Gwyn Don't Know Dyer

By Jeff Berg

15 November, 2007
Countercurrents.org

Richard Gwyn’s November 13, 2007 article “Pessimistic Fuel Report too Bright” comes tantalizingly close to understanding the full peril that the energy question presents to development, our collective wealth and the planet’s health. For this he deserves kudos. Though at this point in the energy and emissions narrative it is hardly news to say that if India and China were to consume like North America we would fry the planet.

However what he has completely missed, and in his defence he is in the majority, is the fact that it is not demand that is the driver of the train we are all on. The conventional view that demand creates supply is a construct of economics that is not supported by the facts surrounding the Age of Oil. For it is in fact the exact reverse that is true. Ever since Spindletop in 1901, through to Ghawar in 1948, the North Sea in the early 60’s, and the North Slope in 1968, it is fossil fuel discovery and energy availability that has dictated consumption not vice versa.

Time and time again over the last 150 years it was discovery that drove prices both up and down. Great discoveries lowered them and lack of discovery raised them. Global demand meanwhile, excepting a couple of geopolitically generated anomalies, simply rose higher and higher year after year with total consumption rising every year notwithstanding every energy efficiency measure we’ve ever introduced.

Since 1999 the price of oil has quintupled. The single most important reason for this is that energy demand continues to do what it has always done only more so now that India and China have joined the fossil fuel party. Discovery on the other hand has so fallen that new discoveries are just barely keeping pace with the many fields so depleted that their production keeps falling year after year.

It has been 40 years since our last great discovery and the odds of our finding the Ghawar we “need” (like a hole in the head) are at this point according to geologists pretty much nil. These facts are well known in the oil industry as was nicely outlined in a recent Gwynne Dyer article about the Oil & Money conference held in London on October 30. These facts have also been freely available online through the ASPO, Global Public Media, Petroleum Review, and Oil Drum sites for years for anybody who cared to read them.

We are quite simply at or at least very near to the all-time historical high of global oil production and global production decline is just around the corner. And if the research institutes EWG & IFE & ASPO are to be believed (and they are) peak energy will soon be on us as well as natural gas in N.A. declines, and global coal and gas production peak around 2025.

Many view this as a problem. I would here like to suggest that this view is in fact an inversion of reality not dissimilar to the one that economists perpetrated about oil. For I ask you what else could ever have provided humanity with an “argument” powerful enough to slow the runaway train of demand? A train headed straight toward the ecological cliff so nicely described in Gwyn’s article.

Soon the fungibility of oil will "jump the shark" and this commodity and its distribution will change from a WAN to a LAN. As this occurs oil production will be increasingly “cannibalized” by its producers and less and less will be available for export. In this brave new oil and energy world N.A., Europe and the ROW (rest of the world) will increasingly have to rely on what they themselves can produce to satisfy their energy and economic needs.

This will of course mean that Renewable Energy capture will increasingly become the only growing energy source. That this fact is already “locked in” makes the recent decision by the U.S. Congress to jettison the Renewable Energy Provisions from their 2007 Energy Bill exceedingly at odds with the facts at hand. At this point the best that one can say of such a decision is that it is very short-sighted. At worst one would have to say that it is a decision that will be devastating to very many of the essential services that energy provides to these citizens. What it will mean to Canada is at least possibly best understood by listening to these words by Henry Groppe. Groppe has been in the oil and gas business for 55 years now and is a "grey eminence" to the National Petroleum Council and the Council on Foreign Relations. When speaking off the record to a Canadian journalist who must remain nameless about the Chinese attempt to invest in the tarsands he said: " There are two countries that don't understand that oil is ours: China & Canada."

What I say here and now is that for the forseeable future energy sovereignty is likely the only argument sufficiently powerful and practical enough to knit the Canadian federation into a fabric strong enough to withstand the strorm clouds that have now "lowered upon our house." (to quote the bard) That the argument about energy is also equally capable of tearing us apart is not very hard to see.


Jeff Berg
www.postcarbontoronto.org
www.pledgeTOgreen.ca