Richard Heinberg, author of Powerdown: Options and Actions for a Post-Carbon World, speaks with Jim Puplava of Financial Sense Newshour on 7 August 2004

The Financial Sense Newshour with Jim Puplava continues, featuring Uncommon News for the Wise Investor. Next – commentary and debate about today’s financial issues with the experts. Here’s Jim Puplava.

Jim Puplava: Welcome everyone. Joining me on the program today is Richard Heinberg. He has been writing about energy resource issues and the dynamics of cultural change for many years. He’s a member of the core faculty at New College of California and he’s an award-winning author of three previous books. His last book is called The Party is Over; his newsletter was nominated for the best alternative newsletter award; his new book is called Power Down: Options and Actions for a Post -Carbon World.

Richard you have an opening paragraph in your book, and I’d like to read it, because I think it describes how much the world has changed, and this is from John Seymour’s The Self-Sufficient Gardner, and it reads like this: “When I was a boy in the country side 50 years ago and more, people for self-sufficiency gardened, for it would not have occurred to them to do otherwise. People were self-reliant because they had to be. It was a way of life. They were doing what generations had done before them, simply carrying on a traditional way of life. Money was a rare commodity; far too valuable to be spent on things you would grow or make yourself. It was spent on tools or fabrics for clothes or luxury foods like tea or coffee. They would have laughed at a diet of store-bought goods.“

What a way the world has changed.

Richard Heinberg: Yes, that’s right. Yes, we have created a way of life now that is entirely dependent on long-distance transportation of food and other essential resources. And of course division of labor is nothing new it goes back to the beginning of agriculture itself, but division of labor has increased tremendously during the industrial revolution, so that today the average person is completely dependent on people that he or she has never met, never will meet, who may live thousands of miles away, who are producing everything that we rely upon. And this system is, you know, there’s a lot to be said for it, but the unfortunate fact is that it is entirely built on the foundation of cheap energy, and once that foundation starts to shift, then the whole structure becomes unstable.

Jim Puplava: Paul Simon wrote a song called Maids of Miracles and Wonders, but as you point out in your first chapter, we live at a time where several storm fronts are colliding. Richard, what are these storm fronts, and how close are they?

Richard Heinberg: Well, there are 6 of them that I’ve identified in the book. The first one of course is resource depletion. The fact that oil and natural gas are starting to become more scarce. We haven’t yet reached the peak in global oil production, but it may be only 3 or 4 years away. Here in North America we have already passed our peak of natural gas production, and that’s a big problem. There’s no easy solution. Secondly there’s continued population growth. So we depend on these resources, but there are more and more of us depending on them all the time. We passed the 6 billion mark in, I think it was 1999, so it’s only 5 years later we’ve added about 400 million more people just since then, and 400 million is just roughly the population of North America. So, in just five years, we’ve added essentially the equivalent of North America’s population to the planet. But of course we haven’t added a North America’s worth of resources or support infrastructure, so as we add more people this becomes an ever-larger problem.

Then there is the decline in per-capita-food production. Now, we’ve been able to increase our population for the last couple of hundred years quite dramatically over 800%, because we’ve been able to feed all these people with better transportation, being able to transport food from where it’s abundant to where it’s scarce, and also industrial agriculture, using chemical fertilizers, pesticides and herbicides to increase yields. But that trend of increasing yields, while it’s still continuing, is not keeping pace with the population increase. And so what we’re seeing now over the past 5 or 6 years is a decrease in per-capita grain production. That means that every year we are eating into whatever stores of grain various countries have in order to meet demand. And at current rates the amount of food in storage could be depleted by later this decade. So that’s the problem.

Then global climate change and other signs of environmental degradation. I don’t need to say a whole lot about that, because that gets a fair amount of press.

Then unsustainable levels of US debt and the possibility of a dollar collapse. The US is able to maintain levels of debt and also a trade imbalance that no other country in the world even approaches. One of the ways we do that is our currency is in demand around the world. Oil is sold for US dollars, and the US dollar is the currency of account for most countries; when the World Bank or IMF make loans, they make loans in US dollars and those loans have to be repaid in US dollars. Now this creates an artificial demand for dollars, and whatever there is demand for obviously is going to be more valued. So this has kept the US dollar strong even while the US economy has not really been able to support that strength. The people of the US are not saving any money. In fact, the US is absorbing most of the savings of the rest of the world, particularly in Japan and China. And so it’s only as long as those countries are willing to invest in US securities and US stocks and treasury bonds and so on that the US economy is able to maintain itself afloat. So there’s a potential problem there.

Then international political instability. We are seeing that now with the invasion and occupation of Iraq going so far awry. The entire Middle East region is becoming destabilized, partly as a result of that. We’re seeing in Saudi Arabia, for example, the Saudi regime becoming ever more vulnerable. The Saudi population is young and quickly growing and per capita incomes in Saudi Arabia are shrinking very quickly, and that’s a prescription for social chaos. There are many other instances we can site having to do not only with the Middle East, but also relationships between China and the US, and actually the US and many other oil-importing nations and oil-exporting nations. Perhaps we can talk about that a little bit more later.

