Sample text for The end of oil : on the edge of a perilous new world / Paul Roberts ; [with a new afterword].


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Counter
Prologue
I was standing on a sand dune in Saudi
Arabia"s "Empty Quarter," the
vast, rust-red desert where one-quarter
of the world"s oil is found, when I
lost my faith in the modern energy
economy. It was after sundown and the
sky was dark blue and the sand still
warm to the touch. My Saudi hosts had
just finished showing me around the
colossal oil city they"d built atop an oil
field called Shayba. Engineers and
technicians, they were rattling off
production statistics with all the
bravado of proud parents, telling me how
many hundreds of thousands of barrels
Shayba produced every day, and
how light and sweet and sought-after the
oil was. Saudi oilmen are usually a
taciturn bunch, guarding their data like
state secrets. But this was post 9/11
and Riyadh, in full glasnost mode, was
wooing Western journalists and trying
to restore the Saudis" image as
dependable long-term suppliers of energy
--not suicidal fanatics or terrorist
financiers. And it was working. I"d
arrived in the kingdom filled with
doubts about a global energy order
based on a finite and problematic
substance--oil. As we"d toured Shayba
in a spotless white GMC Yukon, though,
my hosts plying me with facts and
figures on the world"s most powerful oil
enterprise, my worries faded. I"d
begun to feel giddy and smug, as if I
had been allowed to peek into the garden
of the energy gods and found it
overflowing with bounty.

Then the illusion slipped. On a whim, I
asked my hosts about another,
older oil field, some three hundred
miles to the northwest, called Ghawar.
Ghawar is the largest field ever
discovered. Tapped by American engineers
in 1953, its deep sandstone reservoirs
at one time had held perhaps a seventh
of the world"s known oil reserves, and
its wells produced six million
barrels of oil a day--or roughly one of
every twelve barrels of crude consumed
on earth. In the iconography of oil,
Ghawar is the eternal mother,
the mythical giant that makes most other
fields look puny and mortal. My
hosts smiled politely, yet looked
faintly annoyed--not, it seemed, because
I was asking inappropriate questions,
but because, probably for the
thousandth time, Ghawar had stolen the
limelight. Like engineers anywhere,
these men took an intense pride in their
own work and could not resist a
few jabs at a rival operation. Pointing
to the sand at our feet, one engineer
boasted that Shayba was
"self-pressurized"--its subterranean
reservoirs
were under such great natural pressure
that, once they were pierced by the
drill, the oil simply flowed out like a
black fountain. "At Ghawar," he said,
"they have to inject water into the
field to force the oil out." By contrast, he
continued, Shayba"s oil contained only
trace amounts of water. At Ghawar,
the engineer said, the "water cut" was
30 percent.

The hairs on the back of my neck stood
up. Ghawar"s water injections
were hardly news, but a 30 percent water
cut, if true, was startling. Most
new oil fields produce almost pure oil,
or oil mixed with natural gas--
with little water. Over time, however,
as the oil is drawn out, operators must
replace it with water, to keep the oil
flowing--until eventually what flows
from the well is almost pure water and
the field is no longer worth operating.
Ghawar wouldn"t run dry overnight:
depletion takes years and even
decades; however, daily production would
continue to fall steadily, and the
Saudis would be forced to tap new
fields, like Shayba, to maintain their
status
as the world"s preeminent oil power.
While such expansions were never
a problem during the heyday of Arab oil
wealth in the 1970s and early "80s,
times are much tighter today for Saudi
Arabia and for most other petrostates.
As we drove back toward the airstrip for
my flight home, my hosts
bombarding me with more facts and
figures, I couldn"t shake the feeling
that the gods of energy might not be as
powerful and eternal and confident
as I had imagined.

To me, Ghawar is the perfect metaphor
for what is happening to the larger
energy economy, a geologic cautionary
tale for a complacent world
accustomed to reliable infusions of
cheap energy. On the face of it, our
energy economy is humming along like a
perpetual-motion machine. Today,
billions of people enjoy an
unprecedented standard of living and
nations float
in rivers of wealth, in large part
because, around the world, the energy
industry
has built an enormous network of oil
wells, supertankers, pipelines,
coal mines, power plants, transmission
lines, cars, trucks, trains, and ships
--a gigantic, marvelously intricate
system that almost magically converts
oil and its hydrocarbon cousins, natural
gas and coal, into the heat, power,
and mobility that animate modern
civilization. For three hundred years,
this man-made wonder has performed
nearly flawlessly, transforming coal,
oil, and natural gas (and in much of the
world, a vast volume of wood, peat,
and even animal dung) into economic and
political power--and nurturing
the belief that the surest way to still
greater prosperity and stability was
simple: find more oil, coal, and natural
gas.

