[GJM] Fw: [globalnetnews-summary] What they don't want you to know about the coming oil crisis

[mary rose]

This is a very, very long essay on the oil crisis by Jeremy Legett, Adapted 
from "Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis"

An excerpt from this reads:

<Microcosms of what could be done can be found already on the local 
government scene. Take the small town of Woking. Its borough council has cut 
carbon-dioxide emissions by fully 77 per cent - yes, more than three 
quarters - since 1990 using a hybrid-energy system involving small private 
electricity grids, combined heat and power (CHP), solar photovoltaics (PV), 
and energy efficiency. Woking has turned its town centre, its housing 
estates, and its old people's homes into inspirational islands of energy 
self-sufficiency. The UK grid could go down for ever, and these folks would 
have their own heating and electricity year-round. The technologies work in 
perfect harmony. The CHP units generate heating when needed in winter, and 
lots of electricity along with it when the PV is not working at its best. 
The PV generates plenty of electricity in the summer, when the heating isn't 
needed, meaning the CHP can't generate much electricity. Because the use of 
private wires is so much cheaper than using the national grid, the whole 
package costs fractionally less than the equivalent heating and electricity 
supply would cost from the big energy suppliers.

Compare such out-of-the-box ingenuity with what nuclear has to offer. Even 
if there were no environmental problems associated with it, and we could 
afford the billions needed in perpetuity from the public purse to make the 
voodoo economics stack up, a new fleet of stations couldn't come on-stream 
in the UK much before 2020. And if we and the Americans can't solve the 
energy crisis without resorting to nuclear, the whole world will follow our 
example. Bad as the terrorist threat is now, it would be compounded many 
times as a result. We would live with much increased risk of losing whole 
cities to suitcase bombers.>

Yet it is nuclear that is being pushed.  Why? Is it because it is the 
"money-maker"?  And why not "free energy?"  I just finished doing a Power 
Point Presentation on nuclear and the bottom line is:  without massive 
subsidies it is not feasible. So, here's that word "subsidies" again --  
meaning we the people are pay through the nose to keep a non-sustainable 
industry going so that a few can make money.

mary rose

----- Original Message ----- 
From: "GlobalCirclenet" <webmaster at globalcircle.net>
To: <globalnetnews-summary at lists.riseup.net>
Sent: Sunday, May 25, 2008 9:13 PM
Subject: [globalnetnews-summary] What they don't want you to know about the 
coming oil crisis



(note: this was written over two years ago)

What they don't want you to know about the coming oil crisis
By Jeremy Leggett
Friday, 20 January 2006
http://www.independent.co.uk/environment/what-they-dont-want-you-to-know-about-the-coming-oil-crisis-523830.html


Soaring fuel prices, rumours of winter power cuts, panic over the gas supply 
from Russia, abrupt changes to forecasts of crude output... Is something 
sinister going on? Yes, says former oil man Jeremy Leggett, and it's time to 
face the fact that the supplies we so depend on are going to run out

A spectre is haunting Europe - the spectre of an acute, 
civilisation-changing energy crisis. The latest wobble over disruptions to 
gas supplies from Russia is merely the latest in a series of reminders of 
how dependent our economies are on growing supplies of oil and gas. On 
Wednesday, Gazprom's deputy chairman was in London reassuring Britain that 
there would be no risk of disruption to British gas supplies in the fall-out 
from the ongoing spat between Russia and Ukraine over pricing. The very next 
day, temperatures in Moscow broke a 50-year record, plunging to minus 30C. 
Gas normally exported was diverted to the home front. Supplies to the West 
fell.

In December, Sir Digby Jones, director-general of the CBI, warned that any 
shortfall in gas could cause disaster for British industry. The problem, he 
said, was the likelihood - as forecast by the Met Office - of a particularly 
cold British winter. This would mean more gas burning in homes and power 
plants than our liberalised energy market - or its infrastructure - might be 
able to supply. There aren't enough pipelines from the continent to carry 
the imported gas that we need now that our North Sea production is dropping. 
Tankers that are supposed to be bringing liquefied natural gas (LNG) to the 
UK are instead following market forces and going to the US, where gas prices 
have rocketed even higher than they have here. Meanwhile, not enough gas has 
been stockpiled, because market forces don't favour that kind of thing in 
relatively warm years.

We shouldn't panic, insisted energy minister Malcolm Wicks, because British 
Gas is being very grown up about it, and anyway all this will be sorted out 
by 2007 when a new pipeline and more LNG plants come on stream. Sceptics 
pointed out that our gas reserves were down to 11 days, compared with an 
average of 55 on the Continent. That was before the concerns about Russian 
supplies. If the thermometers fall in the UK it is still quite possible that 
UK firms may have to stop using gas for one day a week, or even that the 
suppliers will also have to introduce rolling power cuts by postcode.

Meanwhile, domestic gas bills, which rose by more than a third last year, 
are expected to rise even higher in the next few months. For many people, 
such fluctuations have lethal implications. Last winter, there were some 
35,000 "excess winter deaths" in the UK, most of them attributable to old 
people not being able to keep warm enough; and last winter was a relatively 
mild one.

All this concerns gas, of which there are undoubtedly huge proved reserves 
left in the ground (even if half of them are in Russia and Iran). Consider 
oil. The geopolitical risks are the same. Only last week Iran threatened to 
retaliate by cutting oil supplies if Europe continued to meddle in what it 
sees as its right to develop a nuclear programme. Where oil differs from gas 
is that a debate is fast emerging about whether we have enough reserves to 
meet needs in the short term - even if geopolitics don't kick in and the 
current infrastructure keeps working as it should. At the annual summit of 
the Organisation of the Petroleum Exporting Countries (Opec) in December, 
Kuwait told the world that, without urgent outside help, it could not 
continue to pump oil at its customary rate. The Kuwaiti oil minister invited 
Western oil companies back into his country to see if they could do better. 
The very next day the US government quietly slashed 11 million barrels a day 
(that's equivalent to the entire daily output of Saudi Arabia) from its 
forecast of oil production levels for 2025.

To most people who noticed them, such announcements will have seemed remote 
and academic. In fact, as I shall attempt to explain, they represent the tip 
of a very big iceberg indeed: one that holds the potential to sink the 
global economy.

We have allowed oil to become vital to virtually everything we do. Ninety 
per cent of all our transportation, whether by land, air or sea, is fuelled 
by oil. Ninety-five per cent of all goods in shops involve the use of oil. 
Ninety-five per cent of all our food products require oil use. Just to farm 
a single cow and deliver it to market requires six barrels of oil, enough to 
drive a car from New York to Los Angeles. The world consumes more than 80 
million barrels of oil a day, 29 billion barrels a year, at the time of 
writing. This figure is rising fast, as it has done for decades. The almost 
universal expectation is that it will keep doing so for years to come. The 
US government assumes that global demand will grow to around 120 million 
barrels a day, 43 billion barrels a year, by 2025. Few question the 
feasibility of this requirement, or the oil industry's ability to meet it.

