The Oil ‘Crisis’
Jun 11th, 2008 by Ben
I’ve never been much of a fan of Richard Glover, but he’s totally won me over. In Saturday’s Herald, he wrote the most commonsense article I’ve read on the the ‘crisis’ so far.
Basic message: it’s not going to be pleasant, but the market will adjust. And we’ll live through it.
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Hi mate,
Richard’s radically underestimate just how bad this could get. You may have heard that I’ve been looking into this for about 4 years now, and even ran presentations warning government ministers that we were approaching the “final oil crisis” as far back as 2005 — when it was still under $60 a barrel.
I’ve been studying this beast for a while now. Not only is oil essential for 90% of the world’s transport, but it also gives us the petrochemical industry… that’s plastics, paints, varnishes, medical plastics and pumps and tubes, some medicines themselves… and food.
It takes 10 calories of oil and gas energy to grow 1 calorie of food.
When you eat a McDonald’s Hamburger, think of the calories in a Big Mac and multiply by 10. That’s how much oil and gas it took to grow the food and get it too you. It doesn’t even included cooking it!
So basically, here’s the bottom line for me. Very soon the world’s oil output will begin to steadily decline. Nothing is ready to replace oil, to scale up at it’s enormous volume. And the market solving the problem? Yeah, we can let “demand destruction” solve the problem for us — if we like inflation, recessions, Greater Depressions….
This is the final oil crisis. Even Dr Karl agrees that we are at “peak oil”. Sometime in the next few years oil production will decline by about 3 to 5% per annum — permanently. Australia could be without imports in as little as 10 to 20 years — forcing us to rely on our own production, about 10% of today’s consumption.
With facts like that, saying “the market will adjust” is like saying human beings will do anything they can to avoid starving to death. Richard Glover — funny man as he is and one of my favourite radio jocks — has no idea what he’s talking about. This “market adjustment” will most probably make 1929 look like a dress rehearsal for the real thing.
A bit of carpooling here and efficiency there only takes our eyes of the main game, we have about 15 years to build a society that functions without oil.
G’day Dave.
I certainly haven’t looked into this as much as you have. And I remember hearing you speak about it some time ago.
We’re not talking about car-pooling here, we’re talking about society dealing with dramatically increased fuel prices. Fuel prices going up is going to have an impact on how people use petrochemical products - that’s Glover’s point. And it’s going to have an effect that won’t be had by just telling people they should use less oil.
I don’t know what kind of timeline he envisages, but surely as prices go up, more money will go into alternative energy research etc, and the weight of momentum will shift toward using less oil. We are in the beginning of something, that’s for sure, and if we’ve got 15 years (although I understand there’s a lot of debate about this), and prices keep going up like they are, I can’t help but think that the market will adjust.
Call me naïve, if you like.
Yes, we both agree that the market will eventually adjust.
And I’m not calling anyone naïve because I was pretty much of the same outlook 4 years ago. Most people that haven’t been exposed to certain data really don’t have any reason at all to glimpse how serious this is.
Yet here’s my summary statement on ‘the market response’: IF there’s no miraculous replacement for oil, it calls into question how much public transport we need, how we are going to get food from where we grow it to where we need it, and even how we design our cities. Massive upgrades to public transport and city zoning laws are a government responsibility.
But an introductory piece I wrote for Zadok magazine might help.
http://tinyurl.com/3z3uka
Also, try Dr Andrew Cameron’s piece for the Social Issues Executive. The scenarios he discusses show how serious people are taking the more ‘depressing’ aspects of this seriously.
http://tinyurl.com/4vkh2a
Then of course there’s Byron Smith’s piece.
http://tinyurl.com/3rjmfu
Thanks for the great links, Dave. I’ll have a look at them. It’s always good to be better informed.