Iraqi Oil and the Invasion

In late 2002, I saw a show on TV which interviewed Donald Rumsfeld (among others) and interspersed his remarks with those of an oil industry executive. The striking contrast that I remembered to this day was the exchange contained in the first few paragraphs below. All of Rumsfeld's objections to the questions about whether an invasion of Iraq would be about oil, contrasted with an oil industry executive's flat-out confirmation that, of course, it would be about oil. I have searched on and off since then for the transcript, not knowing what the show was or remembering whose story it was. I finally found it. It was a show called Iraq's Oil on CBS on December 15, 2002 hosted by correspondent Steve Kroft.

IRAQ'S OIL
STEVE KROFT, co-host:
If and when the United States decides to take military action against Iraq and get rid of Saddam Hussein, the Iraqi dictator will leave something behind: oil,and lots of it, 112 billion barrels of proven reserves, the second-largest supply in the world, behind Saudi Arabia. What happens to all that oil if Saddam goes, and what role is it playing in the current showdown with Iraq? If you ask anyone in the Bush administration about the importance of oil in the current crisis, as I did of Secretary of Defense Donald Rumsfeld a few weeksago during an interview for Infinity Radio, you get this answer.
Mr. Secretary, what do you say to people who think this is about oil?
Secretary DONALD RUMSFELD (Defense Department): Nonsense. It just isn't.There--there--there are certain things like that, myths that are floating around. I'm glad you asked. I--it has nothing to do with oil, literally nothing to do with oil.
(Footage of oil worker; oil well; refinery)
KROFT: (Voiceover) Nothing? If you ask people in the oil industry, you'll get a slightly different answer. They'll tell you it definitely has something to do with oil.
Is oil part of the equation here?
Mr. PHILLIP ELLIS (Boston Consulting): Of course it is.
KROFT: No doubt?
Mr. ELLIS: No doubt.
(Footage of Phillip Ellis; Ellis and Kroft)
KROFT: (Voiceover) Phillip Ellis is head of global oil and gas operations for Boston Consulting, based in London. He travels the world planning strategiesfor large international oil companies. Ten days ago we went with him to get a glimpse of Saddam Hussein's oil, traveling north from Kuwait City on what isstill called the Highway of Death, towards the Iraqi border.
Mr. ELLIS: We are driving on this road....
(Footage of Sarah Akbar; desert; oil wells)
KROFT: (Voiceover) We were the guests of Kuwait Petroleum, and one of its top engineers, Sarah Akbar, who got us access to a vast stretch of desert that isoff-limits to everyone but oil workers and an ever-growing number of American and allied military forces who are gathered near the Iraqi border directly to the west, conducting live-fire training exercises.
So this part of the country is completely closed off.
Mr. ELLIS: Completely closed. Completely closed.
CROFT: For how long?
Ms. SARAH AKBAR (Kuwait Petroleum): Until military action, I guess.
Mr. ELLIS: Till ...(unintelligible) military action.
KROFT: Until further notice.
Mr. ELLIS: Until further notice.
(Footage of Kroft, Ellis, Akbar; oil wells behind fence)
KROFT: (Voiceover) Our destination was an outpost the Kuwaitis call Ritka, where a sand berm and miles of barbed wire and electrified fence now define thelong-disputed border between Kuwait and Iraq. This is where Saddam Hussein's troops first crossed the border 12 years ago, to capture the Rumaila oil field,which is half in Kuwait, and half in Iraq.
How important is this real estate to the world oil economy?
Mr. ELLIS: Oh, this real estate here straddling Kuwait and Iraq is--is very important. It's a giant field and it's, you know, maybe got 3 percent, 4 percent of the world's oil resources pretty much under our feet.
KROFT: Really? Is that an Iraqi rig right over here?
(Footage of oil rigs)
Mr. ELLIS: That's an Iraqi rig. Evidently what they're doing is every time a Kuwait--Kuwait oil drills a well on this side, they move this rig to drill awell directly opposite it.
KROFT: In a line?
Mr. ELLIS: In a line, you know, either because they want to say--you know, it's a tit-for-tat sort of thing or because they think that, you know, `Well, if theKuwaitis know that, you know, this is the best place to drill, maybe we ought to drill here.' The interesting thing is, most of the drilling, a lot of thedrilling, in Iraq now is being done by Russian firms. I have no idea whether this is a Russian rig. Be, you know, very curious to know. But there's a lotof--a lot of activity going on on that side of the border.
