Did you know the oil is running out?

In turn, this implies that we think that the world's supply of oil is all sitting in some vast tank or cavern somewhere, from which it can be pumped at a constant rate until it is all gone.

The world's oil supply in fact is located in thousands of different oil fields, mostly in geographically or politically difficult places. Those oil fields are each of vastly differing sizes. They were found (and began being exploited) at times decades apart. The oils they contain have different viscosities, which affects how fast they can be pumped and the degree to which they need to be refined. The oil fields are not caverns but solid, porous rock, and the porosity of the rock that holds the oil varies, which also affects the rate at which it can be extracted. As well, the pressure in the oil fields varies, again affecting the flow. Knowing all this, it is obvious that those thousands of oil fields are not going to run out at the same time. Indeed, each individual oil field does not give up its oil at a constant rate.

So, it is plain that rather than having the oil suddently 'run out', we will instead find that at some time the world will come to a peak in its production followed, naturally enough, by a fairly gradual decline. That might sound as though it will be easier for the world than 'running out'. It isn't.

I should tell you about a report that was released in the closing months of 1995. It's called 'The World's Oil Supply 1930 - 2050' (I'll call it 'WOS' from here on) and it is co-authored by Dr. Colin Campbell (who also wrote the article in Scientific American that you spoke of) and Dr. Jean Laherrere. It is published by Petroconsultants of Geneva, and makes use of their database. Petroconsultants have the world's best database on the upstream oil industry, having built it up since the 1950s. Unlike the US Geological Survey, they are also free of political interference in their reports.

Instead of just looking at the world's total reserves and dividing it by the world's annual consumption, Campbell and Laherrere went through the Petroconsultants database, looking at the history of each of the world's oil fields from which they were able to estimate their annual production in the future. They were then able to collate them so that they could get an estimate of production in each year right up to 2050. The maintenance of the database and the cost of analysing it is reflected in the price of the report - the three volume report sells for US$32,000. That's right, thirty-two thousand US dollars. It is a serious piece of work containing very valuable information from the heart of the oil industry. It is effectively investment advice which is purchased by the oil companies, oil producing countries' governments and banks and investment houses. Only a couple of dozen copies have been sold around the world. Here in Australia there are only two copies, one owned by a company called Boral, which is one of Australia's biggest companies, and the other is owned by me (actually, I only have volume one - my budget does not stretch all the way to US$32,000!). I purchased it because I didn't see why only the companies and governments should have this information. Volume 1 is like a precis in words of the information expressed numerically in volumes 2 and 3. For an effective guide for investment you would need volumes 2 and 3, but I am not an investor.

The guts of the information is that world oil production is likely to peak within the next 5 - 10 years, after which it will begin its decline at the rate of about 3% per year (which means it HALVES EVERY 25 YEARS). As well, the percentage of the world oil supply coming from the Persian Gulf is again approaching the levels that pertained in the 1970s, which means that those countries around the Gulf will soon again be in the position to dictate price and supply.

Now, M. Ryan Hess states that "vast areas of the ocean, Siberia and Central Asia have yet to be explored and most of the U.S. oil reserves in Texas, California and Alaska are not being fully exploited. I don't see any oil shortage anytime soon." In fact, just about the whole world has now been explored for oil, using technologies undreamed of just a few decades ago. Currently, we are finding about seven billion barrels per year, which sounds pretty good until you weigh that against the fact that we are consuming the stuff at about 25 billion barrels per year. It's actually easier to explore for oil on the sea bed than it is on land. Yes, there are unexploited oil fields in some very difficult, very expensive locations beneath the earth, but at present these are not commercially exploitable. Siberia and Central Asia has been gone over, the Soviets, whatever their faults, were pretty good at looking for oil. Alaskan oil flow is slowing already, and there is a problem with the pipeline from Alaska in that because the oil flow is slowing, the friction of the oil movement is no longer keeping it warm, which makes it harder to pump. The oil companies are looking at replacing the pipeline with a more narrow one, so that the flow-through will be quicker and warmer.

