Guest Post by Steve Andrews
Robert L. Hirsch, Roger Bezdek and Robert Wendling have coauthored a new publication, this time a book called “The Impending World Energy Mess: What It Is and What It Means to You,” a book to be released by publisher Apogee Prime late this month.
Andrews: In your earlier work dating back at least five years, you resisted forecasting a time frame for peak oil. There seems to be a bit of a change on that front in your book. Care to comment on that?
Bob Hirsch: In years past, there was considerable uncertainty in my mind about when the decline of world oil production might begin. Recently it became clear to me that it’s going to be sooner rather than later. I believe that the onset of the decline of world oil production is likely in the next two to five years. And when I say “oil,” I mean all liquid fuels.
Andrews: You say that once declining oil supplies hits, we’re likely to experience deepening worldwide economic damage. How is that likely to unfold? What is your most likely scenario?
Hirsch: Our thinking is that what happened in the two sudden oil shocks of 1973 and 1979 is very likely to be repeated when oil decline sets in. Those were two real world examples of oil shocks surprising people and causing panic. We believe that the same kind of thing is going to happen again, except that the problem is going to last much, much longer because, unlike before, there will be no unused oil supply valves to turn on this time.
While economies have changed since the 1970s, the dependence on and importance of liquid fuels has not. And human nature hasn’t changed. People panic when they get suddenly frightened. Even though -peak oil‖ is recognized by a number of people, it is yet to be realized on a wide scale.
In the book we avoided consideration of such things as anarchy, wars, and other catastrophes that are conceivable. We see very little chance that things will be any better than what we describe, but things could easily be worse.
By the same token, we have faith that humankind is not going to collapse because of the oil decline problem. The world is in for considerable pain for a long time. Nevertheless, we have great faith in human resilience. People will come around, get very pragmatic, dig in and do what’s necessary to meet the challenges. As a result, when we get through all of this-which is going to take longer than a decade-the societies that emerge are going to be much stronger and much more pragmatic than they are today.
Andrews: You note that there will be no quick fixes. What mix of crash programs are you currently recommending as the focus of any accelerated policy efforts today?
Hirsch: We sketch practical, physical mitigation options for the world. They are the ones we described in 2005, plus or minus a few changes due to our being a little smarter now in some areas. In the book, we added what we call “administrative mitigation,” such as forced carpooling, forced telecommuting, and rationing. There is benefit to be gained from those options, but their implementation will not be simple.
For instance, rationing seems like a relatively simple concept but after one considers the details, it is incredibly complicated due to decisions that have to be made, the bureaucracies that have to be built, and the enforcement that has to be implemented. Understanding the complexities is necessary for practical decision-making.
Andrews: You introduce a new acronym in your book. What does LFROI stand for?
Hirsch: It stands for Liquid Fuels Return on Investment. The point is simply that if we have to invest liquid fuels into a process that is going to produce liquid fuels, we had better get a large multiplier on our liquid fuels investment or it is not worth the effort. The concept is clearly of fundamental importance. Options where LFROI is of particular concern are biomass-to-liquids processes, like corn and cellulosic ethanol, where large liquid fuels investments are required for harvesting and transporting biomass to processing.
Andrews: Following up there-since 1978, the most consistent investment we’ve made in alternative fuels is in ethanol from corn. If you were to address the US President and Senate as Energy Czar, what would you tell them about the policy we pursued vis-a-vis ethanol from corn?
Hirsch: I would tell them to learn from past mistakes. Corn-ethanol was appealing in many ways, but it turned out to be a loser from energy, cost, and environmental standpoints. People were grasping at straws — pun intended, sorry. People in the federal government wanted to do something to impact oil imports and to help farmers. I want to protect farmers myself; part of my growing up was on my grandfather’s farm.
Instead of grasping at this or that option which sounds good, government needs to demand serious, unbiased energy analysis so that pragmatic decisions can be made, and the private sector can carry out intelligent, unimpeded implementation. Right now we’re messed up because governments are picking winners and losers and strangling our energy systems.
Among other things we discuss in the book are solar and wind electric generation systems which are losers because they don’t provide what the public demands-electric power on demand; and don’t forget the often ignored fact that electric power generation options will have little impact on our oil import and impending oil shortage problems for a very long time.
Andrews: You state that societal priorities will change dramatically. Can you expound on that?
Hirsch: One of the biggest issues on the table now is climate change-global warming. Related concerns are going to have to give way to the urgent needs of immediate human existence after world oil production begins to decline. Our economies cannot flourish with very high-priced liquid fuels that are in deepening shortage. Massive, rapid, serious mitigation will be required. We can’t do everything at once, which means that global warming efforts and the dreams of a renewable energy future are going to have to be secondary to the urgent, large need to regain some sort of reasonable economic equilibrium.
Andrews: How will some of those changing societal priorities role down to impact individuals?
Hirsch: Every one of us will be impacted by the decline of world oil production. Liquid fuel costs are going to escalate dramatically-that’s what happened in 1973 and 1979, and it will happen again. There will be shortages, which will cause all kinds of problems. There will be rising unemployment and dramatic declines in stock markets. And there will be inflation. It happened before, and it is logical that it will happen again, except this time the pain will last a lot longer.