They should, because the oil industry won't come close to producing 120 
million barrels a day; nor, for reasons that I will discuss later, is there 
any prospect of the shortfall being taken up by gas. In other words, the 
most basic of the foundations of our assumptions of future economic 
wellbeing is rotten. Our society is in a state of collective denial that has 
no precedent in history, in terms of its scale and implications.

Of the current global demand for oil, America consumes a quarter. Because 
domestic oil production has been falling steadily for 35 years, with demand 
rising equally steadily, America's relative share is set to grow, and with 
it her imports of oil. Of America's current daily consumption of 20 million 
barrels, 5 million are imported from the Middle East, where almost 
two-thirds of the world's oil reserves lie in a region of especially intense 
and long-lived conflicts. Every day, 15 million barrels pass in tankers 
through the narrow Straits of Hormuz, in the troubled waters between Saudi 
Arabia and Iran. The US government could wipe out the need for all their 5 
million barrels, and staunch the flow of much blood in the process, by 
requiring its domestic automobile industry to increase the fuel efficiency 
of autos and light trucks by a mere 2.7 miles per gallon. But instead it 
allows General Motors and the rest to build ever more oil-profligate 
vehicles. Some sports utility vehicles (SUVs) average just four miles per 
gallon. The SUV market share in the US was 2 per cent in 1975. By 2003 it 
was 24 per cent. In consequence, average US vehicle fuel efficiency fell 
between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time 
when other countries were producing cars capable of up to 60 miles per 
gallon.

Most US presidents since the Second World War have ordered military action 
of some sort in the Middle East. American leaders may prefer to dress their 
military entanglements east of Suez in the rhetoric of democracy-building, 
but the long-running strategic theme is obvious. It was stated most clearly, 
paradoxically, by the most liberal of them. In 1980 Jimmy Carter declared 
access to the Persian Gulf a national interest to be protected "by any means 
necessary, including military force". This the US has been doing ever since, 
clocking up a bill measured in the hundreds of billions of dollars, and 
counting. With such a strategy comes a disquieting descent into moral 
ambiguity, at least in the minds of something approaching half the country. 
The nation that gave the world such landmarks in the annals of democracy as 
the Marshall Plan is forced by deepening oil dependency into a 
foreign-policy maze that involves arming some despotic regimes, bombing 
others, and scrabbling for reasons to make the whole construct hang 
together.

America is not alone in her addiction and her dilemmas. The motorways of 
Europe now extend from Clydeside to Calabria, Lisbon to Lithuania. 
Agricultural produce that could have been grown for local consumption rides 
along these arteries the length and breadth of the European Union. The 
Chinese attempt to emulate this model even as they enforce production 
downtime in factories because of diesel shortages and despair that their 
vast national acreage seems to play host to so little oil.

There is a similar picture with gas. The scale of the addiction - and of the 
resource - is smaller. But the patterns are the same: growing demand for a 
finite resource, most of which has to be imported from the Middle East and 
the former Soviet Union. Even a temporary blip in supply, such as occurred 
in Europe this week, is enough to create something close to panic among 
governments. But it is oil that keeps our civilisation functioning.

This half-century of deepening oil dependency would be difficult to 
understand even if oil were known to be in endless supply. But what makes 
the depth of the current global addiction especially bewildering is that, 
for the entire time we have been sliding into the trap, we have known that 
oil is in fact in limited supply. At current rates of use, the global tank 
is going to run too low to fuel the growing demand sooner rather than later 
this century. This is not a controversial statement. It is just a question 
of when.

Oil is a finite resource, and there will come a day, inevitably, when we 
reach the highest amount of oil that can ever be pumped. Beyond that day - 
which we can think of as the topping point, or "peak oil" as it is often 
called - will lie a progressive overall decline in production. Putting the 
same question a different way, then, at the current prodigious global demand 
levels, where does oil's topping point lie?

This is a question, I contend, that will come to dominate the affairs of 
nations before this first decade of the new century is out.

Already, a battle is raging, largely behind the scenes, about when we reach 
the topping point, and what will happen when we do. In one camp, those I 
shall call the "late toppers", are the people who tell us that 2 trillion 
barrels of oil or more remain to be exploited in oil reserves and reasonably 
expectable future discoveries. This camp includes almost all oil companies, 
governments and their agencies, most financial analysts, and most business 
journalists. As you might expect, given this line-up, the late toppers hold 
the ascendancy in the argument as things stand.

In the other camp are a group of dissident experts, whom I shall call the 
"early toppers". They are mostly people who - like me - have worked in the 
heart of the oil industry, the majority of them geologists, many of them 
members of an umbrella organisation called the Association for the Study of 
Peak Oil (ASPO). They are joined by a small but growing number of analysts 
and journalists. The early toppers reckon that 1 trillion barrels of oil, or 
less, are left.

In a society that has allowed its economies to become geared almost 
inextricably to growing supplies of cheap oil, the difference between 1 and 
2 trillion barrels is seismic. It is roughly the difference between a full 
Lake Geneva and a half-full one, were that lake full of oil and not water. 
If 2 trillion barrels of oil or more indeed remain, the topping point lies 
far away in the 2030s. The "growing" and "cheap" parts of the oil-supply 
equation are feasible until then, at least in principle, and we have enough 
time to bring in the alternatives to oil. If only 1 trillion barrels remain, 
however, the topping point will arrive some time soon, and certainly before 
this decade is out. The "growing" and "cheap" parts of the oil-supply 
equation become impossible, and there probably isn't even enough time to 
make a sustainable transition to alternatives.

Should the early toppers be right, recent history provides clear signposts 
to what would happen. There have been five price peaks since 1965, all of 
them followed by economic recessions of varying severity: after the 1973 Yom 
Kippur War; in 1979-80 after the Iranian revolution and the outbreak of the 
Iran-Iraq war; in 1990, with the first Gulf War; in 1997, with the Asian 
financial crisis; and in 2000, with the dot.com collapse. The most intense 
peaks were the first two. In 1973, the oil price more than doubled, reaching 
around $35 per barrel in modern value. The cause was an embargo by Opec, led 
by Saudi Arabia, and triggered through overt American support for Israel at 
the time of the Yom Kippur War. World oil supplies fell only 9 per cent, and 
the crisis lasted only for a few months, but the effect was simple and 
memorable for those who lived through it: widespread panic.

The embargo was short-lived, largely because the Saudis feared that if they 
kept it up they would create a global depression that would cripple Western 
economies, and hence their own. As it was, the short embargo created an 
economic recession. I spent much of it doing my homework by candlelight. I 
didn't see much of my father. He was queuing for petrol.

The second, and worst, oil shock was triggered by the toppling of the Shah 
of Iran in 1979, and prolonged by the outbreak of the Iran-Iraq War in 1980. 
The first shock did not push prices as high as those at the time of writing, 
but the second shock pushed them to more than $80 a barrel in today's terms. 
Again panic reigned, even though the interruption to global supplies was 
only four per cent.

