As some of you may have followed, I have been trying to build up a manifesto for an energy policy for the Dems (see this diary: Building together an effective Dem energy policy (I) ). There will be more, which makes more sense to continue over at dKos. But I thought it would be worthwhile to come back to basics, and write once again about “peak oil”.
The occasion to do this is an excellent 10-page article published this week-end in Le Monde, France’s equivalent to the NYT, where they introduce peak oil to their readers. Amongst the highlights:
- Saudi Arabia “does not have the capacity to produce 15 mb/d” says Aramco’s n°2;
- oil sands will never produce more than 5 mb/d, if that
- Total’s CEO said “peak oil will be no later than 2025, and only if we have a demand crisis“
And this graph:
Ready for an introduction or a refresher? Jump in.
Above is the front page of their week-end magazine. It says: “Oil: running dry?”, and the trailer below (from the front page of the daily), says: “the end of oil: a well kept secret“. The article is unfortunately not available online, but it is in French anyway, so I am providing a summary below (it’s not a transcript or a translation – anything between quotes comes from the article, the rest is my translation, sometimes interspersed with additional information).
:: ::
The article begins by reminding us of the economists’ common wisdom on oil: yes prices have increased, but this is purely conjonctural, once Iraq will quieten, or China’s growth slows down a bit, or a few refineries are built, it’ll all go back to normal. Reserves are plentiful and technology will allow us to squeeze more oil from the existing fields and bring new ones up.
And yet, “the best geologists worldwide have now been arguing for several months about the imminence of peak oil. How much time do we have until we enter a era of permanent oil shock?” Our ability to adapt to it depends on how much time we have to do so, and it may be several decades, or it could be “a few months”.
The article notes that non-OPEC production is certain to peak at the latest in 2010, and that we will increasingly depend on OPEC oil, and especially on Saudi oil. The article gives a good summary of Matt Simmons’s claims that Saudi reserves are probably inflated and that nobody knows the real numbers as no reliable information has been provided since Aramco was nationalised. It quotes several Saudi executives with very pessimistic forecasts: one, Nawaf Obaid, strategic advisor to the Saudi Ambassador to the US, says that Saudi Arabia would like not to ever produce more than 12 mb/d (“but no other country is ready to invest today to allow Saudi Arabia to slow down its production”); the other, Sadad Al-Husseini, former n°2 of Saudi Aramco, says that the country does not have today the capacity to go to 15 mb/d; it would need years to get there and, if it did, say by 2015, it would not be able to sustain that level for more than 10 or 15 years before irreversible – and rapid – decline set in. Under Simmons’ pressure, the Saudis have now provided some numbers that showed that Ghawar, the biggest field in the world, is now 48% depleted, and its production (and that of the other big Saudi fields) declining by 5-12% per year.
With non OPEC production peaking, and Saudi saying that it can only increase its own production at a terrible price, no wonder that some are pessimistic…
The article notes the interesting coincidence of two big meetings that took place last May, one being a visit of a massive Saudi delegation in the US to find funds (more than 600 billion dollars) to invest in their country. The other was the yearly conference of ASPO (Association for the Study of Peak Oil), and the games there to identify who was represented (all the oil companies, the EU Commission, EDF, GE) and how many journalists were there (a lot, apparently).
All participants agreed on one thing: it is almost impossible to find reliable numbers on oil reserves. A specialist from the IFP (Institut Français du Pétrole, France’s main school and research center on oil) is quoted as saying “it’s already pretty much impossible to know how much oil comes out of a pipeline, so finding out how much is below the ground…” The IFP president compares reserves assessments to finding out what’s in a warehouse by looking through the keyhole – and everybody has a different opinion.
According to the article, the big players use two main sources to evaluate reserves worldwide: the Oil & Gas Journal, which sends a yearly questionnaire to governments of oil producing countries, and publishes their (unconfirmed) replies, and IHS Energy, a Houston consultancy, which publishes a confidential database – the problem is that it’s so confidential that even the price of the information is not public, but is rumored to be more than a million dollars… Total, which has access to the database, notes that the two sources come up with similar overall numbers (OGJ has 1,266 billion barrels of “probable reserves” from 94 countries, and IHS has 1,152 from 114 countries), but that each line (country per country) is pretty different.
