Over the last sixty years of the Age of Oil, oil crises have mostly been the outcome of political ruptures between nations. Even the gravest crisis was essentially political. The emergence of OPEC in the early 1970s, initially as a political response to US Middle Eastern policy, is the leading example. That crisis for the West was followed in the late 1970s by the Iranian revolution, when supplies were also withdrawn, the United States refusing to deal with Iran ever since.
No society can ignore the basics of material production, and for all ‘modernised’ economies the system of production is in crisis if access to oil cannot be secured. Oil has long been a strategic matter. But the politics of oil changes forever when availability begins to reflect restrictions of a more profound type: those arising out of the finiteness of the resource itself. Such restrictions are matters of fact to be established, but they are also in the eye of the beholder. There are now many beholders: political leaders, including Vladimir Putin, Hu Jintao, George Bush and Dick Cheney, who while publicly saying little, nevertheless believe and act as though policy must now reflect the likelihood of finite availability. Whether restricted supply based in finite resources is actually upon us right now is not the main point. Rather it is that society and politicians believe that it is about to be. With this changed expectation global politics moves into completely uncharted territory.
Any reflections on the oil crisis need to begin with how this new acceptance of a finite resource has emerged. For this revolution in thinking turns most of the assumptions of the growth society on their head, at a time when the growth society is largely taken for granted as the only way to live. There are now quite a few books that explore the contemporary situation of oil as a finite energy resource. In this essay many of the statistics and empirically based conclusions have been drawn from David Strahan’s The Last Oil Shock, published in 2007 by John Murray.
Apart from difficulties in securing supply in the early decades of the twentieth century, the first inkling that there might be a crisis related to a finite resource emerged in the provocative writing of Marion King Hubbert in the 1950s and 60s. An oil geologist, and something of a maverick, he is responsible for the idea of peak oil. This theory, which initially focused on the continental United States, demonstrates via various techniques that the production of oil in any given territory proceeds through stages of growth and then decline. It is grounded in an assumption that geological oil is finite, being generated by known processes of organic transformation over millions of years and found in definite geological structures. While the techniques of discovery and recovery vary, and some are more successful than others, Hubbert used practically grounded mathematical techniques to make his argument. He showed that the Bell Curve was an appropriate tool to predict the life of a given oil province once it was subject to serious exploitation. His most famous victory came when he counter-intuitively predicted in the 1960s the 1970 peak of oil production for continental United States. This prediction was made at a time when production was rising and in the face of universal scepticism.
The United States was something of a special case in that its potential had been thoroughly explored over many years. The likelihood of a sudden shift in the success rate of exploratory wells was unlikely. In other words, exploration was on such a continuous scale that it could be said to have achieved a definite pattern. All the subsequent attempts to turn around the decline in successful wells, especially the decline in the size of fields, have failed. Even the new offshore fields, which seemed — like the earlier enormous fields opened up in Alaska — to hold the possibility of countering Hubbert’s predictions, have only allowed oil producers to avoid a serious plummet in production. In the United States, oil production has been falling since 1970.
Generalising from the US case was not a straight-forward matter because oil exploration was more uneven in the various regions of the world. Relatively unexplored regions can suddenly leap in their potential with the discovery of a single large field. However, over the last twenty years a pattern has also developed as the search for oil worldwide has been promoted. The case of North Sea oil is illustrative of a broad pattern.
North Sea oil played a crucial political role in the earlier oil crisis of the 1970s. The West regarded OPEC as a threat because it held most of the oil cards and was able to control pricing. The emergence of significant suppliers who were not members of OPEC was a condition for managing a serious situation. The new fields associated with North Sea, being outside of the ambit of OPEC, helped lift the confidence of the West that there was plenty of oil to go round and that pricing would not be managed by nations hostile to its interests. However, North Sea oil has also gone through its cycle of development and decline, such that by 2005 it had fallen 30 per cent below its peak in 1999.