But you see all of these things are occurring at the same time. If there were only one problem to be dealt with, it would not be so bad, for example, resource depletion, well we could cut back on our resource usage and find substitutes, but we’re having to do that at the same time as we’re facing increasing economic constraints and population growth. So, as I call it in the book, this is a kind of ‘perfect storm,’ something we have never seen before in the history of humankind.

Jim Puplava: Well, if we take a look at economic development, certainly over the last century, which was built on fossil fuels, beginning in the nineteenth century with coal and then later with oil. There seems to be a preponderance of growing evidence that oil is about to peak, so I am not so sure Richard where that’s going to leave our economic systems that are built on economic models dependent entirely on growth.

Richard Heinberg: Right. Yes, we created not just the ideology of growth, we’ve created a system that depends on growth in order to avoid collapse, and that’s even built into our currency. All money in circulation has to be created somehow, and currently most of it is created through commercial banks making loans. So that means that money in circulation is attached to the necessity for paying interest. So as long as the money supply is growing, hopefully at a controlled rate, then that enables people to pay back their loans eventually plus interest, but if the money supply stays stagnant or starts to contract, then that guarantees that people are going to default on their loans, and then
when that happens the money supply actually starts to contract, and it becomes sort of a positive feedback loop. The last time we saw that was in the Great Depression. So, in order to avoid that, we try to maintain a level of economic growth that is under control, but definitely in the positive territory. But then that requires for the growth of the money economy, it also implies and requires growth in the physical economy, in other words, in the extraction and transformation of resources, and that’s where the problem comes in, because the earth is a finite sphere, and we can only continue to grow human population or grow per-capita resource consumption or total resource consumption up to a certain point, and beyond that point, well, the earth doesn’t negotiate.

Jim Puplava: Now if we take a look at the raw input of this economic output, which is energy, oil discovery peaked here in the United States in the 1930s, production peaked here in 1971, global-oil discovery peaked in the 1960s, and now as we are becoming more dependent on oil, we are moving closer towards natural gas, for example, natural gas power plants, natural gas appliances for home heating and cooking, but it looks like natural gas could be peaking here in the next couple of years right after oil.

Richard Heinberg: Well, that’s right. Here in the US natural gas is already generally in decline in production. We’ve been able to stave off a real crisis for the last couple of years mostly because of good weather. Prices, of course, are quite high compared to historic levels of even three or four years ago, and the alarm has been raised not only by Energy Secretary Spencer Abraham but also even by Federal Reserve Chairman Greenspan. But there really aren’t any short-term solutions for natural gas depletion on the horizon. We’re getting about 16% of our US natural gas supply from Canada, but Canadian production is also in decline. And Canada is exporting about 60% – that’s six-zero percent – of its natural gas production annually to the US. I travel to Canada quite regularly and speak in Montreal and Vancouver and other places, and I often ask my audiences there, “Well, do you think the US would ever invade if Canada were to renege on some of its agreements like the NAFTA agreement that guarantees that the same percentage of natural gas will continue to be exported to the US, even as supplies begin to decline?” And the audience always shouts out, “Oh, yes!”

We’re in a difficult situation with natural gas. My colleague, Julian Darley, has written a book called High Noon for Natural Gas, which is just about to be published by Chelsey Green, and it paints a pretty disturbing picture. Right now the hope is that we can make up for the shortfall with liquefied natural gas [LNG] tankers bringing gas from overseas. But that’s going to be more expensive gas, and the number of tankers available is limited, and also this will make us more dependent on foreign resources. Now this has already happened with oil – over the past 4 decades or so we’ve imported ever more oil, and we’re ever more dependent on places like Venezuela and Saudi Arabia and Nigeria and so on. And of course it plays havoc both with the economy, because we are subject to changes in prices that are controlled by those other countries, and also it plays havoc with geopolitics because of what happens in the Middle East now is of deadly importance and significance in the US – why would we be even interested in the Middle East if it weren’t for the fact that there is so much oil there? But given the fact that there is something like 60% of the world’s oil there in that small region of the world, well, we have 140, 000 American troops there right now, well actually more if you count troops in places like Kuwait and Qatar as well as Iraq. So doing the same thing with natural gas, becoming more dependent on foreign supply is worrisome to say the least.

Jim Puplava: Well, we’re looking at a situation though Richard where this almost reminds me of the ‘70s, where if you looked around on the streets you had the big-muscle cars that were popular in that decade. Today we have the SUV, the Humvees – we are an energy consuming society, even with our technology, more laptops, big screen TVs; I mean we just keep adding more and more energy, and the fallback has always been, well if we need more of it, Saudi Arabia can pump out more oil. They’re sort of the swing producer of last resort, but there is growing evidence, especially coming from studies such as Matthew Simmons has done, that in fact, Ghawar, the largest oil field, which produces somewhere in the neighborhood of 5 or 6 million barrels a day, may be on its last legs, and the fact that they are now using water, pumping water into the wells, and that’s the sign of a well that’s peaking.

