Recently we've heard from many U.S. media outlets that drill-baby-drill is the answer to our oil woes, and we've heard from Rick Santorum and Newt Gingrich an echo of this point of view.
Maybe it takes a non-U.S. media outlet---Al Jazeera---to do an in-depth investigation, then: Oil: In perpetuity no more:
Oil touches nearly every single aspect of the lives of those in the industrialised world. Most of our food, clothing, electronics, hygiene products and transportation simply would not exist without this resource.
There is a reason why oil giants such as ExxonMobile, BP, Total and Royal Dutch Shell, year in and year out, generate more profit than most other companies on the planet.
Our current global economy is based on continual growth, and that growth depends on cheap energy.
"Fossil fuels are roughly 84 per cent of what we use, and oil is 35 per cent of the world's primary consumption energy," says David Hughes, a geoscientist who studied Canada's energy resources for nearly four decades.
Given that oil plays such a critical role in the world's economy, one would deduce it would be important to know how much is left. Otherwise, the world's stock markets would be exposed to fossil fuels, which would pose a grave risk to investors facing down a so-called carbon bubble, which could potentially dwarf the housing bubble and current debt crisis.
First, let's look at the parade of denial and outright misinformation that's been thrown out there in our domestic media on energy issues, as Kurt Cobb explains:
Bloomberg Businessweek emitted a piece entitled "Everything You Know About Peak Oil Is Wrong" on the same day the Nature piece appeared--almost as if the writer knew it was coming. The Bloomberg piece trots out mostly tired, irrelevant arguments and a few that are relevant but factually wrong. Gail Tverberg does a good job of critiquing this very sloppy piece. Chris Nelder at Smartplanet takes on the Bloomberg piece as well as a number of poorly argued responses to the Nature article.Going back to the Al Jazeera story, which is quite in depth and looks at the multifaceted nature of the situaiton:
But the latest counterattack actually began last fall with Daniel Yergin, the smooth-talking and smooth-writing oil optimist that peak oil activists love to hate. Yergin felt compelled to push back in The Wall Street Journal at peak oil ideas in the course of promoting his new book. Thanks, Mr. Yergin, for bringing up the subject.
Many readers will no doubt be acquainted with the saying: "There is no such thing as bad publicity." This corresponds perfectly with Gandhi's phase three of a struggle. The opposition is now forced by obvious circumstances--i.e., no increase in oil supplies despite years of record prices--to explain away something that peak oil theory explains perfectly.
"This is getting very close to the figure that some observers believe is the highest the world will ever produce," Whipple has written. He told Al Jazeera that peak oil could be reached at some point in the next month, or at the latest, within "a few years".To those who have been following the oil production situation as it has evolved over the past several years, this isn't news. Production has been flat for seven years:
The global economic crisis is now another factor in the peak oil equation, as many nations that import oil can no longer afford to do so at previous rates.
Whipple sees the world possibly going into an economic depression that will cut oil demand.
"Peak oil production may come soon because nobody, outside of the oil exporting countries which subsidise the stuff, can afford what they are using now," he explained. "It may not be geological constraints that causes peak oil, but economic constraints."
As the foundation of oil upon which we've built our industrial system crumbles, we will face direct economic impacts. Hirsch, whose 2005 study for the Department of Energy on the peaking of world oil production is still the gold standard, conducted further studies to try to understand how oil connects to GDP. He concluded that there's a 1-to-1 relationship: for every 1% oil production declines, world GDP declines 1%. (This is a rough relationship, so it might be 0.5% or it might be 2%.)
How much does he expect world oil production to decline? Here's what he says:
Best Case Scenario: Maximum world oil production is followed by a period of relatively flat production (a plateau) before the onset of a decline rate of 2–5% per year.
This indicates that in the best case scenario we should expect a yearly 2-5% decline in world GDP, which is roughly equivalent to having a recession nearly yearly (though it's unlikely to be that steady).
The trend break happened in 2005, when global oil production stopped increasing. We've been on a plateau of sorts since then. While the graph above is technically about oil, it maps directly to the economy: we've basically been on an economic plateau since soon after that.
Hirsch and other independent reports have concluded that the current oil plateau we're on is likely to end by or before 2015.
You'd think that a major turning point in the history of industrial nations---the decline of world oil production---would be a big deal in a presidential campaign. Unfortunately, there's little to no accurate reporting on the issue and people can't see the forest for the trees and get lost in discussions about tar sands, North Dakota drilling, speculation, gas prices, etc. The fundamental issue is that oil is finite and that its rate of production is about to begin declining.
This has major implications for our economy, since economic growth won't be a viable option when oil production is declining. We need something else, and I've written what that might be in a previous diary on Steady-State Economics by the brilliant ecological economist Herman Daly. (I'll be posting an interview with Daly at contraposition next week.)
Since this turning point is going to happen during the next presidential term, you'd think candidates wouldn't want to be blamed for it when it happens and would talk about it early. Maybe it's time we bring it up for them?