This decline phase is a general tendency, with an exception or two, all around the world. The rate of worldwide oil discovery has been falling since 1965. Today the rate of discovery is merely one-sixth of the peak rate, while the world consumes three barrels for every one that is found. Many of the leading producers of the past are in a decline of roughly 3 per cent per year. And a question mark even hangs over the secretive production records of the largest producers, like Saudi Arabia. Strahan is convincing that there is good reason to think that the world peak is upon us — at a time when demand is growing at 2 per cent per annum. If the peak is ten years away it will not make a lot of difference.
It does not take much imagination to see what a falling rate of production of 3 per cent might mean when demand is growing at 2 per cent. The supply gap will open at a remarkable pace. The market will respond initially — higher prices will dampen demand while encouraging supply — but it is clear that restrictions based on finite oil resources will limit the efficacy of a market response after a few years. The market, via higher prices, does work with peak oil for a period because oil production that has peaked does not instantaneously convert into zero production. Rather, it plateaus and then falls, one hopes gently. And pricing can reduce demand for oil up to a point. But as we will see, for a critical commodity like oil it can only be a matter of time before such reductions impact upon the very nature of development in the West.
An account of the reasons why oil is now increasingly accepted as a finite resource, soon fatefully to move into production decline, is one thing. The real world of politics as nations, economies and cultures come to terms with what oil as a finite resource means will be a more complex story, one that will entail an enormous upheaval of policy and infrastructure, as well as cultural hope and perspective. While the end of the Age of Oil will entail events and stresses that will be profound in their consequences, it will be a positive development in the mid to long term if it brings the world to its senses.
Of course, it should not be forgotten that the discovery that oil is a finite resource intersects with a longer term crisis also of the most serious kind: climate change. The consumption of oil (and coal) is the major contributor to CO2 emissions. But before any simple conclusions are drawn that the solution is to substitute one type of energy for another less damaging one, it is important to see that the situation is much more complex than is first apparent. Coming to terms with what a declining supply might mean, we must remember that oil and coal are sources of concentrated energy that have no comparison. One gallon of petrol contains the equivalent energy of three weeks of manual labour, and oil is more flexible than coal, especially for transport. It is not difficult to see why oil has become so important for capitalist economic development.
The relationship between oil and economic growth is one key for understanding the rise of the growth society that is now taken for granted as the only way to live. There has been quite suggestive economic research, reported by Strahan, that points to energy being the forgotten factor in assessing the reasons for the explosive economic growth of the last half-century. This contradicts, or more likely qualifies, the conventional view that has credited new technologies with this outcome. If this view is confirmed, it does have serious implications. Replacing dense energy like oil with renewable energies will never be able to support the levels of growth of the last fifty years because renewable energy is too diffuse. And while this is hardly an argument against renewable energy, for it is central to any prospect of containing the furies that are now set free in climate change, it does give some insight into the massive changes that lie ahead. It is true that this is unavoidable anyhow if the world is to respond to climate change. But the demise of oil forces this transformation upon us in the short to medium term.
The multiple ways in which our social world and economy have become wed to dense energy sources, especially oil, is barely realised. Energy, especially oil, has shaped how we think of ourselves as consumers seeking global lifestyles. It has allowed us to think about markets and trade in ways that have never been available to any other society, and soon will no longer be available. It has been part of a developmental core that has allowed society to go out on an unsustainable evolutionary limb. It follows that the end of the Age of Oil will be the end of much more than oil. This will be much more than a serious economic crisis. It will take on new meanings as a cultural crisis that reaches into every aspect of how we assume we should live.
It is arguably the fate of globalised society to come to terms with the finiteness of oil, and it is here that the all-encompassing ways in which oil has penetrated life in globalised society that is striking. The number of commodities that are dependent upon oil is stunning. There are the obvious ones such as the great range of plastics, TVs and computers, cable sheathing, CDs and DVDs, carpets, seals, food colouring, asphalt … the list is near endless. The pillage of oil for six decades has led to an array of commodities that will be seriously pressured once the peak has passed. They make up many of the commodity items that today are regarded as essential.
