expecting to get in. Everyone here is so young. But I did, and I was glad.”

Most other residents had a similar story as to what attracted them. Yes, all had a common interest in sustainability. But most were aching for human connection in a world that is becoming increasingly devoid of it.

“Most people come home to their separate apartments after work, turn on a movie, go on the Internet, and don’t speak to anyone for the rest of the day,” says Brush. “City life can be isolating. We want to support people in making communities, without telling them what to do.”

It’s one solution to the “tragedy of the commons,” the theory that when individuals act in their own self-interest, they will destroy a common resource that is in everyone’s best interest to protect. It is now possible to add to that statement after visiting the farm: Individuals will continue to act in their own self-interest, unless they’re friends. The less connection we have to our resources, the less interest we have in protecting them—and by extension, each other.

Intentional living is holistic.

At first, “intentional living” looks like “intentional chaos.” On Thursday at 9:30 am, I can’t find a single student, let alone anything that looks like a classroom at the Mother Earth School, where I’m scheduled to help with the two dozen or so children who come here for classes five days a week. Finally, Bell catches me heading toward the barn and the farm’s three goats—I am obsessed with the goats—and shoos me uphill.

Another resident, Kelly Hogan, has allowed me to observe the year-round Waldorf-based kindergarten and preschool where the 3- to 6-year-olds eat, learn and play. All profits from the school, which charges $360 a month for tuition, go toward the TLC nonprofit.

Up on the hill, a “yome” (combination yurt and geodesic dome) huddles under the cover of trees. One of the teachers, Trent Price, tends a fire under a pot of water. Another, April Blair, assembles a grain mill on a picnic table. Inside the yome, Elena Wood, another teacher, is cutting vegetables at a table set with some of the tiniest cutting boards I have ever seen. The children arrive with vegetables to make their own midmorning snack—vegetable soup with dumplings.

The holistic part for the schoolchildren—and the full-time farm residents as well—is summed up in the phrase “plerk,” a word used by Blair and others to describe how play and work merge.

“I was tired of having my work and my downtime and my values out of sync with each other,” Brush says, regarding the farm’s adoption of plerk.

Tending a fire and collecting nettles are indeed more entertaining and educational than the coloring books I remember from kindergarten, though during the day we must rescue one girl from the advances of an ornery rooster and another from a blackberry bramble. We eat the soup and dumplings and wash our hands in a basin. Then we listen to a story in front of the honeybee hive before tromping off for free play in the woods.

Growing up on the farm means renouncing boundaries. Grinding a mill is more fun than recess, and learning about trilliums in a story is both entertaining and educational. School isn’t dreary work and useless play. It’s just...plerk. For the rest of my stay, I repeatedly talk about plerk, just because I like the way the word sounds.

Later, Bonsai Matt—a 34-year-old landscaper and gardener with thick black dreads—unconsciously illustrates the benefits of plerk. I find out he used to snowboard and rock-climb for fun. “Why did you stop?” I ask.

He gestures broadly at the vista before us—the greenhouse, the garden, the blackberry brambles and the adorable sheep pair. “I had enough to do here,” he says. “I just stopped thinking about it.”

Intentional living is questioning.

On Friday morning, I sit with Bell on the porch swing on the deck behind the community building, waiting to join Bonsai Matt in the garden. Two of the collective’s children climb onto Bell’s lap, and one carefully arranges my arms around a bald doll. Later, after I’ve started raking rows in the garden, Bonsai calls me to help him water the lettuces in the greenhouse. I follow him on his examination of the beds. While a lot of people like working in the kitchen gardens, Bonsai has a kind of de facto authority, just by virtue of knowing more than most about plants.

To me, the garden beds are about as indecipherable as The New York Times to a blind person. Every few minutes, Bonsai kneels down to pluck and hand me another bunch of fresh, succulent greenery. “This is lovage,” he says. Or, “You want some chives?” Pretty soon, I’ve taken a more active role in my own feeding. “What’s that?” I say. “Can I eat that?”

“Well, that’s a weed,” Bonsai says. He picks something else. “This is the most delicious thing in our garden,” he says, and hands me four or five wide, 3-inch-long leaves. When I chew them, a bright, sunshiny taste fills my mouth. “That’s lemon sorrel,” he says. “The tart taste comes from oxalic acid.”

Questioning everything is a key point of living intentionally. And, not coincidentally, a lot of people on the farm identify themselves as scientists, like Brush, who blows my mind by trying to explain the van der Waals forces between molecules.

“No one ever thinks about most things,” Bonsai says. “It’s like when someone asks, ‘How are you?’ Most people just say, ‘I’m good,’ and move on. Very few people take the time to say, ‘This is what’s going on in my life, and this is how I feel about it.’

“A lot of what’s wrong in the world,” he continues after a few minutes, “could be solved if people were more open, honest and humble.”

That’s definitely the approach at the farm. But constant questioning can be a humiliating, exhausting process. When you’re surrounded by relentlessly inquisitive minds, your basic assumptions are constantly being upended.

“Why do you like fashion?” Leis asks me later that day. We had spent the afternoon unloading salvaged wood for the sauna, and now we’re having tea sweetened with honey and goat’s milk.

I start to answer, then pause. Then start to answer, and stop again. “I don’t really know,” I say. “I’ve never asked myself that question.”

“When it seems that you can’t make sustainable choices, I like to break down the question,” Leis responds. “Is it because you like new things? Is it the primping? You can do that with handmade beauty products. Lena makes all sorts of natural shampoos. You should ask her about it.”

While I’m trying to break down why I like shopping (I like pretty things. Are flowers pretty?), I think back to earlier that morning. Before I went up to the community kitchen for lunch, I asked Bonsai for one simple tip to be more sustainable in everyday life. Without hesitation, he said, “Pee on your plants.”

“I always thought pee killed plants,” I say.

“Nope,” he says. “When diluted by rain, it’s some of the best fertilizer out there. And do you know how much water we waste by flushing all that fertilizer away? It’s crazy, once you think about it.”

Maybe it is crazy. When contemplating a multiple-member commune hidden in the woods, it’s terrifyingly easy to reduce the concept—and the residents—to a bunch of delusional pinko commies and trustafarians.

Certainly their anti-technology, (mostly) anti-convenience stance doesn’t help. No one wants to feel like a bad person because they occasionally enjoy the many fruits of modernization, like Popeye’s buttermilk biscuits or Netflix.

But if there was anything weird or strange about life on the farm, it was how utterly strange it wasn’t. Cooking in common and shared child care are hardly revolutionary innovations. Life on the farm was surprisingly familiar, a return to a way of life that vanished after the Industrial Revolution. Technological advances in the 20th century brought a lot of positive change—vaccines and clean drinking water come to mind—but a lot of social alienation and environmental destruction as well.

Standing under the blooming star magnolia, with the taste of fresh goat’s milk lingering in my mouth, the exigencies of modern life—with student loans and the like—seemed very far away. It was hard not to fantasize about setting up a similarly idyllic arrangement. Maybe on the coast. My boyfriend and I would live with several other friends and share childcare, cooking and gardening duties, but also have a widescreen television and a wireless Internet connection.

Leis has a routine greeting for strangers like me. “Congratulations!” she says whenever she starts a tour; most curious visitors come because they want to change something about their lives, and making the decision to do so is the hardest step.

When I got home, I started researching supper clubs to integrate more sharing into my life. But only after a hot shower, takeout pizza and Quantum of Solace in my blissfully empty apartment, of course.

TLC Farms organizes grassroots efforts for legislation promoting sustainability. One bill would make it easier to reuse graywater, or water already used for laundry or bathing. A measure to make graywater use legal in Oregon has passed the state House and is currently in the Senate Environment and Natural Resources Committee.

Three years after Cedar Moon began, eight of its original 14 inhabitants still live on the farm. One original member who left is Matt Gordon. A 29-year-old musician, Gordon says he returned last September to Northeast Portland to be nearer to the bands he plays and practices with. “It was a hard decision,” he says.

Brush estimates each farm resident has a carbon footprint of about 0.06 tons a year, compared with the average Portlander’s load, which varies from 2.1 to 3.2 tons.

April 22 marks the 39th Earth Day. The first Earth Day, coincidentally, marked the 100th birthday of Vladimir Lenin.

Earth Day Special: Energy and Food in a World of Limited Natural Resources

2009-04-23T14:15:00.001-07:00

fool.com

The world is running out of oil and the evidence is mounting. The term most commonly used in the discussions surrounding first the ceiling in oil discoveries and now more recently the ceiling of oil production is Peak Oil. Peak Oil since the mid 1950s has been argued as theory but their are more convincing arguments than just $4 a gallon gasoline (last summer) that support what should now be deemed as fact. The chances of finding another large oil reserve fall dramatically each day. Another fact that augments this point is that the largest reserves should be the easiest to find and still a major discovery hasn’t happened since Prudhoe Bay in 1969, 40 years ago. Not finding more oil would be well and fine if we simply didn’t use it at all but that’s currently not the case.

A shortlist of items made from oil (not just energy inputs or transportation inputs) include computer chips, dishwashing liquid, insecticides, antiseptics, tires, clothing, food preservatives, disposable diapers, vitamin capsules, fertilizers, water pipes, artificial limbs, aspirin and many other applications. It would be easy to substitute our energy gained from oil and oil based transportation as wind and solar come onto the grid. Unfortunately though the loss of the petroleum based household items and agricultural fertilizer (that is essential to higher crop yields) could significantly change the way we live.

Amazingly many have pointed to technological advances and rightly so. It becomes tough science though as most of the technological breakthroughs in the past have occurred thanks to petroleum. One solution that has been raised has been using biochemicals as replacements to existing petroleum products. I think many of us have seen corn-based plastics in cups and even corn-based fuels for ethanol but this only works as long as agricultural output remains high. This brings us to our problem. By using food as plastics and without the aid of petroleum-based fertilizers we still need a lot more oil to sustain consumption or we need to change our way of life.

One of the world’s foremost thinkers on this subject, Jay Forrester, actually created a systems dynamics model on resource depletion and its effects on population. A popular book “Limits to Growth” published in 1972 outlines the changes. The figure included in the link below is the original limits-to-growth model. It charts resources, births (b), services (s), population, pollution, deaths, food, and industrial output. While it is important to look at any future predictions with a little skepticism it is also clear that if we don’t make any more major discoveries in oil we must fundamentally change the way we get energy and how we use our resources.

With the suggestion of this model and the daily reduction in oil production, Richard Heinberg, an outspoken Peak Oil expert, sees no other way to tackle this problem other than a reinstatement of a communal agricultural society in the next 20 to 30 years. This would represent a drastic shift from our current vocational allocation of 1% to farming. But their still remain questions regarding one of the few factors under human control, our behavior. If we can cut back on consumption of natural resources, mainly those tied to oil, we may be able to ween ourselves off of what has been our economical life-blood and find other solutions. Is it realistic though for a generation and a people to change their entire system of life? While it could go as far as every family having a victory garden, it is the capitalist in me that calls out for a third way.

Sources and Further Reading:

The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse, Richard Heinberg, New Society Publishers, Gabriola Island, BC, Canada, 2006.

Fifty Million Farmers www.richardhienberg.com/museletter/175

Revisiting the Limits to Growth After Peak Oil, Charles Hall and John Day, American Scientist, May-June 2009.

Thirsty Hybrid And Electric Cars Could Triple Demands On Scarce Water Resources

2009-04-13T18:35:00.001-07:00

sciencedaily.com

Eco-minded drivers in drought-prone states take note: A new study concludes that producing electricity for hybrid and fully electric vehicles could sharply increase water consumption in the United States.

In the study, Carey W. King and Michael E. Webber note that policy makers often neglect the impact that fleets of hybrid and electric vehicles could have on already-scarce water resources. They calculated water usage, consumption, and withdrawal during petroleum refining and electricity generation in the United States.

Each mile driven with electricity consumes about three times more water (0.32 versus 0.07-0.14 gallons per mile) than with gasoline, the study found.

"This is not to say that the negative impacts on water resources make such a shift undesirable," King and Webber emphasized. "Rather this increase in water usage presents a significant potential impact on regional water resources and should be considered when planning for a plugged-in automotive economy."

The article, "The Water Intensity of the Plugged-In Automotive Economy" is scheduled for the June 1 issue of Environmental Science & Technology.

The Peak Oil Crisis: Priorities

2009-04-09T10:45:00.001-07:00

Falls Church News-Press

By Tom Whipple

In the next few years, most of us are going to have to make many important decisions that will profoundly affect the rest of our lives. How soon these decisions come will depend on one's individual circumstances.

If you are one of the millions who have lost their jobs or homes in the last year then you already know that something is happening. Returning to the way we have lived for the last 100 years simply is not in the cards. The world is entering a great paradigm shift and our place in it will be markedly different 10 or 20 years from now. The most alarming thing to remember is that 95 percent of us have not discovered that major changes are underway and are waiting for economic recovery and new jobs to open up.

A professor out in California just published a paper concluding that the current economic downturn was caused as much by the $147 oil we saw last summer as it was by the bursting of the housing and credit bubbles. It doesn't much matter if he is right or not. What is important, however, is that hardly a day goes by without another major oil production project being delayed or cancelled due to low prices. The death spiral for the oil age has begun.

The U.S. is currently losing about 600,000 jobs a month. If we did the bookkeeping a bit more honestly, to account for the discouraged or those forced into part-time work, the real total is probably closer to 1 million a month. This hemorrhage may slow for a time when our trillion dollar stimulus catches hold, but there is nothing out there to suggest that spending borrowed or printed money for a year or two is going to turn anything around. The trends all suggest that unemployment is going to continue rising and that social unrest is not very far away.

Someday, many years or decades from now, all this is going to stabilize. Just what the world will look like is impossible to forecast. Will there still be 6.7 billion of us around or will the world's population have declined from deteriorating climate conditions and a lack of food. The only thing for sure is that there is going to be a lot less fossil fuel around to do the heavy work for us.

The last 100 years, particularly the last 50, have been a magic time. The exploitation of fossil fuels has given mankind an era of incredible riches and, for many, unprecedented freedoms to pursue whatever they choose. Now that time is over and humanity is going to have to reprioritize to the basics of life -- food, warmth, shelter, health care, sanitation, and security.

If the oil age had come and gone in a few decades mankind would not have had the opportunity to reorganize our lifestyles so dramatically from the way we lived in the 19th century, but it is too late now. Recent estimates say that nearly half of the world's population now lives in urban areas where they are dependent on others for food. In America, only three percent of us are left on farms to feed the other 97 percent. This is going to be a real problem for if there is anything we really need to do every day, it is to eat.

With shrinking amounts of increasingly expensive fossil fuels, the American way of agriculture is going to be severely tested. Throw in some climate change and our food producers are going to have trouble keeping up with the demand. Many are worried about depleted soils, and the vast amounts of energy required to grow, store, process, and transfer food raised thousands of miles from the consumer. Then there is the growing problem of paying for food when one does not have a job. For the last 100 years the cost of food was a decreasing part of the average American's budget. That is starting to reverse and it will not be long before the discretionary spending that many have enjoyed in recent decades dwindles as more of our incomes go for the essentials of life.

Much food in America currently is being paid for by unsecured credit cards in the hands of people who will never be able to pay. The banks have already reduced the number of open cards from a high of 483 million last July to 400 million. This number will continue to shrink as delinquencies soar and the banks realize they will never be paid back. As with food, the same sort of problems are arising with health care, and housing. Sanitation and public safety, being largely a responsibility of government rather than individuals is, safe for the minute, but governments are facing growing problems. If, as seems likely, government takes on increasing burdens of feeding and housing people, some new form of social contract is going to have to be worked out.

We are already hearing the opening sounds of what may be the greatest political debate of the 21st Century - how do we get out of this mess. On one side are those who continue to believe that free markets, tax cuts, and offshore drilling, will return things to normal. The other side recognizes the magnitude of the challenge we face, but so far have not publically connected the dots.

This great debate will continue in the Congress, state houses, and local board rooms for a long while as the balance teeters between maxims of the 20th century and realities of the 21st. The break will come with social unrest. It has been a long time since mobs took to American streets in protest. Although common in other parts of the world, one has to look back to the 1960's to find serious social unrest in the US.

This time riots will be for food and jobs rather than for civil rights and against the draft. The unrest will change everything. Governments will realize that changing times require changing institutions and new priorities. The mix between capitalism and government involvement in the economy is going to change for there no way that our current institutions and economic arrangements are going to get us through the next 40 years.

Buildings & Grounds: Food For Thought for Agriculture and the Future

2009-03-31T16:05:00.001-07:00

Chronicle.com

A Farm for the Future, a BBC documentary about the prospects of agriculture after peak oil, is now available through Google Video. The program, which was made by the wildlife filmmaker Rebecca Hosking, begins on a conventional farm owned by Ms. Hosking’s father in England’s South Devon region. The documentary goes from there to explore other low-energy, low-impact farming methods that Ms. Hosking says might be necessary in an energy-starved (and food-starved) future.

The documentary should be compelling viewing for anyone involved with campus sustainability and food projects. We’ve recently discussed the importance of teaching agriculture at colleges and the fact that many colleges have become interested in local foods, along with agriculture and community gardens. Some colleges, like Green Mountain College, Sterling College, and Goshen College, have programs to teach students how to farm in a post-oil era.

Peak oil — the concept that oil production will crest and then decline, leading to all sorts of trouble in society — is of course a controversial topic, and the associated movement of so-called doomers attracts its share of ridicule. In a recent book, Global Catastrophes and Trends: The Next 50 Years (MIT Press, 2008), Vaclav Smil, an energy expert at the University of Manitoba, says that the alarmism of peak-oil proponents is “based on a lack of nuanced understanding of the human quest for energy” that disregards economics, innovation, and adaptability. (In his book, he seems more concerned about human interference in the global nitrogen cycle, water shortages, loss of biodiversity, and soil erosion — all of which affect agriculture, by the way.)

Planning for a post-oil era is at least a prudent thing to do. Agriculture, which has been one of the most important disciplines of the American university system, will certainly face a number of pressures in the future, peak oil or no. Ms. Hosking’s documentary might provide food for thought for the future of sustainable food production.

'Peak oil' enters mainstream debate

2009-03-19T14:21:00.001-07:00

BBC NEWS

By Adam Porter

Is global oil production reaching a peak?

A few years ago only a handful of geologists and academics were considering such a possibility.

But now it appears even governments are taking a serious look at the subject.

The question is occupying more and more minds around the world.

It could happen soon.

A French government report on the global oil industry forecasts a possible peak in world production as early as 2013.

Don't mention it

The report 'The Oil Industry 2004' takes a long look at future production and supply issues.

But perhaps what is most interesting about this Economics, Industry & Finance Ministry report, is that it actually mentions a possible production plateau at all.

Even one year ago it was unheard of to find the subject mentioned amongst government ministries or financial institutions.

Now banks such as Goldman Sachs, Caisse D'Epargne/Ixis, Simmons International and the Bank of Montreal have all broached the subject.

"They are being forced to by circumstances," says Professor Richard Heinberg, author of 'peak oil' books Power Down and The Party's Over.

"They have relied on optimistic data and rosy outlooks that are being proven to be incorrect."

Nevertheless, some analysts disagree with the notion of any peak in oil production, also known as 'Hubberts curve', after the geologist M King Hubbert who first argued the case.

Deborah White, senior energy analyst at Societe Generale in Paris, says that "we have heard these arguments about 'peak oil' since the idea of Hubert's curve came into being.

"We don't endorse the idea at all."

'Peak oil' mentioned

And yet, the French report, perhaps the most open government dossier yet, questions the viability of long term oil production.

The report's second chapter 'Global Exploration and Production' runs a series of differing scenarios based on current forecasts.

The scenarios differ according to projected demand increases, from 0% to 3% per annum, and possible new field discoveries, between zero and fifty billion barrels a year.

At a rate of 3% increase in demand per year and annual finds of 10 billion barrels, the ministry report states 2013 as "the time of maximum production or 'peak oil'".

That would mean the world's oil consumption would reach its highest point at around 97 million barrels per day (mbpd).

Forced to react

It is also very unusual to find a government report using the wording 'peak oil'. This is a phrase often used to describe the theory of a global oil production plateau, after which production would begin to decline.

Chris Sanders spoke at the recent Association for the Study of Peak Oil conference and is director of international finance consultants Sanders Research.

He believes 'peak oil' is major threat to modern economies.

"There is only so long politicians can ignore a geological problem, and it is a geological one," he says.

"Governments have had a great chance to take the lead on this situation, but they have not taken it. Now they are being forced to react.

"Why? Because it is very probable that we are nearing 'peak oil'."

The French report uses the phrase, in English, and repeats it on no less than four occasions.

Outdated data

The best case scenario the report lays out is rather far fetched, with a 0% increase in world consumption, at only 79mbpd, with annual finds of 50 billion barrels of new deposits per year.

That makes 'peak oil' arrive in 2125.

Unfortunately the report's figures are already outdated. The world consumed 84.7 mbpd in the first quarter of 2005.

International Energy Agency (IEA) forecasts - traditionally regarded as conservative by the markets - put demand at around 86.1 mbpd for the fourth quarter of this year alone.

Its figures put demand growing at 2.2% in the first quarter of 2005.

This means average consumption for 2005 would come out at 84.3 mbpd. Plus, in the past 30 years, new discoveries of oil have averaged about 14 billion barrels per year, with recent discovery rates well below that.

Despite not endorsing a production peak, Ms White is also factoring in demand growth "of around 1.5mbpd over the next five years, which will mean a total demand of around 91.8mbpd in 2010".

Different definitions

The French report also echoes a fundamental problem at the heart of the oil business, namely data transparency.

Without accurate audited data, discovery forecasts, forward pricing and reserve calculations become a matter of debate rather than science.

This year alone the International Monetary Fund, the G7 and IEA have all called on Opec countries and Russia to open their fields to independent scrutiny.

"The definitions of oil reserves are different in many countries," the report observes.

"The capacities of sustainable production by Opec countries are very difficult to estimate. It is impossible to know production levels without waiting, at best, several months."

The report also goes on to look at the daunting levels of cost needed.

Firstly to extract current reserves but also to explore for new deposits.

"Somewhere in the region of $900bn will be needed by 2013 alone to develop [existing] reserves," it says.

"This massive investment will double as one will need to add exploration costs to this figure as future production from 2013 to 2030 will depend on it which means that to be successful, around $250bn a year will need to be spent."

"Ruinously high oil prices are making governments look at the subject," says Professor Heinberg.

"For example, when they are faced with whole industries like the airlines going bankrupt, it forces them to react, but they may be too late."

Suburban blight

Ms White takes the problem from a different perspective.

Rather than a costly search for more oil, she recommends conserving its use.

"We are at the wrong stage of the economic cycle for a recession that would cut demand," she says.

"What is very important is conservation, especially in transport. Raising taxes on fuel, introducing toll roads and bridges into major cities for example, but also stopping the spreading of suburbs ever further from city centres.

