Part One - Q1. What is oil peak?
Richard Heinberg:
Very often when I talk to people about the likelihood of oil shortages or price
hikes in the future, they come back to me with the statement ‘well I read
that we have another 50 years of oil or 70 years or whatever it is’. And,
what they are really saying is, it will be 50 years before we run out of oil.
Actually, in fact I think it will be a lot longer than that. I would guess a
century from now there will still be oil in the ground and probably some way
of pumping a bit out now and then. But, the question of when we will actually
run out of oil is absolutely the wrong question to be asking. We should be asking
when will production peak?
Back in the 1950’s, M. King Hubbert, the petroleum geologist who worked for Shell and a bunch of other companies and taught at UCLA and MIT and a bunch of other universities, realized that for any given oil province, when about half the oil has been extracted it becomes more difficult to extract what is left. And so the rate of extraction begins to taper off and the production peaks. And he reasoned that if that were true for east Texas or Oklahoma, it would probably be true for the United States as a whole. And he predicted that oil would peak in the U.S., the rate of production of oil, the rate of extraction of oil, which is really what we are talking about, would peak in 1970. And at the time everyone thought he was nuts, crazy. And events of course proved that he was absolutely correct. In fact, production of oil in the lower 48 U.S. did in fact peak in 1970 and has been going down ever since. Up until the 1950s, the US was extracting more oil than any other country in the world. We were not only the leading oil producer, we were also, for a long time, the leading oil exporter. But now, we are at the point where the US is importing 60% of what it uses. That is a result of oil depletion. We are past peak. We can’t produce as much oil now per day or per year as we did back in 1970 when we were at peak.
Now what Hubbert and his followers like Campbell have pointed out, discovery
of oil peaked in the 1930s. So there is this inevitable lag between the rate
of discovery of oil and the peak in the rate of production. It makes perfectly,
obvious sense, you have to find oil before you can extract it. So what Campbell
has does is extrapolated this Hubble Curve to the global situation. So when
did in fact discovery of oil globally peak? This is a bit difficult to figure
out, because the reporting of reserves and discoveries is somewhat politically
loaded. And part of the problem is that sometimes the increases in the reserve
figures appear on the books and it is difficult to tell whether those are actually
new discoveries or simply increases in the estimate of how much is in the province
that was discovered, say 20 years ago. So what Campbell had to do was backdate
those reserve increases to the actual time of discovery so that he could figure
out when the discovery rate peaked. He found that the rate of discovery peaked
in the 1960’s, around 1964. So that being the case, it is not so difficult
to figure out when the rate of production, or the rate of extraction, is likely
to occur. And it turns out that is probably somewhere in the range of 2006 to
2015, roughly speaking. So that’s basically what we are talking about.
We are talking about ‘When is the rate of extraction going to peak?’
That is the all-important date. Not ‘When is oil absolutely going to run
out?’ ‘When is the rate of extraction going to peak?’
Why is that important? It is important because, from that day onward, from that year onward we will have less oil to go around each year from then on. In the US after peak production we solved the problem just by importing the oil from elsewhere. We saved our industrial economy, our industrial way of life, just by importing oil from other countries. But when the globe as a whole peaks in oil production, there is no place else to import it from. So then we get to the real problem, which is that we are tremendously dependent on this energy resource. Hugely dependent. Our whole industrial way of life that we have built up over the 20th century is absolutely tied to oil and natural gas and to a somewhat lesser extent coal, which is also a non-renewable fossil fuel. And once these resources begin to be depleted, once the rates of extraction peak, then we have nowhere else to turn. We have to completely reorganize our way of life to do without them. And virtually no one is planning for that eventuality right now. It seems absolutely insane that that would be case because of course anyone at a moments thought would know that a non-renewable resource that you are using at a prodigious rate is going to run out. So, it perfectly makes sense to make other plans for what you are going to do when it does run out. But no one has done that. That is the real tragedy of the time we are living in.
Part One - Q2. What do the critics of oil peak say?
JD:
In your book you discuss some of the critics of Colin Campbell, Laherrière,
Youngquist, and all the rest of them. The critics are called cornucopians. You
call them that and various other things - flat earth economists, so forth. What
are the arguments of these cornucopian critics? And perhaps you can tell us
what a Cornucopian is. And why do you personally view their arguments as misguided?
RH:
Right, well of course the word cornucopian goes back to the mythical cornucopia,
the horn of plenty, from which all good things emerge. And, Cornucopianism is
actually not confined to a few critics of Hubbert, Campbell, Laherrière
and those people. Cornucopianism is the dominant ideology of our modern world.
It is taught in every school of economics. It is the subtext of every political
speech. And virtually, we are soaked in this point of view. The assumption is
the economy can grow forever. Human population can grow forever. And we will
never actually meet up with any physical limits to the growth of our economy
or population. Now again, a few moments thought should point out the absolute
absurdity of that way of thinking. But some how it has weaseled its way into
our dominant ideology, primarily through the field of economics.
In economics, of course we look not at resources per se, we look at how resources are mediated by money. And money, of course, is something that can be created infinitely and indefinitely. Money is created through the making of loans, and banks create money all the time. So there is no physical limit to the amount of money that can be created. So economists assume that if there is enough money to go around, then when one resource actually starts to become scarce we can just substitute another resource for it. It’s the magic of the market that leads the perpetual growth; the order of the day for eternity.
It’s a very happy way of thinking. And it is a way of thinking that says - that just as our way of life is more opulent and fast paced than our parents and our grandparents, our children’s way of life will be even more opulent and more fast paced, and on and on to infinity. Of course technological changes fed into this too. We developed all kinds of new technologies generation after generation – from the radio, to the television, to the computer, to the cell phones, and so on. And so if technology can continue to become more complex and effective and powerful into the future, where is the limit to that? Where is the limit to human ingenuity? So these are the arguments of the Cornucopians.
