Peak oil's bumpy plateau


Recently, ExxonMobil joined the ranks of the ‘peak-oil’ theorists, those geologists, financial analysts and gloomy doomsayers who predict that the world’s production of oil will soon reach its acme and start to inexorably decline, taking with it our access to cheap energy and all the consumption, trade, and convenience that it allows. According to ExxonMobil’s 2005 report ‘The Outlook for Energy: a 2030 View’, the peak in non-OPEC oil production will arrive in just five years. This admission by ExxonMobil, perhaps the most intransigent of all the big oil companies, signals a sea-change: peak oil has finally come out of the closet.

Thanks to Sharyn Raggett

Thanks to Sharyn Raggett

The new respectability of peak oil provides a vital boost to lively conspiracy theorists and others who for years have been predicting a peak-oil-triggered return to the Stone Age. Drawing on writers ranging from Princeton geologist Kenneth Deffeyes to James Howard Kunstler and Richard Heinberg, these folks tell us that peak oil will trigger nothing short of a total collapse of Western civilization. First, central governments will start to fail, they say, amid the chaos of random oil shortages and rolling blackouts. Airline service will sputter to an end and mines will close. No more truckloads of plastic-wrapped lettuce. No more massive deliveries of cheap plastic goods from China. Instead, armed gangs will wander the darkened malls and abandoned skyscrapers, searching for weaponry and food supplies. The luckiest few will scrape a meagre living by planting their lawns with tubers and huddling with their neighbours in the cold.

It isn’t a pretty picture.

Nor is it particularly realistic. In fact, the peak in oil production – and there’s little doubt one is coming, it is just a question of when – will not be a sharp point at the end of a cliff, over which civilization will plummet. More likely, the coming peak will play out as a bumpy plateau, as high prices and increased investment into R&D moderate demand and increase supply. The trend will be toward decline, but it won’t be rapid.

On the surface, this might sound better than the pointy peak. It isn’t.

The truth is the intense resource-consumption of Western society has always been unsustainable. It’s hung on for over a hundred years by placing the cost of unsustainable practices on people and places separated from consumers by space and time. Just ask the 12-year-old girls who toil in Chinese factories making our disposable plastic baubles, and the Indian villagers who sleep next to smouldering heaps of imported Western trash. When the pinch comes, the price is paid not in the radically restrained consumption, as presaged by the peak-oil doomsters, but rather in the livelihoods of distant others and under protected ecosystems.

So it is with peak oil. The oil industry and state leaders have already laid plans to avoid major disruptions in our beloved flow of oil. According to industry analysts, the flow of oil and gas from the earth’s crust is declining at a rate of 3 to 5 per cent every year. Meanwhile, demand for oil increases at about 2 per cent a year. Predicting the collision of the two lines isn’t exactly rocket science.

And so, government officials have been busily prying open previously inaccessible oil territories, such as Iraq and Libya, neither of which have been subjected to modern exploration methods. In addition, oil companies plan to continue their search for new oil, mostly in poorer countries that they have either been shut out of for political reasons or have stayed away from because of their lack of infrastructure. And they are attempting to switch customers from oil to its neglected step-child, natural gas.

Over the next two decades, the US oil industry plans to spend the biggest chunk of its exploration budget searching for crude in developing countries. If history is any guide, such operations will likely have dire consequences for the local people. In Iraq, Nigeria, Colombia and elsewhere, the piles of corpses ringing Big Oil’s stomping grounds speak for themselves. As well, the business of oil extraction in countries as diverse as Algeria, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Peru, Qatar, Saudi Arabia, and Trinidad Tobago has coincided with a sharp downward slide in living standards, and an increase in corruption and conflict.

Transforming what used to be un-useable ‘unconventional’ fossil fuel resources into exploitable ‘conventional’ reserves using technology and government subsidies is another tactic. Across the bleak landscape of Alberta, Canada, for example, is a huge stretch of sludge called ‘tar sands.’ Experts say there are 2.5 trillion barrels of oil locked in tar sands, that is, more oil than in all of the world’s conventional reserves. In 2003, the US Department of Energy redefined no fewer than 180 billion barrels of tar sands as ‘conventional oil.’

What isn’t counted in the Department of Energy’s tally are the facts that mining oil from tar sands burns up to a fifth of Canada’s natural gas supply, emits six times more carbon dioxide than producing a barrel of conventional oil, and requires six times more fresh water than the oil it renders. That tab will be paid by the shivering Albertan farmers, their dying livestock and shrivelled forests.

Shifting consumers from oil to natural gas is another likely tactic. Shell’s CEO recently announced its hope that demand for gas outshine demand for oil by 2025, making the current era a ‘window of opportunity’ for oil companies to shift their customers from oil to gas, which they call a ‘clean, environmentally friendly’ fuel.

Unmentioned is the fact that methane-rich natural gas is a much more dangerous greenhouse gas than carbon dioxide. Already, about 2.3 per cent of the natural gas produced by the industry leaks out of the valves, pipes, and other infrastructure, unburned. If that proportion makes it up to 3 per cent, using natural gas is no better for the atmosphere than burning oil. Not to mention the unfortunate reality that all the largest remaining reserves of natural gas are situated under conflict-ridden, densely populated regions in countries such as Nigeria, Angola, Venezuela, and Indonesia.

There is a way out of this quandary, but first we’ll have to dispense with the doom-and-gloom scenarios forecasting some earth-shattering oil-crash, one that will definitively ‘end the party’. Such thinking instructs us to simply hide and wait. Banished as well should be laughable baby-steps such as fuel-efficient SUVs. Instead, we need a frank look at how much energy and other resources we consume, coupled with a vigorous public debate with all the stakeholders involved, so we can decide together how much each of us can fairly use over time, and at what cost, to whom.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.