With production already declining in a number of countries (including two OPEC members, Indonesia and Gabon), non conventional oils seems all the more necessary. Total, one of the world leaders in that field, with operations in both Canada and Venezuela, hopes, in its most optimistic scenarios, for 5 mb/d production in 2025. The IEA does not believe that more than 2 mb/d will ever be produced. It’s hugely expensive (Total announced a 10 billion dollar investment to produce 200,000 b/d in 2015 in Canada), terribly dirty, and unlikely to play more than a marginal role overall.
What appears throughout the article is that oil companies, at least, seem well aware of the problem, and have now decided that their interest was to publicise the problem and no longer to deny it. Jon Thomson, the exploration & production head for ExxonMobil spoke at the 2003 APSO conference (when these were fairly discreet affairs) and was already saying then that “to satisfy current demand, we need to find a new North Sea every 18 months… Where are we going to find 10 North Seas?”. The graph at the top of this diary was prepared by ExxonMobil, which did a huge work to collect all doscovery data and backdate them properly. And now Chevron is making the ad campaign we mentioned in an earlier diary about peak oil, and Total is running ads in France which say “for you, our energy is limitless”. Hints, hints, but they are getting clearer every day, it seems… (Simmons is quoted as saying that prior to the publication of his book this summer, “only 2 people in Washington were worrying about the issue”)
3 years ago, these companies refused to acknowledge the problem. Now they’d like it to become more public. Once the non-OPEC peak happens, they will be highly vulnerable against the “real” majors, the national oil companies of the countries which still have reserves, most of which close them off to outside players.
The article states that in a recent meeting with political leaders, Thierry Desmarets, the boss of French major Total, said that peak oil would happen around 2025, provided that there is a demand shock. Which means, obviously, that if we do not curtail our demand, the peak will be much earlier. This is very much compatible with the scenarios drawn by APSO’s Jean Laherrère and Saudi Aramco’s Al-Hussieni, who both expect that production will plateau very soon, with a bumpy ride on such plateau, marked by various shocks and price volatility. Laherrère expects the final decline by 2015, while Al-Husseini sees it closer to 2030.
But a plateau will be enough of a challenge for our economies. Denying it is what the APSO calls “flat earth economics”.
Of course, you can always fall back to this:
There’s lots more coal in the US than there is oil in Saudi Arabia, so what’s the problem?
and nice to see.
I’ve been writing about Iraq and a post-oil Middle East this last week.
You might be interested in the pieces, part three will come out Sunday and address what a progressive proposal for an end to the U.S. occupation and building a post-oil Middle East might look like. Actually, I’d love any suggestions you might have for part three.
Warning they are both long, but they are “juicy” with sources.
I’ll have a look, thanks. I’ll get back to you. (Was out for the evening and now need to crash…)
…companies have come around, rather suddenly. This reminds me of DuPont’s adamant and anti-scientific opposition to control over chlorofluorocarbons, the company going so far as to smear researchers who said the chemicals were eating the ozone. Then, all of a sudden, DuPont is agreeing with those conclusions, a reversal of stance that coincides with its development of an alternative to CFCs. Their economic interests were to shut down CFC production.
The oil companies don’t have an alternative, but their economic interests now depend, in part, on wide awareness of the peak oil scenario. Same old, same old.
Yep…the rebranding is well under way, we all know what bp stands for now…
Beyond Petroleum.
What gets me (and why I’m always thankful for Jerome’s diaries) is that we need a positive vision from the left. I’m convinced that until we propose a ‘green economy’ that engages corporations, governments and communities towards making business green, that actually uses the language of investment in the enivironment and I daresay, some understanding of lessons of socialism…of the uses of government and regulation and the pooling of resources and knowledge for the public good….
all we’ll have is slogans and rebranding with little or no real action.
Funny, the lesson of 1989 was that socialism and state intervention in economies was an outright failure, of no further use to anyone. Hence, even talking about socialism became the realm of a very few professors. Adam Smith was now taking care of all of us, like a baby.
Of course, 1989 also marks the turning point that our understanding of global climate change matured. How ironic that some version of the “socialist project” that we just jettissoned to the “dust bin” of history might actually be useful now. Malthus is now staring us in the face, except his new name is global climate change.
Like I said, we have to innovate this “green economics” and incorporate it into our critique of government…same old, same old from our side, too, won’t work.