Specifically with regard to the oil issue, Cornucopians say ‘Well, we just haven’t looked in all the right places. Surely there is much more oil than we have discovered yet. And we can of course substitute other things for oil. We can substitute coal and natural gas. When we run out of those, we can substitute wind and solar and hydrogen and so on.’ Some of them even say, ‘We are not running out at all. If you look at the reserve figures, reserves of oil are growing in many cases and we are developing new technologies to extract oil more efficiently. So in a particular oil well where using old technology could only extract maybe 20 to 30% of the oil, now we have new ways of accessing maybe 40 to 50% of oil from that same reservoir. So that should keep us going for decades longer until we figure out some real, ultimate solution to the energy crisis. Like fusion for example, or some kind of exotic, free energy devise.’ This is all, again, happy thinking. It puts a smiley face on our thoughts about the future. But when we actually get to looking at the real figures, it is not so simple.
Looking, for example, at oil reserves and oil reserve growth, as Colin Campbell has done. Looking at it closely, one discovers that much of the reserve growth that has been reported is actually political. Back in the 1980s, OPEC changed its rules to say that the amount of oil it would permit countries to export would be based on the amount of reported reserve those countries had. So countries were motivated to increase their reported reserves in order to increase their export quotas, so they can make more money. Immediately when this rule was made, every country in OPEC reported dramatic increases in reserves, in some cases increases of up to 100%, when no new discoveries or few new discoveries actually had been made. These were purely hypothetical, political reserve increases. And yet, the Cornucopians take them at face value. So all of that oil is actually there, waiting to be extracted.
And the United States Geological Survey has bought into this way of thinking entirely. I suspect there is political motivation there as well. USGS has been wrong consistently about future oil production, going back to the days of M. King Hubbert. They were a critic of Hubbert’s Curve from the very start. And they failed to foresee the US oil peak in 1970. Actually they were taken to task by Congress for that. So the US Government’s official cornucopianism has been pretty well dedunct already in the past, and yet the USGS continues to sail onward predicting billions, trillions of barrels more oil than probably actually exists.
Part One - Q3. What is net energy and why is it important to understand the consequences of oil peak?
Julian Darley:
There are clearly going to be a lot of different kinds of consequences from
not having enough cheap energy anymore. Since we've based our whole civilization
in the west and the industrial world on it. But, before talking about that would
you say a word about net energy, which is a complex concept not really understood
but of extreme importance to a wider grasp of oil depletion and its consequences?
Richard Heinberg:
Lets just talk about the net energy per say and then we can get into talking
about the consequences of oil depletion. Net energy is is one of the most important
concepts for people to grasp if they're going to understand our energy reality.
It takes energy to produce energy and this is true at every level from a bacterium
on up. A bacterium has to expend energy in order to get a bit of food. Human
beings have to expend energy in order to get their food and energy. We have
to expend energy in order to search for oil or coal or other energy resources.
And the name of the game of survival is making the amount of energy you have
to invest to get your energy less that the amount of energy that you ultimately
harvest. If the amount of energy that you have to spend to get your energy is
greater than the amount of energy you eventually get. In the biological world,
you die. That's pretty much the end of the story. Well, when industrial societies
discovered fossil fuels, and that's what industrialism is all about, was the
discovery of fossil fuels. When industrial societies began using fossil fuels
they had come upon a source of energy with an extremely high net profit. This
was true for coal and spectacularly true for oil, particularly in the early
days. You have to remember oil in many reservoirs is under pressure. There's
huge pools of this black energy dense liquid underground and basically all one
had to do was stick a pipe down there and the oil under pressure would flow
up through the pipe and all you had to do then was find some way of getting
it into the barrels or tanks or pipelines to take it where you wanted to to
use it or refine it. This was natures free gift of energy that had been produced
millions of years ago and stored through geological time, and the net profit
on oil as a form of energy in those early days was way over 100 to 1. In other
words by expending 1 unit of energy in exploration and drilling and so on. One
could reap 100 units, 200, 300 units of energy profit. Now other sources of
energy don't have such a spectacularly high energy profit ratio. In fact virtually
none of them do, and that's true of coal, that's true of nuclear energy, it's
true of wind, solar and all the rest. And in fact oil itself has a variable
net energy return, and its net energy return is being reduced year by year.
Why's that happening? Well, the stuff that's easy to find, the stuff that's
under high pressure is the stuff that's being depleted first. It makes sense,
if you're an oil company you're going to look for the stuff that's cheapest
to extract first and only when that's gone are you going to want to invest in
extracting the stuff that takes more time and energy investments. So, we have
at this point extracted almost half of the oil that's going to be extracted
economically. About 1 trillion barrels, and that first trillion barrels that
we've extracted is the easy stuff. It's the stuff that's easy to find, it's
under high pressure, you just have to stick a straw in the ground and it comes
bubbling up. What's left, the oil that's left is going to be more costly to
extract, so the net energy profit from that oil, instead of being, you know,
100 to 1, 200 to 1. Oil exploration and extraction are already down to by some
figures 20 to 1, 30 to 1, 40 to 1 in that range. And within the continental
US, the activity of oil expolration has an energy profit ratio that by some
estimates is down to about 1 to 1. In other words it costs as about as much
energy to search and extract a barrel of oil in the continental US as that barrel
of oil actually contains. So what this means is the net energy available to
industrial societies is being reduced year by year. Industrialism as a way of
life, as a pattern of existence on this planet for human being succeeded because
of this immensely huge energy profit ratio that existed in the late 19th century
and early 20th centuries. That's what permitted us to build the vast infrastructure
of agriculture and industrial production and transportation that we have now.