Richard Heinberg: Right. Well, they have been pumping, to be fair here, they have been pumping water into Ghawar for quite a number of years, and the Saudis claim that the ratio of water to oil that’s coming off of Ghawar is pretty constant, so they’re eager to dispute Matt Simmon’s dire assessment of Saudi oil production capacity. However I was in Berlin a few weeks ago at the annual conference of the Association for the Study of Peak Oil, where Matt Simmons actually gave what I thought was the best presentation of that session, and I talked with him briefly, and I found him very convincing. And what convinced me even further was Ali Samsam Bakhtiari (who is an Iranian oil executive, one of the most knowledgeable people in Iran about oil production) also spoke and spoke glowingly of his assessment of Matt Simmons’s work, and Bakhtiari has basically arrived at the same conclusion. We don’t really know the state of Saudi Oil fields because the country is so secretive, but what information is available causes one to wonder. Ghawar as you say is the biggest field in Saudi Arabia; it’s the biggest oil field in the world in fact, and it accounts for over half of the Saudi’s daily production. So if Ghawar were to water out, which can happen very quickly, because when you start using water injection that means that the decline of production can be almost overnight, very rapid, when the level of the seawater reaches the boreholes, then in effect, the field is virtually finished. If that happens then the world is almost by definition has passed its all time oil production peak.

Jim Puplava: The one concept of peak oil that many people don’t understand is not that we are running out of oil, but once you reach peak oil, simply from that point forward you cannot produce more oil, no matter what the demand for it is, and I wonder if you might just explain that for a moment.

Richard Heinberg: Yes, the problem is the rate of production; there’s lots of oil left in the ground, upwards of a trillion barrels probably, and that’s as much or more than we have extracted since the very beginning of the oil industry back in 1859, so the problem is not that we are running out – we’ll still be pulling out oil out of the ground a hundred years from now if there are people around to do it. The problem is that we depend on ever increasing rates of extraction in order to fuel the industrial machine. And when we get to the point where we can’t increase that rate of extraction anymore and it begins to level off and then decline, then we will have to adjust. The US passed its oil production peak as you said earlier in 1971, and we made up for it by importing oil from other countries. But when the world peaks, when we reach global-oil-production peak, then we won’t be able to import oil from Mars or the moon or something like that – we’ll have to make do with what’s left, and with a growing world population and growing economies, particularly in China, India and places like that as well as the US, we will be fighting over the table scraps of the twentieth century. That’s a very disturbing prospect.

We tend to think of oil, I still even to this day read statements in newspapers and over the internet that we have 50 years or 35 years worth of oil left. That’s such a misleading idea because what it does, the way we arrive at that figure, is we take the total amount that we have in the ground, which is about a trillion barrels, divide it by the rate of extraction currently, which is a little less than 30-billion barrels a year, and then we get a figure of something like 35 to 50 years of extraction left. But that’s terribly misleading, because the assumption inherent in that is that we can continue to extract at any arbitrary rate, and then suddenly 30 or 50 years from now one day we’re pumping out 80-million barrels a day and then the next day it’s down to zero. Of course, that’s not going to happen. That’s not how nature and geology work. We are used to thinking with the metaphor of the gas tank in our car where even if you’re down to a sixteenth of the tank you can still go 60 miles per hour. It’s only when you actually run out that you notice any problem. But oil in the ground is not like the gas tank in your car – there are shallow, snaky reservoirs, some of it is of different quality, there’s sweet-light crude and heavy-sour crude, and some of it is under deep water, and so there is a natural kind of bell-shaped curve of oil extraction for any reservoir or any oil producing country, where we get the cheap easy stuff out first, we go for the low-hanging fruit, and then what’s left, what remains tends to be harder, it takes longer to get out of the ground, and you can see this in Texas and Southern California when you drive around and see idle oil wells. Now some of those oil wells are still producing, but they’re only producing a few barrels a day. What happens is that they pump out all the oil in the bore hole, then they have to shut off the pump, and wait for it to recharge over time, and then they get to turn on the pump again, pull out a few more barrels and then repeat the exercise. So in wells like that you can’t just ramp up production, just because there’s greater demand you can’t extract the oil faster, you just have to do it at what rate you can, and the world is entering that situation where even though demand will be increasing, the rate at which we can extract oil will not increase, it will start to decrease, and when that happens as I said earlier we’re in for some rather tough economic times.

Jim Puplava: The rather interesting aspect about world-oil demand, primarily it has come from the US, but as other parts of the world have industrialized, and especially China, I was just reading a report this week that energy consumption and imports in China this year are up 38% in the first six months of the year. So we as Americans tend to think of ourselves, but it’s not just us, it’s others that are industrializing and have a demand for or have greater energy needs now, and perhaps that is accelerating the amount in which we need to extract oil out of the ground, which is also accelerating the depletion rate.

