Idon’t know when global oil supplies will start to decline. I do know that another resource has already peaked and gone into free fall — the credibility of the body that’s meant to assess them.
Last week two whistle-blowers from the International Energy Agency (IEA) alleged that it has deliberately upgraded its estimate of the world’s oil supplies in order not to frighten the markets. Three days later, a paper published by researchers at Uppsala University in Sweden showed that the IEA’s forecasts must be wrong, because it assumes a rate of extraction that appears to be impossible. The agency’s assessment of the state of global oil supplies is beginning to look as reliable as former Federal Reserve chairman Alan Greenspan’s blandishments about the health of the financial markets.
If the whistle-blowers are right, we should be stockpiling ammunition. If we are taken by surprise, if we have failed to replace oil before the supply peaks then crashes, the global economy is stuffed, but nothing the whistle-blowers said has scared me as much as the conversation I had last week with a farmer in Pembrokeshire, southwest Wales.
Wyn Evans, who runs a mixed farm of 69 hectares, has been trying to reduce his dependency on fossil fuels since 1977. He has installed an anaerobic digester, a wind turbine, solar panels and a ground-sourced heat pump. He has sought wherever possible to replace diesel with his own electricity. Instead of using his tractor to spread slurry, he pumps it from the digester on to nearby fields. He’s replaced his tractor-driven irrigation system with an electric one and set up a new system for drying hay indoors, which means he has to turn it in the field only once. Whatever else he does is likely to produce much smaller savings, but these innovations have reduced his use of diesel by only around 25 percent.
Farm scientists at Cornell University say cultivating one hectare of maize in the US requires 40 liters of gasoline and 75 liters of diesel. The amazing productivity of modern farm labor has been purchased at the cost of a dependency on oil. Unless farmers can change the way it’s grown, a permanent oil shock would price food out of the mouths of many of the world’s people. Any responsible government would be asking urgent questions about how long we have got.
Instead, most of them delegate this job to the IEA. I’ve been bellyaching about the British government’s refusal to make contingency plans for the possibility that oil might peak by 2020 for the past two years and I’m beginning to feel like a madman with a sandwich board.
Perhaps I am, but how lucky do you feel?
The new World Energy Outlook published by the IEA last week expects the global demand for oil to rise from 85 million barrels a day last year to 105 million in 2030. Oil production will rise to 103 million barrels, it says, and biofuels will make up the shortfall. If we want the oil, it will materialize.
The agency does caution that conventional oil is likely to “approach a plateau” toward the end of this period, but there’s no hint of the graver warning that the IEA’s chief economist issued when I interviewed him last year: “We still expect that it will come around 2020 to a plateau ... I think time is not on our side here.”
Almost every year the agency has been forced to downgrade its forecast for the daily supply of oil in 2030 — from 123 million barrels in 2004, to 120 million in 2005, 116 million in 2007, 106 million last year and 103 million this year. According to one of the whistle-blowers, however,”even today’s number is much higher than can be justified and the International Energy Agency knows this.”
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