"Controlling suburban blight is one way to slow oil consumption until we are a society no longer dependent on oil."

The Peak Oil Crisis: Oil in the Great Recession

2009-03-06T19:27:00.001-08:00

Falls Church News-Press

By Tom Whipple

Earlier this week the Associated Press grappled with the issue of whether or not the current economic downturn has reached the point that it can be called a depression. After consulting many learned scholars the answer seems to be that it is too early to make such a pronouncement.

According to some, it is going to take three growth-less years during which unemployment will have to climb above 10 percent and the GDP will have to decline by at least 10 percent before the term should come into common use. (During the 1930's unemployment climbed above 25 percent and the economy shrank about 27 percent.) While we have not fulfilled these requirements, some are already suggesting it can be called a "Great Recession."

Last weekend, as a member of a panel on the outlook for energy at a student conference called Power Shift 09 in Washington, I was asked about what happens to peak oil in a depression. The implication was that if the global economy gets really, really bad in the next few years and the demand for oil drops so far, so fast, that nobody would notice that much of the investment in new oil production had stopped. If demand falls fast enough, declining world oil production resulting from depletion overtaking new production simply won't be noticed.

As the bad economic news continues to pour in, and the equity markets keep falling through support level after support level, the chances that we are heading into a very serious recession seem to be improving. In recent days, guests on the financial news networks have turned somber. Instead to talking about buying opportunities before the great cyclical rebound, more are speaking of uncharted waters and that we could see the Dow at 4,000 or even 3,000 in the next couple of years.

Across the ocean, OPEC currently seems much less certain that it can control oil markets through production cuts and seems less enthusiastic to implement further cuts. In recent weeks oil prices have stabilized around $40 a barrel and thus far a 3 million barrels a day (b/d) production cut has had little noticeable effect on raising prices in the midst of the economic storm.

The high oil prices last summer and the economic slump this winter have combined to cut U.S. oil consumption by about 1.2 million b/d or 6 percent during 2008. Oil consumption in Japan and Korea has dropped along with their exports, but Beijing continues to talk bravely about 8 percent economic growth in 2009. If this forecast holds true, it implies that China could increase its oil consumption this year, but certainly not as fast as in recent years.

The great unknown is how much effect a major economic contraction will have on oil consumption. Industrial consumption of oil will drop as economies contract as will discretionary consumption by those who have lost a portion of their former incomes. For other uses such as agriculture, home heating, public safety and utilities, it will be very difficult to make major reductions in consumption in the short run. However, for a world in which oil consumption is deeply engrained in nearly all facets of life, much will be given up before large drops in oil consumption take place.

In addition to the state of the economy, the price of oil obviously will play a major role in determining the level of consumption. Currently prices are relatively cheap, but should OPEC production cuts succeed in pushing prices back towards $100 a barrel, economically weakened consumers will have little choice but to take abnormal measures to reduce their consumption.

Currently world oil consumption is only down by a few million b/d from the all-time high levels of 2007-8. If this level of consumption holds, then the current OPEC production cuts of 3-4 million b/d seem to be on track to reduce stockpiles and force prices higher. The other side of the coin, however, is that the global economic situation is deteriorating far faster than most expected. It is possible that world oil consumption could quickly fall from a high of 86 million b/d in 2007 to 80 or even 70 million b/d simply because consumers can no longer afford and industries no longer need oil products in such volume.

In this situation, a new set of forces would come into play. While OPEC seems to be able to cut oil production by 3 or 4 million b/d, deliberately cutting production by 10 or 15 million b/d seems out of the question. The economies of the exporting nations that are already in financial trouble would simply collapse if oil exports were reduced by 50 percent. The consequences would be political turmoil and likely changes of government. The over-supply of oil would force prices lower. Analysts are already predicting that if oil goes to $20 a barrel there will be widespread reductions in oil production around the world as many fields can no longer produce oil this cheaply.

In a deep depression, supply constraints would no longer be a problem. If annual world oil production were reduced from the current 30 billion barrels per year to 25 or less, geological, and "above ground" constraints on production would likely be delayed for many years. Those individuals and institutions who could still afford oil would likely have available all they can use and probably at moderate prices.

What the global economy would look like under this scenario is another thing altogether. It would obviously be bad, very bad, but the details of the suffering are simply unknowable - there are too many variables.

It appears there are least two possible scenarios that could play out in the months ahead. Either demand holds up to a level at which OPEC can control the situation and we have higher prices, or the Great Recession causes demand for oil to simply melt due to lack of economic activity and declining incomes.

Natural Gas as Answer to Oil Decline Could Lead to Catastrophe, Says Leading Expert

2009-03-06T19:24:00.001-08:00

OilVoice

Ploughing resources into the use of natural gas as an alternative energy supply could lead to global shortage within 20 years time, according to a leading energy expert.

Professor in Physics at Uppsala University in Sweden, Kjell Aleklett, says reliance on natural gas – believed by many to be a key source of alternative fuel for the future – would be a major mistake.

Whilst it could provide a short term solution to the energy issue, Professor Aleklett believes it is not the long term answer we need to tackle what he predicts will be a continuing decline in global oil production.

Professor Aleklett will outline his views this evening (Thursday 5 March) in his lecture Global Energy Resources – The Peak Oil View– which takes place as part of the institution’s Energy Controversies lecture series.

Professor Aleklett said: “The problem we should be concerning ourselves with is not climate change but the fact that there are too many people and not enough energy resources.

“We have reached a level where economic growth in the oil and gas industry is no longer possible. Looking for alternative energy sources has to become a key priority to counteract the continuing decline in global oil production which I predict we will experience.

“Many are looking to natural gas as a solution for electricity production in the future, but this is a massive mistake. Natural gas could generate enough energy to meet the demand for the next five to 10 years, but it is not a long term sustainable option.

“To expand the use of natural gas would be a mistake which could have catastrophic economical consequences for UK, Europe and across the globe in 20 years time. When we are hit by “Peak Gas” there are no alternatives for power generation. We have a discussion about future energy policy - it’s time to start to discuss the future power policy.”

The University’s Energy Controversies lecture series brings together leading international industry and academic experts to discuss the current challenges and debates facing the energy sector.

Professor Aleklett will deliver his lecture to a 250 strong audience at the sold out event which begins at 6pm at the University’s King’s College Conference Centre.

Aimed at influencing energy and social policy at a local and national level, the Energy Controversies series features seven public lectures and a discussion panel event.

Highly topical issues to be covered over the course of the series include:

• The exhaustion of fossil fuel reserves and their decline as an energy source
• The impact of the changing political climate on the energy industry
• The concern surrounding the environmental impact of our continued use of fossil fuels

Dr Peter Jackson, Senior Director for Oil Industry Activity at Cambridge Energy Research Associates and Professor Bahman Tohidi, Director of the Centre for Gas Hydrate Research at Heriot Watt University, will be amongst the lecture speakers, providing their unique insights into critical issues high on the energy agenda over the next few weeks.

What Next?

2009-03-02T19:06:00.001-08:00

www.kunstler.com

By Jim Kunstler

Isn't that a question, though....

The Peak Oil story was never about running out of oil. It was about the collapse of complex systems in a world economy faced by the prospect of no further oil-fueled growth. It was something of a shock to many that the first complex system to fail would be banking, but the process is obvious: no more growth means no more ability to pay interest on credit... end of story, as Tony Soprano used to say.

There was a popular theory among Peak Oilers the last decade that the world would enter a "bumpy plateau" period when the global economy would get beaten down by peak oil, would then revive as "demand destruction" drove down oil prices, and would be beaten down again as oil prices shot up in response -- with serial repetitions of the cycle, each beat-down taking economies lower -- the only imaginable outcome being some sort of quiet homeostasis. This scenario did not play out as expected. It was predicated on a mistaken assumption that all systems would retain some kind of operational resilience while ratcheting down. Anyway, the banking system was mortally wounded in the first go-round and the behemoth is dying hard.

The last desperate act of the banking system in the face of Peak Oil's no-more-growth equation was to engineer species of tradable securities that could produce wealth out of thin air rather than productive activity. This was the alphabet soup of algorithm-derived frauds with vague and confounding names such as credit default swaps (CDSs), collateralized debt obligations (CDOs), structured investment vehicles (SIVs), and, of course, the basic filler, mortgage backed securities. The banking system is now choking to death on these delicacies.

The trouble is that the EMT squad brought in to rescue the banking system -- that is, governments -- can't remove these obstructions from the patient's craw. They don't want to drown in a mighty upchuck of the alphabet soup.

The collapse of complex systems is actually predicated on the idea that the systems would mutually reinforce each other's failures. This is now plain to see as the collapse of banking (that is, of both lending and debt service), has led to the collapse of commerce and manufacturing. The next systems to go will probably be farming, transportation, and the oil markets themselves (which constitute the system for allocating and distributing world energy resources). As these things seize up, the final system to go will be governance, at least at the highest levels.

If we're really lucky, human affairs will eventually reorganize at a lower scale of activity, governance, civility, and economy. Every week, the failure to recognize the nature of our predicament thrusts us further into the uncharted territory of hardship. The task of government right now is not to prop up doomed systems at their current scales of failure, but to prepare the public to rebuild our systems at smaller scales.

The net effect of the failures in banking is that a lot of people have less money than they expected they would have a year ago. This is bad enough, given our habits and practices of modern life. But what happens when farming collapses? The prospect for that is closer than most of us might realize. The way we produce our food has been organized at a scale that has ruinous consequences, not least its addiction to capital. Now that banking is in collapse, capital will be extremely scarce. Nobody in the cities reads farm news, or listens to farm reports on the radio. Guess what, though: we are entering the planting season. It will be interesting to learn how many farmers "out there" in the Cheez Doodle belt are not able to secure loans for this year's crop.

My guess is that the disorder in agriculture will be pretty severe this year, especially since some of the world's most productive places -- California, northern China, Argentina, the Australian grain belt -- are caught in extremes of drought on top of capital shortages. If the US government is going to try to make remedial policy for anything, it better start with agriculture, to promote local, smaller-scaled farming using methods that are much less dependent on oil byproducts and capital injections.
This will, of course, require a re-allocation of lands suitable for growing food. Our real estate market mechanisms could conceivably enable this to happen, but not without a coherent consensus that it is imperative to do so. If agribusiness as currently practiced doesn't founder on capital shortages, it will surely collapse on disruptions in the oil markets. President Obama at least made a start in the right direction by proposing to eliminate further subsidies to farmers above the $250,000 level. But the situation is really more acute. Surely the US Department of Agriculture already knows about it, but the public may not be interested until the shelves in the Piggly-Wiggly are bare -- and then, of course, they'll go apeshit.

The recent huge drop in oil prices has left the public once again convinced that the world is drowning in oil -- if only the scoundrelly oil companies were forced to deliver it at reasonable prices. The public has been consistently deluded about this for decades. What's missing so far is for the president of the US to lay out the reality of the situation in a dedicated TV address. I know a lot of you think that Jimmy Carter already tried this and failed to make an impression (and ruined his presidency in the process). I guarantee you that Mr. Obama will have to do this sometime in the next few years whether he likes or not, and he'd be well-advised to get it done sooner rather than later. And by this I don't mean just vague allusions to "energy independence" or "renewables" in speeches devoted to many other issues. I mean telling the public the plain truth that we'll never offset oil depletion and the intelligent response is to do everything possible to transition to walkable towns and public transit, not to sustain the unsustainable.

The alternatives -- i.e. what we're trying now -- is to further delude ourselves into thinking that we can run WalMart and the suburbs by some other means than oil. Despite all our investments in these things, we won't be able to run them by other means, and the news about this had better get out before enormous disappointment turns into titanic rage. If Americans think they've been grifted by Goldman Sachs and Bernie Madoff, wait until they find out what a swindle the so-called "American Dream" of suburban life turns out to be.

On this blizzardy Monday in the power centers of America, attention is fixed on the never-ending fiasco of AIG -- a company whose main product turned out to be credit default swaps, and is now choking on them. Kibitzers on the sidelines of finance are forecasting a king-hell bear market suckers' rally in the stock markets followed by a belly flop to Dow 4000 or lower. I myself called for Dow 4000 two years ago -- and was obviously a bit off on my timing. All this is surely trouble enough. But while your attention is focused on Rick Santelli in the Chicago trader's pit, or Larry Kudlow desperately seeking "mustard seeds" of new growth in financials, try to let one eye stray to the horizon where these other complex systems are working out their next moves. Farming. The oil markets. These are the coming theaters of alarm and distress.

Take Peak Oil seriously - it'll be here much sooner than you think

2009-02-15T10:26:00.001-08:00

TheStar.com

By Cathal Kelly

While panic is not the prescription, experts are warning that the time to begin taking Peak Oil seriously is past.

"It's not about believing. It's about facts," said Gord Miller, Ontario's environmental commissioner. Miller has been warning about Peak Oil for years. He thinks we hit peak around early 2007.

"If we're not there, we're awful close," said Dave Hughes, a geoscientist who once ran Canada's national coal inventory.

Peak Oil doesn't mean we have run out of the stuff. It means that we have crested the top of a bell curve of supply. Then it's a roller-coaster ride down. Depending on who you ask, that ride will either be slow and uncomfortable or teeth-rattling and destructive.

"Depletion is taking somewhere between 5 and 6 per cent of (existing) world oil production per year," said Hughes. "The reason that oil price is where it is today is that the economy has reduced demand."

No one has found a major new oil field since the 1960s. It's getting harder and more expensive to bring up the oil we know is there. All these signs point toward the peak.

What happens now?

The first stage is price volatility, a little like the $100-per-barrel drop we've seen in less than a year.

The current low price "will increase demand to a certain extent, which will then increase price," Hughes said. "There will be a few cycles of that. That is, until depletion kicks in for good."

Hughes guesses a barrel of oil could cost $200 (U.S.) within the next two to four years. It sits at $41 today. Andrew Nikiforuk, author of Tar Sands, imagines it could go as high as $300 in that time.

"The second stage is supply shortages," Hughes said. "We could see a replay of the (oil crisis of the) early '70s."

Canada might initially be insulated from supply shocks, owing to our huge deposits in the Alberta oil sands. Of course, most of that oil is pumped into the U.S. Since Ontario, Quebec and the Maritimes get most of their oil from overseas, we are vulnerable.

And then?

"It will be a slow deterioration in our quality of life, in the reliability of transportation, in the availability of certain foods as well as price spikes for food," Nikiforuk said.

"It will cause pandemonium in both the public and private spheres."

So what should we do?

"Save your capital. Reduce your consumption. A lot. Make yourself accessible to mass transit," Hughes said. "And forget about buying things at Wal-Mart that were shipped here from halfway around the world."

"You prepare by walking more, operating one vehicle. You prepare by buying more food locally and talking to your friends about getting engaged in the political process," said Nikiforuk. "Oil has made us fat and lazy. ... It was a 150-year addiction to an energy source we didn't appreciate or use particularly wisely. It distorted our economy. Now it's going. And we can't go back to business as usual."

The Peak Oil Crisis: The Economic Rebound

2009-02-12T21:09:00.001-08:00

Falls Church News-Press

By Tom Whipple

A few years ago, peak oil was relatively easy to understand. At some point in the future, and estimates varied as to exactly when, oil production was going to start declining due to a combination of geologic and geopolitical factors, prices were going to rise precipitously and a massive civilization-wrenching paradigm shift would start as the world transitioned from oil to other forms of energy.

Those who understood that oil was going to start running out one day spread themselves along a spectrum of just when this unhappy event would happen. Pessimists saw the decline of oil production beginning in 3 to 5 years, optimists said 10, 20 or 30 years, and most of the world's peoples did not have the faintest clue that the oil was ever going to run out. Things were so simple 18 months ago.

In 2007, however, it was revealed that a collection of realtors, appraisers, mortgage brokers, bankers, builders, financiers, insurers, securities raters and assorted others had been making lots of money by selling houses to people who could not afford them and then dumping the tainted mortgages on the world's banking system. When all the dust from these revelations settled, it looked as if many of the world's banks had suffered grievous if not fatal damage and what could turn out to be the greatest economic downturn of modern times had been set loose. So where does oil fit into all this?

Oil of course, is the life blood of modern economies. Without increasing amounts of it there can be little or no economic growth until substitutes are found in quantity, and if it is withdrawn there will be economic contraction. One of numerous and ill-understood issues in our economic future is the relation of oil --production, consumption and price -- to our economic downturn. The interrelation is a complex one.

The onset of the economic troubles and reduced demand for oil last year not only crashed oil prices to the relief of many, but has led to a precipitous decline in oil exploration, drilling and alternative energy projects. Although it will be months or years before the effects of these reduced expenditures are felt, some are forecasting serious consequences three to five years ahead.

The overriding issue, however, is just how long the economic downturn will last. Historical precedent and conventional wisdom from Wall Street seems to be saying that by the middle of 2009 we will hit bottom and things will start to improve. Some, however, are not so sure and are making cases for a downturn of many months, quarters, years, or in extreme cases decades. Sorting this out is obviously impossible for we seem to be entering an era unique in history. The U.S. administration currently is intent on instituting a $3+ trillion economic stimulus and financial bailout using borrowed money that might do some good, have a negligible effect, or as some fear crash the dollar, the U.S. financial system, and God knows what else.

One of the problems is that there are many feedbacks implicit in all this. Should these government bailout plans start to work, there is likely to be an increased demand for oil. While OPEC which is currently cutting production as quickly as it can get its act together should have spare capacity to respond for a while, demand could get out of hand and oil prices could easily surpass those of last summer thereby dampening or destroying any recovery.

Should the stimulus and financial bailouts have little or no effect in the next year or two and the economic situation continues to spiral downward, then the demand for oil will continue to decline. At some point, however, demand in the U.S., Europe and parts of Asia will run into the limits imposed by our motorized societies. Particularly here in the U.S. the economy simply cannot function without a certain amount of transportation fuel or economic activity will take another major hit. Demand for oil in North America, Europe, and oil producing states is likely to continue at a fairly high level until either it is no longer available or prices become absurdly high in relation to incomes. It is clear the future is going to become a very complicated place with all kinds of forces pushing in all sorts of directions.

A lot of what happens depends on whether our current economic troubles turn out to be only a deep, but run-of-the-mill recession that lasts only two or three years, or whether the damage to the financial system coupled with falling oil supplies have created a new and previously unknown economic phenomenon from which there is no quick recovery. If the downturn continues for the next four or five years the world will be entering oil depletion territory where the fall of production is likely to simply overwhelm any efforts to stem the decline through increased drilling or establishing alternative sources of energy.

If there were still cheap, readily available sources of fossil fuels available then there might be some hope of working our way out the current recession. New sources of oil from deepwater wells, tar sands and heavy oil deposits are very expensive to exploit. While some drilling continues, this is because oil companies are locked into long term obligations which have to be paid anyway so they continue on in the hope that prices again will reach $100 a barrel. OPEC remains committed to cutting production until they can drive oil prices high enough to ensure economic and political stability.

These factors alone suggest that while cheap, plentiful energy is available today, it will not remain either cheap or plentiful much longer.

Candles In The Darkness

2009-02-10T08:57:00.001-08:00

Countercurrents.org

By Dave Bennett

Survival is a universal topic of discussion these days, given clearly evident faltering economies, climate change and rapidly diminishing resources.

Three recent books offer guidance from seemingly disparate authors. Cy Gonick -- editor of Canadian Dimension magazine -- has assembled a well-ordered series of essays which provide a Canadian context on these crucial and relevant topics.

Sharon Astyk is a Shakespearian scholar turned farmer; Pat Murphy, is a computer scientist who became an activist and builder of homes engineered to consume low energy.

Astyk focuses on family, which she ultimately extends to all humanity. Murphy traces the historical roots of consumption from the time of the Roman Empire, making his point that the nature of imperial power is to pillage the resources of subjected peoples, and that modern America is no exception.

Both Astyk and Murphy write with prophetic zeal. The authors foresaw the crises in global warming and financial chaos. They offer -- from different perspectives -- practical guidance on ways to alleviate our predicament, coming to the same conclusion: We stand or fall together. Survival in hard times is -- has always been -- a matter of living together in community.

Energy Security and Climate Change A Canadian Primer edited by Cy Gonick - Fernwood Publishing / Canadian Dimension 2007

Gonick’s book is divided in two parts, one focused on Peak Oil, the other on Climate Change. Richard Heinberg defines the difference in his article, Bridging Peak Oil and Climate Change Activism: “The first has more to do directly with the environment, the second with human society and its dependencies and vulnerabilities.”

Petr Cizek sets the stage with Scouring Tar and Scum from the Bottom of the Pit

In a section headed “The Tar Sands Appalling Impact” Cizek lists some of the costs: “Around Fort McMurray, over 430 square kilometers of boreal forest have been eradicated....[M]ining operations are already licensed to divert 349 cubic metres of water per year from the Athabaska river...” Other revealing sections are headed “Follow the Money” and “Buying the Environmental Movement.”

The other essay titles are self-explanatory: Fudging the Numbers: [Prime Minister] Stephen Harper’s Response (Dale Marshall), The Corporate Climate Coup (David F. Noble), Climate Change and Energy Security for Canadians (Gordon Laxer) and finally, A Twelve-Step Program to Combat Climate Change (Cy Gonick & Brendan Haley)

Plan C - Community Survival Strategies for Peak Oil and Climate Change by Pat Murphy (New Society Publishers – Sept. 2008)

Pat Murphy addresses American readers who have swallowed the myths of Manifest Destiny; but there is much that the rest of us can learn and identify with.

The book begins with the statement, "We are facing multiple world grave crises -- peak oil, climate change, inequity and species extinction. to name just a few. When I began this book our situation was very serious. Now it is life threatening."

He defines Peak Oil as “the term used to describe the point in time at which oil production reaches the maximum and then begins to decline. After 140 years the world has consumed about half the oil available. In the next 40-50 years all the oil in the earth will have been burned."

Plan C’s strength is in its powerful graphics and its compelling logic. Throughout the book, he presents charts and diagrams in support of his arguments. He builds his case systematically as one would expect from a computer scientist and engineer.

Murphy traces the North American sense of entitlement to the arrogance of earlier imperialists, pointing out that “It is the nature of aggressive empires to see themselves as benefactors and saviors of the people whom they conquer...The greed is good economic theory, maintained with nearly religious fervor, has tended to create extremes of wealth and poverty along with unsustainable environmental destruction.”

Murphy faults the consuming lifestyle “promoted and controlled by corporate owned mass media...To gain the wisdom to survive the dual crisis of peak oil and climate change, we may have to abandon our media habit....All teach consumption, competition and violence and tend to make us think along the lines that support a corporate consumer agenda.”