One thing it is important to bear in mind is that the discussion is about CHEAP oil. Economists will say that as the price of oil rises, there will be the incentive to go out and find more of it, which will then bring the price back down. No. The world's economy has become hooked on CHEAP oil. As the price rises, we will not discover significant new oil fields. The big fields were found early simply because they were so big, using simple technology or no technology. All the world has been explored for oil. We will continue to find smaller and smaller fields. Demand will continue to rise. And if we just 'pay the price' of extracting from uneconomic oil fields, the oil industry will become an economic black hole, sucking the rest of the world's economy into it. It will not work.

There are huge reserves of 'non-conventional' oil in Canada, parts of the USA, Australia and South America. It takes the form of bitumen, shale oil and tar sands. The problem is, despite the huge quantity, it can only be exploited slowly. Take shale oil for instance. Instead of the oil (actually, it's not oil, it's kerogen, a pre-cursor to oil which can be refined into something we can use) being held in porous rock, it's tightly locked into the shale. It has to be strip mined, so first you must remove the overburden (the land above it) and put it somewhere. Then you can blast it or dig it out. Then you have to crush the shale, put it into a retort and heat it to over 500 degrees centigrade. This then releases the kerogen as a gas which can be distilled back to liquid kerogen. The kerogen can then be refined into oil and then into gasoline etc. For each barrel of oil, you must mine a ton of shale. After you have heated the shale up, it expands by 30% - 50%, and will no longer fit back into the hole from which it came. And the heating and refining releases heaps of greenhouse gases. We would need to mine and process about 250 million tonnes of shale each year for each one percent of oil that we tried to replace. This is not on, even discounting the moonscape it would make of the mine sites.

Bearing in mind that as well as using oil products for transport and other energy, we also use vast quantities of it in agriculture (fertiliser, pesticide, mechanical farming and food distribution), we may come to a time soon where we have to decide if we want to keep driving or quarantine some of our supply in order that we may continue to eat. We now have nearly 6 billion people on this planet.

I do believe that things are in train, to some extent, to deal with this situation, but I think it is not being done explicitly. What I have in mind is the development of the 'hybrid car' and fuel-cell technology for use in cars. The car companies are now spending literally billions of dollars on the development of these technologies. Their stated reason for doing this is that they expect stringent regulations on emissions from cars because of global warming, so they want to be able to conform to them, they're getting in early. It would be nice to think that they were so forward thinking and responsible, but given that these things are due to start rolling off the production line in about 2002 - 2005, I find it a pretty strange coincidence that it should occur around the time of peak oil production. It means there will be a strong market for those cars.

Of course, the introduction of these vehicles will slow down demand for oil, but it is likely to do it at a rate THAT SUITS THE PRODUCING COMPANIES AND GOVERNMENTS. It is no permanent solution, it just gives a little more time for things to roll along pretty much as they are. As such, it is irresponsible.

Oil is a resource crucial to the world. Our economy, lifestyle, agriculture, trade and military machines are utterly dependent on its cheap availability. All of the world's people need to be informed and take an active part in discussion about what we do about this situation. If this does not happen, we can expect the biggest kick in the face the world has ever seen as far as its aspirations toward equity between individuals and between nations is concerned. It is likely to lead to the worst kind of competition between nations, world-wide depression and war.

We must push the oil depletion story with all the same vigour that we give to the 'greenhouse gas' story. They are also, obviously, fundamentally related. If we do not, we will only go down the path of technological fixes and other energy sources. I think it likely that there will be a resurgence in the nuclear power industry and other destructive forms of energy. It's likely that coal will again be burned in much larger quantities.

Personally, I think we have to seriously get into demand reduction, intitially through changing the mode by which we travel, and then through changes in industry practice and finally through land use regulation. If we act responsibly, humanity might get another 100 years or more on this planet.