The new watchword in the coal mining industry is carbon sequestration. Those who mine coal and those who burn it (primarily electric utilities) are less likely than their counterparts in the oil and gas business to discount the dangers of oil and gas depletion. And, they have an entirely predictable solution: Mine more coal. The natural followup question is: What about global warming? From coal advocates we get another entirely predicable answer: carbon sequestration (i.e., storing the carbon dioxide created by the combustion of coal someplace other than the atmosphere).
These advocates are eager to turn coal into liquid fuel, into slurries for pipeline transport, and into cleaner burning synthetic gas for fuel and chemical feedstocks. In fact, they envision a return to a coal economy as the oil and gas economy declines. They do have one very important fact in their favor: The world still has gigantic reserves of coal, one quadrillion short tons according to the U. S. Energy Information Administration.
Of course, there are questions about the energy content of that remaining coal. Will we reach a point (sooner than we expect) at which the net energy from coal begins to decline precipitously and even turns negative making it an energy sink instead of an energy source? Will we find that as we increase our use of coal, a worldwide peak in production will come much earlier than we thought? And, wouldn't we then face the same challenge all over again of having to move quickly to renewable sources of energy?
But, let us set all these concerns aside for the moment and focus on the question of carbon sequestration. Not too long ago I spoke about oil depletion before a Chamber of Commerce-sponsored gathering. I suggested that we as a world society might decide to return to a coal economy. While that might prove practical in the short run, I explained, it would probably be disastrous in the long run because of the damage it would do to the climate.
Afterwards an engineer who works for a large utility approached me. He explained that his company was already successfully sequestering carbon dioxide underground in a pilot program at a generating plant in Virginia. I asked him how long the company was planning to test its program before expanding it. Would it be five years? 10 years? How long will the company wait to be sure that the carbon dioxide doesn't leak out at a later date, possibly by some process as yet unknown? What if any failure of the company's sequestration method doesn't show up until the 11th year?
He responded, "Well, maybe any leakage will be slow."
Are we really willing to bet the future of human civilization on coal based on that response?
Friday, December 23, 2005
Sunday, December 18, 2005
Peak Oil's Richard Pryor Problem
Comedian Richard Pryor, who passed away last week, was famous for saying, "Who you gonna believe? Me or your lying eyes?" In a way, those who believe that a peak in world oil production is not far away (or possibly already here) are asking the American public the same question.
A somnolent and self-satisfied American citizenry awakens each day to a world with no gas lines, warm homes in winter (or cool homes in summer), an economy which appears to be gaining speed and a gasoline price which has dropped below where it had been before it spiked to record levels.
It is as if we in America were all on a great luxury liner, one brimming from bow to stern with food and entertainment 24 hours day. Our ship is cruising through calm tropical seas under clear blue skies. As part of the afternoon entertainment someone gets up on the stage and starts talking about a huge storm not far ahead. He says the storm is in an area where some ships have simply disappeared and others have been so damaged that they had to be abandoned. At first the crowd squirms uncomfortably at the thought. But after looking out the window they are relieved; the sea is calm and the sky is blue to horizon. They begin murmuring among themselves that this guy is truly crazy.
Is our hypothetical speaker not asking the audience to deny the evidence of their senses? Is he not asking them to believe him rather than their lying eyes?
So, we are left with indirect approaches and appeals to statistics--over which there is admittedly much disagreement. We have no photos of the ancient Maya as their society collapsed. And, even if we had them, it took more than a century for Mayan civilization to disappear under mounting ecological pressures. Could that have been captured in a Kodak moment? In Pompeii we can actually see tortured faces preserved by the hot spewing ash; those faces speak eloquently of a people unprepared for a sudden disaster. And, yet Pompeii was really an isolated event, not a worldwide cataclysm. Even if we somehow had a time machine and could bring back pictures from the future, would anyone know how to interpret them? Even if we could interpret them, would anyone believe them?
We are only now beginning to see the outline of a visual presentation that will be crucial to explaining the risks of peak oil to a television-addicted society. Robert Hirsch's fast declining depletion curves can at least be fitted with the emotions of the market crashes of 1929 or 1987. But, the lesson in both instances is that eventually recovery comes.
America has always been a sucker for the apocalytic story. But, those stories have almost always had religious overtones. Even technological tales of the end times are often filled with moralizing about our unwillingness to control technology. It simply isn't within the American narrative to say, "We ran out of everything and people died."
There are signs of the peak, of course, for those who can interpret them: The global contest for the Earth's remaining energy sources. The inability of Saudi Arabia to increase its oil output as promised, not just over a few months, but over a couple of years. The unexpected rise in oil prices and their resilience in the face of energy analysts' calls for $20 or $30 oil. The sudden and suspicious growth of oil reserves in the Middle East in the 1980s with no new major discoveries, reserves upon which predictions of a peak far into the future are predicated.
But all this assumes a coherent narrative on which to hang these facts. And, that is the thing which hasn't yet emerged in the public mind. Perhaps peak oil is just too contrarian for the ingrained cornucopian expectations of a sated American public. Perhaps its ramifications are just too complex to get across. More important than either of these, peak oil does not yet come with compelling pictures that can be beamed into every home on FOX and CNN.
In our society, talk is good, pictures are better, and narrative is critical. But, in the end, the play's the thing. Can we find a peak oil narrative with pictures and players compelling enough to awaken the public before it's too late?
A somnolent and self-satisfied American citizenry awakens each day to a world with no gas lines, warm homes in winter (or cool homes in summer), an economy which appears to be gaining speed and a gasoline price which has dropped below where it had been before it spiked to record levels.
It is as if we in America were all on a great luxury liner, one brimming from bow to stern with food and entertainment 24 hours day. Our ship is cruising through calm tropical seas under clear blue skies. As part of the afternoon entertainment someone gets up on the stage and starts talking about a huge storm not far ahead. He says the storm is in an area where some ships have simply disappeared and others have been so damaged that they had to be abandoned. At first the crowd squirms uncomfortably at the thought. But after looking out the window they are relieved; the sea is calm and the sky is blue to horizon. They begin murmuring among themselves that this guy is truly crazy.
Is our hypothetical speaker not asking the audience to deny the evidence of their senses? Is he not asking them to believe him rather than their lying eyes?
So, we are left with indirect approaches and appeals to statistics--over which there is admittedly much disagreement. We have no photos of the ancient Maya as their society collapsed. And, even if we had them, it took more than a century for Mayan civilization to disappear under mounting ecological pressures. Could that have been captured in a Kodak moment? In Pompeii we can actually see tortured faces preserved by the hot spewing ash; those faces speak eloquently of a people unprepared for a sudden disaster. And, yet Pompeii was really an isolated event, not a worldwide cataclysm. Even if we somehow had a time machine and could bring back pictures from the future, would anyone know how to interpret them? Even if we could interpret them, would anyone believe them?
