Global Trends by Martin Khor

Monday 23 Oct 2006

Peak oil: the coming energy crunch

“Peak Oil” is a term we will hear more of, as the world fast approaches peak petroleum production, to be followed by fast decline.  The declining energy resources can either be shared fairly through a civilized agreement, or else the war over oil and other resources will bring humanity to the brink of disaster. 


The world will soon be running out of oil, and the consequences will be profound.  If we are not prepared, there will be chaos in the world and each country.

This sober message emerged from a workshop in San Francisco last week which gathered about 60 experts on energy resources, the environment and development issues.

The phenomenon of rapid oil depletion is now increasingly known as “Peak Oil.”   The essence is that global oil output has almost hit its peak.  Within a few years, the production level will peak, then plateau, and then fall.

The decline is projected to be fast rather than gradual, as more financial and energy resources have to be spent to extract oil from fields that are not so accessible or as productive as previous ones.

One of the world’s top Peak Oil experts, Richard Heinberg, reminded that without fossil fuels and cheap energy, the industrial revolution would not have taken place.

Thus, energy transition is necessary (in order to control climate change) and inevitable (because of “peak oil” as well as peak coal and peak natural gas).

“There is need for change in many sectors, and to alter our economic activity,” said Heinberg.  “If we put off the change, there will be civilisational collapse.  If done well, there can be a good outcome.”

Heinberg’s book “The Party’s Over” first created public awareness about the approaching peak oil and the far-reaching consequences.

Peak oil has already occurred in several countries.  The United States was the world’s greatest producer and exporter of oil, but its production hit a peak in 1970.  It has fallen so much that now it imports two-thirds of the oil it uses.

Indonesia’s oil output reached a peak in 1977, recovered a little in the early 1990s, and is now in deep decline.  It is now a net oil importer.

Out of 48 significant oil producing countries, 33 are experiencing declining production.  “We don’t know exactly when the global peak will happen, but it will almost certainly occur in the early part of this century and possibly as soon as this year,” said Heinberg.

There is some complacency about this because of the assumption that alternatives to oil will be phased in.  But most alternatives are problematic.  Coal contributes to climate change and will also run out. 

Nuclear energy carries its own high risks.  Biofuels require a lot of land, significant energy as inputs, and competes with food.  Wind and solar energy is increasing, but cannot fill the energy gap in time.

Oil today fuels so many aspects of life and economy, including transportation, airline travel, agriculture, habitat, urban planning, industry.  Many wars have been fought over control of oil, and many more will be fought as it becomes more scarce.

The San Francisco meeting, organized by the International Forum on Globalisation, concluded that “business as usual” – in the hope of an easy technological fix, with new energy sources taking over from oil – will not work.

Instead there has to be a “Power-down”, in which the world makes use of less energy.  And this has to be done in a fair way.  Countries and individuals that are over-consuming energy have to cut back drastically, so that those who are under-using their share can still increase towards the average permitted level.

That average level would have to be determined by what experts estimate to be the level that does not exceed the world’s carrying capacity, or that level of use per person that will enable energy supplies to be continuously sustainable, so that our grandchildren will still have enough.

And here’s the crux of the problem.  If this “fair shares in energy use” principle is not adopted, then there will be an “each country and each person for himself or herself” fight over resources as populations and economies expand while global oil stocks decline.

The war in Iraq (which many believe was mostly about oil) is a taste of future conflicts.  Big countries are already involved in the scramble over oil resources in Central Asia, Africa and of course the Middle East.

The term “contraction and convergence”, first used to describe the ideal principle in how countries should cut gas emissions to control climate change, could just as justifiably be used for how we should manage future energy use. 

Firstly, we must recognize that with depleting oil and other energy resources, there must be an overall global contraction in the use of energy.  Secondly, there must be convergence towards the average level of use that each person should be entitled to.

Thus, the high energy-using countries have to change their organization of life and economy and cut energy consumption drastically.  The low energy-using countries should not follow the wasteful model of this first group, but develop in ways that are energy saving and that use renewable energy – and they can still increase their energy use up to the per capita entitlement level.

In other words, the rich have to cut downwards, while the poor can still go up, to converge around the middle.  But the average energy use overall will have to go down, to be in line with declining energy resources.

Will people realize all this in time?  Can counties agree to this fair-sharing of depleting resources?  On these questions will the future not only of energy but of the world itself depend.