Get Ready for the Peak Experience

Two new realities are fast converging on the public consciousness with what may be serendipitous timing: climate change and peak oil. After years of controversy and denial, there finally seems to be a solid consensus that climate change is here; that it threatens everything from agriculture to human health; and that it will probably turn out to be even worse than predicted.

"Peak oil" is a still-obscure term you will soon be hearing a lot more often. It simply refers to the peak of oil production. Oil was made over millions of years as ancient life was crushed and buried under the earth, and they ain't making any more of it – at least not on any timescale that is meaningful to us – so like any limited commodity (think Picassos or antique porcelain), the supply will rise to meet demand and then begin to fall. As supply falls, prices will go up, perhaps drastically.

Like a hiker climbing through clouds, we can't know where the peak is until we reach it and feel the ground falling away beneath our feet. But wait – why are there clouds? Why can't we see the peak before we get there? Don't we have monitoring agencies that exist to make predictions about things like when the oil supply will peak?

As far as the average consumer and SUV buyer is concerned, the climb has been a stairway to heaven. The coming decline in oil production is rarely mentioned in public, and when it is, it is portrayed as so impossibly far off in the future that there is no sense in talking about it. The obscuring clouds have been deliberately generated by a collusion of oil industry, financial and government interests. They don't want us to know that we are about to fall off the world as we know it.

So I was mildly shocked to hear Texas oilman and corporate raider, T. Boone Pickens declare on NPR's Morning Edition last week: "The peak is now."

Pickens is certainly not the last word on peak prediction, but other serious analysts come close to his views. Petroleum geologist Kenneth Deffeyes, author of the breakthrough book "Hubbert's Peak," predicts the peak will fall on Thanksgiving Day in 2005. Others are more reluctant to pinpoint the peak and say it may be a few more years yet, but certainly before 2010. That's five, six years at the most to get our ducks in a row and ready to face a world of vastly accelerating oil prices.

Contrast this news with what governments and oil companies and have been saying. According to the US Energy Information Agency, oil production won't peak until 2035.

On the corporate side, British Petroleum publishes an annual Statistical Review of World Energy that is widely cited. Responding directly to the critics who point to an early peak, Lord Browne, chief executive for British Petroleum, wrote in the latest edition of the Review, "At current levels of consumption, there are sufficient reserves to meet oil demand for some 40 years and to meet natural gas demand for well over 60 years." There is no acceleration of oil depletion, he maintained.

But last week the Energy Institute of London released an independent analysis of BP's data showing that total world production declined by 1.14 million barrels a day last year. On top of that, the analysis found that the annual rate of decline is accelerating.

Oil companies do not want the word to get out. On Aug. 24, Shell Oil agreed to pay a $150 million fine for inflating its proven reserves by 4.5 billion barrels. Shell is the third largest oil company in the world and one fifth of their stated reserves were a lie. They did it to protect their stock value.

From the perspective of climate change, news that oil is peaking sooner rather than later is good news. We need to end the fossil fuel addiction anyway, and only higher oil prices will tilt the economics in favor of solar, wind and other renewables.