…same old, same old from our side, too, won’t work.
Now there’s a sig line to die for. Absolutely agree.
I’m convinced that until we propose a ‘green economy’ that engages corporations, governments and communities towards making business green
I believe that window closed around 1980. It has certainly closed now.
Corporations are designed to extract resources for profit; that they could, in the past, serve human needs is a happy accident that made it possible to ignore their fundamental, if obvious, nature. That nature makes them now, in the present, inimical to both human and non-human life. They will continue to do what they do–destroy the environment and the possibilities of the future–until the civilization that spawned them crashes underneath them from the burden of their weight.
What was supposed to happen, under the plans of the powers that be, is that western democracies would be replaced by corporate feudalism–with the democratic facade maintained to mask the change in social organization. This program, which is now nearing completion, did not allow for the effects of resource depletion and especially of peak oil. Resource depletion will force change, though it does not dictate the details of the change. The “soft landing,” where civilization changes its structure of resource use without undergoing collapse, requires that both information and decision-making be distributed through society in a flexible way to accommodate the inevitably unpredictable nature of deep changes. It also requires a common commitment to the common good. A feudal structure cannot do this, and the near-completion of the program of feudalization means constructive decision-making cannot happen.
Americans are witnessing the impossibility of constructive decision-making in their national life right now. Things are not going to get better in 2006 or 2008–all we will see is a new set of schemes generated at the top being sold to the gullible.
Survival will be possible in the post-collapse environment for small groups that are able to assess their local resources and are lucky enough to create a sustainable way of life based on them. Food will be the foremost problem, and in many areas, water will be second. Transportation will break down and finally collapse, and fuel for other uses will also become a problem that will have to be met creatively.
The foremost problem with a green economy is that it must base its aspirations on something other than ever-increasing consumption, and find a different way to assuage the pain of endemic social injustice. Americans have never wanted to do this.
The outlook for Europe is, perhaps, slightly better, although the same constraints apply.
We do have one positive model before us already: Cuba survived its industrial collapse with ten years of hunger but no outright starvation, and is starting to recover. The role of the central government in resource and information sharing and looking out for the common good was crucial. Obviously, the US as a whole has no chance whatever of replicating the Cuban experience.
I disagree with the conclusions of your post. However, Charles Stross’ Accelerando posits a similar view of corporations. Specifically, that they’re parasites, fundamentally hostile to all non-corporate life. Accelerando, like most transhumanist fiction, takes this to a somewhat absurd extreme, but it does a splendid job of getting the point across.
I think the modern massive, centralized corporate system is doomed by peak oil and assorted other problems. However, I doubt that what replaces it or the transition will be as catastrophic as you suggest. There are plenty of usable, clean, efficient sources of energy. We’re simply so addicted as a culture to the convenience of oil that we’ll refuse to change until we have no choice. The change will involve a massive restructuring – of transportation, industry, and power generation – but we’ve survived those before.
sources to be developed. Some are ready for implementation now. It will be a necessity.
However, the amount of energy available from all alternative sources is about a tenth of what we are using now. Survival at this level–without a mass population die off–is certainly possible in North America, if we choose it. That is the whole crux. Because it implies a restructuring of our goals and priorities. So many of the activities that we have learned to love are too wasteful to maintain and will have to go. But that means learning to learn love something else, that is not wasteful.
The reason food will be a problem is because modern agriculture is one of those wasteful activities. It did not used to be this way, and it certainly will not be in the future, but to make a change-over to a non-wasteful form of agriculture will challenge the whole of America’s recent experience.
I agree with your opinion on the narrow vision of the companies, but there is a simple antidote to this: a strong and active State, that provides rules for companies to follow and enforces them. We must fight the idea that government is bad, and we must fight the idea that government is powerless – and we must cut the link between companies and government – or at least blance their influence with that from other parts of society.
There is an important point that I wish could be brought forward: Corporations are part of the state, created and chartered in the first place as a way of raising capital for large-scale ventures. Where the state is strong, it does not forget this. Also, in a democracy, the state is accountable to the people, but the corporation is accountable only to its shareholders and (secondarily) to the the state. As such it becomes a form of private government, opposed in nature to the public government of the state. Why Americans–supposedly democracy-loving–should prefer private government to public government is just one of those mysteries. Perhaps it is–despite all claims–that Americans prefer money to freedom, and corporations have certainly proved marvelous engines of accumulating money.