(Footage of Ellis and Kroft standing by fence; oil well)
KROFT: (Voiceover) This was as close as we could get, but just a few hundred yards off in the distance, you could see Iraqi oil workers flaring off thenatural gas escaping from their oil wells.
Mr. ELLIS: It is the biggest field in Iraq, and it is one of the biggest fields in the world.
(Footage of oil wells; refinery; pipelines; various activities related to oil pumping, refining and transport)
KROFT: (Voiceover) Because of the UN embargo and a 20-year estrangement from Western oil technology, Ellis says Iraq is producing less than half of the oilit's capable of. He doesn't believe the US is interested in controlling Iraqi oil fields, even if it could. The United States, he says, now gets only about12 percent of its oil from the Middle East and is only interested in insuring reliable supplies at stable prices. But if there were to be a regime change inIraq, its oil would become a prize worth billions of dollars for nations and corporations on the winning side of any conflict.
Mr. ELLIS: If Saddam's out of power, there's a friendly Western government, there's going to be technology coming from all over the world into Iraq, whichthey desperately need, to rebuild their--their industry.
KROFT: And presumably, some US participation in that rebuilding and reconstruction.
Mr. ELLIS: No doubt. No doubt. There's plenty of room in Iraq for every--every nationality of--of oil company and oil service company and--and financial institution. There is an enormous amount of oil in Iraq that hasn'tbeen discovered yet, a huge amount. And not only that exploration, but the rebuilding of what's already there is going to take more capital than any onecountry or certainly any small handful of companies can possibly muster. It's got to be a global effort.
(Footage of oil wells; refinery)
KROFT: (Voiceover) It may take a decade or more, but Ellis says all of that Iraqi oil is going to come on the market one way or another. It's just a question of who gets most of the business.
(Footage of Saddam Hussein)
KROFT: (Voiceover) If Saddam could somehow manage to satisfy the United States and the world that he has no weapons of mass destruction, sanctions would belifted, and the biggest contracts would go to Russian and French oil companies who already have signed contingency agreements with Saddam. But if Saddam isdeposed and a new government installed, it could be a whole new ballgame.
(Footage of Ahmed Chalabi and Kroft; oil tanker trucks)
KROFT: (Voiceover) Ahmed Chalabi, the head of the Iraqi National Congress, an umbrella organization of Iraqi opposition groups, says all oil contractsnegotiated by Saddam's regime will be up for review.
Mr. AHMED CHALABI (Iraqi National Congress): Any contracts are either illegal or unfair, and no Iraqi government is bound by them once Saddam goes. This isour belief, and of course, it is up to the Iraqi government in the future to decide those things.
(Footage of Chalabi)
KROFT: (Voiceover) It's impossible to know whether Chalabi or the Iraqi National Congress would be part of a new Iraqi government, but Chalabi says hehas already held informal discussions with international oil companies eager to explore opportunities.
KROFT: Can you tell me which oil companies?
Mr. CHALABI: No.
KROFT: American oil companies?
Mr. CHALABI: Some.
(Footage of American gas stations; Chalabi)
KROFT: (Voiceover) The US government wouldn't allow American oil companies to deal with Saddam, and it's unlikely he would have signed contracts with themanyway. But Chalabi makes no secret of his willingness to let Americans share in the profits of a post-Saddam oil boom.
Mr. CHALABI: American companies did very well by abstaining from dealing with the illegal regime of Saddam, and American companies, we expect, will play animportant and leading role in the future oil situation in Iraq.
KROFT: You would be willing to tear up the contracts, let's say, of the Russians or the French and give those deals to the United States?
Mr. CHALABI: It's up to the future Iraqi government to do that. But my view is American companies must be introduced and given a chance to--to bid and tonegotiate for the same things that these people do. The future democratic government in Iraq will be grateful to the United States for helping the Iraqi people liberate themselves and getting rid of Saddam.
(Footage of French and Russian gas stations; Vladimir Putin and President Bush; James Woolsey)
