Sunday, November 25, 2007

Peak banana

Back when economist Alfred Kahn worked for the Carter administration he suggested that the high inflation of that period could end in a recession or even a depression. The administration moved immediately to distance itself from Kahn's words and admonished him for his bluntness. He promised he would not use the words in public again. Instead, Kahn, known for his cheeky sense of humor, began telling audiences that because he had been prohibited from using the words "recession" or "depression," he would substitute the word "banana" in their place. When a banana company complained, he started using "kumquat" figuring that the kumquat lobby was too small to complain.

Of late we have been getting a similar (but less amusing) displacement of words from officials in the oil industry regarding the idea of peak oil. Very few are willing even to utter the words "peak oil," and when they do, they insist that the world is not near peak as construed by a misguided peak oil movement. Instead, they substitute words such as "plateau." A Chevron vice president has used that word to describe our oil future. And, it is fitting that he used the word at a Cambridge Energy Research Associates-sponsored confab since CERA was the first to coin the phrase. CERA, however, believes a plateau--which they further qualify as an "undulating plateau"--won't occur until the 2030s and then will go on for 20 to 30 years. Any constraints before then, they say, will be due to "above-ground factors."

On the other hand, Chevron's CEO, Dave O'Reilly, says, "The era of easy oil is over." Given O'Reilly's view perhaps we can assume that the Chevron vice president cited above believes that the plateau will be starting a lot sooner than 2030. And as for O'Reilly, he does use the word "peak", but makes clear he doesn't consider nearby peaking some kind of doomsday scenario.

Others speak of "limits" on production as detailed in a recent front-page article in The Wall Street Journal. The limits include lack of access to Middle Eastern oil fields (where much of the additional oil lies), lack of available manpower, and lack of oil service infrastructure such as rigs and pipelines. Another limit is that state-controlled oil companies lack incentives to develop additional production capacity since at current prices these companies are already producing all the revenue their government owners desire. All this adds up to a "ceiling" on production, but not peak oil as the authors of the article are at pains to point out. They say this even though some of their sources point to major constraints in newly discovered oil reservoirs and the expectation that these constraints will grow.

Beyond O'Reilly, only a few other oil company officials aren't afraid to say the word "peak." Thierry Desmarest, chairman and CEO of the French oil giant Total, has stated flatly, “If demand continues to grow at this pace, global production will peak sooner, not later, for geological reasons.” He pegs the peak at between 2020 and 2025. He has called for steps to curb demand to move the peak back and allow more time for a transition to a post-oil economy. A former Shell chairman believes oil could peak within 20 years. One understands why the majority of oil executives shy away from the term since it implies that oil companies as a group are now decaying assets without much of a future.

Limits, plateaus, the end of easy oil, above-ground factors, or constraints on exploration, infrastructure and personnel--call it what you like, but it all adds up to the same thing, namely, a peaking of daily world oil production. As everyone truly familiar with peak oil understands, it is the maximum rate of production which will determine the peak, not the total available resource in the ground. Whether the peak occurs for a variety of reasons--which now seems likely--or whether it occurs due solely to geologic constraints, peak still produces the same problem: There is not enough oil to go around at prices that people can afford. This is, of course, due to falling daily production.

One could argue that responses to any peak would depend on the precise nature of that peak. For instance, if people believe a peak is due to infrastructure constraints, more money could surely be spent on oil infrastructure to increase our daily production capacity. But what company will spend this money if it doesn't believe future oil volumes will justify it? One could also argue for forcibly opening oil fields in the Middle East to rapid development. I have often wondered whether those who say that above-ground factors are limiting our daily production tacitly advocate a military response to peak. If so--apart from any moral or philosophical objections--would such a response actually help? The current experiment in Iraq suggests it won't.

Perhaps the public would be better served if all those who are now under orders to use euphemisms when referring to peak oil were to follow Alfred Kahn's lead and use the word "banana" in their place. At least people would then know that the various terms really all amount to the same thing. They all really mean peak oil--oh, excuse me, I mean banana, or rather to be absolutely clear, peak banana.

Tuesday, November 20, 2007

Clarke's wager

My latest column on Scitizen entitled Clarke's Wager is now posted. Here is the teaser:
Some 350 years ago, mathematician and philosopher Blaise Pascal argued that it is better to wager for the existence of God than against it since the benefits of believing in God are so great. The argument became known as Pascal's Wager. Today, author Duncan Clarke asks us to make a kind of inverted Pascal's Wager in favor of continued abundance in world oil supplies. Is it a good bet?... Read more

Sunday, November 18, 2007

Peak fun (and the inevitable hangover)

Peak oil. Peak gas. Peak food. Peak energy. Peak climate. And now, peak everything!

While the Internet is abuzz with the latest pessimistic forecast about our resource future, the public by and large is busily enjoying the peak. Isn't that what one would expect at the peak? SUVs continue to leave the showrooms, airlines are jammed with vacationing passengers, the cruise lines are still cruising, and the theme parks are still amusing people with their themes. It's no wonder that Americans and many others in the wealthy countries of the world have little time to notice all the bad news.