It costs energy not just to grow that infrastructure, but just to maintain it,
and where's that going to come from? Not only as we reach petroleum extraction
peak, but also as we pass. As we have already have passed the peak in the net
profit from investment in energy resources. What we're headed toward inevitablity
is a much lower energy form of society. Industrial societies, if they're to
survive, have to find a way of working on the basis of using vastly less energy
per capita then we've become accustom to. Whether they're up to that, whether
it's possible for industrialism as a way of life to function in a much lower
energy environment is an open question, and I think that's actually the most
important question that will be facing us during the next century.
Part One - Q4. Why do you talk about the 'fate' of industrial societies - why is it rather bleak?
Julian:
In your book title you say ‘The Fate of Industrial Societies’. Sounds
pretty ominous. What do you mean by that? And you can take that one separately,
… During that answer would you propose to mention the pathological money
system and its relation to the ideology of growth and how might this might cause
a financial crash and monetary collapses, which I think you may be about to
allude to. And, you also mention economies can crash when there is an expanding
energy supply, as 1929 so clearly demonstrated. But is it possible, you ask
in your book, for an economy to remain healthy through an energy crash?
Richard:
There is so much here to unpack. I’ll start and if I don’t get to
some of those points we can come back to them. Theoretically, I believe that
it is possible for industrial societies to convert to a much lower energy regime.
It would be theoretically possible, for example, for the United States to divert
hundreds of billions of dollars a year in investment in say weaponry, entertainment,
sporting events, things like that, into production of windmills, into research,
into new kinds of solar applications, and so on, into subsidizing – putting
photo-voltaic panels on the roof of every office building, every home in the
United States. That is theoretically possible. And if that were done, it might
be feasible for an industrial way of life, a different kind of industrial way
of life than we are used to. Certainly not the growth economy where we are constantly
saturated in advertising images telling us to buy and consume more; where we
are surrounded with twenty kinds of any particular product, twenty different
brands to buy. Walk into the supermarket and there are fifty different brands
of breakfast cereal and all of that. That kind of industrial growth economy
will soon be a thing of the past, in any case. But some version of industrial
lifestyle could persist if we were to undertake a deliberate and coordinated
process of transition that would inevitably involve a tremendous amount of sacrifice
on the part of the individuals and also large institutions.
Now the real tragedy of Cornucopism, the way of thinking that says there is always going to be more and tomorrow is going to be a brighter day for the economy and new technologies will always come to rescue us. The real tragedy of Cornucopism is that it’s telling us that that kind of sacrifice is not necessary. That we are really not going to have to face at any point hard choices regarding resource depletion population pressure. And so we are not as a result of our cultural belief in Cornucopian ideology, we are unlikely ever to undertake those kinds of coordinated efforts and deliberate sacrifices that will be necessary to make that transition.
That’s true because of the nature of our economic system, where money only exists because it is loaned into existence and therefore every dollar or euro of money in existence carries a price tag for the compound interest. And which structurally requires economic growth in order to forestall economic crash. It is also true because of our political system. No politician wants to stand up and say ‘Look folks we are in this horrendous fix. We have gotten ourselves out on a limb here with our industrial growth of the past and our use of non-renewable resources. And we are all going to have to tighten our belts. We are going to have to undertake a collective period of hard work and sacrifice in order to change our way of life. And we can’t really expect more and better and more expensive and more diverse products and so on for our children. In fact, were going to have to perhaps even limit our population increase. To reduce our population, we have to in some ways reduce aspects of personal choice.’ What politician is going to stand up and say that? None. First of all, the people aren’t going to vote for them. Second of all, the corporations aren’t going to fund their election campaigns.
So we have an economic system that is based on perpetual growth, not just ideologically but structurally. With compound interest being charged on all loans, and loans being the basis of the money supply, without economic growth, the money supply collapses and the economy collapses. So we have an economy that is structurally based on perpetual growth and a political system in which no one is able to see the truth or name the truth – which is population pressure and resource depletion. And no one is able to stand up and say ‘This is what we need to do’.
So as a result of that, I think the likelihood of a collective conversion,
a collective transition, to a sustainable, lower energy way of life in the future
is unfortunately extremely low. Its true one politician has done this. In the
1976 Jimmy Carter wrote the following words:
‘We must face the prospect of changing our basic ways of living. This
change will either be made on our own initiative in a planned way, or forced
on us with chaos and suffering by inexorable laws of nature.’
Those are probably the truest and most courageous words ever written by a sitting US President. And yet we all know what happened to Jimmy Carter. I think even today probably Jimmy Carter would be hesitant to write or say anything quite as bluntly as he did back in 1976. The consequences are unfortunately pretty chilling to contemplate.
Part One - Q5. Is it possible for an 'advanced' industrial society to survive a large energy decline?
JD: Do you want to say anything about whether you thought it was possible, or looking at the evidence, because that's of course, that's what is so interesting is not so much empty speculation, its analysis based on evidence and speculation based on evidence. You said very interestingly, you made the comparison between economies that crash when there is expanding energy...
RH: Right.
JD: Do you want to say something about what we're facing the opposite of that and what the possibilities for that are?
RH: Right, in the 1930's, we had an economic crash even when there was still an abundance of labor, resources, raw materials, everything that was actually needed to make an economy work was there. But, because of over-production essentially, during the late 1920's, it was impossible to maintain the same rate of industrial expansion, and therefore expansion in loans and economic activity and an expansion of the money supply. The result was a sudden contraction in the money supply, deflation, and so people were thrown out of work and there was basically no money to buy anything. Banks were closed, mortgages were foreclosed, and so on.
We're facing a similar situation today in regard to over-production that we were in the 1920's. Just as in the 1920's, there was a bubble that had been created through investment in new technology of radio, and of course, the automobile had created a whole new realm of consumer indebtedness that had never existed before consumer credit. We have a similar situation now in the early part of this century where consumer debt is at record levels and investment in new technologies of the Internet and high tech and so on have proven to be overly optimistic, shall we say.
