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The dismal truth, Mr Rudd

By Lionel Orford - posted Thursday, 13 December 2007


Dear Prime Minister,

First, congratulations on your historic election win.

You have come to power at a time of a looming worldwide economic crisis; a time when we desperately need “new leadership” to deal with the immense problems ahead of us and an end to the deception, denial and neglect of the Howard era. The news is in and it is very bad news indeed:

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  • we have now almost certainly reached peak oil (PO). The highest ever level of worldwide production of all liquid fuels was in 2006. It would now take a minor miracle to raise production above these levels and the rate of decline is almost certain to accelerate over the next few years such that “business as usual” is impossible; and
  • global warming is proceeding much faster than most scientists expected and we do not know how serious the problems will be and how fast they will unfold.

Even though the effects of climate change are likely to be very serious, they are largely unknown and will play out over the coming decades. However, peak oil will have major consequences over the coming years - during your time as Prime Minister.

The unfolding crisis is in several ways analogous to the sinking of the Titanic. We are now at the stage where the ship has hit the iceberg and is already taking on water: its fate is sealed.

The crew is trying to avoid causing a panic among the passengers by announcing “All is well, the ship is unsinkable, there’s no need to launch the lifeboats”. Unfortunately most of the crew are optimists, still in denial of the dreadful truth.

Like the Titanic, this crisis was caused by gross negligence and hubris that led to the belief that the ship was unsinkable. The inevitability of peak oil and its effects have been known for decades, but rigorously denied, based on the belief that our technological prowess has made us invulnerable to reality.

Welcome to the job of Captain of the SS Australia.

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Peak oil and the unfolding economic crisis

To those unstudied in PO, it initially seems “no big deal” - something that the market and technical innovation will deal with. The bad news is that the market is completely unable to provide solutions to the demise of its staple food source - cheap energy.

It has been assumed that as crude oil production declines, we will turn increasingly to “alternative” sources of oil. This is a ridiculous assumption based on blind faith; it is completely detached from reality. There are simply no alternatives to oil - no sources that can provide sufficient quantities of liquid fuel fast enough to replace the dwindling supply.

Very soon we will face an oil supply shortfall which will result in a dramatic escalation in the oil price. The result will be a recession, which drives down demand to match supply through “demand destruction”.

It is likely that the economy will overshoot into a recession far more severe than that required to cut back oil consumption to the levels needed to match supply. Ironically, as in the 1980’s, we would then see an excess of oil supply and a dramatic fall in price. However, any economic recovery would be short lived due to significantly reduced oil availability.

The magnitude of the coming decline in oil availability is truly alarming. In October 2007, the Energy Watch Group released a report stating that we passed peak oil in 2006. EWG predicts crude oil production will be down to about two thirds of current production by 2020 and to half by 2030. It is not feasible to reduce consumption sufficiently in two decades, except by a collapse of our current system.

But the story gets worse. Petroleum geologist Jeffrey J. Brown’s “Export Land Model” models what happens to exports from the major oil exporting nations whose domestic demand is still growing while their oil production is in decline: he suggests that it will only take about nine years from peak oil for exports from the major producers to reduce to zero. This spells disaster for major oil importers, particularly the USA and Western Europe.

What your government can do about it

Prime Minister, it’s time to tell the crew and passengers the dismal truth and get everybody working together to launch the lifeboats.

Step 1: tell the truth.

No government wants to tell the truth about the dire situation because that would cause a loss of confidence in the market economy and the government itself.

I contend that it is far better to level with the Australian people before the crisis hits than to wait for it to happen. To claim that you didn’t know it was going to happen would be to claim your own incompetence and the electorate would be justified in throwing you out of office at the next election.

The finesse required here is to talk in terms of Australia planning for the coming oil supply and economic problems.

Step 2: start planning for major infrastructure works.

When the economy goes into recession or depression, the only known way to restore economic activity and reduce unemployment is by government investment. At the same time as this government intervention is required, the nation needs infrastructure which will allow our society to function with an ever declining supply of oil.

