"The Party is Over"
Transcription of Audio Interview, March 22, 2003
Editor's Note: We have edited the interview in this transcription for clarity and readability. Real Audio
JIM PUPLAVA: Welcome back everyone; it is time to introduce this week’s guest on the program. Joining me is Richard Heinberg; he is the author of a new book called, The Party is Over. He has been writing about energy resource issues and the dynamics of cultural change for many years now. He is a member of the faculty of New College of California. He is also an award winning author or three previous books. His Museletter was nominated by the Utny Reader in 1993 as the best alternative newsletter. According to Richard, the world is about to run out of cheap oil and change dramatically. We are here to talk about it with his new book, The Part is Over. Richard the core message in your book is industrial civilization has been based on the consumption of energy resources. These resources however are inherently limited in terms of quantity and are about to become scarcer. I wonder if you might explain that.
RICHARD HEINBERG: Sure Jim. My background, as you mentioned is in human ecology. For many years, I have been interested in trying to understand what makes human societies change over time. The one constant factor, that not only I but many other human ecologists have been able to identify, is the factor of energy. From hunting and gathering, to agriculture, to industrialism, the main factor that has changed really is the amount of energy harvested from the environment per capita. That really began to change a couple of hundred years ago with the beginning of the industrial revolution. What the industrial revolution was really all about fundamentally was substituting the work of fuels in the economy for work previously done by animal and muscle power. In the US for example, in 1850, something like 65% of all the work done in the economy was done by animal and muscle power, something like 15% of the work done in the economy was through human muscle power. By 1970 the amount of work done in the US economy by animal and muscle power had reduced to virtually zero and everything was being done by fuels. Meanwhile, the total amount of work done per capita had increased dramatically. We are at the point now where if all of the work done for us Americans each day by fuel fed machines had to be done by humans, using the equivalent human muscle power, each of us would have something like 150 energy slaves, taking care of our every need, getting us where we want to go, cleaning our clothes, doing all the things that machines do for us. The industrial revolution sure was about invention of machines, but those machines were running overwhelmingly on fossil energy resources leftover from earlier times in geological history. Of course, we should have known from the very beginning that those fossil energy resources were limited in extent and would sooner or later begin to run out and we should have planned for that event, but in fact, what has happened is that our whole society has been running on the assumption that they will continue forever. We are just about to wake up to the awful truth, that in fact fossil energy sources are limited and that is going to have a terrible impact on our economies.
JIM: There are different groups that you list in your book that view this problem from a different perspective. For example, we have the economist, the environmentalist, the geologist and we have the politicians. Why don’t you explain the positions that each group takes towards energy.
RICHARD: The economists typically view energy sources as inherently limitless. By that I mean they believe that the market will magically come up with a substitute whenever any given resource becomes scarce. In a certain way, they are right, in that whenever any resource becomes scarce, the price goes up, therefore there is an incentive to look for an alternative. However, in this particular case, there really may not be an alternative readily available for fossil fuels, because oil, in particular is extremely energy dense. The energy return on the energy invested in obtaining oil is extremely high and that is really not true of any of the possible alternative energy sources. Also, price signals come to the economy from resources beginning to grow scarce; those price signals in this case, could come way too late because the price signal is only going to come when the oil actually begins to become scarce. In fact, we need decades in order to prepare our industrial infrastructure to operate on alternative energy sources. The price signal is going to come several decades to late to be of any real use. There is the economist’s point of view. The environmentalist seem to be fixated on the matter of global warming, which is, I believe a very serious problem, but the environmentalist tend to believe the economists who tell them there is plenty of oil, or running out of oil is not a problem. The environmentalists, rather than calling attention to inherent limitations of fossil fuels, really keep the discussion in the area of; we should limit our use of fossil fuels because of environmental effects, such as the greenhouse effect and global warming. So it is primarily a moral message that the environmentalists are giving us. Then there is the message of the petroleum geologists and most of the ones I have been in touch with are independent and retired petroleum geologists and don’t have any personal economic stake in this in any way, they have no personal axe to grind, these are people like Collin Campbell, who worked for Exxon and Texaco and other major oil companies through a long career in over twenty different countries. Walter **Joungquist and ** the French petroleum geologist, there is a whole roster of them listed in my book. These are people who devoted their lives to this industry. Now that they are retired, they just want to get out the information that they have accumulated during these long careers, which is that in fact resource is limited and we are about to run out. It is not that we are literally going to run out of oil in five or ten years, but what they are saying instead is that we are reaching the half-way mark. That half-way mark is extremely significant. Yes, there are about a trillion barrels of oil still left in the ground and that is a huge amount. But, the problem is we have already skimmed off what is cheap and easy to extract. The message of the petroleum geologist is one that is informed by knowledge of what is really going on in the ground and in the industry. Those are the people I really listened to the most when I was preparing the material in the book. Finally, as you mentioned, there are the politicians, and there is the voice that really counts. They are the ones who set policy. Politicians overwhelmingly listen to the economists and assume that the resources are limitless and they have an excellent motivation for doing so and that is getting re-elected. For any politician who mentions that there are resource limitations and therefore as a society we need to conserve, as a society and possibly do something that might restrict economic growth or result in a reduced standard of living, that would be political suicide. No one is going to do that. Rather than going down that path, virtually all politicians, whether from the right or the left of the political spectrum, would rather give out the happy news that there is plenty to go around, maybe we need to adjust this way or that. The left has a different prescription for how we should deal with resource issues than the right does. The basic assumption that there is plenty to go around isn’t questioned by anyone.