We are only now beginning to see the outline of a visual presentation that will be crucial to explaining the risks of peak oil to a television-addicted society. Robert Hirsch's fast declining depletion curves can at least be fitted with the emotions of the market crashes of 1929 or 1987. But, the lesson in both instances is that eventually recovery comes.
America has always been a sucker for the apocalytic story. But, those stories have almost always had religious overtones. Even technological tales of the end times are often filled with moralizing about our unwillingness to control technology. It simply isn't within the American narrative to say, "We ran out of everything and people died."
There are signs of the peak, of course, for those who can interpret them: The global contest for the Earth's remaining energy sources. The inability of Saudi Arabia to increase its oil output as promised, not just over a few months, but over a couple of years. The unexpected rise in oil prices and their resilience in the face of energy analysts' calls for $20 or $30 oil. The sudden and suspicious growth of oil reserves in the Middle East in the 1980s with no new major discoveries, reserves upon which predictions of a peak far into the future are predicated.
But all this assumes a coherent narrative on which to hang these facts. And, that is the thing which hasn't yet emerged in the public mind. Perhaps peak oil is just too contrarian for the ingrained cornucopian expectations of a sated American public. Perhaps its ramifications are just too complex to get across. More important than either of these, peak oil does not yet come with compelling pictures that can be beamed into every home on FOX and CNN.
In our society, talk is good, pictures are better, and narrative is critical. But, in the end, the play's the thing. Can we find a peak oil narrative with pictures and players compelling enough to awaken the public before it's too late?
Sunday, December 11, 2005
Energy: Fairy Dust for Techno-optimists
Peter Pan knew that anyone could fly after receiving a light sprinkling of fairy dust. And, so he sprinkled three young acquaintances and lured their levitating bodies out a bedroom window for a flight to Neverland.
Today, the world's techno-optimists regale us with tales of a future technological Neverland filled with such miracles as climate engineering (to save us from global warming); vertical farming--something along the lines of farming in a high-rise office building; photographic communications portals between cities--a virtual reality picture phone of sorts; personal fabricators--think the replicator on the Star Trek television series; roving self-powered fish ranches (to make up for the overfishing we've already done); and even Martian terraforming to give us an extra "Earth" when we're ready to throw out the one we live on.
Such stories can truly make us feel as if we could fly without any outside propulsion. But, whatever their merit, these ideas almost never include an explanation of where the energy to accomplish them will come from. The techno-optimists just assume that the necessary energy will show up somehow. It is as if energy were fairy dust to be sprinkled on any energy-devouring scheme we can think of.
Of course, there are techno-optimist schemes for getting all the energy we'd like, too: great solar panels in space, nuclear breeder reactors, clean-coal technology, methane hydrates, biodiesel from soy, to name a few. Some of them might work. The operative word is might.
Often these energy schemes fail to include an adequate explanation of 1) how we will get more energy out of the proposed technologies than we put in, 2) how we will scale them up to meet all our projected needs, 3) how we will deal with the enormous expansion of problems associated with them such as strip mining, nuclear waste or global warming or 4) how long such schemes are likely to sustain us. Perhaps we shouldn't make such a fuss. Peter Pan will find some special fairy dust to solve these problems as well. It's called technological innovation, and like fairy dust, it will arrive at precisely the moment we need it.
The one thing that does not figure into the techno-optimists' future is the possibility that we may have to live simpler, less technological lives. But then, that would require hard choices, clear thinking and careful planning and cooperation. How much easier to fantasize that some technological Peter Pan will arrive and take us to a technological Neverland where the inhabitants never run short of fairy dust--or energy.
Today, the world's techno-optimists regale us with tales of a future technological Neverland filled with such miracles as climate engineering (to save us from global warming); vertical farming--something along the lines of farming in a high-rise office building; photographic communications portals between cities--a virtual reality picture phone of sorts; personal fabricators--think the replicator on the Star Trek television series; roving self-powered fish ranches (to make up for the overfishing we've already done); and even Martian terraforming to give us an extra "Earth" when we're ready to throw out the one we live on.
Such stories can truly make us feel as if we could fly without any outside propulsion. But, whatever their merit, these ideas almost never include an explanation of where the energy to accomplish them will come from. The techno-optimists just assume that the necessary energy will show up somehow. It is as if energy were fairy dust to be sprinkled on any energy-devouring scheme we can think of.
Of course, there are techno-optimist schemes for getting all the energy we'd like, too: great solar panels in space, nuclear breeder reactors, clean-coal technology, methane hydrates, biodiesel from soy, to name a few. Some of them might work. The operative word is might.
Often these energy schemes fail to include an adequate explanation of 1) how we will get more energy out of the proposed technologies than we put in, 2) how we will scale them up to meet all our projected needs, 3) how we will deal with the enormous expansion of problems associated with them such as strip mining, nuclear waste or global warming or 4) how long such schemes are likely to sustain us. Perhaps we shouldn't make such a fuss. Peter Pan will find some special fairy dust to solve these problems as well. It's called technological innovation, and like fairy dust, it will arrive at precisely the moment we need it.
The one thing that does not figure into the techno-optimists' future is the possibility that we may have to live simpler, less technological lives. But then, that would require hard choices, clear thinking and careful planning and cooperation. How much easier to fantasize that some technological Peter Pan will arrive and take us to a technological Neverland where the inhabitants never run short of fairy dust--or energy.
Monday, December 05, 2005
Money and Energy: The Map Is Not The Territory
The map is not the territory. To any thinking person this statement is axiomatic. But, an important corollary is more difficult to discern, namely: Money is nothing more than the right to command energy to do what you want it to do.
To understand how the two statements above go together you need first to understand that money and credit make up what's called the symbolic economy. The symbolic economy merely represents what is happening in the real economy of goods and services including energy goods. Second, it is useful to know that only a fraction of one percent of all energy which goes into the products and services of an industrial economy comes from physical human labor. All the rest comes from a mix of fossil fuels (86%), nuclear power (7%), hydro power (6%) and alternative sources (1%). Since nothing gets mined, grown, harvested, processed, manufactured or delivered without energy, it follows that energy is the true currency of modern civilization. And, without energy sources that go beyond human and animal labor, we would revert to a pre-industrial lifestyle.
But some very smart people who should know better insist that money has a life of its own dancing through the hands of merchants, miners and manufacturers and able to conjure goods and even energy resources out of thin air. Such people treat energy as just another item in the marketplace. A recent commentary took that line of thinking as outlined in the linked article above to its logical conclusion by proposing that we run our entire economy on AAA batteries.
