Media Release for Immediate Use
31 August 2004, Wellington
Alice came to a fork in the road. “Which road do I take?” she asked.
“Where do you want to go?” responded the Cheshire cat.
“I don’t know,” Alice answered.
“Then,” said the cat, “it doesn’t matter.”
Lewis Carroll, Alice In Wonderland
During what will come to be known as the “golden age” of industrial civilisation, the 1990s, Simon Upton, National’s then Minster for the Environment noted the following, “energy wastage through overuse of motor vehicles and inefficient heating in the home and workplace are still the norm. Most of these problems are well-known and efforts to reverse or reduce them are underway.” (State of New Zealand’s Environment 1997)
Seven years on and a couple of Governments later the message has all but been ignored. We needn’t worry, Pete Hodgson tells us, there is enough oil to satisfy global demand until 2030. However what is chilling about the Upton report is that he clearly signalled the peak in world oil production.
“According to some energy analysts, over half the world’s oil has already been consumed and, at current rates, 80 percent will have been consumed by the year 2020 (Laharrere, 1995; Campbell, 1996). The remaining 20 percent is in reserves that are more difficult to access. Oil reserves in the US and Europe are expected to be depleted in 15-20 years. Middle Eastern supplies will be plentiful for some decades, but at higher prices.” (ibid)
The issue seemingly missed by Upton in this statement is that once past the peak production point where 50% of the oil has been extracted depletion characteristics begin to manifest. Oil well’s need to be pumped with water or natural gas to keep pressure high. Oil becomes more and more expensive to pump and typically gets more sour as the percentage of sulphur increases.
Simon Upton most likely had very little understanding of the significance of his statement at the time. The industrial world is totally and completely dependent upon oil for agriculture and transport. Oil is the fuel that drives economies and globalisation. Yet non-Muslim oil around the world has already peaked and is in terminal decline, this is a verifiable scientific fact, based on industry data showing decline in total production figures from all non-OPEC oil fields.
Exxon-Mobil admits that oil discovery has been declining for 40 years. Despite every incentive, world-wide searches, technological progress and greatly improved geological data we are simply not finding any new big oil. Chevron Texaco admit the same.
Saudi Arabia’s Ghawar oil field is the worlds largest. Ghawar came on line in 1951 and still produces 5.5% of the world’s total oil, 4.5 million barrels per day.
Projected demand (not supply) is expected to be well over 100 million barrels per day by the next decade. Increased global economic growth will only inflate this figure further. Yet the International Energy Agency (IEA), whose report our current Minister of Energy, Pete Hodgson relies upon, fills a projected supply shortfall out to the year 2020 with a completely fictional figure “unidentified non-conventional oil” to the tune of 19 million barrels per day.
This figure is absolutely staggering, we are talking about a supply of oil 4-5 times larger than the mighty Ghawar oil field, the largest in the world. To say this claim is exaggerated is an unmitigated understatement. It isn’t exaggerated it is invented.
Extracting oil from non conventional oil sands or shale is heavily energy hungry. The use of an already declining fossil fuel natural gas is required in the process. Natural gas will have been exhausted long before the oil sands. The net energy gain is typically pitiful, the environmental effects through excessive water use and strip mining are appalling. Non conventional oil will never fill the gap between a depleting supply and demand.
Simon Upton in 1997 indicated that we are entering the second half of the oil age. It will be an age characterised by declining supply, increasing prices and shortages, one that is already reshaping the geopolitical complexion of the globe. Hands up if you still think the United States are in Iraq looking for members of Al-Qaeda or weapons of mass destruction.
Economic growth is an artefact of an abundant supply of cheap oil-based energy. The decline of oil production will undermine the very foundations of our economic and financial systems. Such discontinuity is without precedent and will most likely result in only 2 billion or so people surviving this Century.
The enormity of the issue perhaps explains the pathological myopia of our Government’s insistence in clinging to a “business as usual” attitude in regard to peak oil and its inevitable (sooner or later) social, economic and geopolitical consequences.
If only, like Alice in Wonderland we were simply on the road to nowhere, instead we are on a trajectory to the dark ages.
31 August 2004