Peak Oil News: 03/01/2007 - 04/01/2007

Friday, March 30, 2007

America is Unprepared For Oil Supply Shock: Government Report - News -

As crude oil prices surge on rising political tensions with Iran, a new government report released Thursday said that the U.S. is unprepared to face an oil supply crisis and urged U.S. policymakers to develop a strategy in order to reduce potential risks related to an oil shock.

The report from the U.S. Government Accountability Office concluded that the U.S. has no plans in place to address "peak oil," the future point in history of maximum oil production, which would be followed by irreversible declines in oil fields around the world.

"While the consequences of a peak would be felt globally, the United States, as the largest consumer of oil and one of the nations most heavily dependent on oil for transportation, may be particularly vulnerable," the GAO report said.

An expert told CNBC on Thursday that peak oil is the "the single biggest issue to threaten sustainable society" in the United States.

"We are on the verge of actually replacing global warming by this term peak oil," said Matthew Simmons, author of Twilight in the Desert: The Coming Oil Shock and the World Economy. "We have demand roaring ahead and supply is faltering."

Most studies predict oil production will peak sometime between now and 2040, the agency said.

"We're basically held hostage by countries that aren't friendly to us in terms of what's available," John Kilduff, senior vice president of energy risk management at Fimat USA, told CNBC. "That is so dangerous to the United States economy you can't believe it. We have big problems on our hands."

Wednesday, March 28, 2007

Great Risk in Our Oil Delusion

By Simon Ratcliffe

ISN't it interesting how some assumptions about the way society works and what keeps it ticking find their way into the collective consciousness and are not challenged or interrogated? Take for example the way we consume energy. Globally, there seems to be a deep-seated, and wholly incorrect, belief that our current patterns of consumption can continue indefinitely because there is an infinite supply of oil. Over the past century and a half we have allowed oil to become vital to almost everything we do. The global consumption of oil is about 85-million barrels a day, or 31-billion barrels a year. There is an almost universal belief that this can go on forever.

The interesting bit is how self-delusionary it is. What I find extraordinary is that our most risk-averse and financially conservative institutions, our banks, do not even mention oil depletion as a risk in any risk category at all. So overriding is the belief that oil is infinite that even the most simple logic is overlooked.

The four major banking groups use a number of categories of risk, which are assessed and managed in order to ensure they do not mismanage the money of their clients and the investments of their shareholders. The banks also use very sophisticated technical, numerical and statistical methods for the quantification of their risk and yet, at a strategic level, they seem to miss the mark completely.

Initially, the primary effect of oil depletion will be felt as an increase in price. The oil price, as we know, works its way through the economy and affects just about everything.

From a risk perspective, it is vital that oil's production life cycle is well understood. Is it seen as a commodity sensitive to supply and demand pressures, to market sentiment and political dynamics on the global stage? Or is it seen as a resource depleting as fast as we are using it with a bell-shaped production curve that reaches a peak and then begins an irreversible decline? All indications are that it is viewed as the former. Oil should come into the picture in the assessment of loans to large, energy-intensive projects which should be assessed from the perspective of their oil-price risk.

Viewed as the latter (and more closely aligned with reality) the risk picture changes dramatically. In fact, viewed as such, the risk of oil depletion cuts through almost all the risk categories tracked by the banks. It becomes the single overriding risk category, which any rational person working in risk assessment would overlook at their peril. Those in risk management would be grossly negligent if they failed to understand just how the risk of oil depletion affects their institutions.

While there is contention over when it will occur, there is consensus among independent researchers that oil production will likely peak in the near future and then go into permanent decline. Declining rates of oil production mean there will be less and less to fuel the global economy, which means less growth. In fact, oil has been so integral to the growth that has been achieved over the past century that some people question whether growth is even possible as global oil production declines. If that doesn't represent a risk factor worth understanding, assessing, quantifying and mitigating, then I don't know what does.

Less oil available globally affects credit risk, as high fuel prices and the knock-on effect affects the likelihood of defaults on loans. Risk in the loan book would be weighted heavily towards those sectors that are fuel dependent, such as road transport, agriculture and distribution. The rising price will quickly change the way many things happen and how many products are made. For example, train travel may become viable again, so investment in that sort of infrastructure will be profitable. Country risk would be weighted towards poorer countries that have a lower oil price threshold.

One thing is certain: banks that have not planned and prepared their mitigating strategies well in advance risk their reputations, if not their businesses. Conversely, those banks that have assessed their risk based on a sound understanding of the oil production curve are likely to have planned investment strategies and reduced their exposure to sectors with a high peak-oil risk and increased their investments in sectors that have low peak-oil risk, thus enhancing their reputations and their long-term prospects.

It is important that we get past the blind spot in our collective consciousness and get to grips with the consequences, because the risks of not planning for them far exceed the time and cost of good planning and preparation.

--Ratcliffe is an energy and sustainability consultant and is the chairman of the Association for the Study of Peak Oil South Africa.

Technologies to push back the oil peak

Two experts from the French Petroleum Institute (Institut Français du Pétrole – IFP) take a look at the situation created by rising oil prices and argue that, paradoxically, they also bring about new opportunities to push back the oil-production peak.

With rising oil prices, consuming nations in Europe and the United States are seeking to diversify their supply sources and reduce their consumption with efficiency measures, write Jean-Pierre Favennec and Nathalie Alazard-Toux in the December 2006 edition of 'Energies', a publication by oil major Total.

But while investments in exploration and production have increased, these have not yet followed in the same proportion as rising oil prices would suggest, the authors observe. They put forward a number of reasons to explain this:

* Market players have adopted a 'wait-and-see' attitude as they did not know whether the trend would continue;
* with rising prices, the tendency has been for oil-producing nations to toughen the conditions set out in exploration and production contracts, and;
* even when a strong will to invest existed, it was impeded by insufficient human and technological means.

To avoid future supply crises, and assuming that oil will continue to be an important energy source in the foreseeable future, the authors argue that new resources will need to mobilised:

* First, by improving the extraction rate of conventional oil which is currently at around 30% but which in fact varies between 10-50% according to the technologies used;
* then by new detection technologies such as 4D numerical and seismic mapping that help identify oil fields with more precision, and;
* finally by tapping into non-conventional resources such as tar-sands and extra-heavy crude oils, the amounts of which are estimated to be equivalent to that of Saudi Arabia's reserves.

The aim, the authors argue, is to reduce oil dependency in a world in which hydrocarbons are becoming scarce and more costly. But this could also bring a paradox in which high oil prices coincide with a 'golden age' of oil as exploration and production technologies become ever-more sophisticated, leading to the exploitation of previously untapped reserves.

Peak oil scenario paints frightening future for all

By Guy R. McPherson

By day, Chris conducts research in conservation biology and prepares for the intellectually demanding exams required of doctoral students. At home in the evening with his wife and 2-year-old daughter, he teaches himself to create fire by rubbing sticks together.

Chris is one of the graduate students with whom I am fortunate to work, and he has wisely chosen to live in two worlds. The first is the overindulged culture of make-believe in which most Americans are comfortably ensconced; the second is the real world of peak oil.

World oil production reached a peak in 2005 at 85 million barrels per day. We've been easing down the bell-shaped oil-supply curve, losing production slowly and gradually. Next year we will fall off the oil-supply cliff, with an average daily production of less than 78 million barrels.

The response of the Bush administration has been to go to war to get oil. Thus far, we've exchanged considerable blood and $500 billion for a couple million barrels of oil each day. By controlling the Iraqi government, we've also assured a place at the OPEC table. Mission accomplished for the oilman in the Oval Office means sustaining the American Dream one barrel at a time.

By 2015, when world demand is projected to exceed 120 million barrels per day, world supply will drop below 65 million barrels. The double-digit inflation and double-digit unemployment of the 1970s, a predictable result of the continental United States passing the oil peak, will seem like the good old days. For that matter, so will the Great Depression.

Seems the American Dream, rooted in the suburbs and propped up by cheap gasoline, could transform itself into the American Nightmare. The Star's new Interstate 10 widening blog, called Gridlocked, will be revealed as the chimera it is.

Oil priced at $100 per barrel represents serious sand in the economic gears of empire. Imagine what happens when demand outstrips supply by a factor of two or more, and oil is priced at $400 per barrel. Because this country mainlines oil, it is easy to envision the complete collapse of the U.S. economy within a decade.

Because all energy sources are derived from oil, the implications for the Old Pueblo are particularly grim: delivery of water, food and air conditioning depend on ready supplies of cheap oil.

Peak oil is the greatest challenge humanity has ever faced. If World War II rates a 1 on a scale of 1 to 10, global warming is a 3 and peak oil is a 12. Most experts who write about peak oil predict complete economic collapse within a decade, followed shortly thereafter by anarchy.

Although we could employ a variety of conservation measures to mitigate the impacts of ever-decreasing supplies of oil, no politician would propose such a career-ending strategy. After all, conservation went out of style in the early 1980s when Ronald Reagan ripped the solar panels off the White House and trumpeted economic growth as our only god.

According to Reagan's campaign slogan, it was "morning in America," so I suppose he thought future generations wouldn't need electricity.

Now what? It's time to start making other arrangements, the kind that do not include cars, airplanes and the delivery of cheap plastic crap to a Wal-Mart near you. It's time, in other words, to start living in the real world.

Take a page from Chris: Start learning skills for a post-carbon world. If you can find a way to do something practical and useful on a smaller scale than it is currently being done, you are likely to be well-fed and even revered in your local community.

If that community is Tucson, I recommend you learn how to harvest water, grow edible crops and get along with your ill-prepared neighbors when it's 100 degrees and the calendar says summer is still around the corner.

Write to Guy R. McPherson at

Monday, March 26, 2007

Peak oil thriller hits German best-seller list

A peak oil thriller from a popular German novelist has hit the best-seller lists. The 750-page novel is written in a style like that of Michael Crichton's techno-thrillers, and covers many of the themes discussed in the peak oil community.

Ausgebrannt ("Burned Out" in English) was published in February and reached #7 on the Spiegel best-seller list (it's now #10).

German author Andreas Eschbach has written over a dozen novels, including several best-sellers. He is widely known as a German science fiction writer. Several of his books have been translated into English.

There is almost nothing written about Ausgrebrannt in English, and I've seen no mention of an English translation.

