Here’s another story I wrote for The Big Issue. It’s still on sale now, so do yourself a favour and buy a copy - it’s a good read and you’ll directly support a vendor who needs the cash.
Oil No More
The age of cheap and abundant oil is approaching its end, and fast. Simon Ratcliffe, the man sitting opposite me, is passionate about telling the story: “We will have to live with petrol shortages and there will be less every year. Fuel won’t just be on tap anymore and we will have to learn how to live with this”. Far from being a doomsday prophet or purveyor of conspiracy theories, he’s a perfectly respectable, well-spoken, middle-aged, suburban, Captonian father of two and he’s not preaching from a soapbox on a street corner – we’re having a quiet chat in a rather upmarket Constantia coffee shop.
Ratcliffe, an independent sustainable development consultant, is the founder, chairperson and driving force behind the South African branch of the Association for the Study of Peak Oil and Gas. The concept of Peak Oil refers to the point in time when half of all of the world’s extractable petroleum has been pumped out of the ground, to be followed by a steady, but irreversible decline in oil production.
“The logic behind Peak Oil is scientifically sound and not even very complicated.” He picks up the sugar bowl and cradles it in both hands. ”There’s a finite amount of oil in the earth’s crust – it’s a non-renewable resource. If we continue using it at our current rate,” he takes a cube from the bowl and plops it into his rooibos, “we will soon use it all up. The way we treat oil reminds me of a friend who jokingly tells his wife ‘Let’s spend our money before it runs out’”.
The idea of Peak Oil was first introduced in the 1950s by M. King Hubbert, a highly-regarded American petroleum geologist. Realising that the production from an individual oil field as well as that from an entire oil producing region follows a roughly symmetrical, bell-shaped curve – rising rapidly until reaching a peak in flow rate and then decreasing quickly – he predicted that US oil production would reach its maximum output in 1970. Hubbert was ridiculed and publicly discredited by the oil industry, but his forecast was accurate: US oil production peaked in 1970.
Since then the Peak Oil theory has become a hot topic. Just as it allows one to analyse the evolution of individual oil fields and regions, it can be applied to the planet’s entire oil producing capacity and within the last decade a growing number of very prominent petroleum geologists and former oil industry insiders have put their reputations on the line by predicting that the global peak in oil production is imminent.
Pointing out that the effects will only be really evident several years after the event, a number of them suggest that the peak has, in fact, already happened. The German-based Energy Watch Group, for instance, released a detailed study last year that put peak oil in 2006. Others, including the US Association for the Study of Peak Oil and Gas expect the peak to occur before 2015.
Many of the world’s big oil producers, on the other hand, are much less pessimistic and some simply dismiss the Peak Oil brigade out of hand, ensuring us that there will be plenty of oil for all for many years to come. At the 2005 World Petroleum Congress, ExxonMobil president Rex Tillerson suggested that the industry is merely experiencing a temporary glitch that will be corrected by market forces in due course and Cera (Cambridge Energy Research Associates), a US-based think-tank, predicted recently that “we will be able to grow supply to well over 100 million barrels a day by 2017”.
Last year, however, Total Oil boss Christophe de Margerie opined that the world would not be able to lift output from current levels of around 85 million barrels a day, much less achieve the 115 to 120 million barrels a day required in 2030 on the basis of continued growth in demand. In an email sent to his company’s staff earlier this year, Shell CEO Jeroen van der Veer said that “Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand”.
Even conservative pundits like the influential International Energy Agency, a major petroleum market assessment group based in Paris, who until fairly recently suggested that there were more than three decades to go before Peak Oil, are starting to sound more cautious. They now forecast that by 2012, the members of the OPEC (Organisation of the Petroleum Exporting Countries) cartel will have little spare capacity to pump extra oil, while non-OPEC and biofuel production will already reach that point after 2009.
Even the most optimistic observer has to concede that some of the signs are ominous. Many of the big international oil companies are struggling to maintain output levels. Shell’s production, for example, has fallen continuously for the last five years. Over the last decade, 33 of the world’s 48 largest oil producing countries, including six of the eleven members of OPEC, have recorded falling production. Venezuela’s oil production peaked in the same year as that of the USA, 1970. The UK peaked in 1999 and Norway in 2001. Saudi Arabia, Mexico and China are believed to be close to peaking.
New oil discoveries worldwide hit a peak as long ago as 1964 and have diminished ever since despite increasingly sophisticated exploration technologies. The world’s twenty largest oil fields were all discovered between 1917 and 1979 and about 90 per cent of Saudi production comes from just five fields discovered four to five decades ago.
