Thursday, July 26, 2007

A Slippery Bet

World gambles on positive hearsay on energy issues just as it did on global warming

Nobody knows what is really going on under the Earth’s surface. There are mathematical models, there are on site personnel, geologists, but no one in the world can say for sure exactly where we stand on oil supply. Because this is true, people (who also populate governments, cabinets, corporations as well as ordinary households) tend to be susceptible to believing what they want to believe. Even so, everyone is entitled to the opportunity to guess what the situation is.

We are already seeing that our interminable speculations on climate change have cost us dearly, and will continue to have a disastrous impact. People right now in Europe (Rome with nighttime temperatures of 27.1 centigrade) the United Kingdom, and many other countries are starting to discover how radically their lives can and will be effected by the innocuous sounding effects imbued in ‘Global Warming’.
It was obvious for many years, and for most mortals, that what each of us was doing (shopping, driving, polluting) when blown up to a more massive scale, was going to have a major impact on our environment. It was obvious and logical, but while that may be so, we continued to participate in this decades long feeding frenzy, and our gluttonous behavior over the years has only had the semblance of ‘normal’ because we’re surrounded by people just like us in our communities doing the same thing, and obviously enjoying themselves.

I don’t believe we ever needed scientists to tell us we were going to have an impact on the world, or when or how much it would be. We knew we were, we have just wanted to party until the absolute last minute. All of us have long since been aloft on some long haul flight and seen that the sky all over the world has a thin film of smoke, and this haze is getting thicker, and warmer. Over parts of Asia, this smoky cloud resembles more a dense black curtain. Instinctively, we knew, yet we argued intellectually against reality. We’d say: is that mist or smoke? We wanted to believe it was mist, didn’t we?

We are caught up in the same chronic self denial when it comes to betting our futures (and that of our children) on energy systems (fuel and food) somehow working themselves out. Already it is very obvious that energy is no longer cheap, and will continue to get more expensive. Experts reassure us that this will happen very, very gradually, just as we have been told that climate change will take millennia. Already we are seeing complex mechanisms begin to feed off one another, causing feedback loops which create a vicious cycle – in short a situation that accelerates change far faster than we’d anticipated. This puts our species in an increasingly sticky situation.

OPEC has recently announced that oil prices are too high, and suggested that they (OPEC) are ready to start pumping more oil. Well, the Energy Minister of the UAE also happens to be the president of OPEC, Mohammed al-Hamil. According to him there is uncertainty whether this will be ‘necessary’ before the end of the year. It’s an interesting position, considering oil prices are near all time records once more, this time with no war in Lebanon playing off in the background, and very little saber rattling from Iran. According to the Kuwait Petroleum Corporation the ideal price for oil (which stimulates business both on demand and supply side) is in the $60-$65 range. For a number of weeks the world has seen prices $10 in excess of this.

Gerard Burg, an analyst at National Australia Bank has astutely observed that in the last three years OPEC has made these sorts of announcements, but that these are mere posturings to reassure the market, connivances to calm sentiments. It’s all talk, with no actual plan in place, no reserves to actually use. The sentiments though, are rational.
So despite OPEC’s ‘readiness’ to increase production, we consistently see no measures to in fact do so. Fortunately, thus far, the world economy seems to have been able to absorb the ongoing price increases, for energy, remarkably well. This happy scenario though, is becoming more austere as we’re seeing a direct translation now between energy costs (already high) and food costs (high and climbing). Food costs affect everyone. And it is very difficult to adapt retrospectively, and it is almost impossible to adapt during a crisis. And realistically, this is where the world is headed, though many countries already find themselves in a full crisis situation. South Africa for example can no longer feed itself from its own maize crops, it has become a net importer, and this trend is increasingly worldwide.

For all the biting and kicking between naysayers, doomsayers, Peak Theorists and Neocons, everyone can agree that world demand (on a basic human level this means the average consumption per capita) for fuel, food and things, is increasing. OPEC would have us believe that the planet Earth has a nougat centre, and that beneath the nougat is a chocolaty centre filled with oil. Unfortunately, oil is far more precious than that. It is a resource found only in a few areas, created as we all know, under very special conditions. So it’s a very simple equation: a massive world population of human beings (in the billions, and multiplying unabated), and all of these human beings preying, feeding off specialized reservoirs for the extent of 70-something year life spans, while the largest oil reservoirs have been in use for just over 50 years already, and have begun to crash. Do we really expect the children born today, to be living the way we do, when they reach our age? No.

China, the country with the world’s largest population (one sixth of the world lives in that one country), is growing at just under 12% a year, and this year has seen the most growth in over a decade. The world’s fourth largest oil importer is South Korea. Their oil imports have risen almost 4% year on year.
The supply, as in total world production of oil, on the other hand, is flat, and the evidence is increasing that supply is breaking away from demand, creating a demand gap. Supply has already begun a gradual downward curve off all time highs of 85 million barrels per day (in November 2006), and demand is tearing a larger and larger hole on the demand side.

If it seems like the world was never so awash in oil or energy, that’s true. But that’s not evidence that we can expect the cozy cocoons of suburbia, fast food and overseas travel to be there tomorrow, just as they are here for us right now. If we look at many of the effects happening in the world right now, one aspect is incontrovertible: a momentum is building up against human beings, and in particular, against what we wish we were true. This includes of course our simple dreams of being able to drive cars, and see our children drive cars for the rest of our lives. Our children, it is already obvious, will have the threat of extreme weather to deal with for the run of their lives and this is set to worsen as time goes by. If you’re alive today, and you’re not a child, well, that’s your legacy.

It may be just a flaw in human nature that we ingratiate ourselves while we still can. Perhaps our intellects will be our undoing, as we choose to believe whatever supports the bad habits we intend to pursue. But the choice remains for entire nations and communities to make radical changes to lifestyles and living. The individual can no longer be relied on to make this choice; that deadline has passed.

No comments: