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Richard Heinberg and Julian Darley of the Post-Carbon Institute "This is just silly," said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Mass. "It's not like industrial civilization is going to come crashing down." -- Associated Press article of May 24 2005, GLOBAL ENERGY CRUNCH: Oil peak predicted; Some analysts predict irreversible slide for world's reserves By Matt Crenson A.S.P.O. IN LISBON By Jamey Hecht, PhD © Copyright 2005, From The Wilderness Publications, www.fromthewilderness.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only. [June 16, 2005 1400 PST (FTW) -- LISBON] When FTW covered the third annual meeting of ASPO last year in Berlin, we found a bracingly clear picture of the impending world oil shortage. The analysis was powerful, but it remained inside the scientific culture that produced it; journalists were left to wonder how on Earth the dire facts would ever get through to the public without a massive nongovernmental outreach program of some kind. As Michael Ruppert wrote in his report, "It felt strange to discuss Peak Oil in a purely data-driven way while knowing how utterly it will shatter our growth-driven industrial civilization." During May 19 and 20, 2005 in the central building of Lisbon's Calouste Gulbenkian Foundation (Av. de Berna 45 A), A.S.P.O. had a bigger crowd (around 300), more media presence (ten media crews including the BBC and Al Jazeera), and a range of attendees that represented humanity from Nigeria to Beijing. For a while, the same dynamic held: graphs filled a giant screen beside a lectern as speaker after speaker presented rigorous accounts of hypothesis-testing, data, methodology, and conclusions. After all, if you're going to scare the hell out of people, you'd better know what you're talking about. And you'd better be able to show it. After three days of mathematically powerful modeling, surveys of the discrepancies between industry and government statistics, histories of the political distortions affecting reserve reporting, and regional studies of basins and traps, nobody could blithely walk out the conference doors with much hope for world economic growth. In Berlin in 2004, ASPO "had their work cut out for them; not with the audience but with those who had come to deny." Nobody came to Lisbon to deny Peak Oil. Reporting from ASPO's Berlin conference last year, Michael Ruppert wrote: Colin Campbell, the "godfather" of the Peak Oil movement, with a bit of pique, divided the conference presenters into three camps: the Surveyors who were reporting hard data and not abstract modeling; the Economists who were denying reality and asserting that money produces energy and not the other way around; and the Pretenders "who know full-well what the situation is, but pretend otherwise for short-term political objectives." The Lisbon sessions corrected for this amply, as Charles Hall gave a spirited demonstration that neoclassical economics is one huge tragic mistake. "Wealth does not come from capital, nor does it come from labor: it comes from the Earth." Interested readers are referred to a pair of Hall's recent papers on this issue: Hall, C.A.S. 2004 The Myth of sustainable development: Personal reflections on energy, its relation to neoclassical economics, and Stanley Jevons. Journal of Energy Resources Technology. Vol.126, p. 85-89; Hall, C. A. S., Pradeep Tharakan, John Hallock, Cutler Cleveland and Michael Jefferson. 2003. Hydrocarbons and the evolution of human culture. Nature 426 no. 6964. p. 318-322. With Lisbon, the Peak Oil story self-assembled into a coherent narrative: traditional economics is based on the illusion that demand creates supply; finance capitalism compounds that illusion with an even bigger one - that fiat money can bear value through debt indefinitely, because tomorrow's growth will pay for today's debt. As cheap and abundant energy becomes unavailable, the whole house of cards will be shaken, and the solutions will have to come from outside a collapsing system. The proceedings began with a welcome from a gracious host, E. Rui Vilar (President, Fundação Calouste Gulbenkian, Portugal), who eulogized the legendary Armenian petroleum entrepreneur for whom the hall and its environing botanical gardens were named: "Calouste Sarkis Gulbenkian: a pioneer in the Oil Industry." Apart from a large corpus of quotable remarks - e.g., "oilmen are like cats: you can't tell from listening to them whether they are fighting or making love" - Gulbenkian's legacy seems to have been the brokering of relatively peaceful arrangements for mineral exploitation among competing claimants in the wake of the First World War. It was not lost on Mr. Vilar's audience that the world could use the services of such a broker right now. You can imagine