Having set up some major targets, Murphy then explains his title, Plan C. He reviews and discusses the options:

Plan A: Business as Usual (‘The growth-oriented paradigm obsessed with technology.’)
Plan B: Clean Green Technology (‘Cleaner technology is available, it just needs to be deployed.’)
Plan D : Die Off (‘Die off of the race or a drastic population decline.’)
Plan C: Curtailment and Community (The first priority...is to drastically reduce consumption.’)

In tracing the roots environmental destruction Murphy writes, "Undoubtedly one of the most destructive is the private automobile...The car is more than a mode of transportation -- it defines America's homes and communities. The car has formed our physical communities through suburban sprawl and to a great extent destroyed our social communities. Although the car supposedly represents freedom and independence, it may be the greatest creator of alienation between humans that has ever existed."

He sets out to demonstrate how all of the dreams of technical solutions -- from hydrogen fuel cells to battery power -- are in the remote future or too costly in terms of the fossil energy required to create them. In a later chapter he proposes what he calls ‘the Smart Jitney,’ based on the existing pool of cars and augmented by high-tech computer and GPS links. He contends that “The Smart Jitney can replace the private cars, help restore community and reduce emissions substantially.”

Murphy's chapter The Energy Impact of Buildings is stunning. He reveals that “The energy used and CO2 generated by the automobile or food production is much less than the energy consumed by US buildings...[and] we must not forget that a building is a container for a large number of machines that use energy.” He makes suggestions for retrofitting and replacement, which he admits may be expensive and force hard choices, a case of ‘pay now or pay later.’

Murphy takes pains to define the various meanings of Community. He points out that “community cohesion is not likely to be restored by simply calling for cooperation in our present affluent and individualistic society...Once conditions cause people to come together locally to cooperatively organize their own economic affairs and together deal with the issues of survival,”

The question is: Can we do it, and can we do it in time?

Depletion and Abundance, Life on the Home Front - Coming to Terms With Peak Oil, Climate Change and Hard Times by Sharon Astyk (New Society Publishers – Sept. 2008)

Astyk begins her book by reminding us of the Katrina disaster in New Orleans. This becomes a recurring metaphor: We can’t expect that those in authority will act appropriately, even if -- as was actually the case -- they had ample warning but chose to take refuge in denial. We must “take things into our own hands and prepare for the changes at hand.” If we are warned of hard times ahead, the best thing we can do is plan a way to deal with this, even if it is only to get a map of escape routes. Her book is such a map. It is also a chronicle of how she enlisted her family, including four young sons, to the cause.

Astyk’s sweep is wide, with topics ranging from finances and health care to politics and resource wars, all in the context of family and community.

She writes, “The hard times I am talking about do not lie in the conveniently distant future, but have begun already...And many of our problems are going to continue getting worse because we lack either the will or the money or the energy or the time to fix them.”

Astyk describes her despair of finding solutions until she “began looking for solutions that could be applied on the level of ordinary human lives, that involved changes in pulling together, the reclamation of abandoned ideas, and the restoration of strong communities, I began to feel hopeful, even excited...”

She transmits her fervour honestly with wit and wisdom. Her style is often anecdotal, sometimes confessional and seems to emerge organically from her vantage points as mother, feminist, scholar and deeply spiritual person. She doesn’t just pay lip service to saving the planet. Her whole family is involved, from the teenagers to the toddler.

The targets Astyk sets up have to do with setting goals for practical solutions -- some easy, some difficult. She reveals these by describing her family’s journey into voluntary simplicity and what she calls the subsistence economy, pointing out that subsistence is not necessarily the same as poverty.

“Poor agrarian societies generally have stronger social ties. In many cases, people who live in simpler economies, enticed with fewer things they can’t have, report themselves to be happier,”

Astyk writes with a genuine moral fervour that is hard to ignore. She closes her book with these words: “Peak Oil is not about petroleum geology or economics when you get right down to it. Climate Change is not about ice cores and meteorology. These things matter but they aren’t the center of things. Peak Oil and Climate Change are about justice, plain and simple. They are about fairness, morality and integrity -- we in the rich world have chosen to steal from the poor in our own country and other nations and from our children and grandchildren and we need to stop it right now.”

All three books are superb guides and reference works for thoughtful people who choose to survive in a world of diminishing resources.

Dave Bennett created many films about the environment, and spent some years in the Third World, where he learned about the benefits of a subsistence economy as well as the traps of poverty. Now retired, he lives with his wife in Belleville, Ontario, Canada.

Enjoy low oil prices while you can

2009-02-08T07:57:00.001-08:00

financialpost.com

By Barry Critchley

Henry Groppe, founder of Houston-based Groppe, Long & Littell, is 83 years old, a vegetarian and has been a forecaster in the oil and gas business since 1955. And he is not afraid to go against the conventional wisdom. One year back he predicted the oil price would collapse in the second half of the year -- and not reach the much talked-about price of US$200 a barrel.

Now Groppe, a special advisor to the Toronto-based Middlefield group of companies, has done his analysis and concluded that between now and year end the price of oil will double. If that forecast pans out, oil will hit US$80 a barrel, or more than double what others are predicting. His advice to consumers: Enjoy the current low gas prices, because they won't last for much longer.

"Given enough time, it's the fundamentals of supply and demand balances that control the price," Groppe said. "It's just like journalism: 'Get your facts straight,' " he said, when referring to moves inside the 80-million-barrel-a-day global oil business.

He bases his 2009 consumption forecast relative to 2008 on three such factors: the two-million-a-day barrel cut in production from OPEC, the bulk of which will come from three countries (Saudi Arabia, Kuwait and Abu Dhabi); the four-million-barrel-a-day increase in demand that will result from the average 50% decline in the crude oil price; and the 1.2 million barrel drop in consumption that will flow from the global recession. Put them all together and what emerges is a 4.8-million-barrel-a-day net oil shortage.

"There has to be a big upward correction in prices to bring things back into balance," Groppe said.

Groppe pointed out that two of the factors are dynamic, meaning that so-called demand elasticities are associated with them: a 0.1 elasticity between price and demand and a 0.3 elasticity between price and world growth.

Overall, the reduced consumption effect of the global recession, while large, will be more than offset by the effect of the lower price.

"[The significant] price change, because there is so much volatility, has much more impact on oil price than economic activity," he said.

Groppe said cutbacks by OPEC, unusually cold weather and China driving up the price of distillate (because of a plan to substitute for coal) explain all but US$25-US$30 per barrel of 2008's peak-oil price. He puts the rest of the gain down to the actions of "momentum traders. They piled on," he said, noting the current price is about US$20 a barrel lower than what fundamentals would dictate.

The veteran forecaster said "depletion and rational exploration" are the two most important "controlling fundamentals" in the oil industry. He argues that depletion gets underway when production from a new well starts while explorers are focused on finding the biggest discoveries. Groppe isn't impressed with much of the analysis done by governments, agencies or companies.

"The big problem is the terrible quality of the data. Do it long enough over the years, you get some feel for what the actual [supply and demand] balances are." But you have to try and pin down what's actually happening versus the misperception of what's happening," he said.

bcritchley@nationalpost.com

Time to toll the warning bells

2009-02-07T08:08:00.001-08:00

Arab News

By Syed Rashid Husain

The crude world has now traversed the full distance. The inevitable has happened. The bubble has finally burst. Not long ago, the peak oil theory was in robust circulation. New converts were adding to the force and fury of the peak oil camp virtually on a daily basis. Things have changed completely within a very short span of six to seven months.

The tide is exactly on the opposite side today. The market’s obsession today with plummeting oil demand has been so pervasive that it has even fostered a new theory: Peak demand.

In the midst of rapidly falling oil consumption — which as per the IEA is set to contract again in 2009 — the first back-to-back contraction in 25 years. The global focus now is the issue of peak demand and not peak oil. And there exists a world of difference between the two extremes. What a transformation of fortunes indeed!

Much on the pattern the peak oil movement gained momentum when oil prices were rising, now that they have collapsed, some seem convinced oil demand hit its highest point last year in developed economies, never to return. They’re also pumped by the commitment of some governments to support conservation and invest in new alternative energy.

“There is a reasonable likelihood that OECD oil demand has peaked,” Peter Davies, former chief economist at BP PLC, told Reuters recently.

Antoine Halff and Veronique Lashinski, energy analysts at the US brokerage Newedge, said: “More and more analysts are sold on the idea that US oil demand peaked in 2007. The market meltdown is likely to entrench current demand losses not only in the US itself but in the world at large.”

And this realization, coupled with the softening markets is beginning to take its toll in more than one ways. OPEC now stands ready to make further output cuts in case crude prices continue to be subdued; in the second quarter OPEC expects an even deeper drop in demand. “OPEC is dealing with tough circumstances, the toughest in ten, if not 30 years,” said Raad Al-Kadiri of Washington-based PFC Energy. He has a point.

Crude oil prices during the three months to the end of March, Merrill Lynch estimates, could bottom out at an average of just $43 a barrel. Other investment and industry analysts at Deutsche Bank and at the China National Offshore Oil Corporation have predicted an average price of $40, or even lower.

The above scenario has a flip side too — and a scary one indeed!

At stake now are the future projects. For OPEC, and for international oil companies, low oil prices naturally lead to significant cutbacks in future expansion plans. Oil companies are keeping a wait-and-see stance justified by the easing of pressure on supplies. A number of projects are no more feasible. Investment has dropped off and, keeping in view the gap of roughly ten years between geological discoveries and bringing it to market, this definitely does not bode well for the industry.

In West Africa, termed by some as the next global oil frontier the expensive “deep-water oil is at risk of being deferred at current oil prices,” Nigerian Petroleum Minister of State Odein Ajumogobia warned at an oil exploration conference in Abuja.

The IEA is also concerned. Low oil prices and the lack of global liquidity to finance new hydrocarbon exploration and production are causing concern about future supplies and prices.

“We hear almost every day about a project being postponed,” says IEA chief economist, Fatih Birol. “This is a major problem.”

The IEA maintains that the average oil price needs to be significantly higher than in the past five years to encourage the development of new fields that are more costly to exploit, such as Canada’s tar sands, Siberian oil fields and deep-sea offshore reserves, as well as the construction of much-needed new oil refineries.

Estimates by Cambridge Research Associates point out that as much as four million barrels of future oil-productive capacity could be jeopardized if prices remain below $60 a barrel. Other analysts say that figure could be even higher if the figure averages less than $50 a barrel.

Randy Ollenberger, managing director of oil and gas research at BMO Capital Markets, said the global oil supply could decline by as much as 20 million barrels a day over the next three years if the oil industry stops investing new capital, whether by building new projects or sustaining existing ones, because oil prices are too low. This would dwarf a decline in demand of about 2.25 million barrels a day over the same period.

Jeff Rubin of CIBC World markets estimates that oil-sands project cancellations so far add up to the loss of one million barrels a day that was expected to come in the next five to 10 years. Around the world, he estimates, 40 to 50 new projects are vulnerable at today’s prices.

And this is happening at a time when the Russian oil production is also experiencing significant drop. Russian production went down 0.7 percent for the first time in 10 years, Vedomosti, a Russian newspaper reported. However, Russian exports during the year were reduced more dramatically by 6.2 percent over the previous years.

This leads us to another deduction too — the current low prices are not going to stay there long. The tide is in for another transformation down the road. Despite the lowering of raw material prices, especially steel, one is not witnessing a rush for rigs now that recession is eroding demand for fuel worldwide.

Sharp price rise by 2011-12 hence cannot be ruled out. Dan Lewis, research director at London’s Economic Research Council, recently said that an “oil crunch” is looming, a result of oil exploration projects being shelved during the current global economic crisis.

“The market is fixated on the demand side and ignoring the supply side, and if oil prices remain at these levels, what we will see is supply destruction that is much greater than the demand destruction than we have seen,” says Randy Ollenberger.

It’s the reason he doesn’t see oil prices staying at today’s levels for long.

“In the 1980s and through the 1990s, we had lower prices for protracted periods because we had excess supply over that entire period. We don’t have that today,” he said. “I think the turnaround here will be much, much quicker. Maybe not a turnaround in 2009, but by the end of 2009 we will see pretty clear evidence of the supply destruction.”

Jeff Rubin also predicts another oil spike to $100 a barrel toward the end of this year and into 2010, arguing that the recession may temporarily cut one or two million barrels a day from world oil demand, but will do nothing to stop the loss of nearly four million barrels per day this year from depletion alone. We are entering unknown waters again — time to toll the warning bells indeed.

The Peak Oil Crisis: The Stimulus

2009-01-30T07:28:00.001-08:00

Falls Church News-Press

By Tom Whipple

As the economy spirals deeper and deeper into an economic morass, Washington's attention this week is focused on the $900 billion economic stimulus package that is making its way through the Congress.

Opinions as to the efficacy of this effort are all over the map. The President, his allies and advisors knowing they cannot just sit by hoping for better times, have put together a package that is intended to do something for nearly everybody - tax cuts for the middle class, aid to state and local governments to sustain essential services, and above all, funding for projects that it is hoped will create or at least save jobs. They firmly believe that to do anything else would be irresponsible governance.

Critics of the stimulus plan abound. Republicans, who are no longer in charge of much, but can still filibuster the Senate, are calling the stimulus a big Democratic giveaway of borrowed dollars that will bankrupt the government. They, as usual, favor more and bigger tax cuts to deal with the problem. Others, who believe the era of economic growth and prosperity is over, see the plan as a futile effort to revive an un-revivable way of life. They see this plan as a holding action that will spend what may be the last money America can borrow on trying to turn back the clock.

So where does peak oil fit into all this? Let's start with the words of our new President earlier this week. "At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete. These urgent dangers to our national and economic security are compounded by the long-term threat of climate change, which, if left unchecked, could result in violent conflict, terrible storms, shrinking coastlines, and irreversible catastrophe."

This would seem to leave little doubt that the President understands what could turn out to be the two biggest problems of coming decades - dependence on oil and global warming. There is much in the current stimulus plan and other administration initiatives that seem to make sense - increasing renewable fuels, $31 billion towards improving the electric grid, $37 billion to weatherize government buildings and low-income homes, $10 billion to improve public transit and railroads. All this of course is only a small fraction of the $900 billion proposal. The rest seems to be directed towards offsetting the effects of the economic down turn, helping the unemployed and hopefully stimulating what some believe will be an economic rebound. Some parts of the bill, however, such as the $31 billion for repairing and building roads seem downright wasteful given that vehicular traffic has no place to go but down.

We are back to the old conundrum of the urgent and the important. While it is clear that oil depletion will overwhelm our economies and global warming may overwhelm much more, for people who are newly unemployed, impoverished, homeless and don't have enough to eat, the President and Congress must hold out the promise of near-term help. A great irony in all this is that the Congressional Budget office is saying only about $25 billion of the $900 billion is likely to be spent in this fiscal year and only $110 billion by the end of 2010. If these numbers are close to reality, it is clear that we are going to have to endure the trials of the next two years with very little aid from the proposed stimulus. If the stimulus passes, at least Congress and the President will be given credit for having tried to do all they can.

It is unfortunate, but a fact of life that the economic downturn of the last two years sent oil prices tumbling by an unexpectedly large amount. If we have learned nothing else in the last six months, it is that prices are highly susceptible to what seem to be relatively small changes in demand. Although prices seem to be clawing their way higher, there is still a race going on between OPEC production cuts and the sagging global economy. Just at the time when all attention should be focused on preparing for a future with less oil - while there is still time and resources left -- the markets are sending signals all is well for now on the energy front and that "drastic" measures such as higher gas taxes and speed limits are not needed as yet, if ever.

A prime example of this occurred this week when President Obama took action to reverse President Bush's decision and directed the EPA to look into the implications of coordinating California and federal emission standards which would markedly speed up fuel efficiency standards for automakers. If gas prices were still at $4 or $5 a gallon higher fuel efficiency would likely be embraced by all sides, but at a $1.86 a gallon it seems as if we are going to back to rehash the same old arguments about more efficient cars hurting autoworkers and forcing up car prices to unaffordable levels.

Until there are clearer signals, likely in the form of much higher gasoline prices, the American public and their elected representatives are not likely to accept any really painful measures for dealing with peak oil, energy independence, global warming or the like. Such is the nature of democracy and politics will remain the art of the possible.

The Peak Oil Crisis: What of 2009?

2009-01-25T20:11:00.001-08:00

Falls Church News-Press

By Tom Whipple

Our wish has been granted for we are indeed living in interesting times. The world's economy is either collapsing or is putting on a very good imitation of doing so.

Production of cheap, abundant fossil fuels is peaking and will soon be withering away, yet gasoline for our cars has almost never been inflation-adjusted cheaper. Around the world, numerous sovereign governments are close to becoming dysfunctional -- likely with very bad consequences. We are pumping so much of the wrong kinds of gases into the atmosphere that the poles are melting, the seas are rising, the land is drying out and some day soon this planet is going to be very tough to live on. On top of all this, the world seems to be acquiring a fair number of people who are convinced that only they understand God properly and that the rest of us deserve to be done in. The only good news is that, so far as we know, there are no large meteors heading towards earth that would render the foregoing problems irrelevant.

The purpose of reciting a list of woes is to remind ourselves that we are living on one big interrelated, interconnected earth. Attempting to solve one problem will either mitigate or perhaps exacerbate the others for nothing much remains static these days. Economic growth has come to a halt in most countries and even China's meteoric growth is subsiding towards half what it was a couple of years ago.

How long this will last is anybody's guess. While Wall Street babbles on about rebounds in six or maybe nine months, others are convinced that the damage done to the world's financial systems in recent years is so great that, despite the trillions in bailouts and stimuli, there is no hope for recovery in the foreseeable future. Those of us who worry about such things are concerned that low oil prices have stifled new investment to such an extent that in a few years the oil industry will find it impossible to stem declining production from natural depletion.

In recent weeks, the idea of a short recession that will be over in a quarter or two seems to have been replaced by near-universal pessimism. If part of your job is to be eternally optimistic in order to sell things, then you will say that the economic situation will start to get better next year. If you are allowed the freedom to expound on realities, you will say we are in for an unknown, likely lengthy, period of unknown hardships.

In the last six months, oil prices have fallen by an unprecedented amount and are currently bouncing around $40 a barrel depending on the news of the day. This decline clearly is because supply began outpacing demand last summer and there is a widely held belief that as the world economy contracts, the demand for oil will contract faster. While it is true that the demand for oil is no longer growing, the available numbers do not suggest that, as yet, it is exactly "collapsing" either.

This week the U.S. demand for oil is officially reported to be down about 4 percent as compared to last year. Gasoline consumption is down only 2.1 percent, which does not seem to be much for a country that is laying off people by the millions and where all but the poorest of the poor drive cars as part of their daily existence. A fair guess is that the consumption of gasoline is so deeply imbedded in the American way of life that the economy is going to have to get a whole lot worse, and prices are going to have to get a whole lot higher, before we see more impressive declines in oil and gasoline consumption - say on the order of 10 or 20 percent.

Although the growth in China's demand for oil is slackening, it is still up, with December 2008 consumption 12 percent higher than December 2007. Actually Beijing knows a bargain when it sees one and is busily buying up crude to stash away in its new strategic reserve.

The International Energy Agency, which is sort of the official keeper of the world's oil statistics now acknowledges that a global recession is in progress but only sees world oil consumption for 2009 falling by 500,000 barrels a day (b/d) to 85.8 million. While these projections will be revised again and again during the year, at the minute they do not suggest anything that could be characterized as a "plunge" in the demand for oil. Despite rather impressive increases in U.S. stockpiles that have many convinced that demand is disappearing, the IEA reports that total stocks in the OECD countries, while above normal, actually went down by 2 million barrels in November and likely dropped another 8 million in December.

As prices plunged this fall, OPEC met, and met, and met again, each time announcing production cuts which they all swear they will implement. Considering that the unprecedented drop in oil prices has shattered their leaders' plans for power, prestige, glory, and economic development, they appear to be so desperate that they are likely to make a substantial portion of the announced 4.2 million barrel production cut. Some OPEC members are becoming so desperate that they are already calling for another cut that would bring the total to 5 or 6 million b/d.

Thus, the big unknowns for 2009 are just how far and how fast the world's GDPs are going to fall and just how fast the demand for oil will fall with them. It is obvious that if demand falls by only the officially projected 500,000 b/d, or anything close to that number, and production actually goes down 4 or more million b/d, then by every known law of economics oil is not going to stay at $40 a barrel, but is going to rise, perhaps even soar. For now we can only wait and watch.

Gap Oil

2009-01-21T20:05:00.001-08:00

Scitizen

By Prof. Chris Rhodes

It is Gap Oil not Peak Oil that is the problem. Rising demand for oil will exceed the quantity of it that can be withdrawn from the earth, resulting in a supply-demand gap. Once production does peak the gap will be enlarged from both sides, drawing down the supply side against rising demand. This I suggest should be termed "Gap Oil". Energy efficiency and a reduction in our demand for oil is paramount and a growing dependence on what can be grown, to create a sustainable "bioeconomy".

You heard it here first: GAP OIL. I am coining this term since I haven't seen it used before but it succinctly sums-up the prevailing situation regarding the provision and price of oil. We hear much about peak oil, and often this is misunderstood to mean that the world will imminently run out of oil. However, this is neither the case nor the definition of peak oil. Dr Richard Pike, the CEO of the Royal Society of Chemistry and a former oil-man, has made convincing arguments that there is more oil - about twice as much - to be recovered than the 1.2 trillion barrels worth that is generally accepted. That may well be true, but it does not impact on the rate of recovery of oil per se, which is the crux of the issue.

The world gets through around 84 million barrels of oil on a daily basis, which adds-up to just over 30 billion barrels a year; a staggering quantity which underpins the modern industrialised global mechanism and a relentless global population of 6.7 billion souls. Only time will tell history what extent that number will ascend to, but if the WHO is to be believed it will be over 9 billion by 2050 and rising perhaps to 12 billion in the subsequent century, all fed by oil. I have noted on previous occasions a Hubbert analysis, similar to that made for oil, that predicts instead that world population will rather peak at 7.1 billion by 2024 and then fall to around 2.5 billion by 2100. As I say, only time will tell us which manner of estimate is correct.

Demand for oil appears equally inexorable, and there are estimates made that in two decades China will be using more oil than the U.S., and that the world in total will demand another 50% by then. It is obvious that no matter how much recoverable oil there is in the ground, if it cannot be recovered at a sufficient rate to match the prevailing demand for it, then a gap will ensue between demand and supply, as happened last summer with the effect of driving-up the price of oil to almost $150 a barrel. This state of "gap-oil" will maintain a similar consequence: namely that the price of oil will soar from its present low value and the impact on the world economy will be severe, with oscillations of unparalleled amplitude to the global markets. There will be actual shortages of oil too, with supplies going to the highest bidder, and a shift of economic and political power being placed in those hands that hold the oil.