The crisis ended in 1981 when the price fell for three main reasons. First, 
the Saudis opened their taps. With their huge reserves, mostly discovered in 
the 1940s and 1950s, they were able to act as a "swing producer", increasing 
the flow to bring prices down just as they had decreased it in 1973 to push 
prices up. Second, new oil came onstream from giant oilfields in more stable 
regions of the globe, including the North Sea. Third, large amounts of oil 
were released from government and corporate stockpiles.

These three reasons are high on the list of why we should worry today, 
because in the face of another shock things could not be resolved in a 
similar way. First, there are grounds to worry that the Saudis are pumping 
at or near their peak, no longer able to act as a swing producer. Second, 
the early toppers fear that there are no more giant oilfields left to find, 
much less wholly new oil provinces like the North Sea. Third, there is not 
much oil in storage, relative to current demand. The modern world works on 
the principle of just-in-time delivery (another factor in the short-term 
crisis facing Britain this winter). Our economies, overall, are more 
efficient in their use of oil than in the 1970s - a point much emphasised by 
late toppers - but the sheer weight of demand is much higher today, and it 
is still growing without an end in sight, or even strong governmental or 
corporate leadership demands that there should be one.

The cost of extracting a barrel of oil from the ground doesn't change much. 
A good rule of thumb might be $5 a barrel today, though obviously there are 
variations between oilfields in different geographic and political settings. 
What influences the price of oil most is confidence in supply and demand 
among oil traders. Oil prices are already at their second highest levels 
ever, in real terms, at the time of writing. Some pundits now profess that 
they will soon reach their highest ever levels, in modern value. This 
situation has arisen for many reasons - but these do not include the fear 
that the oil-production topping point is near. Early-topper arguments are 
not on the radar screens of the oil traders and analysts, as things stand. 
Should that happen, and should the mood of the packs on the trading floors 
flip to the view that we live no longer in a world of growing supplies of 
oil, but rather shrinking ones, the price will soar north of $100 a barrel 
very quickly.

An investor friend of mine has already concluded that this scenario is 
inevitable. He has switched his investment portfolio to anticipate the 
moment of "market realisation". This peak panic point, as he calls it, will 
not be limited to oil traders. The worlds of economics and business 
routinely assume a future in which oil is in growing and cheap supply.

Economists tend to assume that their "price mechanism" will apply. Higher 
prices will lead to more attractive conditions for exploration. This will 
lead to more oil being found, and the inevitable discoveries will bring the 
price down until the next cycle. Massive corporations write five-year plans 
based on assumed access to cheap oil and gas. Think, for example, how 
important such access must be to a chemical company dealing in plastics 
derived from oil. Or a food-processing company reliant on oil for every 
stage of food transportation, including of perishable final products, plus 
almost all the bottling and packaging and many of the preservatives and 
additives.

But suppose the economists and corporate planners are wrong? Imagine the 
collapse of confidence when a critical mass of financial analysts, across 
the full breadth of sectors in a stock exchange, conclude that they are 
wrong?

If the topping point is indeed imminent, economic depression looms as a real 
prospect. The Saudis were right to be scared of this possibility in the 
1970s. In the Great Depression of the 1930s, triggered in 1929 by the 
worst-ever stock-market crash, economic hardship was horrific. World trade 
fell by a breathtaking 62 per cent between 1929 and 1932. The widespread 
unemployment and social unrest bred Fascism in many countries, in some 
nations on a scale that would change the course of history. As for the stock 
markets, it took them 50 years to regain their pre-collapse value in real 
terms.

There are so many things to worry about in the fall-out from a premature 
peak in oil production. Here is one that gives me particular nightmares. 
When I and some of the oil-supply whistleblowers addressed a conference on 
oil depletion in the formerly oil-rich nation known as Scotland last year, 
five leaders of the British National Party sat in the audience. They said 
nothing. They just listened, and learnt, and no doubt reflected that the far 
right does well in tough times.

The stakes are high with energy policy. Higher than most people dream of 
when they flip a light switch.

The question of how much oil is left actually breaks down into three 
sub-questions. First, the existing-reserves question: how much oil is there 
in discovered oilfields, mapped out, proved and ready to be exploited? 
Second, the reserves-addition question: how much oil remains to be added via 
new discoveries, enhanced recovery techniques and so called unconventional 
oil? Finally, the speed-to-market question: how fast can the oil, once 
found, be delivered to fuel tanks?

One also needs to consider these questions both in relation not only to 
conventional oil - that is, liquid that sits underground in a reservoir 
under pressure - but also unconventional oil (which consists of sands and 
shales containing solidified oil or solid tar or bitumen deposits; is mostly 
found in Canada, the United States and Venezuela; and carries considerable 
environmental extraction costs). The same applies, strictly speaking, to 
deep water oil (much-hyped by Exxon a few years ago but already widely 
thought to have peaked) and gas, whose patterns of availability tend to 
mirror those of oil, and which already faces its own problems of increasing 
consumption (gas demand is expected to double by 2030, reaching 4.3 billion 
tonnes of oil equivalent a year, of which over 40 per cent will be used for 
power generation).

I find it hard to feel optimistic about any of the answers.

I say this as someone who, for most of the 1980s, was a creature of Big Oil. 
I taught petroleum engineers and geologists at the grandiose-sounding but in 
fact quite tatty Royal School of Mines, part of Imperial College of Science 
and Technology in London. My researches on the history of the planet 
included such issues as the source of oil, and was funded by BP and Shell, 
among others. I also consulted for oil companies. In those days, I was 
psychologically insulated in a quest for the respect of my peer group, and 
highly selective as a consequence with the information I allowed on to my 
radar screen. The build-up of greenhouse gases (a separate but scarcely less 
urgent reason for worrying about our dependence on oil) registered nowhere 
on my list of concerns. I had concerns about oil depletion, but only in the 
sense that this cloaked my quest to find more with a certain nobility, at 
least in my own eyes.

But one thing that was clear to me even then was that most of the planet has 
not a drop of drillable oil. Almost everywhere geologists have looked - 
which means everywhere by now, at least at some level of exploration - there 
is no oil because one or more of the key geological requirements is missing. 
Even when all the boxes can be ticked, you can end up finding no oil. Only 
one well drilled in every 10 finds oil. Only one in a hundred finds an 
important oilfield. And the more wells that are drilled in a province or 
country, the smaller the oilfields generally tend to become.

In my book, Half Gone, I examine in detail the prospects of future viability 
for each of the major sources described above. But one of the most important 
arguments against over-confidence in future reserves can be summarised 
simply.

