Oil Has Peaked and
The World Is Heading for a Crash

By Mark Hertsgaard
August 19, 2005

Mark Hertsgaard
It used to be, only environmentalists and conspiracy nuts warned about the world running out of oil. Not anymore.
A growing number of industry insiders now admit that the Earth’s oil is finite; scarcities and skyrocketing prices are imminent; and our governments and economies are utterly unprepared for the chaos ahead.
The insiders include Matthew Simmons, an investment analyst who’s briefed President Bush, and Exxon-Mobil, which recently projected -- without issuing press releases -- that non-OPEC production will peak by 2010.
Peak oil is the key phrase. The earth is not about to surrender its last drop of oil. Rather, peak is when half of a given amount of oil has been pumped out and half still remains.
But that second half is much costlier and uncertain to obtain. With global demand increasing every year, that means higher and higher prices and more frequent shortages.
Think back to the oil shocks and gas lines of the 1970s. Then imagine those shocks continuing for decades. In this peak oil future, suburban living will be impossible. Economies could crater and nations go to war.
Conventional wisdom says the magic of the market will solve the problem: higher prices will call forth more supply. In particular, Saudi Arabia is assumed to hold inexhaustible reserves.
But Simmons, the analyst who briefed President Bush, demolishes those assumptions in his book, Twilight in the Desert. Simmons notes there is virtually no verifiable data that Saudi oil is inexhaustible; outsiders have essentially been taking the Saudis’ word for it. Simmons believes Saudi oil is now at or beyond peak and the world is heading for a crash.
All of which casts a harsh light on the debate in Washington, with its posturing about ending US dependence on foreign oil. If the peak oil prophets are right, $3 a gallon gas will soon sound cheap, and the real imperative is to end our dependence on oil altogether.

The Bad Climate Deal
Blair and Bush May Push in Scotland

The July 6–8 summit meeting of the Group of Eight industrial nations comes as humanity is drifting toward unparalleled catastrophe. Climate change, a prime focus of the summit, is on track to kill millions of people in the twenty-first century. The victims will die not in the sudden bang of radioactive explosions but in the gradual whimper of environmental collapse as soaring temperatures and rising seas submerge cities, parch farmlands, crash ecosystems and spread hunger, disease and chaos worldwide.

As summit host, Prime Minister Tony Blair of Britain has lobbied the heads of government gathering in Scotland to take much stronger action against climate change, a problem his science adviser, Sir David King, has called the greatest danger civilization has faced in 5,000 years. Blair has been pointing out since 2002 that the Kyoto Protocol “is not radical enough.” The protocol demands 5 percent reductions in greenhouse gas emissions from 1990 levels by industrial countries only. The United Nations Inter-governmental Panel on Climate Change says a 50 to 70 percent reduction by humanity as a whole is needed. To bridge that ten-fold gap, Blair has urged the G-8 nations, which are responsible for the majority of previous emissions, to endorse an ambitious program of strict timelines and emissions cuts.

But Blair has been unwilling to admit the obvious: His dream of a historic breakthrough on climate will come only if G-8 leaders are willing to defy the Bush Administration and plot their own course. George W. Bush has made it clear he’s not interested in doing anything about climate change except study it. For Bush and his right-wing base, the non-existence of climate change is an article of faith, like the non-existence of evolution, and it doesn’t matter what scientists say. Nevertheless, Blair insists the United States must be part of any climate accord, arguing, “if you simply exclude America from this equation, we’ll never get it done.” The result is, Bush gets a veto over the world’s progress.

To counter Bush’s objection that Kyoto excuses rising industrial powers from emissions reductions, Blair invited China, India, Brazil, South Africa and Mexico to Scotland to entice commitments from them as well. Bush didn’t budge. Three weeks before the summit, leaked drafts showed that US negotiators had demanded removal of all references to the urgency of climate change from the summit’s final accord. No longer would the G-8 leaders endorse “ambitious targets and timetables” for emissions reductions or fund alternative energy development. They wouldn’t even acknowledge basic scientific findings that climate change has already begun and is due largely to human activity.

There is common ground between Bush and Blair, however, and it hints at the kind of deal that, unfortunately, might emerge from this summit. One year ago, Blair disclosed to a parliamentary committee that Washington was pressing Britain to support a new generation of nuclear reactors that were supposedly safer and cheaper. According to a report in The Guardian, Blair told the committee that “if you are serious about the issue of climate change,” nuclear power must be part of the solution. Unlike coal, oil and natural gas combustion, nuclear fission produces no carbon dioxide, the primary greenhouse gas.

"Admit that the waters around you have grown." Credit: Greenpeace
The US Push for Nuclear Power Is Not a Solution
Reviving nuclear power has been a priority for Bush since 2001, when the energy plan devised by vice president Dick Cheney urged construction of hundreds of nuclear plants. Bush’s 2006 budget proposes reducing funding for the Energy Department by 2 percent even as nuclear funding increases 5 percent.