This will happen irrespective of whether we are at the peak of world oil production. The concept of world peak oil is misleading in any case, since all oil wells are at different phases of their relative depletion and so Russia will still be producing oil long after the North Sea, for example, and Saudi Arabia long after that. Hence some countries will be dependent on others. World peak oil can be thought of as the peaking of the largest fields, and once e.g. the giant Ghawar field peaks we can begin to kiss our lifestyles goodbye. This should auger-in a new age of energy efficiency and a growing reliance on sustainable economies, necessarily localised and so less dependent on transportation, and based around the bioeconomy, i.e. on what can be grown.

Technological solutions, e.g. the hydrogen economy will not be with us for decades if at all, and at the very least we need some interstitial solutions. The future of humankind will depend most viably on sustainable photosynthesis, rather than on the fossil fuel products of photosynthesis that were laid-down millions of years past. Once peak oil does strike it will enlarge the gap further by drawing-down the supply side, which will fall ever consummately against demand. It is gap-oil we need to fear, the state when supply fails demand and which is both inevitable and imminent.

Era of cheap oil is over

2009-01-21T20:04:00.001-08:00

FinanceAsia.com

By Nick Ferguson

Forget about cheap gasoline, today's low oil price masks a looming energy crisis that could dwarf the current economic problems.

If you thought things couldn't get any worse than a collapse of the global financial markets, think again. The economic meltdown is a good reason to be gloomy, for sure, but an under-reported study by the world's leading energy agency recently raised the spectre of a collapse in the global energy market too.

The steep fall in oil prices during the last few months of 2008 prompted many people to think that the run-up to $147 a barrel was an aberration – driven by speculators or another artefact of the credit bubble. But some industry analysts say that today's prices are the real aberration and, in fact, oil production is dangerously close to going into a permanent and unstoppable decline.

Indeed, the collapse in oil prices is accelerating this trend. Non-traditional projects that were profitable when prices were high, such as Canada's oil sands and fields that are deep underwater, are now being postponed or even scrapped. At the same time, the Organisation of Petroleum Exporting Countries (Opec) cut production targets in December in a desperate bid to reverse the decline. That move seems to have had some effect, but there is now a fear that supply in the oil market will be dangerously out of sync with demand when the economy starts to recover.

"We will work our way through these financial problems, but what would be really unfortunate is that once things bounce back, oil prices will bounce back too," said Matt Simmons, chairman of Simmons & Company International, at a roundtable held in mid-December. He says that supply shortages could help oil prices soar through $147 as unhindered as a hot knife cuts through butter.

It is no longer just conspiracy theorists that are worrying about a looming energy crisis. Today, even the International Energy Agency (IEA) is sounding the alarm bells. The agency, which has very close ties to the big oil companies, quietly dropped a bombshell in its World Energy Outlook 2008 when it revealed that its first ever real-world survey of existing oil fields shows production falling at a much faster rate than its earlier guesses.

At the current rate of decline, says the IEA, oil production from existing fields will fall to just 30 million barrels a day by 2030 – or roughly 73 million barrels short of the expected level of demand. New sources will make up some of the difference, but to fully meet future demand, the world's energy companies will need to discover the equivalent of six new Saudi Arabias during the next 20 years. Simply maintaining today's levels means discovering four new Saudi Arabias.

Not even the IEA expects this to happen. Its 2008 report represents the most optimistic outlook, but is nevertheless dire. Its executive summary starts with a quiet, but very important statement: "Current global trends in energy supply and consumption are patently unsustainable." And concludes with a similarly potent call to arms: "Time is running out and the time to act is now."

Put simply, there is no quick fix to meeting the world's future energy needs. "There is no fix actually," says Simmons. "The only fix is making a sprinting retreat from our use of oil today. If you get smart people looking at the data it doesn't take more than a couple of minutes for them to say, 'This is awful.'"

It may be too late already. Forecasts for production declines are based on the depletion rates of large oilfields, but almost half of the world's oil supply comes from tiny fields that produce fewer than 400 barrels a day – and these small fields are known to decline much quicker than big fields.

"Oilfields aren't like emptying a bucket or taking boxes out of inventory," says Robert Hirsch, a senior energy adviser at Management Information Services, speaking at the same roundtable as Simmons. "You can't keep pulling oil out of the ground at the rate that you did in the past because of the basic geological processes."

In the midst of a global recession, much of the explanation for falling prices has focused on the supposed collapse in demand for oil, particularly from Asia's rising economic powerhouses, but talk of China's falling oil imports is misleading. It is only growth that is falling – from 28% in October to 17% in November.

According to Simmons, the story of supply destruction is a more immediate problem. "We're unwinding supply right now just as fast as we've ever done and it's like a bulldog chewing on somebody's behind," he says.

As the IEA says in its report, the era of cheap oil is over. And, unless drastic measures are taken to reduce energy consumption and speed up the development of new energy sources, the world could be headed for a serious energy crisis as soon as 2015. If that happens, our current economic woes will hardly merit a mention in tomorrow's history books.

The Peak Oil Crisis: Renovating Suburbia

2009-01-17T12:51:00.001-08:00

Falls Church News-Press

By Tom Whipple

There has been a lot written lately about the coming demise of America's suburbs. The general thesis is that without cheap fuels for cars, lawnmowers and heating, suburban living will become untenable.

People will be forced to abandon their homes and make their way to cities, small towns or rural communities where they can survive without gasoline. There is, of course, another side to this coin.

I will be the among the first to grant that suburbia is a creature of cheap energy, particularly gasoline, and unless there are some radical changes in the way we power our homes, feed and clothe ourselves and move about, there will be great difficulties ahead. There are two major problems that need to be solved in order to keep the widely scattered housing of suburbia habitable without cheap energy -- transportation and excessive residential consumption of energy.

Not everything about the suburbs will be a downside when the era of cheap fossil fuel comes to an end. Nearly all suburban dwellings have broad roofs and yards that are suitable for collecting some form of solar or in some places wind energy. In many cases, suburban yards are suitable for growing food or perhaps even raising poultry or other small livestock. Most have yards allowing for easy access to subsurface geothermal energy. They are clean and have adequate sources of water and a means to handle sewage. These are not inconsequential assets when trying to maintain large numbers of people in some form of civilization in the face of dwindling supplies of energy. There are already places in Asia that are facing life-threatening water and sanitation problems due to the lack of electricity to run the pumps.

For the immediate future, an unappreciated aspect of suburban homes is easy access to a source of electricity for recharging electric vehicles. Wiring of urban streets and parking areas for recharging plug-in electric cars will cost billions and likely take decades. This week's Detroit automobile show stands as a monument to the closing era of the internal combustion engine. Nearly every automobile manufacturer is showing some form of electric powered vehicle that should be available, for those that can still afford them, in three or four years.

Some, with good reason, doubt that there will be enough resources, energy, and money to replace the 250 million passenger cars and trucks that we have in America so that we can continue motoring with electricity rather than gasoline. These skeptics are probably right if one assumes that the motor vehicles of the future will be electric clones of the of the 3-6,000 pound behemoths that are clogging the roads today.

Transportation to, from and around suburbia ten or 20 years from now will have to be markedly different than today. While some will have plug-in electric cars, it is unlikely that electricity will continue to be cheap in an era of dwindling fossil fuel supplies, carbon caps and emission taxes. Wasting energy will become a thing of the past. Driving to work or the store in a 4,000 pound electric car will simply become too expensive for most. In place of today's ubiquitous automobile will be a variety of light electric vehicles, ranging from electric bicycles, tricycles, and scooters, to very small cars that will be inexpensive to produce, use minimal amounts of electric energy and provide much of the mobility that will be required for everyday life.

An important part of suburbia's future will be far more efficient systems for distributing goods and services than driving many miles to stores and shopping centers in 6,000 pound vehicles to pick up a few pounds of whatever is required. Suburbs need to be modified with the addition of numerous small neighborhood commercial centers so that people can walk, bicycle, or at most take a short light vehicle trip to obtain whatever goods and services they need. Existing housing could be converted into neighborhood centers so that neighborhood centers would not even have to look like stores. Neighborhood centers which would be transfer places for mail, packages, food orders could provide very efficient ways to move essential goods to and from suburban residences without requiring lengthy energy consuming trips.

To maximize efficiency, the concept of a "store" that contains a large inventory could be replaced by warehouses for goods ordered over the internet and delivered to neighborhood centers. These centers could serve as starting points for public transit vehicles that could provide frequent service to move people as well goods to and from the neighborhood centers. They could even supply personal services such as haircuts and dentists. By combining the movement of mail, people and goods on one frequent-service, efficient electric vehicle great energy efficiencies could be achieved.

Renovating the suburban housing stock for optimum energy efficiency will be a long and difficult process taking many decades. With cheap energy, most houses in America were built to very low efficiency standards in order to save on capital costs. It will soon be recognized that using natural gas and oil for residential heating is a massive waste of a valuable resource that should be used for making things and essential vehicles. Residences will have to be modified to all-electricity and renovated to consume the minimum amount of energy for lighting, appliances, heating and cooling that is possible and affordable.

Doing this on a nationwide scale will likely take some form of government intervention. This could be in the form of considerably higher building standards including retrofits of existing buildings, higher energy taxes and even renovation loans to jump start the process. For nearly every existing building there are a variety of steps that need to taken from better insulation and more efficient lighting to replacing windows and heating systems. All of this will be expensive but there is no other choice because staying on in suburbia with greatly reduced sources of energy renovation will be the only option.

Choosing What Our Cities Will Look Like in a World Without Oil

2009-01-14T18:26:00.001-08:00

Worldchanging

By Sarah Kuck

As we draw nearer to reaching the point of Peak Oil, it benefits us to imagine what our cities will look like in a world without oil. Does this conjure up images of cities turned into urban farms just to produce enough food for us all? Do we devote all our energy to growing, bartering and trading the food we grow? Or will the city become divided, with the wealthy moving to the center while higher costs of living force lower-income families to the outer-ring suburbs, where access to goods, services and transport will be limited?

If we start now, we can choose what we want our cities to look like in the future. We can make them the resilient, sustainable centers of culture, justice, art and creativity that we hope they will become.

Author and Professor Peter Newman is asking us to imagine and then get to work building these urban centers. His book and talk, both titled Resilient Cities: Responding to Peak Oil and Climate Change, ask audiences to honestly look at what will happen to our cities when we reach Peak Oil. During his 90 minute presentation last night at Seattle's City Hall, Newman explained to the full house how peak oil will soon change reality as we know it; and how if we choose to make it so, we can take this challenge as our opportunity to create a functional, just and sustainable world.

Picturing a future where we do nothing resulted in some frightening scenarios: ones where we are barely getting by and injustice is running rampant. But, as Newman explained, picturing a future in which we respond to the challenge by building resilient cities results in images of a flexible and supportive, flourishing society.
So, in 2001, under the direction of Seoul's Mayor Lee Myung-bak, a plan was developed to tear down the freeway and to restore the river. The project was completed in 2005 after.jpg
In order to build the new resilient city of the future, Newman said that “we need to stop building extra urban road capacity and urban scatter; we need to start building electric renewable cities with much greater localism in the economy and infrastructure.”

“We need both at the same time," Newman said. "Or they will undermine what we need to do together.”

Here are a few exceptional points, summarized from Newman's worldchanging presentation:

End Agglomeration Diseconomies
The freeway is a failed technology. Freeways don’t actually ultimately help people get where they want to go any faster; they simply scatter people and economies. Freeways fail as public spaces; as infrastructure, they are dinosaurs. Their impact on cities is not good for economics or people. So we should stop building them. We should instead organize and advocate for rail systems so we can reclaim and rehabilitate our open spaces. Car-dependent cities can begin to reclaim freeways by investing in rail transit and building up local economies around station hubs.

Density, Walkability and Affordable Housing
High quality, high rise developments in the city will increase walkability, and decrease the number of trips taken by car. These developments will function best if developers work in partnership with land use planners. To end the division and disagreements that high density development creates, we have to require all developments to allot 15 percent of space to social housing, and require 5 percent of the value of a development to go toward social infrastructure, like landscaped open-to-the-public space, public art, community centers, schools, arts facilities.

Complete Streets, Smart Grids
Cars won’t go away completely, even though the oil we currently use to power them will. The cars of the future will run on alternatively produced electricity. We can link the extra energy produced from solar and wind production systems to the batteries in our cars with Smart Grids. These energy linking systems help buildings and transportation power each other. (Read more about Smart Grids on Worldchanging here and here.)

Eco-villages colonizing the fringe
Build eco-villages on the outskirts of the urban ring. Built with their own water, power and sewage systems, we can turn the crumbling suburbs into self sustaining eco-communities of the future.

What We Need to do Now
Newman gave vibrant examples of each of these ideas happening in cities all over the world, from Seoul to London, Copenhagen to Vancouver, B.C., these cities are proving that this is possible. All we need now, said Newman, is imagination, post oil strategies, partnerships and demonstrations, and above all HOPE!

Let’s get to work.

Oil drying up as world remains unaware

2009-01-11T18:26:00.001-08:00

canada.com

By William Marsden

For more than a century it has been cheaper than coffee and as constant as ocean waves.

Getting it is simple. You select the grade, insert the nozzle, squeeze the handle and gasoline comes out. There seems no end to it.

Until now.

On top of the other problems plaguing the world, such as global warming and the current financial meltdown, there's a third pressing issue that threatens to bring the good life to an end: The world is fast running out of oil.

Given that crude oil makes up 36.4 per cent of the world's energy consumption, the seriousness of shortages cannot be underplayed. Our reliance on oil is almost total. It fuels 100 per cent of air and sea transport and most of our land transport. Without oil there is no petrochemical industry.

Agriculture, manufacturing, building materials, the clothes we wear, the food we eat and the medicines we take depend on oil.

Running out of oil is a question of when - not if.

Normand Mousseau, a physics professor at Universite de Montreal who has written a book on the end of oil, says the beginning of the end struck last summer. "This is why the prices jumped to $147 a barrel," he said. "As soon as the economy comes back, they will be right back up."

However, others say the crunch will come in three to 10 years depending on our rate of consumption.

"I hate being an alarmist about it, but our entire lifestyle is dependent on cheap oil and there just isn't very much left in the ground," Andrew Miall, professor of geology at the University of Toronto, said in an interview.

Most petroleum geology experts contend that we have already discovered the world's giant fields and what's left over will not keep the age of oil alive much longer.

"It's safe to say we have pinpricked the Earth thoroughly enough that it is very unlikely we have missed any Middle Easts," Miall said. "There may be another North Sea or two, but nothing that is going to really change the energy scene."

Matt Simmons, chairman and CEO of Simmons and Company International, which is a private energy investment banker based in Texas, said he believes the world's oil reserves have already peaked and we are on the downward slide.

"I think basically we are now in the early days of a very serious pending scarcity of oil and natural gas," he said. "Because we don't know we are, we are not putting any clamps on demand."

Simmons has been studying world oil production and reserves for decades. His company helps finance exploration and production.

He predicted - accurately as it turned out - that the North Sea fields would peak between 1998 and 2000.

Now he has turned his attention to Mexico, Kuwait and Saudi Arabia, warning that their fields also have hit the downward slide.

"All the major oilfields of the world have peaked and we are going to see soon some precipitous collapses," he said.

Because production flows can still keep pace with demand, the price has remained deceptively low, giving the impression there's still lots of oil out there. Even at its record high of $147 a barrel, crude oil was still only 22 cents a cup, which is a fraction of the cost of a regular coffee.

Simmons called the price of oil absurdly low: "Let's say you and five fat friends run out of gas and you see a guy coming down the street riding a donkey and pulling an old messy cart and you say, ‘Hey pull over here. Can you take me and my five fat friends a couple of miles for 22 cents,' which is what that much gas will get you. And the guy's going to flip you the bird: ‘Are you stupid?'"

Our recent consumption rates are the most voracious in history. By the end of 2007, the world had consumed about 1.1 trillion barrels of oil. Half of this was consumed over the last 25 years alone. So far, we have consumed about 50 per cent of the total recoverable oil, according to the World Energy Council.

Chris Skrebowski, a London-based member of the Energy Institute in Britain and consultant editor of the Petroleum Review, which is considered the oil industry bible, said he believes world oil reserves will peak "no later than 2012."

He paints a doomsday scenario of a world blithely unaware that in a few years its oil-based lifestyle will begin to end.

"Peak oil is when delivery flows can't meet the demand," Skrebowski said. Demand will outstrip production primarily because of a lack of sufficient reserves. Once that happens, we are on an unbroken downward slide.

For Skrebowski, signs of the approaching peak are clear. High oil prices as well as the enormous price fluctuations we're seeing are ultimately the result of emerging bidding wars over oil by oil-deficit countries.

Despite dwindling reserves, demand for oil is expected to continue to rise in China, India and other Asian countries. This will only hasten the moment of peak oil.

And new important discoveries are doubtful.

Canada's conventional oil production peaked in about 1995. U.S. production peaked in the 1970s. North Sea wells peaked in 2000. Mexico peaked in 1997 and Venezuelan production is peaking.

In all, Skrebowski said, about 28 significant producers are in decline. This represents about 35 per cent of global production. Once that figure reaches 51 per cent, "we reach global peak oil," he said.

The only place where production continues to hold up is in the Persian Gulf.

But the elephant wells of Saudi Arabia are showing signs of exhaustion and the Saudis are indicating that they want to begin preserving their oil for their children.

Yet politicians have not addressed the issue.

"They are terrified of it," Skrebowski said. "They don't know what to do. There are no pat solutions."

Montreal Gazette

wmarsden@thegazette.canwest.com

Oil 2009

2009-01-11T11:36:00.001-08:00

tomdispatch.com

Be Careful What You Wish For

By Michael T. Klare

Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline "Oil's Rapid Rise Stirs Talk of $200 a Barrel This Year," the July 7 issue of the Wall Street Journal warned that prices that high would put "extreme strains on large sectors of the U.S. economy." Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

Prices that low -- and their equivalents at the gas pump -- will no doubt be viewed as a godsend by many hard-hit American consumers, even if they ensure severe economic hardship in oil-producing countries like Nigeria, Russia, Iran, Kuwait, and Venezuela that depend on energy exports for a large share of their national income. Here, however, is a simple but crucial reality to keep in mind: No matter how much it costs, whether it's rising or falling, oil has a profound impact on the world we inhabit -- and this will be no less true in 2009 than in 2008.

The main reason? In good times and bad, oil will continue to supply the largest share of the world's energy supply. For all the talk of alternatives, petroleum will remain the number one source of energy for at least the next several decades. According to December 2008 projections from the U.S. Department of Energy (DoE), petroleum products will still make up 38% of America's total energy supply in 2015; natural gas and coal only 23% each. Oil's overall share is expected to decline slightly as biofuels (and other alternatives) take on a larger percentage of the total, but even in 2030 -- the furthest the DoE is currently willing to project -- it will still remain the dominant fuel.

A similar pattern holds for the planet as a whole: Although biofuels and other renewable sources of energy are expected to play a growing role in the global energy equation, don't expect oil to be anything but the world's leading source of fuel for decades to come.

Keep your eye on the politics of oil and you'll always know a lot about what's actually happening on this planet. Low prices, as at present, are bad for producers, and so will hurt a number of countries that the U.S. government considers hostile, including Venezuela, Iran, and even that natural-gas-and-oil giant Russia. All of them have, in recent years, used their soaring oil income to finance political endeavors considered inimical to U.S. interests. However, dwindling prices could also shake the very foundations of oil allies like Mexico, Nigeria, and Saudi Arabia, which could experience internal unrest as oil revenues, and so state expenditures, decline.

No less important, diminished oil prices discourage investment in complex oil ventures like deep-offshore drilling, as well as investment in the development of alternatives to oil like advanced (non-food) biofuels. Perhaps most disastrously, in a cheap oil moment, investment in non-polluting, non-climate-altering alternatives like solar, wind, and tidal energy is also likely to dwindle. In the longer term, what this means is that, once a global economic recovery begins, we can expect a fresh oil price shock as future energy options prove painfully limited.

Clearly, there is no escaping oil's influence. Yet it's hard to know just what forms this influence will take in the year. Nevertheless, here are three provisional observations on oil's fate -- and so ours -- in the year ahead.

1. The Price of Oil Will Remain Low Until It Begins to Rise Again: I know, I know: this sounds totally inane. It's just that there's no other way to put it. The price of oil has essentially dropped through the floor because, in the past four months, demand collapsed due to the onset of a staggering global recession. It is not likely to approach the record levels of spring and summer 2008 again until demand picks up and/or the global oil supply is curbed dramatically. At this point, unfortunately, no crystal ball can predict just when either of those events will occur.

The contraction in international demand has indeed been stunning. After rising for much of last summer, demand plunged in the early fall by several hundred thousand barrels per day, producing a net decline for 2008 of 50,000 barrels per day. This year, the Department of Energy projects global demand to fall by a far more impressive 450,000 barrels per day -- "the first time in three decades that world consumption would decline in two consecutive years."

Needless to say, these declines were unexpected. Believing that international demand would continue to grow -- as had been the case in almost every year since the last big recession of 1980 -- the global oil industry steadily added to production capacity and was gearing up for more of the same in 2009 and beyond. Indeed, under intense pressure from the Bush administration, the Saudis had indicated last June that they would gradually add to their capacity until they reached an extra 2.5 million barrels per day.

Today, the industry is burdened with excess output and insufficient demand -- a surefire recipe for plunging oil prices. Even the December 17 decision by members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce their collective output by 2.2 million barrels per day has failed to lead to a significant increase in prices. (Saudi Arabia's King Abdullah said recently that he considers $75 a barrel a "fair price" for oil.)

How long will the imbalance between demand and supply last? Until the middle of 2009, if not the end of the year, most analysts believe. Others suspect that a true global recovery will not even get under way until 2010, or later. It all depends on how deep and prolonged you expect the recession – or any coming depression -- to be.

A critical factor will be China's ability to absorb oil. After all, between 2002 and 2007, that country accounted for 35% of the total increase in world oil consumption -- and, according to the DoE, it is expected to claim at least another 24% of any global increase in the coming decade. The upsurge in Chinese consumption, combined with unremitting demand from older industrialized nations and significant price speculation on oil futures, largely explained the astronomical way prices were driven up until last summer. But with the Chinese economy visibly faltering, such projections no longer seem valid. Many analysts now predict that a sharp drop-off in Chinese demand will only accelerate the downward journey of global energy prices. Under these conditions, an early price turnaround appears increasingly unlikely.

2. When Prices Do Rise Again, They Will Rise Sharply: At present, the world enjoys the (relatively) unfamiliar prospect of a global oil-production surplus, but there's a problematic aspect to this. As long as prices remain low, oil companies have no incentive to invest in costly new production ventures, which means no new capacity is being added to global inventories, while available capacity continues to be drained. Simply put, what this means is that, when demand begins to surge again, global output is likely to prove inadequate. As Ed Crooks of the Financial Times has suggested, "The plunging oil price is like a dangerously addictive painkiller: short-term relief is being provided at a cost of serious long-term harm."

