Rising prices rekindle peak oil debate
A noted environmental economist at Simon Fraser University believes the issue of peaking oil production will become irrelevant if humanity takes steps to address climate change.
Mark Jaccard made the comment on January 4 as oil prices hovered at about US$90 per barrel—up from around US$75 per barrel approximately six months ago.
“We have to address the climate issue, in my opinion,” Jaccard told the Georgia Straight in a phone interview. “We’ve got to go after that, and that conveniently takes care of your peak-oil concern.”
Jaccard’s view on the threat posed by peak oil sharply contradicts that of Richard Heinberg, a senior fellow-in-residence at the California-based Post Carbon Institute who has written extensively on the subject. Heinberg noted in his 2006 book The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse that the use of fossil fuels is so widespread in everyday life that conflict and societal collapse may result if the transition away from these finite resources is not properly managed.
From his home in Santa Rosa, Heinberg reaffirmed the common belief that the cheapest sources of oil have already been tapped. He told the Straight that the oil industry, if it is to fund new extraction projects, requires the global price to be at about US$70 per barrel. The price that will send the economy back into recession, because of overall increases in the cost of goods and services, is likely to be between US$90 and US$100 per barrel, he said.
“So there is a very, very small range where we can still have a functioning economy, but not really a growing economy,” he explained. Heinberg said he was reluctant to make an economic prediction for the short term, but he was adamant that “one way or the other, by the end of 2011, the economy will be in worse shape than now.”
Jaccard, however, said he believes economic growth is still possible in a world of depleting oil supplies.
“I do think that growth, in terms of human material and energy throughput, has to stop, and very soon,” he stated. “But I still think economies will still grow. It just depends on how you define economic growth.”
Jaccard has frequently disagreed with pronouncements by peak-oil theorists who say that global oil production will peak relatively soon—or that it has already peaked—and will go into inevitable decline. They claim this will push up the price of crude oil unless demand is curtailed or alternatives are found to the fossil-fuel dependence that has propelled economies worldwide since the Industrial Revolution.
Heinberg said he is working on a book with the working title The End of Growth. Jaccard acknowledged that he agrees with Heinberg’s analysis “that we are on a completely unsustainable path”.
“I just don’t see the cataclysm being in energy markets; I see the cataclysm coming much sooner in the climate,” Jaccard said. “And guess what? If we are serious and address climate change, the price of oil plummets.”
Jaccard said this is because, ideally, policymakers would have already placed a price on the atmosphere, resulting in decreased use of oil or a transition to energy sources such as hydrogen or electricity that is derived mostly from renewables.
But Heinberg noted that since The Oil Depletion Protocol was published in 2006, he has seen “almost no indication of interest on the part of policymakers” in introducing a protocol to deal with oil depletion.
“Human nature has this inbuilt discounting calculus,” Heinberg said. “We value immediate rewards over rewards that we’ll get a few years down the line. The same thing with threats: we are more willing to do more to avert an immediate threat than in a few years. So if you are trying to talk people into accepting a reduction in GDP now in order to avert climate change, for example, it is a really tough sell.”