Yet, even the most noted cornucopian of our times, Julian Simon, recognized that energy is the "master resource." If energy is in short supply, that is, if it is costly, then our standard of living cannot be high. If it is plentiful and cheap, we can theoretically use it to transform everything else on earth into what we need and want. In his book, "The Ultimate Resource," Simon essentially admits that without cheap energy modern industrial civilization wouldn't be possible. His main argument on energy is that in the long run human ingenuity will always allow us to find whatever amounts and types of energy we need.
That is the real point of contention between energy pessimists and cornucopians. Intellectually honest cornucopians will recognize that no amount of money will elicit movement from a tractor, flight from an airplane, or the flow of electricity from generator, if there is no energy to make it happen. The quest for profit may motivate people to find and extract new energy resources, but no prospector in his right mind would build oil derricks on top of maps.
What we truly need is to start spending much greater sums of public money--that is, energy allocated for public purposes--to jumpstart the creation of a sustainable, renewable energy society. We don't have much time to prepare.
[Thanks to James Howard Kunstler in his November 28 commentary for pointing out the pieces cited above.]
To understand how the two statements above go together you need first to understand that money and credit make up what's called the symbolic economy. The symbolic economy merely represents what is happening in the real economy of goods and services including energy goods. Second, it is useful to know that only a fraction of one percent of all energy which goes into the products and services of an industrial economy comes from physical human labor. All the rest comes from a mix of fossil fuels (86%), nuclear power (7%), hydro power (6%) and alternative sources (1%). Since nothing gets mined, grown, harvested, processed, manufactured or delivered without energy, it follows that energy is the true currency of modern civilization. And, without energy sources that go beyond human and animal labor, we would revert to a pre-industrial lifestyle.
But some very smart people who should know better insist that money has a life of its own dancing through the hands of merchants, miners and manufacturers and able to conjure goods and even energy resources out of thin air. Such people treat energy as just another item in the marketplace. A recent commentary took that line of thinking as outlined in the linked article above to its logical conclusion by proposing that we run our entire economy on AAA batteries.
Yet, even the most noted cornucopian of our times, Julian Simon, recognized that energy is the "master resource." If energy is in short supply, that is, if it is costly, then our standard of living cannot be high. If it is plentiful and cheap, we can theoretically use it to transform everything else on earth into what we need and want. In his book, "The Ultimate Resource," Simon essentially admits that without cheap energy modern industrial civilization wouldn't be possible. His main argument on energy is that in the long run human ingenuity will always allow us to find whatever amounts and types of energy we need.
That is the real point of contention between energy pessimists and cornucopians. Intellectually honest cornucopians will recognize that no amount of money will elicit movement from a tractor, flight from an airplane, or the flow of electricity from generator, if there is no energy to make it happen. The quest for profit may motivate people to find and extract new energy resources, but no prospector in his right mind would build oil derricks on top of maps.
What we truly need is to start spending much greater sums of public money--that is, energy allocated for public purposes--to jumpstart the creation of a sustainable, renewable energy society. We don't have much time to prepare.
[Thanks to James Howard Kunstler in his November 28 commentary for pointing out the pieces cited above.]
Sunday, November 27, 2005
"Risk" and "Probability": MIA in the Peak Oil Debate
People desperately want to know the one thing which they cannot know: The future. All sides in the peak oil debate are only too happy to oblige with confident predictions about the future which flatly contradict one another. Strangely, it is not only the charlatans who offer such cocksure pronouncements, but also many thoughtful, accomplished people who are competent in every other way, yet who feel compelled to share their opinions as if they were channelling Nostradamus.
The result can be a game of journalistic ping-pong in which unequivocal pronouncements from various sides of the peak oil debate leave the public confused. Many in the public simply dismiss this debate; after all, if the experts can't agree, let them sort things out before they bother me.
While it is true that the public is looking for definitive answers about the complex issue of oil depletion, it is also true that there are none. We are all groping forward in a twilight of partial and often uncertain knowledge. What the public desperately needs to know are the risks we run as fossil fuels deplete. In short, they need a brief course in probability and risk that can prepare them to think clearly about the path we should all take individually and collectively.
When I speak before groups I often ask who has fire insurance on their homes or apartments. Usually, nearly every hand is raised. Then, I ask how many have ever actually collected on a claim for a fire. Only very rarely does even one person raise his or her hand. "Why do you have the insurance then?" I ask rhetorically. The answer, of course, is that even though house fires are quite rare, their consequences can be quite severe. "And so," I continue, "we routinely insure against events which are rare because they have severe consequences." We do this with life insurance. We do it implicitly with many health insurance plans which have coverage into the millions of dollars--even unlimited coverage--that in all likelihood we will never need.
Another useful illustration I use is the stock market. "If I could prove to you that you could be certain the stock market will go up nine years out of the the next 10," I begin, "you would be at ease with your investments in stocks and you might even increase your investment in them." Everyone seems comfortable with that thought.
"Now, let me add one more piece of information to this scenario," I continue. "In one of those years the stock market is almost certain to go down 80 percent." This completely changes the calculus because the element of probability is combined with the element of severity.
We must combine these things in our discussion of peak oil. No one knows when oil will peak for certain. The range of opinion is such that one could feel justified in remaining entirely unconcerned about oil for another 30 even 40 years by which time, we are told, a new energy infrastructure will be in place. But should we really speak in terms of whether a prediction for the peak of 2008 versus 2037 versus 2050 is correct? No one will know which is correct until after the fact. While the actual date of the peak has huge implications for what we should do now, it is the severity of the consequences of a peak which should be our focus. Are we adequately prepared for a peak even if we believe there is a low probability that it will occur in the next few years?
We should talk in terms of probability rather than absolutes. For example, can we rule out a peak entirely in the next few years? Can we reasonably say that the consequences of a peak are something we don't really need to worry about? In the world of probability, it matters whether you are worrying about a minor risk such as getting a hangnail or a major risk such as getting your arm chopped off. When it comes to the consequences of peak oil, "getting your arm chopped off" is a closer analogy.
Even the oil optimists agree that predicting a precise date or even year for peak oil is problematic. That is part of the reason for their skepticism concerning predictions of a nearby peak. But, oil optimists such as Daniel Yergin and Michael Lynch should be challenged in public to say whether they believe there is a zero chance of an oil peak before 2010. Do they also believe there is a zero chance before 2015 or 2020 or 2030? On what do they base their 100 percent confidence? Can they show us that they have perfect knowledge of the world's oil resources and the path of consumption and technological innovation through these dates?