This dependence on oil specifically, however, is not absolute. The scientific processes that allowed derivatives from oil to be made into varied commodities could be replicated using other organic materials. Oil is only organic material (treated by nature over millions of years). This is evidenced in the growing trend in the Western economies to redirect agriculture towards the production of bio-mass, in part to produce substitutes for oil that will allow the continued use of automobiles, but also in order to produce other commodities like plastics. In Indonesia, for example, Western investment is being used to cut down forests and grow palm oil for the same reason. It is a strategy that is gaining momentum. So alternatives to oil are possible, at least in principle. But there is a catch, and this is very much a sign of our times. The shift to an interest in bio-mass is likely to quickly turn into utter disaster.
As Strahan and others have pointed out, this re-direction of agriculture is going to distort resources away from the production of food at a time of unprecedented demands for food. Just to produce the plastics used in the United States would require 40 per cent of US maize production. And if all of the agricultural land in the United States was put to producing fuel through bio-mass, it would only manage to cover one-quarter of current consumption. Oil is a concentrated resource by virtue of its long gestation. The attempt to replace it with a few quick fixes only serves to illustrate the assumption of high-tech culture that finite resources are constraints that may be readily brushed aside.
But it is not only the obvious commodities that are under pressure. Quite unlikely and crucial ones are indirectly affected, like the capacity to produce food employing high-yield agriculture. Here nitrogen fertiliser comes under the spotlight. Strahan makes some telling points about the crucial contribution of nitrogen in disproving the predictions made by Malthus over a century ago, that rising population (that expands exponentially) will outstrip the capacity of agriculture to feed it, because agricultural growth is necessarily arithmetic. A crucial element, nitrogen, made possible the continued improvement in yields that have fed rapidly growing populations throughout the twentieth century. It is nitrogen that has allowed the doubling of yields in China, and even greater growth in yields in the United States. While abundant in the atmosphere, nitrogen is mostly made available by a scientific process that relies on the hydrogen in natural gas.
While the world has more natural gas than oil, this is only relative. There is good reason to think that the future of natural gas will follow closely that of oil, and it is predictable that the cost of nitrogen fertilisers will soar before too long. Benign attitudes towards population growth, triumphant celebrations of agricultural growth, in turn framed by the growth society, have led the world to the brink of a population disaster that was otherwise avoidable.
Finally, and crucially, there is the issue of transportation and globalisation. Here there is much at stake. On the one hand, there is the whole question of trade and prosperity. Trade is regarded by economists, politicians and much of the public as the key to wealth and prosperity. Trade has been important through much of human history, but the scale of overseas trade relative to the local economy under the globalisation of the last two decades is comparable with nothing from the past. Not only industrial goods and services enter this process of exchange. So too does food — even basic vegetables — enter the circuits of global exchange. This has many implications for society, but the concern here are the implications of this reliance on oil. As the levels of traded goods today grow as never before, the consumption of oil escalates. It takes no Einstein to see that, quite apart from the damaging effect of trade on climate change, this is a ‘prosperity’ we cannot have for much longer. It is doubtful that the world could turn to nuclear ships for purposes of trade. Solar ships do not seem likely, and the age of wind-powered ships is well passed. Perhaps there could be a return to coal-fired ships, or some derivative of coal, but this would be an even greater disaster for climate change and the environment generally. Even if twenty years down the track geo-sequestration were to be proven viable, no one has proposed it for ships at sea. It is clear that an era is now on the wane.
And even if there was a revival of coal-fired ships for purposes of trade, this would not help in the least with respect to the question of air travel. George Monbiot in Heat showed that air travel has no way of reducing its rapidly expanding carbon emissions because there is no substitute energy available. But, at least for the foreseeable future, there can be no significant air travel if there is no oil. This is a basic challenge to the lifestyle of global travel and tourism, core institutions of high-tech globalisation.
It is an irony that finite oil has helped form a society that seeks to put behind it all forms of finite limitation. In the West the second half of the twentieth century is noted as being a period of rapid economic growth and cultural change, culminating from the 1980s onwards in the phenomenon of globalisation. The main interpretation of how this change came about credits the new technologies for structuring and shaping the computer on the one hand and bio-technology on the other. By and large these technologies have reconstructed industry on a vast scale, making possible the rise of internationalised media communications, as well as the emergence of global economy, finance and global trade. They have been thought of simply as ‘technologies’.