JIM: You have come from an environmental background, but from reading your book, you seem to side with the geologists. Explain why.
RICHARD: I think the geologists are just giving really important practical information. As I said, I think most of the environmental community is fixated on this one problem of global warming. As a human ecologist, I am more interested in human society and how human societies work over time, which is, again, based entirely based on energy and energy resources. Even if global warming turns out to be not much of a problem, we will in any case, inevitably, from what I see, be facing a problem of oil depletion, and the effects of oil depletion on our societies, both in terms of industrial infrastructure and in terms of the geo-politics and war and peace, to it end up being far more consequential than global warming.
JIM: I wonder, before we get into some of the specific issues in your book, if you would explain the laws of thermo-dynamics and their importance for understanding energy.
RICHARD: Yes, great question. The laws of thermo-dynamics were worked out in the 19th century, and basically they are two. The first is that you can’t create energy from nothing. There is a certain amount of energy in the universe, nobody knows exactly what energy is, but we know that that is what makes things work. If you ask a physicist what energy is, he or she would say it is the capacity to do work. Nothing happens without energy and the amount of energy in any given system, if it is a closed or isolated system is fixed. The other law of thermo-dynamics is, even though the amount of energy is fixed, it will tend over time, inevitably to degrade so that it becomes less concentrated and available and usable. This is the law of entropy. Anyone who has tried to keep an old car on the road or keep a house clean knows about the law of entropy. Things tend to gradually fall apart unless you expend energy in putting them back together or keeping them together. What this tells us is there is basically no “free lunch� in life. In ancient times, in the ancient agricultural civilizations or Rome or Egypt or whatever, if the wealthy elite wanted to improve their standard of living, it was at the expense of the lower classes that had to work harder and extract more resources and so on. We have had a very unusual situation in the last couple of hundred years with industrial societies. Industrial societies have been able to access more energy per capita without anyone really having to pay the price from that. There was a huge bounty of fossil fuels left over from early geological times. The ruling classes if you will, the wealthy elite were able to vastly improve their standard of living, meanwhile the lower classes, middle classes, and the producing classes were also able to maintain or raise their standard of living at the same time. This is a unique situation in the history of human society and it has resulted in the calming of class conflicts that have torn many previous societies apart. It looks like we are getting a “free lunch� like we can always expect more of the same in the future. You and I and everyone who is listening to this program have grown up in a society that was constantly growing where we could always expect a higher standard of living from one year to the next because there was more energy available per capita each year. We are coming to an end of that time, not because anyone wants it that way, but because of the basic laws of physics. The seemingly “free lunch� that we got from nature’s bounteous past is just about eaten up. We are not going to be able to make up for that short-fall through any kind of magic wand, like nuclear fusion or anything like that. We are just going to have to face the fact that from now on we are going to have to live much more on the basis of yearly solar income, like people did for thousands of years up until the industrial revolution, rather than relying on this finite supply of exhaustible fossil fuels.
JIM: Let’s move on in terms of the role of energy in terms of how it is important in determining the earth or economic carrying capacity. One aspect of the industrial revolution is more people moved off the farm and into the city. It took less of the population to farm and more people were able to go work in other jobs. Life spans have expanded in the last one hundred years. There is a whole host of issues that have come up. Please explain the role of energy in this carrying capacity.
RICHARD: Up until the industrial revolution, the population of humans on planet earth had never exceeded one billion. In fact for most of our several million years on earth, we humans have numbered even less than 100 million. Around 1800, between 1800 and 1820 our numbers surpassed one billion for the first time. Now we are up to 6.3 billion humans and that is just over the course of two hundred years. It took us hundreds of thousands of years to get up to one billion and just two hundred years to move from one billion to 6.3 billion. That is an extraordinary rate of increase. If we saw this in any other life form, we would call it a population bloom. That is an ecologist term. You can see a population bloom for example if you put yeast in a vat of wine or grape juice, the yeast will wildly proliferate. Of course, the waste product of the yeast is alcohol, which is how you make the wine. Eventually, the waste product of the yeast begins to smother the yeast themselves and the micro-organisms themselves die off. Typically in ecological situations were you have a population bloom, it is followed by the population using up whatever temporary resource abundance has caused the population bloom and the population begins to die off. With human beings, what caused our population boom, without a doubt was the access to fossil fuels and this huge energy input into our societies. We were able to, for example, fuel tractors to run instead of farm animals. Farm animals had to be fed. So, for any given amount of crop land, something like one quarter, one third or even sometimes one half had to be set aside for feeding livestock, to pull the plows. Well, we don’t need that anymore because the fuel to farm all that land comes now from underground, from fossil fuel reservoirs. So that increased the amount of arable land by a quarter, a third or a half right there. Then food distribution increased dramatically, whereas before food had to be grown locally. Now, food can be transported long distances. The average plate of food that Americans sit down to eat has traveled some 1300 miles, so it is perfectly practical to put 10 or15 million people in Los Angeles or Phoenix, Arizona, where the available land and water couldn’t possibly grow food for that many people. Cities like this where if people in those cities had to rely on local resources, they would not be able to sustain themselves. Now we are able to transport those resources to them and thereby increase the human carrying capacities of those regions dramatically. Also, the Heber-Bash process uses fossil fuels, initially coal, but now natural gas to make nitrogen fertilizers. With the Heber-Bash process, human societies have been able to make nitrogen fertilizers that are equivalent to the amount of nitrogen produced by all of green nature and lightening strikes and the other natural sources of usable nitrogen. So in other words, we have doubled the amount of usable nitrogen in the biosphere by the Heber-Bash process. That has extraordinarily expanded agricultural productivity. Altogether we have created the means for subsistence for well over five billion people, who otherwise would not be able to exist today and all depending upon fossil fuels.
JIM: Explain the concept of draw-down and the danger that we now find ourselves in.
RICHARD: Draw-down is the strategy of using an inherently exhaustible energy resource. It is a strategy that we human beings have only hit upon in the last couple of hundred years. Prior to that time we were using inherently renewable resources, like wood, like animal and human muscle. Once we discovered first coal, then oil and natural gas, we found resources that were vast, incredibly useful and seemingly extraordinarily abundant. That enabled our populations to expand dramatically, as I just described a moment ago. But, those resources are being drawn-down. In other words, we actually started to run out of oil when the first barrel was being pumped. We started running out of coal with the very first coal that was mined. These are resources that cannot be replaced in any time scale that is meaningful to human beings. We are basing our population and our social economic activity these days, on the draw-down of non-renewable resources and that is extraordinarily perilous and meaningful.
JIM: I wonder if you might explain or just give a brief history if you would, in how energy played a key in bringing about America ’s prosperity and success. I am watching a documentary series on World War II and it was hard to believe that during World War II that the US had so much oil that we were actually supplying all of our allies with oil and were indeed the world’s largest exporter and now indeed we are the world’s largest importer.
