Julian Darley: Is it fair to say that you have a feeling that the numbers don't add up as you're seeing them. And if that is the case can you tell us about why?
Roger Bezdek: I think it's fair to say that the numbers may very well not add up, and not add up in an unfortunate direction. The major reason being that the solutions to the problems of peak oil, the mitigation options that we analyze on both the supply side and the demand side, just take many many years to implement and to be effective in terms of either reducing demand for oil or producing substitute fuels. We're talking about decade levels of effort here. If and when peaking occurs it may be rather sudden, and the decline in production of conventional oil could be in the range of 2-4% a year. We're talking about losing, off the world market, 2-5 million barrels a day every year. We simple cannot make up the shortfall in less than 15-20 years with the available technologies and options we have on both the demand and supply side. So that only within the next decade, or even sooner, there may be very serious problems for lack of a better word. Call it a shortage and price increases.
Julian Darley: What might some of those problems look like?
Roger Bezdek: Problems will look like what we experienced in the hurricane here just recently in the US, only much worse. High prices, price volatility, shortage of liquid fuel products, people standing in line in their automobiles for gas for hours on end, price effects rippling through the economy causing inflation, recession, and unemployment.
Julian Darley: You, in your work, have started to make some very serious suggestions about what to do about it. Can you tell us some of those suggestions?
Roger Bezdek: I work in the case that solutions are required in both the demand side of the problem as well as on the supply side. On the demand side the thing is really necessary and we should implement it as soon as possible is very aggressive increases in vehicle fuel efficiency standards. We're talking about anywhere from 30-50% increases in vehicle fuel efficiency, which according to reputable studies by the National Academy of Science in the US are technologically feasible today with off-the-shelf technology. That's absolutely essential. It will take at least a decade to have a serious significant impact that we have to start as soon as possible. On the supply side we should vigorously and aggressively pursue substitute fuel options such as coal liquefaction, gas to liquids, enhance oil recovery, and oil sands.
Julian Darley: We saw some presentations yesterday which suggested that coal to liquids, whilst it's clearly feasible - it's been done for many decades - the amount being suggested that will come on stream in the next one or two decades seems to be awfully small compared to the kinds of... not even be able to make up for one year of decline. What do you make of that?
Roger Bezdek: That is correct. Business as usual scenarios are very depressing. What is required is a massive crash program, for coal to liquid fuels in this case. Double or triple or quadruple or quintuple those estimates so that within a decade we're producing 3-5 million barrels a day from coal to liquid technology.
Julian Darley: Do you think the free market can deliver that?
Roger Bezdek: Not without enormous amounts of dislocation and delay. I think there are requirements for government intervention here.
Julian Darley: Regarding the tar sands. There seems to be some misunderstanding as to what these 175 billion barrels actually are. They cannot be brought on stream quickly like the Saudi barrels with which they seem to be compared. The suggestions when I visited the tar sands a year ago, few people spoke anything about three million barrels a day and yet yesterday's presentation was suggesting five million plus. What's your attitude to that?
Roger Bezdek: I agree. For example, Canadians are now producing about a million barrels a day from their tar sands, but they started 38 years ago. It gives you an idea of the time frame involved. Current projections are by 2030 they may be producing about three million barrels a day. To increase that very dramatically would be very difficult. Maybe you can get to four million, maybe you can get to five million barrels a day with a mass of effort, with a massive investment. Beyond that it's questionable. There's so many huge resources there, but to think that it's like Saudi Arabia where you drill a well and you're getting oil the next... people just don't recognize the scale of the problem.
Julian Darley: You are based in Washington DC and you, I'm going to guess, have opportunities to talk to people who are elected representatives and in power. What kind of things do you say to them?
Roger Bezdek: Well, we try to impress upon them the potential seriousness and gravity of the situation, but unfortunately none of the required solutions, the options, are easy, popular, or cheap. They are all highly impopular. Increased fuel efficiency standards have been fought successfully for the past 25 years now by the automobile manufacturers and the automobile labour unions. If we're talking about coal liquefaction plants you're talking about price guarantees for technologies that have relatively high prices. All of these are time-consuming, expensive, politically controversial, and unpopular. It's not the kind of thing that the politicians, with few exceptions, really want to deal with.