The question then becomes what can each of us as individuals do to protect ourselves. In our second-to-last chapter, we discuss the issues and investments that people should avoid, places where you can look to protect your nest egg, and things that you can do to minimize your personal damage. For instance, if you have a house in the country, far from a grocery store and places where you might work, you’re likely to get hit very hard when the value of that property declines. Remember, the primary reason those places were viable was abundant, cheap gasoline, which allowed people to get to and from them.
Andrews: When it comes to making personal choices, you write that individuals need to understand the situation in order to make the most intelligent choices. What is the key to that understanding here? Why aren’t more people getting this?
Hirsch: The key to making intelligent choices is having 60-80% of the relevant information. Less than 50% is often insufficient, while waiting for over 90% means you probably waited too long. The subject of the decline of world oil production (“peak oil”) is distasteful and painful, so trying to hide from the substance may be understandable, but the problem will not go away. How many of us really like to hear bad news, and how many of us are pragmatic enough to act soberly on bad news?
The current and the previous U.S. administration tried hard to minimize discussion of “peak oil,” because it’s really bad news. When the public consciousness is raised on this subject, the public will be furious with governments: why didn’t you tell us about this and what are you doing about it? Educating yourself ahead of the problem gives you the best chance of effectively coping, rather than being swept along with the current.
Andrews: Going back a bit, what choices are you making in your personal and family life that anticipate our looming energy problems?
Hirsch: One of my slides for my forthcoming presentation at the ASPO-USA conference in Washington is titled “Some of What I’ve Done.” It lists six points. Years ago, I went through the mental and emotional adjustment associated with what’s likely to happen when world oil production declines, and I pondered when it might begin; I determined then that I didn’t know, but I wanted to be in front of the problem rather than behind it, so I “peak-oil-proofed” my investments and personal life to the degree I thought reasonable.
For reasons outlined in our book, I got out of almost all stocks and bonds. I invested in some three-year annuities, which paid good interest and which I could quickly exit, and I reasoned that gold was going to go up dramatically when oil-related inflation hit. We moved to a home closer to shopping and mass transit, and I traded my gas-guzzler for a Prius. The first four steps turned out to be fortuitous because they helped us to weather the “Great Recession.” Given that I now believe that world oil production is likely to begin declining within two to five years, I think I’ve done about as much as I can do to protect my household.
Andrews: In the book you state that you dig into “realities that others are reluctant to discuss.” How so?
Hirsch: We were referring to the impending decline of world oil production and what it means; the climate change issue, both the uncertainties and the deplorable games being played by many in the environmental community; the realities of other energy sources, including renewables-we use the term “people are intoxicated on renewables;” and finally, what actions people might take to minimize the damage that is likely when world oil production goes into decline.
Andrews: For people who are already familiar with your paradigm-shifting report of 2005, is your book primarily a logical building on that foundation or do you think you have diverged substantially from the findings of that study?
Hirsch: The findings of our 2005 study have held up remarkably well over the last five years. Nobody has strongly argued that our mitigation estimates were wrong. One could argue the details of our estimates, but the story remains basically the same. In the book, we’ve updated our earlier considerations and added some things.
One of the biggest differences between 2005 and today is that, back then, we tended to think in terms of “peak oil” as a relatively sharp peak-production rising and then suddenly turning around and going into decline. That was what happened in the US Lower-48 States. Now we don’t think in terms of a sharp peak because world oil production has been on a fluctuating plateau since the middle of 2004 – world oil production has been essentially flat. We see that plateau as very likely continuing for the next two to five years and then decline setting in. So when I say “peak oil,” what I’m really talking about is the impending decline of world oil production from the existing fluctuation. I sometime use the term “peak oil” because it’s widely used, but it’s not now a strictly accurate descriptor. By the way, can you think of anyone who predicted the current five-year world oil production plateau? I can’t.
Andrews: So, at the end of the day, why did you write the book?
Hirsch: Along with you and many others, I’ve been talking and writing about this subject for years. A number of books and articles have been written, but the issue is still “below the horizon” for the general public. My hope was the kind of book that we could write might make a useful difference, so we undertook the effort.
By laying the oil, energy, and climate issues out in writing and carefully selecting our words, we hoped to be able to better communicate with a wide audience of intelligent lay-level people and to conceivably make a difference. That’s why we wrote the book.
Andrews: Why should people buy the book?
Hirsch: People should buy the book because the issues are very important to them in their personal lives. They need to understand the problems, however distasteful. The chances of not getting burnt are essentially zero. Being forewarned is to be forearmed.
Hirsch will present material from his upcoming book at the October 7-9 ASPO-USA conference. Please see the full agenda for details at peak-oil.org. He has spent his entire career working in the energy realm, from the oil sector to numerous forms of electric power generation. In 2005, this team published “The Peaking of World Oil Production: Impacts, Mitigation & Risk Management.” Steve Andrews caught up with Bob Hirsch last week for Steve’s last interview and final work with the Peak Oil Review. (Steve co-established the Peak Oil Review the Tom Whipple some 243 issues ago in January 2006 and has both enjoyed and enormously appreciated a very close collaboration with Tom for nearly five years; Steve is now moving on to other endeavors.)