RICHARD: That is right. That is the story of Americas rise to power and likely to be the story of Americas fall from power, I hate to say. The United States was in a very advantageous position through-out the 19th and 20th Centuries with regard to energy resources. During the early part of the 19th century, America largely grew rich on an agricultural base using muscle power from imported African slaves. Also the US had immense tracks of forest that could be used for wood. Up until the 1880’s, locomotives were running on wood, river boats were running on wood and most of our energy budget either wood or overwhelmingly as I said earlier on human or animal muscle power. In the 1880’s, coal began to take over and lo and behold, the US had huge coal deposits as well, rivaling and exceeding those of any European country. Now, in 1859, oil was discovered in Pennsylvania, and the US very quickly became the leading producer of oil. Standard Oil Company was founded shortly after that and soon became the worlds leading oil company. The US was not only the worlds leading oil producer but also the worlds leading oil exporter for decades after that. Oil had a number of advantages over coal. It was easier to transport, it was more energy dense, cheaper and more convenient to use. As industry gradually began to take advantage of oil, we saw the US really becoming the world’s foremost industrial nation. The automobile industry took hold and grew in this country far more rapidly than any other country in the world. The airline industry began here but again spread through the rest of the world, but again, always with its center or its hub in the United States . In World War I, it was discovered just what an important substance oil was. For the first time, battleships were running on oil. Tanks were invented; aircraft played a role in warfare for the first time. The US was supplying oil to the Allies and Germany essentially lost the war because they ran out of gas. The Germans were seeking oil fields in Romania and were cut off from those and from that point on it was just a question of time before they ran out of the oil in which was needed to pursue that war. From that time onward, countries from around the world, US, Germany, Britain and Japan have all regarded oil as the primary geo-strategic resource. So, that being the case, the US was sitting pretty, we had the world’s largest supplies at that time. More oil wells were drilled in the United States at that time than in the entire rest of the world put together. Now, oil discovery peeked in the 1930s and oil production peaked in 1970. This was truly a momentous event. No one was prepared for it and there were only a few petroleum geologist, principally M. King Hubbard who foresaw the US oil peak. Virtually everyone else was caught by surprise by all of this and virtually from 1970 onward the US has had to import more and more of its oil, until now we are importing 60% of our oil. From being the world’s foremost creditor nation, from exporting much more that we imported. From lending money to other nations, the US is now in the position of being the world’s foremost debtor nation. We import much more than we export. Our balance of trade is overwhelmingly negative. This is not entirely due to but very closely related to the fact that we have peaked in our own oil production and we will never see those days again.
JIM: I wonder if you might explain how this decline in our oil production capacity and the increase in imports are now driving, let’s say how energy policy is driving US economic, political and perhaps military policy.
RICHARD: In 1973, there was a politically motived oil embargo against the US , organized by the Middle Eastern countries of OPEC. This was the first time that oil had been used essentially as a weapon. This was a tremendous wake-up call to the geo-political strategists in Washington. From that time onward, the Middle-East has been a place of extreme interest to the US policy planners. It had been before that of course too. Ever since 1945 when Franklin Delano Roosevelt met with King Ibn-Saud and hammered out an agreement that the US would maintain the House of Saud in power in Saudi Arabia in return for Saudi Arabia’s maintenance of the US dollar as their currency of account in return for their selling their oil on the world market only for US dollars. Every since then, in 1945, there has been a recognition of the geo-political importance of the Middle East . Since 1973, that recognition has become very much sharpened. The first Gulf War in 1991 was very much about asserting US power and dominance in the Middle East and the current war is really, from a historical standpoint, we will see the 1991 Gulf War and the current invasion of Iraq as one historical continuance as two phases of a single war. The objective this time unquestionably is again, to deal with geo-political control of the resources of that reason. It is not to make US Oil Companies rich as some people on the left have said. I think that is ridiculous. In fact, most executives of major oil companies are not excited about the invasion at all. They would rather not see it happen because they would prefer to see stable oil prices and political stability in the Middle East. I think people with the longer view, see that instability in that region is inevitable in any case, and in order for the United States to maintain its way of life and its disproportionate share of global resources, the economic card that the US has relied upon is growing weaker by the day. The US economy is inherently very weak for a number of reasons and other powers in the world, particularly Europe and China have also very powerful and growing resource needs. I think that many of the geo-political strategists in Washington see it as a long-term interest of the US to project its dominance in the region, now militarily, because the economic dominance is no longer the case. I think personally that is exactly the wrong approach and is likely to have horrific consequences in the long run. It appears to me that oil-geo-politics is what is driving the decisions in the White House right now.