KROFT: (Voiceover) Those existing contracts that French and Russian companies have to develop oil in Iraq are among the strongest bargaining chips the UnitedStates has in building and maintaining an international coalition to push Saddam Hussein out of power. And former CIA Director James Woolsey believesthe United States should continue to use them in the weeks and months ahead.
Mr. JAMES WOOLSEY (Former CIA Director): I do think that our French and Russian friends, in the lead-up to whatever may happen in Iraq, really ought to heartwo things. The nice thing is that the United States has no interest in dominating the future of Iraqi oil, but I think they should realize that if they create major obstacles to freeing Iraq from Saddam Hussein's dictatorship and there is a new government, and if that government should come to us some time, let's say late next year, and say, `You know, we're getting these callsfrom these Russian and French oil companies; should we call them back?' I think if I were in the government, I might say, `You know, I can't seem to find that phone number here anyplace.'
KROFT: Do you believe that the United States has said this to the Russians and to the French?
Mr. WOOLSEY: I don't know. I--I rather imagine we've said the carrot side of it. Whether we've said the--the--the stick side, I--I--I'm not sure.
(Footage of UN Security Council meeting; Putin and Bush)
KROFT: (Voiceover) There has been plenty of speculation, but little proof, that that's exactly what was said behind the scenes at the United Nations SecurityCouncil last month when the US persuaded both Russia and France to support a tough American-backed resolution ordering Saddam to disarm or face war. Notlong afterwards, President Bush said Russia's economic interests in Iraq would be honored. This week, Saddam apparently retaliated, notifying three Russianoil companies that their contracts were canceled.
(Footage of Daniel Yergin)
KROFT: (Voiceover) Daniel Yergin is chairman of Cambridge Energy Associates. He's also a Pulitzer Prize-winning author and a leading expert on the historyof the oil industry.
Mr. DANIEL YERGIN (Cambridge Energy Associates): It really doesn't matter whether it's an American company, a French company, a Russian company, a Chinese company producing that oil, as long as the oil is being produced with some kind of reliability and flowing in--into the world market.
(Footage of oil workers; pipelines)
KROFT: (Voiceover) Yergin believes Iraq's oil, post-Saddam, would be developed by lots of international oil companies working together in a consortium. Thereal issue, he says, is about oil security.
And is Saddam Hussein a threat to that security?
Mr. YERGIN: Well, Saddam Hussein has a unique place in the annals of--of oil, in that he has invaded two other major oil-producing countries. In 1980, heinvaded Iran, in 1990, he invaded Kuwait, and it was pretty clear that his ambition was to dominate the oil supplies of the Persian Gulf.
Mr. WOOLSEY: When he had conquered Kuwait and was right on the border of Saudi Arabia in the summer of 1990, he was about 100 miles away from controlling overhalf of the world's oil. I think that's the only sense in which it's about oil.
KROFT: If Saddam Hussein is removed and a democratic government takes power in Iraq, isn't that a huge improvement in the strategic landscape for the UnitedStates as far as oil is concerned?
Mr. ELLIS: I think it is. I think it is. Given that the region is going to see several regime changes coming up in the next decade, having a--a partner would be a--a good counter to the--at least the--the--the possible downsides that we might see in other countries in the region.
KROFT: (Voiceover) Phillip Ellis is talking about Saudi Arabia. In a post-9/11 world, there are serious questions to be raised about the kingdom's politicalstability and uncertainties about the future of the Saudi royal family.
(Footage of oil refineries; OPEC meeting)
KROFT: (Voiceover) Right now Saudi Arabia pumps about 7.4 million barrels of crude oil every day, about 10 percent of the world's output. A fully operational oil industry in Iraq, under a new regime, with lots of Western investment, might be able to produce up to six million barrels a day within the next decade. That would weaken Saudi Arabia's dominant role in OPEC, putdownward pressure on oil prices, and lessen US reliance on Saudi oil.
And you could make the argument that the United States seems to be distancing itself from Saudi Arabia and not counting on Saudi Arabia anymore.
Mr. ELLIS: I think we're spreading the risk, actually. It's important not to have all--all your eggs in--in one basket.

