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Peak oil
Capitalism and the modern world have been built on
the cheap and plentiful energy provided by fossils fuels. But what will
happen when this finite resource runs out? BILL HOPWOOD looks at this
crucial question.
THE WORLD ECONOMY today is hooked on fossil fuels:
oil, gas and coal. This dependency cannot last. All these fuels were
formed millions of year ago and once used up cannot be replaced.
This reliance on fossil fuels has largely developed
in the last 200 years. Before then most energy was renewable – animal
and human muscle, wood, some wind and water power. The harnessing of new
sources of energy, especially coal, about 250 years ago was crucial to
the industrial revolution and all that followed. Oil became a major fuel
about 100 years ago and with it came the explosion in global transport –
automobiles, trucks, steam ships and airplanes. In the last 50 years,
natural gas has been added to the fossil fuels, mainly replacing coal
and its products in heating, electricity generation and industry.
Of course, most of the energy that humans depend on
still comes from the sun, to keep the planet and us warm, to power plant
growth for food, fibres, wood and other uses. However, the sun’s direct
energy is free and therefore does not enter the market place. Fossil
fuels account for nearly all (85%) of tradable energy. Of this, coal
accounts for 25%, natural gas for 20% and oil for 40%. Oil also provides
the energy for 90% of all transport. The remaining energy is from
nuclear, 7%, hydro, 7%, and other renewables, 1%.
But not only is the world dependent on these limited
fuels, it depends on these sources being cheap. Until the recent price
rises, gasoline in the USA was cheaper than bottled water.
In most of the advanced capitalist world we eat oil.
Food could be produced with virtually no energy input other than that of
free sunlight. However, food production in much of the world is so
dependent on massive inputs of fossil fuels that many foods take more
energy to produce than is contained in them. Irrigation, fertilisers,
pesticides, mechanised ploughing and harvesting of crops, all rely on
cheap energy. Then the food is processed and transported, often over
thousands of miles.
The same dependency on cheap energy is revealed when
transport, housing or manufacturing are considered. The modern global
economy is totally dependent on cheap transport, and shipping raw
materials and manufactured goods across the planet requires energy. The
life of people in most of Europe and North America is based on long
journeys from home, to work, to shop, and for leisure – all based on
cheap energy. The dramatic growth of the use of plastics in all walks of
life depends on cheap fossil fuels both as the raw material and to
transport them around the world.
Oil supply limits
AS FOSSIL FUELS are finite, at some stage they will
run out and the present energy uses and patterns will inevitably end. In
reality, the world will not use the last lump of coal, the last drop of
oil or the last puff of natural gas. Long before the end of fossil fuels
is reached they will become so difficult to extract that they will be
too expensive to use and will take more energy to extract than they
release. Realistically, the issue is not when will the world run out of
fossil fuels, but when will the plentiful and cheap energy end and what
will be the impact?
There is growing concern and debate around what is
called ‘peak oil’. This is the point at which the production of oil
reaches the maximum, whether in a single field, a country or globally.
After the peak, which usually occurs when about half of the available
oil has been extracted, there is a longish tail, often lasting decades,
of declining production (see figure 1). Also there is a trend for there
to be a delay of several decades from the peak of discovery to the peak
of extraction due to the time it takes to establish and build up
extraction.
Globally, it is believed that the world is close to
the peak for oil. Discoveries of new oil fields have been in decline for
40 years and, as most of the world has been explored, it is unlikely
that any new super-large fields will be found. In general, the biggest
fields are the easiest to find so new finds are more likely to be
smaller. The world is now using four times more oil than new sources are
being found. There are conflicting views but the general consensus is
that the peak for conventional oil is likely in the next decade.
The supply of oil can be extended for a decade or so
from the peak based on present production, new extraction techniques,
using more-difficult-to-reach sources (such as from the Arctic and deep
ocean) and using tar sands. However, all these take more energy to
produce, so have a lower net energy gain, cost more to extract and
result in significantly more environmental damage. Natural gas can also
be used as substitute for oil and could delay the peak for a decade or
so.
The problems for the world economy begin long before
the absolute end of oil is reached. Reaching the peak, rather than the
last few drops, will begin a major crisis as demand for oil begins to
outstrip supplies, prices increase and pressure for long-term oil
security increases.
If the present rate of oil extraction continues it
would be virtually used up within 30-40 years. However, there are two
conflicting pressures on oil production. Demand for oil has been growing
recently at 3% per year, mainly due to growing transportation in the
global economy, increasing travel in the advanced capitalist world, and
increasing energy use in countries such as China and India. While demand
is increasing, once the world nears peak oil output it is likely to
decline, as the remaining portion of oil is more difficult to extract.
These contradictory trends will lead to a gap between supply and demand.
According to classical economics, higher prices should lead to an
increase in supply. The problem with oil is there is no supply to
increase. Classical economics largely ignored the natural world and the
environment
The approach of peak oil will push oil prices up and
produce greater instability. The present high price of oil, due to
rising demand, instability and fear about the future in the Middle East
and the limitation of production, is likely to be here to stay. As the
impacts of peak oil bite, oil prices overall may go even higher.
As the west is hooked, a secure supply of oil, and
to a lesser extent natural gas, is vital to the economy. There are
already conflicts over oil supplies and these are likely to increase.
