The age of cheap oil is over

There is no time for denial. Governments and communities need to start adapting now.

We are now inhabiting a 'post-peak' world. That is the implication of the International Energy Agency's (IEA) new report, World Energy Outlook 2001, which in its 25-year 'New Policies Scenario' projects that it is most probable that conventional crude oil production "never regains its all-time peak of 70 million barrels per day reached in 2006." In this scenario, crude oil production is most likely to stay on a plateau of around 68-69 million barrels per day.

The IEA blames a number of factors for this - a combination of supply constraints due to below-ground geological resource limits, and above-ground factors such as political obstacles to fully exploiting existing reserves (such as in Iraq), as well as international commitments to reducing fossil fuel emissions to meet climate targets.

So is this the end of industrial civilization as we know it? Not quite. Or perhaps, not yet. Despite the peak of conventional oil production, the IEA concludes that total growth in liquid fuels from other unconventional sources - such as tar sands, oil shale and natural gas liquids - will continue to make-up for the short-fall in crude until around 2035. But while this means there will be no imminent fuel shortages as such, it also means, in the words of IEA chief economist Fatih Birol, "The age of cheap oil is over."

The problem is that unconventional sources of oil and gas are far more expensive to get out of the ground and process into usable petroleum, and environmentally problematic. This means that over the next decade, oil prices are likely to become more expensive. Driven largely by industrial growth in places like China and India demand is projected to grow by 36 per cent up to 2035 - at which point, the price of oil will rise beyond $200 a barrel. On the way, by around 2015, we could see price hikes above $100 a barrel.

Even if the 'post-peak' world by no means implies the End of the World, it will nevertheless be an extremely volatile one if business-as-usual continues. The convergence of food and financial crises we saw in 2008 was one of the first signs of a strained system. Oil price volatility due to peak oil was a major factor that induced the 2008 banking crash. The collapse of the mortgage house of cards was triggered by 'post-peak' oil price shocks, which escalated costs of living and led to a cascade of debt-defaults. A study by US economist James Hamilton for the US Congress Joint Economic Committee confirmed there would have been no recession without the oil price shocks.

The oil shocks also impacted on food prices. The global industrial food system is heavily dependent on fossil fuels, consuming ten calories of fossil fuel energy for every one calorie of food energy produced. As noted by Australian agricultural expert Julian Cribb in his book The Coming Famine (2010), the six-fold rise in food prices between 2003 and mid-2008 was triggered by escalating oil prices (among other factors), and impacting severely on "farmers' fuel, fertilizer, pesticide, and transportation costs." While "financial pain was high" in developed countries, in the less developed world - from where the developed countries import much of their food - "farmers simply could not afford to buy fertilizer, and crop yields began to slip."

All this was exacerbated by a debt-dependent economic system that systematized the very kinds of dodgy derivatives trading which generated subprime mortgage blowback - with speculators throwing money into futures markets for oil and staple food commodities, rocketing prices even higher. The recession that such price hikes partially inflicted, leading consumption and production to drastically contract, allowed prices to drop. But as economies tentatively recover, as populations grow, as demand rises, the danger that we once again hit the ceiling of the world's oil capacity limits will remain.

So if the IEA is anywhere near right, we are in for a rather rough ride. The volatility of the 'post-peak' world will be difficult to predict. It is a world not of easy abundance, but of declining - and increasingly expensive - carbon-based resources. If we are to develop sufficient resilience to the various price shocks and converging crises of the 'post-peak' world, we will need to recognize that they are symptomatic of an inevitable civilizational transition toward an emerging post-carbon age. There is no time for denial. Governments and communities need to start adapting now.

Dr. Nafeez Mosaddeq Ahmed is Executive Director of the Institute for Policy Research & Development. His latest book is A User's Guide to the Crisis of Civilization: And How to Save It (Pluto, 2010). He blogs at The Cutting Edge.

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Brexit Big Brother is watching: how media moguls control the news

I know the Daily Mail and the Daily Telegraph well, and I don’t care to see them like this.

It would take a heart of stone now not to laugh at an illustration of Theresa May staring defiantly out at Europe from the British coast, next to the headline “Steel of the new Iron Lady”.

Those are, however, the words that adorned the front page of the Daily Mail just five months ago, without even a hint of sarcasm. There has been so much written about the Prime Minister and the strength of her character – not least during the election campaign – and yet that front page now seems toe-curlingly embarrassing.

Reality has a nasty habit of making its presence felt when news is remorselessly selected, day in and day out, to fit preconceived points of view. May and her whole “hard Brexit” agenda – which the public has now demonstrated it feels, at best, only half-heartedly enthusiastic about – has been an obsession of several British newspapers, not least the Daily Mail and the Daily Telegraph.

I know these papers well, having spent the best part of a quarter-century working for them, and I don’t care to see them like this. When I worked there, a degree of independent thought was permitted on both titles. I joined the Telegraph in 2002; at the time, my colleagues spoke with pride of the paper’s tolerance to opposing views. And when I was at the Mail, it happily employed the former Labour MP Roy Hattersley.

Would I be able to run positive stories about, say, my mate Gina Miller – who successfully campaigned for parliamentary scrutiny of the Brexit process – in the Telegraph if I were there today? Or at the Daily Mail? Dream on: it’s two minutes of hate for that “enemy of the people”.

Morale in these newsrooms must be low. I am finding that I have to allow an extra half-hour (and sometimes an extra bottle) for lunches with former colleagues these days, because they always feel the need to explain that they’re not Brexiteers themselves.

Among the Telegraph characters I kept in touch with was Sir David Barclay, who co-owns the paper with his brother, Sir Frederick. Alas, the invitations to tea at the Ritz (and the WhatsApp messages) came to an abrupt halt because of you-know-what.

I don’t think Sir David was a bad man, but he got a Brexit bee in his bonnet. I was conscious that he was close to Paul Dacre, the editor of the Daily Mail, and both had cordial relations with Rupert Murdoch. It became clear that they had all persuaded themselves (and perhaps each other) that Brexit suited their best interests – and they are all stubborn.

It seems to me unutterably sad that they didn’t sound out more of their factory-floor staff on this issue. We journalists have never been the most popular people but, by and large, we all started out wanting to make the world a better place. We certainly didn’t plan to make it worse.

People used to tell me that papers such as the Daily Mail and the Telegraph changed because the country had but, even in the darkest days, I didn’t agree with that premise. We are in the mess we’re in now because of personalities – in newspapers every bit as much as in politics. The wrong people in the wrong jobs, at the wrong time.

Would the Daily Mail have backed Brexit under Dacre’s predecessor David English? It is hard to imagine. He was a committed and outward-looking Europhile who, in the 1970s, campaigned for the country to join the EU.

I can think of many Telegraph editors who would have baulked at urging their readers to vote Leave, not least Bill Deedes. Although he had his Eurosceptic moments, a man as well travelled, compassionate and loyal to successive Conservative prime ministers would never have come out in favour of Brexit.

It says a great deal about the times in which we live that the Daily Mirror is just about the only paper that will print my stuff these days. I had a lot of fun writing an election diary for it called “The Heckler”. Morale is high there precisely because the paper’s journalists are allowed to do what is right by their readers and, just as importantly, to be themselves.

Funnily enough, it reminded me of the Telegraph, back in the good old days. 

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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