Richard Heinberg: That’s right, and I am glad you mentioned China, because China’s oil demand is driven by its rapid industrialization and it’s increased demand for cars. We have this nice fuzzy picture in all of our minds, I think, of the millions of Chinese riding their bicycles through the cities-that’s a thing of the past. Last year Shanghai actually banned bicycles on major city streets. Why? Because people there want to have cars. Now where are they going to get the oil to supply those cars with fuel? That’s a big question. The Chinese are looking to Russia, Saudi Arabia, even places like Venezuela, in other words, exactly the same places that we’re looking to for our future oil. So that sets up a dynamic where there’s inevitably going to be increased competition between the US and China, both very formidable nations. How will that turn out? Will there be a shooting war, you know I can’t predict that. The two countries are heavily interdependent in all sorts of ways. And of course we in the US buy everything from cheap electronics to clothing and toilet seats from China, things that we used to make for ourselves. So we’re dependent on them. Also, we’re dependent on China for foreign investment because the money that the Chinese make from selling all that stuff to us they tend to reinvest back into the US economy in various ways. So we’re heavily dependent on them, and they’re dependent on us as consumers, because we buy so much of their stuff. But at the same time, we’re becoming more and more competitors for the resources, the dwindling resources that will enable both of our economies to survive. So this is a very dangerous dance that we are in, and it’s mostly unacknowledged—it’s all going on beneath the surface.

Jim Puplava: Well, you know it’s amazing, it’s only when you have, for example, brownouts as we did in the mid-West-East coast last summer, or here in California in 2000 that it gets the average person’s attention. But I just read an article today where several large companies (steel companies in California) have now been asked by the state to get ready to stand down in case there is a surge in demand for power as we had, for example, last week in the state because of warmer weather when those extra power generators and gas turbines kicked in. So, these things Richard are starting to happen. It happened in 2000, we saw it again in 2003, and here we are in 2004, where the build-up of natural-gas supply going into the winter months is looking below normal, natural gas inventories, oil inventories, heating-oil inventories, gasoline inventories and here in California, where the government is now asking companies to be ready to stand down in case there is a power spike.

Richard Heinberg: Right. Yes, electricity is something that we tend to take for granted, and it’s something that we are as deeply dependent on as we are oil for transportation, because when the grid goes down, it’s hard to do very much of anything – modern life really comes to a standstill. And here in California our electrical grid and the power-generation capacity that drives it are not looking in very good shape, particularly if you look further down the line a year or two years into the future. We get about 50% of our electricity in California from natural-gas-fired plants, and I’ve already talked about our increasingly questionable supplies of natural gas, so what’s the alternative? We’re getting a very, very minor amount of our energy right now from solar and wind, which are capable of being grown, you know, we could get more, but the place where we’re starting from nationally – we get something like .2% of our energy from those sources, which means that even if we double our wind and solar capacity, which we’ve taken the last couple of decades to build up, if we double that and then doubled it again (a huge task requiring immense investment) we’d still be up to 1% of our natural energy budget coming from those sources. So our dependency on fossil fuels is something that really is hard to overstate.

Jim Puplava: What do we do in terms of solving this crisis? It seems to me that there is no magic silver bullet here when it comes to energy, so it’s going to depend on conservation and renewables. But right now conservation is the furthest thing away from most Americans, which is surprising. Even with the price of gas going up at the pump, which recently got as high as $ 2.60 here for premium in San Diego (it’s come down a bit) but I think that what happens is that we get the spike in energy, it comes down, and we’ve got analysts on Wall Street telling us that oil is going to go down below $30.00 a barrel again, so people think well this is a temporary blip, so I don’t have to be concerned with this.

Richard Heinberg: Yes, well you know Jim, speaking frankly, I don’t think we are going to do anything even to attempt to solve the problem until it gets worse. All the incentives are for the folks in charge, both of the financial systems and also government systems, to pretend that everything will be fine, just wait and as you say the price will come down or we’ll make some new discoveries and so on, because nobody wants to contemplate the kinds of really tough choices that will be necessary in order to deal with real energy resource shortages. So I frankly don’t expect that any very vigorous steps will be taken until we are in a real crisis situation, and unfortunately that may not be that far away, I wouldn’t necessarily want to predict an exact year, but certainly before the end of the decade we’ll be facing genuine and obvious scarcity, and at that point I hope that we’ll have some leadership that will be able to help us make the kind of hard choices that we will need to make at that point.

Jim Puplava: Well, it’s amazing here for example, in San Diego, where I live, if you get on the freeway between 3:00 and let’s say 6:00 or 7:00 – it took me an hour and 45 minutes to get from downtown San Diego to where I live, and in fact the last hour, it was taking twenty minutes per freeway exit, and I thought to myself, why hasn’t California, which is a leader in technology and in other areas, a bell-weather state, why we have not gone to some form of mass-transit which would be more energy efficient and certainly would be less congestion. You can’t even go out Richard even on the weekends – if you go out between 10 and 1 o’clock on a Saturday afternoon – you’re stuck in traffic.

Richard Heinberg: Right, and the real tragedy is that we didn’t make those investments in mass transit when we could have afforded to. Now of course the state is practically bankrupt, and the idea of spending several billion dollars on a new mass- transit system in the state is the furthest thing from everyone’s mind. Everyone’s just contemplating being able to keep the lights on in the school and that kind of thing, so yes, we definitely would be much better off if we had the kinds of mass transit systems that you see in Europe, where people are using energy at ½ the per capita rate of Americans, but our ability now to begin to build those kinds of mass transit systems is actually much reduced compared to what it was just a couple of decades ago. That’s very sad.

