Toward an oil apocalypse

 

Within a few years, world oil production by conventional means will decline, while world demand keeps increasing.  The shock that will result from this structural shortage is inevitable, so large is the dependency of our economies upon cheap oil, and impossible the rapid decrease of our needs.

 

We can at best hope to alleviate the shock, and this only provided the coming shortage becomes now the major concern of our societies, and the beginning of drastic changes in all sectors. Otherwise it will be chaos.  This anticipation is based upon the method of calculation of American geologist King Hubbert, who, in 1956, predicted that domestic oil production in United States would peak in1970 - which is exactly what happened.

 

Transposing Hubbert's method to other countries produced similar predictions: today all giant oil fields - the only ones that matter - see their production decline, except in the "black triangle" Iraq- Iran-Saudi Arabia.

 

Hubbert peak for this Middle East oil should be reached around 2010, depending upon the more or less rapid Iraqi production restart, and upon the growth of Chinese demand.

 

Sectors that will be hit first by the continuous rise in oil prices are air transports and intensive agriculture; kerosene prices for the first one, and nitrate fertilizers prices for the second one are directly linked to oil prices. This will happen without the political flexibility that, in other sectors, can stabilize, for a while, economic movements by lowering oil taxes, when prices rise.

 

Next, land transports, tourism, petrochemical and automotive industries will be struck by the depressive effects of a diminishing quantity of oil (depletion).  To which extent this situation will lead to a general recession?  Nobody knows, but the blind behaviour of our political leaders and the usual panic stricken reactions of markets let us forecast the worst.

 

This sure prophecy is universally ignored, denied or underestimated.  Those measuring exactly the imminence and the scope of its advent are rare. Michael Meacher, former British environment minister (1997-2003), recently wrote in the Financial Time that unless a general consciousness arousing takes place, and immediate planetary wide decisions taken on severe changes in terms of energy "civilization will be faced with the most acute and probably the most violent mayhem in its recent history".

 

If we want to maintain, nevertheless, some humanity to life on earth in the years 2010 and after we should, as geologist Colin Campbell suggests, call upon the United Nations to work today on an agreement to guarantee poor countries the possibility to keep importing some oil; to forbid profits from the oil shortage; to encourage energy savings; and to spur renewable energies.

 

In order to reach these objectives the universal agreement will have to enforce the following measures: each state will control imports and exports of oil; no oil exporting country will produce more oil than a scientifically calculated yearly depletion rate permits; each state will reduce its imports of oil according to a worldwide depletion rate agreed-upon.

 

This necessary priority given to physical econometrics will displease economists and political executives, particularly Americans.  The succession of U.S. governments never accepted to question the American way of life.  Since the first oil shock of 1973-1974 all American military interventions can be analyzed in the light of fear of shortage of cheap oil.  In fact, it was the American 1970 production peak, together with the Kippur war, that enabled OPEC to take control of the supply and create this first shock.

 

Western states then tried to get the lead back, and to erase the looming shortage, not so much by adopting energy frugality than by activating oil fields in Alaska and the North Sea. Consequently, in 1979, the Iranian revolution and the second oil shock put the lead back again into OPEC's hands, while western economies paid dearly their oil voracity with the subsequent recessions.

 

In the early 1980's the American strategy of reconquest of oil flows and prices lead them to finance and supply weapons to Saddam Hussein for his war against Iran, and to gain the complicity of Saudi Arabia king Fahd to increase oil exports to the West.

 

This lead to the 1986 oil counter-shock, when the West once again believed in an unlimited oil supply, and to the energy hunger up to the Iraq wars (1991,2003), whatever the number of dead (100 000? 300 000?), whatever the costs (100 billion dollars?  300 billions?), whatever the resources required (annual Department of Defence budget: 400 billion dollars).

 

During these same last 15 years, the multiple Balkans’ conflicts find their source and their resolution in the American will to keep Russia away from the oil transport routes from the Black Sea and the Caspian Sea to the Adriatic seaports, via Bulgaria, Macedonia and Albania.

 

Oil geopolitics allow all kinds of pacts with the devilish Islamists, from Central Asia to Bosnia, and any cynical connivance with terrorists, up to the recent trip of Tony Blair to Libya to enable Shell to raise its reserves, for a price of a few hundred million dollars.

 

The American "Great Middle East" project, dressed up into humanitarian and democratic considerations, is nothing more than the attempt to grab once for all the oil taps of the region.

 

More than thirty years of concerns about oil did not make American and European leaders less blind about the energy crisis that is looming up in the short-term. Despite what René Dumont and the ecologists said as early as the 1974 French presidential campaign, the governments of industrialized countries kept believing, and still believe, in a cheap and limitless oil supply - and also despite the harm to climate and to human health, disturbed by greenhouse gases - rather than organizing the decarbonisation of their economies.

 

However, the oil shock that is likely to happen before the end of the decade does not resemble the preceding ones.  This time the game is no longer geopolitics, it is geology.  In 1973 and 1979 the shortages had a political origin, decided by OPEC.  Then the supply was brought back to demand level.  Today it is the oil wells that are dwindling.  Even if the United States are temporarily able to maintain their hegemony on all the oil fields of the world (outside Russia), their army and their technology will be helpless against the forthcoming depletion of conventional oil.

 

Anyway, too little time is left to us to replace such a cheap fluid, so energetic, so easy to use, to store and to transport, with so many applications (domestic, industrial, cars, raw materials...) and to reinvest within less than 10 years 100 000 billion dollars into another abundant source that does not exist.

 

Natural gas?  It doesn't have all the above mentioned qualities of oil, and anyway it will reach its peak of production 10 years after the first one, around 2020.  The only viable way is oil self-restraint, immediately organized by an international agreement, as outlined above that would permit a rapid drop off of our addiction to this "black gold".

 

Without waiting for this delicate international agreement, our newly elected regional leaders and our forthcoming elected European leaders should, with a high priority, devote their efforts to locally put into practice these objectives, by organizing on their territories the reduction of oil consumption.

 

If this is not done, rationing will be achieved by markets, with the next climb in oil prices, and then, via inflation, the shock will reach all sectors.  At the soon-to-come price of 100 dollars per barrel, it will not simply be another oil shock, it will be the end of the world as we know it.

 

Yves Cochet

Member of Parliament, ecologist party, former minister of environment,

Le Monde, 31 March 2004

(Translation AC)