So, bubble after bubble, real estate bubble, derivatives bubbles, all of these are beginning to deflate. And the likelihood is that just on the basis of, as it's been called, the business cycle of inflation, deflation, investment, production, over-production and eventual crash. Just on the basis of the conventional business cycle, we are due for a serious recession at this stage. But, add to that the reality of the peak in oil and particularly right now, natural gas production in North America and the likelihood is that we not only are headed for an economic crash, but its likely that is one from which there is no real, sustained, long-term recovery.
Now, in some ways, an economic crash may be, it could be a good thing, at least theoretically. It's difficult to say how things will actually work out. But, reduced economic activity means reduced demand, there is no money available with which to buy more "stuff" and therefore, less "stuff" is being produced, which means that less energy is being used. So, its almost an enforced conservation program. This is part of what happened back in the 1970's, after the first politically-created energy crash in 1973 and in later 1979. The global economy went into a tailspin, and as a result, consumption of oil and other energy resources plummeted during the 1970's and if you look at a graph of global oil extraction and consumption, it's this one long ramp upward until about 1973, when suddenly, there's a dramatic dropoff. And it's because of that dramatic dropoff in oil extraction and consumption in the 1970's that we are sitting here today. Because if that hadn't occurred, the global oil extraction peak would have probably occurred around 1990-1995 instead of happening in 2006 to 2015 and we'd all be sitting here in the middle of a huge economic depression and other terrible consequences.
So, basically the economic downturn of the 1970's bought us time. Now, we haven't used that time very wisely. We've used it to again increase industrial production and resource extraction. But, its theoretically possible if we have another major global recession that we could buy ourselves the time to undertake, as I was saying earlier, a coordinated transition to a much lower energy-renewable, sustainable economy. Again, the likelihood of that happening, because of economic and political reasons, is very low but at least that possibility exists.
Part One - Q6. What is your view of hydrogen & other substitutes for and alternatives to hydro-carbons - won't they allow us to continue our industrial way of life?
Juian Darley:
What's your view of hydrogen and other alternatives to fossil fuels? Won't they
be able to permit the survival of our industrial way of life, and Imay add to
that, what about futurists, and then eco-futurists, and the eco-capitalists,
and also what about nuclear and coal? Because the futurists, of course, are
wild about nuclear and coal, the eco-futurists are not so, but they'll throw
fusion in there. We're talking about the general topic of 'substitution will
save us', if you like?
Richard Heinberg:
Yes, well recently George Bush in his State of the Union address suggested investment
in hydrogen as the fuel of the future and I think this probably came as a surprise
to many environmentalists because they had been proposing hydrogen as the fuel
of the future, the hydrogen economy themselves and I think Bush made a politically
motivated effort to co-opt the issue, and perhaps successfully so. Of course
Bush was talking about making hydrogen from coal and nuclear electricity where
as many of the eco-activist's are talking about making hydrogen from wind or
solar produced electricity. But whether it's made from renewables or non-renewables,
the question is hydrogen going to save us? And I hate to say this but I think
it's extremely unlikely. Hydrogen is not an energy source, there is no hydrogen
reserves sitting around beneath the the soil, beneath the rocks that we can
tap into the way we tapped into oil. Hydrogen has to be made, yes it's often
said that hydrogen is the most abundant element in the universe. True enough,
tons of hydrogen on the Sun, there's tons of hydrogen in the methane on Jupiter,
but it's not so easy to get at. Where hydrogen is most abundant interestingly
enough is in fossil fuels. There's a lot of hydrogen in coal, there's a lot
of hydrogen in gasoline. As a matter of fact, there's more hydrogen in a gallon
of gasoline than in a gallon of of liquid hydrogen. Go figure that out, but
it's true. Why? Because, when hydrogen is bound molecularly with carbon in hydro-carbons
it takes up less space. Free hydrogen is even in its liquid form extremely diffused.
That's one of the problems with transporting hydrogen and using hydrogen as
a fuel.
One of the many problems actually. The main problem is simply that it takes more energy to produce hydrogen then the hydrogen itself has, it's always a loser. So if you're going to make hydrogen from natural gas and by the way virtually all commercially produced hydrogen right now is being made from natural gas. If you're going to make hydrogen from natural gas, well you're going to lose energy in the process of converting the natural gas to hydrogen and then when you convert the hydrogen to electricity in a fuel cell say. That process is also inefficient, so you lose some energy there as well. From a strict energy standpoint, you'd be much better off just taking the natural gas and using that directly. Similarly with the natural gas that you're making from hydrolysis you're using electricity say from photovoltaic panels to dissociate hydrogen from oxygen, from water, takes some electrical current from the solar panel, runs it through water dissociate the oxygen from the hydrogen, then use the hydrogen to power a fuel cell and get electricity from that. Well each stage along the way you're losing energy. You're much better off from an energy standpoint simply to plugging your photovoltaic panel directly into whatever it is you're trying to run. The only advantage of hydrogen is a storage medium, that is it's only advantage. And the only reason it could possibly be of use to us is if it's a more effective or efficient storage medium than say a battery. The best way to think of hydrogen is as a fancy battery. And in order for hydrogen to function as a very effective battery it needs a huge infrastructure that we presently don't have. We need an infrastructure of storage. How do you store hydrogen in tanks? Well it difficult because the hydrogen atom, it's the simplest atom it has the characteristics of tending to make metals brittle. So if you have a metal storage tank it's not going to last long, and a certain percentage of the hydrogen is going to leak out the tank. Something like 2% per day which is not negligible of the hydrogen is going to leak through the walls of the tank every day. So there are a lot of technical problems that have to be solved in order for hydrogen to be of use in say powering automobiles. And do we have the necessary investment capital and not just monetary but also energy capital to get from here to an hydrogen economy? I don't think so and is there any cheese at the end of the tunnel in any case? I seriously doubt it.