Of course, both these optimists and their followers are merely assigning a high probability to a later peak. They cannot rule out an earlier one, but can only say that they regard it as unlikely. This means they must agree that with each year the possibility of a peak grows. Since oil is a finite resource, we know that we are depleting it once and for all with every fill-up. And, that means that even in the face of uncertain knowledge we know we are drawing ever closer to the peak as each day passes.
A nearby peak--and by this I mean within the next 10 to 15 years--would be, at the very least, highly disruptive and, at worst, civilization-destroying. Doesn't the possibility of such severe consequences demand our attention even if we believe that the probability of a nearby peak is small? This is the question we must pose to move the argument away from mere point-counterpoint where the validity of precise predictions on both sides is always questionable.
Most of us are not so foolish as to leave all our worldly goods exposed to the risk of a house fire without insurance. Unlike house fires, however, the risk of a peak in world oil production grows every day. Isn't it time to take out some insurance against that day based on the risks we already know about?
[For my suggestions on what form that insurance might take, see my previous post, Peak Oil 'To Do' List: Why We Should Do These Things Anyway.]
The result can be a game of journalistic ping-pong in which unequivocal pronouncements from various sides of the peak oil debate leave the public confused. Many in the public simply dismiss this debate; after all, if the experts can't agree, let them sort things out before they bother me.
While it is true that the public is looking for definitive answers about the complex issue of oil depletion, it is also true that there are none. We are all groping forward in a twilight of partial and often uncertain knowledge. What the public desperately needs to know are the risks we run as fossil fuels deplete. In short, they need a brief course in probability and risk that can prepare them to think clearly about the path we should all take individually and collectively.
When I speak before groups I often ask who has fire insurance on their homes or apartments. Usually, nearly every hand is raised. Then, I ask how many have ever actually collected on a claim for a fire. Only very rarely does even one person raise his or her hand. "Why do you have the insurance then?" I ask rhetorically. The answer, of course, is that even though house fires are quite rare, their consequences can be quite severe. "And so," I continue, "we routinely insure against events which are rare because they have severe consequences." We do this with life insurance. We do it implicitly with many health insurance plans which have coverage into the millions of dollars--even unlimited coverage--that in all likelihood we will never need.
Another useful illustration I use is the stock market. "If I could prove to you that you could be certain the stock market will go up nine years out of the the next 10," I begin, "you would be at ease with your investments in stocks and you might even increase your investment in them." Everyone seems comfortable with that thought.
"Now, let me add one more piece of information to this scenario," I continue. "In one of those years the stock market is almost certain to go down 80 percent." This completely changes the calculus because the element of probability is combined with the element of severity.
We must combine these things in our discussion of peak oil. No one knows when oil will peak for certain. The range of opinion is such that one could feel justified in remaining entirely unconcerned about oil for another 30 even 40 years by which time, we are told, a new energy infrastructure will be in place. But should we really speak in terms of whether a prediction for the peak of 2008 versus 2037 versus 2050 is correct? No one will know which is correct until after the fact. While the actual date of the peak has huge implications for what we should do now, it is the severity of the consequences of a peak which should be our focus. Are we adequately prepared for a peak even if we believe there is a low probability that it will occur in the next few years?
We should talk in terms of probability rather than absolutes. For example, can we rule out a peak entirely in the next few years? Can we reasonably say that the consequences of a peak are something we don't really need to worry about? In the world of probability, it matters whether you are worrying about a minor risk such as getting a hangnail or a major risk such as getting your arm chopped off. When it comes to the consequences of peak oil, "getting your arm chopped off" is a closer analogy.
Even the oil optimists agree that predicting a precise date or even year for peak oil is problematic. That is part of the reason for their skepticism concerning predictions of a nearby peak. But, oil optimists such as Daniel Yergin and Michael Lynch should be challenged in public to say whether they believe there is a zero chance of an oil peak before 2010. Do they also believe there is a zero chance before 2015 or 2020 or 2030? On what do they base their 100 percent confidence? Can they show us that they have perfect knowledge of the world's oil resources and the path of consumption and technological innovation through these dates?
Of course, both these optimists and their followers are merely assigning a high probability to a later peak. They cannot rule out an earlier one, but can only say that they regard it as unlikely. This means they must agree that with each year the possibility of a peak grows. Since oil is a finite resource, we know that we are depleting it once and for all with every fill-up. And, that means that even in the face of uncertain knowledge we know we are drawing ever closer to the peak as each day passes.
A nearby peak--and by this I mean within the next 10 to 15 years--would be, at the very least, highly disruptive and, at worst, civilization-destroying. Doesn't the possibility of such severe consequences demand our attention even if we believe that the probability of a nearby peak is small? This is the question we must pose to move the argument away from mere point-counterpoint where the validity of precise predictions on both sides is always questionable.
Most of us are not so foolish as to leave all our worldly goods exposed to the risk of a house fire without insurance. Unlike house fires, however, the risk of a peak in world oil production grows every day. Isn't it time to take out some insurance against that day based on the risks we already know about?
[For my suggestions on what form that insurance might take, see my previous post, Peak Oil 'To Do' List: Why We Should Do These Things Anyway.]
Sunday, November 20, 2005
Out of Control: Do senators really hate oil price manipulation?
The U. S. senators who recently held hearings to vilify oil company presidents about high oil prices don't so much oppose price manipulation as have a preference for its direction, namely down. But those same senators may soon be wishing that their favorite villains actually had the power to control prices. Such power would imply that considerable extra production capacity still exists.
It should come as no surprise that there is a basis for the senators' suspicion. From the early 1930s onward the Texas Railroad Commission limited supplies from Texas oilfields to keep prices high. Huge discoveries in East Texas during the Great Depression had caused oil prices to plummet below the cost of production--down to 10 cents a barrel at one point. The commission successfully obtained the power to allocate (read: restrict) production among all of Texas' wells, a process called proration. Federal intervention was eventually required to prevent so-called "hot oil," oil illegally pumped from the Texas fields, from moving across state lines. It was a system that had been initially resisted by Texas oilmen, but which they soon realized worked to their advantage. Thus, began the first formal government-run quota system for oil production.
That system allowed regulators to manage world oil prices because Texas alone had the world's largest excess production capacity. From the mid-1930s until 1970 regulators could flood the world market to bring down prices when they got too high or restrict production to keep prices from falling below the level necessary to encourage new drilling and investment.
In 1970 U. S. and world demand outstripped the ability of Texas to play the role of swing producer. The state's wells were allowed to run at 100 percent from that year to this. At the same time a new swing producer emerged, Saudi Arabia. Until recently the Saudi government, through its now government-owned oil company, Saudi Aramco, had been the price maker in the world oil markets. Its close relationship with the United States had resulted in favor after favor for the U. S. government and its allies. In both Gulf Wars, for example, the Saudis pumped extra crude to stabilize prices.
