Transcript
ALI MOORE: Well, as we said earlier, the price of oil reached a 10 month high yesterday making a debate about the realities of peak oil timely. Peak oil is when the world’s oil production literally peaks before going into terminal decline with dramatic ramifications for global economy. Just when that time will come is the subject of intense debate, though the issue receives far less coverage than the related focus on climate change. One man who’s urging global action is Dr Roger Bezdek, president of the Washington-based research firm Management Information Systems. He’s written two reports for the US Department of Energy on how to mitigate the possible effects of peak oil and he’s spending the next two weeks in Australia talking to Government and industry leaders. He joined me from our Canberra studios earlier this evening.
Dr Roger Bezdek, welcome to the program.
DR ROGER BEZDEK: Thank you, pleasure to be here.
ALI MOORE: Peak oil is a theory first talked about in the 1950s. Are we there yet?
DR ROGER BEZDEK: We’re getting – we’re probably getting close. As far as the experts can tell, it will probably occur within the next 10 or 12 years, probably sooner rather than later. However the point is that the implications are so severe that even if it’s as long as 15 or 20 years away, it’s almost too late to take many of the measures that are required to deal with it.
ALI MOORE: That said, there have long been predictions, haven’t there, of the imminent depletion of oil supplies. It was said it would happen in the ’70s and it didn’t. The man who came up with the peak oil theory said it would happen in 1995, and it didn’t. US Department of Energy says we won’t be there even by 2030.
What makes you right?
DR ROGER BEZDEK: You are correct, for the past 150 years there have been many false predictions of the world running out of oil or running short of oil or peaking oil. Some of the predictions have been correct, for example, King Hubbard, in 1957, predicted that US oil production would peak about 1970. It actually peaked in 1971. The problem is now that we’ve had 50, 60, 70 years of exploration of – the entire earth, the entire world, has been explored for oil. For the past 25 years the world has been consuming much more oil than it has been finding and the ratio is getting worse rather than better. For example, last year the world discovered about 6 billion barrels of oil and consumed about 28 billion. This can only go on for so long and is why I’m relatively pessimistic that we’ll see world oil peaking within about the next decade or so.
ALI MOORE: So you don’t see or believe the argument that the greater the technology, the greater the technological development, the more likely that not only will we find more, but previously impossible wells will become viable?
DR ROGER BEZDEK: There’s no doubt that technology will assist us and we’ll find more and more oil. The problem is that the world is already consuming, producing about 87 million barrels a day of oil. Projections are the world will need, by 2030, 120 million barrels a day. The new giant fields simply aren’t out there and most of the world’s oil-producing regions have already peaked – are in decline, declining at the rate of 2 or 3 or 4 per cent a year. Right there it tells you you have to discover at least 2 or 3 million barrel a day every year, just to stay even. And we can’t stay even, the world requires 2 or 3 per cent more oil per year. It’s just an unsustainable trend.
ALI MOORE: Even with the focus on climate change and the impetus that’s giving to finding alternatives and I guess also to making alternatives more competitive?
DR ROGER BEZDEK: Well, climate change is indeed a very serious problem and I would say that climate change and oil peaks are the two most serious, intractable long term problems that the world faces. Many of the problems with climate change are contrary to what is required for solving the peak oil problem. For example, one of the solutions or partial solutions to peak oil is ramping up production of colder liquid fuels which happen to produce a lot of greenhouse gases. So if you’re trying to solve one problem independently of the other you can’t do it, they have to be viewed and solved in tandem.
ALI MOORE: So how do we mitigate this threat?
DR ROGER BEZDEK: The mitigation of peak oil is required on both the demand side and the supply side. On the demand side we have to make the world stock of vehicles much more fuel-efficient as soon as possible. We also have to introduce policies and incentives that will make the world’s population less dependent upon driving vehicles and automobiles. Increased use of mass transit, rail system, smart growth, what have you. On the supply side, we have to pursue all of the supply options that are out there for liquid fuels, including oil shale, oil sands, colder liquids, renewable technologies, biomass, bio-diesel, electrical vehicle, plug-in electrical vehicles, et cetera. So a massive effort is required both for the supply side and the demand side to address the problem.
ALI MOORE: A massive effort and I guess none of that is particularly new. What will be the impetus for people to wake up and say we must do this now, not tomorrow, but now?
DR ROGER BEZDEK: One impetus would be to wait until it’s too late when there are actual shortages and the price of oil has increased dramatically. Hopefully we and the world will be smarter than that and see the problem on the horizon and begin to take some of these mitigation options well in advance, and let me stress that time is running out and we have to start implementing these initiatives as soon as possible.
ALI MOORE: Time’s running out – in the context of a country like Australia, what would be the impact of peak oil? We already import something like 30 per cent of our energy requirements, we have massive resources though, what would be the impact here?
DR ROGER BEZDEK: Well, the potential impact in Australia could be quite severe. Petrol prices could increase dramatically, there would be shortages. There would be some sort of rationing. The entire country would be severely affected as your whole transportation system would be severely disrupted. People who have to drive to work, or to industry to commerce, would simply be unable to get there at any reasonable prices. The potential would be for massive economic and social dislocation.
ALI MOORE: Have you done economic modelling of what it would mean and would any industry sector be immune?
DR ROGER BEZDEK: Yes, we have done extensive modelling and there’s virtually no industrial sector that would be immune. They would all be impacted to a lesser or greater degree.
ALI MOORE: At the same time, though, we’re not seeing it reflected in investment trends are we? We’ve just seen a private equity group try to buy our national airline for $11 billion, and if any sector is exposed to the threat of peak oil, you’d have to say aviation is?
DR ROGER BEZDEK: Indeed and I think there’s a real market failure here that people simply are not aware of the impending problems here and many of these investment decisions, several years from now, may look very foolish in retrospect.
ALI MOORE: So you’ve been talking – you’re going to be talking over the next week or two to both industry and business. Today you’ve been meeting with the department of defence. What’s been the reaction to your story?
DR ROGER BEZDEK: Well the reaction thus far, I think, has been contemplative listening, a lot of good questions have been asked but much of the information that I’m trying to get across simply is difficult to absorb because what we’re looking at here is a very serious energy transition, the likes of which the world has never seen before, and many people are simply not aware of the problem itself, the magnitude of the problem or the magnitude of the efforts and the time required to resolve it.
ALI MOORE: Dr Roger Bezdek, many thanks for talking to us.
DR ROGER BEZDEK: Thank you.