JIM: I wonder if you might explain why we did not learn, for example the crisis we faced during the 1970s. During the 1970’s, it was a political crisis but it was a warning. We downsized, Detroit started making more gas efficient cars. We started using insulation in homes. We started being more energy conscious. Now, a lot of people drive SUV’s as the most popular selling vehicle. We have cars that consume and burn more gasoline and get fewer miles to the gallon. Why didn’t we learn from that? We had an energy crisis in 2000-2001 and here we are in 2003 with gas prices at the pump in Southern California at almost $2.50 for premium.
RICHARD: That is a great question and I wish I had a rational answer for you. I think this whole period in history is going to be seen in retrospect, the last 30 years as a period of lost opportunity. In 1973 we became aware of the finite supply of oil in the world and we became aware also that supplies in the US are particularly limited and we are dependent, therefore on the rest of the world for our energy resources. And as you say, there were tremendous efforts put forward on energy efficiency. Jimmy Carter made some remarkable statements in those days on how dependent we are and how important it is to conserve. Here is Jimmy Carter from 1976, he says, “We must face the prospect of changing our basic ways of living. This change will either be made on our own initiative in a planned way, or forced on us with chaos and suffering by the inexorable laws of nature.� That is an extraordinary thing for an American president to have written. I think he hit the nail on the head. He was voted out of office because another politician had a more palatable message, that it was morning in America . We don’t have to worry about resource shortages. There is always going to be enough. We are American’s after all and we deserve this amazingly fast paced way of life, because we are smart and good and God is with us. That was a popular message and easy message to sell, but it is absolutely a deadly message for us now, for our children and our grandchildren because we are going to be living with the results of that change that was made in 1980. Whether you are a Democrat or Republican, the fact that we have turned away from energy efficiency and gobbling up these limited resources and undermining the ability to our children and grandchildren even to survive, I don’t think we are going to win any popularity contests with our descendants on that basis.
JIM: I wonder if you might relate this to the financial markets today. Were we see in oil industry itself were the majors are investing less money. They are sitting on large amounts of cash. From Exxon-Mobile to BP Amacco, to Royal Dutch Petroleum, we have seen this merger wave sweeping the industry. Exxon buying Mobil, BP buying Amacco and Atlantic Richfield, you just see one company after another gobbling up other companies. What does that tell us? It tells me that the industry is contracting.
RICHARD: That is exactly right. Rex Tillerson, who is the Senior Vice President of Exxon-Mobil, which is the world’s largest oil company, just a few weeks ago, told a gathering at the Institute of Petroleum that the oil industry will have to invest something like 100 billion dollars a year in exploration in order to meet demand for oil product for the coming decade. That is the rate of investment, something like ten times the current rate. He didn’t even speculate on were that kind of investment capital that might come from. Tillerson of course didn’t use the word peak. Peak oil or peak production, but what he is talking about is exactly that, we can only boil down to a peak in global oil production. I think there is some interest in oil companies to establish some rights to some of the R&D money that is inevitably going to be spent in the production of renewables. Mostly I think what they are doing right now is consolidating the resources that they already have; the bigger companies buying out the small ones, buying up the reserves, because they can see the end of the road in sight.
JIM: There have been a number of Cassandra’s but there was one individual in particular, a petroleum geologist King Hubbard, who predicted the decline in US production in 1970, hit the nail on the head. There have been others who have followed in his wake. Why is it that for example, we still have today, the politicians and many others ignoring the Cassandra’s and yet here we are today in March 2003, finding ourselves in another energy crisis. We have motorists screaming at paying over $2.00 at the pump, rising utility bills, rising heating bills. Everywhere you look, we have this problem.
RICHARD: The people, who are giving us the straight information, are the ones who are not generally associated with large institutions that have a financial stake in the outcome. These are the independent petroleum geologists like Collin Campbell, Walt Joungquist, and Rich Duncan and so on. The people who are actually in the industry or in the government, the United States Geological Survey, The Department of Energy and so on, all pretty much have to keep their mouths shut. The USGS for example has given official projections of global oil supply for the next 25 years that are really absurdly optimistic and of course that is an official government agency, so naturally when Congressmen or the President want to make policy, who do they look to, well to the Department of Energy and the USGS. It is a circular situation, like the Emperor hires the spies to go out and collect information and the ones who come back with bad news get killed and so all the Emperor ever gets is good news. That is exactly the situation we are in. The USGS failed to foresee the 1970 peak in US oil production and it is utterly failing to see the global peak that is imminent in the next five to twelve years.