Think of all that expertise that had been built up since the first oil was 
drilled in 1859. Think of all the trillions of dollars in oil revenues 
stacked up in the 20th century, and all the hundreds of billions spent on 
exploration and the hi-tech toys of exploration in the half-century since 
the biggest Saudi and Kuwait fields were discovered. Think of the 
sophistication of the seismic reflection profiling offshore. Consider the 
all-important oil source rocks, and how relatively limited they are in 
distribution. As BP's former reserves co-ordinator, Francis Harper, told the 
Energy Institute in November 2004: "We know how many world class 
source-rocks there are, and where they are." Wouldn't it be reasonable to 
think that with modern technology at least one more field of more than 80 
billion barrels might have been found somewhere, in all the places the 
companies have looked these last 50 years?

The third-biggest oilfield in the world is Samotlor, discovered in 1961, 
with 20 billion barrels. The fourth-biggest is Safaniya, discovered in 1951, 
at which time it also supposedly contained 20 billion barrels. The 
fifth-biggest is Lagunillas, discovered in 1926, containing 14 billion 
barrels. Only around 50 super-giant oilfields have ever been found, and the 
most recent, in 2000, was the first in 25 years: the problematically acidic 
9-12 billion barrel Kashagan field in Kazakhstan.

Let us reduce our scale of scrutiny from the super-giant to the merely 
giant. Half the world's oil lies in its 100 largest fields, and all of these 
hold 2 billion barrels or more, and almost all of them were discovered more 
than a quarter of a century ago. Consider the recent record of discoveries 
of giant oil- and gas-fields of over 500 million barrels of oil or oil 
equivalent. Half a billion barrels - the definition of a "giant" field - 
sounds a lot. But since the world is eating up more than 80 million barrels 
of oil a day at the moment, it is in fact less than a week's global supply. 
In 2000 there were 16 discoveries of 500 million barrels of oil equivalent 
or bigger. In 2001 there were nine. In 2002 there were just two. In 2003 
there were none.

On the basis of this kind of evidence, is the industry going to meet the 
steady increase in demand with new discoveries? Francis Harper, for one, 
doesn't seem to think so. "Worldwide, the frequency of finding giant oil 
provinces and super-giant oilfields has been declining for decades and will 
not be reversed," he told an agog audience at a November 2004 London 
conference on oil depletion held in the Energy Institute. "We've looked 
around the world many times. I'd say there is no North Sea out there. There 
certainly isn't a Saudi Arabia."

In January 2004, the early toppers' case suddenly looked a good deal more 
worryingly feasible to those who have tended to take the late toppers at 
face value. Shell's then chairman, Sir Philip Watts, told investors that the 
company had overestimated its reserves by more than 20 per cent. By March, 
internal e-mails had been requisitioned by lawyers and these made it clear 
that the chairman and his head of exploration had known about this problem 
for some time, and had deliberately lied about it. Both men departed the 
scene.

Shell's corporate scandal is dramatic enough. But there is a clear risk that 
it is only the tip of an iceberg. Today, many people in the oil industry 
appear to be under pressure when it comes to supplies of oil. "There is 
something strange going on in this industry," Shell's replacement boss, CEO 
Jeroen van der Veer, told the press in November 2004. He suspects that other 
companies have the same problems he inherited. The Economist drew the 
following conclusion: "Industry analysts and investors are quietly saying 
that Mr van der Veer may be right, and another big reserves scandal may be 
brewing somewhere."

Against this unpromising start, how much oil do we think the oil companies 
have found to date? Call BP for a bit of help with the answer and you'll be 
sent their annual BP Statistical Review of World Energy. In it, you'll see 
lists of data for national proven oil reserves. Add these up to a global 
total of oil reserves year by year, and you'll see the total creep 
reassuringly upwards over time. The chart on page seven shows those figures, 
from successive annual reviews split into the Middle East and the rest of 
the world. Global reserves rise from just over 600 billion barrels in 1970 
to almost double that today: 1,147 billion barrels at the last count, up to 
and including 2003.

So what's the problem? The first hint that something might be amiss comes, 
as is so often the case in life, in the small print. Squinting through a 
lens if you have anything but perfect eyesight, you will find that the data 
in BP's own report are not BP's at all. The estimates have been compiled 
using "a variety of primary official sources, third-party data from the Opec 
Secretariat", and a few other places completely removed from BP's 
headquarters in St James's Square with all its accumulated research and 
knowledge. Think how many libraries of understanding BP must have gathered 
in over a century of aggressive oil exploration and production all over the 
world. And yet all they offer us as a guide to our own understanding of how 
much "proved" oil reserves there are left on the planet is a compilation of 
other people's data. And much of that itself is secondhand.

After this revelation comes another. The small print continues: "The 
reserves figures shown do not necessarily meet the United States Securities 
and Exchange Commission definitions and guidelines for determining proved 
reserves, nor necessarily represent BP's view of proved reserves by 
country."

They don't even believe the figures they are publishing! Referee! This is a 
publication used as an energy bible by researchers the world over. Students 
quote it as whole truth in undergraduate essays. Journalists quote it as 
gospel in legions of articles. They don't insert caveats like this. Neither 
have they seen such caveats in earlier reports.

You might end up with a few questions for the authors of the BP Review at 
this point. But then, at the end of the document, we read the following: "BP 
regrets it is unable to deal with enquiries about the data in the 
Statistical Review of World Energy."

So what is BP's real view of "proved" reserves? Could it go something like 
this?

Looking closer at the chart and zooming in, you'll see that the figures show 
that global reserves of oil went up particularly quickly between 1985 and 
1990 (a big black oily arrow indicates the point). There must have been some 
big new oilfields discovered then, right? Wrong. The actual new discoveries 
in that period were less than 10 billion barrels. But the Middle East 
nations hiked their "proved" reserves from already discovered oilfields by 
fully 300 billion barrels collectively in that period, professing one after 
another that their national calculations had all somehow hitherto been too 
conservative. Three hundred billion barrels is a lot of oil. It is more than 
a decade of demand at current levels.

Here's how it happened. In the 1950s, the nations with oil organised 
themselves into the cartel known as Opec. Opec's main aim was and is to try 
and control the price of oil. They don't want it too low. That would cut 
their income. Neither do they want it too high. That might get the addicts 
thinking of maybe going elsewhere. They want it just right, perhaps around 
$30 per barrel in today's money. To do this they can't produce too much, 
because that would flood the market, causing the price to drop. They have to 
produce exactly the right amount collectively, and that means quotas. After 
much bickering in the early days, the Opec oil ministers decided in 1982 to 
allocate a quota to each country in the cartel according to the size of its 
reserves.

But in 1985, they began to - how shall I put it? - massage the data. Kuwait 
was the first to give in to temptation. They found that their reserves had 
gone up overnight from 64 to 90 billion barrels. In 1988, Abu Dhabi, Dubai, 
Iran and Iraq all played the same card. Abu Dhabi had been so needlessly 
conservative that their reserves went up from 31 to 92 billion barrels. They 
surely must have employed some incompetent geologists. How could they have 
overlooked 60 billion barrels? Finally, in 1990, Saudi Arabia decided it too 
had been conservative, hiking its total from 170 to 258 billion barrels.

