AWAKENING? (An NPG Internet Forum Paper)

Some major oil companies seem to be trying to persuade Washington that the energy transition is real and imminent and that it must be addressed. The tone of the academic debate is changing, and the imminence of the peak in oil production is now acknowledged by groups that have rejected the possibility in the past. However, most commentators don’t recognize how fundamental the change will be, except for a small cadre of writers who have been warning of the problem for years. And most of the commentary skirts the need to bring demand down to cope with a future dependent upon renewable sources.Note: This was written before Hurricane Katrina demonstrated the fragility of our energy system. Perhaps more Americans are awake now.


On July 12, 19 and 26, Chevron placed two-page ads in the Wall Street Journal. Three two-page ads in the WSJ constitute a pretty bold statement, but even more interesting is what the ads said: “It took us 125 years to use the first trillion barrels of oil. We’ll use the next trillion in 30.” An accompanying message signed by “Dave” (David J. O’Reilly, Chevron’s CEO), said that “Energy will be one of the defining issues of this century… Demand is soaring like never before… At the same time, many of the world’s oil and gas fields are maturing. And new energy discoveries are mainly occurring in places where resources are difficult to extract… We can wait until a crisis forces us to do something. Or we can commit to working together, and start by asking the tough questions: How do we meet the energy needs of the developing world and those of industrialized nations? What role will renewables and alternative energies play? That is the best way to protect our environment?… We call upon scientists and educators, politicians and policy-makers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy.” Chevron extended the campaign with ads in the Economist and the Financial Times. Assuming he was referring to oil and gas, O’Reilly’s two trillion barrel figures approximate the U.S. Geological Survey’s estimate of resources consumed and remaining. In April, he told the Wall Street Journal that rising demand and declines in production had brought us to an “inflection point”.1 Chevron’s bid for Unocal suggests to most commentators that he expects prices to continue to rise. BP (formerly British Petroleum) chimed in with a series of one-page WSJ ads: “It’s time to go on a low carbon diet.” — “It’s time to think outside the barrel.” — “It’s time to turn up the heat on global warming.” Those ads extolled BP’s work on renewables, emissions, the environment and education on alternative energy. The French nuclear company, Areva, joined the chorus with ads nearly as large, pointing out that it offers “new, clean energy” for a new generation. One can only speculate why the two oil companies launched this dramatic PR campaign at that time. BP may be trying to counter the criticism from a series of fatal accidents at its refineries, but perhaps both companies see a real problem and were trying to mobilize opinion to deal with it — and incidentally to tell Washington, as the energy bill finally moved toward passage, that the stale old “solutions” won’t work. Don’t blame the oil companies — they seem to be saying — when you find that out. There is not yet a consensus among oil companies. ExxonMobil runs periodic feel-good ads that don’t hint at problems ahead,2 but it has sounded much less optimistic in industry circles. ExxonMobil CEO Lee Raymond in 2004 vividly described the problems but still talked of continued growth rather than an inflection point. He offered several “hard truths” about the energy situation:

  • “…most of the energy that will be used for many decades will continue to come from fossil fuels. …Like it or not, the United States is only one of several players in the global supply-and-demand balance. …The United States has no guaranteed or preferential supply rights. Similarly, we do not have the resource base to be energy independent. …Even if we are prepared to develop more petroleum supplies here, we will still be far, far short of our needs.”
  • “We expect only modest growth for nuclear power and hydropower.”
  • “While…wind and solar will grow rapidly, these start from a very small base and… will supply only about one-half of one percent of the world?s energy in 2020.”
  • “…ethanol from corn is neither an economic nor an energy-efficient choice, as it can require more energy to produce than it generates in the end. And it relies upon using significant land areas, land that would otherwise go to food crops or forest cover.”
  • “…hydrogen is not an energy source.”
  • “…carbon dioxide emissions…will climb.”

