Image from a collecion called Oil, by Edward Burtynsky
Here is the nub of the interview on Forbes.com with Charles Maxwell, who is senior energy analyst at Weeden & Co a US investment bank.
He is basically saying that Global oil production will max out in the next 5 to 10 years and that this is going to cause an ongoing constriction of supply and a gradual forcing of energy prices…
Maxwell: A bind is clearly coming. We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018.
That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today.
Forbes: As the economies of the world grow, demand is growing.
Maxwell: Exactly. And at around 2015, we will be unable to produce the incremental barrel in the global system. So a tightness of supply will begin to be felt. Let’s say in 2013, we may produce 1% more oil than we did the year before and then if we have a demand growth of 1¼% in 2013, we’ll be very slightly tightening the system.
The difference between supply and demand is not going to be very much at first. It would not normally cause a big rise in price. On the other hand, in 2014, that tightness begins to grow and it is now a trend. By 2015 perhaps we’re only able to produce 0.50% more with about 1.25% higher demand, so that we’re 0.75% short. And now we have to raise prices enough to stop some people from using that oil because it is actually not available.
……..you have to find the oil many years in advance of being able to produce it. We just haven’t found enough oil for a number of years, so this problem is now beyond the reach of some big, major discovery that suddenly would provide us with a sufficiency. And so far, we have no technological breakthrough to assist us.
Forbes: Sounds like some things are going to have to change?
SOCAR Oil Fields #10 Baku, Azerbaijan, 2006 Image by Edward Burtynsky
Maxwell: Yes. In the same way, the American public has not yet really given the go-ahead for the nuclear power developments of the future. So, it doesn’t look like nuclear can get revved up in the time frame of the next 10 years. Even if we decide to seize the nuclear alternative, it’s still a decade before we can get the plants built and operating.
Me: Well we are hearing this message increasingly clearly I guess, I have been avidly reading everything I can get my hands on the subject of peak oil and energy descent over the last 3 or 4 years so its certainly not new to me. As we continue to hear alarming stories of the ecological impact of the Gulf oil spill and the impact of the dispersants they have used to try and hide their mess we are constantly reminded of the devastating impact the extraction and combustion of oil is having on the planet and its living environment.
There are a couple of big points that he goes on to make in the interview that are pretty interesting.
As I said earlier I was convinced about permaculture’s logical and essential approach a long time before I started thinking about peak oil. but the on coming reality of a declining energy supply really will refocus our thinking.
In many ways we have to see Peak Oil as an opportunity. Cheap energy has driven up the standards of living of a great many and has fed an exponential growth in the world’s population but it has also made us forget the limitations of the ecological carrying capacity of the planet. Its allowed us to cheat on the laws of nature by using a one off bonanza of stored, fossilised energy. So we have lost the true meaning of the value of energy and a true sense of what is really important. The end of oil will remind us of the laws of ecology and importance of a healthy biosphere.
But there is another thing he goes to say; which is the wider contect of the article, he is an energy investment banker of some sort, and what they are talking about is investing in medium and longer term energy futures. And what they are saying is invest in oil – in the long term the development of deposits like the Athabaskan tar sands and the oil shale of the Bakken region of Montana. Money chases money, capitalist free market amoral greed. We will keep investing in oil, no matter how much it is against our long term interest to do so as a species because it is profitable. And yay! the oil companies can expect a bonanza of profits as the constricted supply sends the prices rocketing, it is like buying shares in our own funeral.
I think about these issues a lot and I come back to James Hensen, to US climateologist and NASA scientist, who is a big proponamt of a carbon tax. So yes, energy taxes they claim hurt the poorest people, etc. maybe, but the storm that is brewing on the energy front is going to hurt everyone. A carbon tax at source that was ring-fenced money for investment into renewables, organic food development and other climate neutral and energy saving initiatives. Without such a thing we will keep putting resources into short-termist profit making, empowering the very corporations that are causing so much havoc to this beautiful and fragile earth.
Last year, China consumed more than 3bn tonnes of coal. Chinese power stations generated 375m tonnes of coal ash, according to a Greenpeace report. This image shows Shentou number two power plant in Shuozhou, Shanxi province, its ash pond in the foreground
I cant see any other driver to force the hand of these investment bankers who are literally rubbing their hands at the prospect of the enhanced profits likely to be generated by the last chapter in the oil saga.
Switching to coal is certainly not the answer either, the filth, pollution and climate change is cause also needs to be reined in by some kind of base carbon tax. China is drowing in coal ash as a result of their sudden growth as highlighted by a recent report from Greenpeace. Easy to say leave the coal in the ground maybe, but of course are Australia and the other big coal exporters going to sign up for this.. are they? Well yes, less they want their own children to hate them for for their greed and short-termism. It is time for a global wake up and maybe a carbon tax is the way to do it.