I suggest that these are the most pressing needs:

  • Major investment in national electric railway infrastructure - long distance freight, high speed passenger rail and suburban light rail. A vast amount of petroleum is consumed by road freight, air travel and commuting. The majority of it can be powered by electricity. This would also enable greenhouse emissions to be significantly reduced due to the large increase in efficiency of rail transport compared with road and air transport.
  • Major investment in infrastructure to better manage our water usage. We need to return the waste water generated by our cities to the land, together with the precious nutrients it contains.
  • Major investment in carbon capture and storage. We have no other resource except coal which can be readily deployed to provide the rapid increase in the electricity we need.
  • Massive investment in renewable energy. The most promising technologies here are solar thermal with heat storage and geothermal. There is no point in developing large scale intermittent resources such as wind, photovoltaic and wave power because such intermittent generation cannot be managed on a large scale.
  • Develop oil from coal technology in Australia, with the up-front requirement that any plant built must sequester the huge amount of carbon dioxide it produces.
  • Get serious about infrastructure to allow bicycles to be used safely for commuting. This includes bikeways, storage facilities, showers and possibly public hire bike depots.

Step 3: start conserving what we have left.

Rationing fuel, preferably by tradeable quotas, will be one of the first steps required to deal with the coming shortages. If this isn’t done, there will be mayhem - hoarding of supplies, black market profiteering, queues for fuel at petrol stations and crucially, shortages for essential services, particularly food production and distribution.

Support the proposed “Oil Depletion Protocol”, where all countries reduce their consumption progressively to match the available supply, this would mitigate the problem in the most equitable way possible, hopefully preventing a breakdown of world order.

Step 4: get our “best and brightest” researching and developing long term solutions.

The size of the challenge that confronts us is truly staggering. I fully support your “Education Revolution” and regard the deliberate neglect of public education by the Howard government as reprehensible. However, there is no point training more economists and bankers for the capitalist system which will not exist for much longer.

A new economic system

The fundamental problem behind all the problems we face is that we are reaching practical limits to growth, but our economic system will fail without economic growth.

We need an entirely new economic system which must be able to:

  • function effectively without economic growth;
  • function to equitably share resources in a world of declining resources;
  • enable the development of local communities that are largely self sufficient;
  • facilitate depopulation of the planet; and
  • restore planetary ecosystems.

Such an economy may need to be a state-run economy, which tend to have poor track records. We need to learn from the mistakes of former state-run economies and come up with something that works.

A new energy system

We must face reality and understand that we are dependant on large amounts of energy just to meet the fundamental needs of a population that lives in cities and this cannot be changed in years or decades; it will take lifetimes. We must also understand that while there is energy available, we humans will use it because availability of energy equates to our standard of living.

A recent EWG report reveals that coal production will peak worldwide within 20 to 30 years. It will be simply impossible to provide our minimum energy needs once the oil, gas and coal are severely depleted.

Current technology nuclear power (based on the fission of Uranium235) is only able to provide a relatively small part of our energy needs because viable supplies of Uranium235 are very limited. Developing this technology for Australia would be very short sighted indeed.

Hence I contend that we should get started on developing safe breeder reactors which convert Uranium238 to nuclear fuel and/or breeder reactors that convert Thorium to fuel. Uranium238 is a large resource and Thorium is a vast resource, capable of providing our energy needs for millennia. This is a large technical undertaking that will take decades, but the long term need for it is really beyond question.

Conclusion

Like the Titanic, we are in a situation where no desirable outcome is possible. However, we must do what we can to work for the best possible outcome.

The first step is to desist with the denial of the problems and the fantasy that everything is OK; that the market will sort it out. This involves informing the public about the seriousness of our predicament. The second step is to get stuck in and do what we can to adapt to our new situation.

Most sincerely,
Lionel Orford

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This is a shortened version of Lionel Orford's open letter. The full version can be found here (PDF 97KB).



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About the Author

Lionel Orford is a professional electrical engineer with a long standing interest in renewable energy, energy sustainability and climate change. Lionel has studied the peak oil issue in depth since 2004. See here for further reading on peak oil and other energy and societal issues.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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