Peak Oil In The Australian

Peak oil coverage in the mainstream Australian media has generally been quite good in recent years - while the idea of an imminent peak is far from the accepted wisdom, pretty much every major news outlet has provided decent coverage of the subject at some point or another (see the Australian Financial Review, Sydney Morning Herald, ABC, Melbourne Age and Brisbane Courier Mail for a random set of examples)

While I tend to regard The Australian's Nigel Wilson as the best journalist covering energy news in the country, his column in The Australian ("Long-term oil prophecies proven wrong") this week left much to be desired.

IN the early 1970s the end of the world was predicted when a group of Middle East oil-producing countries decided to use their product as a political weapon.

At the time, the Organisation of Petroleum Exporting Countries controlled more than 80 per cent of the world's traded oil, which was being sold at about $US7 a barrel. By 1978 oil was traded at around the equivalent of $US120 a barrel - and the end of the age of oil was widely predicted.

The Club of Rome predictions of the late 1960s, based on the idea that there is a limit to global economic expansion because of scarce natural resources such as oil, have not eventuated, and today there is scepticism about OPEC's ability to dictate oil prices.

And the political choices facing the OPEC members - 11 of them if you include Iraq - are nowhere near as simple as they were four decades ago.

OPEC oil ministers will meet in Abu Dhabi this week to consider a crude market that is again testing $US100 a barrel, and there is no certainty about what will happen. Theoretically, the OPEC members could just turn up their taps: more oil would flow and the world would be an easier place. ...

While its very easy sitting in an office in downtown Sydney to say that OPEC has as much oil as we could ever want and all they need to do is open the spigots a bit further and we'll be drowning in cheap, sweet crude, there doesn't appear to be a great deal of evidence for this theory if you look reasonably hard for it.

While I think its true to say that Iraq could potentially produce a lot more oil than it is at present, that isn't likely to happen until either the US crushes all remaining resistance entirely or they leave and an Iraqi government emerges that can get the local oil industry on its feet again. Venezuela could also possibly produce more oil (from its heavy oil reserves) but this would require vast investment that isn't occurring at present and doesn't appear likely to in the foreseeable future (which will bring a sigh of relief from those concerned about global warming). Other than that there doesn't appear to be much in the way of potential excess capacity out in OPEC, let alone real excess capacity.

The quip about the Club of Rome is also rather annoying, showing (as is common with almost every reference to the Limits To Growth that I come across) a complete misunderstanding of what the book said. For those who can't be bothered reading the book (which apparently includes Mr Wilson):

* it outlined a number of different scenarios
* it didn't claim to predict the future
* it didn't say that global economic expansion would go into reverse with 30 years - the scenarios were modelled over a 100 year period (which we are now 35 years into)
* as a result of the concerns raised by the book, a lot of actions were taken in the 1970's which made the more dire scenarios that were explored less likely to occur (see the oil consumption graph and look at what happens to it during that period - and Europe and Japan at least seemed to have learned some lessons from the experience)
* not all scenarios resulted in resource shortages and collapse - some had good outcomes
* the conclusion to the book concentrates on the positive scenarios, along with a long description about how to make the "transition to sustainability" (which doesn't include population reduction, world government or any of the other measures some conspiracy theorists talk about - it recommends sustainability/equity/efficiency, clean energy, closed loop industrial techniques, regenerative agricultural practices, nonviolent conflict resolution, accurate/unbiased media and "decentralisation of economic power, political influence and scientific expertise")

To a certain extent, The Australian seems to be following the lead of new Murdoch press stablemate The Wall Street Journal, which made a number of similar arguments recently - dealt with at The Oil Drum (twice) and Energy Bulletin, amongst others.

Heading back to The Australian:

But the new head of the Paris-based International Energy Agency, Nobuo Tanaka, says some additional production is necessary. "We would wish for some additional barrels sooner rather than later," he says. "The current price level is sending a message to producers. Current high prices are not caused by disruptions but by concerns about supply and demand, the long-term economic growth of some countries and other structural issues. The high prices are showing that future investment in spare capacity is needed."