Can we run airliners on hydrogen? Conceptually very large ones. Ones about 3 times the size of a 747 might be practical to run on hydrogen, planes any smaller than that really aren't because you have huge storage tanks just with the ratio of the size the aircraft to the size of the storage tanks. It would really only make sense with with very large planes. Are we likely to design and build huge airliners 3 times the size of the 747s to run on hydrogen given the fact that that hydrogen is likely to be extremely expensive, very unlikely I think. I think the hydrogen economy is simply a non-starter.
So what are the other alternatives? Natural gas. Well, here in North America natural gas extraction is is peaking even as we speak and we're seeing right now, we're talking in the later part of February, 2003, and we're seeing natural gas prices at historic highs as a result of depletion in the US and Canada and Mexico. And it's very difficult to transport natural gas from continent to continent, even though there's a lot of it say in the middle east. It's very difficult to transport that to the US, so natural gas is not going to be a very good substitute for oil.
Nuclear, well nuclear has a very low net energy yield to start with. It costs a tremendous amount not just in dollars but also in resources and materials to build nuclear power plants and then to de-commission them at the end of their lives is an extremely expensive process, and during their lifetimes they're producing nuclear waste which we haven't figured out what to do with. Investing more in nuclear energy would be a huge mistake for industrial societies. We would be making problems for ourselves and our children's children for 100s of generations into the future. Problems that I'm sure they would roundly curse us for, assuming they exist.
Coal, there is a great deal of coal left to be mined, but the stuff that is easy to get at is becoming scarcer and scarcer. The net energy profit ratio on coal is declining rapidly. Right now most of the the easy to get at coal is surface coal from strip mining and that's becoming more scarce. So what's left? Well, it's coal that's deep underground and coal mining is not a particularly attractive profession to get into. Most coal miners would rather have their children go into some other line of work and it involves not only hard work, but also skills, and most of those skills have been lost. There aren't that many coal mines in operation these days because most coal is being strip mined and so the skills, the equipment and the motivation for mining coal from underground are fast disappearing. In order to ramp up coal production dramatically to make up for peak oil extraction again would require not only investment but also would entail huge environmental consequences. Coal is nasty dirty stuff. There's just no getting around that and the process of extracting coal ruins land and the process of burning coal ruins air and water and forests through acid-rain. It's a form of energy production that has already resulted in huge environmental costs and the idea of ramping up up coal production is pretty much an acronym to anyone that has the knowledge and care about the natural world.
So what are the other possibilities? Well there are other unconventional sources of petroleum like materials, tar sands, heavy oil and the like and there are potentially huge amounts there but again the net energy profit from those unconventional forms of petroleum like materials is very, very low. For example in Canada about 200 thousand barrels a day are being produced in Alberta of non-conventional oil, but it takes about 2 barrels of oil in energy investment to produce 3 barrels of oil equivalent from those resources and again the environmental costs are horrendous and the process uses a tremendous amount of fresh water and also natural gas, both of which are in limited supply. So it's unlikely that we'll see unconventional petroleum reserves making up very much of the shortfall from conventional oil. And then there are the really exotic things like fusion, in which 10s of billions of dollars have already been invested and the fusion researches keep saying, well you know we're 50 years away from having a useful fusion reactor and that's what they were saying about 25 years ago, and that's what they're still saying now. It keeps receding toward the horizon the further we go. So fusion is not likely to be of any help to us. And then there are people that talk about really exotic forms like coal fusion, zero point energy. People who talk about the US government having secret energy programs stolen from space aliens and so on. Who knows! Could be, I mean the US operates all kinds of black programs off the books. research programs, mostly in weaponry, maybe they have something that they're not telling us. But the fact is, exactly 0% of our commercially produced energy comes from all these exotics put together, including fusion, coal fusion and zero point energy and all the rest of them. Exactly zeros coming from those sources right now. The idea that we can somehow research them, develop them and ramp them up to replace the immense amounts of energy we're getting right now from fossil fuels in any foreseeable kind of time frame is extraordinary wishful thinking and I don't think we should be putting our eggs in that basket either.
So at the end of the day, once you've examined all of these alternatives what you come up with at least what I come up with is essentially the recognition that the only solution to the depletion of oil and natural gas and somewhat later coal is going to be simply using a lot less energy per capita and in total as industrial societies. Again whether industrialism per say can persist in a much lower energy environment is an open question. I kinda doubt it but it sees to me we really have no choice. We have to find a way of changing not only our energy infrastructure toward this much lower energy environment, making that coordinated transition but also changing our economic system and our political system at the same time. It's a huge, huge undertaking. Are we up to it? Right now I'd have to say no. The only real hope that I see is for the general public to become aware of the situation that we're in and that's really why I've written my book and that's why I'm talking right now. I think the only hope is for us to bypass the conventional economic and political system and to spread this information as far and as wide as we can among the general public. So that the people themselves will be motivated to begin to undertake changes in their own personal lives and their own communities. Essentially bypassing the conventional political system.
Julian Darley:
I think that some of these deductions are virtually on the order of arithmetic,
2 + 2 = 4 and yet of course we, as somebody puts at the end of their e-mails
that writes to me, 2 + 2 = 5, for very large values of 2. Which I think is cornucopianism
written into a sort of Burtrand Russell language. Should industrial societies
adapt a no growth economic policy as a response to the energy downturn?
Richard Heinberg:
Should they? Absolutely. Can they and will they? That is the real question and
the problem we actually talked about earlier. When I was talking about where
our money comes from and how it's tied to compound interest. If growth were
merely an ideology it would be so much easier to make this transition to a no
growth or actually a shrinking economy in terms of resource extraction and usage.