But something seems to have gone awry. Even as it appears there might have been some manipulation of gasoline prices made possible by strained refinery capacity in the United States, the price of crude oil remains stubbornly resistant to gravity. The Saudis have been saying for almost two years now that any day they will be swamping the world market with extra oil to moderate the price. The results so far: nothing.
Investment banker Matthew Simmons--now famous in peak oil circles--contends in his new book, "Twilight in the Desert," that Saudi Arabia recently reached the point that Texas reached some 35 years ago. The country has run out of excess production capacity. In other words, if everyone in the world is pumping at 100 percent, there is no extra oil left to be produced to increase supplies and bring down prices.
But, Simmons contends that the problem goes beyond infrastructure. He believes that Saudi and therefore world oil production are at or near their all-time peaks. Only time will tell.
Of course, none of the august senators who specialize in sniping at oil executives either seems to know about the idea of a peak or seems to care enough to ask about it. And none seems to understand that oil prices have been managed for decades by government as much as industry. (Beyond this, a peak in world oil production would, of course, get the oil companies off the hook since there would be nothing the companies could do about it. But that would ruin the senators' fun by forcing the Senate to address the real problem: oil depletion.)
Sen. Charles Grassley of Iowa seemed to sum up the ignorance of the Senate well when he told National Public Radio this in a recent interview:
It should come as no surprise that there is a basis for the senators' suspicion. From the early 1930s onward the Texas Railroad Commission limited supplies from Texas oilfields to keep prices high. Huge discoveries in East Texas during the Great Depression had caused oil prices to plummet below the cost of production--down to 10 cents a barrel at one point. The commission successfully obtained the power to allocate (read: restrict) production among all of Texas' wells, a process called proration. Federal intervention was eventually required to prevent so-called "hot oil," oil illegally pumped from the Texas fields, from moving across state lines. It was a system that had been initially resisted by Texas oilmen, but which they soon realized worked to their advantage. Thus, began the first formal government-run quota system for oil production.
That system allowed regulators to manage world oil prices because Texas alone had the world's largest excess production capacity. From the mid-1930s until 1970 regulators could flood the world market to bring down prices when they got too high or restrict production to keep prices from falling below the level necessary to encourage new drilling and investment.
In 1970 U. S. and world demand outstripped the ability of Texas to play the role of swing producer. The state's wells were allowed to run at 100 percent from that year to this. At the same time a new swing producer emerged, Saudi Arabia. Until recently the Saudi government, through its now government-owned oil company, Saudi Aramco, had been the price maker in the world oil markets. Its close relationship with the United States had resulted in favor after favor for the U. S. government and its allies. In both Gulf Wars, for example, the Saudis pumped extra crude to stabilize prices.
But something seems to have gone awry. Even as it appears there might have been some manipulation of gasoline prices made possible by strained refinery capacity in the United States, the price of crude oil remains stubbornly resistant to gravity. The Saudis have been saying for almost two years now that any day they will be swamping the world market with extra oil to moderate the price. The results so far: nothing.
Investment banker Matthew Simmons--now famous in peak oil circles--contends in his new book, "Twilight in the Desert," that Saudi Arabia recently reached the point that Texas reached some 35 years ago. The country has run out of excess production capacity. In other words, if everyone in the world is pumping at 100 percent, there is no extra oil left to be produced to increase supplies and bring down prices.
But, Simmons contends that the problem goes beyond infrastructure. He believes that Saudi and therefore world oil production are at or near their all-time peaks. Only time will tell.
Of course, none of the august senators who specialize in sniping at oil executives either seems to know about the idea of a peak or seems to care enough to ask about it. And none seems to understand that oil prices have been managed for decades by government as much as industry. (Beyond this, a peak in world oil production would, of course, get the oil companies off the hook since there would be nothing the companies could do about it. But that would ruin the senators' fun by forcing the Senate to address the real problem: oil depletion.)
Sen. Charles Grassley of Iowa seemed to sum up the ignorance of the Senate well when he told National Public Radio this in a recent interview:
You know, what makes our economy grow is energy. And, Americans are used to going to the gas tank and when they put that hose in their tank and when I do it, I wanna get gas out of it. And when I turn the light switch on, I want the lights to go on. And, I don't want somebody to tell me I've gotta change my way of living to satisfy them. Because this is America, and this is something we've worked our way into, and the American people are entitled to it. And, if we're going to improve our standard of living, you have to consume more energy.
Petroleum, however, is completely immune to the bad tempers of senators or the presumed entitlements of Americans. Petroleum sits indifferent and silent under the earth. As we scour the globe for the last remnants of it, it resists us more and more in its discovery and extraction. And, when we do find it, it comes to the surface not at rates determined by wishful thinking, but at those ordained by the laws of physics alone.
Thursday, September 22, 2005
Oil Famine:
Surviving a Post-Oil Future/Class Outline
I'll be teaching a two-session class on world peak oil production this fall. Below I am posting information on the course.
Course Description
Cheap oil is coming to an end. Within the next decade or two world oil production is likely to reach a peak and then begin an irreversible decline. The end of cheap oil threatens to stall and even reverse economic growth worldwide. It could lead to profound disruptions in our way of life, especially in the areas of transportation and food production.
This course examines the inevitable collision between our growing thirst for oil and the certain decline in its availability in the years to come. What might the consequences for the world economy be? Can we find alternatives to oil before its production begins to decline? What can an individual do to help us make a successful transition to a post-oil economy? Alternative energy, lifestyle changes, conservation and efficiency measures will be discussed.
The course will emphasize discussion and interaction among all the participants.
Meeting Times: Oct. 25, Nov. 1
6 p.m.- 9 p.m.
Location: Regional Manufacturing Technology Center
Kellogg Community College
405 Hill Brady Road
Battle Creek, Michigan 49015
Instructor: Kurt Cobb
Cost: $49
Registration: Click here to register
or call (269) 965-4134.
Purpose
The purpose of the course is to familiarize participants with the concept of world peak oil production, an event that almost all reputable geologists agree will happen within the next 30 years. Predictions range from 2005 (Deffeyes) to 2037 (U. S. Energy Information Administration). Because so much of our way of life is dependent on oil and oil-based products, this event has profound implications for how we will have to change our society.
The closer the peak is, the more urgent the need for action. A recent U. S. Department of Energy report evaluating the possible effects of world peak oil production recommended a 20-year head start on a crash program to develop other liquid fuels to replace oil.
Key Concepts
Fossil Fuels - Also known as mineral fuels, are hydrocarbon-containing natural resources such as coal, petroleum and natural gas.