Jim Puplava: Now in your book you have three possible scenarios on how this could be handled. We just talked about you doubt if anything is going to be done until we get in a crisis mode, and by the way, I agree with you 100 percent that politicians are reluctant to take on anything that would cause taxes to go up or government expenditures, especially when nobody is even concerned about it. But in your book you have 3 scenarios: the first is Last One Standing, the Way of War and Competition. Second is Power Down, the Path of Self-Limitation and three is Waiting for the Magic Elixir – False Hopes and Wishful Thinking, and then also Building Life Boats. I wonder if we might talk about each one of these, and let’s start with the one which is most prominent right now which is Last One Standing.

Richard Heinberg: Yes, well the path that we are on right now is one that’s going in the direction of increasing competition for remaining resources; I think we are most likely to see resource wars increasing in intensity over the next two or three decades. I think it was Dick Cheney who said that we should expect war for the remainder of our lifetimes. I think he was probably not exaggerating there; I spoke earlier about our increasingly intense relationship with China based on competition for remaining oil supplies. Well, what happens when an oil-supply nation like Saudi Arabia wants to control its own resources or increase the price in order to provide income for its growing youthful population? Do we simply allow that to happen and suffer the economic consequences? Or do we send in the marines? The path that we are on now is that of looking to military solutions for what’s ultimately an ecological problem. The ecological problem is population pressure, resource depletion and habitat destruction, so it’s nothing unique to human beings, every species has faced it and every human society has faced it, but rather than limiting our population growth and limiting our use of resources, we want to maintain the American way of life, again our government has told us that the American way of life is non-negotiable. Well, if we really believe that, if we believe that those resources are our entitlement, then we are likely to do just about anything to maintain our access to them. The problem is that there are other people in the world who feel exactly the same way. Perhaps third-world countries that have never industrialize and they see that industrialized countries are taking ever-larger shares of the resources that are available. Are they likely to sit by and do nothing? We’re likely to see resource wars of actually several kinds. Ones between powerful consuming nations and weaker resource rich nations; civil wars within countries, we’re seeing that in places like Nigeria, Columbia and potentially in Iraq as well; conflict within nations for control of their valuable resources; and also conflicts between consuming nations, countries like again the US and China; and then asymmetrical war over terrorism between big- consuming nations and non-state actors in producing regions. All of these things are already coming to pass; we can already see these kinds of conflicts in the world. But I think they are likely to become more intense, as long as we continue down this path of resource competition and assuming that access to increasing supplies is somehow our entitlement.

Jim Puplava: What about, just for our listeners of this program, the seriousness of this goes beyond just what you’re talking about, for example, the pentagon has studied the pentagon’s weather nightmare, what would happen if climate changes began changing things in terms of what happens to rain in our farm belt, and the Pentagon and the CIA are also looking into this in terms of resource and energy security, so this is not something that just the government is looking at, our top agencies are looking into this as a real issue.

Richard Hein berg: Yes. This is by no means hypothetical, the plans are being laid for global resource wars even as we speak, and the really frightening thing is the array of weaponry that is increasingly coming online. New kinds of nuclear weapons that are intended for battle field use. They are not intended to just sit on the shelf and be a deterrent, but they are intended to be used, and if you look at the chemical, biological, nuclear weapons that are out there increasingly, it’s a very, very scary thing if we continue down this path of competition for global resources.

Jim Puplava: Well let’s move on to your second scenario, which is the Power Down scenario, the Path of Self-Limitation, Cooperation and Sharing. I want to quote something from Lester Brown’s Plan B, which is a paragraph in the opening chapter, and he states, “keeping the global economic bubble from bursting will require an un-precedented degree of international cooperation to stabilize population, climate, water tables and soils, at a war time speed, indeed in both scale and urgency the effort required is comparable to the US mobilization during World War II.” And on the day that you and I are talking Richard, this is on the front page of the Financial Times: “Modern China is facing an ecological crisis.” It’s talking about scores of rivers, large and small, have dried up in China over the past 20 years. The Yellow River, the mother of Chinese civilization, no longer reaches the sea for much of the year, about half of China’s land is uninhabitable, so the very things that you are talking about in the book, I mean this was front page of today’s Financial Times.

Richard Heinberg: Right.

Jim Puplava: In Power Down, the Path of Self-Limitation, Cooperation, and Sharing, talk about what that entails, and then I’d like your assessment if that’s possible.

Richard Heinberg: Well it’s what will be needed if we are not going to descend into global chaos with resource competition, and it’s not a small thing. If we had taken a power-down process, say 30 years ago, say back at the time of the first energy crisis, we could be well along that path now, and the amount of effort required would have been much, much less, and the amount of sacrifice required would have been much, much less, but unfortunately we have squandered these last 30 years, increasing our extraction of resources, increasing our population levels until now we are at a point where if we are going to back away from the brink of mutual annihilation, it’s going to require some very, very serious changes in our way of life, particularly in the industrialized countries, and also some very strenuous levels of negotiation and cooperation and compromise among the world’s peoples.

