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On the edge of the abyss

SACRAMENTO, CALIFORNIA – The backdrop of a financial crash on Wall Street cast a shadow over this year’s Association for the Study of Peak Oil – USA conference in Sacramento in late September. Speakers talked of an ominous parallel between the financial crisis and another graver crisis in the making – the coming rapid decline of worldwide oil production, which has stalled after reaching an all-time high more than three years ago.

Approaching production peaks of other fossil fuels were also examined while some speakers minimized the immediate importance of dealing with climate change compared to the urgency of peak oil. Solutions offered at the three-day, fourth annual conference, which drew 500 participants, focused largely on technological fixes and public policy changes while the need for massive energy curtailment and lifestyle changes received scant attention.

Robert Hirsch, author of a 2005 peak oil report for the Department of Energy, described the bailout crisis as “traumatic” and “downright frightening” then argued it would be prototypical of future events once peak oil is fully realized. Oil investment banker Matt Simmons warned that an energy crisis could be much worse than the paper-based financial crisis. If a national gasoline shortage happens, he said, “American’s food supply is in jeopardy within a week. The economy slows to a crawl and financial markets panic. This potentially is an American nightmare.”

Speakers displayed innumerable graphs and curves showing world oil production plateauing, new discoveries falling, and global demand soaring. The discussion was not focused as much on when we reach the peak – as there was much agreement that the world has been at the peak/plateau since mid-2005 – but on when production will fall over the edge and how quickly it will decline.

Simmons argued that a 15 – 20 percent worldwide decline per year in conventional oil production is likely, beginning in the next few years, and pointed out that production at the super giant Cantarell field in Mexico declined 32 percent last year. “For global depletion rates to be just 2 – 3%, there would have to be some fields that have a negative depletion rate, which is impossible. This is because there are too many fields depleting at 15 – 20 percent,” he said. Other speakers said they expect a 7 – 10 percent decline per year. These are disturbing predictions for an increasingly oil-dependent world with no one-to-one substitutes for oil on the horizon.

Economic predictions were just as grim. With oil consumption growth directly correlated to gross domestic product growth, a permanent oil decline may mean a permanent recession, according to Gail Tverberg, commentator on the Oil Drum website. Jim Puplava of Financial Sense imagined a time when each American family would get a ration of 20 gallons of gasoline per week. But Simmons said he thinks it’s too late to print the ration books.

Other fossil fuels face supply constraints too. Andy Weisman of Energy Business Watch predicted the doubling and tripling of natural gas and electricity prices within five years causing huge shocks to the US economy. Reasons include surging global demand for liquefied natural gas which we are becoming increasingly dependent upon, the recent cancellation of coal plants locking us into natural gas-fired electricity generation, and the lack of viable alternatives. Worldwide, natural gas production is expected to peak by 2020 with coal peaking between 2025 and 2030, according to projections made at the conference.

Speakers, or participants in conversations, mentioned a multitude of peaks: oil, natural gas, coal, credit, GDP, globalization, phosphorus, indium, roads, parking, democracy, capitalism, healthcare, food, and just-in-time delivery, to name a few, while there were no peaks in sight for debt, inflation, money creation, bank bailouts, American techno-triumphalism and war.

The peak oil awareness movement has come a long way from the first European ASPO meeting in Uppsala, Sweden six years ago, which just 45 people attended. As Bart Anderson of the alternative media website, Energy Bulletin, told conference participants, “The rise in consciousness is astounding and it didn’t come from the mainstream.” Perhaps this is because it now appears our predictions are coming to pass.

But climate change awareness has been growing too in recent years. Both movements spring from groups of fringe scientists forecasting global disaster, and also share similar goals – the immediate reduction in global fossil fuel energy use. Still, some conference speakers questioned climate change’s validity or exigency:

  • Simmons – “Compared to climate change, peak oil is so much more real, more imminent, and has more ghastly impacts. It affects us right now, not just our grandchildren.”

