The world’s economy will falter and collapse as global oil production peaks and heads into a permanent decline. That was the message brought home to 300 participants at an oil depletion conference in Lisbon in May.
Two weeks later in Cleveland, at a national energy conference which attracted 800 participants, neither economic decline nor the imminent oil peak was on the agenda. Speakers, instead, championed their own, sometimes far off, technological fixes, as the solution to our energy woes.
Between these two conferences was a gathering of 25 people at an E.F. Schumacher Society training seminar on building sustainable local economies, held in the western hills of Massachusetts. Here participants discussed how to prepare for a post peak oil age and address other social concerns through local economic development, local currencies, and community land trusts.
“We began the training by imagining an economic system based on the values of cooperation, fair distribution of wealth, mutual aid, ecological responsibility, social accountability, respect for cultural differences, human scale, and local production for local consumption,” said Susan Witt, director of the Schumacher Society. At the Lisbon oil conference, such an economic system was heralded as a way to deal with the coming era of scare and expensive oil.
ASPO Conference in Lisbon
The IV International Workshop on Oil Depletion was hosted by the Association for the Study of Peak Oil (ASPO), a European-based group of scientists and academics. The broad spectrum of speakers included petroleum geologists, oil industry analysts, university scientists, investment bankers, government officials, and current and former parliamentarians.
In his opening talk, ASPO founder and petroleum geologist Colin Campbell said, “We are at the end of the first half of the age of oil. We started running out with the first barrel and the last barrel is far in the future. But production begins to decline when half is gone and that is the issue.” Campbell explained that declining energy equals a declining economy since economic growth is predicated on cheap, abundant energy supplies.
Campbell’s stance was reiterated throughout the two day conference. Manuel Collares-Pereira, a physicist at the University of Lisbon, emphasized that the end of cheap oil means the end of the global economy as we know it and the beginning of “deglobalization.” Charles Hall and Robert Ayes, also scientists, analyzed the foundations of economic growth and expressed the need for an economic system based on biophysical realities such as energy.
Estimating the date of Peak Oil
So just when is the global peak? NASA scientist Marcel Schoppers examined the uncertainty of different models, ultimately coming up with the year 2009 plus or minus 6 years. Other speakers pointed toward the year 2007. The overall consensus was that a peak is imminent.
To determine the date the organization factors in the depletion rate of countries that have already peaked, forecasts of imminent production peaks, and global demand. U.S. oil production peaked in 1970 at slightly more than 9.4 million barrels per day and has been declining since. Production in countries like the UK, Indonesia, and Venezuela are declining by 7-9%. Russian oil production, which represented 50-95% of non-OPEC growth from the period ’01 – ’04 is now slowing. Meanwhile, global oil demand is soaring.
Many presenters noted the increasing appetite for oil in developing countries, specifically China and India. Last year, global oil demand was 3.5%, up from an average rate of a 1-2% increase per year. This new demand could have the effect of bringing the peak sooner.
Saudi Arabia over-optimistic?
In addition, countries like Saudi Arabia may not have the abundant reserves their governments so frequently tout. Two presentations revealed the uncertainty that Saudi Arabia can continue to maintain such high production levels. With one-fourth of the world’s remaining oil and the only country with spare production capacity, Saudi Arabia is the fulcrum on which global oil production and the world economy rests.
Jack Zagar, a Colorado-based petroleum consultant, contended that state owned oil company Saudi Aramco overestimates their reserves and their ultimate recovery rate. He is skeptical that they can continue to increase production to meet the growing world demand, as Saudi Crown Prince Abdullah promised to President Bush last month.
Matthew Simmons, an oil investment banker who advised Bush on energy issues in the 2000 presidential campaign, gave a dismal forecast for future Saudi production. He said the five extremely mature fields that produce 90% of Saudi production are at the risk of unplanned production collapse. Simmons explained that these fields are being overproduced with the injection of seawater and steam to maintain high production levels. His just published book, “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,” focuses on his deep concerns.
“Oil is not renewable and will peak,” Simmons continued, “Discovering the date is the only open question.” The estimates of the Association for the Study of Peak Oil are often called “pessimistic” by governments and oil companies. Yet others within these sectors are beginning to recognize the possibility of an imminent peak.
