Posted by: Jon | 23/11/2010

When Peak Oil happened (and nobody noticed)

So “Peak Oil” has been and gone without so much as a whisper from the world’s mainstream media. When earlier this month the authoritative International Energy Agency announced that the peak to conventional oil production most likely happened back in 2006, the media did not report it. And even when Fatih Birol, the IEA’s chief economist, stated that “the age of cheap oil is over” – echoing the words of people long dismissed by oil companies and governments as alarmists  – still the mainstream press took no notice.

“Peak Oil” is the moment when production of oil reaches its highest level after which there is less oil available to meet the world’s demand.  The precise date for this hugely significant event – significant because it has been the ready availability of cheap oil that, in only a little over a century, has fueled the world’s astonishingly rapid technological and economic growth and enabled the previously undreamt of living standards that today we take for granted – has been the subject of much debate for decades.

Until very recently, the accepted wisdom has been that the production of cheap conventional oil could carry on indefinitely. Even after Robert Hirsch, commissioned by the Bush administration in 2005 to report on global oil reserves, surprised both himself and the world to warn of an imminent peak (and at least twenty years needed to prepare for it), governments still remained complacent.  

Then, in 2008, as the IEA revised downwards their previously optimistic forecasts to project a peak as early as 2020, the media at least began to sit up and take notice. But when, on the 9th November this year, the IEA reported that conventional oil has already peaked (at 70 million barrels per day in 2006), and that future oil production will plateau only at around 68 billion barrels per day for another quarter-century (whilst demand is projected to rise well over 100 million barrels per day), the mainstream media did not see fit to report it.

‘Peak oil’ does not mean that oil is going to run out tomorrow. What it does mean is that available supplies will become scarcer and more expensive as demand continues to grow. Scarce and expensive oil has massive economic and security implications for the world. We can no longer take for granted affordable supplies of the hitherto abundant fuel that has – until now – underpinned our agriculture, our transport systems, our building construction, our manufacturing, our technology, our consumer capitalist model of economics – in short, pretty much everything that enables 21st century Western life as we know it.

From here on, all new oil production will be more technically difficult, more environmentally destructive and polluting, more demanding of energy invested for energy returned, more dangerous to implement and safeguard, and very much more costly.

It is many years since oil flowed freely from gushing wells in Texas or Arabia or the Caspian Sea. And increasingly it will no longer come from established oil fields at all. Instead, to make up the shortfall in supply, it is being laboriously extracted from tar sands, oil shales and deep water drilling platforms  – with all their attendant horrors of massive environmental degradation and increased CO2.  

All the more incredible then that the IEA’s announcement that peak oil is behind us and what this means for our future has passed by with no “shock horror” headlines on the front pages of the world’s usually happy-to-dramatise media.

Only back in 2007, the UK Government  said “Over the next few years global oil production and refining capacity is expected to increase faster than demand. The world’s oil resources are sufficient to sustain economic growth for the foreseeable future. The challenge will be to bring these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy.”  And as recently as 2009, the Wicks Review of UK energy security, carried out for the UK Department of Energy and Climate Change, dismissed peak oil in only a little over one page of a 119 page document. 

This same complacency has been shared by most other governments and their economic advisers, and well-reasoned warnings of impending peak oil (from energy insiders such as Colin Campbell and Jeremy Leggett and groups such as the Association for the Study of Peak Oil)  have been widely ridiculed as alarmist nonsense from a lunatic fringe.

But over the past year, this ‘lunatic fringe’ has been joined by new voices from business and the military who are less easy to dismiss as overstating the case:

Back in February, the UK Industry Task Force for Peak Oil and Energy Security (ITPOES) warned:

“Britain is unprepared for significant risk to companies and consumers”… “oil shortages, insecurity of supply and price volatility will destabilize economic, political and social activity potentially by 2015.”

Then, in April, the Pentagon Joint Operating Command reported:

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.” ….”While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”

In June a report from Lloyds of London and Chatham House stated baldly:

“We are heading towards a global oil supply crunch and price spike”

A draft report on security implications prepared by the German army Bundeswehr Transformation Centre was leaked in September:

“High oil prices would further affect almost all aspects of society”…. “the changes and likely reduction in standard of living might render societies less stable and make them more attracted to extremist political positions and even trigger changes in government systems, as trust in key actors in politics will diminish”…. “For scenarios which end with a complete destabilization of societies, Germany is at a significant risk given its strong participation in a globalized economy. Being still able to act requires a number of basic infrastructures to keep functioning, both for the country and its armed forces. Work is required to look into redundancy, high-resilience of infrastructure and local self-organization approaches.”

This was followed in October by ‘The Next Oil Shock’ Report from the New Zealand Parliament:

“Low-cost reserves of oil are being rapidly exhausted forcing oil companies to turn to more expensive sources of oil. This replacement of low-cost sources of oil with higher-cost sources is driving the price of oil higher”… “there is a risk that the world economy may be at the start of a cycle of supply crunches leading to price spikes and recessions…”

And then at the start of this month the IEA’s World Energy Outlook 2010 had this to say:

“The age of cheap oil is over”… “Recently announced policies can make a difference, but fall well short of what is needed for a secure & sustainable energy future…”

In spite of all these warnings and in spite of global economic crisis, the world is still burning oil like there’s no tomorrow. While climate science is telling us that, if we continue to burn even a fraction of the planet’s remaining fossil fuel reserves, there won’t be a tomorrow. Recession may have caused a slight decline in oil demand from the West, but global demand is rising again – as are carbon emissions too. (We in the West should not feel too virtuous about our slightly lowered energy demand for this has less to do with any domestic efforts to reduce consumption than the fact that we have outsourced our manufacturing to China).

Meanwhile the eyes of the media have been so firmly fixed on the latest lurches and stumbles of the punch-drunk global economy that they have entirely ignored peak oil. And the gaze of governments and most economists remains myopically focused on ‘growth as usual’ – when a brief glance at the zero prospects for the affordable energy to fuel it makes clear that future growth as we now conceive it is impossible. Because our present scale of industrial civilization cannot be run on wind generators and solar power and there is no alternative energy source visible even on the distant horizon that is as cheap, abundant and versatile as crude oil.

So it is with increasing frustration and their eyes wide open that business and military think-tanks are now seeking clear policies from governments to enable them to adapt and prepare for the twin destabilising economic drivers of peak oil and climate change.

It would be nice to believe that the uncanny silence from governments and the media about the end of cheap oil is some sort of well-intentioned collusion to keep us, the unwitting public, protected from realising how dramatically our lives will change over the next decade or two.  

And preferable also to believe that governments secretly do have a joined-up plan for how to recover our economies, secure our energy futures and avert climate change all in the nick-of-time. Because if they really are as unconcerned as they appear to be about peak oil, the dress-rehearsal austerity measures now being imposed to return us to (now mythical) growth will be as nothing to the social and economic turmoil to come.


An internet search reveals only six media articles about the IEA’s admission of peak oil – in the Christian Science Monitor, Hybrid Cars, Arab News and National Geographic and tucked away in on-line blogs in the New Statesman and the New York Times. But, while the big news media have remained spectacularly silent, cyberspace has been alive with comment. Here are links to two better informed commentaries than my own:

Tom Whipple (retired CIA analyst writing on the Post Carbon Institute website – 24th November 2010)


Chris Martensen (of Crash Course fame – 23rd November 2010)


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