Celebrity endorsements can be a mixed blessing. How do you react when a celebrity such as Richard Branson (that’s SIR Richard Branson, if you please) says something like this: “The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well. Our message to government and businesses is clear: act,” he says in a foreword to a new report on the crisis. “Don’t let the oil crunch catch us out in the way that the credit crunch did.” Branson is no Donald Trump, still, what does the flamboyant owner of an airline know about oil…oh wait, he might at that. Airlines are terribly sensitive about fuel prices.
He probably knows that the concept of ‘peak oil’ – the top of the curve in oil production worldwide, that point where production begins its (inevitable) decline – is one of the bigger of the world’s controversies. Not quite up there with global warming, but close. In fact, peak oil is often related to global warming, since the burning of petroleum products, most especially for transportation, is considered a big factor in raising the world’s carbon dioxide level. But what Branson is warning about is something that will happen even before the really big effects of global warming are apparent. That will be the rise of oil prices as stocks become shorter and the demand (seemingly) escalates forever. He’s looking at another chance for global financial collapse, and damn the controversy, this needs to be addressed. Branson’s remarks are in connection with a paper to be shortly released in which several British executives join in calling for the world’s governments (and media, and public) to take peak oil seriously.
It could happen. Oil and money are almost synonymous. We’ve already had several economic shocks related to oil, especially 1973. Our latest financial didoes have been related to bubbles (Dot.com bubble, housing bubble); perhaps if you look at the peak of oil production as a kind of bubble, there is a connection here too. More seriously, if money makes the world go round, oil lubricates the wheels of commerce. There isn’t much in a modern economy that isn’t in some way related to an industry running on oil (or a derivative). So whatever happens to oil, affects the global economy. Petrodollars have been crucial in the financial domain, petroleum is crucial in the real world. Yes, if the world doesn’t have enough oil, the price may (really) kill us.
Part of the controversy has been that though no one denies we’ll someday run short of petroleum; it’s when and how fast that counts. If peak oil happens thirty years from now and takes a half a century to work its way down to zero – well, that’s one thing. On that time horizon, many people assume there will technological fixes – alternatives to petroleum. Obviously, there are some available now, only they’re not as cheap as oil.
On the other hand, if like Branson’s saying, we have only five years or so before peak oil and it plays out in say only a decade…then we won’t have alternatives ready, probably, and the economic impact on the world will be horrifying – $250 a barrel oil?
The yin and yang of this part of the peak oil argument is easy to portray. Unfortunately, a little like the global warming issue, it’s the exact figures that count but are difficult to nail down. Science will try to do its part and provide estimates of oil reserves. Technology can contribute techniques for stretching the extraction of petroleum. But it’s often the vagaries of consumption and the skullduggery of political maneuvering that clouds the future. Many crucial countries (Russian and Saudi Arabia come to mind) are less than forthright about their oil reserves. Too many people, especially in big oil companies, have too much at stake to do anything but manipulate the hell out of information related to oil stocks. It’s a conspiracy theorist’s paradise (if that’s the word).
As the global warming saga is demonstrating, it’s also very difficult to get large populations to give up their habits and dreams. A personal car was and is central to the considered ‘well being’ of most people in the world – that includes countries such as India and China. More smog in the air (and CO2, of course) is unpleasant, but owning a car is a joy to hold. That is, until it sits in the street unable to move because no one can afford to put fuel in it. Will it come to that? Will it be like global warming seems to be heading. Where Bangladesh will have to sacrifice some millions of lives, before ‘people’ get the problem?
If a big part of the problem is not knowing some semblance of the truth about the availability of petroleum and the viability of alternatives, then maybe Branson and his fellows have got at least one thing right. For starters, get the issue out in the open, which may force some facts to the surface.