Peak Oil News: Peak oil: Get ready for it, says GAO

Friday, April 13, 2007

Peak oil: Get ready for it, says GAO

Previously the worry of obscure engineers in technical reports, now the prospect of declining global production of oil is front and centre on the desks of all policy makers.

By Kevin Potvin

The US Government Accountability Office in late February issued a report called "Crude Oil: Uncertainty about future oil supply makes it important to develop a strategy for addressing a peak and decline in oil production." It is to date the most strongly-worded and unflinching view of the state of the global oil supply ever to have been issued by any of the western nations. Importantly, the US Departments of Energy and the Interior both "generally agreed with our message and recommendations," the report says. The 82-page report is no hysterical book about peak oil by a retired technician published by a fringe imprint. It is a guiding document for US lawmakers researched and written by one of the most highly revered federal agencies in that country. What it contains should be required reading for every Canadian lawmaker as well, and if it’s read closely by them, it ought to stand the hair up on the backs of their necks.

"The prospect of a peak in oil production," the report says, "presents problems of global proportion whose consequences will depend critically on our preparedness." In rough brush-stroke fashion, the report leaves the reader with no doubt that global production of oil will definitely peak sometime in the next 30 years and that it is likely to peak and begin declining much sooner than that, and it even raises the suspicion that global production might already have reached its peak.

The reports’ authors go on to review all potential sources of new oil, all potential technologies to extract harder-to-surface oil in known reserves, and all potential unconventional sources of oil, and concludes that even with a best case scenario in all three arenas, future projected demand won’t be met, and that higher prices will alone determine the distribution of declining oil supplies. "If the decline in oil production exceeds the ability of alternative technologies to displace oil," the report says, "energy consumption [will] be constricted, and as consumers compete for increasingly scarce oil resources, oil prices [will] sharply increase." The report compares the expected economic results of sharply increased oil prices to the two periods of oil supply shocks in 1973 and in 1980, then points out that in the two previous cases, the causes of reduced supply of oil were political and temporary, and were also short-lived. The coming oil shortage will be for technical reasons and therefore not so easily solved, and will not only be permanent, but will increase year over year, in essence, providing a fresh 1973-like oil supply shock every year from now on into the future.

The report describes how the economies of the western oil-dependent nations contracted in recession and how the pubic made adjustments by driving smaller cars less often and at slower speeds, for example. It adds that with the dawn of peak oil, those kinds of adjustments "recession and consumer behavior changes" will only work initially. The following year after peak oil, global oil production will contract again by yet a few more percentage points, causing continued recession and more adjustments by consumers. And then again, the next year after that, and so on. It’s easy to see what has the US Government Accounting Office worried, and why Canadian policy makers in Ottawa as well as the provinces and in the cities, should also be worried. Sustained economic recession, that is, a depression, and mounting forced changes in behavior of consumers can only be borne by any society for a limited period of time before massive economic and social damage is done.

What is striking about this report is that its authors don’t consider any scenarios in which the United States, and by implication Canada, can fully escape the economic effects of peak oil, because they don’t see any possibility of doing so. The report instead recommends that the US Secretary of Energy redirect its resources toward accurately assessing the state of oil reserves in the world and developing reliable predictions of global supply limits, starting with the peak and moving forward in the years following with predictions of the rate of decline. This is the best the office says can be done so that other governments and agencies can at least prepare to mitigate just some of only the worst effects.

Obviously, when peak oil hits, mitigating the wide-ranging economic and social effects will become not only the preoccupation of all governments at all levels, but it will likely become the sole occupation for all of them. As the report recounts, the kind of massive efforts at conservation undertaken after the oil supply shock of 1973 will, this time, be required to be doubled every year just to maintain pace with declining availability of oil. But of course, consumers cannot every year buy yet a smaller and more fuel-efficient vehicle, and cannot easily cut back on their driving by a certain percentage year after year, once essential driving is all that is left. And most worrying, the economy certainly cannot sustain a 1973-type recession year after year, yet the report notes that the likely depth of recession will be more severe yet on each following year as oil production continues to decline.

There may not be any solutions for Canadian policy makers to help this country’s people and companies avoid the ravages of year-on-year declines in available oil, and the consequent ever-steeper rise in oil’s prices. But there are options available to help the public, their cities, and the nation’s public and private sectors absorb and mitigate some of the worst effects. For starters, electric-based public transportation systems between Vancouver and suburban cities is required now to ensure citizens, as workers and consumers, can still get around after the price of gasoline for their private cars goes through the roof. The Gateway project, involving oil-driven car and truck-carrying highway schemes lacing the Lower Mainland, to be installed at a cost of $3 to $5 billion, should be shelved. A new infrastructure plan predicated on moving people and goods around, instead of cars and trucks, should be urgently developed.

And national schemes to begin voluntary reductions in national oil consumption in smaller, more steady, and totally predictable increments, should be developed and implemented now, rather than waiting a few years for the age of peak oil to cause huge, very unstable, and wildly unpredictable, and forced, amounts of reduction in the national oil consumption rate.


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