What is Life After Peak Oil?

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While Western governments from the U.S. to the UK debate the validity of “peak oil”, and obfuscate the probability under a cloak of secrecy, the working world wrings its hands, wondering what will happen when the day arrives and the energy needed to fuel industry – the lifeblood of national economies – is no longer available.

Peak oil, as first proposed by geophysicist Dr. M. King Hubbert, describes the moment when global oil extraction reaches a maximum and begins to gradually decline, setting up a scenario where each barrel of oil is increasingly valuable, and where difficult-to-extract reserves (like tar sands and deep-well ocean drilling) are re-evaluated in terms of these higher prices.

Optimistic assessments suggest peak oil is still a decade in the future. Pessimists think we passed the peak in 2005. Time, of course, will tell, because time doesn’t lie. The same can’t be said for world governments, as evinced by the fact that, late in July, the UK’s Department of Energy and Climate Change (DECC) refused to release peak oil policy documents under the Freedom of Information (FoI) Act.

The incident came about when DECC officials, under the guidance of Chief Scientific Advisor David McKay, sent out appeals to oil recovery experts asking for advice and information.

At the same time, industrialists – led by billionaire Sir Richard Branson (Virgin label) – were pushing the government to turn over documents critical to oil policy, and institute contingency plans in the event of a peak oil scenario.

Industry experts responded. The DECC’s response was halfhearted at best. Based on a policy of “don’t see, don’t tell” drafted at a 2009 oil reserves workshop, officials admitted that they could only release some of the information on file. They also acknowledged that “greater transparency” – e.g., releasing all the documents, which would quell rumors and fear – was “impossible”, since it somehow hampered information exchange and negotiations between ministers and advisors.

Part of toeing this invisible line was the caveat that UK government officials maintain the polite fiction that the Paris-based International Energy Agency, or IEA, was the leading authority in the field.

This position has been increasingly hard to hold since 2009, when a whistleblower said that the IEA’s oil estimates had been “distorted” by key U.S. policy makers in order to prevent global panic buying. In addition, news came out that some IEA senior staff members privately disagreed with the agency’s official position on oil reserves, calling them “unduly optimistic”.

Since the IEA insists that there is enough oil in reserve to meet global demand until 2030 – with the caveat that investment in new reserves must be maintained – the UK has insisted that government-initiated discussions of peak oil be abandoned, at least where their substance might be leaked to the public.

IHS Energy Research Associates, a far-from-unbiased observer, says that oil production will actually rise, from 79 to 85 million barrels, by 2030. But the increase will be due to extracting from more difficult sources, like tar sands and deep oceans, with rising demand beyond the 85-million-barrel mark addressed by liquid fuels, either from coal, gas, or the emergent biofuel industry.

The IHS report sounds like a cheerleading campaign designed to reassure industry, though it does admit to a “disproportionate” environmental cost for the difficult-to-extract oil. This cost, though clearly demonstrated in the BP Gulf oil spill, is likely to be driven forcefully home when Arctic exploration begins – an event expected to occur as soon as oil companies are able to acquire and plan drilling operations, now that the ice is no longer a significant impediment to year-round extraction.

Even online news sites like The Oil Drum, formerly a cheerleader for the industry, has adopted a more cautious tone lately, with industry experts like José Sergio Gabrielli de Azevedo, the CEO of Petrobras (a multinational energy company headquartered in Brazil), predicting peak oil in 2010.

With the Arctic viewed as a last-ditch resource by oil-hungry nations – a resource that might well provoke war among border nations like Russia, Canada, the U.S., Denmark, Iceland and Norway – peak oil could get very ugly as a world addicted to fossil fuels struggles to get the last drop from one of the world’s last pristine wildernesses.

“This is the way the world ends,” T.S. Eliot observed. “Not with a bang but a whimper.”

Article by Jeanne Roberts, appearing courtesy Celsias.

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About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

2 Comments

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