However, it is just the imperative to generate money that makes corporations inimical to human and non-human life. They cannot help themselves: They are designed to try to destroy anything that gets in the way of generating profit, and at a certain scale, humanity itself becomes such an obstacle.
I guess I’m not as pessimistic as you – I don’t see us going back to the middle ages so much as to the 1950s. In the 1950s, my mother’s family was working-class, and didn’t have a TV or telephone, although they had ready access to a TV at a neighbor’s house, and a phone at the bar on the corner. Oranges were a treat that they only got at Christmas. No one starved, although they were all certainly slender compared to today’s average American, myself included. People took mass transit or trains, because airplanes were only for the “filthy rich” (funny how the closer a person is to having lived through the depression the more likely they are to use that term – I suspect it’s going to make a comeback…), and cars were too expensive to use if a bus was available. People walked more often. People used the library. A “big trip” was to go from Philly to New York or DC for a few days. People bought locally made (or at least domestically-made) goods and food, because the imported stuff was just too expensive.
The common thread through all of this is that relatively speaking, energy costs were higher then, and the world as a result was a bigger place. And we’re heading back to that level of lifestyle. Teleconferencing will replace air travel for all but the highest executives. Salesmen will have smaller territories, and as a result smaller businesses will begin to compete more and more successfully with larger firms. Wal-Mart is a dinosaur and will go extinct when energy prices get high enough, unless it starts stocking more and more American-made goods – the way they bragged about doing 15 years ago or so. The Chinese economy will slow, providing a breathing space for their environmental protections to catch up to their industrialization.
In short, while I expect 10-20 years of “stagflation” like in the 1970s, I expect a smoother coast than you do to a landing in a place that actually will better meet human psychological and spiritual needs than today’s world. For one thing, the internet provides resources and information flow to allow people to better adapt than they might have in an earlier time.
I expect that the US will have a rougher time than many other nations, due to our foolish policies today, and that certain regions of the country – those with less of an extreme individualistic ethic – will do better than other regions.
Not that it won’t seem terrible, especially to those who are under, say, 40 today. Going on a diet and exercise regime is never fun, especially when it’s not voluntary…
Maybe it’s that I’m middle aged and have been expecting the imminent collapse of civilization on and off since the Nixon administration, but the older I get the more I’ve come to appreciate that there’s more money to be made and pleasure to be had in muddling through somehow, and so people will find a way to allow that to happen, overcoming adversity. The really clever ones will find a way to make money off our changing circumstances by inventing or marketing products we all need to adapt to our new situation. If I had come to that realization sooner I might have bought stock in Apple or Microsoft in 1980, LOL, and now be living on a small acreage where I could grow the produce I expect to not be able to afford in 10 years – but I guess I’ll be shopping at my local farmer’s market instead then, getting there by bus and foot. A civilized community lifestyle the Europeans have not abandoned to nearly the degree we have – a decision we will come to rue.
Frankly, I worry much more about climate change, species extinctions, overfishing, etc. reaching tipping points than I worry about Peak Oil sending us back to the era of Beowulf and Hrothgar. From the planet’s point of view, in some regards Peak Oil cannot come soon enough.
The really interesting thing is that this may drive another technology boom of a totally different sort. Locally-appropriate forms of energy production will, suddenly, become important, because we can’t afford to waste massive amounts of energy on long-distance transmission. Computers are going to have to be as energy-efficient as possible – a direction they are, fortunately, already headed in. Software is going to have to do more with less, and is going to have to take up the slack for the difficulty of travel.
I respect what you say about muddling through: Mostly I expect people will keep things going as long as they possibly can.
The 1950’s was for America a time of approach to maximal material wealth. Look at the amount of steel in a 1950’s automobile. (I don’t mean they were better or more efficient, but that there was enough wealth to tolerate the weigt and inefficiency). Consider that most families felt they could function on a single income. Consider that full-time jobs with benefits were so common that they were the expectation or norm.
Perhaps more important, in the 1950’s the US was an industrial nation producing physical wealth. We have gutted and dicarded that. Whatever lies ahead, the 1950’s are behind us.