$70 to $100 Oil by 2008

From Oil & Gas Journal, February 16, 2005 Written by Judy Clark, Senior Associate Editor

Oil prices have risen permanently to a new plateau, and natural gas prices will rise even more radically within the next decade, contends analyst Fereidun Fesharaki in a February oil and gas price forecast.
Fesharaki, president of Fesharaki Associates Consulting & Technical Services Inc. (FACTS Inc.), Honolulu, said that cycles will still be seen but from a much higher base than in the past.
"If nothing dramatic changes the equation, we expect Brent [crude oil] prices in the range of $35-45/bbl in 2005," when incremental demand is expected to slow to 1.5-2 million b/d from 2.6 million b/d, supply from nonmembers of the Organization of Petroleum Exporting Countries might grow by 1.2-1.8 million b/d, and the market will be less tight than in 2004.
But barring a severe recession and weak gross domestic product growth rate, he said, West Texas Intermediate crude likely will sell for $70-100/bbl after 2008. The continuing supply problem will keep pressure on oil prices, with non-OPEC annual supply growth averaging only about 400,000-500,000 b/d through 2010 and supply peaking globally in 2010-15.
Oil supply issuesThe natural oil production decline rates in some OPEC countries are accelerating, Fesharaki said. "OPEC's decline rate is 1-1.5 million b/d per annum. . . . In a 5-year period, OPEC will likely have 6 million b/d of natural decline."
Even with 2-3 million b/d of non-OPEC incremental supply, the expected 7.5 million b/d of demand "translates to a need for OPEC to add over 10 million b/d of new capacity in 5 years—a very unlikely scenario," he added.
With only a moderate demand growth of 1.5 million b/d, supply would begin to falter by late in this decade and fall far behind after 2010, Fesharaki said. Because the supply will not be there, "prices must rise to slow down the demand growth," he said. "The price has to rise some 50-100% above current levels."
"The higher prices will reduce demand, encourage alternative energy sources, and result in lower equilibrium prices. Prices may end up in the $50-70/bbl WTI range."
Gas, LNG pricesHigher oil prices also will mean higher natural gas prices, also predicated on a supply problem as US gas production faces a permanent decline.Higher oil prices also will mean higher natural gas prices, also predicated on a supply problem as US gas production faces a permanent decline.
"Supplies from Canada face a natural decline too," he added, "while massive gas use to generate hydrogen for tar sands conversion to synthetic oil, will negatively impact Canadian gas supplies to the US."
The US likely will become the second largest LNG importer after Japan by 2010 and surpass Japan after 2015. LNG prices will rise and cause the market to become very tight, Fesharaki said.
As with oil, a slight gas production increase is expected in 2005, "but the trend is clearly towards a flat or declining output." Although US gas demand growth currently is weak, Fesharaki said, "We strongly believe the demand will come back.
"Petrochemical producers who want to switch from gas to naphtha will face an even more expensive feedstock. Electric power producers, who had set their economics at $3.50/MMbtu gas, will find low-sulfur fuel oil just as expensive. Unless they can switch to coal, they have no choice," he said.
Price convergencesThe prices of oil and gas are converging, as are prices in global gas markets, Fesharaki said, with US gas prices at Henry Hub and European gas prices much closer to Asian LNG prices.
"The trend is unmistakable. First, gas prices might well rise to say, $7-10/MMbtu Henry Hub on a delivered basis before the end of this decade. Second, the worldwide prices of gas will converge, with the weaker Asian prices having to move upwards," he said.
New seller's marketChina and India also are preparing for massive LNG imports, as is South Korea. The Asian LNG market already is becoming a seller's market, Fesharaki said.
"In late summer 2004, Iran offered India an fob price of $2.20/MMbtu. India declined, demanding $1.80/MMbtu. But on Jan. 8, 2005, India signed for fob price of effectively $3.10/MMbtu. In 4 months the markets exhibited the signals of a transition to a seller's market.
"Within 24 months, we expect the tables to be fully turned, with sellers refusing to accept price ceilings, insisting on price reviews, and refusing to be content with shorter duration contracts of 10-15 years. Many will want to leave some LNG for spot sales, which may prove very lucrative," he said.
Chinese and Indian consumers, not yet addicted to gas, will find coal a better buy, as will the power sector, limiting demand until affordability rises and new gas resources can be converted to production, concluded Fesharaki.