Most of the major reserves are in the Middle East, Gulf and Central
Asia. A key reason for the two wars with Iraq was the USA’s need for
oil. It is not too far-fetched to see the conflict with Iran as also
being over oil as much as nuclear development. It is possible to imagine
the political struggles between the USA, Russia and China in Central
Asia developing into armed conflict over oil between their regional
client states.
In the next 20 to 40 years, if there is no
replacement for oil, the world would be facing a new depression and,
some have suggested, a new ‘Dark Ages’. Without oil or a cheap
replacement the world would be back to using human and animal power and
wood. An industrialised world, and the possibility of decent living
standards for the masses, needs plentiful energy.
Alarmist
THERE IS A tendency for those who prophesise doom to
exaggerate. There are capitalist commentators who have ridiculed the
idea of peak oil and the prophecies of oil wars, depression and the end
of civilisation. They believe that the pressure of the market will
stimulate ingenuity and technology to find answers. It is true that the
world is awash with energy flooding from the sun and rumbling beneath
our feet in the earth itself. However, to harness these in effective and
affordable ways is a challenge.
The revival of interest in nuclear power among
business and governments is probably more to do with concerns about peak
oil and the desire to have secure and relativity cheap energy than it is
to do with concerns about the environment. After all, nuclear power is
full of risks, as the 20-year anniversary of the Chernobyl disaster
reminds us. It produces highly toxic waste that lasts for thousands of
years and for which there is no safe treatment. If the entire chain of
nuclear power is examined, including the extraction and treatment of
uranium and the construction of power stations, it makes a major
contribution to greenhouse gases. It is not carbon free. Also, if the
world seriously switched to nuclear power, the supply of usable uranium
would only last a few decades and much of it is not in politically
secure places. Nuclear power is at best a short-term and misguided
response to peak oil and climate change, and probably is an answer worse
than the problem. But the problem will be for the future, so the present
decision-makers don’t care.
Another likely response to peak oil will be to
increase the use of coal, as it is the most plentiful of the fossil
fuels and can be processed to produce most of the products that
presently come from oil. If it replaced oil and gas supplies, it would
probably last until the end of this century. And there are significant
environmental impacts, in particular around the release of carbon.
Without major developments, coal use would add to climate change.
It has been suggested that hydrogen will take the
place of oil. This is a view espoused by the US government and much of
big business. However, although hydrogen is a clean fuel, it is not
freely available. It is not a source of energy, rather, it is a means of
storing and carrying energy. To produce hydrogen requires an input of
energy, so it is only a solution if the initial energy source is cheap
and non-polluting. It is therefore no solution to peak oil or, by
itself, climate change.
Using both nuclear power and coal as replacements
for oil would have major environmental impacts and would be only
short-term solutions. The world must move to renewable energy if it is
to maintain the potential for a civilised world.
Renewables
THE ALTERNATIVE TO both fossil fuels and nuclear
energy is a combination of energy efficiency and renewables which in
various ways harnesses the plentiful and free energy from the sun, the
tides and the earth to produce electricity, direct heating and provide
fuel. Given the choice of fossil fuels that are running out, and cause
pollution and climate change, and nuclear which is short term, causes
climate change and produces highly toxic waste, or using renewables
which are free, do not cause climate change or significant pollution, it
would seem there is no contest. Yet internationally there is no serious
move to renewable energy. Governments continue to highly subsidise
fossil fuels and nuclear power, and they and business continue to spend
much less on research and investment into renewables.
Companies that are based on fossil fuels and nuclear
are big business. Oil and gas, auto, road construction, airlines,
property developers and the power supply companies are among the giants
of the world. A shift to a high-energy, high-efficiency society, with
well insulted buildings, a move away from urban sprawl, and a dramatic
shift to public and energy efficient transport would damage many of
these companies. In addition, the supply of renewable energy challenges
the power structures of the corporations. Fossil fuels are found in
large amounts in relatively few places in the world. Energy is supplied
in long supply lines from centralised sources to the users. Energy flows
one way and money the other, with the companies in control.
Renewable energy sources, in contrast, are available
almost everywhere on the planet. In a renewable energy society,
production would include many small sources with households being both
suppliers and consumers. These two features would threaten many of the
energy corporations. Renewables could meet all of the earth’s energy
needs. However, the economics and politics of energy mean that, in the
short term, big business and their governments are not seriously going
to shift to them.
It is likely that in the short term capitalism will
go for nuclear and coal in response to peak oil and leave the increased
problems to future generations. If there is not a fundamental shift to
efficiency and renewables there is a risk of serious energy shortages
and energy wars, with the living standards of the workers in the
advanced capitalist countries facing an additional and fundamental
threat.
In theory, capitalism is capable of moving to
renewable energy, but there are many barriers due to its priorities and
structures, and it is leaving it late. The clocks of both climate change
and peak oil are ticking away. Environmental problems, once considered
small and local issues, now pose fundamental challenges not just to
capitalism but to humanity’s future development. If capitalism does not
solve the energy issues and there is a major collapse in energy supply
before capitalism is overthrown then human society could be thrown
backwards. Again, the future is a choice between socialism and
barbarism. In addition to the crucial issues of climate change and
pollution, peak oil means that socialists need to develop policies to
provide affordable energy for the planet and campaign for renewable
energy.
Some sources of more information
Depletion Scotland: http://www.depletion-scotland.org.uk/
Peak Oil: http://www.peakoil.net/
The Oil Depletion Analysis Centre: http://www.odac-info.org/
Scheer, 2002, Solar Economy
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