It has been known for a long time that there would be oil trouble around the turn of the century. A Blueprint for Survival told us so in 1972. The warning came again in a paper by the UK Department of Energy in 1976, and in the Global Report to the President (1980). And there was something else they agreed on: it would take many years to develop new sources of energy on the necessary scale, so the sooner it started, the better. Fortunately, there was a period of grace – some 25 years – to begin to take effective action.
Nobody blinked. America, having watched its own oil pass its peak in 1971, simply started to buy it in. It now imports most of its oil, as do most other nations. The world’s main supplier is Saudi Arabia, which, thanks to its super-giant Ghawar oilfield, has on its own been able to keep the world supplied with nearly 15 per cent of its steadily growing demand. However, the period of grace is now over.
The new situation has been researched in detail by a small group of geologists with careers in the flourishing oil industry of the 1960s and 1970s. The person who did most to make possible an accurate view of the global future of oil and gas was the late Harry Wassall, founder of Petroconsultants, source of the first and only comprehensive and reliable data. This is the foundation for the detail we now have; it has been interpreted by Colin Campbell, Jean Laherrère and others; in the mid-1990s their work was taken up by Roger Bentley and a group of scientists at the University of Reading, early entrants in a rapidly expanding field, and it is now starting to be reproduced by the industry itself.
The period of turning points which separates the past of abundant cheap oil from the future of scarce and expensive oil has now started. The 1999 turning point was local: production from the UK North Sea passed its peak; it is now falling at six percent a year. A more significant turning-point occurred in the middle years of this decade, when the combined total of ‘conventional’ oil (ie oil from liquid deposits) from all producers with the exception of Middle East Opec (Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates) turns down. Towards the end of the decade it will be falling so fast that the total of conventional oil from all producers including, Middle East Opec, will turn down. This in turn will be shortly followed by a turning point at which the supply from all sources – conventional and ‘unconventional’ (ie heavy oils and tar sands) – will go into decline. Then, in the middle years of the decade 2010-2019, production by Middle East Opec itself will start to fall, and decline will also set in for the combined total of both oil and gas. These turning-points are ‘best-case’ in that they are based on the assumption that there will be no major surprises in international relations.
Now, what we have here is a case of the fuel on which our civilisation depends starting to run down; it is not a case of running out. Oilfields are opened up in series, starting with the largest; the output of each producing nation rises to a peak at about half-way stage, and then declines. This pattern works through to global production, so what really matters is the timing of the turning-point at which production begins to fall.
It can be expected to do so in, or shortly after, 2010. That will be the start of a sellers’ market, putting the producers in control. The consequences will be devastating. Oil production will be the victim of politics; any single large supplier will be able to raise global prices. The high price of oil may be capped by falling demand in the ensuing economic recession but, in relation to incomes and in response to periodic crises, it will reach acutely high peaks. There will be actual interruptions in supply. Among the first to feel the effects of this will be people in the third world: farmers who use oil to drive irrigation pumps, traders who need fuel for transport, and governments who cannot take on even larger debts to pay very high prices for their oil. However, the developed nations will be almost equally exposed. They depend on transport for everything from importing and distributing food to getting people to work. The global market economy is built on limitless cheap, reliable transport. Brief breakdowns in the supply of fuel can be survived; with sustained interruptions, however, the global market economy would cease to exist.
There is an alternative to conventional oil in huge quantities in the heavy, sticky deposits of unconventional oil in Canada, Venezuela and Siberia. However, it takes correspondingly huge amounts of natural gas, water and land to get hold of it. You have to dig out some 75 metres of overburden, quarry the sands, extract the tar, heat it, turning it into synthetic crude oil, and get rid of the waste. Canadian Natural Resources Inc has plans to produce a daily 235,000 barrels of synthetic crude (an insignificant amount by global standards) in Alberta by 2011; the process will use 3.5 cubic metres of water a second (the course of a river is being diverted to supply it), and an estimated 25 percent of Alberta’s gas production. On a scale large enough to offset the decline in conventional oil, it is not an option.
What about gas? For Paul Hawken, Amory Lovins and Hunter Lovins in their book, Natural Capitalism, there are abundant sources of gas – ‘at least two centuries worth’ – but there is no reality in this. Gas production tends to remain flat until about 80 percent of the accessible total has gone; in the case of the UK North Sea, however, compressors have been used to accelerate the extraction, and the turning-point is around now. Britain and the remainder of Western Europe will rely on Norway, and then on Russia (in particular, Siberia) for supplies of gas. The UK’s national grid, which substantially switched from coal to gas in the 1990s, will depend not only on Russia being willing to sell at a reasonable price despite its near-monopoly, but also on the security of a very long pipeline. Then, around 2030, Russia’s gas will approach its own limits.
