RIP Peak Oil? Richard Heinberg, one of the world’s most wellknown writers on Peak Oil and the depletion of natural resources, in an exclusive article for Transition Free Press, explains why he’s convinced that the concept of ‘Saudi America’ is a bubble waiting to burst… In its latest annual World Energy Outlook, the International Energy Agency has forecast continued growth in global oil supplies, led by burgeoning production of ‘tight oil’ in the US through application of fracking technology. Many pundits have been quick to say this means peak oil is dead. Really?
“fracking relies on both Ponzi pyramid scheme investment dynamics and unusual geology” Oil companies only frack tight reservoirs for two reasons: first, they’ve run out of better prospects; and second, because the price of oil has risen so high that there is some hope of profit even in the face of steep drilling costs. It’s helpful to remember the context: 2012 posted the highest average annual oil price ever recorded, even when taking inflation into account. Meanwhile most of the increase in ‘oil’ production in recent years (and most of the growth the IEA anticipates in the coming decade) is from natural gas liquids, which cannot be directly substituted for crude oil because they are much harder to transport and less flexible to use. Global crude oil production has essentially flatlined since 2005. There’s more. Geologist David Hughes is working on a major report for Post Carbon Institute, based on an exhaustive analysis of 30 shale gas plays (areas that have significant shale rock formations) and 21 shale/tight oil plays—over 65,000 wells altogether. The data show a pattern of rapid per-well declines across the U.S. for both shale gas and ‘tight oil’. In the effort to maintain and grow oil and gas supply, Americans will effectively be chained to drilling rigs and will have to endure escalating collateral environmental impacts. Productive areas are turning out to be smaller than originally thought, and frackers are already running out of places to drill. The evidence suggests the US oil and gas industry’s recent successes
will prove to be short-lived. At the same time, financial analyst Deborah Rogers has documented how the significance of unconventional production has been systematically hyped in order to cushion share prices of the companies specialising in fracking. Drilling in tight reservoirs requires innovative financing, and Wall Street has stepped in to help—resulting in a new financial bubble. Little of this bigger picture is captured in the IEA report. But then, consider the organisation’s track record: in its forecasts during the past decade the IEA has overestimated world oil production nearly every year. In 2009 The Guardian quoted a whistleblower at the IEA as saying that forecasts were being skewed by political influence from the US government in an attempt to stop panic buying of fuel. In other words, we should be careful about relying on IEA figures. Yes, US oil production will probably increase for another few years – assuming oil prices remain at their current economy-killing level, which cannot persist for long. But this temporary increase will amount to only a few million barrels per day, and will dissipate far more rapidly than the IEA anticipates. Because fracking relies on both Ponzi pyramid scheme investment dynamics and unusual geology, other nations will have little success applying it. Meanwhile, depletion of the cheap-to-produce crude oil that drove economic growth during the mid-20th century accelerates. Is peak oil dead? No, this is what peak oil looks like. Too bad the IEA can’t see it.
Richard Heinberg is the author of ten books including The Party’s Over and The End of Growth. He is Senior Fellow-in-Residence of Post Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators.
A solar power workshop in December 2012 by Transition Town Tama (a west Tokyo suburb) led by Tetsuya Odashima from Fujino Power Company. Photo by Hisato Kato
After the earthquake by Nae Fukino and Paul Shepherd (Japan)
The 3.11 earthquake and nuclear disaster was a watershed event with longlasting implications for the future of Japan. Transition groups here tend to think in terms of pre-3.11 and post3.11 Japan.
From outside the country (with the exception perhaps of the contaminated areas of Belarus), it might be hard to fully appreciate the difficult context that Transition initiatives in eastern Japan are working in. For example, if there are radiation hot spots in your town, do you and your family continue to eat local food or do you have your food specially flown to you from farms in western Japan and overseas? Transition began in Japan in 2008 when the first 3 Transition initiatives (Fujino, Hayama and Koganei) were established. Until 2011 knowledge about the transition movement spread amongst people in the environmental movement and about 15 Transition initiatives emerged. During this period, we worked hard on awareness raising about community resilience, food sustainability, peak oil and climate change. Then came the 3.11 earthquake, tsunami and nuclear disaster. We had energy blackouts, food shortages, radiation contamination and daily aftershocks across the whole of eastern Japan from Hokkaido to Tokyo. In the first few months after 3.11, there was no need to do awareness raising – people were facing real life problems and the importance of local community
helping each other was obvious. In particular, with the radiation contamination of rice, milk, vegetables and fish, protecting the health of young children and pregnant women became a vital issue. Prior to Fukushima, talking about the risk of building nuclear power plants in earthquake-prone Japan had been a taboo subject. Suddenly, people were free to talk openly about nuclear power and renewable energy. Many people feel our energy wasteful lifestyles in Japan have contributed to the nuclear disaster.
“If there are radiation hotspots in your town do you and your family continue to eat local food?” People have responded to the nuclear crisis by making big efforts to save energy (power use in Tokyo is more than 15% down) and so even with 48 nuclear reactors (out of 50) shut down last summer there were no blackouts (but CO2 emissions were up by about 3.9%). This summer, a long-awaited, comprehensive, feed-in-tariff law to encourage the development of renewable energy came into operation and many people are now investing in renewable energy. Since 3/11, there has been much more interest in Transition and the number of Transition Towns in Japan has increased from about 15 to about 35 citizen partnerships – including the small scale activities of individuals,
community-led projects in villages, rural towns, inner city areas and local government. The emphasis has shifted to starting practical projects. In Fujino, Japan’s first official Transition Town, a notebooktype local currency Yorozu has 140 households signed up and a Forest group is helping to manage the woods of Fujino’s satoyama zone. After 3.11, to cover the electric power supply in Fujino, members established Fujino Electricity Company, which eventually aims to power Fujino on 100% renewable energy. Project teams also went out to festivals in the earthquake disaster zones in the Tohoku region and offered support to the affected areas. The working group holds monthly “Solar Power System Workshops” at their base in an abandoned elementary school where participants can easily assemble a home system by connecting photovoltaic (PV) panels and batteries, as part of a campaign called “An Energy Shift Starting at Home”. By summer 2012, the accumulated output of all the solar power generators assembled at the workshop amounted to over 10,000 watts. Nae Sekino is a graduate student in Bioresource Sciences at Nihon University researching the Transition movements in Japan. She is also in a research group of tsunami disaster district planning. Paul Shepherd is a British-born teacher and a resident in Japan for 25 years. A founding member of Transition Japan NPO and Transition Town Koganei, he is now active in a new TT initiative in Funabashi, Chiba. 7