The Story

Ausgebrannt Imagine if a litre of premium fuel were to cost over 4 Euros. A nightmare? Yes, but it would only be the beginning. Because the Age of Oil won't end with the last barrel. It will end as soon as more oil is used than can be produced. And this moment is closer than most suspect. The problem: Nobody has a plan for what happens next.

Like everyone else, Markus Westermann knows nothing of all this when he finally makes it to the USA, hoping for a career that will fulfill all his dreams.

When he becomes acquainted with Karl Walter Block, Markus sees his chance. The petroleum engineer tells him that there's enough oil for a thousand years lying dormant in the depths of the earth - and that only he knows how to find it. Block only needs a competent business partner. Someone like Markus.

Only too readily the world believes the promises of the two. After the first successes, the talk is of a Renaissance of the Oil Age. But the promise is deceptive.

When in Saudi Arabia the largest oil field of the world runs dry and the Saudis risk everything to hush up the frightening truth, unrest comes -- and not only to the Mideast.

Mankind suddenly confronts its greatest challenge. The beginning of the end of the world as we know it. Only Markus is convinced that he is able to turn the situation around.

Translation of a summary from Der Spiegel's page on the book (where you can buy the book for 19.95 Euros).

Also on the page is a review by Sven Trautwein, which gives more details of the plot. Trautwein compares Ausgrebrannt to a Michael Crichton techno-thriller but complains that the suspense isn't maintained in the last 2/3 of the book.

Interview with the Author

Recently the German site, Das Peak Oil Portal and Forum published a long interview with Andreas Eschbach, conducted by Arvid Doerwad und Stefan Krüßmann. Below are translations of some excerpts.

…Do you expect Peak Oil soon?

We'll only know that we've reached maximum production in retrospect. "In the rearview mirror," as M. King Hubbert put it. At the moment it looks as if we are at least in a plateau, so that it could be that we have just passed the peak. ...

…Did this realization [of Peak Oil] change the life of you and your family? If so, how?

The answer to this question is no, since we always try not to waste resources as a matter of principle. What has changed after this book is that I have a different feeling when I step into the car, and when I get a delivery of heating oil I feel relieved rather than frightened by the bill. As a writer I work at home and am seldom on the road with the car.

...Are you making appropriate preparations? If so, which?

I warn against the notion that there are individual solutions. Civilization is by definition a communal endeavor. If large numbers of people were to try to make themselves self-sufficient in energy, the result would be as devastating as Peak Oil itself.

In the power supply, it is easy to see the physical reasons for having a network. Just as one cannot make a mobile telephone call by oneself unless everyone else can; in the same way one cannot solve the energy problem for oneself alone.

Which is not to say that one shouldn't prepare for emergencies. ...

...Do you think that Europe will have a "soft landing" or -- independently of what happens in your novel -- is a hard landing more likely?

The kind of landing depends more than anything on the pilot, doesn't it? In energy issues, just as in political affairs.

... When I came to understand the consequences of Peak Oil, I felt the need to tell friends and acquaintences about it; however, I encountered only lack of understanding. Do you think that putting this topic into a thriller will lead to better acceptance?

In any case, it should be helpful to put a gripping book into someone's hand and be able to say to them, "Here. Read it. It explains it better than I can in three boring sentences." Many people have done the same thing with my novel, Eine Billion Dollar that dealt with a similarly explosive topic.

...[Do any of the responses that involve dropping out from society (German: Aussteiger)] represent a solution for you?

No, I don't think that is the right path. Dropping out -- that's the emergency brake. With it, one is saying, "I don't care what happens with the rest of the world." If we want to solve the problems of the future, MORE community is needed, not less.

...Again, to compare the USA and Europe. In the USA, the consequences [in the novel] are marked by chaos, scarcity, violence and religious sectarianism; one could speak of collapse. In Europe, the consequences are drastic -- naturally -- but the approach is "more civilized". Is this something to make European readers feel good or do you really see the cultural situations as so different?

It is less a question of cultural differences -- which doubtless exist -- than of the pressures at work. The USA is far more dependent on energy than Europe. We must keep in mind that the population density of the USA is approximately 10% that of Germany. It is also a large, spread-out country -- which means that commerce and transport are much greater factors. In addition, the USA has made some basic decisions [about infrastructure] differently than we have. There doesn't exist any railway system worthy of the name, and most cities are built so that one needs a car. In this comparison, Europe is in a better position.

The American mentality, however, recognizes problems faster and tackles them more decisively, while we Europeans are inclined to close our eyes and think that if we don't see an evil, it won't affect us. This characterstic could become a calamity for us in this case.

Friday, March 23, 2007

Situations To Watch

Falls Church News-Press

By Tom Whipple

Evidence is mounting that oil prices will soon climb to new, perhaps unaffordable for many, highs. Some think “soon” is three, four, or five years away. Others think “soon” may be as close as three, four, five, or six months. It is this latter scenario in which oil and gasoline prices reach new highs before the year is out that we look at today.

Everyone, of course, understands that at anytime a bolt from the blue could seriously curtail world oil supplies and run prices to unimagined highs in a matter of days or weeks. Such an impossible-to-anticipate event might be an assassination, a coup, a new war, a terrorist strike or even a well-placed storm.

There are, however, on-going situations which alone or in combinations could push oil prices to new highs in an easily observable and anticipatable manner.

The most obvious situation is the state of US crude and products stockpiles. Although they are currently considered “ample,” total US stockpiles have been dropping since February indicating that we are burning more than we are pumping and importing. Increased US production is largely out of the question. US oil peaked 35 years ago and talk of new deep water discoveries will be nothing but talk for at least the next five or six years.

Thus the issue becomes why imports have been dropping. Some hold that US importers are cutting back during the spring maintenance season when oil refineries traditionally undergo cleaning and overhaul. Others, looking at the drops in crude production by the US’s traditional suppliers such as Mexico, Saudi Arabia, Nigeria, and Venezuela, are starting to wonder if importers can really find all the crude they want to import. Keep in mind that one of these days the US will be bidding for available supplies against the well-heeled such as China, Japan, and Europe.

The next problem clearly coming onto the radar screens is the Nigerian elections in April. Without going into a long story, it is looking as if the Nigerian electoral process is more likely to initiate yet another civil war than to successfully pass power from one president to another. Oil production is already down about 600,000 barrels a day due to insurgent attacks and more are promised if the elections turn into a fiasco. Many scenarios are possible ranging from a near-total cutoff of Nigeria’s on-shore oil production to US intervention. Watch this one closely.

The 64 billion barrel question, however, is the state of the Saudi oil fields. Many hold, and with good reason, that when Saudi Arabia goes into depletion, the oil age is on the way out. During the last six months Saudi production has dropped from 9.5 million to 8.5 million barrels a day. Now there are several possible reasons for this drop ranging from not being able to find buyers for their heavy, sulfur-laden oil at today’s prices, through a desire to force up prices by cutting supplies, to the key issue which is that the Saudis simply can’t find and open new production fast enough to keep ahead of depletion in their aging fields. If this is the case then 2007 will be a seminal year.

Although the Saudis proclaim that all is well and their “capacity to produce oil” will soon reach new heights, it is likely that before the year is out we should have a better insight into the kingdom’s future as an oil producer.

If Saudi production continues to drop during 2007, suspicions of trouble in the kingdom’s oil fields will increase to a feverish pitch— as of course will oil prices. If prices increase significantly this summer and the Saudi’s don’t respond with significantly higher production, then many will hold that, at least temporarily, the Saudis can not increase production.

A sleeper issue due to come to a head this spring is the nature of the participation by western oil companies in production of synthetic crude from Venezuela’s Orinoco heavy oil sands. A few weeks back, President Chavez decreed the six western oil companies must turn over 60 percent interests and control of the Orinoco projects to the government’s oil company. Negotiations are now going to determine the terms under which the Western oil companies will remain involved in the projects in which they have already invested $30 billion.

The next few weeks should tell whether the oil companies are willing to stay in the Orinoco helping the Venezuelans make synthetic crude, using the oil companies proprietary technology, for much less profit, or simply walk away seeking to recover their investment in the courts. At stake is about 500,000 barrels a day of synthetic crude production which the Venezuelans may or may not be able to keep running by themselves.

Keep an eye on the hurricane season. The El Nino hot spot in the Pacific, which many believe suppressed the 2006 hurricanes in the Gulf, has cooled off. Surface temperatures are already above normal so the ingredients are in place for an active 2007 hurricane season.

Keep the other eye on what the Mexicans are telling us about production from their giant Cantarell oil field, most of which has been coming to the US. Should production really tank in 2007, some believe that the US will have difficulty finding enough oil on the world market to import.

Iraqi oil production continues to bubble along with exports running about 1.5 million barrels a day. Stealing oil and revenue in Iraq is obviously so profitable to the various insurgent groups that nobody wants to blow up the gravy train until they have to. If the recently announced US crackdown on oil stealing is successful, we might see more oil infrastructure blowing up and exports going down.

As a closing thought, keep your remaining eye on the dollar. Some believe there is enough financial turmoil just ahead to limit our ability to import oil.

Apocalypse Soon?

Tucson Weekly

By Saxon Burns

A UA professor thinks an oil crisis is imminent--so kiss your old life goodbye.

A horse and buggy will be more useful than a Hummer after the fall, says UA Professor Guy McPherson.

"We have difficulty talking about the most important issues that face us," says Bob Cook. Professor Guy McPherson understands why it's hard for people to accept it when he says the world as they know it is about to end.

It was a warm springtime morning, and McPherson had gestured toward the street from the back room of a University Boulevard coffee shop. The UA was on spring break, and the frenetic atmosphere that usually grips Main Gate Plaza at that time of day was vacationing along with the students. Everything was bathed in a lazy, sun-kissed sheen that made it perfect weather for sipping lemonade and napping.

"How could things be bad?" said McPherson, a professor of natural resources and evolutionary biology, who has written two guest commentaries for the Weekly on the topic (March 1, 2007, and April 27, 2006). "It's a beautiful day. It's lovely here in Tucson, Arizona, in the springtime. It's fantastic! How could anything be different than this? You're asking people to change their entire perception, their entire image of the way the world works, pretty much overnight. It's a hard sell."