Yet, like Ghawar, our energy economy has
hit a kind of peak of its
own. Each year, the world demands more
and more energy, with no end
point in sight. And each year, it is
more and more evident that the
extraordinary machine we have built to
supply that demand cannot sustain
itself in its present form. Not a day
goes by without some new disclosure,
some new bit of headline evidence that
our brilliant energy success comes at
great cost--air pollution and toxic waste
sites, blackouts and price spikes,
fraud and corruption, and even war. The
industrial-strength confidence
that was a by-product of our global
energy economy for most of the twentieth
century has slowly been replaced by anxiety.

Although, like most consumers, I"ve been
a casual student of this energy
anxiety since it began--circa 1974, with
the Arab oil embargo--I
began exploring the question in earnest
during the boom years of the late
1990s. I was writing about America"s
bizarre and growing infatuation with
that modern warhorse, the "sport-utility
vehicle," or SUV, and its close
cousin, the pickup truck. At first, the
story seemed to be mainly about
conspicuous consumption and automotive
vanity and sheer stupidity, since
very few of their owners actually took
their hugely expensive SUVs off-road
or loaded their pickup trucks with
anything heavier than groceries or soccer
balls. But the more I looked into it,
the more I realized that the real
story lay less in the vehicles
themselves than in the oceans of oil
they were
burning.

As is well known by now, SUVs and pickup
trucks (known collectively,
and somewhat deceptively, as "light
trucks") consume a great deal of
gasoline:the house-sized Ford Excursion
I test-drove gets something like 4.6
miles per gallon in the city, and even
the more sensible models rarely do
better than 18. The cumulative effect of
so much unnecessary internal
combustionis staggering: since the SUV
craze began in 1990, the twenty-
year-old trend in the United States
toward improving automotive fuel efficiency
not only has halted but is now sliding
backward, dramatically increasing
U.S. demand for oil. And here is the
rub: the United States doesn"t have
enough of its own oil to meet that
surging SUV-driven demand. After a
century of full-bore drilling, oil
companies are finding precious little new
oil in the Lower Forty-eight, and
production--the number of barrels
pumped per day--is falling steadily each
year. What this means is that the
United States, despite being the
third-largest oil-producing nation in the
world, now must import even more oil
from the much-maligned "foreign"
producers--including many, like Iran and
Saudi Arabia, whose populations
regard the United States as an enemy. In
one of many energy ironies,
during the months leading up to the
second war with Iraq (charter member
of the Axis of Evil, greatest threat to
the American way of life since the
fall of the Soviet Union, etc.), the
United States was getting more than 10
percent of its imported oil from Iraqi
fields.

The United States isn"t the only nation
with oil issues. Europe has long
been import-dependent, as has Japan.
China, a rapidly industrializing giant
with more than a billion people and
plans to build an economy as powerful
and energy-intensive as anything in the
West, now uses more oil than its
own fields can produce and has begun
courting the same foreign producers
Uncle Sam now spends so much money and
time and political capital trying
to control. As I charted all this rising
demand for oil, I wondered where
it was going to come from, and what new
contradictions and hypocrisies
would result.

I was certainly not the only one asking.
In interviews with oil industry
officials--men and a few women who are,
generally, quite optimistic
about their business--I heard repeatedly
how oil companies were having
a harder and harder time finding new
oil. I learned that most of the world"s
oil reserves are controlled by a small
number of countries whose governments
are unstable and corrupt and whose
dependability as suppliers is increasingly
in doubt. I began to wonder whether the
glorious golden age of
oil might be over. How long would the
supplies of oil last? What would
happen to our phenomenal wealth and
splendid lifestyle if oil production
peaked, supplies grew scarce, and prices
rose? Did world governments and
energy companies have a plan to ensure a
smooth, gradual shift to a new
fuel or a new energy technology? Or
would the end of oil catch us unprepared
and send shockwaves through the global
economy, touching off a
dangerous race for whatever oil supplies
remained?