Signs of a slowdown in oil-output investment are already multiplying fast. Saudi Arabia, for example, has announced delays in four major energy projects in what appears to be a broad retreat from its promise to increase future output. Among the projects being delayed are a $1.2 billion venture to restart the historic Damman oil field, development of the 900,000 barrel per day Manifa oil field, and construction of new refineries at Yanbu and Jubail. In each case, the delays are being attributed to reduced international demand. "We are going back to our partners and discussing with them the new economic circumstances," explained Kaled al-Buraik, an official of Saudi Aramco.

In addition, most "easy oil" reservoirs have now been exhausted, which means that virtually all remaining global reserves are going to be of the "tough oil" variety. These require extraction technology far too costly to be profitable at a moment when the per barrel price remains under $50. Principal among these are exploitation of the tar sands of Canada and of deep offshore fields in the Gulf of Mexico, the Gulf of Guinea, and waters off Brazil. While such potential reserves undoubtedly harbor significant supplies of petroleum, they won't return a profit until the price of oil reaches $80 or more per barrel -- nearly twice what it is fetching today. Under these circumstances, it is hardly surprising that the oil majors are canceling or postponing plans for new projects in Canada and these offshore locations.

"Low oil prices are very dangerous for the world economy," commented Mohamed Bin Dhaen Al Hamli, the United Arab Emirates' energy minister, at a London oil-industry conference in October. With prices dropping, he noted, "a lot of projects that are in the pipeline are going to be reassessed."

With industry cutting back on investment, there will be less capacity to meet rising demand when the world economy does rebound. At that time, expect the present situation to change with predictably startling rapidity, as rising demand suddenly finds itself chasing inadequate supply in an energy-deficit world.

When this will occur and how high oil prices will then climb cannot, of course, be known, but expect gas-pump shock. It's possible that the energy shock to come will be no less fierce than the present global recession and energy price collapse. The Department of Energy, in its most recent projections, predicts that oil will reach an average of $78 per barrel in 2010, $110 in 2015, and $116 in 2020. Other analysts suggest that prices could go much higher much faster, especially if demand picks up quickly and the oil companies are slow to restart projects now being put on hold.

3. Low Oil Prices Like High Ones Will Have Significant Worldwide Political Implications: The steady run up in oil prices between 2003 and 2008 was the result of a sharp increase in global demand as well as a perception that the international energy industry was having difficulty bringing sufficient new sources of supply on line. Many analysts spoke of the imminent arrival of "peak oil," the moment at which global output would commence an irreversible decline. All this fueled fierce efforts by major consuming nations to secure control over as many foreign sources of petroleum as they could, including frenzied attempts by U.S., European, and Chinese firms to gobble up oil concessions in Africa and the Caspian Sea basin -- the theme of my latest book, Rising Powers, Shrinking Planet.

With the plunge in oil prices and a growing sense (however temporary) of oil plenty, this dog-eat-dog competition is likely to abate. The current absence of intense competition does not, however, mean that oil prices will cease to have an impact on global politics. Far from it. In fact, low prices are just as likely to roil the international landscape, only in new ways. While competition among consuming states may lessen, negative political conditions within producing nations are sure to be magnified.

Many of these nations, including Angola, Iran, Iraq, Mexico, Nigeria, Russia, Saudi Arabia, and Venezuela, among others, rely on income from oil exports for a large part of their government expenditures, using this money to finance health and education, infrastructure improvements, food and energy subsidies, and social welfare programs. Soaring energy prices, for instance, allowed many producer countries to reduce high youth unemployment -- and so potential unrest. As prices come crashing down, governments are already being forced to cut back on programs that aid the poor, the middle class, and the unemployed, which is already producing waves of instability in many parts of the world.

Russia's state budget, for example, remains balanced only when oil prices stay at or above $70 per barrel. With government income dwindling, the Kremlin has been forced to dig into accumulated reserves in order to meet its obligations and prop up sinking companies as well as the sinking ruble. The nation hailed as an energy giant is running out of money quickly. Unemployment is on the rise, and many firms are reducing work hours to save cash. Although Prime Minister Vladimir Putin remains popular, the first signs of public discontent have begun to appear, including scattered protests against increased tariffs on imported goods, rising public transit fees, and other such measures.

The decline in oil prices has been particularly damaging to natural gas behemoth Gazprom, Russia's biggest company and the source (in good times) of approximately one quarter of government tax income. Because the price of natural gas is usually pegged to that of oil, declining oil prices have hit the company hard: last summer, CEO Alexei Miller estimated its market value at $360 billion; today, it's $85 billion.

In the past, the Russians have used gas shut-offs to neighboring states to extend their political clout. Given the steep drop in gas prices, however, Gazprom's January 1st decision to sever gas supplies to Ukraine (for failure to pay for $1.5 billion in past deliveries) is, at least in part, finance-based. Though the decision has triggered energy shortages in Europe -- 25% of its natural gas arrives via Gazprom-fueled pipelines that traverse Ukraine -- Moscow shows no sign of backing down in the price dispute. "They do need the money," observed Chris Weafer of UralSib Bank in Moscow. "That is the bottom line."

Plunging oil prices are also expected to place severe strains on the governments of Iran, Saudi Arabia, and Venezuela, all of which benefited from the record prices of the past few years to finance public works, subsidize basic necessities, and generate employment. Like Russia, these countries adopted expansive budgets on the assumption that a world of $70 or more per barrel gas prices would continue indefinitely. Now, like other affected producers, they must dip into accumulated reserves, borrow at a premium, and cut back on social spending -- all of which risk a rise in political opposition and unrest at home.

The government of Iran, for example, has announced plans to eliminate subsidies on energy (gasoline now costs 36 cents per gallon) -- a move expected to spark widespread protests in a country where unemployment rates and living costs are rising precipitously. The Saudi government has promised to avoid budget cuts for the time being by drawing on accumulated reserves, but unemployment is growing there as well.

Diminished spending in oil-producing states like Kuwait, Saudi Arabia, and the United Arab Emirates will also affect non-producing countries like Egypt, Jordan, and Yemen because young men from these countries migrate to the oil kingdoms when times are flush in search of higher-paying jobs. When times are rough, however, they are the first to be laid off and are often sent back to their homelands where few jobs await them.

All this is occurring against the backdrop of an upsurge in the popularity of Islam, including its more militant forms that reject the "collaborationist" politics of pro-U.S. regimes like those of Hosni Mubarak of Egypt and King Abdullah II of Jordan. Combine this with the recent devastating Israeli air attacks on, and ground invasion of, Gaza as well as the seemingly lukewarm response of moderate Arab regimes to the plight of the 1.5 million Palestinians trapped in that tiny strip of land, and the stage may be set for a major upsurge in anti-government unrest and violence. If so, no one will see this as oil-related, and yet that, in part, is what it will be.

In the context of a planet caught in the grip of a fierce economic downturn, other stormy energy scenarios involving key oil-producing countries are easy enough to imagine. When and where they will arise cannot be foreseen, but such eruptions are only likely to make any future era of rising energy prices all that much more difficult. And, indeed, prices will eventually rise again, perhaps some year soon, swiftly and to new record heights. At that point, we will be confronted with the sort of problems we faced in the spring and summer of 2008, when raging demand and inadequate supply drove petroleum costs ever skyward. In the meantime, it's important to remember that, even with prices as low as they are, we cannot escape the consequences of our addiction to oil.

Michael T. Klare is the Five College Professor of Peace and World Security Studies at Hampshire College in Amherst, Massachusetts. He is the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Oil (Metropolitan Books). A documentary version of his previous book, Blood and Oil, is available at bloodandoilmovie.com. To listen to a TomDispatch audio interview in which Klare discusses the future of oil in 2009 and beyond, click here.

The Peak Oil Crisis: Cars - Redux

2009-01-08T20:50:00.001-08:00

Falls Church News-Press

By Wayne Besen

I hate to keep coming back to cars, but in the last hundred years they have come to be one of the most significant facets of civilization - yet their future is in doubt.

Here in America they are clearly the fundamental implement of life for most of us. Their manufacture, financing, care and feeding provides employment for millions. They bring us to work, food, entertainment, shopping, education, love, friendship. In short. nearly all of American life is intimately involved in unrestricted access to our cars. This, of course, is why we have some 250 million of them running around our country and some 900 million running around the world.

Cars have been much in the news lately. New ones have not been selling too well in recent months and their manufacturers, at least in the U.S., are bankrupt. For the next few weeks, the companies will live off government handouts until the new President and Congress decide just how to let them die. GM just announced that for the first quarter of 2009 it plans to produce 420,000 vehicles. This is 180,000 fewer vehicles than it planned to produce just two weeks ago and is down 53 percent from the first quarter of 2007. With numbers like these, it is clear that the end is coming soon.

Unless you are employed in the automobile industry or indirectly make a living from the manufacture or sale of motor vehicles, the demise of Detroit-as-we-know-it will probably not make too much difference to our mobility. Our inventory of about 250 million registered passenger vehicles is about 50 million more vehicles than we have licensed drivers. We can obviously stop adding to the fleet, jack up vehicle maintenance a bit, cut annual mileage, and get along for decades without seriously impairing the important aspects of the nation's mobility.

Shortly, the problem, of course, will not be the cars, but the gasoline and diesel to power them. At the minute, gasoline prices are hovering around an all-time inflation adjusted low; however, this situation is reversing again. OPEC is in the midst of cutting its production by 4.2 million barrels a day (b/d) and U.S. gasoline consumption seems to be inching up again despite increasingly severe economic problems. Within a year or two we could be back over $100 a barrel again and given the likely condition of the economy by then, demand for motor fuel will fall.

The future of the car has become the subject of much debate. It seems likely that most large gas-guzzlers will be out of production within a year or so. Nearly all automobile manufacturers around the world are working on all-electric or plug-in hybrid electric cars that are due to start coming on the market in two or three years. If it were possible to replace the world's light vehicle fleet quickly with cars that ran at least partially on electricity or got over 100 miles per gallon, then there is a chance that the demand for liquid fuels would fall faster than depletion and the problem could be put off for several decades.

For many observers, the notion of replacing our current fleet of cars with some form of electric ones is absurd. Their argument is that there will simply not be enough resources to make the transition. There will not be enough lithium for the batteries; global warming carbon caps will limit industrial production; and consumers impoverished by the continuing financial meltdown will not be able to afford what are likely to be expensive replacements for our current cars. If as seems likely, much of the world's capacity to produce automobiles is going to be shut down in the next couple of years, the likelihood of gearing up and replacing hundreds of millions of cars before sizeable declines in the world's oil production sets in is remote.

Plug-in electric cars of various stripes, of course, will come onto the market and it is likely that millions will be produced and sold in coming decades, but this will only make a minor dent in the U.S. fleet of 250 million passenger vehicles, not to mention the 900 million or more that will be running around the world. So what is likely to happen?

With increasing gasoline prices and falling family incomes, unlimited use of private cars that nearly all in America now enjoy will start moving back up the socio-economic tree. The fortunate, who can afford the new generations of ultra high-mileage plug-in cars, will not have to worry about increasing gasoline prices, shortages or rationing. For the rest, use of the aging fleet of our current car inventory will gradually be reduced. Car pools and public transit are likely to become far more prevalent. Efficient cars will become more desirable as gasoline approaches unaffordable prices.

The very nature of the car will likely evolve to a smaller more utilitarian device to compensate for declining incomes and high gas prices. Consumer perceptions about what constitutes a desirable car that grew up in last 50 years will no longer matter. Various forms of government intervention into the automobile and oil industries - ranging from tax policies to ownership -- will have a major influence in the evolution of cars during the coming decades. In Europe, 30 years of high liquid fuel taxes have resulted in a civilization that uses about half the oil per capita that we use in America. There are already calls in the U.S. for much higher, possibly varying, gasoline taxes to stem roller coaster gasoline prices.

This situation cries out for Presidential leadership if the mobility and freedom and economic benefits of the ubiquitous personal car are going to last much longer. With the U.S. automobile industry in a death spiral and with neither the America's consumer nor the industry leadership basing decisions on much more than wishful thinking, the new President will have to set a new sustainable course and soon. The objective of course would be to start producing a passenger car fleet that will run on a fraction of the current energy and be affordable in the troubled times ahead.

Peak Oil And The Century Of Famine

2009-01-05T20:11:00.001-08:00

Countercurrents.org

By Peter Goodchild

Around the beginning of the twenty-first century, there began a clash of two gigantic forces: overpopulation and oil depletion. The event went unnoticed by all but a few people, but it was quite real. As a result of that clash, the number of human beings on Earth must one day decline in order to match the decline in oil production.

Unfortunately, there seems to be no way to get those two giant forces into equilibrium in any gentle fashion, because in every year that has gone by for the last few thousand years — and every year that will arrive — the human population of Earth is automatically adjusted so that it is roughly equal to the planet’s carrying capacity. Like so many other animals, human beings always push themselves to the limits of that carrying capacity. The Age of Petroleum made us no wiser in that respect, and in fact dependence on fossil fuels has led us to a crisis far greater than any in the past.

For the average human being, life has always been a matter of bare survival, and the same is true now. Population growth is soaring, whereas oil production is declining. If, at the start of any year, the world’s population is greater than its carrying capacity, only basic arithmetic is needed to see that the difference between the two numbers means that mortality will be above the normal by the end of that year. In fact, a simple calculation shows that before the year 2050 there will be about 3 billion deaths above normal, with a grand total of about 4 billion by the end of the century. Whether there are any partial solutions to that crisis is something to be considered at the end of this argument.

Depletion of oil and other fossil fuels will greatly affect food production. In terms of its effects on daily human life, in fact, the most significant aspect of oil depletion will be the lack of food. “Peak oil” is basically “peak food.” There will be severe problems with transportation (e.g., shortages of diesel fuel and asphalt) and communication (e.g., sources of electrical power), as well as with more immediate aspects of getting crops to grow (e.g., the use of fertilizer and pesticides, and the availability of irrigation). Crop yield-per-hectare is far lower in societies that do not have fossil fuels or modern machinery. Maize production, for example, declines by about 80 percent in the absence of modern technology, as David Pimentel notes in “Food and Energy Resources.” We should have no illusions that several billion humans can be fed by “organic gardening” or anything else of that nature.

Over the next few decades, therefore, there will be famine on a scale several times larger than ever before in human history. Let us refer to those above-normal deaths as “famine deaths.” There will, of course, be famines for other reasons during those years. It is also true that warfare and plague will take their toll to a large extent before famine claims those same humans as its victims.

The increase in the world’s population has followed a simple curve: from about 1.6 billion in 1900 to about 6.1 billion in 2000 A quick glance at a chart of world population growth, on a broader time scale, shows a line that runs almost horizontally for thousands of years, and then makes an almost vertical ascent as it approaches the year 2000. Of all the humans who have ever lived on the Earth, most were born in the last 50 years. That is not just an amusing curiosity. It is a shocking fact that should have awakened humanity to the realization that something is dreadfully wrong.

Mankind is always prey to its own “exuberance,” to use William R. Catton’s term in “Overshoot.” That has certainly been true of population growth. “Do you have any children?” or, “How many children do you have?” is a form of greeting or civility almost equivalent to “How do you do?” or, “Nice to meet you.” World population growth, nevertheless, has always been ecologically hazardous. The destruction of the environment reaches back into the invisible past, and the ruination of land, sea, and sky has been well described if not well heeded. But what is even less frequently noted is that with every increase in human numbers we are only barely able to keep up with the demand: providing all those people with food and water has not been easy. We are always pushing ourselves to the limits of Earth’s carrying capacity.

Even that is an understatement. In the late twentieth century it could be said that we actually went beyond the carrying capacity. No matter how much environmental degradation we created, there was always the sense that we could somehow “get by.” But in the late twentieth century we stopped getting by. It is important to differentiate between production in an “absolute” sense and production “per person.” Although oil production, in “absolute” numbers, kept climbing — only to decline around 2000 or 2010 — what was ignored was that although that “absolute” production was climbing, the production “per person” was not. In the year 1990 there were 4.5 barrels of oil per person per year. By the year 2000 there were only about 4.3. As the FAO has discovered, the same sort of problem was occurring with world grain supplies: although government sources cheerfully tell us that grain production in absolute terms is still increasing every year, what they are not telling us is that because of overpopulation the amount of grain per person is actually declining. There is more grain, but there are more mouths to feed. The same problem of resources “per person” can be seen in the world’s fish catches. We were always scraping the edges of the earth’s carrying capacity, but we are now entering a far more dangerous era. The main point to keep in mind, however, is that, throughout the twentieth century, oil production and human population were so closely integrated that every barrel of oil had an effect on human numbers.

While population has been going up, so has oil production: from about 0.1 billion barrels in 1900 to about 4.2 in 1950, to about 27.0 in 2000. (The data are readily available in many publications, such as BP’s annual “Global Statistical Review of World Energy,” and John Gever et al., “Beyond Oil,” is still valuable.) According to most estimates, the peak was (or will be) around the year 2010. The rest is a steep drop: 20 billion barrels in 2020, 15 in 2030, 9 in 2040, 5 in 2050.

The relation between population and oil production is one of cause and effect. The skyrocketing of population is not merely coincident with the skyrocketing of oil production. It is the latter that actually causes the former: that is to say, oil is the main source of energy within industrial society. With abundant oil, a large population is possible — ignoring, of course, the many other things that might wipe out human numbers anyway. Without that abundant oil, on the other hand, a large population is not possible. It was industrialization, improved agriculture, improved medicine, the expansion of humanity into the Americas, and so on, that began the upward climb, but it was oil that allowed human numbers to triple in less than 100 years. Yes, there are other sources of energy, but these range from the inefficient to the irrational.

Incidentally, carrying capacity does not increase in direct proportion to the number of barrels of oil per person, because as the population goes up there is more strain on the environment. As a result, we were comfortable enough with 1 barrel per person in 1940, but less comfortable with 4 barrels per person in 1990.

Because oil production is the determining factor in population growth, we now have a useful set of numbers: the “existing population” for any given year in the past is roughly the same thing as the “carrying capacity” for that year. We can thereby deduce another useful set of numbers: the “existing population” at the start of any given year in the future must decrease to become the “carrying capacity” for that year. “For any industrial society, fossil-fuel production determines carrying capacity”: that is an immutable law.

Human population will collapse in any year in which there is a difference between the initial population and the carrying capacity. The equation is not complex: (A) the previous year’s population (in billions) can be subtracted from (B) the carrying capacity (in billions) to give us (C) the number of deaths (in billions) by famine. The data for the carrying capacity of any future year can be inserted by looking at similar data for oil production and population in the years 1900 to 2000. Some samples of future years are as follows.

2031 (oil 13.8G bbl): (A) 3.5000 minus (B) 3.4465 equals (C) 0.0535

2032 (oil 13.2G bbl): (A) 3.4465 minus (B) 3.3937 equals (C) 0.0527

2033 (oil 12.6G bbl): (A) 3.3937 minus (B) 3.3418 equals (C) 0.0519

The “normal,” non-famine-related, birth and death rates are not included in those 50 million annual deaths, since for most of pre-industrial human history the sum of the two — i.e. the “growth rate” — has been nearly zero. And there is no question that the future will mean a return to the “pre-industrial.”

Of course, it will often be hard to separate “famine deaths” from “normal deaths.” War, disease, global warming, topsoil deterioration, and other factors will have unforeseeable effects of their own. It is probably safe to say, however, that an unusually large decline in the population of a country will be the most significant indicator of famine.

These equations obliterate all previous estimates of future population growth. Instead of a steady rise over the course of this century (as generally predicted), there will be a clash of the two giant forces of overpopulation and oil depletion, followed by a precipitous ride into the unknown future.

The term “carrying capacity,” as used here, incidentally, is not entirely synonymous with the term as used by William R. Catton. A more-appropriate but lengthier and clumsier term might be something like “temporary feeding capacity.” For the last 50 years or so, human population has always expanded to press against the very limits of what is possible for the oil-production level of any particular year — although in recent years even that tight correspondence has started to collapse.

The figures in the above list can only be approximate, of course, and even the most elaborate mathematics will not entirely help us to deal with the great number of interacting factors. We need to swing toward a more pessimistic figure for humanity’s future if we include the effects of war, disease, and so on.

The most serious pessimistic factor will be largely sociological: To what extent can the oil industry maintain the advanced technology required for drilling ever-deeper wells in ever-more-remote places, when that industry will be struggling to survive in a milieu of social chaos? The future will be anarchy. Intricate division of labor, large-scale government, and high-level education will no longer exist.

If the above figures are correct, we are ill-prepared for the next few years. The problem of oil depletion turns out to be something other than a bit of macabre speculation for people of the distant future to deal with, but rather a sudden catastrophe that will only be studied dispassionately long after the event itself has occurred. Doomsday will probably be upon us before we have time to look at it carefully.

The world has certainly known some terrible famines in the past, of course. In recent centuries, one of the worst was that of North China in 1876-79, when between 9 and 13 million died, but India had a famine at the same time, with perhaps 5 million deaths. The Soviet Union had famine deaths of about 5 million in 1932-34, purely because of misguided political policies. The worst famine in history was that of China’s Great Leap Forward, 1958-61, when at least 20 million died, but probably far more than that.

A closer analogy to “petroleum famine” may be Ireland’s potato famine of the 1840s, since — like petroleum — it was a single commodity that caused such devastation. Cecil Woodham-Smith describes the Irish tragedy in “The Great Hunger.” The response of the British government at the time can be summarized as a jumble of incompetence, frustration, and indecision.

On the other hand, there are elements of optimism that may need to be plugged in. For one thing, there is what might be called the “inertia factor”: the planet Earth is so big that even the most catastrophic events take time for their ripples to finish spreading. An asteroid fragment 10 kilometers wide hit eastern Mexico 65 million years ago, but we are alive today to tell the story.

Somewhat related, among optimistic factors, is the sheer tenacity of the human species: we are intelligent social creatures living at the top of the food chain, in the manner of wolves, yet we outnumber wolves worldwide by about a million to one; we are as populous as rats or mice. We can outrace a horse over long distances. Even with Stone-Age technology, we can inhabit almost every environment on Earth, although most of the required survival skills have been forgotten.

Specifically, we must consider the fact that neither geography nor population is homogeneous. All over the world, there are forgotten pockets of habitable land, much of it abandoned for the ironic reason that urbanites regarded rural life as too difficult, as they traded their peasant smocks for factory overalls. There are still areas of the planet’s surface that are sparsely occupied although they are habitable or could be made so, to the extent that some rural areas have had a decline in population that is absolute, i.e. not merely relative to another place or time. By careful calculation, therefore, there will be survivors. Over the next few years, human ingenuity must be devoted to refining our understanding of these geographic and demographic matters, so that at least a few can escape the tribulation. Neither the present nor future generations should have to say, “We were never warned.”