Now I tend to like to think about solving problems at the lowest level possible, in other words, doing things at the community level and individual level. If I can change the way that I live personally and thereby contribute to the solution of problems on a global level, I am all for that, and I can talk for some time about how my wife and I have solar panels on our house, and I drive a car that runs on modified vegetable oil and so on. But individual solutions are simply not going to be adequate to solve the problems that we are talking about today. The reason I say that is because individual solutions really rely on individual choice, and currently the incentives are all in the other direction. Yes, we have a small percentage of the population that is already willing to make those sacrifices, and live more simply and conserve so that others will have some share of the pie, and have fewer children and so on, but that is a very small percentage of the population. Most people are sitting, watching television, which is telling them to buy, and consume and use more, their government is telling them we need more economic growth, so all of the incentives are in the other direction. So those incentives have to change, and individuals can’t do that, individuals can’t make those changes in incentives, it has to be the government that does that.

We’ve been in these situations before, for example, the government in World War II. We had to ration fuel, we rationed tires, people couldn’t even buy nylon stockings without going to the store at a special time when there might be a short-term supply. Well that’s the kind of level of effort that’s required, as you were reading from Lester Brown. I think his book Plan B is actually fairly optimistic, if anything, I think he understates the level of effort that will be required. Even national effort is insufficient, because if only one country is powering down, then it will lose out in competition with others that are still increasing their energy-flow-through rates, and so the only way really for this really to work is with global cooperation between nations.

Imagine yourself being India for example where you’ve signed onto the Kyoto protocols let’s say and even to a more strenuous protocol that reduces oil consumption, oil imports among nations, but then there’s another country, let’s say a big-consuming country like the US that hasn’t signed on to those agreements, and it’s still increasing its share of resource consumption. Well, think of how that would feel to India, if that were the case, the situation, you know we’re doing the right thing but our wealth disparity is increasing, instead of being remedied. Would they be willing to go along with that and continue to power down themselves in that situation; I don’t think they would. The only way this would work would be if all the nations of the world, well, particularly the most significant consumers, and here I am talking Europe, China, Japan and above all the US; we’re all on board, were all signed on to reducing their energy consumption rates, and also investing heavily into renewable, alternate fuels. If we do that I think there is a chance for a peaceful sort of backing away from the cliff, but it’s not going to be a matter of maintaining business as usual, virtually everything about our American way of life our suburban lifestyle would have to change.

And again for that to happen it’s going to require, well, I hate to use this word, but propaganda, people are going to have to be given a different stream of messages than they are accustomed to. We’re already swimming in propaganda – it’s called the American advertising industry. We’re propagandized from cradle to grave, telling us to buy and consume and waste; we need exactly the opposite message. If we had enough time you know 50 or 100 years, people could probably figure it out on their own, but we don’t have that kind of time, so we need accurate information, and we need to be convinced that this is in our interest, and that it’s absolutely essential to our survival, and if we are convinced of that then I think people will be willing to make the sacrifices and life style that they’ll be called to make, but without that it’s not going to happen. So your question at the end, do I think this is likely? No, I don’t. I think it’s possible, and I think it’s more likely after we’re in a crisis situation – if we have good leadership – but that’s a big if.

Jim Puplava: Well, one of the problems as I see it in the energy area is that any time that a crisis erupts, let’s say the power outage we had last summer, the power out that we had with rising gas prices, the first thing that happens is that everybody points the finger – it’s demagogued – the politicians are looking for somebody to blame. Nobody knows about peak oil, no body knows about depletion. We just assume, like we get up in the morning and we turn on the television, we press the button on our laptop, we expect things to work, and nobody is telling, I mean, Boeing is planning bigger airplanes, faster airplanes, GM and Ford are building new automobile plants, and China, nobody is talking about building more hybrids with the exception of maybe Toyota. GM just wrote off a bad investment in B power. The problem is that if we do have a problem, I think the American public is smart enough to look at that, but as you wrote in your book, most people are ill-informed, because they get their news from television.

Richard Heinberg: Right. The only encouraging thing I see on the horizon in this regard is the fact that this basic message about peak oil is starting to get out to more and more people. When I wrote The Party’s Over, I think my conversation with you about that was one of the first interviews I did about a year and a half ago, and when we talked last time, almost nobody knew about this subject. You could say ‘peak oil’ in a crowded room, and you’d be lucky if one person knew what you were talking about. Since then there have been articles in The Wall Street Journal, The New York Times, and the June- 2004-cover story of National Geographic. So, it’s on the radar screen now. It’s not something that everybody really understands; people don’t really get how close we are to global peak oil and what it really means for the future of our industrial way of life. But it’s beginning to enter public consciousness, and I think that’s a good thing. Hopefully, that trend will continue, and this will be the last election in which politicians will be able to avoid the subject all together.

Jim Puplava: Well I was real encouraged, I was reading, you were kind enough to send me an advanced copy of your book, and I was reading it on a plane trip to Vancouver, and when I had a stopover in the Seattle airport, and I went to the bookstand, and low and behold there was the cover of National Geographic – peak oil – so I was quite surprised.

I want to move on Richard to your third topic, which is the Magic Elixir. I just don’t
see, for example, when we went from wood to the coal age, and then we went from coal to oil there was something waiting in the wings that took over another energy source –
I don’t see anything overall right now; I don’t see a silver bullet, do you?

