The Peak Oil Myth

[ThatHawaiiGuy]

Dangerous Oil
By Major Daniel L. Davis • on February 2, 2009

http://www.aspousa.org/index.php/2009/02/dangerous-oil/

There has been much debate recently within the defense community between adherents of the so-called “era of persistent conflict,” which posits future war will look a lot like today’s low-level wars in Iraq and Afghanistan, and those who believe we must maintain our traditional focus on large scale conflict against conventional armies. Thus far, the debate has been seen as occurring between two equally valid points of view with no real right or wrong answer. But I think such a belief is dangerously wrong because the differences between the two couldn’t be more significant, and the consequences of getting this choice wrong could be devastating for the United States owing to one crucial factor: oil and its declining availability in the near future.

Many of the factors which could cause instability around the world are fairly well known. The United Nations has been warning for many years about the probability of significant population expansion in the areas of the globe least able to sustain such increases. Concurrent with this population flux is the danger that billions of people may not have sufficient drinking water within a decade, and both of these problems are compounded by the possibility that the world may be near the limit of its ability to produce sufficient food for everyone. Add in the highly contentious and debatable factor of global warming and the future looks anything but stable.

There is another potential trouble-factor on the horizon, however, whose occurrence could result not in a low level insurgency as envisioned in an “era of persistent conflict”, but in large scale, state-on-state war: the peaking of crude oil production and the consequent irreversible imbalance between global supply and demand. We saw last year when the price of oil skyrocketed to nearly $150 a barrel how much of an economic disruption even a relatively small and short term imbalance between supply and demand could be to the global economy. Imagine the panic - and anger - that would ensue if that reduction could not be relieved by a simple opening of Saudi spigots or a modest dialing back of demand in the OECD countries.

As reported in a 2007 GAO study, the majority of the world’s leading geologists and oil experts believe that the peaking of the conventional crude will occur sometime between now and 2020. A number of these respected experts dampen concern about that fact, however, by citing the huge reserves of alternative energy sources under the earth’s surface that could conceptually be tapped to replace the crude flow. Far less known, however, are a series of reports commissioned by the Department of Energy that explains how even the expenditure of large amounts of money, difficulty, and time may be necessary to ascertain whether or not such alternatives will even be able to produce the required volume. Since 2005, Dr. Robert Hirsch, the lead author of the series, has said that if a crash program costing hundreds of billions of dollars were to begin even a full decade before the onset of the peak, severe global economic disruption would still result; if the crash program were started only after the peak were recognized, economic disaster would be a virtual certainty.

One of the more respected sources of information on global energy in the world today is the International Energy Agency (IEA). In a report the agency issued two months ago called World Energy Outlook 2008 (WEO) there were two critical facts that should get the attention of every serious-minded individual in this country.

First, the report projected that the decline rate of the world’s producing oil wells would increase from today’s average annual decline of 6.7% to 8.6% by 2030. Concurrently, the WEO projected that due to continued population increases and the development of the Chinese and Indian economies into first world status, global daily production would need to increase from today’s 85 million barrels per day (mbd), to approximately 104 mbd (a considerable reduction from previous IEA projections). Buried deep in the WEO study, however, is the staggering confession that in order to produce that 104 mbd by 2030 an additional 64 mbd will have to be found over and above what is being pumped today. To put that in perspective, the report explains that such an increase would require “six times the current capacity of Saudi Arabia.”

The IEA and other organizations assure the world that the production equivalent of those “six Saudi Arabias” will come from a combination of enhanced oil recovery (whereby technology will allow more oil to be retrieved from old fields previously considered exhausted), the discovery of new oil fields, and the development of alternative sources.

But the application of even the latest and most expensive technology has not reversed the continual decline in new discoveries, and it will take decades to develop the infrastructure necessary to produce meaningful volumes of alternatives once a concerted effort has begun - and no such effort is presently even considered. By all accounts, the peaking of conventional oil will begin an irreversible decline in just a few years - assuming we’re lucky and it doesn’t occur sooner. If we don’t immediately begin these crash programs we are condemning ourselves to a near-term future of great peril.

A report looking at future threats and dangers published last November by the Department of Defense and signed by the Commander of Joint Forces Command General J.N. Mattis warned that, “The implications (of insufficient supplies of oil) for future conflict are ominous. If the major developed and developing states do not undertake a massive expansion of production and refining capabilities, a severe energy crunch is inevitable.” In a normal time this challenge would be enormous. But when the nation is already suffering from the worst economic recession since the Great Depression and thus far trillions of dollars have been allocated to right the financial ship, where will the significant additional money, leadership and political will be found to address this challenge?

The likely answer is: they won’t be found until the crisis is upon us. Numerous studies and governmental reports over the past several years have issued warning after warning, all to no avail. Now in early 2009 the evidence of a peak continues to grow and the time available to take mitigating action continues to shrink. If we wait until the peak of conventional oil becomes evident as a result of an insufficient supply to satisfy growing global demand (once it recovers), no amount of money, leadership, or political will at that time will prevent severe crisis. If this crisis is not handled with the greatest of care and wisdom, we could find ourselves involved in a major state-on-state war as national populations the world over demand their governments take action to safeguard their own national interests, regardless of the impact on other countries.

The looming decline of world oil production is not some hypothetical possibility; it is a geological certainty that oil fields begin irreversible depletion once the peak of production has been reached and as the IEA reports, that depletion rate is likely to increase in the coming years. Given these facts, action is not simply a necessity; it is a serious national security imperative.

(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators.)