Political Views,

Beyond Incompetence
By Richard Heinberg

While it would be difficult to create an airtight legal case for impeaching George W. Bush based on his ignoring the very real threat posed by Peak Oil, nevertheless I believe that his actions—and inaction—in this regard constitute dereliction of duty on an unprecedented scale.

It is part of the job of leaders to foresee problems and either steer around them or prepare for them. A head of state is analogous to the captain of a ship, who is responsible not only for keeping his vessel on course but also for avoiding hazards such as storms and icebergs. Some problems are not foreseeable; others are. A ship’s captain who loses his vessel to a freak “perfect storm” may be blameless, but one who steers his passenger liner directly into a foggy ice field, having no sonar or radar, is worse than a fool: he is criminally negligent.

The argument I will make, in brief, is this:

Peak Oil is foreseeable.
The consequences are also foreseeable and are likely to be ruinous.
The Bush administration has been repeatedly warned.
Actions could be taken to reduce the impact, but the longer those actions are delayed, the worse the impact will be.
The administration, rather than taking steps to mitigate these looming catastrophic impacts, has instead done things that can only worsen them.

Let us go through these points one by one.

Is Peak Oil Foreseeable?

Peak Oil—the point at which the rate of global production of petroleum begins its inevitable historic decline—is a subject of growing public interest. The basic concept is derived from experience: during the past century-and-a-half all older oil wells have been observed to peak and decline in output. The same has been noted with entire oilfields, and with the collective oil endowment of whole nations. Indeed, most oil-producing nations have already seen their output enter terminal decline. Few informed observers doubt that the rate of oil production for the world in total will reach a maximum at some point and then slowly wane.

The science of Peak Oil was worked out in the 1950s by veteran geophysicist M. King Hubbert, who successfully used his method to predict the U.S. peak (1970). Declassified CIA documents show that by the late 1970s the Agency was using similar methods to forecast the Soviet Union’s oil peak.1

We do not know exactly when the global peak will occur, but it will almost certainly happen within the period between now and 2035.

Considering the importance of the peaking event, the range of uncertainty regarding its timing is disturbing. If the peak were to occur within the next five years, our national economy would be unable to adjust quickly enough to avert calamity (as we will discuss below), while a peak 30 years from now would present a much greater opportunity for adaptation.

Though there is continuing controversy over the question of when the peak will happen, there is strong evidence for concluding that it may come sooner rather than later, and that the world may already have entered the peaking period. Signs of a near-term peak include the fact that global rates of oil discovery have been falling since the early 1960s—as has been confirmed by ExxonMobil. Declining discovery rates represent a well-established trend and cannot be said to be the result merely of transient factors. In 2005, according to IHS Energy Inc., a total of 4.5 billion barrels of oil were discovered in new fields, while 30 billion barrels of oil were extracted and used worldwide. Thus, currently only about one barrel of oil is being discovered for every six extracted.2

Until now, the global oil industry has been able to replace depleted reserves on a yearly basis, mostly by re-estimating the size of existing fields. The Royal Swedish Academy of Sciences, in a recent publication, “Statements on Energy,” describes the situation this way:

In the last 10–15 years, two-thirds of the increases in reserves of conventional oil have been based on increased estimates of recovery from existing fields and only one-third on discovery of new fields. In this way, a balance has been achieved between growth in reserves and production. This can’t continue. 50% of the present oil production comes from giant fields and very few such fields have been found in recent years.3

The 100 or so giant and super-giant fields that are collectively responsible for about half of current world production were all discovered in the 1940s, ’50s, ’60s, and ’70s and most are now going into decline. These days, exploration turns up only much smaller fields that deplete relatively quickly.

Chris Skrebowski, editor of Petroleum Review and author of the study “Oil Field Megaprojects,” notes that “90% of known reserves are in production,” and that “as much as 70% of the world’s producing oil fields are now in decline” with decline rates averaging between four and six percent per year.4

Thus, while the U.S. Department of Energy predicts that world oil production will increase over the next 20 years from 85 million barrels per day (Mb/d) to 120 Mb/d in order to meet anticipated demand, a growing chorus of petroleum geologists and other energy analysts warns that such levels of production will never be seen.

A French report from the Economics, Industry & Finance Ministry, “The Oil Industry 2004,” took a careful look at future supply issues, forecasting a possible peak in world production as early as 2013.5

Ford Motor Company Executive Vice President Mark Fields, in his keynote address in October, 2005 at the Society of Automotive Engineers’ “Global Leadership Conference at the Greenbrier,” noted the seven most serious challenges to his industry, one of which was that “oil production is peaking.”6 Volvo motor company has for several years acknowledged in its company literature that a global oil production peak is likely by 2015.7

Legendary petroleum geologist T. Boone Pickens, who started his career in the early 1950s as a roughneck in oilfields in Oklahoma and Texas and went on to co-found Mesa Petroleum and Petroleum Exploration, told the 11th National Clean Cities conference in May, 2005 that “Global oil [production] is 84 million barrels [a day]. I don’t believe you can get it any more than 84 million barrels. . . . I think they are on decline in the biggest oil fields in the world today and I know what it’s like once you turn the corner and start declining, it’s a treadmill that you just can’t keep up with.”8

Royal Dutch Shell Chief Executive Jeroen Van Der Veer has said, “My view is that ‘easy’ oil has probably passed its peak.”9

J. Robinson West, founder and chairman of PFC Energy, one of Washington’s most influential international energy consulting firms, and a former Assistant Secretary of the Interior in the Reagan Administration, predicts that the “tipping point” when global supply of oil ceases to grow could arrive in 2015.10

Veteran petroleum geologist Henry Groppe, a Houston-based independent analyst who began his career in 1945 and who is today a consultant to global corporations as well as to nations, said in 2005 that “Total crude oil production may have peaked this year, or perhaps will peak next year.”11

Matthew Simmons, founder of Simmons & Company International energy investment bank, has been perhaps the most outspoken of oil analysts and investors regarding Peak Oil. A consultant to the Cheney Energy Policy Development Group that met in secret in 2001, he is the author if Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Wiley, 2005). Simmons has concluded, on the basis of his study of technical papers from the Society of Petroleum Engineers, that Saudi Arabian oil production is close to its maximum, and that world oil production is also therefore close to its peak.

On March 1, 2006 The New York Times published an editorial by Robert Semple, Associate Editor of the Editorial Page for the Times since 1998, in which he wrote, “The concept of peak oil has not been widely written about. But people are talking about it now. It deserves a careful look—largely because it is almost certainly correct.”12

In short, the science behind Peak Oil is well established, and, while there is some disagreement about exactly when the global peak will arrive, there can be no excuse at this stage for ignoring the problem.