Richard Heinberg: Well, since The Party’s Over has come out I’ve been deluged with well-meaning people who say, “Oh, yes, but you forgot about methane hydrate,” or “You didn’t discuss Canadian Tar sands sufficiently,” or this includes, you know, little pet projects that nobody’s heard about and some are probably great and just looking for some investment money, and some of them probably are just scams, who knows, but I have to say that the ones that I have looked into don’t look all that promising. For example, methane hydrates, for listeners who don’t know what that is, what we’re talking about, it’s basically frozen natural gas, frozen into water crystals, mostly under the sea beds and to a certain extent in frozen tundras in Alaska or the Yukon, or Siberia, places like that. There’s a lot of hydrocarbon molecules frozen in methane hydrates—there’s so much in fact that if all of that if all of that stuff were to thaw out and enter the atmosphere we could be facing a greenhouse effect that could be hundreds of times worse than what we are actually looking at, so methane hydrates are actually nothing to mess with in that sense, because if we destabilize large amounts of frozen methane and that enters the atmosphere—we’re literally cooked. So the question is can we safely and economically extract methane from these deposits, and that’s a question that nobody has a good answer for right now. Japan, which has virtually no indigenous energy resources to exploit, is of course very interested in mining methane hydrates because they have some deposits that are in their territorial ocean waters, but so far their research is not conclusive. It’s a question first of all as to whether the process will be economical, and even if it is economical can it be done safely, because, as I said earlier, if we make a mistake, if we begin to destabilize these deposits, we only get one chance, and if it goes wrong, that’s essentially the end of planet earth as a host to higher life forms. So there’s methane hydrates.

The Canadian tar sands are another subject that comes up very often. Yes there are a lot of hydrocarbon molecules there up in Alberta, but they’re in a form right now that’s very hard to access. Now Canadians are able to produce oil from the tar sands at a rate of less than a million barrels a day, which is respectable for Canada, that’s great for them, but could that be increased to a level where it could make up for oil depletion once we go past the global oil peak? I don’t think so. It requires a lot of energy to produce oil from tar sands and a lot of fresh water. It’s extremely environmentally destructive, the process of producing it, and so the rate of production is likely to remain low even though the resource base is very large, and that’s what we need is a high rate of production to make up for oil depletion. We could talk all day about potential energy sources that could at least, some people are saying, could make up for oil depletion, but you know at the end of the day I look over all of these and look at them added together in various combinations, and certainly there’s many things that we should be pursuing, but will they come on fast enough, can they produce enough at a high enough rate of production to make up for oil and gas depletion? I don’t think so, and many of the experts I am in touch with around the world have come to the same conclusion.

Jim Puplava: So it sounds like if we’re going to solve this crisis 1) we need to make more people aware of it and 2) we need to begin conserving energy in as many ways as we can and 3) it sounds to me like, Richard, that until we find that silver bullet, we’re going to have to try a combination of a number of things, whether it’s solar, wind power or hydro, as much as we can with renewables, maybe even nuclear power to sort of get us a bridge to when eventually that solution comes about.

Richard Heinberg: Right. Well that real tough one is that I don’t think there is a supply-side solution to this—and the reason I say that is let’s do a thought experiment here–even if we discovered the perfect energy source, a source of virtually free energy, what would be the result of that? Well, we would be able to avoid an immediate crash, O.K., so that’s good, but then what would we do? Most likely what we would do would be to continue economic growth, and we would continue population growth until we would hit a peak of something else, food production or we’d run out of good topsoil, we’d run out of fresh water, we’d run out of fish in the oceans, and whole eco-systems would begin to collapse left and right. Ultimately I think the only solution is to begin to limit our own resource usage and our own population. That’s something we haven’t contemplated over the last couple of hundred years. We’ve implicitly believed that we could just continue to grow forever. But a moment’s thought reveals that that is simply impossible. We’re reaching the limits to growth. Of course that was a famous book title back in the seventies Limits to Growth: the Club of Rome Report. And a lot of people have said since then, “Well they got it wrong somehow, they were predicting global industrial collapse and it hasn’t happened and those people have been refuted.” But in fact if you go back and read the book, which I’ve done, you find out that they weren’t predicting global industrial collapse in the ‘70s or ‘80s or ‘90s. They were saying it was likely to happen in the middle of the century we are in now, and the so-called refutations of their predictions, which I looked into very carefully, actually never did. They have been misquoted, misrepresented a number of times in a number of places, and then those misrepresentations get quoted as if they’re authoritative, and people who have never read the book as soon as I mention it will come up and say, “Oh, no, no, don’t you know that that book has been completely refuted?” And I say, “No, go back, look at where it has been refuted, find the page, find the quotation, because when you do you actually find it is a very, very prescient, a very wise message, even though it was written thirty years ago, it’s still almost completely up to date, and in fact there’s a new edition of it coming out just this year, and I recommend that. That’s where we should be going. That’s what we should be reading this summer.

Jim Puplava: Talk about one of your last chapters, Building Life Boats.

