[R-G] 'Don't panic: peak oil won't make sky fall'

[Anthony Fenton]

Commentary
Don't panic: peak oil won't make sky fall
Commentary By Gwynne Dyer
Publish Date: November 15, 2007
http://www.straight.com/article-118410/dont-panic-peak-oil-wont-make- 
sky-fall

During most times of crisis, "Don't panic" is excellent advice  
(though not if you're an investor, in which case the trick is to  
panic 48 hours before everybody else). If the peak-oil crisis is upon  
us, then not panicking is definitely the right response. It could be  
a quite gentle crisis if it is properly handled, but it will be a  
nightmare if governments and markets panic.

The current surge in the price of oil is certainly not driven by a  
conviction that oil supplies have peaked and can only decline from  
now on. The dealers in the London and New York exchanges who make the  
market react to the daily flow of news–a possible Turkish invasion of  
Iraqi Kurdistan, two North Sea rigs closed for a week because of bad  
weather–don't bother much about longer-term issues like peak oil.

The market is a simple-minded beast: supply is tight and disruptions  
are possible, so the price goes up. But the market is so tight  
because demand has been growing faster than supply for years, mainly  
due to the economic boom in Asia, and now the fear is that supplies  
may have stopped growing altogether. The German-based Energy Watch  
Group declared last month that global oil output peaked in 2006 at 81  
million barrels per day. It will fall to 58 million barrels per day  
by 2020, it predicts, and to only 39 million by 2030.

That would give us just over 20 years to cut our use of oil by half– 
or, rather, by two-thirds, since world demand for oil is set to  
increase 37 percent by 2030, according to the annual report of the  
U.S. Energy Department's forecasting arm, the Energy Information  
Administration. In theory, two decades ought to be enough to come up  
with more efficient engines and other conservation measures for the  
half of all oil that is used in transport and to switch to  
alternative fuels for much of the rest. But there are many who doubt  
that we will succeed.

Once the realization sinks in that the future is one of steadily  
diminishing oil supplies and steadily rising oil prices, they argue,  
there will be a vicious scramble for control of the remaining  
reserves, accompanied by wars that deplete those reserves even  
faster. The markets will panic, a deep and permanent global  
depression will impoverish everyone, and there will not be the will  
or the resources to build a new economy that is far less dependent on  
oil.

The most pessimistic of these Cassandras, like American writer James  
Howard Kunstler, predict nothing less than the wholesale collapse of  
industrial civilization. In his 2005 bestseller, The Long Emergency,  
Kunstler envisaged a future in which the survivors of the oil-peak  
catastrophe eke out a living in an 18th-century-style economy: the  
great cities are abandoned, almost all production is for local  
consumption, and the higher technologies have mostly been lost.

Kunstler's great hate is the suburbs, which are mainly an artifact of  
the cheap-oil era, and one gets the feeling that he would secretly  
welcome any catastrophe that destroyed them. You do not have to be a  
Cassandra, driving past the preposterously far-flung suburbs that  
have sprung up around North American cities in the past few decades,  
to see them as the neo-slums of the post–peak-oil future, but their  
demise does not necessarily imply the collapse of an entire  
civilization.

There really is a finite amount of oil, and at some point production  
will peak and begin to decline. Is that time here? Perhaps. World oil  
production, which grew annually by an average of 1.2 million barrels  
per day over the past 20 years, has been almost flat for the past 18  
months despite the absence of any major disruptions.

If peak oil is here, must we all now go into the dark together? Of  
course not. The predicted rate of decline in world oil production  
once we are past the peak is only two percent per year. If demand  
were still rising by about two percent per year, that would imply a  
four-percent shortfall in supply next year, an eight-percent shortage  
the year after, 12 percent the year after that…

However, that presumes that Asian economies will continue to grow at  
the present rate, but they won't go on doing that if the oil price  
goes through the roof. So let us assume that we have to cope with an  
accumulating oil shortfall of about three percent per year. Could  
modern economies transform their basic transport and energy  
structures at three percent per annum?

Certainly they can, provided they continue to cooperate  
internationally and don't panic. Moreover, the technologies they need  
in order to wean themselves from their excessive dependence on oil  
are precisely the ones they need to get their carbon emissions down  
and ward off the threat of runaway global warming.

If peak oil is here, we can deal with it. And if it isn't here yet,  
we should still be acting as if it were. The sooner we start adapting  
our economies to a future in which oil is increasingly scarce and  
expensive, the less pain and risk we will face when it does arrive.