[A-List] US report acknowledges peak-oil threat

[Rick Stahlhut <stahlhut_list@xxxxxxxxx>]

http://english.aljazeera.net/NR/exeres/5EF86883-8CDB-49B5-9A07-5759205A9DBE.htm

US report acknowledges peak-oil threat

By Adam Porter in Perpignan, France

Wednesday 09 March 2005, 18:23 Makka Time, 15:23 GMT


It has long been denied that the US government bases any policy
around the idea that global oil production may be in terminal decline.

But a new US government-sponsored report, obtained by Aljazeera.net,
does exactly that.

Authored by Robert L. Hirsch, Roger Bezdek and Robert Wendling and
entitled the Peaking of World Oil production: Impacts, Mitigation, &
Risk Management, the report is an assessment requested by the US
Department of Energy (DoE), National Energy Technology Laboratory.

It was prepared by Hirsch, who is a senior energy programme adviser
at the private scientific and military company, Science Applications
International Corporation (SAIC).

They work extensively on defence and geopolitical issues for clients,
including many for the US government.

Advisory roles

Among current job openings at SAIC are positions at Fort Benning
(formerly School of the Americas) and a private military contract to
help retrain the Albanian air force in Tirana.

Hirsch has held a wide variety of positions in the US energy
hierarchy including senior energy analyst at the Rand Corporation,
through to a presidentially appointed assistant administrator for
solar, geothermal and advanced energy systems.

He has also previously worked for the US Department of Energy on
numerous advisory committees, including the DoE Energy Research
Advisory Board.

This new report follows on from two presentations by Hirsch last
year. One on 1 March to the same National Energy Technology
Laboratory  and another on 14 June last year at the Annapolis Centre
for Science Based Public Policy. Here Hirsch laid down his ideas on
the peak of oil production.

The Annapolis Centre for Science-based Public Policy is a group which
has received $658,000 in funding from Exxon Mobil since 1998. It
openly disputes the idea that global warming is the result of burning
fossil fuels.

But this brand new senior-level report on "peak oil" is unprecedented
in US government circles. It is not just the existence of the report
itself that is such a landmark in the current oil debate. Its
conclusions also pull no punches.

Uncertain timing

"World oil peaking is going to happen," the report says. Only the
"timing is uncertain".

The effects of any oil peak are similarly not ignored. Specifically,
the impact on the economy of the United States. "The development of
the US economy and lifestyle has been fundamentally shaped by the
availability of abundant, low-cost oil. Oil scarcity and several-fold
oil price increases due to world oil production peaking could have
dramatic impacts ... the economic loss to the United States could be
measured on a trillion-dollar scale," the report says.

The authors of the report also dismiss the power of the markets to
solve any oil peak. They call for the intervention of governments.
But also they rather worryingly point to a need to exclude public
debate and environmental concerns from the process. They say this is
needed to speed up decision-making.

"Intervention by governments will be required, because the economic
and social implications of oil peaking would otherwise be chaotic.
But the process will not be easy.  Expediency may require major
changes to ... lengthy environmental reviews and lengthy public
involvement."

Hirsch notes, despite arguments from the major oil companies and
producer nations, that new finds of oil are not replacing oil
consumed each year. Despite the advances in technology reserves are
becoming increasingly difficult to replace.

Three scenarios

The report sees "a world moving from a long period in which reserves
additions were much greater than consumption, to an era in which
annual additions are falling increasingly short of annual
consumption. This is but one of a number of trends that suggest the
world is fast approaching the inevitable peaking of conventional
world oil production".

The report then takes three possible scenarios and outcomes. Firstly
that energy replacement solutions, or "mitigation" as the report
states, are started 20 years before any "peak". Secondly that
solutions are only enacted 10 years before any peak and, thirdly,
that solutions are only put into practice as the peak becomes
apparent.

In what some may see as an optimistic assessment, the authors believe
20 years is enough time to limit damage from any peak. However, they
point out that "if mitigation were to be too little, too late, world
supply/demand balance will be achieved through massive demand
destruction".

Demand destruction is a modern way of saying catastrophic recessions
and shortages. But as well as these predictions, the report lays out
"signals" it believes will be apparent in the run-up to any peak.
This is perhaps the most worrying aspect of the report, as it seems
to describe the very events that are taking place at the moment.

Supply insecurity

"As world oil peaking is approached, excess production capacity ...
will disappear, so that even minor supply disruptions will cause
increased price volatility as traders, speculators, and other market
participants react to supply/demand events," the report says.

"Simultaneously, oil storage inventories are likely to decrease,
further eroding security of supply, aggravating price volatility, and
further stimulating speculation ... oil could become the price setter
in the broader energy market, in which case other energy prices could
well become increasingly volatile and unpredictable."

The report highlights a series of ways to minimise any impacts. From
increased fuel efficiency to technological help in stopping the
practice of "oil-left-behind" or non-extractable oil and various
forms of new liquid fuels, liquefied coal and gas-to-liquids.

But in its conclusion the report makes troubling reading, noting that
"the world has never faced a problem like this. Without massive
mitigation more than a decade before the fact, the problem will be
pervasive and will not be temporary. Previous energy transitions were
gradual and evolutionary. Oil peaking will be abrupt and
revolutionary".

This report is the clearest signal yet that the U.S government is
taking the subject of  "peak oil" seriously. Yet it remains to be
seen what actions can be taken to stop this potentially
"revolutionary" change.