D  e  s  e  r  t     E  x  p  o  s  u  r  e    December 2005

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Peak oil globally inspires sustainability efforts locally.

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Running on Empty?

Peaking oil production combined with rising demand is creating a global threat—and a local opportunity to build a sustainable community.

By David A. Fryxell

/  

William Joseph would want you to know that he walked to Rejuvenations today. While other patrons of the bustling downtown Silver City coffeehouse arrived in gas-guzzling SUVs and global-warming-inducing pickups, Joseph hoofed it. Other days, he'll get where he's going by bicycle.

If Joseph is right about what's come to be called "peak oil," soon the rest of us will be junking our SUVs and parking our pickups to join him on foot and bicycle. "'Peak oil' doesn't mean we're running out," Joseph explains. "But it does mean that oil production has peaked—and that's forever." Coupled with skyrocketing demand for petroleum—increasing six percent a year in the US, Joseph says, and more than 10 percent annually in rapidly industrializing China—that's a formula for prices at the pump that will make the recent post-Hurricane Katrina spike look like a bargain.

Peak oil may already be here, and most of us just don't know it yet. The Association for the Study of Peak Oil and Gas (ASPO) has calculated that global oil production peaked in the spring of 2004. Other predictions put peak oil—that ominous point at which world oil production begins to go irreversibly down, instead of up, up, up—a few years further out, maybe 2010.

William Joseph isn't waiting. He's helping to organize a forum on Saturday, Dec. 3, "Peak Oil and Local Sustainability: A Community Response," from 1-4 p.m. at the Global Resource Center on the WNMU campus in Silver City. The program is free and child care will be provided (call 538-8078 to sign up for child care). Sponsors of the event range from area conservation and community-action groups, such as the Gila Conservation Coalition, Gila Resources Information Project, Grant County Economic Council, Hometown Initiative, Progressive Forum and Upper Gila Watershed Alliance, to local businesses./

Joseph is the first to admit he's no geologist or energy expert; he's a retired teacher who spent 30 years in Colorado working with delinquent kids, moving here 15 months ago. But he's immersed himself in a crash course on peak oil since seeing the light at the annual World Affairs Conference in Boulder, Colo., in April, where he heard a talk by Christopher Flavin, president of the Worldwatch Institute. That led Joseph to attend the second annual US Conference on Peak Oil and Community Solutions, which drew more than 350 activists from 39 states to Yellow Springs, Ohio, in late September. He'll share his report from that conference at the Dec. 3 forum, along with a DVD featuring conference presenter Richard Heinberg, author of The Party's Over and, most recently, Power Down.

Heinberg's new book is one of 22 published about peak oil in only the past two years, says Joseph. Even though mainstream media outlets are just beginning to "get it"—a search of the New York Times archives turns up a mere seven articles mentioning the subject—peak oil is fueling a semi-underground information boom, with Web sites such as www.peakoil.net, www.survivingpeakoil.com and www.energybulletin.net springing up to spread the word. A Google search for "peak oil" turns up some 2.6 million hits.

 

But why is peak oil a local issue? Isn't the maxing out of global oil production a matter for politicians and diplomats, petroleum geologists and Saudi princes?

Besides giving us a quick taste of higher energy prices, Hurricane Katrina may also have been a wake-up call about relying on federal and state governments in the event of a crisis. "It's our belief that the national politicians and state politicians will respond to peak oil as they did to Hurricane Katrina," says Joseph. "That was a metaphor for peak oil—unprepared at the national level, lack of state response. Katrina showed us exactly what we don't want to happen with peak oil. The political system is broken and unable to respond, so local communities are left holding the bag.

"The only way to respond effectively is at the grassroots level," he goes on. "Our emphasis is to prepare for the problem before it hits us squarely in the face. We want to build a sustainable community so we can work with each other to deal with the problems, instead of wondering after the fact, as one does now, 'What happened?' We want to know what's happening and be able to respond intelligently, maturely and with vision."

The notion of responding to this global problem on a local level isn't limited to Yellow Springs and Silver City. Last month, the mayor of Denver co-sponsored a conference with ASPO on local responses to peak oil. "If you've got mayors talking about this," says Joseph, "this isn't just a bunch of kooks."