Watch, then, for the following deal at the summit, especially if other G-8 leaders are unwilling to challenge Bush’s intransigence. In their final accord the G-8 leaders could agree to disagree about the definition of the problem -- is climate change an urgent danger or not? -- but unite behind a shared solution: rapid development of zero-carbon energy sources that produce no greenhouse gases. The choice of which sources to emphasize -- solar, wind, efficiency or nuclear -- could be left up to each nation, though it’s worth noting that the drafts US negotiators altered specifically endorsed nuclear.

Such a deal would allow Blair, Bush and other G-8 leaders to claim a face-saving diplomatic victory. It would also probably be applauded for its realism and flexibility by media outlets and corporate voices on both sides of the Atlantic. After all, the argument will go, even some environmentalists now accept that nuclear is part of the solution to climate change, assuming that safety concerns are addressed.

But investing in nuclear power would actually make the climate predicament worse. The reasons are economic: Nuclear is seven times less cost-effective at displacing carbon than energy efficiency is, according to studies by the Rocky Mountain Institute. In other words, a dollar invested in insulating a drafty house displaces seven times more coal than a dollar invested in a nuclear power plant, mainly because of nuclear's immense capital costs. (Industry spokespeople like to brag that nuclear is cheaper than wind power, but they count only the cost of operating the plant, not of constructing it -- a trick that would make a Rolls Royce cheap to drive, since the gasoline but not the purchase price would matter.) In a world of limited capital, investing in nuclear would take funding away from the cheapest (and fastest) alternative -- efficiency -- thus slowing the world’s withdrawal from carbon fuels.

Nuclear Power is neither "Clean" nor Inexpensive
Alas, most environmentalists have failed to argue this angle (with the exception of the Nuclear Information and Resource Service, a tiny NGO that has been bird-dogging the industry since the 1970s). Environmentalists focus more on the safety problems that plague nuclear power, starting with the lack of a solution, despite 60 years of experience, to waste disposal. And while there have been no catastrophic accidents at western nuclear plants since Three Mile Island in 1979, a recent investigation by Time quotes many industry insiders warning that terrorists could easily overwhelm the safeguards at US nuclear plants and trigger meltdowns that kill millions.

The idea that environmentalists are nonetheless warming up to nuclear power was promoted by a front-page story in the May 15 New York Times. But independent checking suggests that the article’s claims were overstated. Of four environmentalists cited, only Stewart Brand truly supports nuclear, but Brand is a writer who speaks only for himself, not the environmental movement. Gus Speth, a board member of the Natural Resources Defense Council, and Jonathan Lasch, president of the World Resources Institute, told me the Times had omitted crucial context for their remarks; their actual position, in Lasch’s words, is that “energy efficiency and renewables options will come long, long before nukes.”

Fred Krupp, executive director of the Environmental Defense Fund, did not reply to an interview request but was one of thirteen leaders of major environmental organizations who wrote to Senators John McCain and Joseph Lieberman, reluctantly opposing their Climate Stewardship Act because it subsidized nuclear energy. Nevertheless, the myth of environmental support for nuclear is now sufficiently entrenched to provide cover for Bush’s agenda, at least in the United States.

For the G-8 to endorse Bush’s agenda, however, would be not only wrongheaded but unnecessary. Blair is right that the United States, as the world’s leading greenhouse gas emitter, must be part of the response to climate change. His mistake is to equate the United States with the Bush Administration. Despite the latter’s foot-dragging, other major American institutions have begun taking meaningful action on climate change. The US Conference of Mayors voted unanimously in June to meet or exceed the Kyoto targets. New York and eight other states are establishing a carbon-trading system to reduce emissions. California has required cars to emit 30 percent less greenhouse gas (a move copied by six other states) and is joining eight states in suing electric utilities in a case that could become the greenhouse equivalent of the tobacco industry litigation. Institutions holding $3 trillion in investment assets have demanded that US corporations hoping to borrow from them first demonstrate how they are reducing greenhouse emissions.

Combined, these and other actions amount to real movement against climate change by a global powerhouse; after all, California alone ranks as the world’s fifth-largest economy. Regardless of what Bush does, if the G-8 would make common cause with these American states and institutions, together they could drive global climate policy.

It’s too late to prevent climate change. But the G-8 leaders could give humanity a better chance of surviving it if they have the courage to do the right thing in Scotland: endorse binding emissions cuts and early deadlines so corporate ingenuity and marketplace discipline can accelerate progress; subsidize smart zero-carbon energy sources, starting with efficiency, rather than waste money on the dead end of nuclear energy; and don’t be afraid to leave Bush behind if he balks. It will be hard enough for humanity to defuse climate change if we do everything right; there’s no time to wait for Godot.

Mark Hertsgaard, The Nation’s environment correspondent, is the author most recently of Earth Odyssey: Around the World in Search of Our Environmental Future and The Eagle's Shadow: Why America Fascinates and Infuriates the World.

Copyright 2005, Mark Hertsgaard; all rights reserved. Reposted with permission.

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