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Published on Wednesday, August 29, 2007 by The San Francisco Chronicle
by Erica Etelson
When Hurricane Katrina struck two years ago, Americans learned just how ill-equipped the government is to respond effectively to natural disasters. But if you think the government's response to Katrina was inept, brace yourself for peak oil.
Global oil production will hit its peak in the next few years, at which point oil prices will skyrocket and voracious consumers like the United States, China and Europe will quickly drain every last barrel they can afford to buy. Our per-capita oil consumption is double that of most European nations and more than triple Mexico's, and shows no sign of slowing. As supplies dwindle, an economic disaster on a par with Katrina will start to unfold.
Global oil demand is at 84 million barrels a day and rising, and there are at most a trillion barrels' worth still in the ground, most of which is very difficult and expensive to recover. Do the math, and you'll see that the end of oil is, at most, 30 years away.
But long before oil actually runs out, economists and energy analysts warn that extreme scarcity will cause prices to soar so high that it will no longer be feasible to use petroleum on a wide scale. It is the imminence of this supply-demand shortfall that has people like National Petroleum Council member Matthew Simmons and Reps. Roscoe Bartlett, R-Md., and Tom Udall, D-N.M., worried - very worried - about our economy's ability to withstand the end of oil.
Cheap and plentiful oil is the foundation of our economy. Everything from food production and distribution to the manufacture of clothing, footwear, medications and plastic goods relies heavily on petroleum. You name it, and we need oil to produce it, ship it and, in many cases, run it.
In February, the U.S. Government Accountability Office dropped a quiet little bombshell: a report on peak oil concluding that there is an urgent need for a swift, coordinated government strategy to assess and develop alternative energy technologies to avert "severe economic damage."
The agency concluded: "(T)he United States, as the largest consumer of oil and one of the nations most heavily dependent on oil for transportation, may be especially vulnerable among the industrialized nations of the world." Stark though its conclusion is, the GAO may in fact be understating the gravity of the situation.
The report followed on the heels of a 2005 peak oil risk management report commissioned by the Department of Energy, which warned of the "extremely damaging" and "chaotic" impacts that will ensue if "intensive," "aggressive" and "expensive" mitigation measures are not put in place at least 10 years ahead of time. Both reports landed with a dull thud and have been dutifully ignored. In other words, there is no Plan B.
Depending on whom you ask, the impacts of peak oil range from dire to catastrophic: At best, get ready for a crippling recession and widespread inflation. At worst, we face severe global food shortages that threaten wide-scale starvation and an overall breakdown of social and economic institutions. And if history is any guide, we can expect a series of military invasions into every remaining oil hot spot in the world - invasions that may, by the way, require even more fossil fuels than we could possibly expropriate by force.
Because oil companies and OPEC nations are notorious for overstating their reserves to manipulate the market, it is impossible to predict when exactly the world will start feeling the crunch. As award-winning New York Times reporter Peter Maas wrote in 2005, "Because we do not know when a supply-demand shortfall might arrive, we do not know when to begin preparing for it, so as to soften its impact; the economic blow may come as a sledgehammer from the darkness."
But here's a little hint: Crude oil futures hit an all-time high of $78.21 per barrel on July 31. Prices cannot go much higher without us beginning to feel the foreshocks of a peak oil catastrophe. Oh, and by the way, natural gas (which provides 42 percent of California's power) is running out, too. One day, even coal will be gone. How much longer are we going to wait before we figure out how to survive without fossil fuels?
The United States has reacted to the threat of peak oil and gas with all the alacrity of its response to climate change. It is ignoring the looming crisis for as long as it can, just waiting for that sledgehammer to land its first blow. Eventually, when a recession hits, tax revenue will plummet, and the government will have nowhere near the money it needs to build an alternative energy and transportation infrastructure. Every year that goes by without an intensive mobilization to build an oil-independent economy diminishes our odds of surviving the end of oil.
States, too, seem to have their heads in the sand. California, considered a leader in efforts to reduce carbon emissions, just cut funding
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