Energy Boon or Dirty Boondoggle: Which Would You Choose?

Driving many conversations on energy and climate is a single question: What will the future look like?

Even if you're not interested in the environment, you've asked a similar question before. If you've ever wondered what the weather will be over your vacation, if you've ever filled out a sports bracket, or if you've guessed what gas prices will be like tomorrow, you've ventured a forecast.

Now, let me venture another guess -- hardly ever were you right. That was only one person, in one instance. In instances of collective forecasts, the problem can be worse. Consensus is rare. Opinions diverge, camps form and passions run hot.

When it comes to predicting the future of energy, this is especially true. For energy and environment experts, the question of what the future will look like is most often interpreted to be asking: how much longer will oil dominate?

In response, roughly two large groups have formed. On the one hand, there are those who predict that the age of oil is coming to an end -- that we live in a world where we are skimming the bottom of our limited reserves of oil. The second group argues that, while finite, our reserves of oil will extend further than we anticipate. The former are far more precautionary, the latter more bullish. It's a case of mutual cat calling: one thinks the other lacks regard for sustained profit, the other a lack of regard for a sustainable planet.

Adding to the catalog of bullish forecasts is a recent article published in the last edition of the Energy Journal of the International Association for Energy Economists. According to the group of scientists from the Pontifical Catholic University of Chili and Colorado School of Mines, the future of oil is both cheap and plentiful. (See here for Joe Romm's excellent commentary.) The abstract says:

Large quantities of conventional and unconventional petroleum resources are available and can be produced at costs substantially below current market prices of around US$120 per barrel.

The suggestion is that oil will persist as the dominant energy source for the foreseeable future. This, in my opinion, cannot be true. Nor should it be.

Consider the history of oil. Before oil was coal, and before that was biomass, aided by animal and human muscle. Wood was supplanted by fossil fuels in the US as recently as the 1880s. For thousands of years before that, energy consumption remained low, and dependent on specific fuels. It was only in latter part of the 19th and for all of the 20th century that we have had a rich, and diverse set of rapidly changing energy sources that support a high-energy culture.

Oil, in this sense, is an ancient geological resource we've only very recently become dependent on. Since oil came to replace coal as recently as 1966, only a few generations have relied upon it. That's only a fraction of our time as a species with culture, let alone of our time on earth. There is a very real sense in which our expectations are historically unrealistic, if not unjustified.

This, then, is certain: oil will not remain the sole energy provider into the indefinite future. It cannot. It is finite, and our dependence on it only growing.

Though projections vary, the extraction of a finite resource are likely to follow the general shape of a bell curve. Given that we're annually extracting more oil than we discover, and that most of our wells were discovered prior to 1970, oil is bound to peak sometime soon. After that, costs of production and extraction will climb, driving a shift away from oil as it becomes too costly both for us to purchase and for the environment to tolerate.

What remains uncertain is when this peak will occur, and what price will be considered too costly. The shape of this curve could elongate, for instance, under an optimistic scenario in which extraction techniques and efficiency technologies improve. The duration of this extension will largely be determined by changes in demand, which is in turn determined by a complex web of population, consumption and economic productivity.

This all leads to a simple, but hard truth: we don't know when oil production will peak. In fact, we can't. To quote George Monbiot from The Guardian:

There is nothing certain about the hypothesis that global supplies of conventional petroleum might soon stop growing and then go into decline. There is a large body of expert opinion, marshalling impressive statistics, which is convinced that peak oil is imminent. There is also a large body of expert opinion, marshalling impressive statistics, which insists that it's a long way off. I don't know who to believe. The key data - the true extent of reserves in the OPEC nations - is a state secret. Anyone who tells you that oil supplies will definitely peak by a certain date or definitely won't peak ever is a fraud: the information required to make these assessments does not exist.

Given this, the certainty behind such forecasts as those made in the recent IEA Journal as hubristic. Such forecasts remind me of a line Daniel Day Lewis character from "There Will Be Blood," who, when standing above one of his oil wells, says, "There's a whole ocean of oil under our feet!"

They may be right; extraction and efficiency could improve dramatically, demand for oil could lessen, and we could continue to rely on oil for years to come. Trouble is, it's both hard to know and also highly improbably. Meanwhile, the costs to our planet will surely be great.

The trouble is that we persist in asking a question we cannot answer. And so, perhaps we should be asking a different question.

Instead of asking, when will oil peak, why do we not ask: how can we avoid a decline in oil production from being disruptive? How can turn what some fear will be a boondoggle into what many believe can be a boon?

To that question, there are many options. Speaking on Earth Day, President Obama put it well when he said: "The choice we face is not between saving our environment and saving our economy. The choice we face is between prosperity and decline. We can remain the world's leading importer of oil, or we can become the world's leading exporter of clean energy."

The choice for many countries is the same: transition to a cleaner, more modern energy economy in an economically efficient, non-socially disruptive way, or delay an inevitable, more costly transition later.

What do you see when you look ahead? Which future would you choose?

This post was originally posted on On Earth.

Comments

[TxAggie]

To qoute the President, "We can remain the world's leading importer of oil, or we can become the world's leading exporter of clean energy."

What does that mean? Just exactly what are we going to export and to whom? How will Air Force One buzz NYC? Will it be battery powered?

We need to increase our domestic production, improve our efficiecy, conserve and develop alternatives. It will take time, common sense and efficient use of the resources we have available. Sensational poilitical talking points and demonizing our core industries won't get it done.

[PrawnSprat]

Present and projected oil prices will determine the pace of the transition to green energy. It will be very costly to change our huge installed fossil-fuel infrastructure and transportation fleet. Obama's statement that it is possible to both make huge investments in green energy and grow the economy is only correct given high oil prices...i­f oil prices are forecast to remain within a certain low range for a certain time then there is an economic cost to the transition that the public may be convinced is too high to pay. As far as climate change is concerned it may be too late to ameliorate that, given the highest possible transition rate imaginable under present political circumstances. Environmentalists will always be disappointed by the sluggishness and hypocrisy of the public's attitudes and the political process...­with consumerism still the dominant cultural force, the deep economic and health care problems, fear of epidemics, narco-terrorism, military entanglements, Iran's potential nukes, etc., this green energy issue will always occupy a back burner. The public may be readier to accept last-ditch geo-engineering proposals as a way of still keeping a fossil-fuel based economy and doing something on the climate. As Margaret Atwood, a great liberal/progressive writer and commentator, observed, "a life-boat mentality'' will pre-dominate as global disorder increases and ordinary Americans try to protect their lifestyle. Environmentalists' desire to see global fairness and rational planning will be swamped by the ugly realities of human nature.