Are we approaching Peak Oil Demand? Not if the oil industry can help it

Peak oil used to be about running out of supply; now some think that we will run out of demand. The oil companies will ensure that we never run out of demand.

Remember Peak Oil? It was all over TreeHugger, the idea that the easy oil was going to start running out and it would get more and more expensive and difficult to find.

We wrote post after post about Hubbert's Peak and how we were all gonna die, that we are "in the confusion stage now, followed by chaos and collapse and basically the End of the world as we know it as we slide down the slope from the Peak.”

Then along came hydraulic fracturing (fracking), tight oil, deepwater drilling, Trump, Zinke and Pruitt, and the oil and gas are flowing freely and people are piling into pickups. Peak oilman King Hubbert became "a punchline rather than a visionary." And now, over at the NRDC, Jeff Turrentine asks Could Peak Oil Demand Be Just a Dozen Years Away? But he isn't talking about oil supply, he is talking demand, suggesting that electric cars are going to cause a different kind of peak.

Read Lloyd Alter’s story from Treehugger - “Are we approaching Peak Oil Demand? Not if the oil industry can help it.”

Green tide is turning against oil giants

Remember "peak oil"? It's had many iterations over the years. I remember sitting in a cafe just four years ago, while the executive of a small oil exploration firm explained to me that all the easy-to-reach oil was gone. What was needed, he explained, was for intrepid companies like his to go out and find the tricky stuff hidden in under-explored basins. This would be more expensive, but prices were high. What else could the world do?

The cost of buying an electric vehicle could
reach parity with normal cars by the early 2020s.

Rather a lot, it turns out. In fact, that talk of "peak oil" is now being replaced by another prospect: peak oil demand. This week, GTM Research and Wood Mackenzie, the influential Scottish energy research house, published an analysis suggesting global fossil fuel demand could peak in the next five years. Paul McConnell, the author of the analysis, said two or three years ago it was hard to get oil and gas firms interested. But in the last year, "it's become virtually all we talk about with clients”.

Read what Juliet Samuel had to say in today’s Melbourne Age - “Green tide is turning against oil giants.”

'Market forces' won't resolve climate change

In discussions about climate change, there's a certain constituency of economists and business leaders who say the market will fix the problem. If we let technology work its wonders, they say, eventually clean energy will prove sufficiently cheap and plentiful enough to make burning fossil fuels a thing of the past.

“We need a carbon tax, or we are going to keep using cheap fossil fuels until they kill us all.”

There's just one problem: The market won't. We have enormous remaining supplies of oil, gas, and coal because the technology of exploration and extraction has advanced along with solar and wind technology. We're nowhere near Peak Oil or Peak Gas—despite what some people were predicting a few years ago—and prices continue to plummet.

Read the Co-Exist story “We Can't Rely On Market Forces Alone To Fix Climate Change.”

Our future can be either "good" or "bad" says Ugo Bardi

Ugo Bardi.

Our future can be “good” or “bad” depending on how we react to the collision of events the world is presently experiencing.

The founder and president of the Association for the Study of Peak Oil and Gas, Italia, Ugo Bardi, has written about the past and possible alternatives that he sees for our future.

In a story on the Peal Oil website, Mr Bardi wrote in a story headed: “Ugo Bardi: The next ten billion years”, canvassed the dilemmas humanity face.

He takes what he describes as a “telescopic sweep of scenario building” in an attempt to help us understand what our future could be like, explaining it in both good and bad terms.

Looked at from the comfortable perspective of today neither is all that encouraging, but until we respond to the unfolding scenario in a way that illustrates that we put the welfare of people ahead of the short-termism of profit, the Bardi’s “bad” outcome appears inevitable.

Without oil, modern civilisation doesn’t work

Treasury’s last Inter-generational Report contains, hidden away on page 91, a simple stunning statement: Australia’s oil will be gone by 2020. The timing could not be worse. By 2020 Peak Oil is likely to have rendered oil imports precarious and costly. And without oil, modern civilisation doesn’t work.

The media ignored this part of the Report, so the ministers of our two major parties and the bureaucrats who advise them, have rarely been required to explain why they let this happen. On those rare occasions the question has been brushed aside with assurances that either market forces will always supply oil (or a substitute) at reasonable prices or Australia has vast reserves of natural gas.

Both these arguments are shaky. Firstly, for many uses, such as aviation, mining, and most road transport, there simply is no good substitute for oil. No one has yet built a gas-powered plane.

It may seem impressive to find an urban taxi scooting around powered by a large tank of compressed gas that has taken over the boot, but the energy required to find and transport that gas, and to compress it to an amazing 2500 psi, and safely seal it in a robust tank, did not come from gas. We are a long way from knowing how to run our civilisation on gas.