T. Boone Pickens, former CEO of Mesa Petroleum, was quoted last month as saying, “Global oil is 84 million barrels a day. I don’t believe you can get it any more than 84 million barrels.” Republican congressman Roscoe Bartlett has given four speeches to the House of Representatives on Peak Oil. At the ASPO conference current and former government officials sat on a special panel. Present were a former Canadian governor, a former British environmental minister, a representative from Switzerland, and a French parliamentarian.
Edward Schreyer, the former Canadian governor, said, “Peak is starting to become conventional wisdom,” a sentiment shared by several ASPO members. At this year’s conference predicting the exact date was less important than discussing the implications and alternatives. “The movement is evolving,” Campbell, ASPO’s founder, explained in his final statement. “The issue of peak is accepted and the media are giving it coverage.” Campbell added, “It’s not as important when you peak, it’s the vision of the long decline that follows.”
Cleveland conference touts technology, economics
Yet at a national energy conference in Cleveland on June 2, the issue of peak oil and the associated economic decline was not discussed. Presenters touted the role of technology, economic forces, and additional research dollars in making hydrogen, “clean coal,” nuclear, and fuel cells viable in the future and therefore a solution to our energy problems.
“Energy: A 21st Century Perspective” was sponsored by the National Academy of Engineering and included presentations by Ohio Gov. Bob Taft, a senior scientist at BP, and a director at the Department of Energy. In contrast to the urgent and perilous tone of the ASPO conference, the mood was cheery and congratulatory as the public was reassured that these scientists could solve all of their energy problems.
The main challenges identified included the threat of global climate change, rapid demand growth in developing countries, and dependence on foreign oil. Paul Portney, President of “Resources for the Future,” a Washington think tank, also stressed that the U.S. was built on cheap energy and that everything from our cars and homes to the distance we live from our work was based on this paradigm. While peak oil was mentioned in passing by two of the speakers it was identified as “pessimistic” and quickly abandoned.
Presenters admitted that their proposed solutions may take years or even decades to become a significant part of our energy mix. Professor Joan Ogden, of the University of California – Davis, noted that it takes 30 to 70 years to convert to new transportation infrastructure and that more evolution of hydrogen technology was needed before commercial products would be available. Dr. Roger McKain of the Ohio Fuel Cell Coalition said the cost of fuel cells would have to be reduced dramatically before they could become widespread. Nuclear advocate Dr. Lawrence Papay, who was skeptical that nuclear waste storage could be guaranteed for 10,000 years, identified the long process of researching, designing, and building a new breed of reactors that would reprocess spent fuel and avoid so much waste.
Decentralism and community revitalization
While conventional economic thinking continues at this type of conference, the E.F. Schumacher Society is creating a new economic paradigm based on decentralism and community revitalization. The Schumacher Society, named after the author of “Small is Beautiful: Economics As If People Mattered,” holds annual seminars on these issues, with a focus on training community leaders to implement local initiatives.
The participants at this year’s seminar learned about successful citizen-driven strategies for reconnecting people, land and community, and how communities can regain economic power and create vibrant local economies. Michael Shuman, author of “Going Local: Creating Self-Reliant Communities in a Global Age,” analyzed areas of capital drain from local economies and described various methods, both tried and in planning, to stop those leaks, create “import replacement,” and develop strong local economies.
While peak oil is not at the forefront of the Schumacher message, they certainly share with “The Community Solution” a common vision for the future of a more cooperative, just, and equitable world of small, local communities.
Several ASPO presenters also share this vision. Collares-Pereira, the University of Lisbon physicist, listed as the benefits of a post peak oil era “more time, leisure, culture; cleaner air; and less stress.” Campbell, ASPO’s founder, noted several “silver linings” of the peak oil crisis, such as people “rediscover[ing] rural living, regionalism, diversity and local markets, coming to live in better harmony with themselves, each other, and the environment in which nature has ordained them to live.”
Megan Quinn is Outreach Director for The Community Solution, a program of Community Service Inc., a non-profit organization in Yellow Springs, Ohio. Quinn can be reached at firstname.lastname@example.org.
The Community Solution is a non-profit organization that educates about the coming global oil peak and the transition to small, local communities and low energy lifestyles. They publish a quarterly newsletter, “New Solutions” on peak oil, implications, solutions, geopolitics, Cuba, and more. It is available for a membership donation of $25. They will host “The Second U.S. Conference on Peak Oil and Community Solutions” September 23-25, 2005. More information and comprehensive presentations are available on their website www.communitysolution.org