how awkward it gets when the oil industry is called upon to host the news of its own peril. Our Portuguese hosts included A. Costa Silva, a representative from Partex Oil and Gas, a corporation whose genealogy proudly claims Gulbenkian himself. There we were, pleased to be in the presence of an industry player enlightened enough to prefer natural gas over oil, to use the term "depletion," and to speak at an ASPO conference. But at one point in the Partex presentation I heard these words: "therefore, it is very important to note that Peak will probably come in this century." For my money, I'm with Professor Deffeyes on this one: Peak at Thanksgiving Day, 2005. Next, Professor Rui N. Rosa (Chair of Organizing Committee, ASPO and Geophysics Centre of Évora, Portugal) gave a welcome address that was followed with an announcement of the absence of Ali Samsam Bakhtiari, the Iranian analyst of Middle Eastern oil affairs who was to have presented a paper called "Iran and Iraq: Oil Reserves, Production Capacities and Future Output." The large audience went silent with respect as Mr. Rosa read out a statement provided to him by Mr. Bakhtiari via email. It included the words, "I am now effectively a prisoner in my own country." Geopolitics would be impossible to ignore in Lisbon, as one of our own number had become captive to its perverse ironies. If anyone can guide Iran through the vicissitudes of Peak Oil's new economic reality, it is Ali Samsam Bakhtiari. ASPO's President, Kjell Aleklett, told the story of ASPO: From Uppsala to Lisbon as a clear escalation of interest and support that has run parallel to the unfolding crisis. Compared to the coming crash, the growth of prices and public awareness has been excruciatingly slow. But compared to the usual pace of events during the soft-price period of 1986 - 2003, it's been brisk indeed. And the funny thing about a peak, as everyone knows who has ever ridden a rollercoaster, is that it's so different from the downside it suddenly shows you, dropping out and away toward the unknown. Judging from the Keynote Address by ASPO founder Colin Campbell, there is a consensus coalescing around Ken Deffeyes' suggestion that Peak Oil can be understood as centering around 2005 / 2006. But whatever the date (and the same consensus says that the exact date of Peak is not as important as the gap between supply and demand), this is the calm before the storm: We can say, in other words, that the world has reached the end of the First Half of the Age of Oil, which lasted 150 years since the first wells were drilled in Pennsylvania and on the shores of the Caspian Sea. It saw the rapid expansion of industry, transport, trade, agriculture, and financial capital, much made possible by the abundant supply of cheap and convenient oil-based energy. And as A.S.P.O. has pointed out on several occasions, the world population expanded six-fold-exactly in parallel with oil. The Second Half of the Age of Oil now dawns, and will be marked by the decline of oil and all that depends upon it. This includes financial capital as the decline of oil-based energy removes the essential confidence that there will be Expansion Tomorrow to support Today's Debt, a critical relationship. It spells, in other words, the End of Economics, as presently understood and practiced. That in turn calls for entirely new political structures and policies to replace those based on out-dated economics. With this speech it was clear we were no longer in Berlin; the analysis-only phase of ASPO had yielded to a broader program that now included dire predictions of financial collapse and industrial breakdown. This is just what was needed, and the planners had provided a rich spread of it. Here are some of the presentations that bore most directly on the economic prospects for the near-term: Richard Heinberg (author, professor and educator, USA): The Likely Impact of Peak Oil on the United States João Matias (Technological Forecasting and Innovation Theory Working Group (TFIT-WG), University of Beira Interior, Covilhã, Portugal): The Fifth Kondratieff Wave - The Fossil Fuels Apogee Charles A. S. Hall (State University of New York, College of Environmental Science and Forestry. Syracuse N.Y.; USA): The need for biophysical economics Robert U. Ayres (Professor (and Novartis Chair) Emeritus, INSEAD, Fontainebleau, France, and Institute Scholar at the International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria): Implications of Higher Oil Prices for Future Economic Growth Chris Sanders (Sanders Research Associates, UK): Energy Economics in the Second Half of the Age of Oil Robert L. Hirsch (Senior Energy Program Advisor at SAIC - Science Applications International Corporation - and consultant, USA): Peaking of World Oil Production: Impacts, Mitigation, & Risk