Besides, says John Fridinger, another Silver City forum organizer and the operator of the Gila Regional Community email list (see Sustainability Permalink), locally may be the only effective way to respond to peak oil. "We have to come together in recognition of what peak oil means," Fridinger says, "with a sense of local, place-based community consciousness." Only at the local level, he insists, can we make the fundamental shifts in our way of life—from how we get around to where our food comes from—that peak oil will require.

That comes around to the notion of "sustainability," another term we're suddenly hearing a lot of (60.8 million hits on Google). "The world economy as it presently exists is not sustainable," says Fridinger. "With global warming, limited resources, increasing population and environmental degradation, it's a huge problem. Some people look to corporations or technology to solve these problems, rather than changing the way we live. The reality is, though, that we need to change the dominant paradigm of progress and profit and start seeing that we're part of the web of life on earth.

"The response has to be no longer 'Can we exist separately?' but rather 'How can we exist?' Some places will not be able to."

"We have to admit we're addicted to a lifestyle," adds Joseph. "We can't live in denial that we have a problem. Sustainability means living within our means and not depleting resources."

Both he and Fridinger believe, however, that Silver City and Southwest New Mexico can help point the way for dealing with peak oil. "There are not many towns that are as talkative about sustainability as Silver City is," Joseph says. "There are many visionaries in this town; this could be an exciting time for us. It's non-visionaries who will be left behind—let's be on top of this."

As a model for sustainability, he suggests, Silver City could attract the attention of the governor and funding from the state legislature. "We're already primed to push this further."

 

That's the good news, of a sort. The bad news, if you believe the warnings about peak oil, is that we're headed for a perfect storm of declining oil production coupled with rising energy demand.

The aftermath of Hurricane Katrina, once again, offered a cautionary example: In past disruptions, such as the first Gulf War, Saudi Arabia was able to ramp up oil production to cover any shortfall, and the world's refineries had enough excess capacity to turn a potential energy crisis into a blip. When Katrina ravaged US Gulf Coast refineries and offshore production and prices shot up, however, all the Saudis could offer were promises. Refinery capacity was already at the breaking point—96 percent. "You can't operate anything at 96 percent," veteran oil magnate T. Boone Pickens, founder of Mesa Petroleum, told the New York Times (in one of those seven peak-oil articles). "It'll start breaking down."

No new refineries have been built in the United States for some 30 years. But even if we did launch a crash program to boost refining capacity, that wouldn't put more oil in the ground to pump out and refine. Everyone agrees that petroleum is a finite resource, that eventually we'll use up all that we can possibly extract from the earth. The question is: When?

"We're halfway through the hydrocarbon era," says Pickens, a fella who ought to know.

In fact, though most of us probably don't realize it, US oil production actually peaked way back in 1971; ever since, we've been producing less and less. Alarmingly, that US peak was predicted almost on the nose nearly 50 years ago by an American geophysicist, M. King Hubbert—who also forecast that the world as a whole would hit peak oil production at the close of the 20th century. In a now-famous paper presented in 1956 at a meeting of the American Petroleum Institute, Hubbert unveiled a model of known oil reserves and future oil availability that's come to be called the "Hubbert Curve." It showed that US oil production would begin to head downward between 1965 and 1970.

Hubbert turned out to be pessimistic by only a year or so about US production; for world oil production, he forecast a peak in 2000. Peak-oil theorists argue that if you adjust the Hubbert Curve for the unforeseen artificial drops caused by OPEC in 1973 and Iran in 1979, Hubbert's world forecast remains right on target. We'll hit peak oil. . . oh, right about now.

It's not just a few alarmists and apocalyptic number-crunchers who believe peak oil is imminent—and that its effects will make previous oil crises pale in comparison. This February, the US Department of Energy's National Energy Technology Laboratory issued a chilling report: "Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing," the report stated. "If recent trends hold, there is little reason to expect that exploration success will dramatically improve in the future. . . . The image is one of a world moving from a long period in which reserves additions were much greater than consumption to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production."

The energy lab's report concluded, "The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary."

If in fact we're already at peak oil, we don't have a decade to get ready. It's too late.

