Tuesday, June 29, 2004
Cassandra is alive and well, still looking at impending doom
Posted by Living with Matilda at 3:59 PM
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The Party's Over
by Richard Heinberg

"We need an energy bill that encourages consumption "
- George W Bush (2002)

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist"
- Kenneth Boulding (ca. 1980)
Forget global warming or nuclear weapons in the hands of mad dictators – humankind’s misguided reliance on fossil fuels and the consequences of its depletion will be the harbinger of the end of the world as we know it, long before the floods or explosions hit.

Cassandra is alive and well: Richard Heinberg is as convinced as any of the impending collapse of civilised society. Whether he is accurate is his assessment of 2006-2012 being the critical moment or not, evades the central logic of his book – for he suggests that it is only in retrospect that we will know when the big ‘roll-over’ did in fact hit.

The big roll-over to which he refers is long before the oil runs out. It is when the barman shouts, “time at the bar please” and the free flowing booze dries up. At this point in the evening, we may still have reserves left in our glasses, but we become acutely aware of its finite and dwindling nature. In the real world beyond analogy, this is after we reach the peak of global oil production and demand begins to reaches total available supply.

At this juncture, there may still be many years of useful oil, gas and coal resources still remaining in the ground, but it will become increasingly difficult to extract. At the same time, a global economy institutionally tied to continued economic, population and material expansion and so intimately dependent on petroleum for transport, food production, government and social and commercial services will continue to drive up demand. Catastrophe awaits and society as we know it will be irredeemably transformed. Heinberg forecasts wars, famine and destitution, all in the best Cassandrist fashion.

Heinberg’s apocalyptic scenario is premised on our dependency on oil, our vulnerability to waning resources, the inevitability of exhaustion and most importantly, the immediacy of depletion.

We are dependent, as our entire capitalist system has been nurtured on cheap and easy access to petroleum which has created a vast infrastructure dedicated to growing energy consumption. We are vulnerable, as we have not diversified at the critical time and our rate of energy consumption is rising so quickly that bringing new energy sources (renewable and non-polluting) online could take an impossibly large investment in new kinds of infrastructure. And fossil fuels will inevitably run out. Oil, coal and gas are indisputably finite.

None of the above is particularly controversial. But it is the immediacy of the impending disaster that is a fundamental source of contention. “Act now,” is Heinberg’s call. “Pass the Energy Bill,” is George W Bush’s answer before opening up the Alaskan wilderness for exploitation.

But some signs of the looming calamity can already be seen. Domestic US petroleum production peaked in the 1980s, non-OPEC exports have probably already peaked, Royal Dutch-Shell’s board of directors is still taking casualties from their 20% over-booking of marketable resources and the global markets are only now breathing freely again after oil prices hit US$40 per barrel.

The UK experienced perhaps a taster of the social consequences during the fuel blockades of 2001 where half-mile queues formed at gas stations and people were left stranded, irate and vulnerable. The two giants, China and India, are only now beginning gorge themselves on oil – potentially adding another 2½ billion consumers to our petroleum economy. If China was to consume oil at the same rate as the Americans do now, by 2031 China would need 99 million barrels of oil per day, 20 million barrels more than is currently produced worldwide.

But perhaps the most startling truth revealed by Heinberg is that each year more oil is extracted than new deposits are found. It is on this basis that his ‘roll-over’ date of 2006-2012 is guesstimated.

However, there are some great uncertainties here: increased efficiencies and new technologies may enable more oil to become marketable and deregulated energy markets may quickly increase more diverse sources of renewable energy, reducing demand for oil at the margins. But Heinberg counters this by arguing that there are as many uncertainties restricting our breathing space as there are extending it. For example, how much more oil per capita will China’s industrialisation consume? Will alternative energy paths be taken by India and China to combat climate change? How protected will the (proven and unproven) oil reserves in the Earth’s great wilderness areas, Alaska and Antarctica, remain? How will war and politics affect the flow of oil?

These are important questions for policy makers to answer. But Heinberg goes further and for him, ecology and thermodynamics take precedence over demand and supply, as factors influencing our energy future. Debunking economists as illogical and dangerous and taking an ecologist’s perspective, Heinberg advances the argument that the amount of oil that is finally pumped from the ground is not a question of money, but one of energy and the laws
of physics.

For a capitalist economist (aren’t they all?), increasing demand for oil pushes up its price. This in turn brings new entrants to the market, attracted by the supernormal profits of existing drillers. This brings supply levels up to meet the demand at a new price. It simply all a matter of price, demand and supply and the general theory of equilibrium. This is the charade the Wall Street Journal and OPEC would have us believe, anyway. In reality, Heinberg argues that how much oil is pumped out the ground is matter of net energy gain. As accessible deposits are exploited, oil becomes increasingly energy intensive to extract.

There may be still huge reserves underground, but if it takes the energy equivalent of a barrel of oil to extract a barrel of oil – it ain’t gonna happen, no matter what economists might dream.

In criticism, despite Heinberg’s clear and plausible marshalling of the facts, he does not adequately address the capitalist’s challenge of why the market is not reacting adversely to his foreseen, impending disaster. A rational firm, seeking long term profitability, would have long exited the oil market if its raw material was due to disappear with 2-6 years.

All oil firms are faced with mortality if they do not adapt, so why are so few doing it right now? ‘Rational’ futures markets should have long pushed up the price of crude oil if we were on the brink of disaster. And yet none of this is happening. The adjusted price of oil remains well down on the peaks of the 1970s and 80s. Maybe we have longer than Heinberg thinks. CEOs worldwide are surely not suffering cognitive dissonance?

Is that it then? Is the party over? In Heinberg’s view, the party where the booze ran freely and no one had care in the world is very nearly over. We must now wake up to the cold light of dawn and clear up after our petroleum-fuelled debauchery. Fortunately, this does not involve revolution for Heinberg – just a combination of already recognised strategies and well understood technologies, such as pursuing energy efficiencies, a measure of abstention and shifting to alternative sources of energy for electricity generation.

But it is not all prosaic. A post-petroleum world will evolve into something quite different from an economy built on never-ending growth, fuelled by oil. Those currently alive may nostalgically be referred to by future generations as the most well-travelled and world savvy generation, as alternative fuels are unlikely to be as versatile and cheap as oil. Passenger airline travel could once again become the domain of a wealthy elite. Our fixation with electronic gadgets must be brought into questioned too. All those digital set top boxes left on standby are wastful.
Hienberg tells us that to deflect social breakdown and global disorder all this must be done with great urgency – to ensure that the transition to a low-energy dependent world is done whilst ready sources of petroleum are available to ease us into it.

Cassandra is waiting just around the corner, if we don’t.
Posted by Living with Matilda at 3:59 PM






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I am employed by Brisbane City Council. All views expressed in this blog are my own and in no way reflect the views of my employer.
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