The mop-topped McPherson, whose friends call him "The Prophet of Doom," had come from the shop's upstairs study room, where he had a meeting regarding the purchase of a piece of land in Sulphur Springs Valley. He, his partner/wife and a handful of friends were looking to live there after the oil-dependent economy collapses--and with it, American society.

"I'm trying to prepare for my post-carbon future," he said, "and that involves a piece of property with a community of friends. The property has to be farmable; it has to have shallow water; and it has to be within a tank-of-gas drive of here. And so I'm living in two worlds."

Unfortunately, the meeting didn't go well. The others who were on board to contribute money for purchasing the property simply didn't agree with McPherson's soothsaying, and they yanked their support.

"At this point, I've cashed in all my life-insurance policies, my IRAs, my retirement plans," he said. "I've completely sold out my normal life, my financial future as it were, in planning for what's coming next. It's not quite enough to buy what I think is necessary to pull this off, and so I'm a little disappointed that I'm going to have to start from scratch with my post-carbon planning. I've been working at it for a year--pretty much every waking hour.

"So we're starting over. But that's OK, because we're ahead of most folks."

If McPherson is living in two worlds--as a mild-mannered college professor by day, and a wild-eyed survivalist stocking a fallout shelter by night--it's because he has a vision of Tucson's future that's the stuff of dystopian science-fiction novels. He sees a Tucson in which dead cars litter the streets, and mass migrations leave large swathes of the city uninhabited. Gasoline won't be available to transport food into the city, and there will be power bottlenecks hampering the transportation and pumping of water--not to mention keeping people cool with air conditioning. Tucson will become a desolate, inhospitable place.

"It's hard to imagine a ... capacity of more than a few thousand people 20 years out, and those are going to have to be very hardy folk," he said. "No air conditioning. Perhaps they'll be harvesting water, growing all their own food. But those are the choices in the days ahead. You're going to have to generate your own water and generate your own food. Tough to do that in Tucson."

On the regional and national scale, McPherson worries government and social structures will disintegrate. The notion of globalization would be relegated to the dustbin of history, and people will go back to an agrarian lifestyle in small communities.

McPherson may seem like he's all doom and gloom. He often gives off the appearance of someone who's pained with the knowledge of something he can't change, like a 30-year-old who has just received the test results confirming that he'll develop an incurable, fatal genetic disease.

Then he cracks a joke.

"Believe me, I've had those thoughts about survivalists, and how I thought they were incredibly screwed-up, right-wing rednecks for oh so long," he said. "And then it turns out I am one. Damn it, I hate it when that happens!"

But mixed in with the resignation and dark comedy is hope. Last year, after his first commentary in the Weekly, he helped give life to Sustainable Tucson, an Internet clearinghouse for sustainable living. It might seem hopeless, and, if this oil crisis is as bad as McPherson thinks, then it probably is. He's the first to admit it.

But McPherson still says people shouldn't give up. He has a suggestion that could appeal to the American sense of individuality, if not the virtues of foresight and sacrifice, which he feels many of us have lost in an age of over-the-top, conspicuous consumption.

His idea? Conserve. Do it yourself. Learn to live sustainably. We may not be able to change others, but we can change ourselves and be better prepared for whatever comes.

But first: What's declining oil production all about? Depending on your point of view, Peak Oil, as this concept is known, has the potential to be one of the biggest calamities to befall humankind.

Peak Oil doesn't mean there'll be no more oil; it means there'll be no more cheap oil.

Oil comes in lots of different purities, contained in lots of different geological formations that impact the ease--and economy--with which it can be extracted. Some so-called "peakists" assert that we've picked almost all the low-hanging fruit. Meanwhile, consumption continues to increase.

It takes an investment of energy to get more energy in the form of oil. If we have indeed siphoned off all the easy-to-obtain, good-quality oil, then that leaves less-accessible, poorer-quality reserves. To obtain those, we have to invest more energy, impacting the investment-to-yield ratio, and, as a result, overall production.

The ratio of energy return to energy investment in oil production has been declining steadily since World War II, McPherson said. Crude oil prices have hovered around record highs for the past three years, and no significant oil-field discoveries have been made for the past four decades. The reserves found today tend to be small and rapidly depleted, so we depend upon a handful of aging mega-fields for our consumption.

Recently, there's been debate over whether the world's largest oil field--Ghawar in Saudi Arabia--is peaking; if it is, there are myriad political and economic implications from the depletion of that oil field alone. There's evidence to suggest that many of the world's largest oil fields have reached that tipping point as well.

In addition, geologists point out that oil-field production starts to decline when half of the oil has been siphoned away. The graph of output would look something like this: Production gains rapidly; it peaks; then it declines--slowly at first, but then much more precipitously. It's a bell-shaped curve, one that many people say also holds true for overall world oil production.

Despite predictions using various models, no one knows yet exactly when world oil production will peak. It could have happened in 2005 or 2006, as many experts suggest, or it could be as many as 40 to 50 years in the future. Optimistic oil companies tend to gravitate toward the far-off estimates, saying there are untapped resources in parts of the world that have yet to be surveyed.

But a wide range of voices--from geologists to the U.S. Army Corps of Engineers to government officials in Republican presidential cabinets--disagree with such rosy predictions and, at the very least, are warning about the ramifications of Peak Oil. James R. Schlesinger, who has served as secretary of energy and defense as well as the director of the CIA, testified about the problem before the Senate Committee on Foreign Relations in 2005.

"In the decades ahead, we do not know precisely when we shall reach a point, a plateau or peak, beyond which we shall be unable further to increase production of conventional oil worldwide," Schlesinger told the committee, adding that the oil peak is a "fundamental" problem. "We need to understand that problem now and to begin to prepare for that transition."

But regardless of how gently the United States is weaned from oil, the impact of decreasing production is clear. With industrializing countries such as India and, in particular, China feeding a voracious appetite for energy, and with the United States already mainlining, there'll be lots of demand. Prices will go up.

Art Silvers, a UA professor emeritus of public administration and policy, agreed with McPherson that higher oil costs will negatively impact the economy. After all, oil's tentacles reach throughout the economy.

"Most industries, directly or indirectly, have their costs based on the use of oil," Silvers said, rattling off a list of expenses that includes transportation and power. "Rising costs will cause increases in prices."

The speed at which production rates decline will likely determine the impact on the economy and society, Silvers said. If it's a slower decline, he has faith technological solutions will be able to compensate for the loss of oil.

"It depends on how fast this thing happens, right?" he said. "If it happens next Thursday--that the price of oil triples--we'll be in big trouble."

But McPherson, who sees the oil-production plunge just over the horizon, dismisses technological solutions.

"The more technology favors conservation, the less you're able to conserve, because it takes more energy for the technology than what you conserve by buying into the technology," he said. The Toyota Prius McPherson regrets buying is not the answer, he continued, because it took 840 gallons of oil to construct it. Corn-based ethanol--heavily touted by politicians--also isn't the answer, because it barely has a positive energy balance after tractors harvest the corn and it's been processed.

By the same token, solar panels may make sense for the individual, but they don't make sense at the societal level, he said.

"If we switch all of our electrical grid for the country to solar panels, I believe that would take all the oil left on the planet Earth to make that conversion," McPherson said. "Solar panels are energy intensive to build. And, by the way, that doesn't do anything about the 75 percent of the oil we spend on the road; that just replaces the electrical grid. The only alternative that is scalable is conservation, and nobody's asking us to be particularly conservative with energy or anything else."

There is very little in the way of leadership coming from our elected officials, and there's scant mention of Peak Oil in the media. McPherson was puzzled about why that is, especially when on a calamity scale of one to 10, he rates the Peak Oil phenomenon a "12." It's the looming disaster that no one knows about, he said.

"In my lifetime and my parents' lifetimes, we've enjoyed relative peace and enormous prosperity--economic growth off the charts," McPherson said. "Well, those days are just about behind us. If you're a 20-year-old or a 30-year-old, your future is very different from the one your parents had. Mine is very different from the one my parents had; they basically grew up post-World War II, and so they're in denial about it.

"I think that's a big part of it: denial. The powers that be, including the politicians and the mainstream media, maybe they don't want us to know. I mean, it's pretty obvious the Bush administration doesn't want us to know."

It would be hard for the Bushites to claim that they aren't aware of the possible crisis, however, considering that one of Peak Oil's media darlings, Matt Simmons, served the administration as a policy adviser and has written a book on the subject called Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Leslie Liberti, director of the city of Tucson Office of Conservation and Sustainable Development, said there just isn't enough solid information to move forward with a program specifically addressing Peak Oil.

"We've heard a lot of differing opinions on the topic," Liberti said. "It's something that, unlike global warming, where at least we're getting to the point where there seems to be a general consensus on the issue, the estimates of the timing of Peak Oil and the ramifications are pretty varied. It's hard for us to have a real strong position one way or another until it's clear where the scientific community is falling on this."

The city of Tucson has endorsed the United Nations Urban Environmental Accords and the U.S. Mayors Climate Protection Agreement, Liberti said, and the growth of the Office of Conservation and Sustainable Development will allow officials to build the framework for working with the community on environmental matters.

Liberti's views on Peak Oil seem to be shared by most officials at all levels of government. That's not necessarily government's fault, however. After all, it's hard to institute the kinds of far-reaching lifestyle changes required to deal with McPherson's cataclysmic forecasts when most people probably don't even know what Peak Oil is. Even tamer reforms are made hard by the fact that everything seems so hunky-dory right now.

But if McPherson and others are right, then we may not have time to reach that consensus. And that means people could be in for a rude awakening.

We have difficulty talking about the most important issues that face us," said Bob Cook, president of nonprofit community organization NEST Inc. and maintainer of the Sustainable Tucson Web site. "The issues of growth, the issues of public finance, the issues of workforce development and education, health care--we just don't have the level of political discourse in the community to move forward.

"And I think Peak Oil is particularly difficult, because it's such a big issue. It's sort of paradigmatic. It's about (the) end of era, (the) beginning of new era. ... Because of the uncertainty and the lack of firm knowledge, people feel very reticent about addressing it. But that doesn't mean we shouldn't."

Cook gave the Weekly a tour of his home near Tucson Boulevard and Elm Street. He's made a number of minor adjustments so that he and his wife could live more sustainably, which include planting garden vegetables (he and his wife have been getting more lettuce than they can eat), installing a cistern and constructing a groovy red-tile outdoor shower that waters plants as it cleans humans.

