LIGHT GOES ON "In America we consume the
most energy per capita in the world. That's got to
change." Who said it? Not Ralph Nader or Amory
Lovins. Rather, it was Louis Hughes, a General
Motors vice president for international operations.
The oil companies and automakers are beginning to
understand that we must move quickly to develop a
more oil-efficient economy. Toyota is selling
66-mpg cars in Japan. Honda is poised to follow.
From a global perspective, oil is not a "sunset
industry" after all, 65% of the world's
petroleum remains to be produced. Nonetheless, oil
companies are beginning to diversify. Royal Dutch
Shell recently launched a renewable energy division
and British Petroleum is making solar panels. The
ultimate heresy: General Motors supports a 50 cent
per gallon gasoline tax. In this case, what's good
for GM would be good for America.
SILVER BULLETS Oil depletion is a slow, wasting
disease. Is there a quick fix, a miracle cure? Actually,
there are exciting new developments. They include technology
for converting natural gas to a diesel-like fuel; horizontal
drilling and 3D imagery to recover more oil from aging
fields; cars powered by fuel cells that run on hydrogen
rather than gasoline; telecommuting and other social changes
that reduce oil consumption. All can buy time, delay the
peak, and soften the transition that must follow. None,
though, can cure depletion, or greatly reduce America's
dependence on imported oil. Technology shows promise, but
the negative trends remain more powerful. Every day the
world uses 73 million barrels and finds 15 million.
Consumption up, discoveries down. Burning more than we
earn a surefire recipe for bankruptcy.
STOCK TIPS Forbes and Fortune recommended oil
stocks in 1995. In 1997 energy service companies were the
stars of Wall Street. But maybe there will be another
stock-buying opportunity. The economic turmoil in the
Pacific, the Asian flu, will dampen energy demand for a year
or two. With the collision between rising demand and limited
supplies still five to ten years away, it's a good time to
travel. Fly to Baja, take a cruise, see Costa Rica. Life's a
journey, enjoy the ride. Around 2005 you might want to
unload your shares in Winnebago.
SILVER BULLETS II The physics of a Pontiac (or
pickup) are abysmal. According to Rocky Mountain Institute,
just 1% of the energy in the gasoline moves the driver.
About 15% moves his steel shell, the 2-ton carapace. The
remainder is lost in the engine, drivetrain and to wind
resistance. This is actually great news, because it suggests
there's tremendous scope for improvement. Soon you'll be
able to buy a car that gets 65 miles per gallon. These
clean, efficient "21st Century" cars may capture a third of
the market by 2010. But adding 20 million fuel-frugal cars a
year to a global fleet that may then number 800 million will
have only a modest impact on oil consumption. Every little
bit helps, but it will be decades before the world fleet is
dramatically more efficient.
OIL IS ASPEN Our ski economy is much more
dependent on oil than snow. After all, we can make snow. At
Buttermilk or Highlands or Ajax, oil's importance is
affirmed every few minutes as a loud jet accelerates down
the runway. One in five Aspen skiers fly in from overseas.
Economically, Aspen functions as a snowy suburb of New York,
Chicago, and Los Angeles. How long can this continue?
Decades perhaps, not forever.
RIVING BLIND Petroconsultants, a respected Geneva
energy consulting group, recently concluded that by 2050
world oil consumption will be just one-fourth what it is
today. Another oil expert, University of Colorado professor
John D. Edwards, predicts that world oil production will
peak in 2020 at 90 million barrels per day. "If the hundreds
of billions of dollars needed to increase productive
capacity to these levels are not available, peak production
will occur earlier. Planning without anticipating this trend
is analogous to driving without a gas gauge."
TREX Most people abhor change. Change is scary.
Mentally, we tend to be prisoners of the past, hoping that
the future will be just like the present, only more so.
Abundant oil is all we've known. Cheap gas is a given. But
this quaint assumption may soon take a beating. The silver
miners who settled Aspen in 1880 didn't drive Range Rovers.
It's a safe bet that Aspenites in 2090 won't drive them
either. If the average person has a car 50 or 100 years from
now it will be dramatically more efficient and powered by
hydrogen or electricity. The heyday of the guzzler is
passing. The gargantuan 6,000-pound 14-mpg Expeditions that
now rule the road are to the car as the T Rex was to the
dinosaur: the end of the line.
PURE SPECULATION Inexpensive oil is so deeply
embedded in our economy, psychology, and even diet that it's
difficult to imagine a world in which oil will be more
expensive. What would a sudden spike in oil prices mean for
Aspen? Let me speculate, knowing I'll probably get it wrong.
An oil crunch might, where nothing else has, rein in the
valley's real estate boom. Some believe that the
stratospheric prices in the upper valley are a speculative
bubble waiting to burst. Our valley's economy has proved
remarkably resilient to other shocks, but this one could
shatter Wall Street. An Oil Crunch would also slow tourism.
Because only 10% of an airplane ticket pays for fuel, the
direct effects would be dwarfed by the larger inflationary
impacts. Psychology will come into play, too, since
inexpensive oil buttresses the belief that growth is
inevitable, stocks go up, and things get better. But, come
what may, higher gasoline prices are not the end of life as
we know it. After a rocky year or two or three of global
recession, people will adjust, life will go on. Most
Europeans already pay $3 or more per gallon; Americans
presumably could, too.
