Washington
People have been nagging me about my wasteful oil consumption for 30 years. I didn’t pay much attention. I love my Mustang convertible.
I was the kind of guy who, hearing President Bush tout the virtues of ethanol and decry America’s “addiction” to oil in the State of the Union speech, would dismiss it as empty rhetoric.
Except, recently, I was stopped in my tracks by a message on an airport billboard.
“The world consumes two barrels of oil for every barrel discovered,” it said. “So is this something you should be worried about?”
The question was a grabber. But what really stunned me was the billboard’s sponsor. Not the government. Not the Sierra Club.
This message was brought to us by Chevron.
Here are more facts from the oil company’s ad campaign: “The world has been finding less oil than it’s been using for 20 years. … It took us 125 years to use the first trillion barrels of oil. We’ll use the next trillion in 30. … By 2030 the number of cars in the world will increase by 50 percent.”
Why is Big Oil disturbing my complacency? I did some poking around, and what I found was unsettling. They appear to be preparing us for an era of higher prices, environmental tradeoffs and lifestyle changes.
The problem is not declining oil production. The problem is that global consumption is exceeding discovery and supply. At some point, maybe soon, oil supplies will “peak” and fail to satisfy demand.
Enhanced oil recovery, oil-sands production, coal liquefaction and the use of ethanol may all mitigate the crisis, but Earth’s soaring population and the thirst for oil in China, India and the former Soviet states will exacerbate things.
In the next two decades, world oil demand is expected to grow 50 percent, with oil consumption in China alone expected to increase 4 percent a year. By 2025, China is projected to be the second-largest oil consumer in the world.
A U.S. Department of Energy report released last year concluded that “the peaking of world oil production presents the U.S. and the world with an unprecedented risk-management problem.”
Unless we change our ways, “peaking will result in … protracted economic hardship in the United States,” the report said. “In the developing nations, peaking problems have the potential to be much worse.”
Draw a list of the challenges America faces: Islamic fundamentalism, outsourced jobs, Third World diseases, resurgent Russian power, bankrupt airlines, pension shortfalls, auto industry layoffs, illegal immigration, global warming, the rise of China. There is an energy component to them all. An oil crisis will magnify these difficulties, geometrically.
“The long-run impact of sustained, significantly increased oil prices associated with oil peaking will be severe,” the DOE report warned.
“Higher oil prices result in increased costs for the production of goods and services, as well as inflation, unemployment … and lower capital investment,” the report said. “Tax revenues decline and budget deficits increase, driving up interest rates.
“The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary.”
The DOE report guesstimated (OPEC countries and oil companies are not known for sharing data) that the world will hit its oil “peak” within 20 years. Why worry now? Because remedies may take a decade or more.
We can switch to coal or wind or nuclear energy for electric power. But transportation accounts for two-thirds of our oil consumption, and we keep our gas-guzzlers on the roads for years.
The DOE researchers found that half of the 1990 model-year cars will still be in use in 2007. My Mustang is 10 years old, and I don’t plan to sell it soon.
After the great oil shock of 1973, the federal government set fuel efficiency requirements for cars and trucks. It took a decade or more for Washington and Detroit to implement the changes, and for consumers to replace their old cars. Significant increases in fuel efficiency did not occur until the late 1980s.
We will see how serious Congress is the next time higher fuel-economy standards come up for a vote. And we’ll see how serious Bush is when the administration releases its energy research budget Monday.
Biomass. Cellulosic. Get to know these words. It takes too much energy to grow corn to produce cheap grain ethanol, but the DOE researchers found that public grasslands and crop waste could produce the biomass needed to make 50 billion gallons of cellulosic ethanol – the equivalent of 35 billion gallons of gasoline, or 17 percent of current U.S. consumption.
“This could be achieved without any impact on current food production and at prices only 35 cents per gallon higher than refinery prices for gasoline,” the DOE said.
As strange as it sounded coming from the lips of a Texas oilman – whose vice president believes conservation is a mere “personal virtue” – Bush seemed to concede last week that the age of alternative fuels is upon us.
Or, like Chevron says: “The era of easy oil is over.”
John Aloysius Farrell’s column appears each Sunday in Perspective. Comment at the Washington and the West blog () or contact him at jfarrell@denverpost.com.