You can also see in BP's data that the Middle East's reserves have been 
almost constant in size since then. What you don't see in the figure - but 
do see in the data - is that this is apparently the case not just for the 
sum of the reserves of the Middle Eastern oil producers but also for the 
figures of reserves for the individual nations.

Consider the enormity of this coincidence. It means that the billions of 
barrels found in new discoveries each year would have to match exactly the 
billions of barrels produced each year in each of the Middle Eastern OPEC 
nations, and do so consistently every year for more than a decade.

BP's Statistical Review of Everyone's World Energy Statistics Except Their 
Own invites us to believe all this without comment from them or recourse to 
questions by us. We are left to look at the total figure they cite for 
"proved" reserves, 1.1 trillion barrels, and think to ourselves ... "Er, 
really?"

The early toppers have a different view. Being in most cases old hands from 
the oil industry, they know a thing or two about the games that go on in 
their industry. They estimate the total of proved reserves to be 780 billion 
barrels, some 300 billion barrels short of "BP's" figures. This is less than 
the world has produced since the first oil was struck over a century ago: 
920 billion barrels by the end of 2003 (a figure about which there is 
somewhat less controversy).

Let us take some opinions that ought to be difficult to discount, one from 
the top of the oil tree in the US and two from the Middle East. The 
Houston-based energy investment banker Matthew Simmons has been one of 
George W Bush's energy advisers. He has studied reports by Saudi engineers 
showing that pressure is dropping in Saudi oilfields. The four biggest 
fields (Ghawar, Safaniyah, Hanifa, and Khafji) are all more than 50 years 
old, having produced almost all Saudi oil in the past half-century. These 
days, Simmons says, they have to be kept flowing largely by injection of 
water. This is of explosive significance, he argues. "We could be on the 
verge of seeing a collapse of 30 or 40 per cent of their production in the 
imminent future. And imminent means some time in the next three to five 
years - but it could even be tomorrow."

The Saudis dismiss this, claiming that they have slightly more than the 258 
billion barrels of "proved" reserves they claimed they had in 1970, with 
lots more yet to be found, and that they can lift the current extraction 
rate of around 9.5 million barrels a day to more than 10 with little 
difficulty. As Nansen Saleri, Manager of Reservoir Management at Saudi 
Aramco, puts it: "... we have lots of oil, not only for our grandchildren 
but for the grandchildren of our grandchildren."

Saudi Aramco has the largest reserves of all the oil companies in the world: 
20 times the size of ExxonMobil's, if they indeed have 260 billion barrels. 
They also have the lowest discovery and development costs, some 50 cents per 
barrel, or 10 per cent of what the private companies pay in Russia or the 
Gulf of Mexico. And, being state-run, without much need for debt, they are 
under no pressure to divulge much to the financial markets.

Lately, in the face of concerns about their ability to ramp up production, 
they have been marginally more open. They say they can maintain spare 
capacity of 1.5 to 2 million barrels per day and would be content with a 
fair price of $32-$34 a barrel. Aramco's geologists have insisted they can 
hike output to 15 million barrels a day (adding more than 5 million to the 
9.5 million reported today); 5 million of which come from the giant Ghawar 
field alone. Contractors report that drilling activity is increasing, as it 
needs to, given the age of the fields.

But consider what A M Samsam Bakhtiari of the National Iranian Oil Company 
(NIOC) has told the Oil & Gas Journal about the existing-reserves question: 
"I know from experience how 'reserves' are estimated in major Middle Eastern 
and Opec countries, and the methods used are usually far from scientific, as 
the basic knowledge for such a complex exercise is not to hand." Bakhtiari 
is withering about Saudi Arabia's reserves hike of 90 billion barrels in 
1990. But he is not too keen on his own national figures either. The BP 
Statistical Review cited 92 billion barrels of "proved" oil reserves at the 
end of 1993, but Bakhtiari preferred the estimate of a retired NIOC expert, 
Dr Ali Muhammed Saidi, who could add the proved reserves up to only 37 
billion barrels.

Dr Mamdouh Salameh, a consultant on oil to the World Bank, agrees there is a 
300-billion-barrel exaggeration in Opec's reserves. More recently, a former 
director of Aramco has said that Saudi Arabia's proved developed reserves 
stand at 130 billion barrels. An anonymous informer talking to Dr Colin 
Campbell of the Association for the Study of Peak Oil goes further. His 
conclusion is that Saudi Arabia would have gone over its peak of production 
in the last quarter of 2004. This person speaks with front-line inside 
knowledge. "Saudi has at various times put 19 fields into production," he 
says. "Of these, eight are 'stars', being highly productive fields that 
produce around 90 per cent of the country's production. All the others are 
'dogs' that have never worked well and probably never will. Recovery rates 
of up to 50 per cent may be appropriate for the 'stars'. For the 'dogs', 10, 
15 or 20 per cent would be more appropriate. Make this adjustment and Saudi 
has depleted more than 50 per cent of its realistically recoverable 
reserves."

In February 2005, Matthew Simmons speculated that the Saudis may have 
damaged their giant oilfields by over-producing them in the past: a 
geological phenomenon known as "rate sensitivity". In oilfields where the 
oil is pumped too hard, the structure of the oil reservoir can be impaired. 
In bad cases, most of a field's oil can be left stranded below ground, 
essentially unextractable. "If Saudi Arabia has damaged its fields, 
accidentally or not," Simmons said, "then we may already have passed peak 
oil."

Is there any chance that the early topping point of oil production is 
somehow wrong, all just a bad dream? I am sorry to say that I think not. It 
is important to realise that the early toppers are not advocates or 
agitators by choice. They tend to have high residual affection for the 
industry they have spent their lives in. Colin Campbell, for example, the 
founder of the Association for the Study of Peak Oil (ASPO), worked for 40 
years in the oil industry before retiring to western Ireland. Chris 
Skrebowski, the editor of Petroleum Review, a leading trade journal of the 
oil industry, spent nearly a decade arguing against Campbell before 
conceding that he was right. "In 1995 it all seemed pretty fantastic," says 
Skrebowski. "I tried hard to prove him wrong. I have failed for nine years. 
I am now with him. In fact, I think he's a bit of an optimist." Other 
early-toppers include Richard Hardman, former chief executive of Amerada 
Hess; Roger Bentley, formerly of Imperial Oil in Canada; and Roger Booth, 
who spent his professional life at Shell, and who now believes that, when 
the peak does hit: "A crash of 1929 proportions is not improbable."

Chris Skrebowski believes that, from as early as 2007, the volumes of new 
oil production are likely to fall short of the combined need to replace lost 
capacity from depleting older fields and to satisfy continued growth in 
demand. In fact, given the time frames with which offshore oilfields are 
developed and depleted, it seems certain that there will be nowhere near 
enough oil to meet the combined forces of depletion and demand between 2008 
and 2012. If there were, it would be from projects we would know about today 
(oil companies liking as they do to boast to their shareholders about every 
sizeable discovery). Given the inevitable time-lag from discovery to 
production, there is now no way to plug that gap.