These are lifestyle adaptations almost anyone can make. However, the reality is that any energy savings produced by these and other changes are counteracted by the energy costs associated with Tucson's transportation system.

As the former chair of the Tucson-Pima Metropolitan Energy Commission, Cook has overseen a number of energy assessments and helped institute a range of building innovations that produced sizable energy savings.

"In fact, per-capita energy consumption in buildings has actually decreased over the last 10 years," he said. "So we're really seeing energy savings from buildings. The unfortunate thing is that our energy studies showed that's all being canceled by increased energy consumption in transportation."

According to Cook, in 1998, the price of fuels used in the Tucson metro area totaled $480 million. In 2005, it had ballooned to $1.8 billion.

"That should ring some alarms, because there's a very, very high likelihood that trend is going to continue," he said. According to Cook, the issue isn't so much about energy in the most general sense--it's about energy for transportation.

Like so many cities in the West, including Las Vegas and Phoenix, Tucson is all about urban sprawl and a dependency on cars. If there is a Peak Oil crisis, both McPherson and Silvers agreed, a need will develop for more efficient transportation and land use.

"The price of going out to the suburbs is relatively cheap in this country, in comparison to other countries," Silvers said. "There'll be an interest in finding more compact development and probably a new wave of public transportation."

Although Cook took a far more measured view of Peak Oil than McPherson, he did hit upon the idea that there needs to be a great mobilization of Americans, similar to World War II, in which we take aggressive steps to conserve right now, and not wait for technology to help us out.

"We're a society and culture that's so conditioned to think that technology ... will somehow save us: 'Somehow we'll find an answer, and we'll solve the problem,'" he said.

The conservation measures necessary to combat the Peak Oil crisis may be hampered by political roadblocks and a lack of knowledge, but there's also a problem with the public discourse. There's a fear that if leaders push for the cautious, sensible use of resources, it would be seen as a blow to the economy, Cook said. And the economy reigns supreme.

"Any message that says, 'Don't consume,' translates into slower economic growth for some," he said.

Meanwhile, inaction just makes it harder to combat the inevitable.

"The sooner we are adults about this thing and face it as a reality of the future, and not quibble about whether it's going to be this year or next year or 10 years from now or 15 years from now ... the sooner we start adapting to that overall picture, the better."

Back at the coffee shop, McPherson insisted that one person can be the catalyst for the great growing up of America when it comes to energy consumption.

Just ask someone who understands the life of Gandhi, Jesus or George W. Bush.

"We have to take action," McPherson said. "There is no choice. Don't be thinking that we can just go on with business as usual. If you're going to go on with business as usual, then, I'm sorry, you're going to be dead soon.

"I'm hopeful that we can get through this. If people start spreading the message, and people come to grips with the new reality, there are things that we can do. The world is going to be very, very, very different than it has been in the past. It won't all be bad, though. No, you won't be able to replace your iPod with a new version every second year. You won't be able to decide between Britney Spears and the latest rendition of American Idol.

"See? Good news everywhere."

The Mexican Peak Oil Crisis: Lowest rate of oil output in seven years » The Daily Reckoning Australia

The Daily Reckoning Australia

By Mogambo Guru

Sean Brodrick at Money and Markets writes that it appears Peak Oil has affected Mexico, as, “In December 2005, Mexico sent the U.S. 1.7 million barrels of oil per day (bpd). This past December, Mexico only exported 1.2 million bpd to the U.S.”

He asks, “Why is Mexico sending less oil?” For some reason, I thought that he was really asking a question, so I leap up and say, “Because they are selling it to China and India and everywhere else, but they don’t need the money, anyway, because my appetite for tacos is off the charts here lately, and they are making plenty of money that way! And speaking of tacos, that sounds good! Let’s break for lunch! Your turn to buy! Let’s go! Hup! Hup! Move it! Let’s go, go, go!”

This was, as I interpret the pained and angry look on his face, the wrong answer, probably because it is only 9:30 in the morning. He pointedly ignores me and explains, instead, “Because it’s producing less oil. Total oil output fell to just below 3 million bpd in December 2006. That’s down from nearly 3.4 million barrels at the start of the year, and Mexico’s lowest rate of oil output in seven years.”

This is bad news for Mexico because “Mexico relies on oil exports for about 40% of its revenue.” Notice the complete lack of exclamation points in those four previous sentences. When it is reported in the Mexican newspapers, you can bet your burrito supremo that headlines will have PLENTY of exclamation points all over the damned place. For example (showing off my impressive command of Spanish), “Ustamos Mucho Grande Freaking Doomed, Just Exacta Mundo Para El Mogambo Habla!!!” which got three exclamation marks, since they understand the true significance of, “Mexico relies on oil exports for about 40% of its revenue”!!!

It seems that half of the revenue of the whole economy of Mexico is unhealthily dependent on just one source of revenue! Hahaha! If the Mexican government had taken the time to look, they would have seen that my family is dependent on me as their sole source of revenue, and as I am as similarly corrupt, stupid and worthless as the Mexican government, they should have noticed from the chaos and hostility that it clearly hasn’t worked out here, either! I mean, the parallel is obvious! What in the hell is the matter with those people?

Even worse, “55% of Pemex’s sales revenue went to the Mexican government last year.”

And it is not just the Mexicans that seemed to be gripped by the looming terrors of Peak Oil Syndrome, as “Kuwait’s giant Burgan field has also peaked. Iran’s energy use is rising so fast that its oil exports are being crimped badly. And despite the fact that the Saudis are supposed to be sitting on a thousand years of oil, their oil production declined 8% last year”. Of course, “The Saudis will say they made their cuts to ’stabilize’ the market.”

Hahaha! “stabilize” the market! I did not realize the generous beneficence of the Saudis! They will sell less oil and make less money, while their competitors wax rich by continuing to pump furiously, so that the cost to the ultimate consumer, mainly Chinese and Western infidels, doesn’t rise! What can I say, except “Thanks, dudes!”?

But the underlying message is that (and pay particular attention here) demand for oil is going up, but supply is going down. And I am sure that something flickered in your Fledgling Mogambo Mind (FMM) about the effect on the price of oil (an absolute energy necessity) resulting from such a falling supply/growing demand imbalance, which is actually getting worse rapidly, and which will continue to get worse for a long time.

And if you are a Junior Mogambo Ranger (JMR), then you are probably salivating, literally, at the prospect of reaping a lot of those enormous oil riches for yourself so that you can easily afford to stretch your Second Amendment rights to include getting some tactical nuclear weapons. That’ll show that pesky Skyview Neighborhood Association who’s REALLY the freaking boss around here, and it will be very educational to see if the threat of imminent nuclear obliteration will make my decrepit hovel seem a little less of an “eyesore” and “public nuisance” to them! I’m betting it will! Hey! I love this investing stuff!

Doug Noland’s Credit Bubble Bulletin at starts out this week with some interesting graphs. All of them are bad news, of course, but the one that really grabbed my attention was the one labeled “Balance Sheet of Household Sector”. Going back to March of 1989, the average household had $19,000 in net worth, which was, back then, about the average household yearly income.

Now, as our bloodshot eyes nervously scan across the graph, we see that the average household net worth is about $55,000, which is, again, about the average household yearly income! Hahaha! You are right back where you started, in terms of buying power, and yet you think that the stock market and the housing market and the bond market are going to provide you with a decades-long comfortable retirement? Hahahaha!

I’m laughing so hard that I am actually spitting up blood! Hahaha! I can’t stop! Hahahaha! With a burst of Mighty Mogambo Self-Control (MMSC), I gain dominance over my giddy emotions, and with rasping, gasping breath I say, “If you believe that everyone will make money and retire in comfort by investing long-term in the stock and/or bond markets, then that is the biggest load of hooey that a gullible, dimwitted population has ever swallowed without even gagging.”

The ugly truth is that the majority of investors will not only suffer a loss in strict dollars (”the majority is always wrong”), but even those who manage to get marginally ahead, in nominal terms, will have the purchasing power of the money stolen by the ravages of the inflation caused by the Federal Reserve constantly creating so much money and credit, which is, ironically, where the money came from that enabled them to buy the stocks and bonds!

The bottom line? The best that you can expect to do is to invest one dollar’s worth of buying power to get, in the future, an equivalent amount of buying power. The majority, alas, will lose both nominal money AND the buying power of what’s left!

Until next week,

The Mogambo Guru
for the Daily Reckoning Australia

Can Peak Oil Save Us?

By Colin Wright

Occasionally I run into someone who has heard about Peak Oil, but doesn't think it will matter much. Usually they are convinced that the peak is at least 30 years off. Or that we have copious amounts of alternative sources of energy (tar sands, oil shale, methane hydrates, etc.) that we can tap into as soon as the market signals. They may have read somewhere that people have been warning about the depletion of oil ever since it was first discovered. Or they may dismiss Peak Oil as the rantings of a doomsday cult, much like the Y2K prophesies of societal collapse.

Unfortunately the Peak Oil deniers are usually not familiar with the writings of world-class geologists like Colin Campbell and Ken Deffeyes. Or energy analysts (and Friends of Bush) like Matt Simmons. They usually don't know about the Hirsh Report, a DOE-sponsored study concluding that Peak Oil would need 20 years to plan for and would require multi-billion dollar investments in coal-to-liquid projects.

Meanwhile world oil production has been flat for two years now, even as increasing demand from the US, Asia, Latin America and the Middle East has priced the third world out of the little oil they have been using. Peak Oil means that half the world's usable reserves are gone, but more importantly, that falling production rates will have devastating economic consequences on the global economy.

The Portland City Council takes Peak Oil very seriously (see Their 12-member Peak Oil Task Force is recommending that the city cut its fossil fuel consumption by 50 percent over the next 25 years. They think this is achievable through high-density planning and zoning and increased public transportation. Additionally, they "see the potential for profound economic hardship and high levels of unemployment, and recommend having plans in place to adapt social and economic support systems accordingly."

While Portland has been actively preparing for an expensive-oil future, Seattle has been planning to spend billions of dollars on a new highway replacement. While claiming to be a leader in the fight against global warming, the city of Seattle seems to have no recordings of greenhouse gas emissions, like Portland, on its web site. It's not clear whether we're on target to meet even Kyoto standards (which apparently we're not). Biofuels are going to save us and our auto-centric lifestyles, I suppose, if we can believe the mayoral photo-ops.