Running on Empty: A Field Guide to the Coming Fuel Crunch

Here is a piece by Brian Kallar in Pulse of the Twin Cities, an alternative newspaper in Minnesota. Originally published August 4, 2004

There are some excellent links at the end of his piece.

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Five minutes before he was supposed to take the stage, Marion King Hubbert’s bosses at Shell Oil called him on the phone and begged him not to go through with it. They had heard that Hubbert, a respected geophysicist, was about to tell a meeting of the American Petroleum Institute in San Antonio, Texas that the all the oil in the United States would soon peak, and, eventually, end. It was 1956.

Hubbert, by all accounts a stubborn and cantankerous man, defied his superiors, walked onstage and publicly predicted that U.S. oil production would peak around 1970. We use more and more oil each year, he said, but there is only so much in the ground, and at in that year the rising rate of demand will meet and surpass the falling rate of supply. Fortunately for Shell Oil, most of his colleagues laughed at him. For years scientists ignored Hubbert and, more importantly, did not apply his analysis to the rest of the world. Not even after U.S. oil production indeed peaked around 1970, and fell almost every year since, until the United States had to import 60 percent of its oil. Not after shortages and oil wars. “It was as if a physician diagnosed virulent, metastatized cancer; denial was one of the responses,” wrote Hubbert’s former colleague Ken Deffeyes, who later taught at the University of Minnesota and is now professor emeritus at Princeton University, in his book, “Hubbert’s Peak.” Deffeyes wrote that he left the industry in the 1960s, concerned that Hubbert was right, but he was one of the few.

It was not until the 1990s that a critical mass of scientists returned to the Hubbert calculation, applied it to the entire world and found that the peak year, the beginning of the crisis, would take place no later then 2010, and as early as … well, now. You would have to work very hard to overstate the magnitude of change a permanent oil crisis would demand from our lives. Such an event would have been profound in 1956, when Hubbert made his prediction and the oil economy had existed for almost a century. But that same year also saw the opening of the federal highway system. That same decade saw the destruction of most of our cities’ streetcar systems, and the explosion of suburban sprawl. From 1960 to 1990, the United States population increased 40 percent but the number of drivers doubled, fuel consumption doubled and the number of miles driven tripled, according to Jan Lundberg, whose Lundberg Letter was the top-rated oil industry publication in the late 1970s. Like Deffeyes, Lundberg left the oil industry, taking the additional step of selling his car and founding the anti-car Alliance for a Paving Moratorium. He has not owned a car in years, and recently turned his driveway into a garden. “Each decade in the U.S., approximately one and a half million people are killed by cars and their fumes, and millions more from diseases caused by the sedentary lifestyle of commuting,” he wrote. Nor, he added, has the flow of cheap oil made our lives much cheaper or faster. “The average speed of the U.S. motorist is only about five miles per hour when time is factored in to earn money to buy the car, maintain it, pay for gasoline, and insurance, etc.”