JIM: Now we have got a lot of other voices concerning energy and you address others in your book that take a less of an apocalyptic view towards energy. You have *Peter Hubert, *Bian Lomberg that are skeptical of this oil depletion or running out of energy. You did take on each one of their issues. Why, in your opinion, do you feel these people are wrong?
RICHARD: These folks have a number of different arguments. I will address only some of them here because it would take too long to go through all of them. Let’s look at some of them. First of all they tend to take the reserve increase announcements of different oil companies and exporting countries at face value and that is dangerous because many of these reserve reports are politically motivated. For example in 1987 OPEC changed the rules to say that each OPEC countries market share would depend upon its reported reserves. So the OPEC countries were motivated to increase their reserves. In actual fact, not that much new discovery was taking place but nobody was looking over their shoulders either, so all of the OPEC countries, within two years showed dramatic increases in their reserves, something like 50% to over 100% in their reserves. That was without much discovery taking place. How could that happen? It was all on paper, but the oil optimists take that at face value and say “Well, yeah, that oil is in the ground.� Another thing they say is that there are huge amounts of unconventional oil, shale oil and heavy oil. In Alberta, so called oil shale, there is enough to power industrial societies for at least a couple of hundred years in the future, theoretically. That “theoretically� is pretty significant in this case because it turns out that shale oil is extremely difficult and costly to extract. Even with all the technological improvements that can be imagined, it is going to cost something like a barrels worth of oil, to produce a barrels worth of oil. Also, production of shale oil uses huge amounts of fresh water, so it is an environmental catastrophe. It also uses a lot of natural gas, and that is becoming scarcer in Alberta and Canada in general. So are we going to see 200 years worth of cheap shale oil in Alberta? Very unlikely! The same thing with the unconventional energy sources that the oil optimists like to trot out. The reason we are using conventional oil overwhelmingly right now is because it is cheaper and easier to get at. We are about halfway through nature’s endowment. We have used about a trillion barrels and there are about a trillion barrels left. It makes sense if you are exploring and pumping oil, you are going to use the stuff that is easiest and of highest quality first. That is what you look for first. It is only when that stuff is gone that you are going to go after the stuff that is kind of nasty and difficult and expensive to get out. That is the situation we are in. The light sweet crude that is under pressure underground so all you have to do is stick in the pipe and it comes to the surface by itself, that is getting harder and harder to find. More and more of what is left over is stuff good for making asphalt roads basically (it isn’t quite to that point yet) but within the Continental United States it costs about a barrel of oil to explore for and drill a new oil well. It costs a barrel of oils worth of energy for the energy that will come from such an enterprise, meaning that it is not worth doing. We are going to be approaching that same situation in many other oil providences in the world.
JIM: What about some of the alternatives to solving the energy crisis. You mentioned natural gas, and even that has gone into a decline. Let’s take wind power, nuclear power, solar energy, hydrogen, geo-thermal power. Do we have enough alternate power, and is there any one that is in abundance that can replace, let’s say, the energy we get from fossil fuels?
