The Peak Oil Conundrum
The Dec. 19, 2005, issue of OGJ ran two articles on peak oil. One covered a recent congressional hearing, and one was an Editorial by Bob Tippee. Tippee expressed what many in the industry often feel: “...the most constructive thing Congress can do in response may be nothing, absolutely nothing.”
Having spent 15 years in the oil industry, I’m well aware of the almost universal desire to keep government as far out of the business as possible; it’s almost a matter of religion.
However, when it comes to peak oil, the usual desire to keep the government at bay may not be in our collective interest. Geologists know that conventional oil production will peak but we don’t know when. Some worry that it will be within years, others think a decade, still others forecast somewhat longer.
Furthermore, we don’t know what peaking will look like. Some hope that peaking will phase into a plateau, but it may well be characterized by a sharp production decline, like the North Sea.
Finally, geology and investment may not be the primary determinants; national interests will impact, maybe overwhelming all else.
OGJ readers understand the incredible bounty that petroleum provides to our modern world. Liquid fuel demand has feed and tracked economic growth for roughly a century. Huge fleets of light and heavy-duty vehicles, planes, trains and ships depend on petroleum worldwide. Yes, some can be made more efficient but not without radical, time-consuming change. Even then, most of what will result will still rely on liquid fuels.
Think of what a decline in world oil production would mean. Ask yourself what you are willing to risk on the optimism that peaking is in the long-term future and that normal market forces alone will suffice. Those in E&P know the meaning of risk better than most, and they risk-weight their investments as a matter of course. Apply the same principles to the risk of escalating world oil shortages associated with not being prepared for peak oil.
Peak oil requires us to squarely and realistically address a world-changing event like none that the modern world has ever faced. We have a collective responsibility to help develop a sensible, risk-weighted public policy path to address peak oil. Unless you and your companies are confident that you can ramp up to mitigate oil shortages of millions of barrels per day, likely compounding every year after peaking, government involvement is unavoidable. If peaking comes relatively soon, we may have already past our collective ability to deter dire consequences, because mitigating oil peaking will take decades under the best of conditions.
Think about it; do your own calculations, factoring in your view of world-scale economic risks. Peaking is an incredibly serious problem that deserves our serious, active, thoughtful attention. Think risk on a national and world scale.
Robert L. Hirsch
Senior Energy Program Advisor
Science Applications International Corp.
Alexandria, Va.
