Reaching our peak oil supply


Richard Moore

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Reaching our peak oil supply

09:51 AM CST on Sunday, November 25, 2007

It cost more than $40 to fill up my Honda Accord last week. That's a pain, but 
not one I have to suffer often. Not only does the Honda get good gas mileage, I 
live close to my downtown job, so I put maybe 6,000 miles a year on the car. The
price of oil will have to go up a lot more before my wallet feels the burn ­ at 
the gas pump, at least.

But the price of oil affects far more than our daily commutes. Our entire 
consumer economy is built on the idea that oil will be relatively inexpensive 
and infinitely available.

A reliable and affordable supply of oil makes globalization possible. Wal-Mart, 
for example, wouldn't be able to fill its shelves with consumer goods made for 
less in overseas factories if not for the ability to ship these products 
inexpensively. Within our own borders, food is cheap and plentiful in large part
because oil is. One reason we've built bigger houses ­ the average house size 
has doubled since the 1950s ­ is because we can afford to heat and cool them.

In fact, cheap oil has made development in Dallas and the entire Sunbelt 

But what if it's ending? The authoritative International Energy Agency recently 
warned that the price of oil would remain high for the foreseeable future 
because of supply shortages. China and India are developing rapidly and 
consuming vast amounts of oil.

World supply can barely keep up with demand ­ a problem the IEA blames primarily
on human failures. IEA forecasts that China and India alone will add about 13 
million barrels a day to the global demand by 2030.

But the IEA forecasts world oil supply at 116 million barrels a day by 2030, up 
from 85 million barrels a day now ­ enough to meet expected demand. Some top oil
company CEOs disagree. Christophe de Margerie, chief of the French oil giant 
Total, said in late October that a supply level of even 100 million barrels a 
day ­ barely enough to cover anticipated growth from China and India alone ­ is 

"It is not my view. It is the industry view, or the view of those who like to 
speak clearly, honestly and not ... just try to please people," Mr. de Margerie 

And ConocoPhilips CEO James Mulva told a financial conference earlier this 
month: "Demand will be going up, but it will be constrained by supply. I don't 
think we are going to see the supply going over 100 million barrels a day, and 
the reason is: Where is all that going to come from?"

That's the question adherents to peak-oil theory ask. They argue that the world 
either has or soon will have reached the maximum output level of its oil 
reserves and that supply can only decline from here on out ­ even as demand 

Though some dismiss them as crude-oil Cassandras, the peak-oilers are not 
wild-eyed pessimists. Their number includes men like T. Boone Pickens, the 
Dallas oil tycoon, and Houston's Matt Simmons, who founded the world's largest 
energy investment banking company. They point to hard data indicating that the 
world is quite simply running out of oil and doing so quickly 
( and are two good Web sites compiling 
peak-oil news, analysis and information).

If they're right, peak oil poses a far more critical challenge to our 
civilization than global warming. The modern industrial world cannot function in
any recognizable form without cheap and plentiful oil. Stu Hart, a Cornell 
management professor, warned on public radio recently that "we're in the midst 
of the crash of the system" ­ meaning that absent breakthroughs in the way the 
world meets its energy needs, we are in for rough times.

What would life after peak oil mean for Dallas and its surrounding suburbs, a 
metropolis created by the availability of cheap energy?

Cars would be an unaffordable luxury for most, making life in suburbia 
difficult, perhaps impossible, to sustain. Likewise, air travel and shipping 
likely would be sharply curtailed as too costly, causing Dallas/Fort Worth 
International Airport, a major regional economic engine, to slow substantially.

Truck transport, too, would diminish, causing a sharp slowdown in the consumer 
economy and, crucially, making the kind of grocery-store bounty we now enjoy a 
thing of the past. And with a general rise in energy costs blasting electric 
bills into the stratosphere, we may all have to get used to ­ wait for it ­ life
without air conditioning.

Jeffrey Brown, a Richardson geologist who has been active in the peak-oil 
debate, advises far-sighted folks to abandon the outlying suburbs and exurbs and
move closer to the city center. "The smart money has been moving in," he said. 
"The closer you are to job centers, the more stable the property values have 
been. That will continue."

Post-peak-oil conditions would reverse globalization, forcing a return to 
intensely local agriculture and local manufacturing. The stores and services 
that communities need in order to carry on everyday life would emerge in 
neighborhoods, as in the pre-automobile era. Cities would empty out, with rural 
areas and small towns in agriculturally rich areas reviving. Culturally, all 
Americans would have to undergo a Great Relearning of skills and social habits 
that our ancestors developed to survive in community.

"My hopeful view is that we'll be living like we did at the turn of the 20th 
century, but with computers," Mr. Brown said. And he's right: Americans have 
done this before and can do it again, if scientists don't come up with a 
solution before the oil spigot starts to sputter.

But no one should be under the romantic illusion that life would be easy then or
that the transition would be smooth. We will be poor. Our sons probably would be
sent overseas to fight resource wars. Back home, regions of America where tens 
of millions of people live will be uninhabitable ­ especially the Southwest and 
much of suburbia. The economic contraction and social dislocation will be, in 
many cases, nothing short of catastrophic and will produce political upheaval. 
Radical conditions easily could produce radicalism.

Which could explain why so many people aren't paying attention to peak-oil 
concerns; we have a financial and emotional investment in the status quo.

As Matt Simmons pointed out at a peak-oil conference in Houston this fall, if 
global warming predictions prove out, it won't be a serious crisis for the 
planet until many decades into the future. If peak-oil fears prove out, the 
crisis could be upon us in very short order ­ and indeed may already have begun.

It is possible that we haven't reached peak oil yet ­ nobody can say for sure, 
because governments and oil companies keep much data confidential ­ but the 
signs of the times are not encouraging. Now is not the time for survivalist 
panic or denial-based paralysis.

It is time, however, for discerning people ­ not only decision-makers, but every
one of us ­ to start talking about and urgently planning for a peak-oil future. 
It may come sooner, it may come later, but it's coming.

Rod Dreher is a Dallas Morning News editorial columnist. His e-mail address is 

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