All true, but he never addressed the questions: how much fossil fuel can we hope to extract, how much damage will it cause, and how much can we eventually expect from renewables? Having underlined the problems, he called for massive investments in energy and for “appropriate and constructive relationships with oil-rich countries.” He called for long-term research to “improve our ability to discover and produce the increasing amounts of oil and gas the world will need” and for “new ways to generate energy for the long term.” As to whether that will be enough, he simply said that “we must succeed.” He is the CEO of an oil company, not President of the United States; he doesn’t have to make that calculation. But the reader comes away with the feeling that this is a pretty chancy gamble unless — with or without Exxon’s blessings — we do something about the demand side.3 Royal Dutch/Shell seems to be off by itself, singing to itself the songs of yesteryear. Its CEO said in June that it expects to raise oil and gas production by 30 percent by 2015, but he admitted that for the next several years production will be “quite horizontal”. He did not identify the projects on which he relies for the later production surge. It all sounds a bit wistful for a company that has had to downgrade its estimated reserves by nearly one-third in recent years and that has just announced that a project in Sakhalin will cost $20 billion dollars, twice the original estimate.4



Shell not withstanding, the statements from oil leaders seem to be adding strength to a fundamental shift in the debate about energy that has been gathering momentum. Various scientists, particularly petroleum geologists in the oil companies and universities, have been issuing warnings for years. They used to be scoffed at. The list of honor starts with M. King Hubbert. Using standard statistical bell curves for different oil fields, in 1956 he correctly predicted the peak of oil production in the 48 adjacent states in 1970, when almost everybody else was expecting production to rise more or less forever. He was followed by Walter Youngquist (whose Geodestinies in 1997 sounded the alert about world petroleum supplies), Colin Campbell (founder of The Association for the Study of Peak Oil), and Richard Duncan, and more recently by Kenneth Deffeyes of Princeton and A.M.S. Bakhtiari (the chief scientist for the National Iranian Oil Company). They all put the peak within the next two years. Some others, including the U.S. Geological Survey, are more optimistic, but those pioneers have transformed the debate to when, not whether, the peak or peaks will come. Other specialists have warned of the alarming trends without calculating dates on peak oil. Matthew Simmons challenges the official figures for Saudi reserves in a new book, Twilight in the Desert. Paul Roberts’ The End of Oil in 2004 stated the same critique of Saudi reserve figures. Vaclav Smil’s Energy at the Crossroads (2003) is a vast and unsettling compendium of information about the history and potential future of energy supply and demand. At the popular level, David Goodstein’s Out of Gas is an excellent primer on the decline of fossil fuels, the physics of energy and potential alternatives. Richard Heinberg contributed The Party’s Over. Taken together, these writers have put the oil transition on the intellectual map, if not yet the political one. Petroleum economists have tended to be much more optimistic. The petroleum geologists have had a private joke that perhaps management should invite the economists to identify new fields, since they apparently found it so easy. That seems to be changing. In an academic exchange between two academic economists in the Wall Street Journal Econoblog, both agreed that a massive change is coming, probably in less than 20 years. They differed primarily as to whether market forces could handle the adjustment to scarcer energy, or whether government intervention will be necessary. They did bring the demand side into the debate, whereas the geologists are interested primarily in supply. (There may be two peaks, or a plateau, if a worldwide recession or massive increases in oil prices temporarily depress the demand.) I think these two may have yet to recognize just how extraordinary the coming changes will be, but this kind of language from economists will help to sound the alarm. Several writers have been writing about the world after oil. Howard Haydn’s The Solar Fraud (Pueblo, CO: Vales Lake Publishing Co., 2001 & 2004) undertook to show just how costly and impractical solar energy would be as a substitute for fossil energy. Thom Hartmann’s The Last Hours of Ancient Sunlight (New York: Three Rivers Press, 1998) is a poetic condemnation of the damage that human activity has inflicted on the Earth and a mystical essay on the return to an idyllic society that he believes will come with the end of fossil energy. James Howard Kunstler’s The Long Emergency (New York: Atlantic Monthly Press, 2005) is a thoroughly frightening speculation about the impact of the end of oil and a speculative effort to describe a better world to follow. Kunstler’s book makes no attempt to analyze whether the post-petroleum future he portrays is feasible, but books such as his play a valuable role. They show readers that the future is not necessarily an extension of the past (a mind-set common among academicians and politicians). Real solutions may require more than patches on the existing arrangements. These are only a few of the books, and there are many useful technical articles. The National Geographic has gotten into the act, with an issue devoted to “The End of Cheap Oil.” (June 2004) T. Boone Pickens, the business raider and sometime oil tycoon, has announced that “Global oil production is 84 million barrels per day. I don’t believe you can get it any more than that.”5 Stock market commentators used to treat oil price spikes as momentary; now, some of them are beginning to see rising oil prices as a permanent phenomenon. Congressman Roscoe Bartlett (R, Maryland) gave long presentations to Congress in March and April (probably to a nearly empty house) which set forth the petroleum issues in graphic detail and warned that we are at or near the peak of production.6 Unfortunately, political decisions are shaped by the politically possible rather than by objective reality. Congress was hardly ready to listen to Congressman Bartlett, and his speeches had no perceptible effect on the energy bill. All told, this is an extensive literature.