The IEA, which represents some of the major oil consuming countries, including Australia, has just published its 2007 Oil Supply Security report. "Despite growing global concerns about energy security, the IEA emergency response system remains robust and effective," Mr Tanaka said.

IEA member countries - though not Australia, which relies on the oil refining and marketing chain - currently hold stocks equivalent to about 122 days of net imports and constantly review and fine-tune their emergency response mechanisms, according to the report.

"Demand growth, increased concentration of oil reserves in fewer countries, the concentration of oil use in the transport sector, and insufficient investment in capacity additions to keep pace with demand growth exacerbate the potential of an oil supply disruption in a tight oil market," the report says.

That seems to sound quite a lot like peak oil to me (it also sounds like Australia should think about its own strategic reserve if we aren't smart enough to start switching to an electric transport system).

So what does Mr Wilson conclude from this ?

OPEC now accounts for less than 40 per cent of the world's traded oil, and the higher price means the prospect of peak oil so confidently predicted a decade ago has been postponed.

Errr - did I miss something here ? A little bit of data (not to mention some analysis of what "concentration of reserves in fewer countries" and the growth in oil consumption in those countries really means) to support this theory would be nice...

In the light of the prospects for inflation, the threat posed by the US sub-prime mortgage problem etc., it is important for the new Labor Government in Australia “not to scare the horses” in respect of the economic situation they face. On the other hand, unless they grit their teeth and give advanced warning of Peak Oil they will be blamed for the economic consequences of future energy price rises.

The Liberals sure know when to abandon ship (remember, they lost office just before the 1929 crash!). The Sydney Morning Herald’s editorial on Tuesday November 27 noted that the new Labor government could be there for two terms at least “barring an outside economic cataclysm on the scale of the 1973 oil shock that helped bring down Gough Whitlam within three years.” Well, that cataclysm seems to be on its way. The price of oil has already increased about 50 per cent since Kevin Rudd, the new Labor leader, assumed leadership late in 2006. Prices will, no doubt, fluctuate up and down but I predict that by the end of Rudd’s term they will have doubled again. The only thing that will stop that is a huge recession. And the US economy seems to be headed that way. So the future ain’t looking rosy.

Perhaps the only thing that will save the Rudd Government is integrity. If in the November 2007 election the Australian people deliberately chose to throw out a morally bankrupt Howard government even when the economy was at the height of a boom (low unemployment, low inflation, high economic growth) then maybe, just maybe, they will vote to keep an honest Rudd Labor government in office even if the economy crashes. It is for this reason that I think that Senator John Faulkner’s appointment as integrity policeman (Special Minister of State) is the most interesting in Labor’s new line up.

When push comes to shove I am probably on the side of a Hobbesian view of human nature. But I think (hope) that we in Australia are not yet anywhere near that extreme situation. When the Peak Oil crunch arrives in this country I expect that a Labor government (and perhaps a future Liberal one) will see this as a problem to be solved collectively and, as far as possible, cooperatively, rather than the violent zero-sum blame game that seems to be envisaged on so many US Peak Oil sites.

There seems to be a real fundamental difference here between, on the one hand, Australian and European (and also Canadian) views on responses to Peak Oil, and those of some of our U.S. colleagues. I wonder, for example, if the lower tendency to resort to violence in Australia has anything to do with our attitude towards religion. We are far less polarised along denominational lines, and atheism and agnosticism rank far higher here on census surveys than in the US. And, in practical terms (as opposed to theoretical), the religions of Thoreau and Whitman seem to be more alive here than in most states of the US. [Note that I said MOST states: I am aware, of course, that the US is not homogeneous].

When the Peak Oil crunch arrives in this country I expect that a Labor government (and perhaps a future Liberal one) will see this as a problem to be solved collectively and, as far as possible, cooperatively, rather than the violent zero-sum blame game that seems to be envisaged on so many US Peak Oil sites.