Peak-oil may well curtail our most destructive activities. This may be good for the biosphere, including that part which supports human life. This would make peak-oil an actual virtue, whether civilization collapses or not. My greatest fear in this regard, is that we try to switch to nuclear power and then contaminate the world with nuclear wastes. Unlike the collapse of civilization, this would be a disaster from which there would be no recovery. Perhaps it would serve as a solution to the problems of human population growth, but a more bitter solution I cannot imagine. And it would be permanent.
I wouldn’t use the “lots of steel in 1950s cars” argument, because today’s cars weigh just as much as cars did then. For example, the 1957 Ford Fairlane weighed about 3400 pounds, while today’s Ford Taurus weighs about 3300 pounds…
Sloppy thinking on my part–all my friends drive Hondas, Hundais, and the like, which are not American cars at all.
I can not make the statistical argument: Do the miles-driven of SUV’s out-weigh the Prias’s? I just don’t know the numbers.
The numbers are far, far skewed towards SUVs. The Ford F150 pickup truck is the MOST POPULAR CAR in America. More popular than the Accord or Civic, Taurus or Focus, and way beyond all the hybrids put together.
While the Prius is getting a lot of press, there aren’t really very many of them. There will be about 175,000 hybrids (of all makes) sold in 2005. Ford expects to sell 925,000 F-series pickups.
Some sales statistics at
http://images.wardsauto.com/files/1004/USSalesSummary0508.xls
No I don’t think socialism is consigned to the dust bin of history. Capitalism has problems in worlds with supply issues. Shortages lead to rationing. Rationing is best controlled by a strong central government. New Orleans has shown us that eventually the masses will have to reject capitalism. If only for the sake of self-preservation. The rich are so blatantly lining their pockets with tax cuts, its inevitable we go to the left. Its a common sense reaction to their tyranny. They need to pay their share of taxes or our children will be paying off this debt. If that means we vote socialist then we vote socialist. It would be nice to have a government involved in the financial and physical well being of all of its people. Not just the biggest campaign donors.
I may not post on all your ‘oil’ diaries but read them all. All these diaries are fascinating and informative and have given me a much much greater understanding about this huge subject.
I also confess that the greed of the oil companies escapes me..with all the windfall profits right now and their own knowledge of peak oil I would think they would jump on the bandwagon and start moving some of those profits and investing in ‘green cars, green projects and would then continue to make money into the future. They just seem to be so incredibly shortsighted, making them completely greedy idiots and almost criminally stupid in the business sense also for ignoring the massive potential for ‘green’ profits.
Do they believe that physical survival of an aristocratic class only is the best option for the coming doomsdays?
An aristocratic class needs serfs and slaves. Where will they get them if they save only themselves? These guys want to be the top of a pyramid that has no bottom to support it. What are they thinking?
Maybe they plan to become reasonable, peaceful and self-reliant, learn cozy equalitarian democracy and concerned habits. It is always good to survive 😉
Oil will end as we know it…
And they are sure about climate as well!
Religious leader preaches about peace and a tunnel
World peace, and a $200 billion tunnel under the Bering Strait to link Alaska and Russia.
That’s the dual mission that brought the notorious Rev. Sun Myung Moon to Seattle Wednesday for the 10th stop on a 12-city tour. Should be no problem for the man his followers revere as the messiah – though not Jesus Christ himself, let it be said. —
Moon is promoting a new, spiritually driven international organization to do the job the United Nations can’t seem to manage. He also wants to see a 52-mile tunnel tying together the old Cold War adversaries of the United States and Russia.
Getting ready for warmer Alaska? Did the US Conress really cancel that $941 million bridge project?
You have a way of scaring the hell out of me every week. I’m glad you are. 2015, 2025, 2030; these dates are not that far away. Recently (about two weeks ago) in Detroit, a headline in the Free Press proclaimed that “GM Stakes Its Future On The New Yukon”. The story extolled the virtues of the new Yukon explaining that EPA Highway Millage estimates were increased from something like 18mpg to “over 20” with the new model! Rest easy Jerome, Detroit and the big 3(?) have responded to your concerns in a big way.
Today in the same paper September sales figures were in and GM can’t sell anything (especially the new Yukon) it seems. I Told you before that denial is a powerful force.
What is Europe doing about this? Are governments encouraging conservation? Is research in new technology likely to solve our problems? Or will we all return to the horse and buggy days within 10-30 years??