DEBATING THE TRAIN Over the last 70 years the
automobile grew dominant because oil was cheap. All across
America trains gave way to cars. Neighborhoods surrendered
to suburbs. In the words of the song, we "paved paradise and
put up a parking lot." In Colorado, too, the transportation
network we see today is an artifact of abundant oil, an era
that's destined to end. With oil depletion in mind, the
suggestion that we should remain auto dependent, construct
underground garages, and six-lane Highway 82 seems like old
think. Is our long-term vision driving cars fueled with
gasoline on tires made of petroleum on roads paved with
asphalt? Hell-o! To quote Marshall McLuhan, that's like
"speeding into the future while trying to steer with a
rear-view mirror." The train may or may not make economic
sense. But as we debate whether valleywide rail is a wise
investment, our focus should not be 2008, a short decade
from now. Rather it should be 2018 or 2028, when world oil
production will be falling, as global population continues
to climb. As we study rail, let's not assume the status quo
is sustainable, because it's not. By 2025, driving alone 70
or 80 miles to work may be as obsolete as riding a horse to
work is today.
HARD ROCK CAFE Is there really no substitute on
the petroleum menu? Our natural gas reserves wouldn't last
long if we burned them in both homes and cars, but what
about all that oil shale near Parachute? Oil lobbyists will
tell you there's tons of "unconventional" oil tied up in
Canadian tar sands, Venezuelan heavy oil, and Colorado's oil
shale. True enough, but that's like saying hang gliders can
substitute for airplanes. Producing unconventional oil has
more in common with hard-rock mining than with typical oil
production, where you crank a valve and let if flow. The
former is a slow, arduous, energy-intensive process that
will never replace a tenth of today's conventional oil.
Indeed, there's some question whether oil shale yields more
energy than it takes to produce it. If conventional oil is
black magic, oil shale is fool's gold.
FLOW, RIVER, FLOW Every 24 hours the global
economy burns 73 million barrels of oil. If you poured all
that oil into a river it would be the size of the Colorado
as it flows through Glenwood Springs. That modest river
propels all motorized motion on the planet. Every car in
Carbondale, China, and Chile. Every Boeing, every Airbus.
Semis, autos, trucks, bulldozers, B-1 bombers, motorcycles,
supertankers, tugboats, tractors, lawn mowers, snowmobiles,
jet skis, snowblowers… if it moves it's powered by oil.
Looking ahead, oil demand is projected to increase rapidly.
By 2010 most experts predict the world will be consuming 90
million barrels a day, 25% more than it does now. Sometimes
between 2005 and 2020, world oil production will reach an
apex, an all-time high, a peak. A plateau in production will
be followed by a relentless inexorable decline.
DOOMERS & BOOMERS World oil experts fall into
two camps, pessimists and optimists. It's striking how
little difference there is between them. Both camps agree
we've already used 800 billion barrels. The pessimists, or
doomers, think there's one trillion left and that oil
production may peak by 2005. Boomers believe there's 1.8
trillion left and that production will peak in 2020. If
fifteen years is the only difference between pessimists and
optimists, perhaps we ought to begin planning for a world in
which oil is not as abundant as it is today.
LIFE IN 2050 By 2050 a world of perhaps 9 billion
people will be consuming only as much oil as 3 billion did
in 1950. There will be three times less oil per person. Oil
will be more expensive. Is this a Doomsday message? Not
necessarily. A more sustainable world may actually be a
better place in which to live. The difficulty is getting
from here to there.
WHY HAVEN'T I HEARD THIS BEFORE? Who would tell
you? Exxon? Ford? Bill Clinton? "Remember my Bridge to the
21st Century? Well, there's a big pothole on the far side.
I'm sending Al over there right now to patch it up. When you
hit that rough spot, remember Hillary feels your pain."
Should Ronald Reagan have told us? "My fellow Americans, it
is not morning in America. Actually, it's getting on towards
sundown." The Oil & Gas Journal publishes articles on
oil depletion, but the coming crisis is not yet on the
mainstream media's radar. It's astounding that, in a country
like ours, which uses 25% of the world's oil, no one is
responsible for setting oil policy. The oil majors produce
oil. Carmakers make cars. The Pentagon spends $50 billion a
year safeguarding our "cheap" Persian Gulf imports. The U.S.
Department of Energy cleans up nuclear bomb plants. If
ignorance is bliss, this must be Nirvana.
SOURCES & INFO This petroleum primer was
written by Randy Udall, Director of the Community Office for
Resource Efficiency, with Steve Andrews, a Denver-based
energy analyst. Our numbers and graphs were derived from
U.S. Geological Survey, British Petroleum, and American
Petroleum Institute reports. Oil consumption to 1996 is
historical record. Depletion curves and future consumption
were extrapolated from conservative assumptions and personal
interviews with world oil experts, including Chuck Masters,
Neil Foreman, L.F. 'Buzz' Ivanhoe, Colin Campbell, Joseph
Riva, and James MacKenzie. Different scenarios can be
imagined, some uglier, some prettier. No one can predict the
future. But, on the strength of our research, America can
expect a wake-up call before 2020. It could come tomorrow.
Even 2020 is only 8,000 days away, which, given the stakes,
isn't far. If you want more info call CORE. Good books: The
Coming Oil Crisis by Colin Campbell and GeoDestinies by
Walter Youngquist. CORE has the former ($25); to order the
latter call (800) 827 2499. The Prize, Daniel Yergin's
classic oil history, is available in text or video at local
libraries. Good Internet sites:
Ecotopia
and "U.S.
Geological Survey" CORE will host a half-day seminar on world oil this spring.
If you wish to attend, call for details.