Even after decades of environmentalism, Americans are not conserving more than in Hubbert’s day; some cars then could get 40 miles to the gallon; now SUVs get about 18 miles to the gallon, and the Ford Excursion gets about 4.6 miles in the city. There is now almost one car for every American, and our society is built around that fact. Having transportation is having a car, a crucial factor in getting a job. Half of all urban space exists for cars, the other half for people. Ten percent of all arable land in the United States has been paved over. Many newer suburbs don’t have sidewalks, since the expectation is that people will leave their homes mainly to get inside cars. Many new minivans have televisions, a feature that assumes children will spend a hefty chunk of their childhood in the back seat. Nor does the problem stop at vehicles, which consume only about half the oil produced. America, and to a lesser extent the rest of the world, has largely abandoned plant-based products for oil-based ones; polyester instead of cotton, GoreTex instead of canvas. Plastics are so ubiquitous – keyboards, gelcaps, furniture, business suits, the lid of a coffee-to-go -- that they are largely invisible. But these, too, are oil, wealth from another era, a tapping into our trust fund of liquefied dinosaur biomass. Finally, there is the under-appreciated use of oil as the basis for fertilizer. Around the time of Hubbert’s prediction, almost all arable land had been taken and world grain yields had hit their limits in production, notes author Richard Manning in his book, “Against the Grain.” In the fifty years since, yields have tripled in a so-called “Green Revolution” that has allowed the world’s population to double; a revolution due almost entirely to oil. “The common assumption these days is that we muster our weapons to secure oil, not food,” wrote Manning. “There’s a little joke in this. Every single calorie we eat is backed by at least a calorie of oil, more like ten. In 1940 the average farm in the United States produced 2.3 calories of food energy for every calorie of fossil fuel it used. By 1974 (the last year anybody looked closely at this issue), that ratio was 1:1.” Aside from any issues surrounding chemicals in our food, these agricultural turbochargers add a new dimension to any potential oil crunch.

Two hundred years ago, Thomas Malthus proposed a now-famous calculation; that food production increases mathematically (two, three, four …) but population increases geometrically (two, four, sixteen …). Thus, he said, if humans do not control their reproduction, there would be massive famine. Today, Malthus is often held up as an early Chicken Little, for the years since then have seen humanity grow far beyond what he thought possible. But much of that increase is due oil-powered machines and oil-fertilized crops. Take out those, and Malthus is back in the game. “Oil and natural gas still underpin almost all aspects of modern society,” said Matt Simmons, CEO of Simmons & Co. International, said in a Dow Jones Newswire report earlier this year. “Transport is almost solely reliant on oil. It’s oil that is the basis for the fertilizers that enhance food stocks and that is used in the manufacture of countless goods.” Simmons is not a hippie. He was a member of the Bush-Cheney energy transition team. He leads the world’s largest energy investment bank. He is an advisor to Republicans, albeit one sufficiently riled to endorse Dennis Kucinich this year. “We have to radically start changing our lifestyles and trying to come up with a brand new source of energy,” he said. “At the moment we can't even replace five percent of the oil we use with alternatives. The world economy has no Plan B.” He believes we should take the coming oil crunch “as seriously as we took the threat of nuclear war.”