Richard Heinberg: Yes. If we are in fact going in the wrong direction, if we’re increasing our population, increasing our resource usage, and we’re not listening to those voices like the limits-to-growth people, who are telling us that we’ve got to change direction. If we’re not listening, not making the changes, what are we to conclude from that? Well, that probably it’s not going to work out, that industrial society is likely to collapse in one way or another over the next few decades. Frankly I think that is the most likely outcome. If that is the case, shouldn’t at least some of us be making plans for that? And by plans I don’t mean just for personal survival, because I don’t think that’s likely to work. If you have a, say you’ve built the perfect vegetable gardens, and you’ve got your solar panels and so on. Well if your neighbors are starving, guess who’s going to be eating out of your garden? So you’ve got a shotgun, ok? So you can defend it. Well, you got to sleep some time and so on, you know, you can follow out the scenario yourself in your own mind. So I am not talking about individual survivalism. What I am thinking of is some way, some community efforts to maintain, to preserve some of the benefits, some of the achievements that have come out of this last couple of centuries of just amazing, of what we call progress. You know we have composed symphonies, we’ve created magnificent artwork, we’ve created all kinds of amazing communication technologies and information storage technologies, we’ve learned a heck of a lot about our world. We’ve learned about physics and astronomy and biology, evolution and so on. It would be a terrible shame for all of that to be lost and destroyed if our civilization comes to what may be its inevitable conclusion, after all, we wouldn’t be the first civilization to have collapsed as a result of resource consumption and depletion. So what I am advocating in that last chapter of the book is the creation of communities of cooperation, mutual survival and mutual aid, communities that would be of service to the surrounding society, providing them with knowledge, means for conflict resolution, with inspiration, with seeds for food production, practical skills, teaching practical skills and so on. Communities of service that would be supported by the surrounding population, because they would be providing these necessary survival skills and services. I think the time to start building those cooperative service communities is now, before the crunch hits.

There already are a number of these kinds of communities around the country and around the world. I have visited a number of them, and I admire unreservedly the people who are making the considerable effort to devote their lives to this task. Some of them call themselves eco-villages, and the people there have to be generalists—they have to know about food production and home building and so on—but I have to say that the people that I have met who are devoting themselves to this way of life are generally pretty optimistic and happy even though they realize the dire state that the world as a whole is in. At least they have the satisfaction of knowing that they are doing the best thing that they could possibly do to help what’s best about us to survive for the next generations.

Jim Puplava: As you and I are talking about this I think for most Americans or even people around the world are thinking, now what the heck are these guys talking about, but you just got back from Berlin, where you had the Association of Peak Oil, and there were some pretty influential people there, so the word is starting to get out and certainly governments are starting to become aware of that. I noticed that, for example, the G-8 countries—they’re stockpiling oil.

Richard Heinberg: Right.

Jim Puplava: Asia –

Richard Heinberg: Yes, China is stockpiling oil.

Jim Puplava: Yeah, and Japan has called for further stockpiling of oil, so certainly the topics that you and I are talking about, maybe we’re not in a crisis mode today, but I can tell you on the day that we’re talking there was a front page in the LA Times about the government of California calling and notifying companies here, from steel companies to defense manufacturers, to get ready to stand by to shut down because we’re approaching peak power limits here in California with the heat wave, so these little things don’t make it to the front page Richard, which is where they should be, because to make people aware, I think more people are aware of what Brittany Spears (ph) is doing this week.

Richard Heinberg: Yeah, I am glad you mentioned the Berlin gathering again, because here was a gathering of, I don’t know, 200 or 300 people. And it included members of the European Union, it included members of the German parliament, there were government officials from Britain there, there were officials from oil companies, the World Bank and so on, and there were reporters from media outlets throughout Europe and the Middle East, and from the US there was a single media representative, somebody from Dow Jones News Wire, and that was it. So, it was a bit lonely there, as an American, looking around and seeing all of this awareness and interest and concern from the rest of the world about the problem of peak oil, and virtually no awareness represented from the US. It’s good that we have the cover story of the June National Geographic, but there’s so much more that needs to be done before the people in this country realize what we are up against.

Jim Puplava: Well, fortunately Richard, people like yourself and others, we’re going to be interviewing here shortly a friend of yours, of which you wrote the forward to Julian Darley’s High Noon For Natural Gas. We’ve got Oil, Jihad and Destiny. I’ve read probably seven or eight books on this topic, so they’re starting to come out, and certainly by the National Geographic putting it on the front cover, which I thought was a fabulous article, because it showed, you remember the picture of the family sitting on their front lawn, and they had all their products that come from oil, which are just amazing. We don’t realize how much of our life is built around fossil fuels and oils. So I guess the best thing that we can do is educate people and hopefully from that some good solutions will come out.

Richard Heinberg: That’s right. Well I am glad you are doing what you are Jim, with your show, so more power to you.

Jim Puplava: The name of the book is called Powerdown: Options and Actions for a Post-Carbon World. It will be out shortly by Richard Heinberg. And once again Richard, great work, glad that you’re keeping up the effort, and it’s a pleasure to have you on the program.

Richard Heinberg: Yes, it’s good talking with you again Jim.

Jim Puplava: Thank you.

Transcribed by Rita Wiltsie

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