If we are beginning to recognize that there is an oil problem, we are a long way from a national consensus as to what to do about it, and some of the proposals sound like a panicky search for simple panaceas that will not rock the system. The “hydrogen economy” fad, in the face of all the expert opinion including the National Academy of Sciences, reflects that combination of fear and hope. The sense of immediacy about the energy transition has yet to penetrate very far into Congress. My home town newspaper, the Santa Fe New Mexican, on April 14 carried side-by-side discussions of energy by our two Senators, Messrs. Bingaman and Domenici. Domenici is Chairman of the Senate Natural Resources Committee; Bingaman is the Committee’s ranking Democrat, so what they think is important. Senator Bingaman offered the usual mix of bromides: produce more oil and gas, use corn ethanol, improve energy efficiency, introduce more fuel-efficient cars, modernize our electric grid, promote research into renewables. Some of those suggestions are useful, some not, but together they completely fail to reflect the sense of urgency I described above. Senator Domenici concentrated on one proposal: a hydrogen economy, with high-temperature gas reactors to produce the hydrogen. The problems are that (1) such reactors don’t yet exist, (2) if built, they will be a transitional source of energy, like fossil fuels and conventional fission reactors, and (3) the power they eventually produce, if they can be built and safely operated, may be better used on a variety of tasks than in simply producing hydrogen. Hydrogen as an energy carrier may or may not have its uses, but they are decades away at best, and it is folly to put all our money on that one bet, this early, as the President and Domenici propose. The New Mexican weighed in with a ringing editorial: “What’s needed is to convert our country to hydrogen.” I hope they don’t mean that literally. The new energy bill presumably reflects those attitudes, in a distorted way. It is conspicuously silent on conservation and energy efficiency. It attacks the environment, lavishes research money on hydrogen, (which is at best a distant and uncertain energy carrier for transportation, not a source of energy), subsidizes the misuse of corn, throws subsidies at agribusiness and at oil companies that are stuffed with money as a result of the rise in oil and gas prices. It does nothing to address the issues that ExxonMobil CEO Raymond described — and it will cost us all a bundle. Incidentally, none of those companies I cited above had anything good to say for the new U.S. energy bill. Both the economists I cited expressed very low opinions of it. It manages to offend almost everybody, and even those who benefit from it are dubious about it. So much for simple solutions. A friend of mine remarked that “It looks as if the 21st Century will be a replay of the 20th Century, in reverse.” He was speaking of the economic arrangements and the social and economic infrastructure. It was a perceptive remark. Necessity may dictate the resurrection of technologies, consumption habits, living patterns and organizational arrangements that we have left behind. By 2100, the 1900 U.S. pattern of farms and market towns and mostly smaller cities may have been revived. The structure of life was in dramatic change in 1900, however, and the template for 2100 may be more like a pastiche of earlier patterns and the technologies we have since learned. In earlier writing, I attempted to draw thumbnail portraits of what transportation, agriculture and industry may look like after the fossil fuels are gone.7 I will not repeat them here, but I will offer one illustration. A friend told me he found it hard to take seriously my suggestion that we may revert to the use of sail. Maybe we won’t. Maybe biodiesel will be cheap enough for all the demands on it — if we can free up enough land to raise it. But sailing schooners still served the United States until the 1930s, carrying low-value bulk cargoes. When I was in Hong Kong and Singapore in the early 1950s, most regional waterborne commerce, and the fishing fleet, depended on sail. When fuel gets very costly, but wind is still free (if capricious), economics may well justify the resurrection of sail, but it will be accompanied by navigational and communications equipment unimaginable in an earlier time. We must be open to such ideas if we are to thread the transition successfully, but perhaps — as mainstream economists argue — we must give experimentation and experience room to find the best solutions, rather than rushing into panaceas such as hydrogen. It will demand a delicate balance of innovation and caution. As a nation, we haven’t gotten there yet.



