Climate Progress

The WSJ blog reprints an incredibly dumb “You can’t handle the truth!” memo from uber-peaker Robert Hirsch.

Yes, the author of the seminal 2005 study funded by the Bush Energy Department on “Peaking of World Oil Production” has written a memo “To The Peak Oil Community,” recommending that group “minimize its effort to awaken the world to the near-term dangers of world oil supply.”

Well, I’m not on that distribution list, so instead of endorsing Hirsch’s inanity, I’ll endorse his original conclusion:

The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.

So why is a guy with such foresight now urging temporary blindness? Read his dopey memo and see if you can figure it out:

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The Global and Mail reported last week:

Less than 24 hours after the election of Barack Obama, Canadian cabinet ministers begin calling for a pact that would keep emissions down while protecting Alberta’s oil sands projects

This is Canada’s version of “Two tens for a five?”

Seriously, Canada, just a couple of days into his transition, and already you’re trying to play our Prez by getting him to high five (fist bump?) the “biggest global warming crime ever seen”? Back off, dudes!

Prime Minister Stephen Harper is proposing to strike a joint climate-change pact with president-elect Barack Obama, an initiative that would seek to protect Alberta’s oil sands projects from potentially tough new U.S. climate-change rules by offering a secure North American energy supply….

A Canada-U.S. climate-change pact could tie those issues together by adopting common standards and mechanisms such as a market-based emission trading system, while acknowledging the important contribution the oil sands make to North American supplies and the need to adopt technologies that would reduce oil sands emissions.

What the Obama team has acknowledged to date is the important contribution the tar sands make to global warming.

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The staid International Energy Agency is poised to bring a note of sanity back to the oil discussion next week, according to the Financial Times:

Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.

“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the report states….

“Current global trends in energy supply and consumption are patently unsustainable,” the report states.

Duh!

This is a strong reaffirmation of IEA’s “dire forecast” from July (see “IEA warns of impending oil and gas supply crunch“).

The above figure is IEA’s new demand forecast. Needless to say, for global fossil fuel emissions to peak by about 2020 and drop 50% from current levels by 2050 — in order to have a chance of keeping total planetary warming at or below the (hopefully) safe level of 2°C [see “Must Read Bali Climate Declaration by Scientists“]– then a 25% increase in oil consumption is untenable.

The new report lays out a stark warning about the difficulty of increasing supply even that much in the next two decades — and a starker indirect warning about the gross misallocation of global resources needed to achieve that increase:

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A: It certainly looks that way.

When I first posed this question in August, I began my answer:

A: “Who knows?” and “It doesn’t really matter.” Much higher gasoline prices that are sustained for a long, long time are now inevitable. The fundamentals in the oil market are that we are in the beginning stages of peak oil. Supply can no longer keep up with demand, which has kept soaring even in the face of record prices.

In August, I had assumed that things had gotten as grim under President Bush as they could get. My bad. I did, however, point out:

In the short-term, I suppose it is possible that we can go back to $3 gasoline, although that would probably require a deep global recession, and prices would only stay low for the extent of the downturn.

But I didn’t think that would actually happen, as evidenced by my 401K. Nonetheless, the fundamentals of supply and demand mean prices are inevitably headed much higher in the medium term. A figure from a new CIBC report makes that clear:

[Note: This is total world production of crude oil (excluding natural gas liquids).]

Even in the face of the staggering rise in oil prices of the last few years, production has barely budged. What about demand? As I noted in August, despite a sharp drop in US oil consumption, “global consumption rose by roughly 500,000 barrels per day (bbl/d) during the first half of 2008.” And that led me to the obvious conclusion that only much, much greater demand destruction can stop the inexorable rise of oil prices. And that obviously requires much higher prices than what we’ve seen in the first half of this year.

That conclusion remains true for the medium-term, but there is another way to get serious demand destruction in the short term — a major global economic slowdown. Given that people have started to use the D-word to describe where our current mess is headed, oil prices can clearly go lower and stay there awhile. If we assume, optimistically, that we avoid a true depression and only end up with a major recession, then the WSJ Environmental Capital blog has a good summary of new price projections:

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