Elephants in the Green Room

by Jeff Berg

What I would like to talk about here today are two of the elephants in the room that are pretty much unmentioned by those who we have elected to oversee such problems for our society 1) North American natural gas supplies 2) The self inflicted plight of our neighbours to the south. 

The Essential points as I see them:

North American oil production peaked over thirty years ago. Despite this our demand for oil has continued to increase even as our extraction of it continues to decline. Our resulting extreme dependence on the resources of other countries is now very much being felt throughout the world. (September, 2006, saw the highest ever dependence on foreign oil imports in U.S. history: 69%)

Natural gas production now too has peaked in North America .  Our looming shortfall here has at a minimum the potential to be no less injurious to the planet and its people than has been our oil dependence.  The upside to our natural gas problem for the rest of the world at least is that this shortfall will impact very negatively on a significant number of North America 's citizens. This may create more momentum for the creation of local and renewable sources than has our oil dependence. The pain of our shortfalls in oil having pretty much only been felt elsewhere. 

North America 's future will see it increasingly reliant on its own internal energy supplies.   It would be very much for the best if we accept now rather than later that the only non-lethal energy security plan for the future will have to be based on local and renewable resources . N.B.  Due to technical, economic and geopolitical constraints the attempt to globalize natural gas would be an enormous error with devastating results.  The most significant damage being the loss of irreplaceable time and capital very much needed elsewhere.  

N.A. energy planners intend to try to increase or at least plateau N.A. oil production by ramping up tarsand oil production . In addition there is planning towards the end of extracting liquid fuel from coal and oil shale. Wildly unrealistic numbers like 8 Mmb/d are being bandied about. Nonetheless if these efforts get ramped up anywhere near to their technical maximum their contribution to GHG's will be massive.

The Angloshphere's catastrophic occupations of Iraq and Afghanistan will have profound economic consequences for its people.  Just as the U.S. debt position and the cost of the Vietnam War precipitated the end of the Bretton Woods era; so too will the U.S. debt position and war in Iraq today significantly change our international monetary system. It is impossible to know just exactly how the impact of the $9 trillion and growing U.S. debt will play out on the international scene but at least part of the answer will undoubtedly lie in the diminishment of the dominance of the greenback.

Severe economic discontinuities are all but guaranteed in the near term: 2010-2012. These discontinuities will arise principally as a result of the failure of the U.S. economic engine arising from flawed economic fundamentals and shortfalls of energy. U.S. debt, militarism and fossil fuel energy dependence imperils  North America 's social stability, its standard of living and its ability to transition to renewable energy and sustainability.

North American natural gas supply is the elephant in the room that all but no one is talking about.  If you have not already please listen to the following from Andrew Nikiforuk and David Hughes: http://tinyurl.com/nfuq8 & http://tinyurl.com/yn4tng

THE JUDICIOUS USE OF THIS INFORMATION WILL GREATLY HELP STRENGTHEN THE AGREEMENT OF CANADIANS WITH THE CONCLUSIONS AND SOLUTIONS TO WHICH YOU HAVE MAY HAVE ALREADY ARRIVED FOR OTHER REASONS.

The above listed issues are guaranteed to impact decidedly on Toronto and Canada in the near term and all but guaranteed to lock us in to a decidedly unsustainable future path if not addressed in the even nearer term. 

Before proceeding further context is I think necessary.

There are two clocks ticking as far as energy supply to North America is concerned: One geological, the other geopolitical. By geology what is here meant is the finite nature of fossil fuel reserves and the inescapable certainty that their production will peak and then decline.  Geopolitics on the other hand is being used here to stand for an international monetary system that benefits the dollar and the ways by which militarism shapes resource allocation and the distribution of taxpayer and investment dollars.

The link between the geology and geopolitics in the sense that I am using them here is the very profound effect declining fossil fuel production has had and will continue to have on industrial societies, war and peace, and globalized trade. As well as the effects that this link will have on the choices that will need to be made by the Anglo powers to address their vulnerability in these areas. I choose to concentrate on the Anglo powers because I am a citizen of one and because they are in by far the best position to be leaders in the crusade for sustainable practices.

As I see it the ultimate question is are we going to concentrate our financial and human resources on reshaping our socio-economic systems so that they can function on local resources? Or are we going to continue to use them to maintain our access to other people's resources?

Both the geopolitical and the geological energy and financial constraint clocks are ticking away rapidly and it is very much a toss up as to which one will first rear up and foreclose the more sustainable paths to a better tomorrow. And it hardly matters which will be first given that if they are not sufficiently addressed before yet another decade ticks past us in the loss column either is singly capable of smashing our hopes for a better and more sustainable human world.