Management Rui N. Rosa (ASPO and Geophysics Centre of Évora, Portugal): The Urgency for Energy Economics While Lisbon was marked by the attendance of several parliamentarians and former government ministers, special mention should be made of Robert Hirsch, who holds or has held major posts at Science Applications International Corporation, Exxon, Atlantic Richfield, RAND Corporation, and the U.S. Energy Research and Development Administration, among others. Hirsch is the primary author of a much-noted report produced at the request of the US DoE. Along with the recent presentations of Representative Roscoe Bartlett on the floor of the U.S. House of Representatives, Hirsch's report is among the few public signs of Peak Oil awareness in or near the American corridors of federal power. 1 Of course, it is FTW's contention that, at the very heart of the American government, the secret sessions of Mr. Cheney's National Energy Policy Development Group (or "Energy Task Force") were focused directly on Peak Oil as an unprecedented crisis for which the Vice President and his partners chose the murderous supply-side solution that has cost so much in blood and treasure between the Tigris and the Euphrates. This week, the number of American dead - utterly dwarfed by the number of Iraqi civilian casualties - topped 1,700. Among the attendees at ASPO Lisbon was an advisor to that task force, energy investment banker Matthew Simmons, whose courageous push toward glasnost has done much to illuminate the shadows of Saudi Aramco and its artfully obscure reserve data. Simmons' new book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, will strike a major blow for transparency and help to force a new reckoning with our global predicament. But Simmons denies that Peak Oil was even mentioned inside the Task Force. I asked him about the NEPDG and other issues: MS: Part of what we're going to do in this new war on energy [sic], is go on the biggest R & D explosion. We don't have any idea how it will work, but we've spent so little time doing serious R&D on trying to create new forms of energy. JAH: Is there any political sign inside the Administration that anyone's willing to act on that? MS: Not really, because nobody thinks this is a problem. No one in the United States thinks it's a problem. I mean, I do - I'm, all the time - I was in the Senate giving a lecture at a Hearing last Thursday afternoon, on the urgent need for date reform. And I basically said, I'd rather see the United States go without traffic lights for the next two years, or shut down their air traffic control system, than have one more year with no data. But I'm really one of the very, very few people. And, you know, just to pick on someone who has a very loud kind of voice who is every bit as prominent in the United States, if not more so, than I am, Dan Yergin - Dan Yergin is giving talks saying that, given the ingenuity of the technology, we can basically grow oil demand by 50% and halve the cost! So if you're sitting as a Senator or a cabinet officer and you read Dan Yergin and you read Matt Simmons, you say - hmm. I like Dan; I like Matt; the answer must be halfway in between. JAH: This is the mystery of the Vice President's Energy Task Force, to me: that that much brainpower could get together in the same room, and the sequel be a military race which is itself very energy intensive - MS: We didn't have anything to do with that. I know most people don't believe that. JAH: So those meetings were lucid, perceptive, fact-driven meetings - MS: I don't have any idea what those meetings were like because they were all cabinet officers, but I spent a lot of time in the nine months preceding the inauguration being the [inaudible] one of the most prominent providers of energy data, trying to get these guys to make sure they were connecting the dots, and I had the opportunity of editing every single word that went into Governor Bush's Comprehensive Energy Plan. There were very few differences between the Comprehensive Energy Plan (that was put together in haste, while he was running for office), and the detailed energy plan by Cheney, other than - and again, I was one of the few people who knew both documents backwards and forewords - there was an enormous tilt from a reliance on hemispherically available natural gas to diversifying ourselves away from relying on natural gas and a turn to nuclear and the urgency of doing Yucca Mountain. Why? Because President Bush himself observed that a drilling boom happened for natural gas, and after eighteen months, it had no impact on supply. And you know, everyone was wrong there, too. And over the previous year and a half, I was telling everyone I knew, watch natural gas! We're peaking! - JAH: Watch Uzbekistan - MS: And 98% of the other people in the United