There is worse: people in the oil industry must know this. They should be 
alerting governments and consumers to the inevitability of an energy crunch, 
and they aren't.

In July 2004, Campbell and Skrebowski tried to carry their warning jointly 
to the UK parliament. In the Thatcher Room they delivered a seminar to a 
pitifully thin audience, including only three MPs and a handful of 
researchers. I sat there listening to it with as surreal a feeling as I have 
ever experienced in all my years working on energy. Over the course of a 
decade at and around the climate negotiations, I have rarely been able to 
claim that the global warming problem is not reaching the ears it needs to. 
The same can manifestly not be said about the oil-depletion problem. This is 
the starting point for any analysis of how serious the problem is. How can 
evidence so compelling go almost unheard in one of the world's centres of 
government, even with a suspiciously high oil price at the time and so much 
obvious oil-related trouble brewing in the Middle East?

Having built their cases, the two spelt out the consequences of the early 
topping point. "The perception of looming decline may be worse than the 
decline itself," Campbell said. "There will be panic. The market overreacts 
to even small imbalances. Prices are set to soar in the absence of spare 
capacity until demand is cut by recessions. We will enter a volatile epoch 
of price shocks and recessions in increasingly vicious circles. A 
stock-market crash is inevitable."

"If the economic recovery continues," Skrebowski added, "supply will get 
very tight from 2008 or 2009. Prices will soar. There is very little time 
and lots of heads are in the sand."

In 1956, a Shell geologist called M King Hubbert famously calculated that 
oil production in the "lower 48" states of America would peak in 1971. 
Almost nobody believed him. Shell censored the written version of Hubbert's 
address to the American Petroleum Institute, changing the wording of his 
conclusion to read that "the culmination should occur within the next few 
decades". The US Geological Survey, in particular, did everything it could 
to hike the estimates of ultimately recoverable American oil to a level that 
would make the problem go away. The US had 590 billion barrels of 
recoverable oil, the survey said, in 1961, meaning that the industry had 30 
years of growth to look forward to.

The years went by and the "lower 48" did indeed hit their topping point. It 
came a year ahead of estimate, in 1970, at 3.5 billion barrels. Since then, 
production has sunk down the second half of the curve at a steady rate. Many 
billions of dollars have been spent on ever more sophisticated exploration, 
including in areas where nobody imagined oil would be found at the peak of 
discovery in the 1930s, such as the deep water in the Gulf of Mexico. A 
frenzy of new domestic exploration began after the first Arab embargo in 
1973 and the realisation that domestic production could be ramped up no 
more. Every enhanced production technique invented has been tried and tested 
in American oilfields. But it has all made no difference to the remarkable 
symmetry of the up-and-down curve that expressed Hubbert's thinking. The US 
is just short of halfway down the second half of the curve now. In other 
words, it has used up some three-quarters of its original endowment of 
recoverable oil. Given its almost total lack of attention to the efficiency 
with which oil is burned, the US becomes more dependent on foreign oil 
imports by the day.

The US Secretary of the Interior at the time, Stewart Udall, later 
apologised for having helped lull Americans into a "dangerous 
overconfidence" by accepting the advice of the US Geological Survey so 
unquestioningly. A long-serving US Geological Survey director who had led 
the campaign against Hubbert, V E McKelvey, was forced to resign in 1977.

We need to remember this sequence of events, and the windows it gives us 
into individual and collective behaviour, when we come to consider the 
global oil topping point.

The American pattern of historical oil discovery and production is only a 
loose guide to what is going on in the rest of the world. In the US, oil, 
once found, was pumped without much substantive effort at constraint. The 
curves for discovery and production are going to look different where 
conservative nationalised companies are doing the looking, or where - as in 
the case of Saudi Arabia - there has been so much oil that the taps can be 
turned up and down for long periods so as to moderate supply and thus 
influence price. Countries that have onshore and offshore oil can have two 
curves, because the technology for offshore oil exploitation was developed 
much later than that for onshore. Curves will also be disrupted by wars, big 
political events, even accidents. None the less, country after country 
follows a crude bell curve - like Hubbert's curve - in both discovery and 
production. Today, more than 60 out of the 65 countries possessing oil have 
passed their discovery topping points and 49 of them have passed their 
production topping points. The US has a particularly long gap between the 
two: 40 years (1930 to 1970). The UK has one of the shortest: 25 years (1974 
to 1999). This is because the first discoveries were made much later in the 
UK, when technology for both exploration and production were more advanced. 
Growing supplies of British oil didn't last long, though. Britain is now a 
net oil importer just like the US.

Nor is there any comfort to be derived from gas. Gasfields deplete very 
differently from oilfields, gas being much more mobile than oil. It is 
normal for a gasfield to yield 70-80 per cent of its gas over its production 
lifetime, whereas an oilfield will typically yield only 35-40 per cent of 
its oil. Drillers normally set gas production far below the natural 
production capacity so as to give a long production plateau. But the danger 
in this is that the end of the production plateau comes abruptly, and 
without market signals.

Colin Campbell, a prominent early topper, estimates that the original global 
endowment of conventional gas was around 10,000 trillion cubic feet 
(equivalent to 1.8 trillion barrels of oil), of which about a quarter has 
been produced to date. He expects a global plateau in production of around 
130 trillion cubic feet per year during the period 2015 to 2040, with 
production falling over a cliff beyond that. Jean Laherrère forecasts 12,000 
trillion cubic feet for all gas including unconventional sources (2 trillion 
barrels of oil equivalent). He puts the peak of gas depletion in 2030, at 
130 trillion cubic feet per year. But the exact figures need not concern us. 
What matters is that gas has all the same problems of dependence on overseas 
supplies as oil, and more besides.

Meanwhile, the five essential facts about global oil discovery can be 
summarised as follows.

1. The biggest oilfields in the world were discovered more than half a 
century ago, either side of the Second World War.

The big discoveries on the Arabian Peninsula opened with the discovery of 
the Greater Burgan field in Kuwait in 1938. At that time, it supposedly held 
87 billion barrels. The slightly bigger Saudi Arabian Ghawar field, 
supposedly holding 87.5 billion barrels before extraction started, followed 
in 1948. These fields, the two biggest in the world, are so big that they 
dominate the global figures in their years of discovery.

2. The peak of oil discovery was as long ago as 1965.

How many people appreciate this? I invite you to do a bit of personal market 
research. Line up ten of your better-educated friends. Preface your question 
to them with a few reminders about how many millions of dollars the oil 
companies make in daily profit, tell them, if you can, an anecdote or two 
about the technical wizardry they use, and ask them to imagine how many 
billions of dollars they must have spent on exploration over the years - 
both of the companies' own money and of the massive tax-deduction subsidies 
available to them. Then ask: in what year would you guess the most oil was 
ever discovered?

