Whistleblower: Officials lie, peak oil actually near

12 Nov 2009

A big event every year in the energy world is the publication of the International Energy Agency’s “World Energy Outlook”. This year’s report, a survey of possible energy supplies over the next couple of decades, was issued a couple of days ago. While I haven’t combed through it extensively, it seemed things were not as gloomy as I’d expected from reading books like The Last Oil Shock and The Long Emergency.

But I shouldn’t have been surprised by this headline in the Guardian today: “Key oil figures were distorted by US pressure, says whistleblower”. When it comes to oil—or fossil fuels in general—so much money and power is at stake that you have to be skeptical of any reports on how much the world has left.

Why lie? The Guardian article says:

according to a whistleblower at the International Energy Agency… it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

If oil production is around its peak now, then we could expect competition over oil reserves and production to heat up over the next decade or two. As another recent Guardian article puts it, “The race for the world’s remaining oil reserves could get very nasty.”

But more immediately, an admission of peak oil might trigger panic buying, not because oil is going to completely run out in the next few years, but because it means that the supply won’t keep rising to meet demand.

And Economics 101 says that when demand outstrips supply, prices go up. To get ahead of that, people start snapping up what’s available—creating an artificial price spike.

As Thomas Friedman points out in Hot, Flat, and Crowded, whenever the oil price soars like this, it makes it harder on the U.S. because it’s so dependent on oil, and it means countries like Iran and Saudi Arabia are making loads more money. So, Friedman argues, even if it weren’t for climate change, it would be a good idea for the U.S. to largely wean itself off oil.

It’s not surprising, then, that the Guardian reports that the U.S. is meddling with the figures:

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

If the IEA’s numbers are way off, then this is not a good basis for planning for the future. And this is what people are using the IEA’s reports for, the agency says:

The IEA acknowledges the importance of its own figures, boasting on its website: “The IEA governments and industry from all across the globe have come to rely on the World Energy Outlook to provide a consistent basis on which they can formulate policies and design business plans.”

But some officials are already wary of the IEA’s figures. As the Guardian article continues:

John Hemming, the MP who chairs the all-party parliamentary group on peak oil and gas, said the revelations confirmed his suspicions that the IEA underplayed how quickly the world was running out and this had profound implications for British government energy policy.

He said he had also been contacted by some IEA officials unhappy with its lack of independent scepticism over predictions. “Reliance on IEA reports has been used to justify claims that oil and gas supplies will not peak before 2030. It is clear now that this will not be the case and the IEA figures cannot be relied on,” said Hemming.

“This all gives an importance to the Copenhagen [climate change] talks and an urgent need for the UK to move faster towards a more sustainable [lower carbon] economy if it is to avoid severe economic dislocation,” he added.

(See the official site on the Copenhagen climate change talks, where leaders will meet to try to hash out a deal to regulate carbon dioxide [CO2] emissions. And see my article, “The Climate Change Game”, for why the talks probably won’t accomplish much.)

The UK’s Energy Resource Center (UKERC) also recently ran the numbers themselves and came up with a much gloomier picture. Their “Global Oil Depletion Report”, published las month, says that oil production will peak soon—most likely before 2030, and a significant chance of it peaking before 2020. If you’re like me, that might sound like a ways off in the future. But really it’s only 10 years away. Tick, tick, tick…

Hoping that peak oil won’t come until 2030, says UKERC report lead author Steve Sorrell, is “at best optimistic and at worst implausible.”

And given the world’s overwhelming dependence upon oil and the time required to develop alternatives, 2030 isn’t far away. The concern is that rising oil prices will encourage the rapid development of carbon-intensive alternatives which will make it difficult or impossible to prevent dangerous climate change.

That is, if the s&*t hits the fan and oil is unexpectedly hard to get, people will most likely fall back on the cheapest alternative that’s a quick fix—things like converting coal into gasoline. And as Wired.com reports, “coal-derived fuel could produce as much as twice as much CO2 as traditional petroleum fuels and at best will emit at least as much of the greenhouse gas.” (See also the Washingont Post editorial, “Coal-to-Liquid Boondoggle”.)

We’d be better off burning the coal in power plants to charge up electric cars—but to build the infrastructure for that and convert the car fleet, we’d have to plan ahead at least 10 years.

I’d guess that Obama’s Green Dream Team is similarly worried about peak oil, although as far as I’ve seen that hasn’t translated into any official statements or policy shifts.


books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World

Mason's favorite books »