Runninig on empty

The Guardian

By Jeremy Leggett
November 8, 2005

History shows that James Schlesinger, a former director of the CIA, is not a man to mess with. As secretary of defence during the first oil shock in 1973, he threatened to invade the Arabian peninsula if the Saudis didn't reopen the oil pumps they had shut down in ire over the October war, thus precipitating the crisis.

In an interesting contrast with the US's current professed intentions in Iraq, Mr Schlesinger was on record then as saying: "Militarily we could have seized one of the Arab states. And the plan did indeed scare and anger them. No, it wasn't just bravado. It was clearly intended as a warning. I think the Arabs were quite worried about it after 73".

So it was with some surprise that participants in last week's oil summit in Rimini, Italy, heard Mr Schlesinger give a speech warning of a grave threat to the world economy from a coming peak in oil production.

Addressing a select audience that included oil ministers and senior officials from the oil cartel Opec, the energy watchdog International Energy Agency, and the UN, plus advocates of a premature oil peak such as the former British cabinet minister Michael Meacher, Mr Schlesinger offered a graphic analogy.

The peak-oil threat and the response to it are reminiscent, he said, of the rumbles under Vesuvius and the reaction to them of its hapless residents. "The peak or plateau is coming," he said.

He's right. We don't know exactly when, but the probability is sooner rather than later. When it comes to oilfield discoveries these days, oil companies are finding small deposits, in contrast with the massive oilfields of old. In fact, 80% of global production today still come from the oilfields discovered before 1970, and these are being rapidly pumped towards exhaustion.

Yet demand is soaring. "Political systems do not deal easily with long term threats, even if they have a probability of 100%," Schlesinger warned.

His message was clear: economic horror will descend on the world if we do not plan ahead, and the time to start is now. We are asleep at the wheel, like the citizens of Pompeii and Herculaneum were, looking up at their volcano and thinking that its dormant state would be destiny. They ignored the rumbles, and ended up buried under ten metres of ash.

Mr Schlesinger threw a barb at the detractors he knew would follow him at the podium. Most people, and all governments, are in denial, he intimated. "Every time someone says the peak is far off, there is an audible sigh of relief."

He cited Daniel Yergin, the chairman of the influential oil industry consultancy Cambridge Energy Research Associates. "When Daniel Yergin said the peak wouldn't be until 2020 in a recent report, it was greeted with elation," Mr Schlesinger said.

This is what people in denial want to hear, Mr Schlesinger implied, and people like Mr Yergin are happy to say it. Somewhat appropriately, Mr Yergin gave the last speech in the main plenary. "I don't see why human genius can't meet the challenge," Mr Yergin said. He recited a long litany of the oil industry's technical prowess, and the scope for all the kit and fine minds to find new oilfields in deep water, enhance recovery from existing oilfields, and the like.

Moreover, he said, his company had access to a proprietary database run by the US-based IHS Energy group that backs the case for optimism.

Ordinary mortals can buy access to that database for a million dollars or more. Or they can talk to the geologist who worked on it in its early years, Colin Campbell, for free. Working on the early version of the database, and keeping his own version of it updated since, Mr Campbell has become the lead architect of peak-oil whistleblowing in and around the oil industry.

Mr Campbell was at the Rimini event, and had with him the draft of a protocol written in the language governments would need if they wanted to defuse the peak-oil crisis. Advocating the simple and achievable expedient of demand management at the same rate as global depletion, it was to be called the Rimini protocol.
Mr Campbell's understanding, along with fellow advocates like Mr Meacher, was that the launch of the protocol was to be a main feature of the summit. Indeed, the organisers told him that Mikhail Gorbachev was due to launch the protocol in a plenary speech.

Mr Meacher had earlier appealed publicly for the organisers to give the protocol maximum publicity, saying that the peak-oil crisis would unleash an economic apocalypse if governments didn't act.

It was not to be. Mr Gorbechev didn't show up and Mr Campbell was not allocated a slot to speak in the main plenary. Somewhere, somehow, amid all the machinations involved in persuading the oil industry's glitterati to turn up at the event, the Rimini protocol had become sidelined.

The summit was entitled "The Spirit of the Empire," and that spirit - exemplified by Daniel Yergin's bravura performance - expressed itself in accordance with current global form. The rumblings below the Vesuvius of the hydrocarbon age could be heard loud and clear in Rimini. And the citizens of Pompeii elected to dream on.

· Jeremy Leggett's book on peak oil, Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis, is published this week by Portobello Books.

http://www.guardian.co.uk/oil/story/0,11319,1636920,00.html