As my research took me to places like
Houston, Saudi Arabia, Azerbaijan,
and other outposts of the oil empire,
the more I realized the story
that needed telling wasn"t simply about
oil, but about all energy. Oil may be
the brightest star in the energy
firmament, the glamorous, storied shaper of
twentieth-century politics and
economics, and the owner of 40 percent of
the world energy market. Yet oil is only
one of a triad of geological siblings
known as hydrocarbons that have
dominated the global energy economy for
centuries and whose histories and
destinies are hopelessly intertwined with
our own. Twenty-six percent of our
energy still comes from coal, a cheap,
abundant mineral used to power
industrial processes and generate most of
the world"s electricity. Twenty-four
percent comes from natural gas, a versatile
energy source that will soon surpass
coal as the preferred fuel for
heating and power generation--and quite
possibly become the "bridge
fuel" to some future energy system. And
yet, although coal and gas are, in a
sense, alternatives to oil, both impose
many of the same environmental,
political, and financial costs. Coal is
fatally dirty. Gas is extremely hard to
transport and comes with its own thicket
of geopolitical snarls; a global
energy economy based on either would be
just as problematic as the one we
have, if not more so. In other words,
when I began to ask about the end of
oil, I was really asking about a
transformation of the entire hydrocarbon
economy and the end, perhaps, of a story
that is almost as old as civilization.
For most of the past six thousand years,
human history has been
characterized by a constant struggle to
harness ever-larger quantities of
energy in ever more useful ways. From
the earliest experiments with animal-
drawn plows in what is now Iraq, the
march of material progress has been
accompanied by--and, one could argue,
driven by--increasingly
sophisticated mastery of fuels and
energy systems. Animal power made
agriculture possible. Firewood let us
cook our food, heat our homes, brew
barley into
beer, and smelt metal ores into
plowshares and spearheads. The wide-scale
use of coal in England set the
conditions for the Industrial Revolution. A
century later, oil and natural gas,
followed by a plethora of "advanced"
technologies ranging from nuclear to
solar, completed the transformation,
dragging the industrializing world into
modernity and in the process
fundamentally and irrevocably reordering
life at every level.

We live today in a world completely
dominated by energy. It is the
bedrock of our wealth, our comfort, and
our largely unquestioned faith in
the inexorability of progress, implicit
in every act and artifact of modern
existence. We produce and consume energy
not simply to heat and feed
ourselves, to move ourselves, or to
defend ourselves, but to educate and
entertain ourselves, to expand our
knowledge, change our destiny, construct
and reconstruct our world, and fill it
with stuff. Everything we buy, from a
hamburger at McDonalds to a duck at a
Beijing market, from plastic lawn
chairs and opera tickets to computers
and garbage service, from medical
services and cancer drugs to farm
fertilizers and Humvees, represents a
measure of energy produced and then
consumed.

Energy has become the currency of
political and economic power, the
determinant of the hierarchy of nations,
a new marker, even, for success
and material advancement. Access to
energy has thus emerged as the
overriding imperative of the
twenty-first century. It is a guiding
geopolitical
principle for all governments, and a
largely unchallenged heuristic for a
global energy industry whose success is
based entirely on its ability to find,
produce, and distribute ever-larger
volumes of coal, oil, and natural gas,
and their most common by-product,
electricity.

Yet even a cursory look reveals that,
for all its great successes, our energy
economy is fatally flawed, in nearly
every respect. The oil industry
is among the least stable of all
business sectors, tremendously vulnerable
to destructive price swings and utterly
dependent on corrupt, despotic
"petrostates" with uncertain futures.
Natural gas, though cleaner than oil, is
hugely expensive to transport, while
coal, though abundant and easy to get
at, produces so much pollution that it
is killing millions of people every
year.

Worse, it is now clear to all but a
handful of ideologues and ignoramuses
that our steadily increasing reliance on
fossil fuels is connected in
some way to subtle but significant
changes in our climate. Burning
hydrocarbons releases not only energy,
but carbon dioxide, a compound that,
when it reaches the atmosphere, acts
like a planet-sized greenhouse window,
trapping the sun"s heat and pushing up
global temperatures. If left unchecked,
this so-called greenhouse effect will
keep warming the earth until
polar icecaps melt, oceans rise, and
life as we know it becomes impossible.
The only way to slow global warming (for
at this late date, the process cannot
be stopped) is to cease emitting carbon
dioxide--a monumental and
expensive task that will require us to
reengineer completely the way we
produce and consume energy.

Climate change is in fact widely
regarded as one of the main factors
driving change in the energy economy--but
it is not the only one. While
climatologists and environmentalists
fret about the quality of the energy we
produce, most other experts worry far
more about the quantity of energy
we can make and, more specifically,
whether we can produce enough energy
of any kind or quality to satisfy the
world"s present and future needs.