World peak oil production, often "peak oil" for short - The time after which the rate of world oil production will begin an irreversible decline.
Net energy - The amount of energy yielded by a resource minus the amount of energy it takes to find, extract, refine, transport and utilize that resource, i.e., it takes energy to get energy. If the net energy is positive, the resource is an energy source. If the net energy is negative the resource is an energy sink. (Also referred to as Energy Return on Energy Invested (EROEI) and Energy Profit Ratio.)
Renewable Energy Source - includes all sources of energy that are captured from on-going natural processes, such as solar power, wind power, water flow in streams (hydropower), biomass, biodiesel and geothermal heat flows. Most renewable forms of energy, other than geothermal and tidal power, come from the Sun.
Plan of Course
Session 1 - Peak Oil and the Oil Predicament
In-class video: The End of Suburbia
Session 2 - Consequences & Responses
Please read the following articles and listen to the interview before coming to class. The reading totals only 30 pages:
1. Do high oil prices foreshadow a deeper crisis?
Kurt Cobb, October 25, 2004
2. Oil: It's Everywhere, Attached
3. Energy Evaluation Criteria, Handout from The Party's Over by Richard Heinberg.
4. The Long Emergency, James Howard Kunstler, Remarks in Hudson, NY
OR
listen to Kunstler's 2003 Interview with Julian Darley. Scroll down to where you can see the choices that include "Complete Interview", "mp3" and "Transcript." The mp3 is a large file but can be easily downloaded if you have high-speed Internet access.
5. Peak Oil 'To Do' List: Why We Should Do These Things Anyway, Kurt Cobb, April 9, 2005
6. Alternative Energy Sources, Walter Youngquist
Recommended:
Some perspective from two optimists. See if you can spot the flaws and strengths in their thinking:
7. The Art of Energy - The future will not be painted in oil. By Peter Huber and Mark Mills Slate, Feb. 1, 2005
Course Description
Cheap oil is coming to an end. Within the next decade or two world oil production is likely to reach a peak and then begin an irreversible decline. The end of cheap oil threatens to stall and even reverse economic growth worldwide. It could lead to profound disruptions in our way of life, especially in the areas of transportation and food production.
This course examines the inevitable collision between our growing thirst for oil and the certain decline in its availability in the years to come. What might the consequences for the world economy be? Can we find alternatives to oil before its production begins to decline? What can an individual do to help us make a successful transition to a post-oil economy? Alternative energy, lifestyle changes, conservation and efficiency measures will be discussed.
The course will emphasize discussion and interaction among all the participants.
Meeting Times: Oct. 25, Nov. 1
6 p.m.- 9 p.m.
Location: Regional Manufacturing Technology Center
Kellogg Community College
405 Hill Brady Road
Battle Creek, Michigan 49015
Instructor: Kurt Cobb
Cost: $49
Registration: Click here to register
or call (269) 965-4134.
Purpose
The purpose of the course is to familiarize participants with the concept of world peak oil production, an event that almost all reputable geologists agree will happen within the next 30 years. Predictions range from 2005 (Deffeyes) to 2037 (U. S. Energy Information Administration). Because so much of our way of life is dependent on oil and oil-based products, this event has profound implications for how we will have to change our society.
The closer the peak is, the more urgent the need for action. A recent U. S. Department of Energy report evaluating the possible effects of world peak oil production recommended a 20-year head start on a crash program to develop other liquid fuels to replace oil.
Key Concepts
Fossil Fuels - Also known as mineral fuels, are hydrocarbon-containing natural resources such as coal, petroleum and natural gas.
World peak oil production, often "peak oil" for short - The time after which the rate of world oil production will begin an irreversible decline.
Net energy - The amount of energy yielded by a resource minus the amount of energy it takes to find, extract, refine, transport and utilize that resource, i.e., it takes energy to get energy. If the net energy is positive, the resource is an energy source. If the net energy is negative the resource is an energy sink. (Also referred to as Energy Return on Energy Invested (EROEI) and Energy Profit Ratio.)
Renewable Energy Source - includes all sources of energy that are captured from on-going natural processes, such as solar power, wind power, water flow in streams (hydropower), biomass, biodiesel and geothermal heat flows. Most renewable forms of energy, other than geothermal and tidal power, come from the Sun.
Plan of Course
Session 1 - Peak Oil and the Oil Predicament
In-class video: The End of Suburbia
Session 2 - Consequences & Responses
Please read the following articles and listen to the interview before coming to class. The reading totals only 30 pages:
1. Do high oil prices foreshadow a deeper crisis?
Kurt Cobb, October 25, 2004
2. Oil: It's Everywhere, Attached
3. Energy Evaluation Criteria, Handout from The Party's Over by Richard Heinberg.
4. The Long Emergency, James Howard Kunstler, Remarks in Hudson, NY
OR
listen to Kunstler's 2003 Interview with Julian Darley. Scroll down to where you can see the choices that include "Complete Interview", "mp3" and "Transcript." The mp3 is a large file but can be easily downloaded if you have high-speed Internet access.
5. Peak Oil 'To Do' List: Why We Should Do These Things Anyway, Kurt Cobb, April 9, 2005
6. Alternative Energy Sources, Walter Youngquist
Recommended:
Some perspective from two optimists. See if you can spot the flaws and strengths in their thinking:
7. The Art of Energy - The future will not be painted in oil. By Peter Huber and Mark Mills Slate, Feb. 1, 2005
Sunday, August 21, 2005
All the oil news that's fit to print
The New York Times Magazine has a long piece on oil supplies which mentions peak oil. Two keys things which have been noted here and in many other places in the peak oil community are worth mentioning.
First, the piece mentions that Saudi Arabia is considered the key to raising oil production to meet world demand. It then outlines energy investment banker Matthew Simmons' contention that Saudia Arabia is near or at peak production and will not fulfill its expected role. Simmons provided a detailed analysis of the problem in his recently released book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." Saudi oil officials, of course, dismiss Simmons' claims. In the Times piece Simmons makes a sensible response, one that he has reiterated several times in the last few months:
First, the piece mentions that Saudi Arabia is considered the key to raising oil production to meet world demand. It then outlines energy investment banker Matthew Simmons' contention that Saudia Arabia is near or at peak production and will not fulfill its expected role. Simmons provided a detailed analysis of the problem in his recently released book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." Saudi oil officials, of course, dismiss Simmons' claims. In the Times piece Simmons makes a sensible response, one that he has reiterated several times in the last few months:
"If they want to satisfy people, they should issue field-by-field production reports and reserve data and have it audited,'' he told [the reporter]. ''It would then take anybody less than a week to say, 'Gosh, Matt is totally wrong,' or 'Matt actually might be too optimistic.'''