The silver lining of Peak Oil and Gas is of course that it may save us from the worst of global warming (if we leave the remaining coal in the ground). A low-carbon diet will be forced upon us, which will make Ron Sims' 80 percent carbon reduction targets by 2050 much more realistic. (But if we don't manage to construct an effective mass transit system in the next two decades, increased energy costs will probably mean it will never be built.)

But I see another possible "upside" to Peak Oil. It forces upon us the chance of a paradigm change in our behavior.

For almost all of our history human populations have been growing and we have sought out just about every available niche. "Go forth and multiply" has been the biblical imperative. In North America, Europeans decimated native populations and spread west when group or class conflicts arose. Elites urged imperial expansions in places like Hawaii, the Philippines and Iraq. When African Americans and other minorities demanded equitable treatment in employment, housing and education, many whites simply fled to the newly-developing suburbs.

These expansions were all made possible by developments in technology (among other factors)--Guns, Germs and Steel. But underlying this were new ways to harness energy, be they in sailing ships or automobiles. Human population growth has been mirrored and enabled by energy growth. In fact, while the population quadrupled over the last century, the energy in the food production system has gone up by 80 times (according to Thomas Homer-Dixon).

We are now close to the pinnacle of net energy use. (In fact, we have long passed the net energy per capita peak.) To use an analogy from physics, the centrifugal forces which pushed humans out into the world will soon be replaced by centripetal forces which will draw us back together again. As we go over the energy peak and move onto the energy down-slope, we will be forced to learn to live with less. This will require a new outlook, but one for which I believe we are well equipped.

Humans are extremely adaptable. It's one of our defining traits. But above that, we are social animals. Except for a few outsiders, our hopes, dreams and efforts are all motivated by group purposes. Everyone wants to be well-regarded by their peers and neighbors. We crave respect and status. (How do you want your obituary to read?)

The mythical figure of the macho, rugged individual suited imperial expansion. In their time and place, these Davy Crockett figures were common heroes. (They were for my boyhood. And no doubt for W's.) But now, driving a Hummer signals the driver as someone decidedly un-cool, a square, out of touch with the new zeitgeist. The new status symbols are high-tech, but low-energy. Think iPod. Bicycle. Condo. The Dandy Warhols.

Anecdotal evidence for a change in zeitgeist, perhaps. No doubt, change will be uneven and drawn out, dependent on local circumstances. But my feeling is that when people are forced to live and work closer together, this will unleash the creativity to produce a richer social environment that will counter the isolated consumer/worker ethos that corporate capitalism fosters.

Just because we are moving into a low-energy future does not mean we will move backwards in time, like a movie in reverse. Writers like James Howard Kunstler look to a dystopian future, where women lose their freedoms and ethnic tensions are exacerbated. But the "Long Emergency" is definitely not the only possibility in the history books not yet written. We have accumulated fantastic wealth and know-how, including hundreds of years of science and technology, and advances in human understanding. The trick is to convince enough people of the changes that are coming before we are overtaken blindly by events. To plan for our future.

Over 70 years ago, in a country using little oil, Bertrand Russell wrote in In Praise of Idleness that we could meet all our needs with less than four hours of work per day. His evidence was how England mobilized its economy during WWI. As he put it:

"Modern methods of production have given us the possibility of ease and security for all; we have chosen, instead, to have overwork for some and starvation for the others. Hitherto we have continued to be as energetic as we were before there were machines; in this we have been foolish, but there is no reason to go on being foolish for ever."

Even today, machine technology and cooperative economics may offer the keys to a prosperous and sustainable low-carbon economy, as writers such as Jon Rynn have suggested. The biggest challenge may be convincing people that our current economic system, after a century of state and corporate propaganda, is not the only option. In fact, I would argue that the current system is one which supported a growing population and a growing GDP during the up phase of the energy curve. (And that is why the working classes went along with it, bought off with the trickle-downs.) In a world of diminishing energy, we will need to rethink our economy--and that implies our relations to one another. Peak Oil will provide us with that opportunity, perhaps sooner than we expect.

--Colin Wright,


Thursday, March 15, 2007

Oil companies running hard to stand still

By Phil Hart

DURING a previous oil price crisis in the United States, a jovial service station attendant may have remarked to customers that "We've run out of $2 gas, but we've got plenty of $5 gas". Attendants on the trading floors might today observe that we've got plenty of $80 (US) barrels, but we're running short of $50 barrels.

Last Friday, the US Energy Information Administration released oil production data to the end of last year. Crude oil production was nearly 200,000 barrels a day lower than in 2005. Total liquid supply was flat. That's gripping news and should be enough to rattle any economist's confidence.

Despite a calm hurricane season, record prices and a forecast consensus from energy agencies that supply would continue to grow, oil production stalled last year. Were the oil companies not trying hard enough?

Chris Skrebowski, editor of the British oil industry journal Petroleum Review, would not agree. He has just published his annual Megaprojects report. The numbers show the global oil industry implemented oilfield projects providing an extra 3.2 million barrels a day to the market last year.

This is a historically high level of activity. So why was production flat, and even falling in many countries? The answer begins with "d" and gets to the heart of the debate about when global oil production will finally peak and begin its terminal decline: depletion.

A typical oilfield is a layer of sandstone buried far underground, with oil filling the tiny spaces between the grains of sand. Buried so deeply, the oil is under extreme pressure. When a well is drilled into the reservoir, the oil eagerly flows up to the surface. Then, with less competition for space in the reservoir, the pressure falls and the flow rate declines. To compensate, the operator drills more wells and can put in place elaborate mechanisms to maintain pressure in the field.

For several years, even decades for the largest fields, it is possible to continue extracting oil at a high rate. Inevitably though, the amount that flows from the reservoir begins to decline.

Many of the world's largest and oldest oilfields are succumbing to this fate; production is falling, sometimes rapidly. Two of the biggest fields, Cantarell in Mexico and Burgan in Kuwait, are confirmed in this category. Even the giant Ghawar field in Saudi Arabia, the largest discovered, may be showing the same symptoms of old age.

Despite enormous industry efforts, production from the largest fields and regions such as the North Sea is declining. Companies must now exploit new frontiers. They are taking enormous strides; into deep water off Africa and Brazil, remote areas of the Caspian and East Siberia, and also into unconventional Canadian tar sands. All this and more in a bid to shore up falling production in old heartlands.

The oil industry is running hard but only just managing to stand still. The size of discoveries in the new frontiers is falling. Depletion, the rate production is declining in existing oil provinces, meanwhile, increases.

In just a few years, the scales that are now finely balanced between new production coming on stream and declines in mature regions may lean more heavily on the side of depletion. Peak oil would then be behind us and our economies will be forced to survive with less oil each year.

What then for oil prices? Supply can no longer increase to meet rising expectations. Increasing oil prices over the past five years, and the subsequent fall in vulnerable housing markets, have pushed the US towards recession. Perhaps that move already has enough momentum to keep a lid on consumption. If not, prices will rise again to further destroy demand. Either way, the fate of the world's largest economy may already be sealed.

Phil Hart is petroleum facilities engineer, Melbourne, for the Association for the Study of Peak Oil

The Peak Oil Crisis: The Portland Report

Falls Church News-Press

By Tom Whipple

Last week Portland, Oregon became the first governmental body in the US to not only acknowledge that imminent peak oil is a reality, but also to publish a plan as to what the city should be doing to cope. Breaking new ground has both its perils and its rewards. The peril is that you have no guidelines to the road ahead. The advantage is that there is no standard of comparison so your efforts instantly become the textbook to mitigating the effects of peak oil at the local level.

As someone who is familiar with the literature and follows the peak oil story on a daily basis, I can report that the folks on the Portland Peak Oil Task Force have produced a succinct, outstanding report that should be read by every local official everywhere. While there will naturally be many local variations, Portland’s approach to the problem contains much that seems universally applicable.

The tone of the Portland report is one of moderation. Although it deals with the most serious issue the world has had to face since the world wars and threats of nuclear holocaust a generation or two ago, the report’s 85 pages methodically makes the way through the peak oil story and what needs to be done. In a matter-of-fact way, the report deals with numerous issues likely to ensue from peak oil and offers many new insights as to what is likely to happen and what we as a civilization should be doing to transition away from fossil fuels and feedstocks.

Portland clearly benefited from the expertise of the many people who served on the task force and its four expanded subcommittees. This process allowed the task force to break down a large and unwieldy problem into more manageable topics (land use and transportation, food and agriculture, public and social services, and economic change) to come up with some new insights and good recommendations for each.

The report’s authors grasp the point that whether oil depletion impacts our civilization this year, in three years, ten years or 20 years makes little difference as the changes required will be so massive that we need to start working on the problem immediately. The authors give short shrift to those who claim we will be saved by alternatives and new technologies by making the point that there is nothing on the horizon that can cheaply, quickly and efficiently replace oil and natural gas. They warn against rapid drops in oil prices as we saw last year as nothing more than the volatility we can expect as we approach peak oil.

In assessing the impact of peak oil, the report starts with the most fundamental of issues: the human carrying capacity of the planet which has been dramatically increased in the last 100 years by the widespread use of fossil fuels.

Drawing on the historical experiences of the 1973 Arab oil embargo which cut world oil production by six or seven percent, the report notes the harm done to US economic growth, productivity and rate of inflation. This discussion leads into three possible scenarios for peak oil’s impact on the world.

In the best scenario, oil availability drains away slowly so that 20 years from the beginning of oil depletion, 50 percent of current consumption is still available. Under such a scenario prices would be volatile with demand dropping in response to spikes and increasing as prices recede.

A second scenario would be sudden disruptions in supplies which could last for months or years leaving the advanced economies in a state of emergency for long periods. Society could cope but with much more disruption.

The final scenario is social disintegration. The economic impact of peak oil simply becomes so great that multiple global systems, financial, currency or trade fail. Governments are forced to concentrate on basic human needs and are overwhelmed. The Portland study concentrates on the long-term transition scenario as a situation that if properly handled has the potential to deal with shocks and prevent social deterioration.