By 2035, the world will use more than
twice as much energy as it does today.
Demand for oil will jump from the
current 80 million barrels a day to as
much as 140 million barrels. Use of
natural gas will climb by over 120 percent,
coal use by nearly 60 percent. Demand
will be especially acute in
"emerging" economies, like those of
China and India, whose leaders see
voracious energy consumption as the key
to industrial success.

Yet while the future energy demand seems
certain, no one is clear
where all this energy will come from.
Consider oil. Quite aside from questions
of how much is left (we"ll get to that
matter very shortly), there is simply
the matter of finding and producing
enough oil, and moving it via
pipeline and supertanker to the places
it needs to go. The sheer scale of the
task is mind-boggling: when we say that
by 2035 oil demand will be 140
million barrels a day, what we mean is
that by then oil companies and oil
states will need to discover, produce,
refine, and bring to market 140 million
new barrels of oil every twenty-four
hours, day after day, year after year,
without fail. Simply building that much
new production capacity (to say
nothing of maintaining it or defending
it) will mean spending perhaps a trillion
dollars in additional capital and will
require oil companies to venture into
places, like the Arctic, that are
extremely expensive to exploit. Repeat the
exercise for gas and coal, and you begin
to understand why even optimistic
energy experts go gray in the face when
you ask them what we will use to
fill up our tanks thirty years from now.

To make matters more complicated, it is
not merely a question of procuring
enough, as our growing appetite for
electricity shows. Today"s boom
in technology and information has made
electricity the fastest-growing
segment of the energy market, and a
crucial resource for emerging
economies.

By 2020, demand for electricity could be
70 percent higher than today.
Yet because most electric power is
generated in gas- and coal-fired
power plants, making all that new power
would mean putting an even
greater strain on the hydrocarbon energy
economy. At the same time, moving
all this new electric load will
completely overwhelm the existing electrical
system--from power plants and
transmission lines to the emerging
and problematic network of energy
traders. The great blackout of 2003 and
the California power crisis of 2000 (due
as much to dishonest energy
speculators like Enron as to any
shortage of power plants) are only the most
colorful examples of what we may expect
to see as the need for electricity
continues to outpace supply.

It is in the third world, however, where
we see the energy economy
breaking down entirely. In Asia today,
electrical demand is growing so fast
that governments in China and India have
essentially declared a state of
emergency, sidelining environmental
concerns to build hundreds of cheap
coal-fired power plants, whose emissions
may make it impossible even to
slow climate change. And China and India
are by no means the worst cases.
Around the world, more than one and a
half billion people--roughly
one-quarter of the world--lack access to
electricity or fossil fuels and thus
have virtually no chance to move from a
brutally poor, preindustrial existence
to the kind of modern, energy-intensive
life many of us in the West
take for granted. Energy poverty is in
fact emerging as the new killer in
developing nations, the root cause of a
vast number of other problems, and
perhaps the deepest divide between the
haves and have-nots.

My point here is not simply that the
modern energy economy should be
changed but that we no longer have a
choice in the matter: the system is
already changing, and not always for the
better. Everywhere we look, we can
see signs of an exhausted system giving
way messily to something new: oil
companies quietly reengineering
themselves to sell natural gas; governments
scrambling to develop, or least
understand, the "hydrogen economy";
a desperate search for new oil fields;
rising tensions between energy
producers and importers; diplomatic
skirmishes over climate policy; and
the frightening energy race between
countries such as Japan and China to
secure access to the last "big oil" and
gas in Siberia, Kazakhstan, and the
Middle East.

Yet if it is obvious that the current
energy economy is on its way out,
no clear consensus has taken shape on
what happens next, what the "next"
energy economy will look like. Can
existing hydrocarbon technologies be
adapted to new realities, or does the
world require a radical new energy
technology? If so, which technology?
Newspapers and magazines and
political speeches are filled with
descriptions of brave new energy
technologies--hydrogen fuel cells and
wind farms and solar buildings and
tidal generation and fantastic processes
that turn grass into diesel and
manure into gasoline. But are any of
these truly viable? How much will they
cost? Can they be brought to bear in time?