States who were involved in natural gas were saying, oh, we have got so much natural gas you can't believe it. So, what they were trying to do in that energy plan was not a twenty-year lead, it was a four-year fix, to get us out of the hole we were in when Bush took office. With the knowledge that America hates talking about energy. It's really tough as a politician - JAH: But it's his second term. I just can't figure it out. MS: Well, one of the problems is Bush is probably still getting people daily giving him advice daily to just beat the hell out of the Saudi Arabians and they'll produce more oil. And my answer is that you can beat the hell out of them and they can't produce any more. It'd be dangerous if they did. So it's very tenuous trying to - I think he was - it would have been so unbelievably easy to drop ANWAR; ANWAR was a toxic issue in the United States. But he knew that ANWAR was about the only supply thing that you could humanly do that if it worked might actually bring another million barrels a day of domestic oil, and save Prudhoe Bay. Because at risk is Prudhoe Bay. Because you get that production down to under around 500,000 barrels a day, and it won't make it over Brooks Range. So, I give him a lot of credit. Once he'd killed it in a month, to go from natural gas, to we've got to go nuclear - I mean here's a guy who was basically elected by the skin of his teeth, and he basically presses the "go button" on Yucca Mountain, knowing full well he's writing off five electoral votes in Nevada. Everybody in Nevada hated Yucca Mountain. Why? Because they were afraid it might hurt the tourist business. But Bush was saying, we gotta do this. We've gotta return to nuclear power. So I think that some of his actions that look so wacko to so many Americans, and especially to people outside America, I actually look at in kind of a different light and say, some of it was some pretty gutsy political action. JAH: Unless one concludes that, having commissioned a software program that was going to essentially steal the 2004 election, he could afford to affront the Nevadans. MS: If you believe that, then you ought to believe that there's a colony on the Moon that directed picking John Kerry, the single weakest candidate since Al Gore. I think the Republicans were unbelievably lucky that we ended up with Al Gore and John Kerry. Collectively, you couldn't have two more incompetent people trying to run the United States. What's scary is how close both of them came to being elected. JAH: It's also the case that [the former Rocky Flats Nuclear Weapons Plant cleanup program] runs on software which is produced by a company called Ptech 2, which was raided by Operation Greenquest in December of 2002, and it turned out that their major financial backer was Yassin Al-Qadi, who was on the State Department's Specially Designated Terrorist Watchlist - which doesn't spell necessary disaster for [the entire nuclear industry, or] Yucca Mountain, but it's somewhat unsavory… MS: You know, I've gotten to know relatively well a cadre of the civil servants at the Department of Energy. People who have been there for twenty or thirty years, and they are totally apolitical. And the amount of scientific work that went in to proving Yucca Mountain for ten thousand years is far beyond any one software program. So I think, from the start, most people thought give me a break - we've been having nuclear tests for forty years. So the shrillness of Yucca Mountain was just one more great fundraiser for the Sierra Club. And it was a great fundraiser for the Sierra Club. And it scared the bejesus out of everyone in Nevada. And one thing that scared the bejesus out of them is that we were in danger of having nuclear waste traveling from [for example], Maine, to Yucca Mountain. And I said, well, I drive by Wiscasset [Maine], every week during the Summer, and it scares the bejesus out of me; I know we've destroyed Maine Yankee [Atomic Power Company], but I know that right there, unguarded, is a bunch of nuclear waste. Seems to me that if that's your concern, we could take a page out of Wells Fargo (when they used to have stage coaches), and get some Federal Marshals with Uzis and say, 'by the way, this is nuclear waste and anybody who gets within a hundred feet gets both eyeballs shot out.' And I bet you we could store nuclear waste at Yucca Mountain with no problem. But the idea that we have these scare tactics! When you say, wait a second. Come to Wiscasset and go look at where the nuclear waste is stored and if you think that's a safer place, then you ought to take some home and eat it. Simmons continued on the nuclear issue: MS: Three Mile Island worked. The tragedy of Three Mile Island was that it showed you could have an accident. But the positive thing was, it showed the safety