The specific impacts on various aspects of Portland’s economy and social fabric are too numerous to list much less discuss. The basic recommendation is nothing earthshaking— cut absolute use of oil and natural gas in half over the next 25 years. The faster this happens, the smaller Portland’s or anybody else’s vulnerability to shrinking supplies of oil and natural gas will be.

Fifty percent is a challenging number for population growth and is likely to continue, and some services – police, medical, fire, garbage, sewage, clean water – are so vital to modern civilization that more modest reductions in their energy consumption are likely to be feasible. Thus the impact of an absolute 50 percent reduction in oil and natural gas consumption is likely to be closer to two-thirds or more for the average citizen.

The recommendations as to how to achieve such a reduction, even over two decades, are pretty straight forward: mass transit, better land use, walkable communities, far more efficient vehicles, freight moving from planes and trucks to rail and water, building standards improve, and above all, education.

There are other features of the report, such as emphasis on joint planning and coordination with surrounding and other levels of government.

Again, for the first cut at describing what is likely to be one of the major paradigm shifts of the 21st century, the folks in Portland have done an excellent job. Much of what they say is applicable everywhere so their report might turn out to be an instant classic. Should you be interested in just how we might all get through the years ahead, a pdf of the report is available online at:

Friday, March 09, 2007

"Peak Oil" RIP. Official Obit Frontpaged in the New York Times

By Raymond J. Learsy

Now that sustained high oil prices and environmental concerns have stimulated massive efforts to develop alternative fuel sources, the oil industry pooh-bahs are finally realizing they have overstepped themselves. For decades they have been frightening us into accepting ever higher prices with their postured concerns of the imminent demise of oil. Suddenly they and their allies in the media are rushing to inform us they have been wrong wrong wrong, for decades. Oil is not scarce, nor are we about to run out of it!

On Monday March 5 in a first page right-hand column The New York Times' oil specialist Jad Mouawad, following up on the recent commentary by Cambridge Energy Research analyst Daniel Yergin, two of the oligopoly's most amenable parrots, have finally come round to the argument I have been making for years (see "Oil Is Not Scarce -- The Oil Industry Continues to Play Us for Fools," 5/24/06, not to speak of my book Over a Barrel: Breaking the Middle East Oil Cartel, pub date 08/05).

But why this sudden sea change? Mouawad unwittingly telegraphs the producers new strategy when he opines that OPEC's clout will be reinforced in coming years" because the cartel "is poised to control more than 50 percent of the oil market". The king of the thieves, Saudi Arabia, is now bandying about about a number for its potential reserves pegging them closer to 1 trillion barrels. You may remember when scarcity was the ploy the Saudis owned up to having only 260 billion barrels of oil (and not to overlook Matt Simmons who made millions trading by propagating his Halloween scenario in "Twilight in the Desert", spooking us with predictions of the near term end of Saudi oil"). Now, suddenly having more oil not less is the game plan and that makes great good sense if the goal is to run alternative energy developers off the playing field. Mouawad, always ready to impart the oil patch pitch advised us the oil companies "see few alternatives to fossil fuels" (where did the Times find this guy). What else would those sitting on top of all the oil say, particularly if they wanted to scare away any competition.

There seems to be a lot more oil our there and under our oceans than most so-called experts thought, many of whom have their own vested interests to tweet "peak, peak, peak". As Times' Mouawad breathlessly related in his longish epiphany not only are new, deepwater deposits being found, but new technology and techniques developed in the last decade are discovering and bringing to the surface trillions more barrels still left in wells long thought unrecoverable. Indeed, the Cambridge consultants now put recoverable oil reserves at 4.8 trillion barrels, and that's their low-end guesstimate.

Of course, the diehard peak-oil theorists among petroleum geologists and those pundits with their own agendas still won't face up to their error. They continue to sound the alarm of shortages, price spikes, and economic decline just down the road. If this dubious line of reasoning sounds familiar, it is. Ever since oil was first discovered more than a century ago, alarmists have been predicting its imminent disappearance. But such stubborn wrongheadedness isn't winning any new converts these days, merely casting the naysayers in the dim light of the ill-informed.

Here are the two things we must not lose sight of:

• First, OPEC, the Saudis, and Big Oil in general are not our friends. They're all in it for the money, no matter how their extreme greed harms us and the global economy. What is more, far too many of the billions upon billions of dollars we've shipped to the Middle East have bankrolled those who seek to destroy us. We have to free ourselves from their grasp. And we can only do that by developing alternative sources of energy.

• Second, if Big Oil doesn't bankrupt us and if Islamic extremists don't kill us, we'll do the job for them unless we can wean ourselves away from fossil fuels, no matter how large the supply. Global warming is no joke; greenhouse gases are choking the life out of our planet. Our only hope for saving ourselves is by cutting emissions and developing alternative sources of energy.

That means we mustn't be lulled by any temporary price declines or false hopes that the likes of ExxonMobil will find a conscience. The biggest of Big Oil admits that the planet is warming, but, "hey, it's not my problem" appears to be its response (see "Size Begets Arrogance...," 3/2/07). Making obscene profits is Exxon's be-all, end-all.
Now that the truth about oil resources has been revealed by America's most famous newspaper, we can at least hope that the scarcity threat has lost its punch. But if the truth is going to set us completely free, we have to keep the pressure on Congress to rein in our consumption of fossil fuels while giving more support to the development of alternatives.

Thursday, March 08, 2007

Biofuels: An Advisable Strategy?


Biofuels have been an increasingly hot topic on the discussion table in the last few years. The main argument behind the policies in favour of biofuels is based on the idea that biofuels would not increase the concentration of greenhouse gases in the atmosphere. However, a more careful analysis of the life cycle of biodiesel reveals that the energy (and CO2) savings is not so high as expected. It might even be negative.

In 2003 the European Union introduced a Directive suggesting that Member states should increase the share of biofuels in the energy used for transport to 2% by 2005 and 5.75% by 2010.

In 2005 the target was not reached and it will probably not be reached in 2010 either (we are in 2006 at approximately 0.8%), but in any case, the Directive showed the great interest that the European Commission places on biofuels as a way to solve many problems at once. The new European energy strategy, presented on 10th January 2007, establishes that biofuels should represent at least 10% of the energy used for transport .

Biofuels are not competitive with fossil fuel-derived products if left to the market. In order to make their price similar to those of petrol and diesel, they need to be subsidized. In Europe, biofuels are subsidized in three ways:

1) agricultural subsidies, mainly granted within the framework of the Common Agricultural Policy

2) total or partial de-taxation, which is indispensable, because energy taxes account for approximately half of the final price of petrol and diesel

3) biofuels obligations, which establish that the fuels sold at the pump must contain a given percentage of biofuels

These three political measures need financial means, which are paid for by the European Commission (agricultural subsidies), by the governments (reduced energy revenues), and by car drivers (increase in the final fuel price). For this reason, an integrated analysis is needed in order to discuss whether investing public resources in biofuels and employing a large extension of agricultural land is the most advisable strategy to solve the problems associated with fossil fuels.

The main argument behind the policies in favour of biofuels is based on the idea that biofuels would not increase the concentration of greenhouse gases in the atmosphere. In fact, the amount of carbon dioxide emitted by biodiesel in the combustion phase is the same as that absorbed by the plant during its growth through photosynthesis, resulting in a neutral carbon budget. Moreover, substituting part of the oil products with biofuels would reduce the European energy dependency and increase energy security.

However, a more careful analysis of the life cycle of biodiesel reveals that the energy (and CO2) savings is not so high as it might seem at first sight, and in some cases might even be negative. In fact, the raw materials for biofuels are normally obtained with intensive agriculture, which imply a high use of fertilizers, pesticides and machinery. The reason is that, with less intensive agricultural methods, the yield would be lower and the land requirement and the costs would be higher. Also, fossil fuels are used in the processing phase (oil pressing, trans-esterification) and for transporting the oil seeds to the processing plant and from there to the final users.

In any case, even if the objective of the Directive were met, the savings would not be significant. In fact, since the transport sector accounts for 30% of the final energy consumption, the 5.75% of the fuels for transport corresponds to 1.8% of the final consumption. Taking into account that this amount requires the indirect use of fossil fuels, the final savings would be even lower.

For example, considering a very optimistic output/input ratio (the biodiesel produced using one unit of fossil fuels) of 2.5 , we obtain that reaching the 5.75% percentage (approximately 20 million tons of oil equivalent) would imply saving around 36 million tons of CO2 equivalent, i.e., less than 1% of the European Union emissions in 2004 (4,228 million tons CO2) If we take into account the emissions related to the transport of raw materials that are imported and the imports of food crops that would be substituted by energy farming, the savings would be even less, and if the oil seeds are imported from outside Europe possibly even negative.

Another point that is often raised to promote biofuels is urban pollution. Biofuels are not only seen as a "green" fuel on a global scale (reduction of greenhouse effect) but also on a local scale. They would contribute to reducing traffic contamination, and therefore the numerous ailments associated with it. In reality, the advantages from this point of view are very modest. For example, according to a study of the USA Environmental Protection Agency (2002), if diesel is replaced with a blend of 20% biodiesel (B20), Nitrogen Oxides (NOx) would increase by 2%, particulate matter (PM), unburnt Hydrocarbons (HC) and Carbon Monoxide (CO) would decrease by respectively 10.1%, 21.1% and 11% . Therefore, it can be assumed that with a 5.75% blend, the reduction in PM, HC and CO would be respectively 3%, 6% and 3% (and the increase in NOx would be negligible).

Against the modest advantages (a small substitution of fossil fuels and a slight reduction of some contaminants with respect to diesel), the disadvantages of a large-scale biodiesel production are apparent.

Due to the low yield, the land requirement is enormous. In the Biomass Action Plan (Annex 11) it is calculated that in order to achieve the 5.75% target (18.6 million toe biofuels), about 17 million hectares would be needed, i.e. one fifth of the European tillable land (97 million hectares). Since there is not so much marginal and abandoned land in Europe, the consequence would be the substitution of food crops and a huge increase of the food imports.

For this reason, both in the Biomass Action Plan and in the EU Strategy for Biofuels it is stressed that Europe will promote the production of raw material for biofuels in extra-European countries, where the European Commission intends to incentive energy farming.