  • Hirsch – “There are people who think we should treat peak oil and climate change the same. I find it difficult. Yes, there’s warming, but there are people who believe it’s us, which might not be true. When people are hurting badly and losing their jobs and car and don’t know how to survive they’ll be thinking ‘fix this now.’”
  • David Hughes, retired from the Canadian Geologic Survey – “Of the two problems, climate change and energy sustainability, energy sustainability is the nearest and likely most severe and if we can deal with the energy sustainability problem it will take care of the carbon problem by default.”
  • Randy Udall, ASPO – USA co-founder – “Climate change science assumes that energy scarcity is a myth and that fuels are superabundant. Our obsession with climate change is dangerous because it’s distracting us from the more immediate problem.”

In response to a question from the audience on whether peak oil and climate change solutions could be treated with the same brush and if speakers could be less divisive, Kjell Aleklett, ASPO International president and physics professor from Sweden, said that peak oil must be ahead of climate change because climate change’s significant effects are 50 years off while people will be affected much sooner by peak oil. He suggested peak oil would be much harder to survive while people can survive climate change simply by moving from coastlines before they’re flooded out by rising sea levels. He said that with peak oil looming the U.S. is still totally dependent upon five tankers of oil containing two million barrels each reaching its shores every day and no solutions that will significantly cut this dependence on foreign oil are in sight.

The solutions offered at the conference fell into two categories – policy changes, with suggestions on how to convince legislators to take action, and technological fixes, which would no doubt require both large-scale investments and government support. There was remarkably little discussion on practical strategies for attendees to cut their energy use, municipal responses, emergency measures, or long-term visions of a post-oil economy. There was no discussion of food, agriculture or household energy use, and instead a whole session on high-tech cars and futuristic transportation schemes, with vague hints of how they would be powered.

Energy efficiency was mentioned a few times, but without noting how efficiency gains tend to increase overall consumption. Most importantly the need for massive curtailment was only remarked upon in passing by two speakers. Wind energy enthusiast Paul Gipe noted that we had to cut electric consumption by 50 percent per capita to make powering America with wind energy even possible. Dr. Ken Verosub, a University of California geology professor, ended his talk on how oil is created by asking participants if they were ready to make the ultimate sacrifice by cutting their oil consumption in half. He acknowledged that to share the decline equitably, the U.S. must reduce its oil use by 80 percent to six gallons per day per capita.

Americans have cut back on their driving recently in response to higher prices, but their over-consumptive ways of living continue. As former BP petroleum engineer Jeremy Gilbert put it at the conference: “Americans are changing their gasoline consumption but not their lifestyle.” He ended his talk with the call: “Wake up America!”

Relocalization advocates got some good news from Jeff Rubin, chief economist of CIBC World Markets, who thinks globalization is being reversed because distance finally matters with triple digit oil prices driving up shipping costs. Still, even with de-globalization coming, no viable alternatives to the growth economy, which is completely dependent upon increasing oil supplies, were addressed at the conference.

As for why America is not moving forward on real solutions and adaptations to peak oil, the roadblocks identified at the conference included: politicians, economists, rampant hype of new technologies, faith in government and technology, denial, and the attention demanded by other pressing problems such as preserving Social Security and Medicare.

ASPO-USA organizers deserve credit for putting on an annual conference which gathers the foremost experts on peak oil together with engaged participants from the United States and abroad. As the conference ended I thought of its basic message – that peak oil is real, that it’s at hand, and that its aftermath will be dire.

Megan Quinn Bachman (megan@communitysolution.org) is the outreach director for Community Solutions, a non-profit based in Yellow Springs, Ohio, USA, focusing on household sector solutions for peak oil and climate change. Its fifth annual conference, “Plan C: Individual and Community Survival Strategies for the Energy Crisis” will be Oct. 31 – Nov. 2, 2008 in Rochester, Michigan, near Detroit. More information can be found at http://www.plancconference.org.

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