3. There were a few more big discovery years in the 1970s, but there have 
been none since then.

The biggest irregularity on the downside of the global discovery curve 
involved the discovery of oil in Alaska's giant Prudhoe Bay field, and the 
North Sea, in the late 1970s. I was a geology student then. I remember the 
thrill as the giant fields were discovered one after the other. They all had 
such serious-sounding names. Forties, Brent, Piper. I look back on those 
days now and I see something of the primeval attractions of the hunt in it. 
As a junior trainee hunter, I used to listen to the tales of the senior 
hunters, and how they had found their quarry, quite atremble with 
admiration. However, what I and the other hunters didn't know was that the 
days of giant discoveries were more or less over.

4. The last year in which we discovered more oil than we consumed was a 
quarter of a century ago.

Since then, despite all those generations of eager brainwashed geology 
students, we have been burning progressively more, and finding progressively 
less. This is another one to try out on the 10 educated friends.

5. Since then there has been an overall decline.

A small rise in discoveries in the 1990s that must have looked promising at 
the time has dropped in the opening years of the new century. Does this 
sound like a world without a looming oil depletion problem, as portrayed by 
BP's CEO Lord Browne - who in March last year insisted "There is no physical 
shortage. The resources are there"? Are people are being lulled into a sense 
of false security about oil supply based on his speeches, and publications 
like the BP Statistical Review of World Energy? Or are we simply failing to 
pay sufficient attention to alarm signals such as last month's 
little-noticed announcement by the US government's Energy Information 
Administration, in which forecasts of Opec production between now and 2025 
were slashed by 11 million barrels a day?

Let us suppose for a moment that the late toppers are correct. The topping 
point, as defined by reserves available in principle, is off in the 2020s or 
2030s, and we can look forward to growing supplies of relatively cheap oil 
for a decade or more. There is another aspect of the problem: whether or not 
the production capacity is sufficient.

Oil-industry analyst Michael Smith, who took his PhD in geology just after 
me - sitting in the same chair as I did in the research lab - is an expert 
in this subject. He has spent most of his vocational life as an oil-industry 
geologist working around the world, particularly in the Middle East. 
"Reserves are largely irrelevant to the peak," he says. "Production capacity 
is the important thing - how quickly you can get it out. It is an 
engineering problem, not a geological problem."

Of the 11 countries in the Middle East, only five are significant oil 
producers: Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates, 
known sometimes as the Middle East Five. They produce around 20 million 
barrels a day today, a quarter of the global total. If global demand rises 
at the average rate of the past 30 years, 1.5 per cent per year, these five 
countries will have to meet around two-thirds of the demand, Smith 
calculates.

Let us assume they can do what they say they can, no more, no less. Where 
does that leave us? Saudi Arabia says it can lift production from 9.5 
million barrels per day today to 12 million by 2016 and 15 million beyond 
that. This despite 50 per cent of the oil coming from the Ghawar field, 
where a water cut is already reported. Smith sums all the reported 
capacities in the Middle East Five and finds that if the rate of demand 
growth continues at 1.5 per cent they will fail to meet global demand by as 
soon as 2011. If it rises to 2.5 per cent the demand gap appears in 2008. If 
it is 3.5 per cent - the rates in China and the US of late - the gap is 
already here.

"What's more," Smith adds, referring back wryly to the starting assumption, 
"I do not truly believe the claims of the Middle East Five. In fact, 
although I don't believe Saudi and Iranian claims in particular, I think 
their politicians do believe them. I don't think there is a conspiracy, more 
a division of labour such that no one knows the whole story, each part of 
which has wide error bars. The summed result is inevitably the most positive 
conclusion which goes to the politicians. I've seen this in all the oil 
companies I have worked for." At the November 2004 conference on oil 
depletion at the Energy Institute, Michael Smith showed a slide at the end 
of his presentation that gave a pictorial summary of his views. It showed a 
group of firemen posing for the camera outside a burning house.

The investment bank Goldman Sachs drew attention to the problem of access to 
oil on a global scale in a much-quoted 2004 report. "The industry is not 
running out of oil - reserves are large and continue to grow," it asserts - 
though failing to offer evidence of this analysis. "What the industry is 
running out of is the ability to access this oil." Two decades of chronic 
underinvestment in the 1980s and 1990s are responsible. During this time the 
industry was feasting on reserves discovered in the 1960s and earlier with 
infrastructure capitalised in the 1970s, after the first oil shock. Global 
oil demand is now closing fast on tanker capacity and refining capacity. The 
peak year for tanker capacity was way back in 1981. So, too, was the peak 
for refinery capacity. Global rig counts also peaked that year.

So, how much new investment is needed to fix the shortfall? Over the next 10 
years, assuming oil demand increases as commonly projected, fully 
$2.4trillion will need to be spent, according to Goldman Sachs. This is 
nearly triple the level of capital investment by the oil industry in the 
1990s. And if it isn't spent? "If the core infrastructure does not improve, 
energy crises are likely to become progressively more frequent, more severe 
and more disruptive of economic activity," the investment bank concludes.

Stated simply, it seems that even if an early topping point doesn't hit us, 
the results of two decades of negligence in investment in infrastructure and 
exploration will. You need to read between the lines of the Goldman Sachs 
report to smell the level of anguish about this. Even where substantial 
money has been invested, a further list of serious unresolved problems can 
often be quickly summoned up. Oil in the Caspian is central to every 
scenario that envisages oil supply meeting demand off into the 2020s. The 
oil industry has long regarded the Baku-Ceyhan pipeline from Azerbaijan to 
Turkey as essential if it is to get Caspian oil out to market without the 
need to go through Chechnya and Russia. By the time this pipeline begins to 
shift oil as planned in 2005, it will have cost $4bn, almost three-quarters 
of that in the form of bank loans. The problems for this pipeline begin with 
reports of its construction standard. Four whistleblowers recently told a UK 
national newspaper that the pipeline was failing all international 
construction standards, including installation of inadequately welded pipe 
before it had even been inspected. It passes through a major earthquake 
zone. Turkey has had 17 major shocks in the past 80 years, and the pipeline 
is supposed to last for 40 years.

At the time the pipeline was conceived, industry reports talked of several 
hundreds of billions of barrels in the Caspian region. Now estimates of 
around 50 billion barrels, about the same as the North Sea, are more common. 
After the discovery of the last of the super-giants, the Kashagan field in 
1990, there was a burst of predictable interest in Kazakhstan. But now, in 
terrain where individual wells cost $1bn to drill, in conditions where only 
foreign companies have the know-how and technology to drill, the Kazakh 
government has introduced new legislation that makes investment 
unattractive. As an ExxonMobil executive told Petroleum Review, "...the jury 
is still out on whether all these obstacles will delay Kazakhstan's 
production".