system worked. And today we wouldn't build nuclear plants anything remotely like we were building back in the '70's. They're the single best energy efficiency we've ever created. I've never been a total believer that we have all the data we should have before we buy in to say that global warming is the worst thing since mankind, but I'd be the last person to say don't pay any attention to it. And if there's any validity that that's an issue, and you ignore nuclear, then we're gonna basically turn to coal, or we're basically gonna camp out in yurts. I mean, at some point we're going to have to be energy adults. People call me a fear monger about oil, but I'm a realist about oil. JAH: That's what Helen Caldicott says about nuclear. And that was that. Now let me point out a few interesting elements here before moving on. While a new infusion of "serious R&D" would certainly help the renewables industry, the trouble is not that nobody knows how to build an efficient, well-sited wind turbine farm, install solar panels on all public buildings, replace the whole fleet of federal and state vehicles with hybrids, hook up every gym in the nation to on-site capacitors, and implement a massive public works project to undo the damage of Ford and Firestone and GM by building a new infrastructure of freight and commuter light rail. The real trouble has much more to do with the American people's energy wasting habits, and with the fact that the Bush administration is dumping hundreds of billions of dollars - the very capital that Peak Oil mitigation desperately requires - into an orgy of racist violence in Iraq that has locked-in a longstanding humanitarian disaster in that country. "Task force"? What was the task? One might also dispute the claim that the primary reason the men and women of Nevada overwhelmingly opposed the use of Yucca Mountain as a permanent nuclear waste repository was because of their fears for the tourism industry. The major tourist attractions of that state are, after all, gambling and prostitution; those activities don't tend to be mediated by much of an environmental consciousness. The people who live there might instead be more concerned with things like leukemia, birth defects, diminished longevity, and cancer. All their water comes from an aquifer that runs under the mountain. That's why the state vetoed the project. A propos of Three Mile Island, Dr. Caldecott once said: "When you get your cancer, it doesn't come with a label on it that says, 'I was made by some strontium-90 in a piece of cheese that you ate ten years ago, from a dairy near the nuclear power accident.'" And the analogy with Maine is misleading. Waste leaves from Maine. It travels to Nevada, from everywhere else. At a town meeting on the Yucca Mountain project, one Nevadan (an "energy adult," surely?) put it this way: I call it the funnel tunnel syndrome, all the shipments coming to Nevada, and then you're saying, well, take this information and go tell them it's safe, and they say, yeah, but we're going to get all the shipments. The people that live in Maine, they're only getting maybe 30, and it's only once they ship from Wiscasset and that's done, that's done. They're never going to see another shipment. Furthermore, the Nuclear Regulatory Commission (to which the DoE is now applying for an operating license for Yucca) is far less trustworthy than the Saudi oil officials about whose obfuscations Matt Simmons has been so illuminating. Indeed, NRC corruption is legendary. And which agency is responsible for determining how much water flows through the mountain as a vector for possible dispersion of radioactive contaminants?3 The U.S. Geological Survey, whom everyone interested in Peak Oil has learned to distrust. Surely, hundreds of Federal employees in the energy sector meet Matt Simmons' laudatory description: "I've gotten to know relatively well a cadre of the civil servants at the Department of Energy. People who have been there for twenty or thirty years, and they are totally apolitical. And the amount of scientific work that went in to proving Yucca Mountain for ten thousand years is far beyond any one software program." But here is a very recent look at the internal workings of Yucca Mountain: E-mails by several government scientists on the Yucca Mountain nuclear waste dump project suggest workers were planning to fabricate records and manipulate results to ensure outcomes that would help the project move forward. "I don't have a clue when these programs were installed. So I've made up the dates and names," wrote a US Geological Survey employee in one e-mail released Friday by a congressional committee investigating suspected document falsification on the project. "This is as good as it's going to get. If they need more proof, I will be happy to make up