But reference to technologies is deceptive because these high technologies are a new kind of technology, emanating from universities and research institutes. They are technologies that carry the new insights of highly generalised social relations of inquiry, the high-tech sciences. Because of the new capacities of the high sciences to see nature from a more generalised standpoint as bytes of information, high-tech industry has enormous power at its disposal. As such high-tech makes possible forms of development, based in the deconstruction of all ‘natures’, that hold out the prospect of transcending all versions of a finite world. Nonetheless this promethean drive towards a world without particularity or limits still encounters barriers that defy that broad impulse.
Many have been caught up in naive enthusiasms for this possibility of ‘emancipation’ from the finiteness of our biology (for this tendency, see Geoff Sharp’s ‘From Here to Eternity’ in Arena Magazine nos. 88 and 89). There are other limits too, that continue to constrain globalisation. While high-tech society offers to transcend manual labour by resorting to automation, the desire to engage in a cooperative and tangible work process remains important to people. If globalisation offers the world of the global celebrity the temporary excitements of fleeting identity, the desire to live in local and regional communities that represent a finite and knowable social world engages the ethical desire of many people. Very major limits arise from the finiteness of planet Earth and its self-maintaining systems. And, as has been argued, globalisation is constrained by oil as a finite resource.
There is little doubt that the globalised high-tech world seeks to transcend the limitations of oil. In this regard high-tech globalisation mimics the transcendence at the core of all technological utopias. In relation to energy, the promise of unlimited power in nuclear technologies is a powerful symbol that attracts many in scientific and political circles. From their view the high-tech society can, in principle, go beyond its early dependence on a finite resource and move to another level of development. But by and large nuclear power is failing because it is unable to be domesticated. It generates deep fear because, set against the beauty and glory of planet earth, nuclear energy is a wild and unpredictable power, it is a step beyond the capacity of human beings to control their creations, its wastes degrading the habitats it interacts with, and its potential for calamitous wars ever present. It encounters an increasingly universal resistance from ordinary people. And, ironically, there is good reason to believe that its source in uranium is also finite (see Alan Roberts’ ‘Nuclear Power: The Phantom Solution’ in Arena Journal no. 23). Nuclear dependence is a blind alley hidden by the implicit hopes for transcendence that inform our commitments to high-tech globalisation.
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Two immovable forces within globalisation now face each other in an unfolding drama one would normally associate with a disaster movie: finite oil and the forces of global expansion. The forces associated with globalised society are extremely powerful. On the one hand, there is the force of actual developmental processes, which rely upon objective social structures such as high-tech strategies and global capital, that tend to sweep away all that stands in their path. On the other, there is the force of taken for granted belief systems that mean we have forgotten that other ways of living are possible. But, if it is a truism that something will have to give, it is not likely to be finite oil.
It will take a very substantial wrench for the world to take seriously that, apart from broader forms of communication, the prospect for the global way of life is no longer viable. People simply do not believe that our economies could be so unrealistic or our cultures so oriented towards fantasy. Nor do they believe that society could have such weak, if not criminal, leadership. They do not understand that global cultures systematically screen from view alternative pathways and present contemporary reality as the only reality. The distinction between oil as a strategic problem and oil as a finite resource escapes them. The search is on for a knight in shining armour to save the world from these finite frustrations. Whether it takes the form of nuclear energy or solar energy, by and large people’s desire for ‘solutions’ at the present time carries the assumption that, somehow, global expansion will continue.
This is a miscalculation on a scale incomparable with any other modern world crisis. The holy grail of world trade, the basis of neo-liberal growth and prosperity, is completely dependent on a resource that is not only finite but moving into decline. The era of globalisation seems destined to be relatively short-lived.
This leaves only one question: how to revivify local and regional cultures and economies on a modest scale and reduce our expectations of a life based in consumption — in other words, to build towards a society no longer fixated on economic growth or global trade. There is much to gain from such a re-orientation. While contemporary political institutions are unable to respond, once ethically oriented people see a way forward and channel vital energies into the restructuring of cultures, much can be achieved.
John Hinkson is an Arena Publications editor.