This means that the impacts of energy farming would be exported to Southern countries. It is easily foreseeable that if the European demand for biofuels increased because of biofuel obligations and other supporting policies, Southern countries may be stimulated to replace if not food crops at least native forests with large monocultures.

Energy farming would presumably have a big role in deforestation, because pristine forests would be cut down in order to cultivate energy crops. The consequences would be, besides a worrying reduction of wild biodiversity, a decrease in soil fertility, water availability and quality, and an increase in the use of pesticides and fertilizers, as well as negative social effects like potential dislocation of local communities.

The European Directive, and in general all biodiesel promoting policies, do not only imply a competition for arable land but might also incentive plantations of palm trees, whose oil is cheaper than any other source. Palm plantations are responsible for most deforestation in South Eastern Asia and represent a real threat to the remaining native forests. Also they are responsible for a high soil erosion rate. For example, between 1985 and 2000 in Malaysia palm plantations caused 87% of the total deforestation and further 6 million hectares will be deforested to make room for palm trees . The same more or less applies to sugarcane plantations in Brazil.

Moreover, taking into account the CO2 emissions due to inter-continental transport and the increase of CO2 in the atmosphere due to deforestation (forests are CO2 sinks), the final result might be an overall increase of the greenhouse emissions instead of the whished reduction.

Another possible negative consequence is a reduction in world food availability, which can be a particularly serious problem in a context of increasing population and energy demand. A recent example is the increase in corn price in Mexico by 30% in early 2007, caused by the growing demand for corn-derived bioethanol in the USA (Mexico is a net importer of corn from the USA). Some use the term "ethanolinflation" .

Also, a large scale biodiesel production would imply a strong environmental impact in the agricultural phase: the huge monocultures of energy crops would dramatically reduce agricultural biodiversity, with strong environmental impact in terms of soil erosion, use of fertilizers and pesticides, and water requirement. Also, one of the consequences may be an increase in the use of GMOs. In fact, soybean, maize and rapeseed (among the most used raw material to produce biofuels) are respectively the first, second and fourth most important GMO crops.

Another argument often used in favour of biofuels is rural development. However, it can be argued that support to biofuels should not be used as agricultural subsidies. If the objective is to support agricultural sector, subsidies should be granted to organic agriculture and landscape protection.

Concluding, using public funding to support a large scale biofuel production is not an advisable strategy. Obviously, these considerations do not apply to used oil or agricultural residue recycling, nor small-scale niche productions, all of which may be good strategies, instead.

Summing up, biodiesel cannot contribute to the solution of the problems related to the high dependency of our economy on fossil fuels. The idea that biodiesel could be a solution for the energy crisis is not only false, but also dangerous. In fact, it might favour an attitude of technological optimism and faith in a technological fix of the energy problem. We should never forget that if we want to reduce the use of fossil fuels there is no magic wand: the only possible solution is to modify consumption patterns.

Tuesday, March 06, 2007

Technology lifts productivity of old oil fields

International Herald Tribune

By Jad Mouawad

The Kern River oil field, discovered in 1899, was revived when Chevron engineers here started injecting high-pressure steam to pump out more oil. The field, whose production slumped to 10,000 barrels a day in the 1960s, now has a daily output of 85,000 barrels.

In Indonesia, Chevron has applied the same technology to the giant Duri oil field, discovered in 1941, lifting production there to more than 200,000 barrels a day, up from 65,000 barrels in the mid-1980s.

And in Texas, Exxon Mobil expects to double the amount of oil it extracts from its Means field, which dates back to the 1930s. Exxon, like Chevron, will use three-dimensional imaging of the underground field and the injection of a gas — in Means, carbon dioxide — to flush out the oil.

Within the last decade, advances in technology have made it possible to unlock more oil from old fields, and, at the same time, higher oil prices have made it economical for companies to go after reserves that are harder to reach. With plenty of oil left in familiar locations, forecasts that the world's reserves are drying out have given way to predictions that more oil can be found than ever before.

In a wide-ranging study published in 2000, the U.S. Geological Survey estimated that ultimately recoverable resources of conventional oil totaled about 3.3 trillion barrels, of which a third has since been produced. More recently, Cambridge Energy Research Associates, a multinational energy consultancy, estimated that the total base of recoverable oil was 4.8 trillion barrels. That higher estimate, which Cambridge Energy says is likely to grow, reflects how new technology can tap into more resources.

"It's the fifth time to my count that we've gone through a period when it seemed the end of oil was near, and people were talking about the exhaustion of resources," said Daniel Yergin, chairman of Cambridge Energy and the author of a Pulitzer Prize-winning history of oil, who cited similar concerns in the 1880s, after both world wars and in the 1970s. "Back then we were going to fly off the oil mountain. Instead we had a boom, and oil went to $10 instead of $100."

There is still a minority view, held largely by a small band of retired petroleum geologists and some members of Congress, that oil production has peaked, but the theory has been fading. Then there is the growing voice of environmentalists, who do not think that pumping and consuming an ever-increasing amount of fossil fuel is in any way desirable.

Increased projections for how much oil is extractable may become a political topic on many different fronts and in unpredictable ways. By reassuring the public that supplies will meet future demands, oil companies may also find legislators more reluctant to opening Alaska and other areas to exploration.

On a global level, the Organization of the Petroleum Exporting Countries, which has coalesced around a price of $50 a barrel for oil, will likely see its clout reinforced in coming years. The 12-country cartel, which added Angola as its newest member this year, is poised to control more than 50 percent of the oil market in coming years, up from 35 percent today, as Western oil production declines.

The oil industry is well known for seeking out sources of fossil fuel in far- flung places, from the icy plains of Siberia to the deep waters off West Africa. But now the quest for new discoveries is taking place alongside a much less exotic search that is crucial to energy supplies. Oil companies are returning to old or mature fields partly because there are few virgin places left to explore, and, of those, few are open to investors.

Some forecasters, studying data on how much oil is used each year and how much is still believed to be in the ground, have argued that at some point by 2010, global oil production will peak — if it has not already — and begin to fall. That drop would usher in an uncertain era of shortages, price spikes and economic decline.

"I am very, very seriously worried about the future we are facing," said Kjell Aleklett, president of the Association for the Study of Peak Oil and Gas, based in Uppsala, Sweden. "It is clear that oil is in limited supplies."

Many oil executives say that these so- called peak-oil theorists fail to take into account the way that sophisticated technology, combined with higher prices that make searches for new oil more affordable, are opening up opportunities to develop supplies. As the industry improves its ability to draw new life from old wells and expands its forays into ever-deeper corners of the globe, it is providing a strong rebuttal in the long- running debate over when the world might run out of oil.

Typically, oil companies can produce only one barrel for every three they find. Two usually are left behind, either because they are too hard to pump out or because it would be too expensive to do so.

Going after these neglected resources, energy experts say, represents a tremendous opportunity.

"Ironically, most of the oil we will discover is from oil we've already found," said Lawrence Goldstein of the Energy Policy Research Foundation, an industry-funded group. "What has been missing is the technology and the threshold price that will lead to a revolution in lifting that oil."

Saturday, March 03, 2007

The 4 Facets of Peak Oil

Falls Church News-Press

By Tom Whipple

Looming just over the horizon are four great storms that soon will have a major impact on nearly all the world’s peoples and their descendents for decades to come. We know these storms are coming, for we can clearly see their outlines and some are already beginning to feel the winds.

We don’t know the exact timing nor the order of these storms’ arrival. We do know that the order in which they come will be important to how these storms interact with what our lifestyles will be like in the years ahead.

The first storm is what we talk about in this column: the balance between oil depletion and production from new oilfields that will determine how much longer the world’s economy can continue in its present form. For the last 140 years, the world has had nearly uninterrupted access to a virtually unlimited supply of oil. Except in times of war and similar crises, if you could pay for the oil, you could have as much as you wanted. Soon, this will not be the case

Our second storm, a corollary of the first, is the balance among the ability and willingness of oil exporters to export, the price of oil, and the demand and ability to pay of oil importers. This is not quite the same as the availability of oil, for there will come a point when today’s oil exporters will not be shipping the desired quantities of oil to today’s importers. This reduction in size of the oil trade can be for any of several reasons.

As production from the giant Cantarell oilfield is dropping rapidly, many forecast that Mexico soon will be out of the oil exporting business. This is not because Mexico’s wants to stop exporting to the US; they simply will not have excess oil to sell abroad. Here we will have a component of storm one directly causing storm two – the reduction in world exports.

As Mexican exports, and those of other countries, start to dry up, either they will be replaced by increased production elsewhere in the world, or the richer countries will simply outbid the poorer ones for the available oil. There are many other reasons, besides inability to maintain production, which might cause a reduction in the oil trade. Terrorists might blow up some vital oil installation. Iraq could deteriorate to a state where no oil is available for export. Or Iranian relations with the West could go really sour. In these cases export flows could slow for reasons other than oil depletion.

Our next big storm is global climate change, which can interact with peak oil and export flows in many ways. Large temperature-induced hurricanes have and could continue to tear up oil production and import or export facilities. A really large and well-placed hurricane might establish the peak of peak oil.

However, there is another side to the “storm” of global warming. Most governments and world organizations, except maybe ExxonMobil, are saying that we really need to do something “serious” and fast about global warming. Serious and fast can only mean major cutbacks in the consumption of non-carbon sequestered fossil fuels. Here the problem is that short of a scientific miracle, large reductions in fossil fuel consumption are almost certain to cause serious economic problems.

For those for whom economic growth has become the Holy Grail of civilization, deliberately slowing economic growth is unthinkable. There are many, who believe they would rather see their grandchildren bake, starve, drown or what have you, than deliberately crash the stock markets with some fool emissions-reducing cap or tax.

Although it does not seem imminent at the moment, somewhere along the line governments are going to start capping the release of carbon from the burning of fossil fuels unless peak oil production or “peak oil exports” do it first. Should governments mandate major reductions in fossil fuel consumption before the geological or geopolitical peak in world production, then we could have global warming induced peak rather than a geological or geopolitical induced peak.

Our final storm is a great economic recession. It’s clear much is out of balance in the world’s economy— deficits, money supplies, world trade, and exchange rates to name a few. Should a major world recession or worse set in before oil shortages begin, then obviously the demand for oil will be reduced, production will slow and oil reserves would be stretched out.