This example of a real-world current problem for the oil industry raises the 
subject of the interplay between the early topping point and oil 
geopolitics. As the world's No 1 consumer, the United States will have much 
to say about how the crisis - whether of early depletion or inadequate 
infrastructure and investment, or both - plays out. The geopolitics of 
American oil dependency is well summarised by Michael Klare in his recent 
Blood and Oil. He sees four key trends in US energy behaviour: more imports, 
increasingly unstable and unfriendly suppliers, escalating risk of 
anti-American violence and rising competition for diminishing supplies. 
Imports we have talked about above. Increasingly unfriendly suppliers and 
escalating anti-American violence are linked.

The point here is that the US can have relationships with governments in 
unstable countries if it chooses the path of oil dependency, but not easily 
with their populations. Terrorism can be expected to grow with every 
American act interpretable as imperialistic in the Middle East and Central 
Asia. The Iraq-to-Turkey pipeline illustrates the problem perfectly. It 
suffered near daily attacks in 2003.

As for competition over diminishing supplies, therein lies the stuff of 
nightmares. The Pentagon established a Central Command in 1983, one of five 
unified commands around the world, with the clear task of protecting the 
global flow of petroleum. "Slowly but surely," Michael Klare concludes, "the 
US military is being converted into a global oil-protection service."

At $30 a barrel, the total bill for imported oil - now more than half the US 
daily consumption and rising fast - should reach $3.5 trillion over the next 
25 years, and this does not include the Pentagon's overhead. Beyond the 
Middle East Five, the Bush strategy of supplier diversification will look to 
eight main sources, which Klare calls the Alternative Eight: Mexico, 
Venezuela, Colombia, Russia, Azerbaijan, Kazakhstan, Nigeria and Angola. 
These countries and their oil operations are characterised by one or more of 
the following attributes: corruption, organised crime, civil war, political 
turmoil short of civil war, and ruthless dictators. The US military is being 
forced into deeper relationships with such regimes, including joint military 
exercises.

The bottom line for Klare is this. "Any eruption of ethnic or political 
violence in these areas could do more than entrap our forces there. It could 
lead to a deadly confrontation between the world's military powers." Because 
obviously, in a world as enduringly addicted to oil as ours is, others are 
going to be looking for their own supplies. Russia and China will be among 
them. As one global-security analyst recently put it: "I am afraid that over 
the years we will see China become more involved in Middle East politics. 
And they will want to have access to oil by cutting deals with corrupt 
dictatorships in the region, and perhaps providing components of weapons of 
mass destruction, ballistic missiles and other things they have been 
involved with, and that could definitely put them on a collision course with 
the United States." Oil dependency could yet prove to be the route to a 
Third World War. The stress associated with an unforeseen early topping 
point surely makes that horrific prospect more, not less, likely.

Humans are good at staying loyal to their theocracies, and a hundred years 
of fossil fuel addiction has created impressive theocracies. However, as 
Einstein said, you can't solve the world's problems with the same thinking 
that created them. We have to think outside the box. That means giving 
renewable energy, alternative fuels, energy efficiency and storage 
technologies the space they need to grow explosively.

The good news is that it will be possible to replace oil, gas and coal 
completely with a plentiful supply of renewable energy, and faster than most 
people think. Shell employs roomfuls of clever people just to think about 
the future. They are called scenario planners. In their 2001 book of 
scenarios, Shell's planners mention that renewable energy holds the 
potential to power a future world populated with 10 billion people, and do 
so with ease. The needs of the 10 billion can be met even in the unlikely 
and undesirable event that all of them use energy at levels well above the 
average per-capita consumption today in the EU. The Shell futurists mention 
this almost in passing, in the caption of a diagram showing the 
continent-by-continent potential for individual renewable-energy 
technologies to contribute to such a power-rich future. Working for an oil 
and gas giant as they do, it is perhaps no surprise that they fail to 
explore a scenario wherein something resembling this renewable-power-rich 
future comes to pass. Others are not so constrained.

When I began my time in Greenpeace, in 1989, the protestations my colleagues 
and I made that renewable energy could displace fossil fuels and run the 
world were ridiculed by energy experts and officialdom as naïve wishful 
thinking. Now, more than a decade later, such views can be found in the 
heart of government, at least in Europe. The Blair Government published a 
report in 2003 that concluded: "It would be technologically and economically 
feasible to move to a low carbon-emissions path, and achieve a virtually 
zero-carbon-energy system in the long term, if we used energy more 
efficiently and developed and used low-carbon technologies."

Among the low-carbon technologies on offer, the government report placed 
heavy emphasis on renewable energy and hydrogen, rather than nuclear power. 
Of solar energy, the report concludes: "[It] alone could meet world energy 
demand by using less than 1 per cent of land currently used for 
agriculture." Tony Blair used these same words in the speech he gave 
launching the UK Energy White Paper. I sat there watching him do it, 10 feet 
away in the front row. I was momentarily tempted to leap to my feet and 
shout: "So why don't you invest in it like the Germans and Japanese, then?" 
But he hasn't. Not then. Not now.

Microcosms of what could be done can be found already on the local 
government scene. Take the small town of Woking. Its borough council has cut 
carbon-dioxide emissions by fully 77 per cent - yes, more than three 
quarters - since 1990 using a hybrid-energy system involving small private 
electricity grids, combined heat and power (CHP), solar photovoltaics (PV), 
and energy efficiency. Woking has turned its town centre, its housing 
estates, and its old people's homes into inspirational islands of energy 
self-sufficiency. The UK grid could go down for ever, and these folks would 
have their own heating and electricity year-round. The technologies work in 
perfect harmony. The CHP units generate heating when needed in winter, and 
lots of electricity along with it when the PV is not working at its best. 
The PV generates plenty of electricity in the summer, when the heating isn't 
needed, meaning the CHP can't generate much electricity. Because the use of 
private wires is so much cheaper than using the national grid, the whole 
package costs fractionally less than the equivalent heating and electricity 
supply would cost from the big energy suppliers.

Compare such out-of-the-box ingenuity with what nuclear has to offer. Even 
if there were no environmental problems associated with it, and we could 
afford the billions needed in perpetuity from the public purse to make the 
voodoo economics stack up, a new fleet of stations couldn't come on-stream 
in the UK much before 2020. And if we and the Americans can't solve the 
energy crisis without resorting to nuclear, the whole world will follow our 
example. Bad as the terrorist threat is now, it would be compounded many 
times as a result. We would live with much increased risk of losing whole 
cities to suitcase bombers.

There is a part of me that looks at the prospect of a cold snap in Britain 
this winter, and of a consequent fuel-supply crisis, and thinks "Bring it 
on." Maybe this is what we need to stop our sleepwalk towards catastrophe, 
and to make us rethink our energy policy. Perhaps the government can be 
judo-thrown into the Wokingisation of Britain now, and dissuaded from the 
nuclearisation of Britain 15 years from now.

But then I think of all the grans and granddads that would die in a 
one-in-ten winter, and I just feel sad. Sad, and mad with our hot-air 
Government.

Adapted from "Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis", by 
Jeremy Leggett (Portobello Books, £12.99). To order a copy for the special 
price of £11.99 (inc P&P), call Independent Books Direct on 08700 798 8897