Amidst several weeks of hearings about global warming, a less noticed but equally important piece of energy news came out of the Capitol last month when the Government Accountability Office, the investigative arm of Congress, released a long-awaited study on the question of when global oil supplies will peak and begin to decline.
Entitled, “Uncertainty About Future Oil Supply Makes it Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production,” the report offers little new information to those who have been following the recently escalating debate about peak oil. But given the lack of attention that government at all levels has paid to this extremely serious threat, it provides a welcome validation to those who argue that there is much to be worried about when it comes to the question of future oil supplies.
For the past few years peak oil activists—a disparate group of retired petroleum geologists, oil industry insiders, ecologists and social critics—have fought an uphill battle against the oil industry’s public relations machine to argue that an imminent peak and permanent decline of global oil production is about to devastate the world economy.
Sometimes dismissed as a mere theory, peak oil is more accurately described as shorthand for the scientific observation that any given oilfield or oil producing region tends to increase its production until around half of its oil is gone, and then declines. United States oil production peaked in 1970 at 10 million barrels per day; today, even after 37 years of improvements in the technology of finding and producing oil, the U.S. produces about half of what it did then. According to the GAO report, most countries outside of the Middle East are now also in decline.
As for total world production, the report also points out that “most studies estimate that oil production will peak sometime between now and 2040.” That may seem like a wide timeframe, but according to a 2005 report commissioned by the Department of Energy, adequately mitigating a peak in world oil production would require a crash program to develop alternatives twenty years before the peak in order to avoid “significant shortfalls,” in liquid fuels. Given that under any circumstances an increasing percentage of the world’s remaining oil will have to come from politically unstable or unfriendly regions, it is difficult to see how the high-profile critics of the peak oil movement can continue to justify complacency.
In reality, it is extremely unlikely that the peak will be delayed until anywhere near 2040; optimistic scenarios making that case depend on highly dubious assumptions about both how much conventional OPEC oil remains and how rapidly countries like Canada can ramp up their production of unconventional supplies.
By contrast, numerous experts and industry insiders believe that we could be at or very near peak production now. A series of chilling technical debates on the Oildrum website have recently addressed the question of whether Saudi Arabia is in or near production decline. The majority opinion seems to be that they are, based on conclusions reached both mathematical models and bottom-up analysis. The most recent post projects that by the middle of this year global supply will not meet projected demand (a sentiment echoed in recent interviews by Matthew Simmons), resulting price spikes, higher volatility and possible shortages for the next two years, at which point the world experiences “drastic demand destruction” coupled with the possibility of emergency rationing.
If these authors are correct, the implications could be severe, especially for energy intensive countries like the United States. According to the GAO report, “the consequences would be most dire if a peak occurred soon, without warning . . . competition for increasingly scarce energy would drive up prices, possibly to unprecedented levels, causing severe economic damage.”
As for the prospect of turning to alternatives, “[The Department of Energy] projects that even under optimistic scenarios, by 2015 these technologies could displace only the equivalent of 4 percent of projected U.S. annual consumption.”
If there is any weakness in the GAO report, it’s that despite its warnings, it still fails to adequately convey the breadth and scope of the crisis. It never mentions, for instance, that North American natural gas supply is also currently in decline, a fact that poses serious obstacles to attempts to increase production of gas-dependent ethanol and oil sands. As for solutions, the report focuses far too heavily on hypothetical improvements in automotive technology, when in reality it may be time to face the idea that soon we will simply have to drive much less.
For that matter, it may be time to recognize that any number of our current social and economic arrangements—from globalization, to suburban-sprawl based living, to industrial agriculture—are not inherent parts of the natural order, but are merely artifacts of a cheap oil era. If that’s true, the world could be in for a very bumpy ride—and the future could look a lot different than most people expect.
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