These problems are of course not unique to N.A. and the Anglosphere but for the first time in our history events are conspiring to make the perils of resource scarcity particularly relevant to our societies and economies. Be it our former colonial master Britain , our current corporate one the U.S.  or the first country invited to PM Harper's chamber, Australia , the scenario is very much the same: Our past is prologue.  By this I mean that the dye is already cast in the near term as far as our energy future goes.  i.e.  What our “betters” (the political and financial elite) have in mind as panacea for our energy ills is the “solution” that has everywhere already been adopted throughout our sphere for the last thirty years. aka. “Let the market decide”.

Greg Allen referred directly to this dynamic in his talk at Pledge TO Green with a very apposite reference to “demand destruction” and what this will mean to the less financially hale among us in the dead of winter.  And while I, perhaps, still have your attention I would like to continue on that theme and follow one or two of the trails that lead from it.

First.  Our neighbours to the south and all of the “we” that make up the Anglosphere have in most respects but one plan as far as any of the markets for our resources go.  Liquidate them as quickly as possible. Nowhere is this more true than with the energy resources in Alberta and I think a quick review of recent history with respect to our “planning” re conventional oil resources will be instructive for setting up what I'd like to say about the impact of natural gas depletion in light of U.S. financial and geopolitical vulnerabilities.

In December 1970 U.S. conventional oil production peaked at 10.2 million barrels per day. (Mmb/d) As a result of the Prudhoe find and offshore drilling America was able to maintain a bumpy plateau in production for another few years.  But by the time of the second oil shock of 1979 it was obvious to oil industry experts, obvious to U.S. energy planners and obvious to those at the top of America's top industrial, financial and intelligence decision making trees that U.S. oil production was in absolute decline. (The CIA has research and planning documents on this subject dating from 1975.) 

Today the very same fields that once made the U.S. the mightiest of all oil producing nations producing 10.2 Mmb/d are now only producing 2 Mmb/d despite four and a half times as many wells.  By running flat out in every area but the ANWR the U.S. is able today to pump about 5 Mmb/d and it imported 10.9 Mmb/d in September 2006. The U.S. is also dependent on close to 4 Trillion cubic feet of natural gas imports p/a almost all of it from Canada .

The response of U.S. geopolitical energy security planners to this vulnerability was unambiguously stated in the Carter Doctrine.  A geopolitical position statement which told the world that any interference with U.S. access to the resources of the Persian Gulf would be treated as an act of war.  This doctrine was later augmented by the Bush/Cheney junta which has stated that the U.S. will act preemptively to protect her strategic interests.  There was a concerted effort by this regime to push these strategic interests to essentially encompass the resources of the globe, the “grasping of the unipolar moment” in their language, but this push is largely moribund as a result of the catastrophic failure of the Iraq  occupation. To date however failure has seemingly proven to be naught but a spur to this set of martial men. 

Just this week they have indicated that space itself is now to be included in the Cheney/Wolfowitz Doctrine and that no arms limitations agreements will stand in the way of their “Full Spectrum Dominance” of space. Just as dangerously they have stated that any who are not aligned with U.S. interests, as defined by them alone, will not be allowed into space and that any efforts to interfere with total U.S. dominance of space will be viewed as provocation.  It is little wonder that Robert S. McNamara, in an article in Foreign Policy, referred to their policies as “Apocalypse Soon.”  http://tinyurl.com/cfosy

Canada  and the U.S. both went over the top of their peak in terms of conventional oil production in the 70's.  Canadian production has been able to grow recently despite the continuing decline in our conventional production as a result of production from the tarsands.  U.S. production is on the other hand in terminal decline, declining at about 2% to 3% per annum.  This rate of decline will likely increase over time as offshore oil now makes up the largest ever percentage of U.S. production. Offshore oil production declining at a much faster rate than does onshore oil for fairly obvious economic and technical reasons. The British experience with their first and last great oil discovery, the North Sea , indicates that an annual decline rate of somewhere around 7 - 10% can be expected after peak production has been reached.

So what has in fact been the North American response to our experience with declining domestic oil production? Has it been to institute radical conservation measures and to redesign our societies in such a way as to reduce our exposure to this geopolitically and financially destabilizing vulnerability?  As the kids say today, “Not so much”.  