Even if we do have time, current efforts to reduce US oil consumption are modest at best. The post-Katrina bump in gas prices caused carmakers to start advertising their fuel-economy numbers again, at least. But the recently passed Energy Policy Act—shepherded through Congress in large part by New Mexico's two US senators, Republican Sen. Pete Domenici and Democratic Sen. Jeff Bingaman—didn't find room in its almost 2,000 pages for legislation increasing the mandatory fuel-economy standards. These "CAFE standards"—short for Corporate Average Fuel Economy—were first enacted in 1975. They succeeded in nudging automakers and their customers to be a bit more fuel-stingy: By 1987, total US fleet fuel economy reached a high of 26.2 mpg. But that was when vehicles classified as "light trucks" made up just 28.1 percent of the market. By 2001, however, light trucks had zoomed to a 46.7 percent market share, and total fleet fuel economy had fallen to 24.4 mpg. Pre-Katrina, at any rate, light trucks made up more than 50 percent of new vehicle sales.

Last month, a bipartisan coalition of senators—including some of the Senate's most conservative members, who view US oil dependency as a national-security threat—unveiled a package of tax breaks aimed at saving 2.5 million barrels of oil a day. The incentives to switch to hybrid cars and develop alternative fuels would save 10 million daily barrels by 2031, the lawmakers said.

Tax breaks may not be enough, however. Writing recently in the Atlantic Monthly, economic journalist Clive Crook dared to suggest that consumers be prodded to conserve by boosting prices back to immediate post-Katrina levels, or even higher. "Burning petroleum imposes costs (insecurity, carbon) on society at large. It is a perfect case of externality," he wrote, "and the best remedy, whatever the price of oil may be, is a tax that pushes those costs back to the consumer. It would raise some badly needed revenue at the same time. That is correct: a gas tax. Its time is coming."

Not if politicians have anything to do with it, of course. You'll recall that during what passed for an energy-policy debate during the 2004 campaign, Sen. John Kerry was pilloried for proposing a 50-cent-a-gallon gas tax—11 years ago: "Some people have wacky ideas. Like taxing gasoline more so that people drive less," went the GOP attack ads. During the presidential campaign, Kerry never made a peep about gas taxes; instead, he proposed to attack high gas prices by jawboning OPEC to boost supplies.

 

Once upon a time, pressuring OPEC to increase oil production might have worked. Indeed, Saudi Arabia—overwhelmingly the world's largest oil producer—has already promised to push its current oil output from 10.5 million barrels a day to 12.5 million barrels by 2009 and 15 million barrels daily beyond that. (World oil consumption is about 84 million barrels a day and rising; the US uses almost a quarter of that.) With 22 percent of the world's known oil reserves, some 263 billion barrels, Saudi Arabia is by far the most important part of the peak-oil puzzle. Understanding this math is crucial to grasping why supposed fixes such as opening the Alaska National Wildlife Refuge (ANWR) to oil drilling amount to barely a drop in the bucket: The ANWR reserves are estimated to total 10 billion barrels—enough, if fully exploited (which many experts believe isn't practical), to fuel the world at present consumption rates for 119 days.

So a lot depends on Saudi Arabia. When Matthew R. Simmons, who's now one of the chief peak-oil doomsayers and who spoke at the recent Denver conference, took a government tour for business executives to Saudi Arabia two years ago, he came away with serious doubts about the world's largest oil producer. Simmons is the antithesis of an anti-corporate, left-leaning troublemaker: For more than 30 years, he's headed Houston-based Simmons & Co. International, a consultant to energy companies on mergers and acquisitions. A Harvard MBA and member of the Council on Foreign Relations, Simmons unofficially advised then-candidate George W. Bush on energy issues during the 2000 presidential campaign.

But what Simmons saw in Saudi Arabia—and what he later learned studying more than 200 papers from the Society of Petroleum Engineers—led him to write what the New York Times calls a "heretical" book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Simmons believes the chances of the Saudis being able to sustain their promised 12 million barrels of oil a day are slim; the likelihood they can reach 15 million barrels a day and keep up such a level for the next 50 years, he says, is near zero. "We're going to look back at history and say $55 a barrel was cheap," Simmons recently told a group of business leaders, and in a TV interview he predicted "triple-digit" prices for a barrel of oil.

When the TV interviewer repeated dubiously, "A hundred dollars?," Simmons corrected him: "I wasn't talking about low triple digits."

Even Simmons might be dismissed as an alarmist, a convert to peak oil with the overzealousness of all converts. Nansen Saleri, a senior official with the giant Aramco Saudi oil conglomerate, calls Simmons a banker who is "trying to come across as a scientist," adding, "I can read 200 papers on neurology, but you wouldn't want me to operate on your relatives."