Deffeyes dismisses proposals to simply explore more or drill deeper. Oil, he said, was created by specific circumstances, and there just isn’t that much of it. First there had to be, in the dinosaur era, a shallow part of the sea where oxygen was low and prehistoric dead fish and fish poop could not completely decompose. Then the organic matter had to “cook” for 100 million years at the right depth, with the right temperature to break down the hydrocarbons into liquid without breaking them too far into natural gas. Almost all oil, he said, comes from between the hot-coffee warmth of 7,000 feet down and the turkey-basting scald of 15,000 feet down – a thin layer under the surface, and then only in limited areas. We could drill the deepest oil, he said, back in the 1940s. As for discovering new fields, global discovery has been declining each year since 1964. Even if the oil does not run out as quickly as some think, most of the remaining reserves are in countries openly hostile to the United States. “More than 70 percent of remaining oil reserves are in five countries in the Middle East: Iran, Iraq, Kuwait, Saudi Arabia, Oman,” said Dean Abrahamson, professor emeritus of environment and energy policy at the University of Minnesota. “The expectation is that, within the next 10 years, the world will become almost completely dependent on those countries.” Drilling in the Alaska National Wilderness Reserve, he said, will offer only an additional three months of oil. “In 2000, there were 16 discoveries of oil ‘mega-fields,’” Aaron Naparstek noted in the New York Press earlier this year. “In 2001, we found eight, and in 2002 only three such discoveries were made. Today, we consume about six barrels of oil for every one new barrel discovered.” If the world ran on oil and had to stop, that would be problem enough. But there is one more issue: most of the world doesn’t run on oil, and wants to start. They see Americans, and want what we have, when in a decade or two we will not have what we have. “The issue of peak oil is not that we are at the point of consuming the last drop,” said Michael Noble of Minnesotans for an Energy-Efficient Economy. He uses the analogy of a party of 100 guests and 24 bottles of champagne. Around midnight the host finds 12 bottles of champagne left, but then many more guests show up, and there’s not much champagne left to go around. “The United States has drunk most of it, and now the Indians and Chinese, with six times as many people, are showing up expecting to be served,” Noble said. “Sales of autos in China rose about 70 percent in 2003 alone, and almost as much in India, and half the population of the world is in those.”

Privately, at least some politicians are aware of this issue. In a 1999 speech to the London Institute of Petroleum, then-Halliburton chair Richard “Dick” Cheney told his fellow oil executives that the United States “will need an additional 50 million barrels of oil per day” by 2010, the most commonly-cited peak oil year, implying an awareness of the peak. But Cheney had a solution, he said: “the Middle East, with two-thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies.” Publicly, however, the election year is the season for Democrats and Republicans to blame the other party for rising gas prices, and to boast that they will make it cheaper again. On March 29, Cheney accused Kerry of once supporting a gas tax and now denying it. Kerry fought back that evening at a speech in San Francisco, blaming the administration for the rising gas prices. If the rise continued, he said, “Dick Cheney and President Bush are going to have to carpool to work together.” The zinger was a hit, but as Naparstek noted, both sides mention carpooling exclusively as a laugh line. The Bush campaign struck back with a new television ad, called “Wacky,” showing silent-movie footage of 12 men on a comically long bicycle. “Some people have wacky ideas,” said the voiceover. “Like taxing gasoline more so people drive less. That’s John Kerry.” In fact, it is not John Kerry, but many wish it were. Before any reader gives up hope, there are a few more things to consider. Even if peak oil predictors are right, the crunch may not be sudden, and it may not be all bad.