But because of the nature of the money system that we have adapted it's going
to be very difficult to make that transition. That's why I think it's the kinds
of alternatives that we need to adapt include not only alternatives in like
solar panels and windmills but alternative money, local currencies and strategies
for revitalizing and protecting local economies.
Right now the world is dominated by the dollar. Dollar hegemony it's called, for decades actually going back in the era of the Soviet Empire. Even people in Russia when they wanted to keep the value of their savings, converted their rubles into dollars and there are literally billions of dollars in coffee cans and under mattresses in Russia being kept as a store of value and the dollar has been propped up for decades by this confidence that people have had world wide in its value. It's also been propped up by the fact that the dollar is the currency of account for many nations. When nations borrow money from the world bank they borrow it in dollars and they have to pay it back in dollars. And when OPEC countries sell oil on the open market they sell it for dollars, they expect to be paid in dollars. This has been a subtle subsidy to the US economy that's been occurring for these past many decades. I think probably Richard Douthwaite in his interview with you, I haven't had a chance to read or listen to it all, but I suspect that he touched on many of these points in it. So people who are listening to this interview might want to go check his out as well. This has been a subtle tie if you will to the US economy. Every-time someone uses a dollar it has to come from somewhere and the only place it ultimately can come from is US banks because US banks have a monopoly on the creation of dollars. So because each dollar originates as a loan, as a debt coming from a US bank it also is attached to a necessity of interest and compound interest being repaid at sometime. Therefore necessitating even more growth.
We're in a situation right now where there's increasing pressure around the world to switch from dollars as a currency of account to euros. This has already happened in the case of Iraq, In November, 2000 Iraq decided to cease accepting dollars for its oil and to accept euros instead. At the time many financial analyst's thought this was a real bad economic decision on the part of Iraq and they thought that they were going to lose 10s of millions of dollars in euros. In fact it worked out just the other way. Iraq made10s of 100s of millions of dollars just from its switch from dollars to euros regardless of the amount of oil it was actually pumping. So now Venezuela, Iran and even Saudi Arabia are talking about making a similar switch from dollars to euros. And as the New York Times reported a few weeks ago, people in Russia are starting to take the dollars out of their coffee cans and out from under their mattresses and exchange them for euros. More and more international trade is being denominated in euros as opposed to dollars. This spells big trouble for the US economy and I suspect that it has something to do with Bush's administration insistence on invading Iraq. First of all to teach them a lesson for its abandonment of the dollar. Second because Iran and Saudia Arabia, two other countries considering such a switch from the dollar to the euro are on either side of Iraq and therefore establishing military bases there in Iraq would send a signal as is often said these days about the likely consequences of that action.
I think we're in an extraordinary delicate time right now from the standpoint
of global geo-politics. There has been a relatively stable geo-political situation
in the world since WWII, really through the cold war and even in the last 10
years after the fall of the Soviet Union. There's been a kind of pax-americana
administered by global corporations mostly centered in the US and with dollar
hegemony as one of the main instruments of maintenance of that stability. The
other instrument for the maintenance of stability has been the US military which
has been trotted out from time to time to of course support the interests of
US corporations and so on, but also just to in a sense maintain the stability
of the empire. Now with one of those two props of the US global empire being
threatened, the dollar hegemony. I think the US geo-political strategist's see
that their only other strong card is the military and that's why their so anxious
to play it right now in Iraq. To demonstrate that they still have that card
and to frighten off any potential competitors and to insist that everyone still
continue playing by the old rules of dollar hegemony. The rest of the world
is not all that happy about the situation. I think it's pretty clear to most
of the people who are actually in the know in other countries in the world that
the US is acting not out of position of strength but out of a position of great
weakness. The US economy is extremely weak right now and likely to become much
more weak as a result of natural gas and oil depletion and increasing dependence
on imports. So the US is becoming much, much more dependent year after year
upon other countries and at the same time exerting more and more overt aggressive
force against other countries in order to maintain, successfully maintain its
position of dependency on one hand and control on the other. Not many countries
are happy about that. So nations particularly in Europe and Asia, France, Germany,
Russia, China, Iran are beginning to rethink their own future strategies and
the possibility of some kind of economic alliance and also some sort of alliance
in the allocation of resources is conceivable. If that were to take place it
would have pretty dire impact on the US economy and unfortunately given the
nature of the people in charge of the US political structure right now, I think
the likely US response would not be a peaceful one. So as I said I think we're
in an extremely delicate moment in the history of the world right now, from
the standpoint of geo-politics and of course oil and oil depletion are right
at the heart of this whole drama that's working before our eyes and one can
only prey that somewhere there are cool heads that will prevail in all of this.
Julian Darley:
I don't think that either of us thinks that's likely at the moment. How does
oil depletion figure into the current geopolitical scene? And obviously you've
said quite a lot about that so you might want to extend that somewhat. Do you
think that Bush's determination to invade Iraq comes from a desire from oil
profit?
Richard Heinberg:
Let me answer that first and see what that triggers off. There's's a lot of
people on the political left who are calling this a war for oil and there's
certainly a lot of of truth in that. But I think most of them have a rather
simplistic view of the situation. They think that since Bush is an oilman and
Cheney and Condoleezza Rice and a lot of the people in the administration are
former oil executives that the real idea behind the invasion of Iraq is just
to funnel profits to oil companies like Exxon-Mobile and maybe Halliburton.
I really think that's probably an extremely minor consideration if it is a consideration
at all in these peoples minds. And the reason I say that is that I think it's
very unlikely that Iraq will be able to increase its production very significantly
after military action. And if you look at what the oil companies themselves
are saying, they're not all that excited about this prospect. Certainly they're
looking at who will get the spoils, but they're not exactly rubbing their hands
with glee and something similarly happen with Afghanistan. You know many people
were saying this is all about an oil pipeline and in fact after a US invasion
of Afghanistan a pipeline was approved but in fact the oil companies haven't
been all that excited about pursuing it and it's really not happening at this
point. The reason in Afghanistan was it turned out that there was much less
oil there than had been hoped for after some exploratory wells were drilled
in Kazakhstan and Turkmenistan and elsewhere. It was found that while there's
a fair amount of natural gas there the amount of oil is really much less than
had been hoped and so the pipelines are mostly languishing.
