Peak Oil News: The end of cheap oil is now

Tuesday, May 06, 2008

The end of cheap oil is now

People's Weekly World


By Mark Hertsgaard

Never underestimate a politician's ability to pander. With gasoline prices nearing $4 a gallon and the summer driving season approaching, presidential candidates John McCain and Hillary Clinton have responded by calling for a consumer holiday from the federal gasoline tax. But both McCain and Clinton must know that blaming taxes for soaring gasoline prices is absurd. The tax hasn't changed. What has changed is the price of crude oil, which hit a record $119 a barrel in April.

Get used to it. Contrary to McCain and Clinton's feel-good simplifications, there's no easy answer to this problem. Gasoline prices are rising-and will continue to rise-because global demand is outstripping supply. Combine America's gas-guzzling ways with millions of new middle class consumers in China and India, and global demand is bound to increase for years to come (absent a global economic depression). Meanwhile, global oil supplies are essentially flat. This mismatch pushes up prices.

The real issue that McCain, Clinton and anyone truly serious about gas prices must confront is peak oil. Peak oil theorists do not suggest that the Earth will surrender its last drop of oil anytime soon. Rather, they contend that the world's oil supply has, or soon will, hit its upper limit, and then shrink. This, the end of abundant oil, spells the end of cheap oil. As limited supply confronts growing demand, the result will be volatile higher prices and shortages that could bring back the gas lines of the 1970s. And that's just for starters. The modern world needs cheap oil like the human body needs oxygen; remove it, and we could be headed for economic decline, resource wars and social chaos.

Conventional wisdom says the market will solve the problem: higher prices will call forth more supply. But a growing number of oil industry insiders are disputing that and instead backing the peak oil thesis. Though largely unnoticed by the media, a decisive moment in the debate came last September, when James Schlesinger declared that the "peakists" were right. You don't get closer to the American establishment than Schlesinger, who served as head of the CIA, Secretary of Energy, and adviser to oil companies. In a speech to a conference sponsored by the Association for the Study of Peak Oil, Schlesinger said, "It's no longer the case that we have a few voices crying in the wilderness. The battle is over. The peakists have won." Schlesinger added that many oil company CEOs privately agree that peak oil is imminent, but don't say so publicly.

One who does is Royal Dutch Shell CEO Jeroen van der Veer. Without using the term peak oil, he warned this year that, "After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand."

The United States, with its two hour commutes, three car families, atrophied mass transit and petroleum-based food system, is most vulnerable to an oil shock. But similar vulnerabilities exist in most industrial societies, not to mention China and other emerging economies that are only now getting a taste of oil-fueled modernity.
Ironically, peak oil could actually harm the environment, making climate change worse. One might think that less oil would mean less consumption and lower carbon dioxide emissions. But the modern world is addicted to oil. If peak oil arrives before the addiction is broken, societies will likely do whatever is necessary to keep their addictions fed. That is already happening in Canada, where Exxon-Mobil and others are mining so-called tar sands-a very dirty fuel that carries a much greater carbon footprint than conventional oil.

Luckily, there are smarter ways to fight both peak oil and climate change. The first step is a massive investment in energy efficiency-by far the quickest, cheapest way to reduce consumption. This will buy us time to deploy alternative fuels, reduce demand via better mass transit and less sprawl, and green our economies. Plug-in hybrid cars, for example, get over 100 miles per gallon-double what today's generation of hybrids achieves. And if plug-in hybrids rely on electricity generated by solar, wind or other green energy sources, they will fight both climate change and peak oil.

More encouraging news: some top government officials understand what needs to be done. For example, David Paterson, the new governor of New York state, has spoken in detail about peak oil and the necessity of investing in energy efficiency and alternative energy sources.

As it happens, Governor Paterson is a strong backer of Senator Clinton. Maybe they should talk. And they should invite McCain-and Senator Obama-to join them. Peak oil seems poised to become the next big idea commanding the attention of governments, businesses and citizens the world over. We need our presidential candidates to talk sense about it, not use it to make cheap political points.

Mark Hertsgaard (www.markhertsgaard.com) is the environment correspondent for The Nation and the author of many books, including Earth Odyssey: Around the World In Search of Our Environmental Future.

(c) 2008 Blue Ridge Press


1 Comments:

At 8:59 PM, May 07, 2008, Blogger Anaconda said...

Peak oil is false. Exploration and production is being limited by politics. In the United States, politics has limited exploration; in OPEC, politics has limited production by politically derived quotas.

Some people question the ability to increase "flow rate" to meet demand. There may be some truth to the concern because over three quarters of total world oil production is by state petroleum companies, many of which have a poor track record of capital investment to increase exploration and production.

Also, while demand is increasing, a significant factor for the rising price of oil is the falling U.S. Dollar. The Dollar simply has lost a lot of buying power because the world is being flooded with Dollars as a result of the U.S. trade deficit.

Again, this is a political issue, not a physical supply issue.

Considering the threat of high oil prices to the U.S. economy, the reaction by policy makers has been pathetic.

No discussion to increase exploration in U.S. territory (only Rose Garden lip-service from President Bush). No discussion to increase the Dollar's value by achieving a sustainable trade policy that lowers the trade deficit. The U.S. likely will never be oil independent, but easily could be less dependent on foreign oil.

Conservation and increased efficiency are positive goals to strive for, but increased oil production in the United States must also be a goal.

A near worthless Dollar is a severe obstacle for the U.S. to maintain a balanced and stable energy profile.

A worthless Dollar will deliver dear oil. That's a recipe for bad politics.

 

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