Every year since 1984, global oil production has exceeded new oil discoveries and the gap is constantly widening. In 2006, 31 billion barrels of oil were extracted from the earth, but only 9 billion barrels of new discoveries were made. New discoveries tend to be smaller in size, lower in quality and more difficult and expensive to exploit than earlier ones.
Some people point to so-called unconventional oil resources as the answer, but more often than not these require so much energy to exploit that they become economically dubious and frequently they also carry monumental environmental price tags. The oil sands buried in the Canadian province of Alberta, for instance, could yield as much as 175 billion barrels of oil, making Canada the most well-endowed oil producer in the world after Saudi Arabia. The process of extracting the oil, however, requires large amounts of energy and fresh water, produces vast quantities of toxic and carcinogenic waste water and according to a report in Toronto’s Globe and Mail “may transform [a] Florida-sized swath of forest into a massive lunar landscape – much of it unlikely ever to return to its original state.”
The environmental advocacy group Environmental Defence has dubbed it “the most destructive project on earth” and Al Gore calls it “truly nuts”. To make matters substantially worse, the process generates two to five times more greenhouse gas emissions than oil pumped from a conventional well. Which sheds some much needed light on the ginormous elephant permanently camped out in the oil industry’s living room: climate change.
The irony that the very companies making the biggest profits in history (earlier this year, Shell, ChevronTexaco, ExxonMobil and BP reported profits of 27.6, 18.7, 40.6 and 17.3 billion US dollars, respectively; China’s state-owned oil firm PetroChina is the world’s largest company, worth US$1 trillion) are also the ones who keep us hooked on oil and are major contributors to global warming is lost on fewer and fewer people. As is the fact that the same companies are now pushing for increased oil exploration in the ecologically übersensitive Arctic which is only possible because of excessively melting sea ice.
Not even biofuels – the pet hope of many an environmentalist – can provide a silver bullet solution. New scientific studies have shown that when everything is taken into account, biofuel crops may actually cause an overall increase in greenhouse gas emissions. Comments UK writer and activist George Monbiot: “Apart from used chip fat, there is no such thing as a sustainable biofuel” and that may be enough to drive a bunch of diesel trucks, but not our current economy.
Exactly when global Peak Oil will occur is a tricky thing to predict. The fact that it will occur, however, is no longer in doubt. Intermittent water and electricity shortages in the last five years have taught Captonians that even such very basic resources can no longer just be assumed to flow freely from taps and plugs until the end of time. Similarly, fuel price increases and the prospect of R10 per litre of petrol, have started to shatter the assumption that our ever-growing hunger for oil will be met indefinitely by rising supplies (although it should be noted that most analysts link the recent petrol price increases to the activities of financial speculators, rather than to economic fundamentals of demand and supply).
So what are the implications of Peak Oil? Ratcliffe highlights several main areas of impact. The first is pretty obvious for a society that has made a fetish of the gas-guzzling SUV: mobility and transportation. Next are finance and the economy, which can be expected to take a major nosedive in the face of long-term fuel shortages. Cheap and abundant oil has allowed us to become dependent on very energy and resource intense methods of food production and agriculture, which will not be sustainable in the wake of Peak Oil. Similarly, the structure of our cities is entirely inappropriate for a severely energy-constrained future world. Finally, Ratcliffe is not alone in believing that the geopolitical implications of Peak Oil, including the threat of more conflict and war over oil, could be devastating.
According to Ratcliffe, “Our relationship with Peak Oil is reminiscent of the passenger on the Titanic, who, while everyone else is scrambling for the lifeboats, remains adamant: ‘… but the brochure specifically states that it’s unsinkable’”. There are alternatives, but they demand action today rather than tomorrow. We need to re-asses how we run our society, re-structure what we’ve got and re-localise our economies into more sustainable neighbourhoods.
The Californian city of Oakland has recently released a report that aims to put it on track towards oil independence by 2020. Plans include public education, reconfiguring the city into several “urban villages” and a commitment to reduce oil consumption by three percent every year. Sweden boasts a national action plan that aims to lower national oil consumption by 40 to 50 percent by 2020, and in the UK the growing Transition Town movement is hoping to set rural towns on an “energy descent” path that will help them to cope with the impending end of cheap and abundant oil.
So where are we in Cape Town and South Africa with regard to all of this? Pretty much nowhere, it would seem. Awareness of Peak Oil appears to be almost as low among politicians and policy makers as it is among the general public. “We are inevitably bound for a new world.” Ratcliffe points out. “Whether we get there via the rough and painful road of ‘business as usual’ or via a smoother alternative that emphasises renewable sources of energy and growing independence from oil will depend on the decisions we make now.”
