Energy crisis — has the day of reckoning been delayed?

A few years ago, many people were concerned about the rise in oil prices and declining supplies of conventional oil.

Sep 30, 2016

By Anil Netto
A few years ago, many people were concerned about the rise in oil prices and declining supplies of conventional oil.

It was felt that Peak Oil had been reached, and I wrote about that in this column.

This was not a new phenomenon. Oil company geologists M King Hubbert had warned in 1956 that global oil production would reach a peak in 1965 and then decline.

Economist EF Schumacher (in the 1970s) then warned that the rate of increase in global oil consumption was unsustainable and that production and expected reserves of oil would have a hard time matching that of rising consumption.

Back then, he predicted that we would reach a situation “which is absolutely certain to arise within the lifetime of most people living today — when oil will be scarce and very dear”.

He warned that the oil-exporting nations needed time “to develop alternative sources of livelihood”. We in Malaysia can understand that better now after seeing how the government is struggling to balance its budget given the dwindling contribution from Petronas to government coffers, already feeling the impact of significant corruption and other leakages.

Oil-dependant economies, on the other hand, he said, needed time “to adjust their oil-dependent economies” to a situation of scarce and expensive oil.

Now both Hubbert and Schumacher may have been off the mark somewhat for various reasons.

For here we are today, with the United States having ramped up its oil production and oil prices have plunged from their peak a few years ago.

So how did that come about? Is that the end of the energy crisis?

Unfortunately, it is not as if finite oil resources have suddenly become infinite. What has happened is that with high oil prices, it became viable to invest in unconventional methods of oil extraction such as the fracking of shale oil and gas

As a result, the United States managed to almost double its crude oil production from 5.0m barrels a day in 2008 to 9.4m barrels in 2016, according to the US Energy Information

Administration. This expanded oil production has created something of a temporary glut.

But the life-span of a fracked oil well is much shorter. The best reserves of unconventional fuel have already been targeted. And major new discoveries are hard to come by.

As as oil prices have fallen with increased production, these unconventional sources may no longer be as viable as before.

Moreover, the production of tar sands oil is expensive and uses up almost as much energy as it produces. For every one unit of energy used up in producing conventional oil, 25 units of energy is produced. But for tar sands oil, one unit of energy used up in production results in only 2.9-5.1 units of energy produced.

Already US production of crude oil has slowed in the first three months of 2016 to 9.2m barrels a day (according to CNN), though the country is now the third largest oil producer in the world after Russia (10.5m barrels) and Saudi Arabia (10m).

Effectively, the expensive and energy-intensive production of unconventional oil and gas has just delayed our day of reckoning brought about by our corporate greed and our unsustainable consumption and lifestyles.

We have been granted a reprieve, maybe a few years, maybe even a decade or more. But it is just a reprieve. Unfortunately, this period of lower oil prices has made us as complacent as before towards carbon emissions which are changing global weather patterns. So we are still producing more and more oil-guzzling private motor vehicles and building ever-longer highways.

Emissions have already taken a deadly toll: scientists from Harvard University and Columbia University have carried out new research which shows that Indonesian forest fires last year may have caused 100,000 deaths.

So now we are faced with a glut of cheaper oil (but for how long?) — yet, many of us refuse to opt for a lifestyle of radical simplicity. Instead, it is business as usual — except that our unsustainable pattern of economic growth, combined with rampant corruption and regressive taxation (GST) has left many feeling poorer and indebted, as household debt creeps upwards.

Instead of investing in renewable energy — even though that will probably not be enough to meet all our energy needs — we have continued along an unsustainable path.

Schumacher dismisses nuclear energy as a solution on ethical grounds because it still requires us to store hazardous radioactive waste material for almost an eternity. Moreover, decommissioning nuclear reactors at the end of their life-span presents another monumental challenge.

So for now, it is business as usual — which is sad. The one thing that can avert both climate change and the looming energy crisis is the call to radical simplicity in our lifestyles.

This involves more than just shunning plastic bags in favour of recyclable biodegradable bags.

It is a radical call to embrace voluntary poverty and simplicity as much as we can as we follow in the zero-carbon footsteps of Jesus who walked this earth two millennia ago.

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