Most of the discussion above has been about the supply of oil and gas. Whether or not a given supply is adequate depends on the other side of the equation: demand. Demand is the composite of population size, per capita consumption, and the efficiency with which technology can provide that level of consumption. Of these three variables, population size is the primary one and the most important. The country will not be able to manage the energy transition until the people — and leaders — recognize that a population level reached in the brief flare of the oil era will be condemned to poverty and starvation when we depend on renewables. “Conspiracy” may be a bit theatrical, but it is remarkable that, in all the discussion — some of it very emotional — about the energy transition, almost nobody asks the question: “What size population may we expect to be supportable by the Earth’s natural energy systems once we have moved past the bonanza of fossil fuels?” As a civilization, we have grown accustomed to remarkable solutions; now, we complacently wait for impossible solutions. We had better not wait. There is a critical question of time. In the United States as everywhere else, we need to bring population down to a level that can be supported by renewable energy, and we must achieve the reduction during the brief remaining decades of fossil fuels. Last year, I attempted a rough guess at the total U.S. population that could be comfortably supported by renewables. The figure was 125-150 million (see note 7). That figure may turn out to be too high. We were not living sustainably even in the 19th Century — in that earlier age of renewables — when we numbered only in the tens of millions. We were stripping our forests, impoverishing our soil, and killing off other species. (We may need those species. In a renewable system, they play important roles.) As we adjust to renewables, fewer people may mean less pressure on natural systems. Certainly, chemical pollution and climate warming will grow less serious when we have no more hydrocarbons to burn and to synthesize into chemicals. But we will be taking more biomass for energy, and that can strip the land. Whatever numbers prove sustainable, we must be moving now, because it takes time to bring population down. Populations in Europe, Japan, and South Korea are growing smaller while ours grows larger. If they can manage their demographics to achieve a substantially smaller population, without simply disappearing, they will have reached the goal of real sustainability. In the United States, we haven’t begun that process. BP is warning us that the solutions can be found only by looking “outside the barrel.” The primary determinants of population growth in the United States are the policies that we pursue without even thinking about their demographic impact. By far the most important of these is mass immigration, which we encourage by law and further encourage by winking at the legal restrictions, because of the demand for cheap labor on the part of powerful businesses and individuals. Yet, inadvertently, immigration and the high fertility of immigrants are driving U.S. population growth. If the nation is indeed slowly coming to realize that we are in an energy transition, it can preserve a decent standard of living for all in the subsequent age of renewables only by coming to grips with the demographic impacts of the other policies we are pursuing, such as immigration. We must “think outside the barrel.” We haven’t even started.



1. Wall Street Journal 2-16-05, p A11. For a detailed look at fossil energy resource calculations and alternative energy sources, see my book The Collapsing Bubble. Growth and Fossil Energy (Santa Ana, CA: Seven Locks Press, 2005.)

2. See, for instance, the New York Times, 12-21-05, p. A27.

3. Quotations are from World Energy, Vol 7, No.3, 2004. I am indebted to Walter Youngquist for calling them to my attention. Raymond is retiring; it will be interesting to see whether his successor deals more candidly with the problems.

4. Wall Street Journal, 6-23-05, p.A3 and 7-5-05, p. B2.

5. Quoted by, 5-4-05.

6. Congressman Bartlett is one of only three scientists in Congress. His April presentation, with graphics, can be read on his Congressional website.

7. See The Collapsing Bubble (op cit Note 1) or my NPG FORUM paper “The End of Fossil Fuels, Part 2. Twilight or Dawn?” November 2004, in the Library at

Lindsey Grant

Lindsey Grant is a retired Foreign Service Officer; he was a China specialist and served as Director of the Office of Asian Communist Affairs, National Security Council staff member, and Department of State policy Planning staff member. As Deputy Secretary of State for Environmental and Population Affairs, he was Department of State coordinator for the Global 2000 Report to the President, Chairman of the interagency committee on Int'l Environmental Committee and US member of the UN ECE Committee of Experts on the Environment. His books include: Too Many People, Juggernaut, The Horseman and the Bureaucrat, Elephants in Volkswagen, How Many Americans?

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