RICHARD: In a word, No. Let me go into more detail on that. I am an advocate of solar and wind energy. I have photovoltaic panels on my roof right now that are generating energy as we speak. I drive my car, which is a diesel Mercedes on stuff called Bio-Diesel which is made out of vegetable oil, so I don’t directly use petroleum to get myself around. However, I am a realist about these things. The fact of the matter is solar, solar photovoltaic and wind account for a tiny fraction of one percent of our national energy budget right now. So in order to ramp up the energy production for those sources, to meet the shortfall from fossil fuels when it does peak in production, will take immense amounts of investment, research, development and manufacturing of infrastructure. President Bush said he was going to appoint 1.2 billion dollars in hydrogen research in his State of the Union address, but most of that will go to hydrogen made from nuclear electricity and from hydrocarbons. Most hydrogen made right now, virtually all commercial hydrogen is made from natural gas. The development of renewable alternatives simply isn’t taking place at nearly the rate that will be necessary in order to make up for the shortfalls. Nuclear has the unsolved problem of storage and elimination of nuclear waste. Nuclear plants are extremely vulnerable to terrorist attacks and the whole nuclear industry has been an environmental catastrophe on a number of fronts. The mining of uranium in native lands and this country is just a history of atrocity after atrocity. I think that nuclear would be exactly the wrong way to go. There is also the question of net energy analysis that not many people know much about, but is extraordinarily important for answering the question of what alternatives we should be going towards. It costs energy to get energy. So in order to explore for or drill for oil, you have to expend energy. In the case of oil, the amount of energy that you get back from the oil that you find and pump is vastly greater, typically than the energy it costs you to find it. With many of the alternatives, the energy profit is not very high. With photovoltaic for example, it costs energy to manufacture photovoltaic panels. The amount of energy pay back from the photovoltaic panels, once they are manufactured, even over the years and years that they are going to sit on someone’s roof, is not nearly as great as the energy pay back that we are accustomed to with fossil fuels. In the case of nuclear, that energy payback is not very great considering the immense energy outlay, first of all in building nuclear plants, mining and purifying uranium, then decommissioning plants and storing radioactive waste for decades, centuries and possibly millennia. It turns out that wind power has pretty good energy return on energy invested. Wind power is probably one of our best alternatives. We are so far behind in implementing wind power that it would literally take hundreds of billions of dollars in investment to ramp up wind power to meet the energy shortfall that we are going to be seeing from oil and natural gas and no one is contemplating that level of investment.
Does it take actually a crisis. We had a crisis in 2000, here we are in
2003 and we have another energy crisis, not in the power sense, but
certainly motorist and those paying heating bills in the east coast are
seeing that. Does it take a crisis were you actually have market
mechanisms move into place, with rising prices that is suddenly dawns on
someone that perhaps there is an incentive here to go out and do
RICHARD: Unfortunately I think so. We are seeing a natural gas crisis unfold before our eyes. US natural gas production is down. We are importing 16% of our natural gas from Canada . Now, the Canadians are finding it more and more difficult to maintain natural gas extraction at a rate sufficient to supply their own needs plus those of the US . Natural gas prices are near record levels right now and natural gas in storage is at near record low levels. The situation with natural gas is that it is difficult to transport, say from the Middle East. There is a fair amount of natural gas left in the Middle East, in the North Sea and so on; however it is very difficult and expensive to get here. We are largely limited to supplies available in North America . The natural gas in storage reaches very low levels, what happens is that the pressure within the storage caverns in the distribution lines begin to decrease. If the natural gas pressure levels decrease significantly, then the whole system goes down. In order to keep that from happening, the administrators in the natural gas system systematically cut off some of their large industrial users. The people they cut off first or the industries they cut off first are the fertilizer manufacturers. Already right now, most of the fertilizer companies in North America are sitting idle or operating at a fraction of production capacity. This will have an impact on the agriculture industry for the coming growing season and will impact food prices. We are really at the early stages of the natural gas crisis now, because everything depends on whether storage during the summer season can be brought up to normal levels as we go into the draw down season of winter, were a lot of natural gas is used for home heating. If those storage levels can’t be brought up to near normal levels, next winter, we may actually see real natural gas shortages in the form of outages, brown-outs and black-outs. Does it have to get this way in order to get people to realize what is going on? Unfortunately that is what I see happening.
JIM: So, basically we are going to have to have another energy crisis. Perhaps this summer we see gasoline prices approach levels, that maybe others in the rest of the world, such as in Europe and maybe Asia are paying in gasoline, before we wake-up. Don’t you feel professor that eventually, politicians run out of excuses? You can’t just blame it on the “greedy oil companies� any time there is an energy crisis. You start running out of scapegoats.
RICHARD: Absolutely. I am just waiting for some politician to step forward and educate him or herself as to what is going in on here and then tell the public. So far, I don’t see any indication of any politician from either party, being willing to do so. It is actually pretty hard to run out of scapegoats. Whether it is the oil companies, the terrorist, the Middle-Eastern countries or you name it. I think we are going to run through a long list of scapegoats before the chickens finally come home to roost on this one and say, “Hey folks, the party is over.�
JIM: I just wonder does the public finally wake up. I recall as a student in the late 1960’s and 1970’s, getting gas at 12am during the gas rationing due to the oil embargo. There was a period of time that people got sick of it. We had brown-outs back east. Finally the market mechanism began to move. Detroit got the message that people wanted more gas-efficient cars. Home builders began to put more insulation, we began to conserve. People got tired and the markets responded. Can we perhaps have the general public get tired of the excuses from politicians and perhaps encourage someone, like a politician to take the kind of response.