The truth is that the world has now lost touch with its pre-petroleum memory. The vast majority of people alive now only know the continual ascent of fossil fuel power. Today's fun seekers have experienced only increasing abundance (except in a few places such as sub-Saharan Africa). This state of affairs flummoxed one attendee at a recent peak oil conference.

"Why don't people get it?" he wondered.

"They're too busy enjoying the peak," I responded.

"We're at peak fun," another conference goer added.

"But, the facts are all there on the Internet," the first conference goer insisted.

In order to comprehend the idea that we are at peak fun, however, one must have the background to see that we are also at or near a number of other peaks, I explained. Otherwise, what people are experiencing seems merely the extension of a trend that they have come to rely on. And besides, when you are at the peak of the biggest party ever thrown in history, the fossil-fuel party, who worries about the hangover?

So, the task for peak oil activists is two-fold. First, educate the public. This is no small task given the complexity of all the peak issues confronting us. Second, get the public to care now rather than later when severe consequences start rolling in.

Peak oil activists are inevitably cast (rather unfairly I think) as a bunch of killjoys. The activists are not really trying to take pleasure away from life; rather, they would really like to redirect us to different forms of pleasure that will be appropriate within the constraints of an energy-starved world. Unfortunately, the message that often emerges focuses on the expected terrible hangover from our fossil-fuel splurge. And, any attentive listener to the peak oil story during this final fossil-fuel party would quickly (and correctly) conclude that it's too late to avoid that hangover completely. Do we activists offer a cure? Alas, no. We only offer ways of coping with the inevitable pain.

Some activists are certainly working on what they believe will be a better, more just, more leisurely world where happiness will not be derived from excessive consumption. That sounds all well and good. But perhaps it does not sound quite as good as the party which is going on now with its metaphorical punch bowls filled to the brim and its party dip and other food crowding the tables.

We might be tempted to try to conjure up the image of a better party in the future where our quality of life has improved in some ways; but it is hard to compare something that has yet to arrive with something that already exists.

So, if lecturing a world full of fossil-fuel drunks about the dangers of their addiction won't work, and if telling them a better world awaits if they would only kick the habit won't work either, then what will work to get the attention of the partygoers at the last great fossil-fuel bash? I'm afraid that like the Titanic, we'll have to hit an iceberg before the danger even gets noticed by the vast majority. And even then, it will still be necessary to explain to them what is happening and to guide them to take full advantage of the few available "lifeboats" such as conservation, efficiency, and a less vehicle-dependent and less energy-dependent life.* (We won't, however, have to convince them about the wisdom of alternative fuels though these will likely be in short supply.)

This doesn't seem like the kind of result most peak oil activists have in mind. They would rather see us make major preparations in advance. Perhaps we will get lucky. Perhaps there will be some breakthrough in the public mind before it is absolutely too late to engage in preparations. But I think we activists must all be ready to accept assignments on the emergency rescue team. Given the lateness of the hour, it may be the only role left to us.

*It is worth noting that the passengers and crew of the Titanic did not at first perceive the danger of the situation and delayed lowering the first lifeboat for an hour. Also, the number of lifeboats was only half of what was needed to accommodate all the passengers. Even so, far less than half were saved because the evacuation was so badly managed that many lifeboats cast off without being filled. These were the tragic results of thinking that the ship was unsinkable.

Sunday, November 11, 2007

None dare say it was for oil

It must have seemed puzzling to many when the Bush administration put a full court press on former Federal Reserve Board Chairman Alan Greenspan recently after the release of his memoir. In it Greenspan wrote that the administration had gone to war in Iraq over oil. That's hardly a blockbuster. The search for weapons of mass destruction (WMD) had ended in failure. The connection between Saddam Hussein and al Qaeda had long since been debunked. And, any hope of establishing a stable democracy in Iraq had already been dashed by the wildly incompetent execution of the war.

WMD, the al Qaeda connection and the introduction of democracy in Iraq had all been at various times justifications for the war. One would think that under such circumstances a competent public relations adviser would have counseled the administration to just let Alan Greenspan's assertion pass. After all, the former central banker would soon be completing his book tour, and then he would fade from the news. Why respond, when doing so would only fan the flames?

But the counterattack came quickly on the Sunday morning talk shows and in the White House press room. Under bombardment from the administration Greenspan quickly "elaborated" on his views in order to deflect the return fire.

All of this could be seen as a relatively minor dustup over what is now broadly believed by the American public to be at least one of the major reasons for going to war. But, the assertion that the military mission in Iraq is primarily a raiding party for oil is more than just an embarrassment to the administration. Naturally, the collapse of the other justifications for the war led to a more widespread acceptance of this assertion. But, even more important, this assertion has implications which, if discussed and properly understood, would thunder through the public mind.

Admitting that the invasion of Iraq was about oil opens the door to a very troubling conversation. If the invasion was about oil, then it must mean that the supply of imported oil was somehow threatened. The supply could be threatened, of course, for two reasons: 1) Someone was threatening it, in this case Saddam Hussein, or 2) something was threatening it, possibly depletion. Delving further into both reasons demonstrates that both are plausible explanations. Of course, Saddam had already tried more than a decade earlier to seize the oil fields of Kuwait. If we examine the oil depletion argument, we find that depletion was starting to take its toll on world oil supplies. Today, we have confirmation of the administration's prescience on this point. So-called total liquids--which include even ethanol--remain down more than a million barrels a day from the high reached in July 2006. Therefore, it is of more than passing interest to Americans whether Middle Eastern governments, which control more than 60 percent of the world's remaining oil supply, are willing to pump it out more rapidly to keep the world economy afloat. If those governments won't do so voluntarily, perhaps the U. S. military can provide them with the proper incentive. (For a discussion of this interpretation, see my earlier piece from March 2005, Global Resource Wars: The Rosetta Stone.)

But, wait a minute? I thought we had ethanol, biodiesel and pretty soon hydrogen to power our cars. If the Iraq war is really about dwindling oil supplies, then that would call into question whether proposed oil substitutes will work as advertised. (Remember when hydrogen cars were just around the corner?) If these substitutes are going to work so splendidly, then why would we need to fight a war for oil at all?

Many inconvenient questions come tumbling out of the assertion that the Iraq War is about oil. This is the reason I believe that the Bush administration spends so much effort refuting such assertions. The simple fact is that if the Iraq War is really about oil (and I believe that it is), then this means that the current official story, namely, that a smooth, seamless transition to a post-oil economy is underway, is something that even the administration itself does not believe.

I am fairly certain that if the public understood this, it would be a lot more panicked about our energy future than it is.

Sunday, November 04, 2007

Let's play "Peak Oil Shock Me"

An increasingly popular parlor game among peak oil activists is to see who can serve up the most shocking morsel of peak oil news at any one sitting. There are now plenty of morsels to choose from on an almost daily basis. Here are some recent samples:

Persistent new highs in the oil price of late only add to the end-times quality of the game.

Of course, there is a desire among the participants to be validated in their belief that peak oil is a major concern that needs our attention now. Otherwise, what would be the purpose of all that effort and worry concerning peak oil awareness and preparation? There is also the desire to discover THE revelation that will finally shock the rest of the seemingly zombified planet into realizing the seriousness of our predicament. And, there is always hope that even if today's news was not enough, another round of "Peak Oil Shock Me" tomorrow will finally yield the Holy Grail of peak oil awareness, namely, a piece of peak oil news so horrifying that it simply cannot be ignored by the population at large.

Played for the purposes of education, entertainment, solace, or even a kind of morbid comic relief, the game itself is harmless. But when played in an earnest quest to find that Holy Grail of peak oil awareness, it courts a two-fold danger. First, we peak oil activists have a way of putting off even our friends with the latest bad news. It's not that bad news should be ignored. But if the purpose of the peak oil movement is to spread awareness and ultimately spur action, then telling uninformed people news which radically challenges their worldview may cause them simply to tune us out. In this regard, the worse the news is, the less likely people are to want to hear what we have to say or to believe it if they do listen. Second, the preoccupation with that "breakthrough" piece of news misses the point. Peak oil is a complex phenomenon with ramifications that are difficult to see. The way news is nowadays conveyed, one can hardly expect people to understand that complexity without considerable background--background which is almost never offered up in either the print or electronic media. By focusing on finding a "breakthrough" piece of news, we take energy away from the more difficult but necessary task of public education.

Certainly, many peak oil activists wonder if anything will cause the public to wake up. The vast majority of those activists--by my admittedly small and informal poll--appears to believe that an extreme crisis will have to arrive before the public finally "gets it." Accordingly, many of those I talk with have become deeply pessimistic about the prospects for making any substantial society-wide preparations before peak oil arrives. Indeed, many believe peak has already arrived and that therefore it is too late to prepare. All we can do now is cope.

But we cannot assume that even an extreme crisis will be interpreted within the context of peak. In fact, we can already see that the usual bogeymen are being trotted out: price-gouging oil companies, speculators, Arab oil producers who hate us, and government policy that blocks new drilling. There is also the belief among the public--who are heavily influenced by the priesthood of professional economists--that the high oil prices of today will resolve themselves the same way they have in the past, i.e., by going a lot lower.

Undermining what I call the official story is going to take persistent and intelligent effort on the part of the peak oil movement. And, this effort will require constant vigilance as new conspiratorial explanations and cornucopian stratagems (such as the hedge that above ground risks are more important than below ground risks) are deployed to defend the current paradigm.

In the meantime, I'm all in favor of a few rounds of "Peak Oil Shock Me," especially when it's used as an icebreaker among peak oil activists. But don't mistake this game for genuine preparation in dealing with the as yet uninformed public. That task requires an entirely different approach.