In the case of Iraq the oil production practices in Iraq have been largely destructive of the resource base. So even though there's something like 112 billion barrels of proven reserves under Iraqi sands the likelihood of being able to increase rates of production significantly after military action is very low. It may be 5 to 10 years before rates of production can be increased past what have been historically over the last 10 years. So there's not huge profits there to be made. So what is the motivation? I mean you know the fact that we have to speculate why this war is is being planned is itself pretty remarkable. The argument being put forward about weapons of mass destruction and so on are so patently flimsy that you know one has to speculate, but the speculations, the inevitable speculations that I find most convincing has to do with what we were talking about earlier. The propping up of the dollar on international exchange markets and the securing of the resource base in the region as a whole by establishing permanent military bases in Iraq. The US would have a strategic foothold in the region that it does not have currently. I think that there is no real exit strategy from the Iraq invasion. I think that the idea is not to go in and establish an American style democracy and get it up and running and then pull out. I don't think that's really in anyones game plan for this venture. The establishment of a strong military foothold in Iraq would tip the balance of geo-strategic power quite dramatically.
China which is the one country in the world that is experiencing pretty dramatic industrial growth right now has fairly limited petroleum reserves and is importing more oil each year. China is eyeing the Middle East very closely because in order to maintain industrial growth China will need more and more oil imports. The North Sea which sustained growth in Britain and Norway for the last couple of decades, North Sea oil has peaked as of 2000, 2001and is on its inevitable decline. So Europe needs oil from somewhere. Russia is currently a net oil exporter, a big source of oil for the Eurasian continent but Russia's oil production peaked back in 1987. So even though they've been able to export a considerable amount over the past few years, the likelihood of the maintenance of that rate of extraction is very low. So right now the OPEC countries of the Middle East are sitting on something like 3/4s of the proven oil reserves of the planet. That means that the Middle East is the strategic pivot for the entire globe and US geopolitical strategists's seeing the inevitability of the contest for control of the Middle Eastern oil between all of these powers,. Europe, Russia, China and the United States itself and this will be the determining geopolitical struggle of the 21st century, and I think the Wolfowitz's and the Richard Perle's and the Donald Rumsfeld's are just determined to get there first with the biggest army, stick the flag in the ground and say, “ok this is our's.” That's what it's really all about.
Julian Darley:
Not a very happy prospect. Let me lead to a little color to that. You covered
everything that I had put down in there including as I was going to ask you
about petrol euros and China and Japan and Russia. You didn't say anything about
Japan, you mentioned Germany and Iran, do you want to say a quick word about
Japan in any regards?
Richard Heinberg:
Japan of course has been a US protectorate. We've guaranteed their access to
petroleum resources from the Middle East for the last several decades and Japan
has been quite a happy partner to the US in that regard, but Japan is starting
to look out after its own interest as well. The post WWII global political regime
involved really Europe and Japan as major pivots for the US major protectorates
and this situation worked well for all parties involved, but both Europe and
Japan especially Europe right now but I think in coming years Japan as well
is starting to to look out more for their own interests because Washington is
going to be abandoning them. Washington is seeing its interests being not in
the military and economic protection of Europe and Japan so much as in the military
and economic protection of its resource base, and it will be seeing Europe and
Japan not so much as allies but as competitors for that resource base, just
as it would be seeing as much more so China as a competitor for that resource
base. Japan of course has been almost no indigenous energy resources and so
Japan will be motivated much more so than the US to engage in radical conservation
efforts and transition to renewables. And particularly from a sort of sociologically
standpoint one could say that people in nations with no resources will in fact
be in a much better place in many ways than than people that are living in countries
that do have resources. That seems almost counter intuitive but the reason I
say that is that whatever resources that still exist, particularly energy resources,
also water. Fresh water are going to be in places that will be contested for
and contested for ever more vigorously as time goes on. So many of the people
that live in countries that still have natural resources remaining and I include
the people of Iraq and Saudi Arabia and Venezuela in that. Japan simply by its
lack of resources on one hand is in a situation where its industrial economy
is deeply imperiled because of course it relies on imported oil overwhelmingly.
But on the other hand because it lacks indigenous resources it's not likely
to be fought over very much by other other powers. So Japan's challenge in the
next century is to reduce its population, reduce its per capita energy usage
and make the transition relatively undisturbed by other countries. I predict
relatively undisturbed, make the transition from its industrial growth economy
presently to a sustainable low end energy economy.
Julian Darley:
You were just saying at the end of your previous reply. You were talking about
war and military behavior and so forth and I wondered what your thoughts were
just briefly about this as it ties into net energy as well. You get into a situation
where you need oil to fight wars for oil and I wonder if the military planners
at any stage do a little calculating and say “hang on we're going to use
more oil killing all of these people and using all of our machines and our stealth
bombers then we'll actually get out.” Do you think, I mean can you speculate
on that?
Richard Heinberg:
Well you know if these people were acting rationally I think they would be doing
exactly those sorts of calculations. In fact I doubt that there's anyone in
the military doing those sorts of calculations because if you look at the weapons
systems that they're proposing having built and deploying they're extraordinary
energy wasteful systems. I mean there are more efficient ways of waging wars
and less efficient ways and the people in charge in the pentagon seem to have
no clue about energy efficiency. Not one brain cell in anyones head is flashing
in that direction. I think this is part of a much larger problem. It's possible
to speculate that there are a few people in the Bush administration who are
somewhat aware of energy depletion, of the oil depletion issue. The reason I
say that is because Matt Simmons whom you also interviewed is in touch with
officials in the Bush administration and Bush him-self.. And of course he's
the crusader when this issue of natural gas particularly and also oil depletion.