The Saudis, of course, have plenty of motivation to dismiss peak-oil theorists. But when reporter Peter Maass tracked down Sadad al-Huseini, Aramco's recently retired top official for oil exploration and production, for the New York Times Sunday Magazine, he got a perhaps more honest assessment from the former oil executive: The world is headed for an oil shortage. "You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia," Huseini told him.

Once again, it comes down to a math problem. On the one side of the equation, demand for oil is increasing by two to three million daily barrels every year. On the other, if oil production from known sources is declining instead of increasing, subtract four to five million daily barrels of oil. That works out to six to eight million daily barrels of oil—added consumption plus declining production—the industry has to find someplace.

"That's like a whole new Saudi Arabia every couple of years," Husseini concluded. "It can't be done indefinitely. It's not sustainable."

That word "sustainable" keeps popping up, like a ghost haunting our gas-guzzling lifestyles.

 

Daniel Yergin says the world has heard this doomsaying before—and it's been wrong before, just as "peak oil" preachers are wrong again. Yergin, founder of Cambridge Energy Research Associates, is the author of the 1992 Pulitzer Prize-winning book The Prize: The Epic Quest for Oil, Money and Power. This is the fifth time in history, he says, that supposed experts have warned oil supplies were becoming exhausted.

In the 1880s, engineers at Standard Oil told John Archobold—-who would succeed John D. Rockefeller at the helm of the giant oil trust—that American oil would soon be tapped out; Archobold started selling his shares in Standard Oil, no doubt losing a small fortune. After World War I, according to Yergin, the US government's top oil expert warned of a "gasoline famine." (One solution, he notes, was to cobble together—under British control—a new oil-producing country called Iraq.) Similar fears arose after World War II, until the oil industry discovered offshore drilling in places like the North Sea and the Gulf of Mexico; the Gulf is now the source of 30 percent of US crude oil supplies. He adds to these examples the 1973 Arab oil embargo and the 1979-80 Iranian revolution: Oil was supposed to hit $100 a barrel, but instead sank as low as $6 as new non-OPEC sources came online and coal and nuclear power plants supplanted oil in electricity generation.

What might save us this time? As oil prices rise, the industry has incentives to open new fields for production—much as Russia has become the world's second-leading oil producer just since 1998—or reopen oil fields previously uneconomical to exploit further. Yergin also cites new technology—which, for example, brought seismic sensing to oil exploration after it was invented for use against artillery in World War I. Tomorrow's breakthroughs might make it easier to tap "unconventional oil" such as Canadian oil sands. Even existing reservoirs might be more fully tapped, given the right technology: Only about 40 percent of the oil in a field can be pumped to the surface with today's tools.

Yergin concedes that of course oil will peak some day, but he and other peak-oil skeptics put that day much further in the future. When oil production does peak, he suggests, sometime before 2050, it will first simply level off for a number of years before actually declining.

Why can't the supposed experts agree on something as important to the global economy as peak oil? Part of the divide springs from divergent worldviews: Generally, geologists think oil production will soon head downward, if it hasn't already; economists believe market forces will spur new oil discoveries and technologies. Not even the big oil companies can agree, with Chevron placing ads with a peak-oil theme and rival Exxon/Mobil on the "no-worries" side. Part of the problem, too, is the secretive nature of Saudi society and the OPEC oil business. The Saudis won't let outsiders audit their oil reserve and production data, so nobody really knows the size of the biggest single piece of the puzzle.

Nor can anyone be sure of the demand side of the equation, which threatens to combine with peaking oil production to disastrous effect. US consumers' consciousness was briefly raised after Katrina, but how quickly will we slide back to our gas-guzzling ways? The Energy Information Administration (EIA), part of the US Department of Energy, forecast last year that Saudi production would reach 18.2 million daily barrels by 2020—but those numbers were based not on data about the Saudis, but guesses about rising US demand. As Maass puts it, "The figures simply assumed that Saudi Arabia would be able to produce whatever the United States needed." This October, the EIA suddenly revised those numbers downward—perhaps hopeful that Katrina had taught us a lesson.

