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November 16, 2010
What will define the 21st century? Is it the end of cheap oil?
The concept of 'peak oil’ holds that the peak occurs when world oil production reaches its maximum level at the point when half the world’s reserves of cheap oil have been depleted, after which it becomes geophysically increasingly difficult to extract it. This means that passed the half-way point, world production can never reach its maximum level again, and thus continuously declines until reserves are depleted.
Has this point been reached? It is not a sensible question for neo-classical economics, which the obvious reality of the embeddedness of the economy in the natural environment. Sure, they understand that for the economy to grow requires increasing inputs of energy, obtained from exploitation of natural resources – currently, for the most part, fossil fuels such as oil, gas and coal.
Orthodox, neo-classical economists generally argue that capitalism can solve the energy-dependence problem by maximizing efficiency, so that the greater the economic growth, the more efficient the use of resources, and thus the less actual energy is required. This sort of argument underpins government support for the oxymoron of ‘high growth, low carbon’ societies.
It does appear that we are entering into a post peak period characterized by a gradual but increasing decline in production. The IEA concludes its World Energy Outlook 2010 with the judgement that that total growth in liquid fuels from other unconventional sources - such as tar sands, oil shale and natural gas liquids - will continue to make-up for the short-fall in crude until around 2035.
While this means there will be no imminent fuel shortages as such, it also means, that the age of cheap oil is over. In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades. The report says that though oil production might rise marginally under the "business-as-usual" scenario (without efforts to cut fossil fuel pollution) supplies would be short enough to send oil prices soaring to double today’s level.
The neoliberal doctrine of unlimited growth, which overlooks the finite reality of the earth’s resources, ignores that the traditional resource-base for continued exponential industrial growth simply no longer exists.
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I had trouble with the link to Ceasefire magazine. This link worked for me:
http://ceasefiremagazine.co.uk/features/cutting-edge-2/