Peter Goodchild is writing a book called “Surviving the Oil Crash.” His previous work includes “Survival Skills of the North American Indians,” “Raven Tales,” and “The Spark in the Stone.” He is temporarily living in the Sultanate of Oman. His email address is odonatus@live.com.

The Risk of Misjudging Peak Oil: A Real Physical Crisis

2008-12-30T16:10:00.001-08:00

321energy

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Cheap gas today, but 'peak oil' crisis near

2008-12-28T12:37:00.001-08:00

canada.com

Our Oil Reserves Are Depleted; It's Time for Utopia

2008-12-27T20:03:00.001-08:00

huffingtonpost.com

By Jim Schumacher and Debbie Bookchin

Last week at a Christmas party in the hills of Umbria, we were part of a captive audience listening to an American businessman holding forth on an ever-popular expat subject - the dismal exchange rate of dollars to euros. He informed his listeners that they needn't worry: In just a couple of years, he said, America will have pulled out of the recession and the economy will be growing strong; Europe, on the other hand will still be facing the ripple effects of the global meltdown - and will be suffering.

"You'll see," he said blithely, "the dollar and the euro will be at par."

Although the conversation took place in Italy, it could have as easily occurred in a Wall Street boardroom. Despite the ongoing economic meltdown, the dominant, "business as usual" wisdom is that the ascendancy of the American model of global capitalism can only continue. It's just a matter of time before the good ship USS Free Enterprise rights itself and we have smooth sailing ahead.

But exactly what resources will the U.S. call upon to fuel the economic recovery that our American businessman and millions of others like him continue to believe in? Our longtime economic paradigm - growth fueled by cheap oil - has no future. Even when it did, it was a flawed concept because the constant growth required under the "grow or die" capitalist paradigm demands that we relentlessly exploit natural resources - how else to increase profit margins and pay investors their ever-greater dividends?

This paradigm has brought us to the brink of ecological disaster, with a planet so over-heated that even the most optimistic climate experts are doubtful whether we will be able to prevent cataclysmic disruptions unless worldwide carbon emissions are drastically reduced in the coming years - an unlikely scenario given the unwillingness of most governments to enact tough standards and regulations.

Not only has the planet been brought to its knees as a result of this capitalist ethos, but we humans haven't fared so well either. Can we really say we're succeeding as a human race when half of the world's population is starving, or lacks adequate access to potable water, or is suffering from preventable diseases? Even in the U.S., our "high standard of living" leaves much to be desired, not only for the 45 million people who have no health insurance but for the tens of millions who work 40-80 hours a week and find themselves with little time to socialize, go for a walk, prepare and enjoy a meal with friends, or read a book - in short, have less free time and a lower standard of living than their parents did.

With oil virtually at an end, what better time to re-examine the economic paradigm that allowed us to think we could use up finite resources and just "grow" forever? Isn't it time to rethink our blind embrace of the "grow or die" philosophy that led us down this self-destructive path?

In her recent post, "Laissez-Faire Capitalism Should Be as Dead as Soviet Communism," Arianna Huffington suggests that the collapse of our financial system as a result of deregulation proves that this form of deregulated capitalism should be relegated to the dust bin of history. But is it just deregulation, or is it capitalism itself that needs to be junked? Inherent in the capitalist ethos is the endless exploitation of natural resources. Indeed, not only the exploitation of nature, but the exploitation of individuals by individuals is a guiding principle of modern capitalist society. You needn't travel to 19th century England to understand this; it's not just the exploitation of workers in factories anymore. As capitalism colonizes the realm of interpersonal relations, we've ceased to become human to each other and instead become "resources" (think "networking") to be exploited for one type of gain or another.

Considering the tremendous advances in labor-saving technology in the last century, isn't it time for a new form of social organization? One that prizes mutual aid over competition, collective stewardship of nature over its rapacious exploitation, and recognition that "life, liberty and the pursuit of happiness" must include the provision of basic necessities for all, regardless of status: shelter, food, free healthcare. Even better, imagine if we could recognize that ultimately human beings are capable of much more than just earning money? It's time to use our immense powers of reason to ask ourselves: What does it mean to build a truly civilized world? History has shown us that Leninist Communism - itself a form of state-sanctioned exploitation of nature and human beings - wasn't the answer. But neither has capitalism allowed us to fully realize our potential as free, creative beings.

We stand on a threshold. Will we use our extraordinary technology, science and rationality to create a just, humane and truly free society? Or will we continue down the path of domination - of each other and of the natural world - destroying our environment and ourselves?

The great utopian, Murray Bookchin, said: "If we do not do the impossible, we shall be faced with the unthinkable." When he said those words, more than a quarter of a century ago, the notion that capitalism could bring the world to the brink of destruction was ridiculed by almost every mainstream intellectual. Yet here we are on the precipice, confronted with the unthinkable. The only course left to us, is to do the impossible - to abandon the paradigm of capitalism that has defined our cultural, political and economic life for the past 250 years, and whose supremacy has led inexorably to the despoilation of our planet and demeaning of human existence.

Let us choose to end the domination of each other and the unthinking exploitation of nature, and find a more human, decent form of social organization, one that prizes true, decentralized democracy, basic decency and the common good.

The oil is almost gone. The hourglass is about to run out. It's time to create a utopia.

The Peak Oil Crisis: Confusion In the Markets

2008-12-26T08:50:00.001-08:00

Falls Church News-Press

By Tom Whipple

If you don't understand what is going on with the price of gasoline and demand for the world's oil supply, then join the club.

Analysts, pundits, government officials, oil ministers, oil executives, and oil traders are all over the board in trying to explain what is happening and more importantly what is going to happen. Some are saying that $30 oil will be with us until the economy recovers while others are talking of a spike to $200 in 2009.

We are currently finishing out an extraordinary year. For several years now, oil prices have been moving steadily higher. They passed $100 a barrel around New Year's and moved on to peak at around $147 in July. By late spring much of the world was in turmoil. Politicians were out in force, bashing speculators, environmentalists, OPEC, additions to the Strategic Petroleum Reserve and you name it. Airlines and car sales were collapsing. The President flew off to Saudi Arabia where he personally appealed to the King to send us more oil. The King held a big oil conference and promised to do what he could.

Then, in mid-July, the great oil panic came to a screeching halt. While several explanations have been offered for this turnabout, I believe the start of the Beijing Olympics the most proximate cause. If 2008 has been hard on America it has been traumatic for China. In the first half of the year the Chinese endured a great earthquake, major snowstorms, and a nationwide panic over readiness to put on the Olympics. All this, of course, was accompanied by some of the worst air quality on earth.

For six months China was in an oil-buying frenzy trying to compensate for lost production during the quakes and storms, and ensuring that there would be no fuel shortages during the Olympics. To clean up the air, Beijing banned half the cars and trucks in and around the capital from operating and shut down every industrial enterprise that contributed to air pollution for hundreds of miles around the Olympic sites. The plan worked, but China's oil imports plummeted and the greatest oil price plunge in history began.

The great plunge was aided by the $4 to $10 gallon cost of gasoline and diesel in the U.S. and Europe which some believe was a primary cause for the world economy tanking in the second half of the year. To the surprise of nearly all observers, once oil prices began falling; they fell, and fell, and then fell some more. From $147 a barrel, prices dropped until they briefly touched $32 last week and are currently sitting around $40. To the delight of motorists, gasoline prices in the US went from $4 - $5 a gallon in July to $1 - $2 in December. Although it went unnoticed, America's economy received a massive stimulus from the billions of dollars that were left in consumers' pockets after each fill-up.

Now we get to the key question of why oil has fallen so low and the corollary of what happens next -- $20 or $200 oil. For the why-so-low question there can only be two answers: either demand has dropped well below readily available supplies or market factors such as speculation, trader pessimism, or the unwinding of hedge funds has caused oil to drop so rapidly.

Despite the lack of good information, it is clear that worldwide demand for oil has fallen in the last six months. U.S. demand is down about 1.2 million barrels a day(b/d). OECD commercial petroleum inventories, including those of the US have increased steadily as importers have taken advantage of lower prices. We know that Japanese imports are down around 500,000 b/d over last year and that Chinese imports have dropped a little. What is missing for now is a good feel for the actual size of the worldwide drop in demand. At one end of the scale is the IEA who recently opined that for 2008 worldwide demand will only be down by 200,000 b/d. Some, however, are saying demand is already 6 or 7 million b/d lower than the peak of around 86 million b/d reached last summer. This will take some time to sort out.

What is important, however, is that oil traders and the financial press continue to repeat over and over again that oil prices are dropping because of the contracting world economy. This has become the mantra of the market. There is also a substantial body of opinion that some component of the fall in oil prices is due to the unwinding of hedge funds and the general deleveraging of nearly all financial institutions.

While U.S. demand for oil products currently is down about 6 percent, this number has been stable for several months. Oil is so deeply ingrained in the fabric of most countries, particularly that of the U.S., that deeper cuts in consumption are unlikely unless the economy really sours.

OPEC production cuts are now approaching 2 million b/d and are scheduled to reach 4 million b/d in the next couple of months. Whether this will be enough to cover the drop in demand is the question of the day. Most commentators are fearlessly predicting a rapid rise in oil prices as soon as economic recovery sets in -- either in a few months or a couple of years. The more interesting issue is what happens if there is no recovery in the next few years or the next few decades. Do oil prices bounce merrily along at rock bottom levels until geological and investment constraints start to massively limit supplies? OPEC is already talking of yet another cut as the last three have had no measurable effect. Will OPEC overcut and cause another price spike within the next year despite the state of the economy?

There is clearly an irreducible minimum amount of oil consumption out there below which our oil-based economies will begin to deteriorate rapidly. If there is anything that is certain as a result of the present low oil prices, it is that investment in new oil production is dropping so rapidly that there will be serious problems three to five years from now.

George Monbiot asks Fatih Birol, chief economist of IEA, when will the oil run out?

2008-12-21T10:01:00.001-08:00

The Guardian

George Monbiot puts the question to Fatih Birol, chief economist of the International Energy Agency - and is both astonished and alarmed by the answer

By George Monbiot

Can you think of a major threat for which the British government does not prepare? It employs an army of civil servants, spooks and consultants to assess the chances of terrorist attacks, financial collapse, floods, epidemics, even asteroid strikes, and to work out what it should do if they happen. But there is one hazard about which it appears intensely relaxed: it has never conducted its own assessment of the state of global oil supplies and the possibility that one day they might peak and then go into decline.

If you ask, the government always produces the same response: "Global oil resources are adequate for the foreseeable future." It knows this, it says, because of the assessments made by the International Energy Agency (IEA) in its World Energy Outlook reports. In the 2007 report, the IEA does appear to support the government's view. "World oil resources," it states, "are judged to be sufficient to meet the projected growth in demand to 2030," though it says nothing about what happens at that point, or whether they will continue to be sufficient after 2030. But this, as far as Whitehall is concerned, is the end of the matter. Like most of the rich world's governments, the UK treats the IEA's projections as gospel. Earlier this year, I submitted a freedom of information request to the UK's department for business, asking what contingency plans the government has made for global supplies of oil peaking by 2020. The answer was as follows: "The government does not feel the need to hold contingency plans specifically for the eventuality of crude-oil supplies peaking between now and 2020."

So the IEA had better be right. In the report on peak oil commissioned by the US department of energy, the oil analyst Robert L Hirsch concluded that "without timely mitigation, the economic, social and political costs" of world oil supplies peaking "will be unprecedented". He went on to explain what "timely mitigation" meant. Even a worldwide emergency response "10 years before world oil peaking", he wrote, would leave "a liquid-fuels shortfall roughly a decade after the time that oil would have peaked". To avoid global economic collapse, we need to begin "a mitigation crash programme 20 years before peaking". If Hirsch is right, and if oil supplies peak before 2028, we're in deep doodah.

So burn this into your mind: between 2007 and 2008 the IEA radically changed its assessment. Until this year's report, the agency mocked people who said that oil supplies might peak. In the foreword to a book it published in 2005, its executive director, Claude Mandil, dismissed those who warned of this event as "doomsayers". "The IEA has long maintained that none of this is a cause for concern," he wrote. "Hydrocarbon resources around the world are abundant and will easily fuel the world through its transition to a sustainable energy future." In its 2007 World Energy Outlook, the IEA predicted a rate of decline in output from the world's existing oilfields of 3.7% a year. This, it said, presented a short-term challenge, with the possibility of a temporary supply crunch in 2015, but with sufficient investment any shortfall could be covered. But the new report, published last month, carried a very different message: a projected rate of decline of 6.7%, which means a much greater gap to fill.

More importantly, in the 2008 report the IEA suggests for the first time that world petroleum supplies might hit the buffers. "Although global oil production in total is not expected to peak before 2030, production of conventional oil ... is projected to level off towards the end of the projection period." These bland words reveal a major shift. Never before has one of the IEA's energy outlooks forecast the peaking or plateauing of the world's conventional oil production (which is what we mean when we talk about peak oil).

But that is as specific as the report gets. Does it or doesn't it mean that we have time to prepare? What does "towards the end of the projection period" mean? The agency has never produced a more precise forecast - until now. For the first time, in the interview I conducted with its chief economist Fatih Birol recently, it has given us a date. And it should scare the pants off anyone who understands the implications.

Birol, the lead author of the new energy outlook, is a small, shrewd, unflustered man with thick grey hair and Alistair Darling eyebrows. He explained to me that the agency's new projections were based on a major study it had undertaken into decline rates in the world's 800 largest oilfields. So what were its previous figures based on? "It was mainly an assumption, a global assumption about the world's oil fields. This year, we looked at it country by country, field by field and we looked at it also onshore and offshore. It was very, very detailed. Last year it was an assumption, and this year it's a finding of our study." I told him that it seemed extraordinary to me that the IEA hadn't done this work before, but had based its assessment on educated guesswork. "In fact nobody had done this research," he told me. "This is the first publicly available data."

So was it not irresponsible to publish a decline rate of 3.7% in 2007, when there was no proper research supporting it? "No, our previous decline assumptions have always mentioned that these are assumptions to the best of our knowledge - and we also said that the declines [could be] higher than what we have assumed."

Then I asked him a question for which I didn't expect a straight answer: could he give me a precise date by which he expects conventional oil supplies to stop growing?

"In terms of non-Opec [countries outside the big oil producers' cartel]," he replied, "we are expecting that in three, four years' time the production of conventional oil will come to a plateau, and start to decline. In terms of the global picture, assuming that Opec will invest in a timely manner, global conventional oil can still continue, but we still expect that it will come around 2020 to a plateau as well, which is, of course, not good news from a global-oil-supply point of view."

Around 2020. That casts the issue in quite a different light. Birol's date, if correct, gives us about 11 years to prepare. If the Hirsch report is right, we have already missed the boat. Birol says we need a "global energy revolution" to avoid an oil crunch, including (disastrously for the environment) a massive global drive to exploit unconventional oils, such as the Canadian tar sands. But nothing on this scale has yet happened, and Hirsch suggests that even if it began today, the necessary investments and infrastructure changes could not be made in time. Birol told me: "I think time is not on our side here."

When I pressed him on the shift in the agency's position, he argued that the IEA has been saying something like this all along. "We said in the past that one day we will run out of oil. We never said that we will have hundreds of years of oil ... but what we have said is that this year, compared with past years, we have seen that the decline rates are significantly higher than what we have seen before. But our line that we are on an unsustainable energy path has not changed."

This, of course, is face-saving nonsense. There is a vast difference between a decline rate of 3.7% and 6.7%. There is an even bigger difference between suggesting that the world is following an unsustainable energy path - a statement almost everyone can subscribe to - and revealing that conventional oil supplies are likely to plateau around 2020. If this is what the IEA meant in the past, it wasn't expressing itself very clearly.

So what do we do? We could take to the hills, or we could hope and pray that Hirsch is wrong about the 20-year lead time, and begin a global crash programme today of fuel efficiency and electrification. In either case, the British government had better start drawing up some contingency plans.

George Monbiot asks Fatih Birol – Click to view video interview

International Energy Agency says peak oil is coming sooner

2008-12-21T09:49:00.001-08:00

Straight.com

By Gwynne Dyer

Worried about "peak oil"? The International Energy Agency's annual report, "The World Energy Outlook 2008", admits for the first time that "although global oil production in total is not expected to peak before 2030, production of conventional oil...is projected to level off towards the end of the projection period."

When the Guardian's environmental columnist, George Monbiot, pressed the IEA's chief economist, Fatih Birol, on that opaque phrase, the actual date turned out to be 2020.

The IEA's previous reports, which assured everyone that there was plenty of oil until 2030, were based on what Birol called "a global assumption about the world's oilfields": that the rate of decline in the output of existing oilfields was 3.7 percent a year.

But this year some of the staff actually turned up for work occasionally and did a "very, very detailed" survey on the actual rate of decline. It turns out that production in the older fields is really falling at 6.7 percent a year.

There are still some new oilfields coming into production, but this number means that the production of conventional oil--oil that you pump out of the ground or the seabed in the good old-fashioned way--will peak in 2020, 11 years from now.

Birol assumes, or rather pretends, that new production of "unconventional oil" will allow total production to match demand for another decade until 2030, but this is sheer fantasy.

"Unconventional oil" is oil that is extracted, at great expense and environmental cost, from tar sands or oil shales.

But nobody is actually working the oil shales, and only 1.4 million barrels per day are currently being taken out of tar sands, all in Alberta.

The most optimistic production forecast for the tar sands in the 2020-2030 period is five million barrels per day, half of which would merely replace declining Canadian production of conventional oil. Tar-sands oil is not going to postpone the arrival of peak oil for long.

So what are we to make of this news? Monbiot uses Birol's admission to launch an impassioned appeal for the rapid development of non-oil-alternative sources of energy.

That is obviously urgent if we are close to "peak oil", but this may not be as great a crisis as it seems. It may not be a bonanza for the oil-producing countries, either.

The IEA presumes that demand for oil will rise indefinitely, so the price of oil only gets higher after "peak oil", but in technology nothing is forever.

Set into the front doorstep of my house (and most other 19th-century houses in London) is an iron contrivance called a boot-scraper. It is a device for scraping the horseshit off your boots before coming into the house, and the iron blade is worn into a shallow curve by a half-century of use.

Nineteenth-century cities depended on horses to move people and goods around. London in the 1890s had 11,000 horse-drawn taxis and several thousand buses, each of which required twelve horses a day.

Add all the private carriages and the tens of thousands of horse-drawn carts, wagons and drays delivering goods, and there were at least 100,000 horses on the streets of London every day--each producing an average of 10 kilos of manure.

Two thousand tonnes of manure a day. There were flies everywhere, and if you didn't shovel the manure up quickly, it dried up and blew into your eyes, your hair, your nose, your clothes.

As the cities grew, even more horses were needed and the problem grew steadily worse. One writer in the Times in 1894 estimated that in 50 years, the streets of London would be buried under three metres of manure.

In fact, within 35 years the streets of London were almost completely free of horses, and filled with automobiles instead. They created a different kind of pollution, but at least you didn't step in it.

The same fate is likely to overtake oil-fuelled vehicles in the next 35 years.

The shift will be driven by concerns about foreign exchange costs and energy independence, and increasingly by the need to curb greenhouse gas emissions.

It is starting with ever-tightening standards for fuel efficiency. That will be followed by the first mass-market generation of electric vehicles, due in the next two or three years.

The coup de grace will be delivered by third-generation biofuels, probably produced from algae that do not use valuable agricultural land, that are fully competitive with oil in price and energy content.

We will never get back the eight wasted years of the Bush administration, and it may now be too late to avoid drastic climate change, but Barack Obama is clearly going to try.

You do not appoint Steve Chu as your energy secretary and Carol Browner as your "climate tsarina" if you intend to evade the issue. So American oil consumption is going to start falling quite fast, quite soon.

The same is true elsewhere. Indeed, it is a safe bet that the demand for oil is going to fall faster than the supply over the next 10 or 15 years. Even if we are already at or near "peak oil", the annual decline in oil production just after the peak is actually quite shallow--around two percent---in the classic Hubbert curve. And if demand falls faster than supply, the price will also collapse.

Ladies and gentlemen, place your bets....

Gwynne Dyer's latest book, "Climate Change", has just been published in Canada by Random House.

Nigeria oil reserve may dry up in 50 years, says DPR

2008-12-18T08:37:00.001-08:00

Guardian Newspapers

By Sulaimon Salau

Even though optimists in the energy sector have flayed the insinuations that the nation's oil reserve would dry up in the next 50 years, reports from the Department of Petroleum Resources (DPR) recently suggest that the woe may still take effect on the country if the current trend in the industry continues.

Specifically, the Director of DPR, Mr. Aliyu Sabonbirni, presenting the third quarter report of the industry in Lagos recently, said the situation of event in the industry does not prove the probability of an increase in reserve, instead, daily decrease.

He however attributed the downward trend to poor performance of the Joint Venture (JV) companies and the lingering Niger Delta crises, which had prevented most companies from full operations in the oil-rich region.

Sabonbirni, who was represented by the Head of Gas, DPR, Mr. Billy Agha, said, "current daily oil production is 2.108 million barrels of oil per day (bopd). Current oil reserves depletion rate is 2.23 per cent based on an estimated yearly production of 730.90 million barrels. Remaining reserves' life index is 45.75 years.

"Investigation conducted on reserves situation from 2002 - 2007 revealed a downward trend in the oil reserves in most of the JV companies, which accounted for 70 per cent of our nation's reserves."

However, he said PSC companies and a few indigenous operators showed aggressive exploration activities that led to some reserves growth over the reviewed period.

"As at January 1, 2008, the nation's Proven plus Probable (P+P) oil reserves was 32.93 billion barrels. Condensate (P+P) reserves was 5.19 billion barrels. Net increase of 525.67 million barrels or 1.62 per cent was recorded over January 2007 reserves," he said.

Sabonbirni noted that crude oil production for 2007 was 805.1 million barrels with an average of 2.21 million bopd. While it was noted that the current production from deep offshore is 458,542 bopd, the current average daily production as at August 2008 stood at 2.108 million bopd.

As at 2008, second half technical allowable is 2.4 million bopd as against 2.7 million bopd in first half of 2008.

On the impact of the Niger Delta crises, he said the situation has caused an average daily production deferment of 397,697 bopd showing a significant improvement from 406,493 bopd in the first quarter, noting that SPDC is making efforts to commence operations at the western location and the remaining locations in the East.

Affected companies are SPDC, Express, Elf (in western area), NAOC's Beniboye flowstation, NPDC, Dubri, SNEPCO's EA field and Cavendish. Cavendish's Obe field was shut down due to dry-docking of the FPSO.

Meanwhile, he said not less than 6,630 oil wells have been drilled in the Nigeria's onshore and offshore basins till date, while a total of 1,088.967 sq. km of seismic data was also acquired between April and September 2008.

