Peak oil? Consider it solved

It won't be easy but we can fix our oil and climate problems at the same time.

By Joseph Romm

Read more: Environment, Politics, News, Peak Oil

March 28, 2008 | For more than a decade, a fierce debate about peak oil has been raging between those who think a peak in global oil production is at hand and those who think the world is not close to running out of oil. The debate is moot for two reasons. First, the growing threat of global warming requires deep reductions in national and global oil consumption starting now, peak or no peak. Second, relying on unconventional oil like tar sands and liquid coal to make up a supply shortage, as the oilmen say we must, would be climate catastrophe. More supply is not the answer to either our oil or our climate problem -- reducing consumption of oil is. And right now we have two feasible solutions: greatly increase our vehicle fuel economy and find alternative fuel sources that are abundant, low-carbon and affordable.

Make no mistake about it: Soaring global oil consumption has brought the nation and the world to a point of reckoning. Last year, consumption was 86 million barrels a day, up from 78 million in 2002, roughly a 2 percent annual rise. Where is all the demand coming from? Hint: It's not just the rapidly developing countries. From 1995 to 2004, China's annual imports grew by 2.8 million barrels a day. Ours grew 3.9 million. China now sucks up about 6 percent of all global oil exports. We demand 25 percent. American's trade deficit in oil alone is nearing $500 billion a year.

That said, if by 2050, the per capita energy consumption of China and India were to approach that of South Korea, and if the Chinese and Indian populations increase at currently projected rates, those two super giant countries by themselves would consume more oil than the entire world used last year.

This massive, unsustainable consumption has more than peak oil doomsayers like James Kunstler worried. In January, Jeroen van der Veer, chief executive officer of Royal Dutch/Shell, e-mailed his staff that the world will peak in conventional oil and gas within the decade. He wrote: "Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand." It used to be unheard of for oil executives to talk about limits to oil production. Now it happens all the time.

John Hess, chairman of Hess Corp., a global oil and mineral exploration company, said recently, "An oil crisis is coming in the next 10 years. It's not a matter of demand. It's not a matter of supplies. It's both." In October, Christophe de Margerie, CEO of French oil company Total S.A., said that production of even 100 million barrels a day by 2030 will be "difficult." In November, James Mulva, CEO of ConocoPhillips, the third biggest U.S. oil company, told a Wall Street conference: "I don't think we are going to see the supply going over 100 million barrels a day ... Where is all that going to come from?"

The problem is graver than it appears for one simple reason: Replacing oil in the transportation sector requires strong government action two decades before a peak because of the time needed to replace vehicles and fuel infrastructure. That was the conclusion of a major study funded by the Department of Energy in 2005 -- yes, the Bush DOE -- on "Peaking of World Oil Production." The report notes: "The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary."

Ouch! The same central point is true about global warming. If we want global carbon dioxide emissions to peak and start declining, the planet will need to start aggressive mitigation policies two decades in advance. We're at about 30 billion tons of annual CO2 emissions and rising 3 percent per year. By 2020, we'll be over 40 billion tons annually. If we average more than 18 billion tons of CO2 a year this century, we risk widespread desertification, sea level rise (of 80 feet or more) and the loss of up to 70 percent of all species.

To preserve the livability of the planet, we must cut liquid fossil fuel use more than 50 percent by 2050. That is a central reason that more supply is not the solution to peak oil. That is why it is crucial we don't adopt the strategy that most in the oil industry prefer for dealing with the peak in conventional oil -- ramping up unconventional oil. Most of the major forms of unconventional oil will make global warming worse -- and some would make a climate catastrophe inevitable.

The world has a number of viscous oils called bitumen, heavy oil and tar sands (or oil sands). There is more recoverable oil in Canada's tar sands than there is conventional oil in Saudi Arabia. Tar sands are pretty much the heavy gunk they sound like, and making liquid fuels from them requires huge amounts of energy for steam injection and refining. Canada is currently producing about 1 million barrels of oil a day from the tar sands, and that is projected to triple over the next two decades.

Tar sands are doubly dirty. On the one hand, the energy-intensive conversion of tar sands generates two to four times the amount of greenhouse gases per barrel of final product as the production of conventional oil. On the other hand, Canada's increasing use of natural gas to exploit the tar sands is one reason that its exports of natural gas to the U.S. are projected to shrink in the coming years. So instead of selling clean-burning natural gas to the U.S., which we could use to stop the growth of carbon-intensive coal generation, Canada will provide us with a more carbon-intensive oil to burn in our cars. That's lose-lose.

Even more oil can probably be recovered from shale, a claylike rock, than from the tar sands. Most of the world's shale is found in the U.S., notably in Colorado and Utah. After the oil shocks of the 1970s, billions were spent exploring the possibility of shale oil, but those efforts were abandoned in the 1980s when oil prices collapsed. Shale does not contain much energy per pound: It has one-tenth the energy of crude oil and one-fourth that of recycled phone books. Converting shale to oil requires a huge amount of energy -- possibly as much as 1,200 megawatts of generating capacity to produce 100,000 barrels per day. What a waste of energy just to create a fuel that would spew more greenhouse gases into the air when burned in a car. We must leave the shale in the ground.

Next page: Are we wise enough to break our carbon addiction?