The Last Oil Shock

I am reading a rather interesting book at the moment: The Last Oil Shock. Last year I read another book about impending peak oil, The End of Oil, and found it really interesting – although at the same time somewhat annoying as it was published in 2003. Clearly, so much has happened with oil prices, oil security and peak oil theory since then that this was like reading a book about Adolf Hitler that was published in 1939. That’s no disrespect to “The End of Oil” at all, as it’s a damn interesting book and really taught me a lot about why peak oil will happen, what we can possibly do about it and how this all tied in with climate change issues as well. So I was pretty happy to find another book about a fairly similar subject, but one that was published as recently as 2007. While it still misses the insane fluctuations of oil prices since then, the trends were definitely emerging enough by the time this book was published to provide more insight into the whole issue of peak oil.

I’m only just over halfway through “The Last Oil Shock” so far, so I cannot really comment on the book as a whole quite yet. However, what I have read so far is, indeed, incredibly interesting. It avoids being repetitive, even though being repetitive about peak oil is very easy to do. The first chapter sets out in no uncertain terms (and with very difficult to argue logic) that the Iraq War was most definitely about oil. Although most of us suspected that to be the case anyway, it’s pretty scary when all the dots are joined together. Subsequent chapters have looked at how the theory of peak oil came about, and how it has been proved over and over again, through a huge variety of different models. Interestingly, the guy who originally came up with the idea of peak oil, M. King Hubbert, was clever enough to prove that US oil production would peak around 1970 that he used three different methods to come up with the same figure. Indeed, 1970 was the year when oil production in the US peaked, and it’s been going backwards pretty much ever since.

I think the most interesting part of the book so far is what I’m reading at the moment, which relates to how inter-connected cheap oil is with the functioning of developed-world economies. Although less oil per GDP dollar is used these days than back in the 1970s, the more I read the more obvious it seems that a huge chunk of economic growth has occurred pretty much simply because we have got better and better at using more energy more efficiently. I guess that makes most sense when one looks at what around them makes their work more efficient: computers, machinery, better transportation technologies and so forth. All of it is dependent upon utilising energy, effectively making it possible for us to chip in less of the energy ourselves per unit of activity created. So in short, we’re enormously dependent upon energy – and crap loads of it. Throughout the last 100 odd years most of that energy has come from burning stuff such as oil (though also coal and natural gas, which will peak themselves, if later in the piece). Of course we don’t have to make energy out of oil, gas and coal. Renewables such as solar, wind, geothermal, tidal and wave power clearly are the ultimate solution. Hydrogen is NOT a realistic option, until we figure out how to make it from something other than natural gas effectively and cheaply.

Nothing particularly new there I guess. But it is interesting to note that energy has been somewhat ignored as a major factor of economic growth by many economists around the world. Perhaps we don’t quite realise how utterly dependent we are on the supply of adundant, and cheap, energy? So the question sits there about what will happen once a major source of cheap and abundant energy runs out? I should be majorly worried. There’s a reasonable argument that exceptionally high oil prices were the catalyst for the “current economic crisis” that’s taking place around the world – as more money going to the sheikhs of the middle east meant less for everyone else, which coupled with all the other mistakes being made, ended up being a straw that broke the camels back (as the saying goes).

However, interestingly enough I’m not worried about it. Well, perhaps not as worried as I should be. First, to talk about the aspects of peak oil that are worrying. It is very worrying that so many of our fertilisers are dependent upon oil for their creation and transportation. Lowering food output, especially in the third world, is a recipe for disaster in the longer-term. The obsession with biofuels is also problematic, potentially taking land away from productive food output to be used for biofuel creation. The amount of grain that goes into one tank of petrol could, apparently, feed someone for a year. I know where I’d rather that amount of grain went, and it certainly isn’t into someone’s SUV. I’m also worried that it will become much more difficult to make important stuff, like plastics. However, as peak oil doesn’t necessarily say that oil will simply run out, but rather that after a certain point it will just get really expensive, I imagine that plastics will be around for a good long while yet, they’ll probably just be more expensive. The other main way that peak oil worries me is its effect on air travel. This is largely because I live in New Zealand, a heck of a long way away from most other people on the planet. Peak oil could be incredibly isolating for us, making NZ very inaccessible for tourists (a hugely important part of our economy) and also making it damn hard for me to visit other parts of the world. Biofuel doesn’t work in aeroplanes because it gets too cold, and I can’t exactly see how a solar or wind-powered plane is going to work. In the shorter-term, I can see our government having to subsidise air travel in the future to protect the tourist industry – though that certainly can’t last forever.

However, regarding most other aspects of peak oil, I say bring it on! While the advent of cheap oil over the past 100 odd years has enabled unprecedented economic growth, it has also enabled unprecedented environmental destruction and unprecedented horrible urban outcomes. In a car-obsessed country like New Zealand, I believe that impossibly high petrol prices is the only way we’ll ever be able to curb sprawl and create more sustainable cities. Once it becomes impossible to simply drive everywhere, our cities will have to become more compact, public transport will have to be improved and the blight of sprawl will have to be eliminated. Perhaps it is the blight of urban sprawl, and my annoyance at our automobile dependency that makes me almost look forward to the days of unaffordable petrol. If it happens too quickly though, we’ll definitely be stuffed, but if the increase happens over a period of 10-20 years as seems most likely, hopefully planners and policymakers out there will realise what is happening, and we’ll see a huge rethink about the way our cities operate. In some respects that was starting to happen, before the economic crisis hammered oil prices down.

I think the other main reason I find myself almost looking forward to peak oil, is that there’s a reasonable chance it will be the only way to actually stop climate change from REALLY destroying the planet. Of course there’s the huge worry that people will switch from using oil to using coal (which is more environmentally destructive, but probably has bigger reserves), but putting that aside peak oil is potentially a huge ally in the battle against climate change. Hopefully it happens first, to really force people to change their ways, as has seemed almost impossible by just telling them how bad climate change will be when it really kicks in. As I mentioned to my mum a few weeks back, the problem with the climate change issue is that nobody’s really suffered yet, and people just simply aren’t willing to give up anything because they don’t see the point. Effectively they don’t see that there’s a problem because they haven’t suffered yet. Peak oil could be that kick in the guts that forces people to change, with reducing the extent of climate change being a nice little side-effect.

So yeah, it’s an interesting book which hasn’t really changed my viewpoint on much, but has helped me understand the issue in far more detail. I may blog again once I’ve finished it.

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