RICHARD: That is what I am hoping for. That is what I am trying to promote by putting out this book. I think it is very important that the general public becomes aware of these issues. If the leaders aren’t going to lead, then I think the people need to lead, and maybe the leaders will follow. I am hoping that it will become an open secret that in fact, fossil energy resources are becoming scarce. It has got to result in changes in individual choices, people deciding on an energy conserving way of life and demanding recognition from officials on what is happening. We need to engage in coordinated social responses. Even if all of the individuals in the country started to undertake more conservative energy choices, that would be great. The fact is, our whole industrial infrastructure is incredibly inefficient right now, based on the assumption of limitless fossil fuels. Individuals have limited ability to make the policy decisions that go into designing the future industrial infrastructure of our society. There are some decisions that can only be made by people at the top of the power pyramid. We have to get to them. The way we will get to them is by changing millions of individual minds.
JIM: I guess, in a couple of final questions. If you were to have one concept you would like delivered to readers of your book, what would want them to extract from it?
RICHARD: I would hope that they would understand that the increasing scarcity of fossil fuels will have an impact on our way of life, whether we like it or not. Blaming other countries or oil companies is futile. We are at a historical juncture right now that none of us has ever seen before. We have all grown up in a period of industrial growth based on expanding fossil fuel availability. Now as fossil fuels begin to become less available, that way of life is gradually going to come to an end. We are going to have to scale back our way of life *commiserately. We have basically two options ahead of us for the coming century. On one hand, we could decide, as a people, that our American way of life is non-negotiable. If our oil happens to be under someone else’s sand, too bad, we have the biggest guns and the biggest bombs and it is up to us to take what is ours from whoever has it. I think if we follow that path to its logical conclusion, the end result will be universal destruction. On the other hand, there is a possibility that we could recognize the situation we are in, chose to join with other countries in a voluntary process of resource conservation and sharing and power down, in a deliberately and coordinated way, power-down our industrial way of life. Find more efficient and simpler local ways of meeting basic human needs. That is going to be painful too. There is no easy way out of this situation, which no one is going to feel any pain. Over the long run, that at least has the option of peace and survivability. Whereas a winner take all solution might buy us another five, ten or on the outside twenty years of our precious American way of life. In the long run, I fear for future generations if there are going to be future generations if we take that path.
JIM: Are you optimistic or pessimistic, as you have done the research for this, coming more from the environmental side, is it somewhat strange finding yourself siding with a geologist.
RICHARD: With a petroleum geologist, yes it has been very interesting. I meet and talk with these people. They have spent their entire careers working with the oil companies. These are some of the nicest people I have ever met. They are extraordinarily generous with their time. I think it is because they realize what is at stake. I think they have a better idea, than virtually anyone else, where we are and what is really at stake right now. Am I optimistic? I think optimism is the only functional attitude to have in life and pessimism will never really get you anywhere. If I had to bet on which way things will go, I would have to bet that the next century will be very difficult to live through. I think as many challenges as we had during the 20th century, with two world wars, the cold war and so on. I think the 21st century is going to hold far more challenges. I believe that we have to maintain an optimistic and hopeful attitude in order to get ourselves through this. I think with a proper frame of mind and willingness to change, we could arrive in a situation where human beings are happier and the environment is better off than the situation we are in right now. I think that human needs are pretty much the same. We want to live in safety and relative comfort. Wealth is not so much important to us as is the qualities of our relationships and our abilities to feel secure in our relationship with the world and the natural environment. Those kinds of needs I think can be met on the basis of a much lower material level in society and they will have to be. I think if we keep cool heads, remain optimistic and make good choices, our grandchildren could be living in a very beautiful world and I hope we make it there.
JIM: Thank you Professor. I want to thank you as always, for joining us on the Financial Sense Newshour. A very thought provoking book. I have to admit that when I first heard about it, someone writing about oil as an environmentalist, I thought, do I really need to read that? Once I got into your book, going through and taking look at the basis of many of our arguments, I found myself agreeing with you on so much of what you have written. Thank you for joining us. The name of the book is called, The Party is Over. It is by Richard Heinberg, The Party’s Over, Oil War and the Fate of Industrial Societies.
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