US Report Acknowledges
Peak-oil Threat
By Adam Porter
14 March, 2005
Aljazeera
It
has long been denied that the US government bases any policy around
the idea that global oil production may be in terminal decline.But a
new US government-sponsored report, obtained by Aljazeera.net, does
exactly that.
Authored by Robert
Hirsch, Roger Bezdek and Robert Wendling and titled The Peaking of World
Oil production: Impacts, Mitigation, & Risk Management, the report
is an assessment requested by the US Department of Energy (DoE), National
Energy Technology Laboratory.
It was prepared
by Hirsch, who is a senior energy programme adviser at the private scientific
and military company, Science Applications International Corporation
(SAIC).
They work extensively
on defence and geopolitical issues for clients, including many for the
US government.
Among current job
openings at SAIC are positions at Fort Benning (formerly School of the
Americas) and a private military contract to help retrain the Albanian
air force in Tirana.
Hirsch has held
a wide variety of positions in the US energy hierarchy including senior
energy analyst at the Rand Corporation, through to a presidentially
appointed assistant administrator for solar, geothermal and advanced
energy systems.
He has also previously worked for the US Department of Energy on numerous
advisory committees, including the DoE Energy Research Advisory Board.
This new report
follows on from two presentations by Hirsch last year. One on 1 March
to the same National Energy Technology Laboratory and another on 14
June last year at the Annapolis Centre for Science Based Public Policy.
Here Hirsch laid down his ideas on the peak of oil production.
The Annapolis Centre
for Science-based Public Policy is a group which has received $658,000
in funding from Exxon Mobil since 1998. It openly disputes the idea
that global warming is the result of burning fossil fuels.
But this brand new
senior-level report on "peak oil" is unprecedented in US government
circles. It is not just the existence of the report itself that is such
a landmark in the current oil debate. Its conclusions also pull no punches.
"World oil peaking is going to happen," the report says. Only
the "timing is uncertain".
The effects of any
oil peak are similarly not ignored. Specifically, the impact on the
economy of the United States. "The development of the US economy
and lifestyle has been fundamentally shaped by the availability of abundant,
low-cost oil. Oil scarcity and several-fold oil price increases due
to world oil production peaking could have dramatic impacts ... the
economic loss to the United States could be measured on a trillion-dollar
scale," the report says.
The authors of the
report also dismiss the power of the markets to solve any oil peak.
They call for the intervention of governments. But also they rather
worryingly point to a need to exclude public debate and environmental
concerns from the process. They say this is needed to speed up decision-making.
"Intervention
by governments will be required, because the economic and social implications
of oil peaking would otherwise be chaotic. But the process will not
be easy. Expediency may require major changes to ... lengthy environmental
reviews and lengthy public involvement."
Hirsch notes, despite
arguments from the major oil companies and producer nations, that new
finds of oil are not replacing oil consumed each year. Despite the advances
in technology, reserves are becoming increasingly difficult to replace.
The report sees
"a world moving from a long period in which reserves additions
were much greater than consumption, to an era in which annual additions
are falling increasingly short of annual consumption. This is but one
of a number of trends that suggest the world is fast approaching the
inevitable peaking of conventional world oil production".
The report then takes three possible scenarios and outcomes. Firstly
that energy replacement solutions, or "mitigation" as the
report states, are started 20 years before any "peak". Secondly
that solutions are only enacted 10 years before any peak and, thirdly,
that solutions are only put into practice as the peak becomes apparent.
In what some may
see as an optimistic assessment, the authors believe 20 years is enough
time to limit damage from any peak. However, they point out that "if
mitigation were to be too little, too late, world supply/demand balance
will be achieved through massive demand destruction".
Demand destruction
is a modern way of saying catastrophic recessions and shortages. But
as well as these predictions, the report lays out "signals"
it believes will be apparent in the run-up to any peak. This is perhaps
the most worrying aspect of the report, as it seems to describe the
very events that are taking place at the moment.
"As world oil
peaking is approached, excess production capacity ... will disappear,
so that even minor supply disruptions will cause increased price volatility
as traders, speculators, and other market participants react to supply/demand
events," the report says.
"Simultaneously, oil storage inventories are likely to decrease,
further eroding security of supply, aggravating price volatility, and
further stimulating speculation ... oil could become the price setter
in the broader energy market, in which case other energy prices could
well become increasingly volatile and unpredictable."
The report highlights
a series of ways to minimise any impacts. From increased fuel efficiency
to technological help in stopping the practice of "oil-left-behind"
or non-extractable oil and various forms of new liquid fuels, liquefied
coal and gas-to-liquids.
But in its conclusion
the report makes troubling reading, noting that "the world has
never faced a problem like this. Without massive mitigation more than
a decade before the fact, the problem will be pervasive and will not
be temporary. Previous energy transitions were gradual and evolutionary.
Oil peaking will be abrupt and revolutionary."
This report is the
clearest signal yet that the U.S government is taking the subject of
"peak oil" seriously. Yet it remains to be seen what actions
can be taken to stop this potentially "revolutionary" change.