The one thing that struck me about the Liberals campaign was their stupid slogan "GO FOR GROWTH". There were snippets from both Howard and Costello that this idea of perpetual growth was absurd, with JH warning of econmic storm clouds gathering and Costello warning of the dangers of high oil prices earlier this year. (Don't fret if you missed either of these, they weren't trumpeted very loudly).

The COALitions actions in govt led me to believe that know full well about the oil supply situation but lacked teh courage to tkae the nation into there confidence and spell it all out. JH made a very small attempt in the campaign but he should have made it the central theme which may not have won the election but would at least have been going down with honour.

Rudd and Garrett really are cluless when it comes to Peak Oil. It goes against their leftist belief that corporations and especially oil companies are the enemy, when in fact it is our whole way of life that is at fault. Both of these millionaires are beneficiaries of the consumer-industrial world and theere ideas are that everything can be fixed if the govt just throws enough money at it.

Exhibit No1 is the stupid Australian Hybrid Car project which will cost us half a billion dollars to prop up an the idea of cheap guilt free personal road transport for all. Exhibit No 2 is their investment in "clean coal" which will allow all the CO2 from power stations to be buired, along with any lingering guilt back inot the earths crust. And once we know how to do CCS, we can go merrily building all those coal to liquids plants to enble us to keep driving our Ausiie Hybrids long commuting distances in our sprawl afflicted megalopolises. Simple!

I think the Libs actually threw the election becasue tehy knew that the proverbial fan has already cranked up to high enough RPM's to make a real mess of the other proverbial substance which I will lable generaly as the current consumer-industrial economy.

Good Luck Kevin. Your going to need it.

The Garnaut Review will presumably form the basis of much of the Gov. policy re climate change. In a recent paper Prof. Garnaut indicated his support for the reduction of Australian per capita emissions to the world average by a process of "Contraction and Convergence" simultaneously with an overall reduction in world emissions.

Effectively this means a reduction of about 97% of our emissions. Impossible to have private motor vehicle, holiday travel and many other things. Probably just impossible without descent to Stone Age.

Prof. Garnaut thinks that if we design and execute the policies he is going to suggest we can achieve the emission reductions and maintain economic growth (includes the obligatory carbon sequestration).

As I've said before a Nobel prize wouldn't come close to being sufficient reward for the Prof. if he pulls this one off.

Any encouragement of car industry, new road building, immigration, increased birth rate, airport extensions etc is going in the wrong direction.

You can get reductions in your greenhouse gas emissions roughly as follows,

- stopping obvious waste, 25%
- planning to make use of economies of scale, 25%
- voluntary simplicity, 25%

In our home lives, "obvious waste" is stuff like leaving the aircon on when you're not home, appliances on standby, and so on.

"Economies of scale" at home are things like only doing the clothes washing when the machine is entirely full - 1x large load instead of 3x small loads - cooking a few litres of sauce or soup for the week instead of having 6x tv dinners, etc.

"Voluntary simplicity" are things like reducing your meat consumption, walking any journey under 3km, biking any journey from 3-15km, and public transport for longer journeys, or listening to music on your 1 watt MP3 player instead of your 1,000 Watt stereo, and so on.

So with a small amount of thought and effort, and without spending any money at all - in fact, saving money - you can reduce your domestic greenhouse gas emissions by 75%, to 25% of average.

The remaining 0-25% reduction (depending on who you believe when they say how much we have to reduce) requires either a non-industrial lifestyle (no electricity, etc), or else some money spending (either by you or the government) on solar panels, wind turbines, more public transport, more localised agriculture and manufacturing, and so on.

So we can get 75% of the way there with no significant change in our lifestyles. The remaining 25% would be achieved either by reverting to the iron age (not stone age), or else by spending money on solar panels, etc.

