Editore"s Note
Tilting at Windmills

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June 3, 2005
By: Kevin Drum

PEAK OIL....PART 5....The coming peak in oil production, which is likely to lead to permanently expensive oil and increasingly frequent oil shocks, isn't the end of civilization as we know it. Honest. But it is likely to be fairly painful. What can we do about it?

To begin with, we need to be careful not to conflate "oil policy" with "energy policy." They're two different things. Nuclear energy, for example, has good points (no global warming) and bad points (Three Mile Island), but in the near term it's not a replacement for oil. It's a way of generating electricity, and as such it's mostly a replacement for coal and natural gas, the two things that currently produce most of our electrical power.

Oil, on the other hand, is mostly used in two other sectors: transportation (cars, trucks, and planes) and industry (for example, as lubricants and chemical feedstock). Any plan to deal with future oil shocks has to focus on those two areas. What's more, since (a) transportation is by far the biggest consumer of oil and (b) there aren't very many good substitutes for industrial use of oil, our focus needs to be pretty squarely on transportation.

In the short term, our options for dealing with a future of expensive and unstable oil supplies are limited. One thing we can do, and for which George Bush deserves credit, is to continue filling up the Strategic Petroleum Reserve, something he's gotten some flak for recently in the face of rising gasoline prices. But he's right to ignore the critics: higher prices are not an emergency, and that's what the SPR is for. If terrorists manage to blow up Ras Tanura and put it out of commission for a few months, we'll all be happy the SPR is topped up.

The medium and long term are different stories, though, and this is where we can make a real difference. Serious solutions take years or decades to implement, though, which means the time to start working on them is now.


One thing for which George Bush decidedly doesn't deserve any credit is his energy plan, which does almost nothing to address our future oil problems. It's laughably unserious, little more than a transparent payoff to his campaign contributors that's derided by practically everyone on both the right and the left. We can do better.

Any sensible oil plan has to be built on four fundamental pillars. This is a subject that would need a five-part series of its own to do it justice, but here's the basic outline:

  1. Increased production. This is the part that liberals hate, but there's no way around it. Like it or not, our economy really does depend on oil and there are no immediate substitutes. We're just not going to become a nation of bicycle riders and small farmers either now or in the future.

    Increasing production mainly means investing more in "frontier oil" and in the U.S. drilling in ANWR. As Jared Diamond points out in Collapse, it's perfectly possible to drill for oil in environmentally sensitive ways, and the fact is that Prudhoe Bay has been relatively trouble free for such a large-scale operation. ANWR is unlikely to be any more damaging to the environment than Prudhoe if it's done right, and it deserves to be on the table as part of a comprehensive energy deal. On a related note, building more refineries is probably going to be part of the deal too.

  2. Conservation. This is the part that conservatives hate. Getting people to use less oil means getting them to drive less, and that means gas taxes and carbon taxes. It also means mass transit, as well as things like government programs to buy up old gas guzzlers. These are going to be hard pills to swallow for anti-tax conservatives, but it's not possible to address our oil problem solely on the supply side. We have to reduce demand as well.

  3. Increased efficiency. There's no question that cars can be made considerably more efficient than they are today. HybridCenter.org has details about hybrid cars, but non-hybrid cars have lots of room for improvement too. Raising CAFE gas mileage standards and bringing SUVs under the CAFE umbrella would go a long way toward making cars more efficient, but this will require conservatives to get over their aversion to industry regulation and it will require liberals to get buy-in from auto unions, which have opposed higher CAFE standards in the past.

  4. Alternative fuels. Biofuels look promising as partial replacements for oil (see "Independence Way" from last July's Monthly for more details), and some additional federal support could be helpful here. Natural gas is a clean alternative to oil, although it's also a fossil fuel and has its own problems. (For starters, no one seems to want an LNG port in their neighborhood, and that's what it's going to take to significantly increase our use of gas.)

    In the longer term, hydrogen fuel cells are promising although it's worth keeping in mind that fuel cells are storage devices, not power sources. Their energy has to come from electrical plants, and realistically that means more power generation from both nuclear and coal along with increased use of clean coal technology and carbon sequestration. That's expensive stuff, but probably worth it. No matter what we do, we have to get used to the idea that energy is going to be a lot more expensive in the future than it is today.

None of these four things will solve our oil problem by itself, but each one can solve a part of it. Put them all together and you have a plan that could start to have a serious effect within 5-10 years. But it will take some compromise on all sides. I'm not a fan of drilling in ANWR, but if it were part of a larger deal that included things like higher CAFE standards, an incremental gas tax, and serious support for alternative fuel research, I'd swallow hard and support it.

There's more, of course, including the larger non-oil energy picture as well as the environmental impact of all this stuff, with global warming at the top of the list. Maybe I'll address those later. In the meantime, comments are open.


If you want to read more about peak oil, here are a few places to go:

Here are a couple of blogs that track peak oil news daily:

For what it's worth, there are some hyper-alarmist sites out there as well (the code phrases to watch out for are things like "end of civilization" and "massive die-offs"). I'd avoid them. Peak oil is a serious problem, but the free market really will work the way economists say it does, by reducing demand and spurring innovation as prices rise. If we combine that with some common sense planning for the future, we can go a long way toward making this problem manageable. Both our economy and our national security depend on it.

One final word is here.

Kevin Drum 12:05 AM Permalink | Trackbacks

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