more stuff." In another message the same employee wrote to a colleague: "In the end I keep track of 2 sets of files, the ones that will keep QA happy and the ones that were actually used." QA apparently refers to "quality assurance." The e-mails were in a batch of correspondence released in advance of next week's hearing by the House Government Reform Subcommittee on the Federal Work Force and Agency Organization, chaired by Rep. Jon Porter, R-Nev. The Native American community and the broader environmental movement are not alone in their opposition to nuclear energy and its waste-disposal fait accompli. Here is the Nevada Department of Justice: The defeat of the Yucca proposal is mission number one for the Nevada Department of Justice. There are some who believe the project is inevitable and that we ought to "negotiate" for benefits in exchange for warehousing the nation's nuclear waste, however, for the NDOJ, this is not an option: The NDOJ upholds the law, and the lawsuits filed over Yucca are due to the Department of Energy's disregard for it-federal laws such as the Nuclear Waste Policy Act, and Nevada law as well. Those who support a negotiation for benefits would be wise to investigate the DOE's record on such agreements: fifteen promises made yet not one agreement fully satisfied. The point is that in the redoubtable Mr. Simmons - to whom we all owe a debt of gratitude for his tireless work on Saudi oil depletion and his publicizing the dire facts thereof - we have an example of a very significant link between advocacy of nuclear energy, and neglect of the Powerdown imperative. As Julian Darley told me in Lisbon, "the problem is big energy." The choice is not between nuclear-powered suburban sprawl on one side and "camping out in yurts" on the other. That's what's called a false dichotomy, and it drives people into the nuclear camp for lack of the third alternative. The converse is another false dichotomy: we'd better burn coal galore, because the only real alternatives are camping out in yurts or getting irradiated. Drilling in ANWR is not mediation. It may postpone the crash, but it accelerates the world Peak because it accelerates depletion. Its only redemptive value would be the time (six months to a year, by some estimates) it would afford us for real mitigation efforts. And among the major lessons of Lisbon was this: the only real mitigation of Peak Oil is a massive de-consumption and re-localization program (Powerdown) including the proliferation of small-scale, local renewables. That's why the focus of From The Wilderness is shifting toward survivability and planning. In the coming months and years, groups with this focus will be playing an ever-larger role in the reality-based political discourse of the industrialized world. For all the depth and power of the official presentations at ASPO this year, some of the conference's most stirring moments occurred in the hotel lobby where the Post Carbon Institute and Community Solution held their informal planning meeting. All the facts lead toward such a spot: learn enough about Peak Oil, and you find yourself sitting in a circle of chairs among other people who are trying to figure out how to plan for what's coming. After all, the only exits from a reluctant acceptance of Peak Oil are the abiotic theory, -which has been thoroughly discredited in these and other pages - and the claim that depletion is not a big problem because of "reserve growth" whereby oilfields turn out to be larger and/or more thoroughly exploitable than geologists initially expect. But that argument turns upon the claim that optimistic reports are inherently more honest than pessimistic ones, and that we ought to embrace the happy signals reported by exporting countries since the wild upward revisions of reserve estimates in 1988 and 1990. A SLIDE FROM COLIN CAMPBELL'S PRESENTATION, INDICATING HIGHLY DUBIOUS, DRAMATIC UPWARD REVISIONS OF RESERVE ESTIMATES. For example, Michael Lynch (an ardent cornucopian who was not at the ASPO conference) insists that "reserve growth" will postpone Peak for the foreseeable future; for Lynch, pessimists like ASPO founder Colin Campbell are wrong to neglect such reserve growth: "Campbell notes that Prudhoe Bay's proved reserves have grown, but are actually just approaching the operators' initial estimates of 12.5 billion barrels (Campbell 2000). Aside from the lack of citation for this anecdote, it is assumed, not demonstrated, that the reported reserves will not surpass that number. However, BP recently put them at more than 13 billion barrels." Lynch cites a recent BP report: "Arctic Energy: For Today and Tomorrow" in support of this assertion. That report does indeed give a figure of 25 billion barrels for "Original Oil in Place" and 10.839 billion barrels of cumulative production