His words, "four appraisal wells were drilled during the period under review, 75 wells were drilled and at various stages of completion between April and September 2008. Over 6,630 oil and gas wells have been drilled in Nigeria as at end of August 2008."

The department, he said has started reviewing companies' performances against their set objectives or targets, while the year 2008 work programme/budget presentation to DPR by E & P companies has been concluded.

Current deep offshore projects that are being monitored are given as; the Bonga Main, Bonga Southwest/Aparo, Bonga Northwest, Abo, Nsiko, Bosi, Erha Facilities, Usan, Agbami Aparo and Akpo.

Noting that Abo, Erha, Agbami Bonga main fields have been put to production, he said the rest are expected to come on stream between 2009 and 2012.

The DPR report also stated that about 75 rigs were in operations during the second and third quarters of 2008 as against 32 in the first quarter.

Don’t be fooled by low gas prices — the crunch is nearly here

2008-12-16T20:02:00.001-08:00

The Ottawa Citizen

By Dan Gardner

In Greek mythology, the enchanting songs of the Sirens lured unwary sailors to shipwreck and death. Today's Sirens are the roadside signs singing sweetly, "Cheap gas! Cheap gas! Drink deeply and be at ease, weary traveller!"

After suffering record-high oil and gas prices earlier this year, it's understandable that we see cheap gas as anything but a danger. We're in a recession. Times are tough. It's a relief that the cost of getting around and heating our homes has plummeted. It's also an economic stimulus at a time when we need all the stimulus we can get.

But before we drink deeply and relax, let's have a good look through the telescope at what lies ahead.

In November, the International Energy Agency - an intergovernmental organization which advises 28 member countries - released its latest forecast. The current global economic downturn changes the numbers, the IEA concluded, but not in a way that will make a difference in the long term. Between 2006 and 2030, the IEA predicts, worldwide energy consumption will grow 45 per cent.

"Current trends in energy supply and consumption are patently unsustainable," declared Nobuo Tanaka, executive director of the IEA. "Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes. At the same time, greenhouse-gas emissions would be driven up inexorably, putting the world on track for an eventual global temperature increase of up to 6° C."

Now, some people continue to deny the reality of man-made climate change. I'm not one of them, but I'd like us all to stay on the same page so I won't even mention climate change for the remainder of this column.

What does Tanaka's statement mean? Think 1973. That year, an oil embargo imposed by the OPEC countries hammered the developed world. Gas stations ran dry, prices soared, economies plunged into recession.

Oil shocks will become more common and more severe. The triggers could be anything. A terrorist attack in the Strait of Hormuz, maybe. A coup in Saudi Arabia. The collapse of Nigeria. Whatever it is, wherever it occurs, it will cause oil prices to explode and economies to fall to their knees.

Canada and every other developed nation runs on oil. It moves our cars and trucks. It heats our homes. It is essential in the manufacture of plastics and countless other products. It is the very foundation of our economy.

But with most of the world's oil production coming from unstable regions far away - and the proportion that comes from places such as the Middle East is growing rapidly - that foundation is not reliable. Tomorrow's headlines could cause it to shake, crack or crumble.

Bad as that sounds, it's likely to turn out even worse.

In preparation for its 2008 report, the IEA conducted a detailed study of depletion rates in 800 of the world's largest oil fields. Nobody had ever done such work before and what the IEA found caused the agency to revise its understanding of the world's energy future in a profound way.

The change has to do with worldwide "peak oil" - which is the point at which global oil production can no longer keep up with global oil demand. That sounds bland and technical, but it's actually a nightmare scenario: If oil demand outpaces oil supply, the price of oil will go up and up and up and never go back down. Imagine the oil shock of 1973 as a permanent reality.

It has always been accepted that the world would get to peak oil one day. The only question is when.

Some over-excited proponents of peak oil have been saying for decades that it would come any day now. More restrained voices say we're at peak now. Or we will be in a few years.

The IEA always insisted peak oil was decades off. Nothing to worry about. And so governments didn't.

But then the IEA conducted its survey of oil fields and got spooked. "Although global oil production in total is not expected to peak before 2030," the IEA's 2008 report states, "production of conventional oil ... is projected to level off towards the end of the projection period."

That's alarming, but vague. So British journalist George Monbiot asked the IEA's chief economist, Fatih Birol, to elaborate.

The really bad news lies in oil-producing countries that are not members of the OPEC cartel, Birol said. "We are expecting that in three, four years' time the production of conventional oil will come to a plateau, and start to decline."

And worldwide? "In terms of the global picture, assuming that OPEC will invest in a timely manner, global conventional oil can still continue, but we still expect that it will come around 2020 to a plateau as well, which is of course not good news from a global oil supply point of view."

Not good news, indeed. If oil production comes to "a plateau," it's not rising - but demand will be.

That's the nightmare scenario of peak oil. And it starts in 2020.

That's 11 years from now.

Now, for some problems, 11 years is plenty of time to get ready. But not for this problem.

As George Monbiot notes, the U.S. Department of Energy commissioned a report by oil analyst Robert L. Hirsch on how long it would take for developed economies to mitigate the effects of peak oil. Hirsch concluded that even a worldwide emergency response launched 10 years before the crisis hit would still result in "a liquid fuels shortfall roughly a decade after the time that oil would have peaked." That would be a disaster.

In order to avoid this scenario, Hirsch advised, a massive mitigation program must begin at least 20 years before peak.

If a chill didn't run up your spine, you need to read that again.

Fortunately for every man, woman and child on the planet, one of the few politicians who seems to understand the urgency of the situation is the president-elect of the United States.

On Monday, in announcing his energy policy team, Barack Obama noted that presidents since Richard Nixon have recognized that oil addiction is a dangerous vulnerability but all have failed to make real change. "This time has to be different," he said. "This time we cannot fail. Nor can we be lulled into complacency just because, for now, the price of gas has fallen below $4 a gallon."

Obama backed his rhetoric with a daring choice for energy secretary. Rather than appoint a politician who could be counted on to say and do what is politically expedient, Obama picked Steven Chu, a physicist and Nobel laureate who has been leading research into cutting-edge energy technology.

We must have a "global energy revolution," the IEA's Fatih Birol told Monbiot. And it has to start now. "I think time is not on our side here."

Don't listen to the Sirens, weary travellers. Be not at ease.

Dan Gardner writes Wednesday, Friday and Saturday and blogs at ottawacitizen.com/katzenjammer. E-mail: dgardner@thecitizen.canwest.com.

Study: End of oil could worsen warming

2008-12-11T17:24:00.001-08:00

Discovery.com

As humanity wrings ever more fossil fuels from our planet, the question of when the taps will start to run dry — when "peak oil" will occur — looms ever closer on the horizon. Some say a decade, maybe two. Some say it's already passed. No one is sure.

Whatever the answer, new research has come to the ominous conclusion that slackening oil and gas supplies could actually accelerate the pace of global warming.

If it seems counter-intuitive, consider that generating a kilowatt hour of energy by burning oil pumps 274 grams of the greenhouse gas carbon dioxide into the atmosphere. Natural gas is cleaner, accounting for 202 grams. But coal is by far the worst polluter, clocking in at 331 grams of CO2 per kilowatt hour (a kilowatt hour is when 1000 watts of energy is used for one hour).

As the oil and gas begin to dry up, coal could move in to fill the demand for energy, Pushker Kharecha of the Goddard Institute for Space Studies at Columbia University explained. And unless the carbon it emits is captured and sequestered underground, it will saturate the atmosphere, pushing temperatures ever higher and worsening a host of global environmental problems.

In a series of calculations, Kharecha and co-author James Hansen, also of Goddard, suggest that major climate damage could be avoided even if oil and gas production continue unabated, and are allowed to peter out as reserves dwindle.

"Those two fossil fuels couldn't keep us in the danger zone for very long," Kharecha said, referring to a CO2 concentration of 350 parts per million in the atmosphere or higher.

Right now, the concentration is about 385 part per million, which Kharecha said is already "undesirably high," adding, "but we must reduce coal emissions. Coal has the potential to keep us in the danger zone for a very long time, well past the year 2150."

Kharecha and Hansen will present their work in San Francisco next week at the Fall meeting of the American Geophysical Union.

Kevin Gurney of Purdue University said the world is even more addicted to coal than it is to oil because it is cheap and abundant. And that's not likely to change in the near future.

As peak oil begins to dictate the need for new sources of energy around the world, he said "I unfortunately think that without serious leadership intervention, we are going to trundle along and start using coal."

"Of course there could be some kind of fuel crisis, or the president could put his career on the line and embrace a green economy, or there could be a profound technological breakthrough," he said. "But failing something like that, I just don't see how we're going to make a dent in the energy generation mix."

Kharecha, however, remains optimistic that the story of humans' influence on climate can still have a happy ending.

"Peak oil and gas can really go both ways," Kharecha said. "If people choose to use coal, oil sands, methane, or other fossil fuels as a substitute, that's going to be a major problem. But if it spurs society to realize we need to wean ourselves off fossils fuels, it could be a huge boon for climate."

A Gift to Planet Earth and Humanity

2008-12-08T08:16:00.001-08:00

huffingtonpost.com

By Patrick Takahash

A miracle has occurred. Many were beginning to contemplate a survival strategy because of the dual hammer of Peak Oil and Global Warming. But a funny thing happened on our way to doomsday. It is appearing that we are getting a reprieve, and, ironically, the gift is this serious, but fixable, economic collapse.

An absolutely incredible prognostication in Bloomberg is that January delivery will see crude oil below $20/barrel and oil traders are today purchasing gasoline for $0.97/gallon. What does all this mean?

Let us look at some historical consequences. Much of this is detailed in Chapter 1 of SIMPLE SOLUTIONS for Planet Earth, but the price of gasoline in 1973 (all the following will be in 2008 dollars) was $1.80/gal when the First Energy Crisis increased the price to $2.30/gal. The Second Energy Crisis of 1979 kicked it up to $3.17/gal in 1981. Gasoline then, with a small uptick due to the Gulf War of 1991, declined to $1.35/gal in 1998. That was the absolutely lowest real price of gasoline in history.

On July 11, 2008, petroleum skyrocketed to $147.27/bbl, causing gasoline to sell for $4.12/gallon on July 17. Gasoline on December 5 subsequently crashed to $1.77/gallon, 57% lower. The stock market only declined about half that in this interim.

This time, then, the economy affected oil prices, as the recession is reducing use, causing an oversupply. Following the First and Second Energy Crises, higher oil prices dampened the economy. After recovery, oil (and gasoline) prices dramatically dropped. The key question is, will this next recovery raise oil prices? Yes, of course.

We can thus expect the following:

1. Oil could drop below $30/bbl.

2. Gasoline prices might plunge below $1/gallon. This will be the lowest gasoline will ever be in all of history, even if the decline only settles down to $1.34/gallon.

3. If no Solar Manhattan effort occurred in 1982 when gasoline prices were near the modern day high, what are the prospects of anything monumental happening when it will be at an ALL-TIME LOW when Barack Obama becomes President on January 20? Remember, T. Boone Pickens, with all his sincere bluster, abandoned his wind farms when oil was still more than $50/barrel.

4. The economy will recover. It might take all of a year if there is no depression, but, certainly, in 5 years.

5. If, in the meantime, oil does rise to $75/barrel in a year or two, the slack now available to producers will delay any sudden escalation, for OPEC can increase production as necessary. However, the surging economies of China, India and rest of the world will almost surely further escalate the price beyond $100/barrel, maybe up to $200/barrel, in five to ten years. There is such a thing as Peak Oil, and there is mounting evidence that the Middle East does not really have as much of this resource as they claim.

In grand summary, then, this world economic collapse could well be a gift to Planet Earth and Humanity, for Peak Oil will be delayed, carbon dioxide in our atmosphere will be somewhat alleviated and, thankfully, we will have this five to fifteen year period to work on sustainable options that can begin to competitively replace fossil fuels.

The following simple solutions can be recommended:

1. Take advantage of this "gift" of time and comprehensively prepare for a sustainable energy economy. The Obama energy transition team and the new Congress can either instill a yes we can change...or royally blow it.

2. As research and development are only a fraction of actual commercial investments, government can cost-effectively and should expeditiously partner with industry and academia to plan for, fund and implement a visionary renewable energy mandate, even more monumental than the Apollo Project.

3. Smartly insert a carbon tax linked to the price of oil, now. As crude prices increase, so will, thus, this tax. At $30/barrel, something like a 2 cents / pound carbon dioxide tax is significant but tolerable. When oil eventually jumps to $150/barrel, the tax should be proportionately higher, at 10 cents / pound carbon dioxide. The revenues should fund renewable energy and conservation programs.

4. To kick-off the Planet Earth rescue strategy, immediately add a $1/gallon gasoline investment surcharge (also known as a tax, but the semantics can't hurt--and remember, Europe and many parts of the world already pay twice as much for pumped gas), which will result in nearly $150 million/year, also to be applied to the Obama Sustainable Energy Plan.

Society barely reacted after the First Energy Crisis of 1973. We did absolutely nothing after the Second Energy Crisis in 1979. Let us use this "gift" to act wisely this time.

Gulf CEO: $1 gallon gas in 2009

2008-12-04T17:23:00.001-08:00

The Raw Story

CEO also claims carbon-driven warming a 'myth' as Merrill Lynch predicts $25 a barrel oil

Joe Petrowski, CEO of Massachusetts-based Gulf Oil, has some good news for consumers.

In years past, market speculation inflated prices, said Petrowski. Now that the prices are deflated, speculators may 'overshoot' and actually drive the consumer cost down further.

His statements came shortly before Merrill Lynch & Co. predicted oil prices will plunge to $25 a barrel in the coming year if the global recession begins heavily affecting China.

Petrowski also claimed that the threat of global warming driven by carbon emissions is a 'myth,' and instead insisted that dependence on oil imports poses a greater threat to economic stability.

Petrowski's remarks were delivered to the South Shore Chamber of Commerce in Randolph, MA, according to a published report.

In spite of his remarks, the Intergovernmental Panel on Climate Change, in its 2005 report on the effect of hydroflorocarbons on Earth's atmosphere, maintained (PDF link) that "the balance of evidence suggests a discernible human influence of the global climate."

AAA's national average gas price for regular unleaded was $1.78 as of Thursday, down from $3.04 this time last year. The highest recorded national average was $4.11, registered July 17, 2007.

Oil was trading at $44 a barrel on Thursday evening.

Does Mr. O Know?

2008-12-03T18:10:00.001-08:00

James Howard Kunstler

A lot of readers are twanging on me for refraining to castigate President-elect Obama for deeds yet undone. They're discouraged by the advisors and cabinet sectetaries he's picked, ostensibly because the crew coming in are Washington "insiders," meaning they can't possibly see or do things differently.

My own starting point for this is the belief that in the years just ahead any sociopolitical entity organized at the giant scale will flounder -- this includes everything from the federal government to global corporations to factory farms to centralized high schools to national retail chains. So even expecting Mr. Obama's government to act effectively may be asking too much in a situation that will require mostly local action.

The meta-situation will be the overall decline of energy resources and the necessary downscaling of our activities. We are obviously in a transitional period between the old profligate energy economy and the new economy of relative scarcity. We have no idea how disorderly this transition will be, but there is certainly potential for tremendous instability in daily life.

For a while, perhaps, the federal government may retain some ability to affect the way things go, or give the appearance of doing so. This raises the issue of what Mr. Obama and his team really know about our energy predicament. The president-elect has made some noises -- recently on the 60 Minutes show -- that he understands something about the current price dislocations in the oil markets resulting from the larger financial turmoil. He alluded to the public's erroneous notion that current low-ish oil prices mean the oil problem is over. But does the incoming president know some of the following details?

For instance, does Mr. O know that global oil production appears to have peaked at around 85 million barrels a day, with poor prospects of ever getting beyond that? This single naked fact has broad ramifications, above all whether we can continue to think in terms of industrial "growth" as the benchmark for economic health. There are many interpretations of the current financial fiasco. Some of them are based on long-term technical wave theories. A more down-to-earth view suggests the shock of peak oil -- though it doesn't exclude wave theories.

Does Mr. O know that world oil discovery has fallen to insignificant levels after peaking long ago in the 1960s. Does he know we are finding no more super-giant oil fields on the scale of Arabia's Ghawar or Mexico's Cantarell, which have supplied most of the world's oil for the past forty years and are now running down? Does he know that you can't produce oil that hasn't been discovered? Does Mr. O know that virtually all the oil-producing nations have entered production decline. Surely someone has whispered in his ear about the IEA's projection that global oil production would fall 9.1 percent in the coming year.

Does Mr. O know that oil exports have been trending to decline at a steeper rate than oil depletion? That is, the exporting nations are losing their ability to send oil to the importers (like us) at a rate mathematically greater than the run-down in their production.They are using more of their own oil even while their production is going down. For example, Mexico is depleting overall at more than 9 percent a year (with the Cantarell field alone running down at more than 15 percent annually). Does he know Mexico's net exports are crashing? Mexico has been our number three leading source of imports. In a very few years they will not be able to send us any oil. A deluded American public has no idea that this is happening. Will Mr. O explain it to them?
Does Mr. O know that the "old major" oil companies (Exxon-Mobil, Texaco, Shell, et al) produce less than 10 percent of the world's oil now -- the other 90 percent coming from the foreign nationals -- and that blaming them for the situation is a waste of time. The foreign national companies are changing the landscape of the oil markets. They're making special contracts with "favored customers" rather than just putting their oil up for auction on the futures markets. One thing you can infer from this is that we're entering a period of national oil hoarding based on coming scarcity. The futures markets were based on relative abundance, and they will not operate very well in a climate of scarcity. Consider that the USA will probably not be among the "favored customers" for several oil producing nations. Figure that in with the coming loss of imports from Mexico (and Venezuela and Nigeria).

Does Mr. O know that the current drop in oil prices (due to massive financial deleveraging) has resulted in the cancellation or postponment of the very oil production projects that were hoped to offset the coming depletions? It's not worth it for an oil enterprise (private or foreign) to drill in deepwater or venture into arctic regions when oil is priced at $50-a-barrel -- if it costs $80 to get the stuff out of the ground. It's not worth digging up tar sands in Canada at that price. This halt in activity is going to boomerang back on the US in a year or so, with depletions ongoing everywhere and no new oil to take its place. Does Mr. O know that we're just as likely to see shortages as a resuming rise in oil prices here in the US during his coming term?

Does Mr. O know that the current re-inflation program being run by the Treasury and the Federal Reserve is so egregious that it may lead to loss of the dollar's legitimacy, to the renunciation of dollar holdings by other nations, to the down-rating of US Treasury debt instruments, and finally to an inability of the US to purchase foreign oil -- which comprises two-thirds of all the oil we use every day?

Does Mr. O know that we are not going to run the US automobile and truck fleet on any combination of alt.fuels? Continuing it by other means is a fantasy that will only disappoint us. The motoring era is coming to an end. Heroic investments in highway infrastructure to create jobs will be a tragic waste of our dwindling capital. The pressure for Mr. O to make these misinvestments will be enormous, perhaps insurmountable. There are probably not a thousand people in the US who agree with what I am saying -- meaning the consensus to keep the cars running at all costs overwhelms reality at the moment. Does Mr. O's concept of "change" include the possibility that we may have to live very differently in this society?

Chances are, if Mr. O knows any of these things he might be crucified in the polls and the media by acknowledging them. The only "change" that America really wants to hear about is evicting George Bush from the White House. They're sick of him and all the disturbance he has caused in their financial affairs. But beyond that, the American public is deathly afraid of the kind of changes we actually face -- such as, the end of consumer culture, the gross loss of value in suburban real estate (which forms the bulk of the middle class's private wealth), the prospect of food and fuel scarcities, the need to re-localize our lives, the need to physically shape up to stop the costly and unnecessary drain on our medical resources, to grow more of our own food, to work harder at things that actually matter, and to save whatever we can for a difficult future.

If Mr. O introduces any of these themes into the national discourse, the public and the media and the bloggers will all dump on him for failing to prop up the wild party that American life became in recent decades.

Did peak oil go away? No

2008-11-30T18:47:00.001-08:00

Brattleboro Reformer

By Tim Stevenson

With the price of oil plummeting below $50 a barrel, shedding close to $100 since July, and commensurate readings appearing at the gas pump, people have something to feel good about during an otherwise dismal economic time. Unfortunately, it may mislead the less informed to dismiss warnings about imminent peak oil as so much Y2K false alarm.

For there is a dark side to this otherwise salutary turn of events. Rather then rendering moot the question of peak oil, the falling prices of petroleum actually exacerbate it. This is because, while the current economic free fall will continue to lower demand for petroleum and drive down prices, these lower prices have also fallen below the cost of bringing new oil into production.

As the International Energy Agency (IEA) has repeatedly warned for over a year, excessively low prices will discourage investment in production, especially with the steadily rising costs of extracting and processing oil from increasingly difficult places. This lack of sufficient investment has serious implications for the future supply, once the global economy recovers from its current descent, particularly when we wrap our minds around the $26 trillion that the IEA says it will now cost over the next 20 years to keep energy flowing at its current pace.

In a Nov. 12 interview with The Times of London, Dr. Fatih Birol, the IEA's chief economist, said that fresh sources of oil equivalent
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to the output of four Saudi Arabias will have to be found to provide not only the 45 million daily barrels needed to simply stand still, but the additional 20 million to keep pace with the surging demand. Noting that much of the increase would have to come from costly unconventional and environmentally dangerous sources (such as the tar sands of Alberta, Canada), Birol emphasized that the twin challenges of meeting surging energy demand, while dealing with the threat of catastrophic climate change, would require "a global energy revolution."

The IEA's fears are echoed throughout the oil industry and financial world. The Financial Times reported earlier this month that more than four out of five refinery construction projects face cancellation. The Wall Street Journal reported last month that "big oil companies are already finding it harder to maintain, let alone increase, production."

Jad Mouawad recently wrote in The New York Times, "Some analysts predict oil could fall to $30 to 40 a barrel as the world economy worsens." He goes on to cite the conservative Cambridge Energy Research Associates that estimate that "As much as 4 million barrels of future oil could be jeopardized if prices remain below $60 a barrel."

Quoting several energy executives, The Financial Times reported last month that "delays in developing projects in Russia, Angola, Nigeria, Australia and elsewhere mean there will not be enough oil available once the world economy is ready to get back on its feet."

What lends special significance to this development, however, is that it is part of a larger trend of underinvestment in the industry that predates the current drop in prices. Western oil companies have been decapitalizing in recent years, buying stock back and otherwise returning cash to shareholders, rather than exploring for large new fields that just aren't there.

Petroleum is a capital-intensive industry, where massive amounts are required just to offset depletion and to maintain production. Drilling and platform equipment has aged and is unavailable. The cost of drilling rigs has doubled in recent years. There is an alarming dearth of skilled personnel. What is the oil industry telling us with this retrenching, while it continues to reap unprecedented profits at the same time?