So there has to be some awareness among these people that this is a factor that
this is an issue. But on the whole I get the impression from everything I read
that there understanding of the issue is very, very dim. I think George Bush
him-self has very little scientific background, very little scientific training
or understanding. Even someone like Dick Cheney who's from all accounts is pretty
intelligent is balancing so many other factors in his head, geopolitical strategies
and economic and dollar and politics and getting ahead of the democrats and
so on. Balancing all of these factors that the overwhelming importance of the
energy issue just doesn't seem to get through. Whether it's the military or
the congress or the executive branch. I think the understanding is pretty dim.
It's not a very hopeful situation in that regard.
Julian Darley:
I was very interested in chapter 5 of of your new book. You made some
comments about traditional politics right and left and difficulties that both sides
are having and you also mentioned that marxist's and anarchist's were going to
find themselves also in difficulties. And you also mentioned, you made the
question, if the right triumphs, what would that look like? So I wonder if you can
say something about traditional politics and what some of the traditional
alternatives have to offer which I think we both agree are problematic, but I would
love to hear you say this and you might want to tuck-in where some green
organizations are on this because that kind of spreads across that.
Richard Heinberg:
The traditional political philosophies really try to avoid population and
resource issues like the plague and that goes for the left as well as the right.
Nobody wants to present bad news or be associated with the bad news, but there
are limits. The right political philosophy basically says that individuals
should have the freedom to accumulate resources or to gain access to resources to
an unlimited degree. So if one person accumulates 100s of billions of dollars
and other people are starving, that's fine and the reason that's fine is that
it's because of individuals, talented individuals, geniuses, that society as a
whole advances. We only had one Beethoven, we only had one Einstein and if
societies were just leveled out and people had no incentive to become outstanding in
their fields and to work hard, then society as a whole would languish. So that's
the politics of the right, the resource politics of the right, for individuals
to to have freedom to accumulate as much as possible.
Well the political philosophy of the left is that's basically immoral, when individuals accumulate extravagantly unequal resources or access to resources, which is what money is a symbol to, access to resources. Then society as a whole suffers because what happens if you have few people with lots and many people with little? Then you have to have well armed police to protect the people with the much from the rest of the people with the little and you have to then pay for the social costs of the fact that the society as a whole is not working, because there's so many people that can't get by who are whatever, starving or in hospitals with diseases that could cheaply be treated or avoided but people can't do that because they don't have the access to the resources. So the left is saying that access to resources should be more or less equal and democracy which is the idea that everybody should be involved in the decision making process is in a fundamental way, a kind of leftist's idea. Because when everybody is together making decisions democratically what are they going to be making decisions about.
Well allocation of resources is probably one of the most important areas of decision making in any society. So if you're saying that the people themselves, all of the people are going to have access to decision making about allocation of resources, well that's inherently a kind of leftist idea. But neither the left or right is really prepared to deal with the situation in which resources become depleted. Why's that? Well for ideological reasons the right has adopted the view that if we leave everything to the free market, if we allow wealthy individuals to accumulate capital with no limits then everything will work out in the end, there will be enough for everyone because it will trickle down by the wealth accumulating and then investing that money in more productive enterprises it will create jobs and everybody will ultimately be better off. And the left is saying, well if we just make our decisions democratically and share relatively equally the resources that we have there will be enough for everybody. So if you get to a situation where there actually for physical reasons isn't enough for everybody. The kind of situation that's approaching with oil depletion, what does that do to the arguments of both the left and right? It makes them untenable. So if you happen to have a rightist government in power saying that it's all going to trickle down and that society as a whole is going to do OK, and people in fact see that they're not doing better, that they're doing worse and worse because there's less to go around, well that rightist government isn't going to be very popular for very long. But on the other hand if you're a leftist government in power that's saying, well if we just share equally and make our decisions democratically, there's going to be plenty for everybody and they find out in fact that there isn't plenty for everyone, that there are fundamental limits to population and resources, that leftist government isn't going to be very popular for very long.
So we're entering a period of potential political turmoil where we may see governments shifting from one extreme to the other with nobody really having the ability to address the issues and with both sides being motivated to hide what the real issues are. Nobodies going to want to say, well this is all the inevitable result of industrialism itself, it's the way of life that our parents and grandparents and we ourselves have adopted, a way of life based on resource extraction and growth that has produced these problems. Nobody's going to want to say that, you know there are people on the left that are going to want to point the finger at rich individuals and the greedy corporations, and the people on the right are going to be pointing their finger at the leftists and foreigners and terrorists and saying we'll just need to invest more money in police and military and intelligence gathering and so on, and none of these solutions will help the least bit. I'm afraid that political and economic and energy capital are going to be squandered, not in solving the problem but in hiding the problem. So what we really need is actually a whole new form of politics. An ecological politics, a politics of reality. Now who's talking about this? Very few that I have seen. I think the marxist and most of the anarchists are pretty much avoiding the issue. There are a few people who are mostly scientists, people like Virginia Abernathy who wrote the book "Population Politics" and David Pimentel a professor up in Ithaca, New York, people like that are aware of the issues but these are scientists, they're not political leaders. It's going to take a different kind of political leader to raise these kinds of issues and it's difficult because people don't want to hear the bad news. Political leaders who begin to raise these issues are not likely to get re-elected or likely to gather people around them. When I talk about this stuff to audiences, people immediately say, 'can't you give us some hope' well I think hope is actually part of the problem. Yes we all need hope in order to keep going. I'm not putting it down entirely but we tend to attach ourselves to false hopes. We'd rather have a rosy picture of the fut
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