It's quite doable, we just need to have our shit together and not cry like little girls at the thought of less burgers and time in traffic. Man up.

a little too simplistic really. Household and personal consumption is but one part of the economy. For example how mnay tonnes of FF go into making your MP3 player, dishwasher, washing machine, bicycle etc.An then there is the whole question of food production and ditributions not to tmention all the other manufactured stuff which we will still use regardless of our personal household reduction.

So we can get 75% of the way there with no significant change in our lifestyles. The remaining 25% would be achieved either by reverting to the iron age (not stone age), or else by spending money on solar panels, etc.

There is going to be significant change to our lifestyles if we hope to achieve a 75% reduction in national greenhouse gas emissions. And RE is not going to save us. The GHG involved, and the energy input, in manufacturing the RE infrastructure is a losing game. More energy required than what is yielded over the life of the turbione, solar panel etc. You simply cannot run a steel mill on solar panels. You need mountains of coal both for the energy and the carbon. You need lots of steel (an copper)to build wind turbines as well as hundreds of kilometres of cable (aluminium) to carry the electricty to the grid.

But of course its just a matter of the guvmint spending money and all our little girl cries will be fixed. When the cornucopians realise that money is simply a figment of our collective imagination and that its only value is the symbolism we give it to allocate energy across the population, we will be getting somewaht closer to finding a way to live in a world of energy descent.

Of course it's simplistic, it's the response to an article which will be forgotten about within a week, what do you want, a doctoral thesis?

Relatively little fossil fuels go into our consumer products. The biggest contribution to fossil fuel consumption and greenhouse gas emissions are transport, power generation, and food production (especially meat). Everything else is small potatoes compared to those three.

Reducing those three are well within the ability of a person at home.

We'd also see flow-on effects from such reductions. If people are aiming to reduce electricity consumption, then they simply won't buy plasma screen tvs, so there'll be less emissions from their production. If people take the train instead of driving, then they won't have to replace their cars very often, and so on.

It's not well-appreciated, but ultimately the entire economy is about things we use in our day-to-day lives. Everything we mine or manufacture either ends up in our homes, or goes to produce something that ends up in our homes, or in our daily lives (public spaces like town halls). So if you and I reduce our consumption and emissions, that'll have a flow-on effect.

In any case saying that there should be household efficiencies and reductions is not to say that there should be no agricultural or industrial efficiencies and reductions. That I tell Jim to stop screwing around on his missus does not mean that I think Bob should keep doing it - I just happen to talking to Jim at the moment.

It's not true that renewable energy involves power plants which take more energy to manufacture than they'll ever produce; half an hour with google and a critical mind will show you this.

More energy required than what is yielded over the life of the turbione, solar panel etc. You simply cannot run a steel mill on solar panels.

Saying this sort of stuff just discredits the rest of your message - people have got to cut making these sorts of nonsense arguments out if they want peak oil to be taken half seriously.

Wind turbines and solar panels (let alone solar thermal) are not energy negative - they have very good net energy paybacks (as long as the siting of them is reasonably intelligent anyway).

Steel mills (and anything else that sucks energy from the grid) couldn't care less if the power they use is coming from a solar panel or a nuclear power plant. A watt is a watt...

It's quite doable, we just need to have our shit together and not cry like little girls at the thought of less burgers and time in traffic.

Garnaut too says we can have economic growth and international equity and vastly reduced emissions.

Given the "Contraction and Convergence" principles by 2050 the per capita Australian and American and European etc emissions target would be roughly that of today's Zimbabwean. Yuk.

Easy or likely? Look at the squabbles in Bali over the easy first steps.

It seems Rupert's new editorial policy is to have an each-way bet. Because I want to save the trees by not buying newspapers but the lead story in today's Australian was about trees I borrowed someone else's copy. The front page was about the hypocrisy of the Indos saving the forests for outside cash, then the editorial (by Alan Wood or some dinosaur) was about overreacting to GW.

We just need Page Three girls and the paper will have something for everybody.

Interesting suggestion - maybe you could get a job in product design.

You'd probably have to start at The Daily Terror or The Hun though and work your way up...