More to the point, even if some miracle
technology is developed, this
in itself is no assurance of an orderly
or peaceful transition. Historically,
shifts from one energy technology to
another have proved wrenching. The
leaps from wood to coal and from coal to
oil caused economic disruption
and political uncertainty
(sixteenth-century Englishmen nearly
revolted at
having to burn sooty coal instead of
wood). And these were fairly slow motion
transitions, occurring over several
decades. Given that today"s energy
infrastructure is even more intertwined
with global economies and
politics and culture, would a
fundamental change in our energy technology
be even more disruptive? How long would
a transition take--a decade,
fifty years? And what would a new energy
order look like? Will it be better
than the one we have, or a hastily
arranged, stopgap arrangement? Will we
be richer or poorer, more powerful or
more hampered, happier with our
advanced energy technologies, or bitter
over our memories of a bygone
golden age? And who will be in control?
Are the current world powers--
most of whom are the biggest consumers
of oil--still likely to be the leaders
in this brave new world? Or might a new
energy order breed a new
political order as well? This book is an
effort to answer these questions.

It is hard to imagine a more appropriate
moment to be talking about a new
energy economy. Electrical blackouts and
gasoline price spikes have
reminded us of the vulnerability of our
energy system and our precarious
dependence on foreign producers. Europe
and the United States have parted
ways over climate change and energy
policy generally, with Europeans
making modest efforts to develop a
post-oil economy, while American
leaders, beginning with the president,
have adopted an aggressive policy of
domestic oil drilling that wishes away
environmental, geopolitical, and
even geological realities. Meanwhile,
OPEC, the Organization of Petroleum
Exporting Countries, the bogeyman of
yesteryear, is regaining much of its
old power and is vying with an oil-rich
Russia and, increasingly, the United
States for control over the world oil
markets. Perhaps most tellingly, the
United States and Britain are struggling
to extricate themselves from a sec-
ond oil war in Iraq that, whether openly
acknowledged or not, was clearly
meant to restore Middle Eastern
stability and maintain Western access to a
steady supply of oil.

Moreover, if recent events are any
indication, we may be entering a period
of payback for a century of
petro-diplomacy. Unstinting efforts by the
United States, Europe, and other
industrialized powers to ensure access to
Middle Eastern oil--by any means
necessary, and often with the help of
Israel--have helped foster a perpetual
state of political instability, ethnic
conflict, and virulent nationalism in
that oil-rich region. Even before
American tanks rolled into Baghdad to
secure the Iraqi Ministry of Petroleum,
leaving the rest of the ancient city to
burn, anti-Western resentment
in the Middle East had become so intense
that it was hard not to see a
connection between the incessant drive
for oil and the violence that has
shattered Jerusalem, the West Bank,
Riyadh, Jakarta, and even New York
and Washington. Only days after
September 11, in fact, commentators were
suggesting that the attacks were not
only motivated by decades of oil politics
but had been financed by oil revenues
from the United States.

By nearly any sane measure, then, the
quest for less problematic forms
of energy and more energy-efficient
technologies should be a top priority
for all players in the energy world.
Even now, a veritable army of energy
optimists--scientists, engineers,
policymakers, economists, activists, and
even energy company executives--is
working on the next energy economy,
piece by piece, each participant
confident that it can be built. I have
seen energy technologies that are
frankly miraculous: wind farms that
generate enough electricity to power a
city; ultraefficient office buildings
requiring no outside power; cars that
get a hundred miles per gallon of
gasoline or run on clean hydrogen fuel
cells; refineries that turn coal into a
clean-burning gasoline.

I"ve seen how much energy can be saved
through absurdly simple ef-
ficiency measures--and how much cheaper
it is to save oil or electricity
than it is to go out and produce more. I
have watched the world"s biggest
energy companies slowly emerge from a
policy of flat denial and begin a
cautious, calculated, yet measurable
shift toward a new energy economy. I
have had politicians, economists, and
energy executives lay out the
Realpolitik of the energy economy by
showing me the money we"ll need to
spend, the sacrifices we"ll need to
make, and the political deals we will need
to cut in order to launch a new,
sustainable energy economy.

Yet I have also encountered phenomenal
resistance. The path toward a
new energy economy is fraught with
political and economic risk. No one
knows when or if the new technologies
will be ready, or how much they will
cost, or what kinds of hardships they
will impose--and few countries and
companies are eager to be the first to
take the leap. The current energy
economy, with its oil wells and
pipelines, its tankers and refiners, its
power
plants and transmission lines, is an
enormous asset, worth an estimated ten
trillion dollars. No company, nor any
nation, not even America, can afford
to write that off--even if many of the
gloomier commentators believe
that doing so is the only way to slow
climate change. Instead, energy
companies are looking to minimize their
losses, waiting till the last minute to
adopt some technology so that they can
squeeze the last drop of revenue
from their existing hydrocarbon assets.
Governments, too, fearing economic
dislocation and political disadvantage,
are steadily delaying any signi-
ficant move away from the existing
energy economy--thereby ensuring
that change, when it occurs, will be all
the more sudden and disruptive.