Julian Darley: Do you think we're even going in the right direction in North America?
Roger Bezdek: No. There is virtually no sense of urgency. The people's perceived reaction to high gas prices is to try to reduce federal and state taxes to make it a little bit cheaper, which is actually the wrong direction to move into. There's no serious consideration of increasing vehicle fuel efficiency standards. There's no serious consideration of re-instituting 55 MPH speed limit. There's no serious consideration of crash programs to produce substitute fuels. Unfortunately the energy policy in the US continued on autopilot and the solution is simply import more from the rest of the world.
Julian Darley: The IEA has recently talked about rationing. Is that something you think should be considered?
Roger Bezdek: We are rationing now by price. If, in the not too distant future, peak oil occurs and we're not prepared price rationing will certainly implement itself. There will be cries for other types of rationing such as allocations, price controls, odd-even days we had back in the '70s. All of which are highly efficient, highly controversial. There'll be pressure on the government to do "something" about the problem and probably end up with those sorts of policies implemented.
Julian Darley: You, in your work, have made assumptions of depletion of decline rates of just a few percent, 2-4%, and yet some voices in the industry, including voices from Schlumberger, have suggested background depletion rates as high as 8%. That doesn't mean we'll actually go down quite that fast, but that's a very very high number. What implications might that have for what you're looking at, for what you're doing?
Roger Bezdek: You are correct. In our work thus far we've been very optimistic assuming that after oil peaking oil, conventional production declines at a rate of about 2% a year. This is lower than most of the experts think. As you've indicated, 3-5% will be much more realistic and others have estimated as high as 8% a year. Anything in the range approaching 8% will be catastrophic. There's no way you could hope, with any mitigation options you talk about on the demand side or the supply side, we could hope to cope with that level of decline.
Julian Darley: Colin Campbell has suggested that from his work for instance, that light conventional may already have peaked. That has implications surely for refining and the kind of oil that's being offered by Saudi Arabia is heavy and it's not necessarily the stuff that's wanted.
Roger Bezdek: That's right. What is your definition of "peaking" and when will it occur and it's not a question that we have tried to address in our study, which is assuming that if and when it occurs what is required is mitigation options well in advance of that whether it's light, heavy, OPEC, non-OPEC. Since obviously none of these mitigation options have been, or are being, implemented we're simply waiting for the disaster to occur, at which time it will be too late.
Julian Darley: You've been using the phrase if and when peaking occurs. There's no if or when about the peak of natural gas production in North America. It has occurred about 2-2.5 years ago in both Canada and the US, and it's in headlong decline now. There's going to be no way to reverse it. Have you taken any account of the natural gas decline in your work? Do you think it's important?
Roger Bezdek: It's extremely important and it's important for our work because when we look back to several years ago, and all the "experts" who were just a few years ago forecasting unlimited supply of cheap natural gas in North America proved dramatically wrong for reasons you just mentioned: that natural gas production has peaked and is now in decline. Well, it's the same experts, by and large, today who are telling us not to worry about oil peaking. Based on their past history of accuracy it does not give me great comfort.
Julian Darley: Do you think oil will peak?
Roger Bezdek: Yes, I mean it's a geological fact. No one disputes that, everyone recognizes that oil is a finite, limited resource and the optimists hope that it will so that our children and grandchildren will worry about it. I'm afraid it's gonna happen somewhat sooner than that.
Julian Darley: Given that we've seen a not stellar reaction from governments and one thinking of also about reactions to Katrina was not ideal I think it's fair to say, many ordinary people on the local level are wondering what they can do. Does your report have, and do you have any suggestions for what local people at the municipal level can do?
Roger Bezdek: We do, and again, it's some things that we're continuing to work on. At the local level there are options that could be implemented, including smart growth policies, mass-transit policies, tele-commuting, imposition of increased parking fees. Anything to reduce the demand for conventional fuels. As well as in the supply side we stimulate local industry in the area of substitute fuels, biomass, biodiesel. Every little bit that helps here. I think what our study shows is that we need everything possible from both the supply side and the demand side. The federal level, the state level, and the local level. Even then we may be in trouble.
Julian Darley: Thank you very much indeed.
Roger Bezdek: Thank you.
- 987 reads
