Wednesday, September 15, 2010

Pentagon and Bundeswehr on peak oil

I know it's been out for a while, but back in April, the Pentagon released a report on global energy outlook that turned a few heads. Here are some key quotes:
"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.* [...] While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. [...] One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest."
*To get a sense of the scale of this warning, the total global consumption is around 85 million barrels per day.

It is also worth considering the recently leaked draft report of a think tank employed by the German military (known as the Bundeswehr), which advises that in order to maintain its supply, Germany may need to revise its foreign policy: friendlier to Russia, Saudi Arabia and Iran; a little less friendly to Eastern Europe and Israel. It also warns of the dangers of restricted supplies of energy in a globalised marketplace, when oil is involved directly or indirectly in the production of over 95% of food and industrial goods: "In the medium term the global economic system and every market-oriented national economy would collapse [... making] room for ideological and extremist alternatives to existing forms of government."

The challenge of the next two or three decades is going to be avoiding massive political instability and resource wars while expanding global food production in the face of rapidly declining soil health, water stress and an increasingly unstable climate, all with ever increasing shortfalls in energy production. Current rates of oil field decline mean that we need to bring a new Saudi Arabia online every three years just to maintain current production and current rates of demand growth (largely in the developing world) mean that on top of that we need another Saudi Arabia every seven years. If you're banking on Canadian tar sands or US shale oil making up the shortfall, you're dreaming. Or perhaps, starting a nightmare, since these would only cover part of the likely shortfall and would singlehandedly ensure we'd be at the worse end of climate predictions. The extraction of tar sands and shale oil are slower, more energy and water intensive, more expensive and especially more polluting (of both water sources and the atmosphere) than conventional oil extraction.

We face massive technical, economic, ecological, social and political challenges in the coming years. I currently don't see how widespread unrest, price shocks, rising international tensions and increasingly desperate grabs at remaining resources are not going to be a large part of the likely storyline of the next few decades.

If the significant risk of such scenarios is not factored into our thinking, I suggest we're out of touch with reality. It is no virtue to have one's head in the sand.


lukeisham said...

A sobering analysis.

byron smith said...

Of course, military intelligence can sometimes be an oxymoron, so I take this with a grain of salt. Nonetheless, it is in the same ballpark as numerous other analyses, which makes me think it is worth paying serious attention to, even if it turns out we have another decade or two before peak. Indeed, the 2005 Hirsch Report for the US Senate said that the minimum timeframe for a wholehearted effort to transition to alternative fuels without major global economic disruption would be about 20 years. So if we have 20 years until peak, there is still a good case that we ought to be pursuing alternatives as vigorously as possible.

byron smith said...

Hydraulic fracturing process used in extraction of shale oil is being investigated by the EPA. See trailer of a doco on this process and its dangers here.

byron smith said...

Tar sands: stats and figures on just how much dirtier they are.

byron smith said...

On the same day as the Bundeswehr report, the Australia Institute also published a major report on peak oil. Also worth a read. Balanced and insightful.