down to January 2004, yielding a total existing reserve of 14.161 billion barrels. As Lynch says, this is more than 13 billion. Now, those BP oil figures include gas liquids, but that's not the major problem. Nor is the fact that the same report states that Prudhoe Bay is declining at a rate of 3.5% per year. Nor the ugly statistic, from the same BP report, that Prudhoe Bay is currently producing 474, 000 bbl/day of oil, as against 1,200,000 bbl/day of water. The problem is that "reserve growth" means the recovery of previously inaccessible oil in young fields, but (a) the young fields are so small that even an impossibly high recovery rate will likely not postpone Peak long enough to buy sufficient time for a peaceful Powerdown; (b) worldwide discovery peaked in 1964; (c) the technological advances upon which Lynch bases his notion of reserve growth may indeed extract more oil from existing fields, but that only accelerates depletion and eventual decline. Lynch tends to chastise Campbell, Laherrere and Deffeyes and others for using the Hubbert paradigm, as if the finite nature of the world's oil required a perfectly smooth bell-curve: "There are a number of points that are taken by the Hubbert modelers that are crucial to their work which have no evident empirical or theoretical support. For example, Campbell and Laherrere (1998) states that 'in any large region, unrestrained extraction of a finite resource rises along a bell-shaped curve that peaks when about half the resource is gone.' The first shortcoming of this argument is that no countries have 'unrestrained extraction' everywhere, a host of regulations and taxes, among other policies, affect the level of exploration and production. And in fact, few countries exhibit production in a classic bell curve, which is sometimes admitted by Hubbert modelers." "DEMAND DESTRUCTION" Of course there are always restraints on extraction, including prices, regulation, politics, and taxes. That's why the bell curve is not smooth or symmetrical. That's the point. Under ideal conditions, production follows a bell curve; the conditions are not ideal, since they are distorted by extrinsic factors; but it is precisely Hubbert's curve which those factors distort. The most critical of the distortions - as we head into a period when these merely analytic points become urgently practical - is "demand destruction." Where Robert Hirsch speaks of three scenarios - a mitigation program introduced 20 years prior to Peak, 10 years prior to Peak, or no mitigation until Peak arrives - Chris Skrebowski and others have concentrated on the role that high prices will play in slowing down economic activity and thereby softening the pressure on oil production. If liquid fuels cost enough, economies will slow down until consumption decreases and the former swing producers (especially Saudi Arabia) may recover some spare capacity. At that point prices will come down again, and the growth cycle will convulse again - reducing the incentive to develop renewables and downscale our economies. A SLIDE FROM CHRIS SKREBOWSKI'S PRESENTATION, INDICATING JUST HOW MUCH SUPPLY SHORTFALL AND PRICE INCREASE WILL BE REQUIRED TO REDUCE DEMAND SO THAT IT MATCHES THE DIMISHING SUPPLY: This suggests that the downslope after Peak will be a descending series of spikes as demand overshoots supply and price suppresses demand - with supply declining all the while. It will be like riding downhill in a vehicle that has no tire pressure and no shock absorbers - and plenty of dead-weight, and not a lot of fuel. Former British Environment Minister Michael Meacher began his presentation with a reaction to these same figures: Market forces will undoubtedly exert strong signals, but are unlikely to be able to prevent abrupt dislocations without powerful accompanying strategies ruthlessly enforced in the face of vested interests. CIBC predicts that likely supply shortfall will be some 9m barrels per day by 2010 and that the oil price needed to reduce demand will be around $100 per barrel, and of course thereafter figures steadily rise further. But with oil prices at say $100/150 per barrel, economies of heavily oil-dependent countries (the great majority in the world) will be forced into a tailspin of decline, leading to violent uprisings, revolutions and mass migration on a scale we have never seen. But Meacher went on to provide some strikingly bright prospects for conservation: Potential for conservation is enormous since the volume of energy wasted is prodigious, e.g. US power plants discard more energy in waste heat than is needed to run the entire Japanese economy. Only 15% of the energy in a gallon of petrol ever reaches the wheels of a car. Less than a quarter of the energy used in a standard oven reaches the food. It has even been estimated that a