So, what is the response of the Saudi national oil company? "Either you believe us or you don't." The Saudis have the power to resolve all doubts within a few weeks, but they refuse any field-by-field accounting of their oil and they refuse any external, independent audit. Is this how people who are telling the truth behave?
The second critical issue concerning supply projections is somewhat buried in the article. Again and again, people have pointed out that supply projections provided by the U. S. Energy Information Administration are based not on reasonable, well-documented evidence of future supply, but rather on demand projections. You read that right! The EIA figures out what it believes future demand will be and then simply assumes that the supply will be there to meet it. Recently, even Saudi Arabia warned that it will not be able to live up to the EIA projections for increased supply.
Nearly all of the ground covered in the Times piece is not new. What's new is that the Times is covering it. Is anyone in America's circles of power capable of listening?
Tuesday, August 09, 2005
Congress's Rapid Energy Depletion Bill
While the pundits analyze the fossil fuel subsidies and nuclear industry giveaways in the energy bill only just signed by President Bush, they miss the overall. From the standpoint of ecology, the primary strategy behind the bill is a simple one: Increase the rate of drawdown in order to shore up a world economic and social system that is suffering gravely from the effects of a global environmental meltdown.
Drawdown, you may recall, is one of two strategies that animals use to obtain food and other resources they need. Drawdown is a strategy of drawing down finite resources in a way that temporarily increases the carrying capacity of a given area. (The other strategy is takover, as in taking over land, forest and other renewable resources for one's own use.)
In his brilliant 1980 book, Overshoot William Catton describes The Great Depression as an ecological crisis. Occupational niches were wiped out willy nilly within a couple of years as a worldwide economic system devolved into a more national and local one with all the attendant disruptions. The solution: In Hitler's Germany it was to create vast new occupational niches in the armaments industry and put others to work by increasing the size of the military. All of this was accomplished, of course, by increasing the drawdown of finite fossil fuels, especially coal and oil.
In World War II, the United States followed suit, creating a vast new military-industrial complex that remains with us today as an indispensible source of employment. That complex is all based, of course, on drawdown. As is the case with any drawdown situation, the faster you draw down resources, the richer and better you feel. Everything goes along swimmingly until the rate at which you can draw down the crucial resources starts to decline--oil comes to mind.
America's new energy policy isn't so much about the future as it is about the past. Drawing down precious finite resources of coal, oil and natural gas worked in the past to "solve" our problems, so we are going to try doing even more of it now. Of course, the irony of this is that all the money spent on better technology to draw down finite resources at faster rates only brings the inevitable crisis that much closer while making it that much worse when it does arrive.
Those who think that technology will save us fail to recognize that technology is what got us here. Technology is what has enabled us to draw down finite energy and other resources at faster and faster rates with all sorts of deleterious environmental side effects--global warming comes to mind.
Perhaps the answer to our energy woes is something Congress can't even contemplate. Perhaps the answer is less technology. After all, technology is what consumes such great amounts of energy while promising to provide the means to get more of it faster. Thus, technology creates an ever accelerating circle of activity from which there is no escape.
Is it possible so slow that circle down or even step outside of it? Would we be better off if we did?
Don't expect anyone in Congress* to discuss such an approach or to campaign on it in the coming election. Preaching restraint is a certain loser and every politician knows it. That may seem odd since self-restraint used to be a virtue. Now it is considered an economic impediment. Unfortunately, restraint is also the only path to long-term sustainability.
How much longer will we be able to afford to ignore the warning signals of resource exhaustion and environmental pollution before the day of reckoning arrives? No one really knows. But one thing is certain. The Congress's rapid energy depletion bill is certain to move that day ever closer.
_______________________________
*There is one brave exception. One must give Rep. Roscoe Barlett of Maryland a great deal of credit for trying to bring the issue of peak oil to the attention of his colleagues. So far he's not making much progress.
Drawdown, you may recall, is one of two strategies that animals use to obtain food and other resources they need. Drawdown is a strategy of drawing down finite resources in a way that temporarily increases the carrying capacity of a given area. (The other strategy is takover, as in taking over land, forest and other renewable resources for one's own use.)
In his brilliant 1980 book, Overshoot William Catton describes The Great Depression as an ecological crisis. Occupational niches were wiped out willy nilly within a couple of years as a worldwide economic system devolved into a more national and local one with all the attendant disruptions. The solution: In Hitler's Germany it was to create vast new occupational niches in the armaments industry and put others to work by increasing the size of the military. All of this was accomplished, of course, by increasing the drawdown of finite fossil fuels, especially coal and oil.
In World War II, the United States followed suit, creating a vast new military-industrial complex that remains with us today as an indispensible source of employment. That complex is all based, of course, on drawdown. As is the case with any drawdown situation, the faster you draw down resources, the richer and better you feel. Everything goes along swimmingly until the rate at which you can draw down the crucial resources starts to decline--oil comes to mind.
America's new energy policy isn't so much about the future as it is about the past. Drawing down precious finite resources of coal, oil and natural gas worked in the past to "solve" our problems, so we are going to try doing even more of it now. Of course, the irony of this is that all the money spent on better technology to draw down finite resources at faster rates only brings the inevitable crisis that much closer while making it that much worse when it does arrive.
Those who think that technology will save us fail to recognize that technology is what got us here. Technology is what has enabled us to draw down finite energy and other resources at faster and faster rates with all sorts of deleterious environmental side effects--global warming comes to mind.
Perhaps the answer to our energy woes is something Congress can't even contemplate. Perhaps the answer is less technology. After all, technology is what consumes such great amounts of energy while promising to provide the means to get more of it faster. Thus, technology creates an ever accelerating circle of activity from which there is no escape.
Is it possible so slow that circle down or even step outside of it? Would we be better off if we did?
Don't expect anyone in Congress* to discuss such an approach or to campaign on it in the coming election. Preaching restraint is a certain loser and every politician knows it. That may seem odd since self-restraint used to be a virtue. Now it is considered an economic impediment. Unfortunately, restraint is also the only path to long-term sustainability.
How much longer will we be able to afford to ignore the warning signals of resource exhaustion and environmental pollution before the day of reckoning arrives? No one really knows. But one thing is certain. The Congress's rapid energy depletion bill is certain to move that day ever closer.
_______________________________
*There is one brave exception. One must give Rep. Roscoe Barlett of Maryland a great deal of credit for trying to bring the issue of peak oil to the attention of his colleagues. So far he's not making much progress.
Monday, August 01, 2005
Oil Supplies and the "Infallible" Goddess of the Marketplace
It is unfortunate that the debate over when and whether world oil production will peak has taken on the character of a grudge match. Underlying the debate is a grudge against those who believe the marketplace cannot solve all of our problems, especially problems which stem from resource depletion.