The other side of the coin says that major reductions in oil supplies for either geologic or geopolitical reasons will undoubtedly cause serious economic reverses.

So there we have the great four part mix that will be a major part of all our futures: peak oil production, peak oil exports, global warming, and economic recession. They are all coming and they are all tied inextricably together. It is not yet clear which will affect our lives first. Right now it looks as if recession and peak exports are in the lead but things are changing rapidly. The only thing that’s sure is when these four storms have passed through, life as we have known it will never be the same.

Saudi Oil Production Down 8 percent

Raise the Hammer

By Ryan McGreal

Almost a year ago, on a tip from Richard Gilbert, RTH picked up on a mostly-ignored report in Platts Oilgram News that Saudi Arabia was past its oil production peak.

Today, over at The Oil Drum, Stuart Staniford reports that Saudi Arabian oil production dropped eight percent last year.

Some commentators - including most peak oil deniers - are arguing that OPEC's oil production dropped last year because they want to maintain high prices.

However, this flies in the face of OPEC's longstanding policy, which is to keep oil trading in the $20-35 dollar range - high enough to be profitable, low enough to price non-conventional oil out of the market, and moderate enough to encourage steady consumption growth of around two percent a year.

We learned reecently that oil production has been stalled at 84 million barrels a day for the past two years, and many buyers, especially in less developed countries, are simply being priced out of the market as sustained high prices destroy market demand.

We are certainly being lied to about Saudi Arabia's oil reserves - and the reserves of every other OPEC country as well. In the 1980s, when OPEC changed its rules so that countries could only export oil based on their reserves, every country's reserve estimates jumped.

In January 2006, a leaked internal memo found that Kuwait's oil reserves were only around 50 billion barrels instead of the 100 billion the Kuwaiti Oil Company had been claiming.

Similarly, we are being lied to about Saudi Arabia's continued ability to crank out millions of barrels a day. Saudi Aramco has been pumping seven million barrels of saltwater a day into its massive Ghawar field just to keep production flat, and the water cut is a significant, and growing, share of the total output.

Thursday, March 01, 2007

A Review of the Documentary "What A Way To Go: Life At The End Of Empire"

The American Muslim

By Carolyn Baker

I didn’t way it would be easy; I just said it would be the truth. Morpheus, from “The Matrix”

If anything is not easy to watch but absolutely the truth down to one’s toenails, it is Tim Bennett’s and Sally Erickson’s doggedly transparent documentary, “What A Way To Go: Life At The End Of Empire.” Nothing less than a 123-minute cat scan of the planet and its twenty-first century human and non-human condition, this documentary is indeed, “in your face” but with reverence, poignancy and solemnity yet sending world-class denial artists running to re-watch “Little Miss Sunshine” another one hundred times. While viewing it, I could see in my mind Carl Jung puffing on his pipe and pensively whispering under his breath, “Human beings can only handle so much truth.”

Divided into four parts, Waking On The Train, The Train And The Tracks, Locomotive Power, and Walkabout, the film begins with Tim Bennett’s personal saga of awakening in the eighties from lifelong slumber. Recounting the realities he has subsequently discovered is a tedious litany of human and planetary horrors that only those ready to awaken with him are likely to endure. To their credit, Bennett and Erickson offer no “happy ending chapter” at the end—no list of quick and painless fixes. Nothing about the world humans have created in the past several thousand years is painless, and nothing they might contemplate doing to remediate it could ever be quick. “What A Way To Go” is nothing less than two physicians presenting a diagnosis of terminal cancer to a patient who currently feels and looks “just fine”. Still another metaphor might be the one that Bennett and Erickson present in the documentary’s first chapter, namely, that of a suicidal individual standing on a ledge at the top of a very tall building, contemplating jumping to his death. It is an image to which the filmmakers return several times as the film progresses.

The issue of denial is addressed head-on as the documentary’s numerous interviewees name it and its consequences. Those individuals include: Thomas Berry, Richard Manning, Stuart Pimm, Ran Prieur, Paul Roberts, William Schlesinger, Richard Heinberg, Chellis Glendinning, Derrick Jensen, Jerry Mander, and Sally Erickson. Specifically, Derrick Jensen speaks of the energy that it takes to remain in denial, and how humans who stop clinging to it discover that as a result, an enormous amount of energy is freed up to do whatever work the planet’s terminal state calls them to do.

“What A Way To Go” names Peak Oil, climate change, mass extinction, and population overshoot, as the four pivotal and daunting challenges that humans must address and resolve if any species are to remain on planet earth. Equally terrifying, in my opinion, are two symptomatic offshoots of these four: nuclear holocaust and global economic meltdown.

So how do humans—that species which unlike all the others, is in the process of rendering earth uninhabitable—reverse the nightmare we have created? While for many of us, it may seem like a no-brainer, Bennett and Erickson emphasize that unless the issues are unveiled and talked about, no hope for solution exists. Given the documentary’s unrelenting reminders of the lethal trajectory to which the human race has committed itself, the filmmakers’ insistence on breaking one’s own denial system is a crucial first step to all others.

As an historian I particularly appreciate Sally Erickson’s assertion in the film that in order to begin addressing the issues, we must develop a historical perspective and understand how we arrived at this point in human history. This is exactly what I have attempted to do in my recently-published book U.S. HISTORY UNCENSORED: What Your High School Textbook Didn’t Tell You. Americans in particular are loath to investigate causes and prefer to hastily “move on” to solutions; however, without understanding causes, it is impossible to construct viable solutions.

Especially validating for me was the perspective this documentary lends to the issue of Peak Oil in relation to climate chaos. While experts on hydrocarbon energy such as Richard Heinberg leave no doubt in the viewer’s mind that Peak Oil is a frightening reality, those same experts, including Heinberg, acknowledge the gargantuan climate change monster that could surpass Peak Oil not only in its consequences but how quickly those consequences manifest the collapse of civilization and make the planet uninhabitable.

As for the tiresome “technofix” argument—you know, the one that says that because humans are the superior specie and have created such highly sophisticated civilizations, we will ultimately invent technology that will adequately reverse the “Big Four” pivotal challenges, Daniel Quinn, author of Ishmael and The Tales Of Adam, compares humans living in developed countries to people living in very tall brick buildings who every day go to the bottom of their building and remove 200 bricks and bring them to the top of the building. Obviously, such ludicrous behavior is unsustainable and will inevitably result in the demise of the building’s foundation and its collapse.

Ultimately, “What A Way To Go” meanders into the root causes of our planetary nightmare: our disconnection from ourselves, each other, and the earth; the cultural stories that have been forgotten and replaced with newer, self-destructive ones about growth, domination, and hubris; the systems we have created and the addictions that feed those systems, and of course, our denial.

In Part Four, “Walkabout”, we are given not hope, but the challenge of creating options, the first being, the decision to grow up, forsake our denial, and become adults. Richard Heinberg reminds us that, “We have been so infantilized by civilization that we can no longer survive without it. As all of this starts to shift and change and disintegrate and collapse there’s the opportunity, in fact, to come back to ourselves. To grow up, fundamentally, as people and as a culture.”

Both Erickson and Bennett have incorporated their own children into the documentary with brief comments from Erickson’s daughter and Bennett’s son. Erickson herself states that in terms of future generations, “I think they’re going to look back and shake their heads and say, ‘What happened to those people? How did they lose sight of such basic things.’?”

Earlier I used the analogy of two physicians announcing to a patient that she/he has terminal cancer, and it is appropriate here to ponder what cancer actually is, namely, the growth of cells out of control, thus the more archaic reference to a cancer as a “growth.” Growth has become for Western civilization a cancer that is destroying its inhabitants, the ecosystems, all other forms of life on earth and the planet itself. Or as the author, William Kotke notes, “Civilization is a mental/material world of culturally transmitted illusion.” Growth must cease, and it will cease, whether we choose to participate in that process or whether we don’t. Civilization will collapse, and that collapse offers opportunity as well as crisis. It may occur suddenly, or it may transpire as the economies and infrastructures of developed nations are hollowed out over time.

Appropriately, Bennett and Erickson have chosen the subtitle, “Life At The End Of Empire.” In his recent book Nemesis, historian Chalmers Johnson notes that an empire and a democratic republic are inimical to each other. Where one exists, the other cannot. If a nation chooses empire, its democratic republic will dissolve and ultimately perish. Should it choose to retain democratic republic, it must forsake empire; it cannot have both. The United States has chosen empire, and its citizens are allowing the shredding of its Bill of Rights and the evisceration of its civil liberties. All empires inevitably collapse, and everyone reading these words is living that collapse in this moment.

At this writing, world financial markets are reeling from yesterday’s sell-off bloodbath in China and Europe. The day before, a U.S. government auditor warned that U.S. debt to other nations is spiraling out of control. Virtually every project of Western civilization is unsustainable, especially its debt. An equally frightening but enormously important documentary that every thinking American must see is “In Debt We Trust” which illumines another locomotive out of control, imminently headed for a bottomless chasm. While I don’t wish to prognosticate that this week’s plunge of financial markets is the beginning of that economic train wreck, I know that the centralized financial systems which manage the United States government are behaving like the individuals mentioned above who carry the bricks from the bottom of their building to the top of it, leaving the foundation in peril of collapse. The fundamental difference is that when the American people behave in such a manner, they remain in the building and will be victimized by the collapse, whereas members of centralized financial systems have helicopters waiting at the top of their buildings which allow them to abscond with the bricks, turn them into gold, and deposit them offshore.

While no one wishes to jump off the ledge like the one on which the man at the beginning of “What A Way To Go” has perched himself, there is a sense in which all of us must either jump or have something far more momentous than our physical existence annihilated. The documentary quotes Andre Gide:

One does not discover new lands without consenting to lose sight of the shore for a very long time.

In the final moments of the documentary, Bennett offers an invitation to the viewer: “Let’s jump off the train and build a boat…a lifeboat, an ark, a galleon of adventure and imagination destined for unknown lands. Build it now. The ice is melting. The waters are rising. We’re going to have to let go of the shore.”

Bennett concludes the documentary by stating that he doesn’t know if he will survive the collapse but that he is committed to showing up in the world and telling his truth. It’s almost as if his physical survival is much less urgent than that commitment—in which case, I must concur with his and Erickson’s message: What a way to go!

Visit Carolyn Baker’s site at