Americans will probably not wake up Amish one day. Television and the Internet will probably continue. According to peak oil experts, natural gas should not peak for a few more decades, and coal later still, although Deffeyes is concerned that we will take that easy way out and bring back the heavy pollution of the late 19th century. Nuclear power will still exist, its own controversies notwithstanding. Solar power and wind turbines exist, although Americans will have to scramble to make many more. David Morris of the Minneapolis-based Institute for Local Self-Reliance said that, while oil will become more expensive in the coming years, it will be 50 to 100 years before the world actually runs out of fossil fuels. “As the price of oil goes up, alternatives become cost competitive,” Morris said. “For example, oil shale is competitive at about $50 per barrel. Bio-fuels are competitive at about $45 per barrel. Of course, improved efficiency is competitive at about $5 per barrel but institutional restraints stop us from taking advantage of that.” "And the United States will feel the crunch least, as we will have the money to pay for higher prices and be able to create alternative sources if necessary.” In fact, analysts last year at the University of Uppsala in Sweden predicted that the oil crunch could be good news for the world, removing a major source of pollution soon enough to prevent the doomsday scenarios popularized in movies like Waterworld and The Day After Tomorrow. “There is a ‘die-off’ crowd that takes a certain amount of delight in thinking that we about to be punished for our sinful ways,” said Ken Avidor, who illustrated this story and whose comics often focus on the un-sustainability of our car culture. “They are actually very similar to fundamentalist groups that believe we are living in the End Times and look forward to the Rapture. They are not always wrong, but their kind of thinking isn’t helpful.” Instead of feeling hopeless, Avidor said, Americans should spend more time talking about the kind of neighborhood they could have the opportunity to create once gasoline becomes expensive and traffic thins out. He and his wife, illustrator Roberta Avidor, have drawn their own proposed post-oil community called Illichville, after social critic Ivan Illich. “I really won’t be very sorry to see our way of life go,” he said. “The idea that luxury brings happiness is false; we have high rates of depression, widespread obesity and a large number of lifestyle disorders that come from living in this strange society.” Noble cautions people not to become too preoccupied with when world production will peak, but instead acknowledge that it will happen soon. “If we find it’s not happening until 2009, that doesn’t mean we can party until then,” he said. Instead, he said, Americans should assume that the price of transportation will increase in the coming years. “Get your family to live as close to your work as you can,” he said, adding that homes next to public transportation will become more valuable. “Get by on one car instead of three for your family. If you buy a car -- and a lot of people need them to get around – pay a little more to get a hybrid electric.” Noble recommends people start early on car-sharing, and cites a local non-profit project called Hourcar.org, which allows people to time-share neighborhood cars. He also recommends buying organic food from local producers, making one’s food supply less vulnerable to change. But while Morris and Noble are on the optimistic side, Lundberg’s predictions are more severe. He said bluntly that “our cities are not in the near future going to survive the final petroleum crunch,” and that “attempts to create a network of eco-villages in large cities are going practically nowhere.” After the crisis, however, he believes “it is conceivable that large cities could maintain substantial populations of humans if much de-paving happens, to plant food gardens and orchards.” “The global oil predicament will simply compel Americans to live differently whether we like it or not,” said author and commentator James Howard Kunstler. “Events are in the driver’s seat now, not personalities or even ideologies. The cheap oil fiesta is over. The only reasonable path for the American public is to prepare to downscale everything we do in this country, from retail trade, to agriculture, to schooling.” Simmons has predicted a massive series of wars in the coming decades, as nations fight over the remaining energy scraps.

I typed much of this late at night while holding my four-week-old daughter, and have been comparing my childhood memories to what hers will be. I knew five of my great-grandparents, all born in the 19th century, and my daughter, if she is lucky, may live to see the 22nd. I don’t know what world she will think normal. These experts might be wrong, as many have before them; perhaps our ingenuity will simply come up with a substitute, and we will laugh at articles like this as we laugh at the Y2K scare. Or perhaps the more apocalyptic predictions are right, and my daughter will one day hunt elk through the snowy canyons of Minneapolis. In lieu of further evidence, I’m placing my money in-between. My hope is for a crunch slow enough to ease us into a better world, in which people have three more hours a day from not sitting in traffic, where they cannot escape to the suburbs and are forced to deal with each other. My daughter may see a return to a simpler agrarian era, but with telecommuting and e-mail. She may see an America where the endless rows of houses have become neighborhoods again, where more backyards are becoming gardens, where you can walk through a suburb and again see people. And I’m picturing a future grandchild taking a class field trip to the local history museum, where the children are shown footage of our television shows, with people just driving around like it was nothing, and all the children gasping in amazement. For more information: BOOKS: “The End of Oil: On the Edge of a Perilous New World,” by Paul Roberts, Houghton Mifflin, 2004 “Hubbert’s Peak: The Impending Oil Shortage,” by Kenneth Deffeyes, Princeton University Publishing, 2001.

ARTICLES: National Geographic, “The End of Cheap Oil”
Scientific American, “The End of Cheap Oil”
London Guardian, “Quest for Energy is Race Against Time”
New York Press, “The Coming Energy Crunch”

WEB SITES: Association for the Study of Peak Oil and Gas Die Off: A population crash resource guide
Culture Change
Hubbert Peak of Oil Production
Peak Oil Action