A more immediate shock with respect to gas, however, is America’s supply. The gas provinces both of America and of Canada (which already provides about a fifth of America’s gas consumption) are now mature, and are unlikely to sustain current production beyond the middle of this decade. Within as little as two or three years, therefore, North America will face an acute shortage of gas, and will have no alternative to shipping it in the form of liquid natural gas (LNG) from Norway, Russia and the Middle East. The facilities to compress the gas, to load it and ship it are all vulnerable to insurgency – and are not yet built.
In principle, none of this would matter if renewables could be brought in quickly to fill the gap. We need to do this now, with intense commitment and urgency; the problem is that we have run out of time to do it successfully. Renewables will rely on solar power, wind, tide, wave and biomass, supplemented with some coal; they will require energy storage systems, consisting mainly of hydrogen, along with gas and liquids derived from biomass and coal; a transformation in efficiency, reducing the energy used by some 70 percent; localised minigrids and radical changes in patterns of land-use and transport. One indication of how long all this would take to build is provided by the LTI-Research Group in Germany, who suggest that it could be done in 50 years, given unprecedented priority and urgency.
Energy famine
The conclusion to draw is that a devastating energy famine lies ahead. America is beginning to wake up to this. What drives America’s Middle East policy is not a fat-cat desire for Iraq’s oil; it is – mixed in with the issues of terrorism and international order – a well-founded concern. If Iraq’s ambitions, with nuclear backing, were successful to the point of mastery of Saudi Arabia and other nations in the region, access to purchases of oil worldwide would be under the control of interests explicitly hostile to the American-led market economy.
This would sharply bring forward the collapse of the global economy, including food exports, with the loss of many lives. Suddenly, as forecast 30 years ago, there is no room for manoeuvre. America’s determination to take military action to prevent the Middle East being closed-off as a reliable seller of oil can be thus be better understood as a case of self-defence.
David Fleming is writing a book, The Lean Economy, about the shattering consequences of the coming oil shock, and how to cope with them.
30 steps to an oil-free world
Our addiction to oil is not inevitable. We can all take steps to kick the habit:
People
1) Walk, cycle, take public transport or consider a car-pool whenever possible.
2) Reduce your travel by air.
3) If you need a car, buy the most fuel-efficient (currently Toyota’s Prius and Honda’s Insight – both hybrid cars that use petrol and electricity) or one that runs on bio-diesel or natural gas.
4 Service your car regularly – keeping the engine tuned and your car tyres at the maximum recommended air pressure saves petrol.
5) Live as close to work as possible.
6) Shop locally rather than in out-of-town superstores.
7) Buy regionally and seasonally produced organic food whenever possible.
8) Switch your investments away from fossil fuel to renewable energy companies, or exercise your right as a shareholder to pressure energy companies to make the transition to renewables.
9) Boycott the products of companies like Esso that are obstructing the transition to renewables.
Government
10) Lobby your political representatives to press them to act, and vote accordingly.
11) Accept a target of phasing out oil & gas use within 50 years.
12) Discontinue all direct and indirect subsidies to the oil & gas industry.
13) Refuse licenses for the exploration and development of new oil & gas reserves.
14) Provide investment, grants, and tax breaks for the development and purchase of clean renewable alternatives to oil and for energy efficient vehicles.
15) Increase investment in public transport.
16) Pedestrianise city centres and introduce congestion charges in cities.
17) Require car makers to ensure an escalating proportion of their vehicle fleet sales consists of petrol-free vehicles.
18 ) Increase minimum energy efficiency standards for vehicles.
19) Change tariff policies on imports to support the local consumption of goods (particularly food) that have been produced locally.
Business
20) Phase out subsidies to industrial food production, which is petrol-intensive, and support conversion to organic methods instead.
21) Oil & gas companies should commit to converting themselves into renewable energy companies, and redirect their investments accordingly.
22) Car makers should commit to mass-manufacture cars now that run on hydrogen fuel cells or other renewable fuels, and that use lighter materials.
23) Companies should convert their truck and car fleets to the lowest petrol-consuming vehicles available.
24) Companies should provide incentives for employees to leave their cars at home and use public transport instead, reduce air travel, and promote telecommuting.
25) Companies should site their offices close to public transportation.
26) Retailers should adopt a purchasing policy that provides preference to goods from short supply routes and regional markets.
27) Companies should shift freight out of trucks and onto rail and waterways.
28) Farmers should convert from industrial to organic farming methods.
29) The plastics & packaging industries should replace their use of oil with corn, soybean, potato starch or limestone derivatives.
30) The clothing industry should use vegetable starch and natural fibres, such as wool and cotton, instead of oil derivatives in their products.
