Get Cracking

Well, here we go: ExxonMobil, the largest company on Earth and one of the few remaining energy companies explicitly opposed to the facts of climate change and oil peaking, is softening it's stance. In a new announcement, Exxon is saying that non-OPEC oil production is going to peak sometime in the next five years*. This is significant for a number of reasons. First off, it's interesting to note that Peak Oil has gone from fringe theory to accepted wisdom in less than 5 years. Galileo would be envious.

Secondly, this is a severe blow to anyone who thinks that Peak Oil can be delayed by more drilling. Whenever you talk about Peak Oil, you'll usually get a question like "What about X?" where X is some far-flung outpost that is always rumoured to be the next Saudi Arabia. We've seen this process in Russia, Central Asia, and the South China Sea. What Exxon is saying is that there are not going to be any new Saudi Arabias - just the one. We are unlikely to find any new, large oil fields from here on out. What Exxon is essentially saying is that we can't drill our way out of this problem.

Thirdly, what should really concern us is the possibility that both Exxon and Matthew Simmons are right - that Saudi oil fields will also go in to decline in the next five years, and that they could decline in a big way. If we believe these warnings - and Exxon's comes with a pretty good pedigree, at least - then there's the possibility of the global economy being several millions barrels of oil short by 2010.

So the obvious question is what do we do about it? If we can't drill our way out of the problem, then there's some simple solutions that we need to start on - first off, free public transport in urban and sub-urban areas could cut oil demand quickly. But if the decline comes quickly enough, it's hard to see how we could easily save energy quickly enough to offset the losses we'd be seeing.

This is usually the point where we all start worrying about resource wars - that the US and X (China, India, Russia) will start fighting to gain control of the last drops of oil. It should be said that this is the stupidest possible foreign policy any state could ever pursue. Ever. The US has spent more than $300 billion on the war in Iraq - and at best, Iraq has only ever produced 3.5 million barrels of oil per day. So if you believe that the US invaded Iraq to control it's oil reserves, the US has spent about $100 billion per million barrels of oil of daily production. We should probably note that a war with Russia, China, or India (all nuclear powers) would probably be far more costlier than the war in Iraq.

(There's some belief that Iraq's production has been artificially low for historic reasons. But even if you assume that Iraq's production could double post-Saddam, the numbers don't make sense.)

Meanwhile, for a cool $25 billion you get one million barrels of oil per day from Alberta's tar sands. Now, I'm no fan of the tar sands, but if you want to secure oil reserves, the Dominion of Canada's a safer bet than most countries whose names end in -stan. And at 1/4 the cost of a war in the Middle East, it's a steal!

Using that money to buy plug-in hybrids would be slightly less cost-effective - you'd save a bit more than half of what you'd buy from Alberta - except that you'd save that much oil for the indefinite future, without needing to pay the costs of actually buying the oil. I'd personally prefer this option more than the others, but I think we know where the government is going to throw our money.

Anyway, there are solutions out there for us to grab hold of. If Exxon is beginning to admit reality, then it's long past time to act.