Sleepwalking over the oil peak

If you are an avid listener of ABC radio you will hear the words "peak oil" pop out now and then with increasing frequency. Fran Kelly mentions it on Breakfast (John Anderson on food shocks oil dependency and drought), a caller to Australia Talks Back mentions it with respect to food prices, even news stories on oil are introduced with lines such as, "In a world with oil peaking…". ABC TV has broadcast its excellent documentary Crude, The Incredible Journey Of Oil. There are occasional articles relating to it in the Fairfax and Murdoch press. One could almost start to believe that peak oil consciousness is spreading into the Australian mainstream and that we can soon discuss how to prepare to cope with it rather than debate whether or not it will occur. But if you believe this you are wrong. The great majority of Australians have simply no idea that oil production will soon be decreasing, and the few that do mostly do not comprehend the extent to which this will change their way of life.

Let me give you an example. On the day the impending federal election was announced I was to give a lecture to a group of about 70 second year Dentistry students at my university. I was told that these are very bright and vocal 20-year-olds – they have to be since admission to Dentistry requires a very high tertiary education entry score. As I set up my computer for the lecture I was musing how little was being said in the election campaign about the things that really matter - such as peak oil, rapidly rising food prices, the coming crash of the overheated Shanghai stockmarket etc - so I asked the students whether any of them had ever heard of the term "peak oil". 70 puzzled faces stared back at me (and some that looked as though they thought I was a little weird). Not one of them knew what I was talking about! I did not push it much further since I did not want any of these "bright" young things learning the truth just before their end-of-year exams. However, it did occur to me that they might ultimately benefit from reading some recent articles on post peak dentistry.

A recent speech in South Australia’s state parliament by Democrat Sandra Kanck illustrates why we have a problem. As she stated:

I typed 'peak oil' into the search facility on the Liberal Party's national site and the message came up 'Sorry, no data found'. I went to the Liberal Party's state site and typed in 'peak oil' and none of the offerings that came up were about peak oil. I went to the Labor Party's national website and did the same and the message came up 'The search terms returned no result'. I went further into that website to a section entitled 'Roads, transport and aviation' and came up with about a dozen statements from their federal leader, Kevin Rudd, but it contained diddly-squat about public transport in fact, it was almost exclusively about roads.

I then tried the Labor Party's state site and when I clicked on 'news' it took me to the government's website. On I battled, and I typed 'peak oil' into the search facility on the government's website. The page of results that came up for that had absolutely nothing to do with peak oil. For comparison, I checked out my own party's national site and, after typing in 'peak oil', I got 40 different entries about speeches and media releases, which is what I would have hoped to find on Labor Party and Liberal Party websites.

In other words, we lack leadership on this issue. The major parties are not going to talk about this until they have to. Andrew McNamara, the Queensland state Labor politician, has released his oil vulnerability report but who outside of Queensland has heard of it? As Prime Minister John Howard showed in his federal election "debate" with Kevin Rudd, it is not permissible to be anything other than optimistic about our future. Even the Greens (the party of which I am a member) appear to be avoiding the topic for fear of appearing too "loony" or "contentious" and thus scaring the voters. This is in spite of the outstanding work done by Senator Christine Milne in the Federal Senate’s Rural and Regional Affairs and Transport Committee Report into Australia’s future oil supply and alternative fuels.

What can be done? I think it is obvious now that absolutely nothing will be done until we first have a liquid fuels crisis. "Fortunately", we may not have to wait too long for that day. The International Energy Agency is predicting a "supply crunch" within five years, while other experts, such as Texas oilman T. Boone Pickens, believe we are already one year beyond the peak and have now begun a downward production slide. The German Energy Watch group has just published a report asserting we are past the peak and predicting a 50 per cent decline in oil production by 2030 (and I earlier reported how an ex-vice president of the National Iranian Oil Company, Ali Samsam Bakhtiari, has predicted a 30 per cent decline in production within the 13 years to 2020). An interesting survey by researchers at Case Western Reserve University integrating the opinions of 155 oil industry experts now rates peak oil before 2010 as "highly likely".

Dramatic as these projected declines are (and they will be devastating for the world’s economy and already dwindling food production at a time when we must find a way to feed an additional 76 million mouths every year), they portray a falsely optimistic view of oil availability. Of course, it is not the world’s oil extraction rate that matters so much as oil’s availability on the world market. The current high oil prices are a boon for the world’s main oil exporters. Their economies, if not their populations, are growing rapidly. (An average Saudi Arabian woman has four children.) These nations typically have low domestic fuel prices and these three factors are leading to rapid rises in internal oil use. Rising internal oil consumption reduces the capacity of oil-exporting nations to export. This is the basis of the "Export Land Model" of Jeffrey Brown and it goes a long way to explaining why oil is currently US$95 per barrel and rising. Oil available on the world export market is already decreasing and the price for Australian consumers would currently be higher if a number of poorer developing nations had not already given up trying to afford it. (In a sense, oil is still “cheap” for our use because we are now using "their" oil.) According to the simplest extrapolations of the Export Land Model (for example. ignoring the negative feedbacks on growth in exporting nations that may result from the economic privations of oil importers) the export market for oil may, essentially, dry up within six years.

(From World Energy and Population, Trends to 2100 by Paul Chefurka, October 2007.)

That is a very, very sobering prospect, especially when one considers that Australia’s own oil production is expected to tail off to a fraction of its current, inadequate level within the next decade.

(History and prediction of Australia and New Zealand future oil production in Crude Oil, The Supply Outlook by Energy Watch Group)

Even the Export Land Model cannot predict what will happen when the world’s financial and political elite finally decide that declining oil supplies are an irrevocable fact. There will probably be hoarding and conflict that will reduce the availability of oil on the world market even faster. For example, if the USA does eventually attack Iran (and recent rhetoric about acting now to "avoid WWIII" make that seem increasingly likely) we will probably see the flow of oil from Gulf states stopped and serious retaliatory damage done to oil infrastructure outside of Iran. 25 per cent of the world’s oil exports may be lost overnight and access to 2/3rds of the world’s remaining oil reserves may be denied for months or years. My home state of South Australia has a maximum fuel storage capacity of less than 20 days average use (too little to allow rationing) and receives its fuel supplies in "just in time" fashion from Singapore. We may find ourselves without fuel imports and desperate for emergency deliveries from crisis-struck refineries in other Australian states!

Is it possible that Australians may have virtually no oil by 2020? How will we grow our food, let alone distribute it? When the crisis hits (by all accounts soon) will our government recognise it for what it is and institute a drastic policy of conservation of our remaining oil supplies to give us some small chance to adapt to that new world or will it blindly push for maximal use of our remaining resource and so drive us headlong over the cliff? Unfortunately, it is not in the nature of economic conservatives to conserve …

Thanks to www.energybulletin.net for making it so easy to keep up with peak oil-relevant literature.