Consumers, meanwhile, seem almost
oblivious. In industrialized nations,
energy is so cheap and incomes are so
great that consumers think
nothing of buying ever larger houses,
more powerful cars, more toys and
appliances--increasing their energy use
without even knowing it. And if
people in developing nations use far
less energy today, this is not by choice:
they, too, want the cars, the large
homes, the entertainment systems, the
conditioned air, and other features of
the energy-rich lifestyle enjoyed in
the West. The trend seems clear: barring
some economic collapse, world
energy demand can do nothing but
rise--and the energy industry not
only intends to meet that demand but,
for all its talk of novel technologies
and approaches, will do so almost
entirely with existing methods, fuels, and
technologies--at least, for the time being.

Thus, even as it becomes more and more
possible to imagine a new
energy economy, the old one is switching
into high gear. In places like
Borneo, Kamchatka, and Nigeria, off the
coast of Florida and in the South
China Sea, in Alaska and Chad,
multinational energy companies comb the
earth and ocean beds in search for the
next big oil and gas plays. And
around the world, the diplomatic,
economic, and military strategies of
nearly every nation continue to be
shaped by one overriding objective--
to maintain uninterrupted access to a
steady supply of energy. The goal is
sacrosanct, to be pursued at all costs,
regardless of the way it perverts the
culture and politics of entire regions
or props up corrupt governments and
dictators or, ultimately, fosters the
instability and resentments that have
already spawned such malignant figures
as Muammar Qaddafi, Saddam
Hussein, and Osama bin Laden.

Yet despite the staying power of the
status quo, each year that energy
consumption continues unabated, the end
of the current energy system not
only becomes more inevitable but appears
more likely to occur as a traumatic
event. As energy supplies become harder
to transport, as environmental
effects worsen, and as energy diplomacy
sows even greater geopolitical
discord, the weight of the existing
energy order becomes less and
less bearable--and the possibility of a
disruption more undeniable.
In the end, this question of disruption
may be the most critical one of
all--not simply for policymakers and oil
sheiks, but for anyone accustomed
to filling up at the gas station or
switching on an air conditioner; for
it is not simply change that affects us,
but the rate of change--how quickly
and cleanly one way of life is exchanged
for another. A swift, chaotic shift in
our energy economy almost guarantees
disruption, uncertainty, economic
loss, even violence. By contrast, were
we somehow to manage a gradual,
smooth change, phased in over time, we
might be able to adapt, minimizing
our losses and even allowing the more
clever of our species to profit
from new opportunities.

In fact, while the precise shape of our
energy future remains veiled, we
can already discern two distinct paths
for getting there. On the one hand,
we can imagine the transition as a kind
of a proactive endeavor, driven by
global consensus over some perceived
threat, based on scientific analysis,
and managed to minimize disruption and
maximize economic gain. On
the other, we can picture a change that
is less a transition than a reaction, a
patchwork of defensive programs
triggered by some political or natural
disaster. Suppose, for example, that
worldwide oil production hits a kind of
peak and that, as at Ghawar, the amount
of oil that oil companies and oil
states can pull out of the ground
plateaus or even begins to decline--a not
altogether inconceivable scenario. Oil
is finite, and although vast oceans of
it remain underground, waiting to be
pumped out and refined into gasoline
for your Winnebago, this is old oil, in
fields that have been known
about for years or even decades. By
contrast, the amount of new oil that is
being discovered each year is declining;
the peak year was 1960, and it has
been downhill ever since. Given that oil
cannot be produced without first
being discovered, it is inevitable that,
at some point, worldwide oil production
must peak and begin declining as
well--less than ideal circumstances
for a global economy that depends on
cheap oil for about 40 percent of its
energy needs (not to mention 90 percent
of its transportation fuel) and is
nowhere even close to having alternative
energy sources.

The last three times oil production
dropped off a cliff--the Arab oil
embargo of 1974, the Iranian revolution
in 1979, and the 1991 Persian Gulf
War--the resulting price spikes pushed
the world into recession. And
these disruptions were temporary.
Presumably, the effects of a long-term
permanent disruption would be far more
gruesome. As prices rose,
consumers would quickly shift to other
fuels, such as natural gas or coal,
but soon enough, those supplies would
also tighten and their prices would
rise. An inflationary ripple effect
would set in. As energy became more
expensive, so would such
energy-dependent activities as manufacturing
and transportation. Commercial activity
would slow, and segments of the
global economy especially dependent on
rapid growth--which is to say,
pretty much everything these days--would
tip into recession. The cost of
goods and services would rise,
ultimately depressing economic demand
and throwing the entire economy into an
enduring depression that would
make 1929 look like a dress rehearsal
and could touch off a desperate and
probably violent contest for whatever
oil supplies remained.