As for the rest of the world, it no longer seems content to let the US gobble up nearly a quarter of the global oil supply. According to Joseph, total world demand is projected to grow from 84 million daily barrels to 112 million in the next five years. China in particular has stepped up its oil consumption—much as it has its military, adding a fresh threat to the global fight for oil. As Joseph puts it, "China is no longer sitting by and saying, 'I guess America gets the cars.' All those billion people in China want to have cars, too."

"It all comes back to how can a local community be locally sustainable," says Fridinger. "Oil demand continues to go up even as production begins to taper off. You can't pull on one little string without it connecting to a lot of other things."

 

We'd feel the pinch of peak oil plus rising demand most immediately in the ways we get from here to there. The transportation industry, from cars to planes, depends on oil for 90 percent of its energy consumption.

"Mass transit has to be reinvented," says Joseph. "Silver City is an isolated community. We need to think how tourists will come to Silver City, and how we'll transport them when they get here. How will people get to Las Cruces? Can we carpool?"

Peak oil will challenge our ideas of leisure as well, he argues. "A lot of environmentalists nonetheless travel 100 miles to take a hike in the wilderness. Then there are people with ATVs and motorboats. You do not need a motorboat or ATV to be happy, and you do not need to go 100 miles to take a hike."

Ultimately, Joseph believes, we'll have to rely much more on walking and bicycling. "Cars hardly have to be used—unless you're handicapped—within the radius of how small Silver City is."

With natural-gas prices skyrocketing even more than those of oil, the push will be to take advantage of Southwest New Mexico's abundant sunshine for electric power. Joseph is converting his house to all-solar; rather than being "off the grid," however, he'll be on it—actually feeding energy back into the system when he has a surplus. Fridinger, who has a background in construction, talks about the many solar-power systems he's begun installing in the area.

Of course, we can still take steps to save electricity here at home, too. Joseph advocates changing lightbulbs to more energy-efficient designs and pretty much junking our clothes driers and air conditioners.

The area is also a hotbed of alternative-energy schemes. Tom Gibbons of Silver City is experimenting with "biodiesel"—turning discarded restaurant cooking oil into diesel fuel. Beyond that stopgap measure, the idea is to grow algae that could be converted into biodiesel.

The local response to peak oil goes beyond energy per se, however. "That Caesar salad from California has to be transported here by truck," Joseph points out. "Local food production will be a necessity." He's working with a group of more than 20 people experimenting with food production in a greenhouse on his property, as an educational project.

"We need to support farmers' markets [see the May 2005 Desert Exposure] and go locally at all costs," Joseph says. "Organic food is less energy consumptive, because pesticides and insecticides are all petroleum-based."

Recycling, reusing and renewing are also all part of the peak-oil mantra that communities must adopt.

See the Sustainability Permalink for a list of local resources and watch for in-depth reports on many of these projects in future installments of the "Living Within Our Means" series in upcoming issues of Desert Exposure.

 

A few months ago, John Fridinger began forwarding a number of articles about peak oil and its consequences to his email list—then he stopped. "I was scaring the heck out of myself," he confesses. "And scaring people is not moving them in the direction we need. We won't create a sustainable community out of fear.

"This is not something on the apocalyptic fringe," Fridinger goes on. "We don't want to do this out of fear. This is what we should be doing anyway—building a sustainable relationship with other localities, scaled in the way that the earth scales itself. We as humans want something way out of scale; we can't produce most of the things we produce in the US without an unsustainable transportation system."

Joseph agrees, saying the point of the Dec. 3 forum is "to present the problem realistically, not to instill fear. This is not a made-up issue. The question is, what do we do about it? There's an opportunity here we've not seen before in America, but it will require a major shift in our thinking and our way of life. It's a cultural change as much as an energy change.

"The crux of the matter is: At what cost are we living our lifestyle?" he goes on. "This is not a right or left political issue. This is all of us."

The transformation triggered by peak oil doesn't have to be catastrophic or painful, Joseph emphasizes—not if we're proactive rather than reactive. Walking and biking everywhere, after all, has made him feel healthier, and the greenhouse project has helped him meet dozens of new people.

"It's the healthy way to be on the planet," says Fridinger. "'Sustainability' doesn't mean cutting ourselves off from the world. If we continue to think of the world in terms of whether it's useful or not, then we'll start to think of each other that way.

"These are long-term dreams. We're not going to achieve them all next week or next year. It's about planting the seeds."

 

David A. Fryxell is editor of Desert Exposure.

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