On one side are a group of retired petroleum geologists and academics including Colin Campbell, Jean LaHerrere and Kenneth Deffeyes who have provided extensive research on world peak oil production and its timing. On the other side are prominent energy consultants such as Michael Lynch and Daniel Yergin (Cambridge Energy Research Associates) who claim that energy supplies are ample and that any energy transition is far away and will be smooth.
Campbell, LaHerrere and Deffeyes have little to gain from their prognostications. Their concern about oil depletion has been a decades long one, and they are all retired now. Lynch and Yergin are active consultants who make their livelihood projecting energy supply and prices. To be fair, some who are sounding the alarm about peak oil are consultants and investment bankers and managers. The most prominent among them is Matthew Simmons who insists that it would actually be better for his business if he didn't ruffle so many feathers with his outspoken warnings. Both sides then have every incentive to get their forecasts right.
Is it really just a case of bulls and bears espousing their opinions about the direction of the petroleum markets? Or does the disagreement stem from something more basic? I think the answer can be found, in part, in Yergin's paean to free-market ideology, "Commanding Heights." The book traces the transition away from government control of the world's economies to the laissez-faire ideology of today. There is no doubt where Yergin stands. Peak oil critics such as Yergin and Lynch believe the marketplace can solve all the world's ills. What they do not explain is why, with their preferred free-market ideology now ascendant practically everywhere, the marketplace is only making global warming, soil erosion, deforestation, and water depletion worse. They glide around all questions of ecological damage and focus on economic growth alone. They are cornucopians who cannot fathom the possibility of limits to growth.
When such cornucopians are asked how the marketplace would handle a hypothetical peak in world oil production in the next five years, they respond that there will be no peak. Do they have perfect knowledge of the future? Lynch's crystal ball has been off recently. In April 2004, he predicted $25 a barrel oil by the summer of 2004. In 2001 Yergin's organization predicted growing supplies of natural gas for the United States through 2005. The reality has been very different as Yergin admitted to Congress last year.
So why do these cornucopians behave as if they have been the recipients of infallible whisperings from the goddess of marketplace? Because they have no answer to an imminent oil peak, save perhaps that the marketplace would be "self-correcting" by "destroying demand." That's a polite way of saying a lot of people would have to do without, and for many that could mean doing without the very necessities of life: food, water, and heat. In short, Lynch and Yergin seem to be saying that because the marketplace would not produce a salutary outcome, such an outcome must be impossible.
A pragmatic person might admit that no one has perfect knowledge of oil supplies or of the future. He or she might try to construct scenarios from very favorable to very unfavorable to discern the risks. And, then such a person might suggest ways to mitigate those risks. Such a person (actually three people) has done just that for the U. S. Department of Energy.
The Department of Energy study is the result of an open, pragmatic mind, and its message is not all that sanguine: Even if the peak is 20 years away, we would have to start a crash program now to make up for the loss of liquid fuels after the peak. Given what's at stake, is it really wise to rely on whispers from the goddess of the marketplace into the ears of the chosen ones?
UPDATE: An anonymous commenter brings our attention to Richard Heinberg's explanation of an oil depletion protocol designed to reduce oil consumption and encourage energy savings. Such a protocol would use both non-market and market mechanisms in a pragmatic approach to heading off the substantial disruptions that are sure to follow an oil peak.
On one side are a group of retired petroleum geologists and academics including Colin Campbell, Jean LaHerrere and Kenneth Deffeyes who have provided extensive research on world peak oil production and its timing. On the other side are prominent energy consultants such as Michael Lynch and Daniel Yergin (Cambridge Energy Research Associates) who claim that energy supplies are ample and that any energy transition is far away and will be smooth.
Campbell, LaHerrere and Deffeyes have little to gain from their prognostications. Their concern about oil depletion has been a decades long one, and they are all retired now. Lynch and Yergin are active consultants who make their livelihood projecting energy supply and prices. To be fair, some who are sounding the alarm about peak oil are consultants and investment bankers and managers. The most prominent among them is Matthew Simmons who insists that it would actually be better for his business if he didn't ruffle so many feathers with his outspoken warnings. Both sides then have every incentive to get their forecasts right.
Is it really just a case of bulls and bears espousing their opinions about the direction of the petroleum markets? Or does the disagreement stem from something more basic? I think the answer can be found, in part, in Yergin's paean to free-market ideology, "Commanding Heights." The book traces the transition away from government control of the world's economies to the laissez-faire ideology of today. There is no doubt where Yergin stands. Peak oil critics such as Yergin and Lynch believe the marketplace can solve all the world's ills. What they do not explain is why, with their preferred free-market ideology now ascendant practically everywhere, the marketplace is only making global warming, soil erosion, deforestation, and water depletion worse. They glide around all questions of ecological damage and focus on economic growth alone. They are cornucopians who cannot fathom the possibility of limits to growth.
When such cornucopians are asked how the marketplace would handle a hypothetical peak in world oil production in the next five years, they respond that there will be no peak. Do they have perfect knowledge of the future? Lynch's crystal ball has been off recently. In April 2004, he predicted $25 a barrel oil by the summer of 2004. In 2001 Yergin's organization predicted growing supplies of natural gas for the United States through 2005. The reality has been very different as Yergin admitted to Congress last year.
So why do these cornucopians behave as if they have been the recipients of infallible whisperings from the goddess of marketplace? Because they have no answer to an imminent oil peak, save perhaps that the marketplace would be "self-correcting" by "destroying demand." That's a polite way of saying a lot of people would have to do without, and for many that could mean doing without the very necessities of life: food, water, and heat. In short, Lynch and Yergin seem to be saying that because the marketplace would not produce a salutary outcome, such an outcome must be impossible.
A pragmatic person might admit that no one has perfect knowledge of oil supplies or of the future. He or she might try to construct scenarios from very favorable to very unfavorable to discern the risks. And, then such a person might suggest ways to mitigate those risks. Such a person (actually three people) has done just that for the U. S. Department of Energy.
The Department of Energy study is the result of an open, pragmatic mind, and its message is not all that sanguine: Even if the peak is 20 years away, we would have to start a crash program now to make up for the loss of liquid fuels after the peak. Given what's at stake, is it really wise to rely on whispers from the goddess of the marketplace into the ears of the chosen ones?
UPDATE: An anonymous commenter brings our attention to Richard Heinberg's explanation of an oil depletion protocol designed to reduce oil consumption and encourage energy savings. Such a protocol would use both non-market and market mechanisms in a pragmatic approach to heading off the substantial disruptions that are sure to follow an oil peak.
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