mere 3 mile per gallon improvement in the fuel economy of US cars and light vehicles would be enough to forego oil imports from the Middle East entirely - a better solution than launching a war in Iraq! If we could reduce energy intensity by just 3% per year, we could meet world demand in 2100 with only a quarter of the energy used today. Not all talk of renewable energy sources is dreamy talk. While he acknowledges the enormity of political inertia and deep-political reaction that stands in the way, Meacher brings out some inspiring statistics which I hope are correct: The potential for a huge global shift to renewables is greatly under-estimated. The US Department of Energy estimated that three states - North and South Dakota and Texas -have enough harnessable wind energy to meet the entire US electricity requirements. Similarly, it is estimated that Europe's off-shore wind potential in waters of 100 feet depth or less could supply all of the continent's power, while China has so much wind energy that it could double its national electricity generation by harnessing it. Regarding solar power, where the price has already fallen 10-fold since 1980, a recent study (by accountants KPMG) estimated that construction of a 500 MW plant (at a cost of only $0.7 billion) would bring the wholesale price down to that of conventional energy. By the time of next year's ASPO conference, many of our hypotheses about the economic and political side of Peak Oil will have been tested. Unless, as Mike Ruppert recently suggested, there should be such a scarcity of jet fuel and ground transport that international conferences become impossible. 1 ROBERT L. HIRSCH Dr. Hirsch is a Senior Energy Program Advisor at SAIC and a consultant in energy, technology, and management. Previously, he was a senior staff member at RAND, where he did energy policy analysis. Prior to that, he was Executive Advisor at Advanced Power Technologies, Inc. (APTI), where he developed and evaluated startup business opportunities and provided programmatic support to the Department of Energy's Environmental Management Program. His primary experience is in research, development, and commercial applications. He has managed technology programs in oil and natural gas exploration and production, petroleum refining, synthetic fuels, fusion, fission, renewables, defense technologies, chemical analysis, and basic research. Previous management positions include: - Vice President of the Electric Power Research Institute (EPRI). - Vice President and Manager of Research and Technical Services for Atlantic Richfield Co. (Oil and gas exploration and production). - Founder and CEO of APTI, a $50 million/year, employee owned company recently sold to BAE Systems (Commercial & Defense Department technologies). - Manager of Exxon's synthetic fuels research laboratory. - Manager of Petroleum Exploratory Research at Exxon (Refining R & D). - Assistant Administrator of the U.S. Energy Research and Development Administration (ERDA) responsible for renewables, fusion, geothermal and basic research (Presidential Appointment). - Director of fusion research at the U.S. Atomic Energy Commission and ERDA. He has served on advisory committees for Department of Energy programs and national laboratories, the General Accounting Office, the Office of Technology Assessment, the Gas Research Institute, and NASA. He holds 14 patents and has over 40 publications. He is immediate past Chairman of the Board on Energy and Environmental Systems of the National Research Council, the operating arm of the National Academies, has served on a number of National Research Council committees and is a National Associate of the National Academies. Phone: 703-535-3173; RLHIRSCH@COMCAST.NET (March 2005) 2 Ptech is a revolutionary artificial intelligence construction that derives from PROMIS software and has been the target of high-level Federal investigations and journalistic inquiry, including a two-part series in From The Wilderness by this writer and Michael Kane. 3 "Yucca Mountain is in a seismically active area and lies above an aquifer that is the only source of drinking water for area residents. Opponents of the repository project are concerned that radioactivity would eventually leak into the groundwater. High-level nuclear waste remains dangerously radioactive for a quarter-million years." See "U.S. Chamber of Commerce Ignores Public Health and Safety; Sides with Nuclear Industry on Yucca Mountain Dump Proposal." Dec. 6, 2001. See also "Testimony of Joan Claybrook, President, Public Citizen, Yucca Mountain: The Hazards of Nuclear Waste Storage and Transportation, The U.S. House of Representatives, Committee on Energy and Commerce, Subcommittee on Energy and Air Quality." April 18, 2002.
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