When such a production peak will occur
is, as we shall see, a Very Big
Question. Optimists like the U.S.
government believe that a peak in oil
production cannot occur before 2035 or
so and that would give the world
plenty of time to find something else to
burn. Pessimists, by contrast, a
group whose members include geologists,
industry analysts, and a surprising
number of oil industry and government
officials, believe that a peak
may come much sooner--perhaps as soon as
2005. (Indeed, a small but
vocal minority believes that the peak
has already occurred and that this
is why oil companies like Shell and BP
are struggling to find untapped
sources of oil to replace all the
barrels they produce.)

Granted, such a wide range of dates is
not particularly helpful for anyone
wanting to know when to start hoarding
diesel, light out for the hills,
or invest in oil company stocks. But
lest you think it"s about time to buy a
larger SUV, it is worth noting that even
the oil optimists concede, usually
privately, that the important oil--that
is, the oil that exists outside the
control of the eleven-country OPEC oil
cartel--will in all likelihood peak
between 2015 and 2020.We call this
"important oil" because, once it peaks,
the free world will have to rely more
each year on oil controlled by the
likes of Saudi Arabia, Venezuela, and
Iran--governments that cannot be
counted on to bear the best interests of
the West in mind in setting pricing
policy.

That brings us back to the question of
smooth or sudden change. Admittedly,
even if the world knew exactly when
non-OPEC oil was going to
peak, only so much could be done to
prepare, given the size of the existing
oil infrastructure and the complacency
of the average consumer. Yet it"s
also true that were Western governments
to begin taking steps to reduce oil
demand, or at least to slow the rate at
which it is growing (by, say, raising
fuel efficiency standards for cars), the
impact of such a peak would be
lessened dramatically--and the world
would gain all the benefits of using
something other than oil.

At the same time, if the consuming world
instead continues in its current
mode--known by energy economists and
other worriers as "business
as usual"--oil demand will be so high by
2015 that a peak (or any big
disruption, such as a civil war in Saudi
Arabia or a massive climate-related
disaster that kills thousands and forces
politicians to cut the use of oil and
other hydrocarbons in a hurry) could be
an unmitigated disaster. Thus, the
real question, for anyone truly
concerned about our future, is not whether
change is going to come, but whether the
shift will be peaceful and orderly
or chaotic and violent because we waited
too long to begin planning for it.
In writing this book, I have focused on
all aspects of the energy economy
--the past and present of energy, the
technology and business of energy,
and the major players. I"ve studied the
big energy producers, like Saudi
Arabia and Russia, who control most of
the world"s oil reserves and who
will play a critical role in the
transition to a post-oil economy. I"ve
looked
in depth at China and India, two energy
paupers whose enormous populations
and growing economies will nonetheless
make them the biggest energy
players of the twenty-first century. I
have examined Japan and Germany,
countries that, lacking their own
domestic oil supplies, have adopted
energy-efficient policies and have
fostered a culture that accepts if not
embraces a low-energy way of life.

But by necessity, much of this book will
focus on the United States.
For all that the new energy economy is
an international issue, no nation
will play a greater role in the
evolution of that economy than ours.
Americans
are the most profligate users of energy
in the history of the world: a
country with less than 5 percent of the
world"s population burns through
25 percent of the world"s total energy.
Some of this discrepancy is owing to
the American economy, which is bigger
than anyone else"s and therefore
uses more energy. But it is also true
that the American lifestyle is twice as
energy-intensive as that in Europe and
Japan, and about ten times the
global average. The United States is
thus the most important of all energy
players: its enormous demand makes it an
essential customer for the big
energy states like Saudi Arabia and
Russia. Its large imports hold the global
energy market in thrall. (Indeed, the
tiniest change in the U.S. energy
economy--a colder winter, an increase in
driving, a change in tax law--
can send world markets into a tailspin.)
And because American power
flows from its dominance over a global
economy that in turn depends
mainly on oil and other fossil fuels,
the United States sees itself as having no
choice but to defend the global energy
infrastructure from any threat and
by nearly any means available--economic,
diplomatic, even military.

