Endgame Volume I_ The Problem of Civilization - Derrick Jensen [58]
I responded, “Wait a minute. I’ve seen industry and government figures showing that “proven reserves of oil are enough to supply the world for forty-three years at current rates of production.”
He said, “I see two immediate problems with this. The first is that these figures come from government and industry. You don’t think that either of those groups would lie to the American public, do you? For political reasons, proved oil reserves are consistently substantially overstated. It is in the interest of both oil-producing nations and companies to overstate their remaining oil, because their business agreements limit them to pumping and selling a proportion of their remaining resources. For example, if contracts limit you to pumping 10 percent of your proven reserves per year, you’ll make a lot more money, and you’ll make it a lot more quickly, if you simply lie about your proven reserves. But in fact the rate of oil discovery is falling sharply. Discovery of oil and gas peaked in the 1960s, and the situation has deteriorated enough that by now the world consumes more than three times as much oil each year as is discovered. Do you think the oil industry is aware of oil field depletion? Of course. It’s their business. Why do you think no new supertankers have been built for twenty years? A report written for oil industry insiders and priced at $32,000 per copy concludes that world oil production and supply peaked in 2000, and will decline to half by 2025. The report predicts large and permanent increases in oil prices for the very near future.
“The second problem with that argument—that oil reserves will last forty-three years—is that it is based on ‘current rates of production.’ Their use of that language should clue us to the fact that they are dissembling, because the truth is that production is skyrocketing. At one time I thought that the downslope of the Hubbert Curve might be at least slightly gradual, but because in recent years production has accelerated to unanticipatedly high levels, I’ve come to believe that the downslope of the curve will be extremely steep.”
I told him I didn’t understand.
He said, “It means we’re using up the oil far faster than anyone anticipated, so the crash will be sooner and harder than even environmentalists predict.”
“But as oil becomes increasingly rare, it will become increasingly expensive, which will provide financial incentives to develop other forms of energy. Tar sands for example, or oil shale.”
“Economists say this all the time. They like to argue that scarcity results in price increases, making it more profitable to access poorer deposits. It’s too bad that economics and the real world so rarely intersect.”
“True. I took a year of graduate study in Mineral Economics back in the 1980s, and I remember informally renaming one of my classes ‘ME 514: Guessing at Things,’ and another ‘ME 525: Pretending to Have Answers.’”
“In this case the economists are confusing dollars with calories. The fact is that as an oil field ages, it takes increasing amounts of energy to pump out the remaining oil. You need to subtract that energy cost from the total value of the energy extracted. Even now, the average energy profit ratio for newly discovered oil in the United States has fallen to 1:1, meaning the energy required to find and extract a barrel of oil increasingly exceeds the energy contained in the barrel. At some point it will no longer make sense to use oil for energy, no matter how much you can sell it for. Too often, both economists and engineers forget that they cannot repeal the laws of thermodynamics.