And without cheap oil, most business plans might crash. BHP for instance is threatening to pull out of the Olympic Dam expansion unless diesel prices are kept low but the Pentagon’s projection is that oil prices will in time double.

It is also far from clear that market forces will provide oil cheaply, or spread it evenly. The International Energy Agency has provisions to compel equitable sharing of traded petroleum. Yet once Peak Oil bites, energy-producing countries may hoard the increasingly precious stuff, like Russia did with its grain harvest recently, or sell it selectively to their friends. Or to those who bully them.

Energy shortage will affect each country differently, and often via its effects on fertiliser and food production. Australia’s generally thin soils are particularly dependent on fertilisers made from or transported by fossil fuels. As the Immigration Department’s recent Sobels report (p. 89) showed Australia’s future food supplies are not guaranteed.

Is this our future
without oil?

As well, higher prices may create a rush to “cut green tape”, which is code for going after dirtier and more environmentally destructive forms of energy. Examples include BP’s deep-sea drilling, or the U.S. “fracking” craze with its now well-known health and environmental risks. Optimists argue that the U.S. is now looking to export Liquid Natural Gas, and hence world gas prices are actually falling. Yet some experts believe the shale gas industry drilled the best sites first, hyping prospects to attract investment and that politicians, and the media, desperate to identify a new energy source to support future economic growth, accepted the hype uncritically.

Turning to the government’s second excuse, Australia does not have vast reserves of gas put aside. We have, or have had, very large gas fields, but almost none of this is kept for Australian use, because we don’t reserve gas: we sell the stuff off soon after we find it. Or we all but give it away, in return for ephemeral jobs and often inappropriate or damaging “development”.

The last government to make a creditable attempt to retain Australia’s energy reserves was the Whitlam government – which got into trouble for trying to borrow huge sums to buy back energy reserves that had been sold off while still in the ground. Oddly enough, the lesson most politicians seem to have learnt from this, under the tutelage of the Murdoch Press, is not that further energy discoveries should be retained, but that they should be sold off as fast as “market forces” would like.

Democratic leaders are often so focussed on getting re-elected in one, two or three years, that they make utterly short-sighted decisions to get a temporary upswing in GDP, so they can boast of being “good economic managers”.

On a slightly kinder view, they may be blinded by economic growthism – the belief that if you just keep “the economy”, meaning GDP, growing today, your successors are bound to find some other expedient to keep it growing in the future.

The media often imposes such views. In 2011 when the federal government approved the Wheatstone gas project in W.A. TheAustralian burbled that thanks to this sell-off “Australia is poised to become a global energy superpower”, and implied that Chevron had done us a favour by accepting the deal.

In Pantera Press’s forthcoming debate book Big Australia Yes/No? (of which I did the No case) I wrote: My opponents claimWe will have enough food and water. They do not consider energy, without which neither food nor water can be supplied to large cities in a semi-desert continent. Yet Australia has recklessly sold off its energy resources…True, the 2010 Intergenerational Report Australia to 2050: future challenges, says on page 91 that our known reserves of natural gas would last about 70 years if we continue to use it at 2008 rates. But this is unlikely. After Peak Oil, gas may be used at far higher rates, and hence be gone in a fraction of the time.

We can’t assume that Australia will keep a strategic reserve of its own gas to protect us from the world peak in gas. Some experts predict global gas supplies will peak as early as 2020, though others predict no decline before 2030. Studies of how civilisations fall, such as Jared Diamond’s Collapse, show a common cause is that populations outgrow their resources.

Sure there are plenty of politicians and advisers who think there is no problem. Maybe by the time our gas runs out, we’ll have invented something else. Or we’ll have discovered another major field that some enlightened future government won’t sell off.

Yet we have a history of grossly over-estimating energy resources. The desire of exploration companies to boost their share-price by overstating a find combines with the tendency of journalists, once they have taken on a story about a find, to exaggerate its implications. We have often been assured we have centuries’ worth of a resource when in fact we have only decades.

The U.S. Professor of Statistics Albert Bartlett gives a withering account of this pattern in his article Arithmetic, Population and Energy. He points out that despite claims that the U.S. had “more than 500 years” of coal, and more recently that globally “coal will last us for at least 119 years,” it seems coal may in fact be peaking now. Similar points are cogently made in Richard Heinberg’s Forward to the recent report Will Natural Gas Fuel America in the 21st Century?

And now even industry is getting worried, and claiming that our sell-off of gas may leave us short of energy as early as 2015. According to Andrew Liveris, the Australian CEO of Dow: “Most obviously, Australia has no evident energy strategy…You tend to get what you plan for. And if you don’t plan…