Our collective N.A. response to the first oil shock wasn't all bad.  CAFE regulations in the U.S.  helped to approximately double the MPG of N.A's vehicle fleet.  We started to invest in alternative energy solutions and President Carter spoke extremely plainly to the American people.  Telling them in his fireside chats in very clear terms what they needed to do if they wanted to avoid a future fraught with the peril of dependence on other country's resources.  Carter was of course replaced by Reagan and proclamations of it still being “Morning in America ”. (Albeit “Mourning in America ” would have been more prescient.) 

The very first symbolic act of that Presidency was to immediately tear the solar panels off of the White House roof when what they should have been doing instead was putting a windmill on its lawn.    The really teeth gnashingly frustrating part about this being that this was known even then .  Instead however CAFE standards were allowed to stagnate and the fleet's fuel efficiency as a direct result is unimproved over the last 25 years.  

In other words as a direct result of allowing the “market to decide” we have seen ZERO improvement in almost three decades.  During the same period as a result of political manoeuvrings and production choices by Saudi Arabia the oil market was flooded with Saudi oil in the mid-eighties and the price of oil collapsed from a high of about $80 (inflation adjusted) stabilizing at around $18 for the next decade and a half. 

This devastatingly short-sighted one time “advantage” caused the destruction of much of the renewable energy sector in North America and was also a contributing factor in the implosion of the Soviet blocks economy.  A collapse so profound that Russia has experienced a historically unprecedented unrelated to disease population die off of about 11 million and a plunge in longevity rates for Russian males from 72 to 57 years.     

It is also very instructive to note that the Reagan Presidency was also the one that launched the first “War on Terror”: A military aggressiveness that led to what can only be described as wholesale slaughter in  Latin America . It is also important to note that the current War on Terror is very much a reprise of the original with very much the same cast of characters.  To date those doing the bleeding are different though it seems frightenly likely that U.S.  militarists have not yet done with  Latin America . 

Given the context of previous U.S. responses to increasing energy dependence I would now like to focus on the natural gas elephant in the room. 

North America went over the top of peak natural gas production in Canada in 2001 and in the U.S. in 2002.  David Hughes is a geologist with the Canadian Geological Survey, the Ministry of Natural Resources and a senior analyst with the Canadian Gas Potential Committee.  He and his colleagues have been studying Canada and North America 's fossil fuel reserve situation for decades. The results of this study is most succinctly  summarized as follows.  “The average rate of decline of gas wells after peak in Canada is 21% p/a and in the U.S. it is 28% p/a.”  Such a fact bears repeating.

“The average rate of decline for gas wells after peak in Canada is 21% p/a and in the U.S. it is 28% p/a. “ – David Hughes, CGS, MNR, CGPC.

Oil and gas extraction are very mature industries here in North America .  We have been pumping oil and finding gas for 150 years.  This year is actually the 150 th anniversary of the beginning of North America 's oil industry.  We have the most educated geologists, planners and workforce and the most sophisticated extractive technologies in the world.  And as a result of it being a very mature, well developed and extremely well funded industry we have a very good sense of where we are at and where we are headed. 

The simple facts of the matter being that in terms of oil and natural gas extraction we are no longer on our way up and the decline rate of natural gas is not going to be anywhere near as gentle as it is with oil. Adding to the pain that this is going to cause our citizens and our economies is that due to technical, geopolitical and financial constraints natural gas will almost certainly never be a fully globalized commodity. Though as previously stated for the rest of the world these constraints may prove a godsend as they may cause us to choose to move much more rapidly than we otherwise would to more sustainable practices. I emphasize MAY as the global “dash for gas” is already well underway and many a powerbroker is pushing for a global markets in gas as the solution to our and Britain 's looming shortfalls.

Given that even if a global push is attempted it will fail to meet our shortfalls means that we are going to have to learn to do without as much natural gas as we are used to and very much sooner rather than later. That this is true and largely inescapable is a fact that must be added to the arguments for the need for a very much ramped up effort at creating renewable energy substitutes and alternative means of delivering the services that natural gas provides. Locally for example it is a strong argument against creating another consumer of this precious and declining resource in the form of the Portlands Energy Centre.

As Post Carbon Toronto spends a great deal of its time studying the facts about energy from the point of view of the geological constraints on fossil fuel availability I thought it important to interject this note into the discussion. 

If any of you would like to continue this discussion in terms of what these facts will mean to your particular areas of concern we at Post Carbon Toronto are at your disposal on line or in person. 

Finally, thank you for the contributions that you have and will no doubt continue to make. We hope in our own small way to be there with contributing with you.

JEFF BERG is a commentator on issues of social justice, democracy and the environment. Jeff Berg is a member of Post Carbon Toronto