The result of this simultaneous might
and dependency is that the
United States is, and will be, the
preeminent force in the shaping of the
new energy economy. The United States is
the only country with the
economic muscle, the technological
expertise, and the international standing
truly to mold the next energy system. If
the U.S. government and its citizens
decided to launch a new energy system
and have it in place within
twenty years, not only would the energy
system be built, but the rest of the
world would be forced to follow along.
Instead, American policymakers are
too paralyzed to act, terrified that to
change U.S. energy patterns would
threaten the nation"s economy and
geopolitical status--not to mention
outrage tens of millions of American
voters. Where Europe has taken small
but important steps toward regulating
carbon dioxide (steps modeled,
paradoxically, on an American pollution
law), the United States has made
only theatrical gestures over
alternative fuels, improved efficiency,
or policies
that would harness the markets to reduce
carbon. As a result, the energy
superpower has not only surrendered its
once-awesome edge in such energy
technologies as solar and wind to
competitors in Europe and Japan but
made it less and less likely that an
effective solution for climate change will
be deployed in time to make a difference.

Critics place much of the blame on a
political system corrupted by big
energy interests--companies desperate to
protect billions of dollars in
existing energy technologies and
infrastructure. An equal measure of blame,
however, must fall on the "average"
American consumer, who each year
seems to know less, and care less, about
how much energy he or she uses,
where it comes from, or what its true
costs are. Americans, it seems, suffer
profoundly from what may soon be known
as energy illiteracy: most of us
understand so little about our energy
economy that we have no idea that it
has begun falling apart.

The End of Oil is a dramatic narrative
in three parts. In the first five chapters,
I set the stage for the current crisis,
by explaining how and why energy
has become so vital a part of our
existence. Chapter 1 offers a short history
of energy, describing the long, slow
rise from muscle power and sweat to a
sprawling, hydrocarbon-powered economy.
In Chapter 2, we tackle the
question of how much oil is left and see
firsthand how difficult the search
for oil has become. Chapter 3 takes a
sharp look at one of oil"s most talked
about challengers--the hydrogen fuel
cell--highlighting that technology"s
awesome potential, yet showing just how
far it has to go. Chapter 4
discusses the connections between energy
and power and outlines the role
energy plays in domestic and
international politics, trade, and even war.
This first part closes with a chapter on
global climate change--a complex
phenomenon that is both the consequence
of our current energy economy
and, perhaps, the most important impetus
for building a new one.

In Part Two, we look at the mechanics of
the energy order. In Chapter
6, we examine energy consumption and see
how our evolving use of oil,
electricity, and other forms of energy
has become one of the most powerful
economic and political forces on the
planet. In Chapter 7, we meet the
producers of oil and gas, and learn how
the energy business is undergoing a
radical and potentially disastrous
transformation. Chapter 8 takes us on a
tour of the options for that new
system--the alternative fuels and systems,
their potential for changing the world,
and the many obstacles they face.
Chapter 9 introduces the important yet
often-neglected concept of energy
conservation and shows how a radical
improvement in energy efficiency
will be essential to any new and
sustainable energy economy.

In Part Three, we chart the promise and
the peril of our energy future.
Chapter 10 describes how the existing
energy system is already failing to
meet even current needs--and shows how
the race to develop "clean" energy
must compete with the more basic need to
produce enough energy of
any kind. Chapter 11 describes the
colossal inertia of the current energy
order, and the way it has influenced,
shaped, and, too often, corrupted
economies and entire nations. Chapter 12
lays out the terms of the coming
struggle, as defenders of the energy
status quo go up against a new
generation of players. Chapter 13 offers
a speculative account of the
transition to a new energy economy, in
extrapolating current trends to show
how a new system might actually emerge.

I am under no illusions that this book
addresses all the important aspects
of the evolving energy economy, or even
most of them. Energy is a
vast topic, with millions of components
interwoven in a complex and
everchanging pattern that defies quick
answers or simple truths. Instead, my
hope is to provide an introduction, a
way for nonexperts to begin to think
about what experts have long known: that
energy is the single most important
resource, that our current energy system
is failing, and that the shape
of the next energy economy is being
decided right now--with or without
our input. Ideally, readers of this book
will acquire a better understanding
of what is coming, and perhaps a better
chance of making a difference in
that future.

Copyright © 2004 by Paul Roberts.
Reprinted by permission of Houghton
Mifflin Company.


Library of Congress subject headings for this publication:
Petroleum industry and trade -- Government policy.
Petroleum industry and trade -- Government policy -- United States.
Energy policy.
Energy policy -- United States.
Petroleum industry and trade -- Political aspects.
World politics -- 21st century -- Forecasting.