The fact is that the systemic conditions that drove prices to record levels have not disappeared. Oil production has "plateaued" (to use the term favored by the industry) at about 85 million barrels per day since 2005, and this at a time when prices were rising. Production is in decline in 33 or the world's 48 oil-producing countries.

In its 2008 edition of its "World Energy Outlook," the IEA took the unprecedented step of including a comprehensive study of depletion rates in the world's largest oil fields, demonstrating annual depletion rates of 10-11 percent in non-OPEC countries, and 2-3 percent in OPEC members. The fact that the discovery of new fields peaked in the 1960s, and that we consume three barrels of oil for every new barrel discovered means that these smaller, new fields can't compensate for the decline in production in older fields.

As Lawrence Eagles, an energy analyst at JP Morgan, recently observed in typical business understatement, "the fact is that supply side problems in oil have not completely gone away."

When you combine the "plateauing" in production over the last three years, peak oil author Richard Heinberg has opined, with the ongoing depletion and rising decline rates in the oil fields, we may have already reached the all-time peak this past July. If this is true, then the country is going to have to adjust quickly to steadily decreasing amounts of oil.

Given that we are totally, utterly, completely dependent on fossil fuels for our being, this fundamental change will necessitate a massive overhaul of the U.S. economy including transportation, lifestyles, jobs, agriculture, and industrial production. Think Apollo Project, squared.

While enjoying this respite from high oil prices, we should also seize it as an opportunity to address what needs to be done, as rapidly as possible, so we can reasonably transition into the post-petroleum age we have irrevocably entered.

Tim Stevenson is a community organizer with Post Oil Solutions

Crude mathematics

2008-11-30T18:45:00.001-08:00

guardian.co.uk

A plunging oil price means cheaper petrol now – and no fuel later as industry investment shrivels
Comments…

By Michael Meacher

A snip at $48.50. Now that the price of a barrel of benchmark Brent crude continues to fall like a stone in the global recession, a drop of no less than two-thirds since the high point of $147.50 just four months ago, the relief is huge among motorists and hard-pressed consumers.

Conversely, for the oil-producing countries (especially Russia, Iran, Saudi Arabia, the UAE and Venezuela) it is potentially cataclysmic, though some, such as the US, may rejoice at that. But there is another dimension to this oil-price slide which has been little noticed, but which long-term is extremely serious.

If oil prices remain well below a certain critical level for any significant period of time, large amounts of investment in expected oil production capacity will simply be written off, and the consequence could then be a recovery-stopping supply-side crunch within little more than two years.

That critical level is widely reckoned within the oil industry to be $90 a barrel. A current price as low as half that critical level is already forcing many companies to drop oil projects, and the banking crisis is also squeezing project financing for foreign oil companies operating in OPEC and outside.

Russia's four major energy companies – Gazprom, LUKoil, Rosneft, and TNK-BP – depend heavily on debt to finance operations, and are scaling down their investments. They have already been forced to seek an allocation of more credit to refinance their external debts. But with Russia now facing a $150bn shortfall in its spending plans for 2009 and where Russian markets have lost 70% of their value in just six months since May, it is all too likely they will be forced to slash their investments further.

The consequences of this for the EU and the UK are very serious. Since the EU gets 40% of its gas from Russia, where 70% of the gas fields are already in decline, any further major cutting-back in future oil and gas investments could act as a pincer on EU and UK energy supply. Indeed, the Russian energy industry has warned that if the decline continues, Russia may not be able to service even its own domestic gas needs by 2010 – this from a country where Gazprom is the largest extractor of gas in the world.

A prolonged slump in the oil price at below $50 a barrel will thus inevitably lead to another cycle of shortages and soaring prices. This intense price volatility is the first stage of the devil's see-saw that is likely to accompany the coming of Peak Oil, which is widely expected within the next five years.

These very sharp boom-and-bust capitalist cycles in oil may well turn out to be even more globally destabilising than the credit crunch. What is clearly needed, though sadly highly unlikely, is an international conference (perhaps as a serious offshoot from the lightweight G20 conference a week ago?) to reach a binding agreement on the oil price for a five-year period rolled forward, which might then avoid the massive overshoot in prices at both peak and nadir which we are seeing at the present time, with potentially calamitous consequences.

America's Perfect Storm: What Will You Do When It Hits?

2008-11-30T18:15:00.001-08:00

By Frosty Wooldridge

This past week, I attended a meeting in Denver, Colorado featuring Michael Brownlee, a speaker on the fastest growing organization in the 21st century. Over 900 cities across the globe participate in preparation for the coming resource crisis. For anyone who might be concerned as to the future of this nation, you will find a plethora of information at the websites provided. Additionally, you will be able to hook-up with people in your state.

A “Perfect Storm” gathers on the horizon as Peak Oil, Economic Instability, Climate Change and Hyper-Population Growth collide within the United States. While Americans watch multiple breakdowns throughout their economic and environmental systems, a gathering citizen armada prepares for an uncertain future—that most assuredly looms on the U.S. horizon.

Dana Miller, director of the “Denver Transition Movement” in Denver, Colorado, sponsored Michael Brownlee, a man sporting swept-back silver hair and wearing John Denver glasses, to speak about how average Americans can mobilize to deal with the coming loss of cheap oil energy, called “Post Peak Oil.” With his compelling power point program, Brownlee addressed a packed house on what all Americans face in the coming decades.

“We face a Perfect Storm with the triangulation of Peak Oil, Climate Change and Economic Instability,” Brownlee said. “These converging factors create a dynamic that we are unprepared for. James Howard Kunstler addresses them in his book, “The Long Emergency.”

Brownlee demonstrated how humans on a global scale wreak havoc on the natural world by producing, “…bigger, faster and more as they eat up the land, fowl the biosphere, lose connection with the earth, sky and water--and each other. We have lost our sacred connection to all life and with spirit.”

Economic engines wreak mayhem on the natural world. However, that ravenous global economy we created runs straight toward a wall or over a cliff—take your pick as we run out of oil. Brownlee provided the audience with sobering graphs showing how world oil production hit its peak or is about to hit its peak by 2010. From that point onward, everything must contract because nothing can provide the energy that oil provided to keep hyper-population growth accelerating.

Brownlee said, “We must learn how to prepare for the future that’s about to change dramatically. We are in for some uncomfortable surprises. Economic growth will reverse course.”

He provided a website for those who remain skeptical; See Steve Andrews .

While we run face first into this growing “Hobson’s Choice”, Washington DC ‘risk mitigation’ experts demand a 20 year plan for coping with a world without cheap oil energy. As anyone with a nose on his or her face can discern, President Bush twiddled his thumbs and stuck fingers in both his ears for the past eight years—as to energy conservation or planning. He treaded water while our civilization stood nostril-deep on its tippy-toes gasping for solutions.

Brownlee told a rapt audience, “It will hit us soon and hard. We don’t have time or capital to avoid economic consequences.”

He mentioned the Hirsh Report of 2005 that somehow suffered ignominious burying at the hands of the media. Richard Heinberg, author of “Peak Everything: Century of Declines,” said, “The world has never faced a problem like this. The problem will be massive and pervasive.”

After “Peak Oil” hits in places like Saudi Arabia, Iraq and other countries exporting oil in 2008, they will export only 10 percent in the coming years. That will leave America, currently importing 60 percent of the 20 million barrels of oil it burns daily, out of luck. For more information click here.

Brownlee said, “In our plausible future, we can expect $200 a barrel by 2010 and on toward $300 a barrel. Any alternatives cannot come on line fast enough or equal the power of oil.”

To show how much energy oil provides the U.S. annually, Brownlee provided a graph of one cubic mile of oil. That’s how much the USA burns annually. That equals the same amount of energy provided by 52 nuclear power plants generating energy being built every year for 50 years or 104 operating coal-fired electrical plants built every year for 50 years or 32,000 wind turbines built every year for 50 years and in continuous operation or 91,250,000 solar panels built every year for 50 years.

In other words, oil produces dramatically incredible amounts of energy that we cannot and will not be able to duplicate in the coming years. Thus, when the oil runs out, our civilization, as they say, faces Hobson’s Choice: if we turn left, we walk over a cliff; if we turn right, we walk into quicksand.

Why hasn’t the media reported what we face? Brownlee said, “The media hasn’t caught up to science.”

Brownlee mentioned James Hanson of the Goddard Space Institute who said, “We have 10 years to change the trajectory of green house gases, yet we have done nothing.”

Brownlee addressed the third crisis, “We face an economic collapse with the U.S. dollar based on fossil fuel. Those bailouts show us on the brink of unraveling. Colin Campbell said, “The second half of the age of oil will be marked by the decline of oil and all that depend on it—world depression. It will challenge the continuation of civilized life.”

While Brownlee’s soft-spoken approach landed like a brick on a Monet painting, he talked about humanity passing through its irresponsible teens and now faces adulthood. We must be realistic as he pointed out over 900 transition communities worldwide taking action toward sustainable futures. Anyone can purchase “The Transition Handbook: From Oil Dependency to Local Resilience” by Rob Hopkins, founder of the Transition Movement.

Brownlee proposed a 12 point program for local action. You may find it at the web sites provided. Brownlee quoted Gary Snyder, “All things are possible when enough human beings realize everything is at stake.”

“This is the fastest growing most significant movement in the 21st century,” Brownlee said. “We must be creative, engaged and work at the local level. We may become more socially connected, produce of goods and food closer to home, and enjoy newly reconnected local networks.”

At the end of his presentation, Brownlee talked about reconnecting with our planet home. He spoke of changing from our individual obesity, inequality of incomes and status, high speed rat race, and fouling our planet—toward a simpler and more balanced humanity on Earth.

Brownlee said in closing, “We don’t know if it will work. If we wait for the government, it will be too late; we cannot wait for someone else to do the work for us. There will be plenty to do! We will need 50 million farmers to grow our food!”

For information on the meetings; For your state, please refer to the main web site!

The Peak Oil Crisis: Electrical Efficiency

2008-11-30T18:12:00.001-08:00

Falls Church News-Press

By Tom Whipple

Last week the Virginia Commission on Energy and the Environment held a day long meeting to hear testimony on the future role of electricity in the commonwealth.

Representatives of the various power companies serving the state testified as to their plans and their commitment to reaching the state's goal of reducing electricity consumption by 10 percent by 2022. As it turns out, this goal turns out to be murky as nobody ever said what the 10 percent should be based on - 10 percent of current consumption so that the state is actually using 10 percent less 14 years from now, or 10 percent less than what 2022 consumption would be if no efforts to conserve electricity were undertaken. In the latter case the state could actually be burning considerably more electricity in 2022 as the state's population is expected to grow and it is likely that a lot of electric or plug-in hybrid cars will be refueling off the electric grid by then.

The most interesting presentation of the day, however, was made by a non-profit group called the American Council for an Energy Efficient Economy (ACEEE). This group believes that making the most efficient use of the electricity we already generate is the best and cheapest way to gain more electricity. While converting over to more efficient electricity consuming devices (such as compact fluorescent bulbs) is not free, the Council cites studies that replacing end user equipment, adding insulation, etc. can cost anywhere from one half to one quarter the cost of installing and fueling new electricity generating capacity. This includes wind generated electricity which gets its energy for free.

It turns out that ACEEE recently completed a detailed 170 page study of electricity consumption in Virginia and concluded that with a maximum effort, the commonwealth could save as much as 31 percent of its current electric consumption while still doing all the things we do today. They also cite policy achievable savings of 19 percent, or possibly 27 percent with more aggressive policies, which are deemed a more realistic goal rather than an all out efficiency effort. Either of these numbers amounts to some serious savings which when combined with conservation measures such as turning off power suggests that there are ways to survive and prosper while using considerably less electricity than we use today.

Part of the problem in Virginia is that it has had relatively inexpensive electricity due to readily available supplies of coal in the state and in nearby West Virginia and two large nuclear reactors that have been functioning for many years. In this situation, consumers, businesses, and governments do not have a particularly strong economic incentive to turn off lights, adjust thermostats and buy more expensive, yet more efficient, devices. As a result, Virginia consumers use a lot of electricity. The average residential customer now consumes 14,000 KwH per year which is 25 percent above the national average and the average commercial customer has increased consumption by 50 percent in the last eight years. As a result, Virginia ranks 38th out of the 50 states in terms of efficient use of electricity.

All this is about to change. The cost of new generating capacity has been rising steadily. Cheap Appalachian coal is running out. Regulatory boards have recently given the power companies substantial rate increases, are beginning to contemplate increasing the cost of electricity during high demand periods and possibly even reversing the concept that the more you use the cheaper it gets.

Although oil, coal and natural gas prices are currently in a slump due to a multiplicity of factors, over the long run they have no place to go but up and up. The limitations on carbon emissions could send electricity prices to unheard-of levels. In this environment, conservation and efficiency become the only viable option, for, in coming decades dwindling supplies of liquid fuels and eventually natural gas are going to leave us with electricity as the only viable way of powering our civilization.

The ACEEE recommends to Virginia policymakers a suite of 11 policy recommendations that the council feels the state has the power to implement and which combined will result in energy savings of 20 percent or better and savings of roughly $2 billion for electricity consumers over the next 14 years. There are, however, numerous cultural and regulatory barriers to increased efficiency. For example, why should the landlord pay for more efficient lighting and air conditioning when the tenant pays the electric bills directly?

Over half the savings from increased energy efficiency will come from industrial and business consumption and only a third from residential. The advent of smart meters and electricity prices based on time of day consumption will likely be in place within the next ten years. If the rate structure puts a very high premium on electricity consumption during peak hours, a little consumer education should be enough to encourage washing and drying late in the evening and setting air conditioners to higher settings on summer afternoons.

Most of the policy recommendations to achieve higher efficiency are simply adjustments and tightening to existing laws, codes, policies, and rate structures. For example leaving office and other lighting on all night when no one is there is a prime example of egregious waste of dwindling resources. Redrawn regulations, rate structures and building codes can do much to reduce or eliminate such waste.

Some of the energy efficiency problem is the relationship between the state and federal governments. Most state building codes that have great potential for saving energy are modeled after the national code. Here again you have the problem of who is paying for the building and who pays for the energy. It is obviously to the benefit of builders to keep their cost of construction to a minimum and argue vigorously that their industry and the economy will be destroyed by energy efficiency standards. This, of course, is a problem for the Congress to sort out. Amidst all the bluster about "energy independence" the proper decision makers will soon figure out that tougher codes and regulations are the quickest and cheapest way to make progress towards this goal.

Exploring Civilization

2008-11-23T10:00:00.001-08:00

Planet Thrive

By Derrick Jensen

It is customary when writing to hide one's presumptions. The hope is that readers will flow along with the narrative and get swept up by the language until by the end they've reached roughly the same conclusions as the author, never realizing that oftentimes the unstated starting point was far more important to the conclusion than the arguments themselves. For example, you hear some talking head on television ask, "How are we going to best make the U.S. economy grow?" Premise one: We want the U.S. economy to grow. Premise two: We want the U.S. economy to exist. Premise three: Who the hell is we?

I'm going to try to not slide premises by you. I want to lay them out as clearly as I can, for you to accept or reject. Part of the reason I want to do this is that the questions I'm exploring regarding civilization are the most important questions we as a culture and as individuals have ever been forced to face. I don't want to cheat. I want to convince neither you nor me unfairly (nor, for that matter, do I want to convince either of us at all), but instead to help us both better understand what to do (or not do) and how to do it (or why not). This goal will be best served by as much transparency—and honesty—as I can muster.

Some of the assertions undergirding [my] book Endgame are self-evident, some I've shown elsewhere, some I will support here. Of course I cannot list every one of my premises, since many of them are hidden even from me, or far more fundamentally are inherent in English, or the written word (books, for example, presume a beginning, middle, and end). Nonetheless, I'll try my best.

The first premise I want to mention is so obvious I'm embarrassed to have to write it down, as silly in its way as having to state that clean air or clean water are good and necessary, and as self-evident as the polluted air we breathe and water we drink. But our capacity and propensity for self-delusion—indeed the necessity of self-delusion if we're to continue to propagate this culture—means I need to be explicit. The first premise is: Civilization is not and can never be sustainable. This is especially true for industrial civilization.

Years ago I was riding in a car with friend and fellow activist George Draffan. He has influenced my thinking as much as any other one person. It was a hot day in Spokane. Traffic was slow. A long line waited at a stoplight. I asked, "If you could live at any level of technology, what would it be?"

As well as being a friend and an activist, George can be a curmudgeon. He was in one of those moods. He said, "That's a stupid question. We can fantasize about living however we want, but the only sustainable level of technology is the Stone Age. What we have now is the merest blip—we're one of only six or seven generations who ever have to hear the awful sound of internal combustion engines (especially two-cycle)—and in time we'll return to the way humans have lived for most of their existence. Within a few hundred years at most. The only question will be what's left of the world when we get there."

He's right, of course. It doesn't take a rocket scientist to figure out that any social system based on the use of nonrenewable resources is by definition unsustainable: in fact it probably takes anyone but a rocket scientist to figure this one out. The hope of those who wish to perpetuate this culture is something called "resource substitution," whereby as one resource is depleted another is substituted for it (I suppose there is at least one hope more prevalent than this, which is that if we ignore the consequences of these actions they will not exist). Of course on a finite planet this merely puts off the inevitable, ignores the damage caused in the meantime, and begs the question of what will be left of life when the last substitution has been made. Question: When oil runs out, what resource will be substituted in order to keep the industrial economy running? Unstated premises: a) equally effective substitutes exist; b) we want to keep the industrial economy running; and c) keeping it running is worth more to us (or rather to those who make the decisions) than the human and nonhuman lives destroyed by the extraction, processing, and utilization of this resource.

Similarly, any culture based on the nonrenewable use of renewable resources is just as unsustainable: if fewer salmon return each year than the year before, sooner or later none will return. If fewer ancient forests stand each year than the year before, sooner or later none will stand. Once again, the substitution of other resources for depleted ones will, some say, save civilization for another day. But at most this merely holds off the inevitable while it further damages the planet. This is what we see, for example, in the collapse of fishery after fishery worldwide: having long-since fished out the more economically valuable fish, now even so-called trash fish are being extirpated, disappearing into civilization's literally insatiable maw.

Another way to put all of this is that any group of beings (human or nonhuman, plant or animal) who take more from their surroundings than they give back will, obviously, deplete their surroundings, after which they will either have to move, or their population will crash (which, by the way, is a one sentence disproof of the notion that competition drives natural selection: if you hyper-exploit your surroundings you will deplete them and die; the only way to survive in the long run is to give back more than you take. Duh). This culture—Western Civilization—has been depleting its surroundings for six thousand years, beginning in the Middle East and expanding now to deplete the entire planet. Why else do you think this culture has to continually expand? And why else, coincident with this, do you think it has developed a rhetoric—a series of stories that teach us how to live—making plain not only the necessity but desirability and even morality of continual expansion—causing us to boldly go where no man has gone before—as a premise so fundamental as to become invisible? Cities, the defining feature of civilization, have always relied on taking resources from the surrounding countryside, meaning, first, that no city has ever been or ever will be sustainable on its own, and second, that in order to continue their ceaseless expansion cities must ceaselessly expand the areas they must ceaselessly hyperexploit. I'm sure you can see the problems this presents and the end point it must reach on a finite planet. If you cannot or will not see these problems, then I wish you the best of luck in your career in politics or business. Our collective studied-to-the-point-of-obsessive avoidance of acknowledging and acting on the surety of this end point is, especially given the consequences, more than passing strange.

Yet another way to say that this way of living is unsustainable is to point out that because ultimately the only real source of energy for the planet is the sun (the energy locked in oil, for example, having come from the sun long ago; and I'm excluding nuclear power from consideration here because only a fool would intentionally fabricate and/or refine materials that are deadly poisonous for tens or hundreds of thousands of years, especially to serve the frivolous, banal, and anti-life uses to which electricity is put: think retractable stadium roofs, supercolliders, and aluminum beer cans), any way of being that uses more energy than that currently coming from the sun will not last, because the noncurrent energy—stored in oil that could be burned, stored in trees that could be burned (stored, for that matter, in human bodies that could be burned)—will in time be used up. As we see.

I am more or less constantly amazed at the number of intelligent and well-meaning people who consistently conjure up magical means to maintain this current disconnected way of living. Just last night I received an email from a very smart woman who wrote, "I don't think we can go backward. I don't think Hunter/Gatherer is going to be it. But is it possible to go forward in a way that will bring us around the circle back to sustainability?"

It's a measure of the dysfunction of civilization that no longer do very many people of integrity believe we can or should go forward with it because it serves us well, but rather the most common argument in its favor (and this is true also for many of its particular manifestations, such as the global economy and high technology) seems to be that we're stuck with it, so we may as well make the best of a very bad situation. "We're here," the argument goes,"We've lost sustainability and sanity, so now we have no choice but to continue on this self- and other destructive path." It's as though we've already boarded the train to Treblinka, so we might as well stay on for the ride. Perhaps by chance or by choice (someone else's) we'll somehow end up somewhere besides the gas chambers.

The good news, however, is that we don't need to go "backward" to anything, because humans and their immediate evolutionary predecessors lived sustainably for at least a million years (cut off the word immediate and we can go back billions). It is not "human nature" to destroy one's habitat. If it were, we would have done so long before now, and long-since disappeared. Nor is it the case that stupidity kept (and keeps) noncivilized peoples from ordering their lives in such a manner as to destroy their habitat, nor from developing technologies (for example, oil refineries, electrical grids, and factories) that facilitate this process.

Indeed, were we to attempt a cross-cultural comparison of intelligence, maintenance of one's habitat would seem to me a first-rate measure with which to begin. In any case, when civilized people arrived in North America, the continent was rich with humans and nonhumans alike, living in relative equilibrium and sustainability. I've shown this elsewhere, as have many others, most especially the Indians themselves.

Because we as a species haven't fundamentally changed in the last several thousand years, since well before the dawn of civilization, each new child is still a human being, with the potential to become the sort of adult who can live sustainably on a particular piece of ground, if only the child is allowed to grow up within a culture that values sustainability, that lives by sustainability, that rewards sustainability, that tells itself stories reinforcing sustainability, and strictly disallows the sort of exploitation that would lead to unsustainability. This is natural. This is who we are.

In order to continue moving "forward," each child must be made to forget what it means to be human and to learn instead what it means to be civilized. As psychiatrist and philosopher R.D. Laing put it,"From the moment of birth, when the Stone Age baby confronts the twentieth-century mother, the baby is subject to these forces of violence . . . as its mother and father, and their parents and their parents before them, have been.These forces are mainly concerned with destroying most of its potentialities, and on the whole this enterprise is successful. By the time the new human being is fifteen or so, we are left with a being like ourselves, a half-crazed creature more or less adjusted to a mad world. This is normality in our present age."

This essay was excerpted from Endgame Vol 1: The Problem of Civilization, Endgame Vol 2: Resistance

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