Kiss your lifestyle good-bye

Three years ago the Saudi oil minister and chairman of Aramco Ali I. Al-Naimi visited Manila. My daughter Veronica who was still at CNN then (she’s now with Al-Jazeera) called to ask if she could do a telephone patch interview with him. I conveyed that to Saudi Ambassador Wali who promised he will try to squeeze it in. He was here to meet with then Energy Secretary Vincent Perez and make a courtesy call on President Gloria Macapagal-Arroyo. No other details were given. The visit was made a week after the Saudis convinced its fellow Organization of Petroleum Exporting Countries (OPEC) to raise OPEC’s oil production ceiling by half a million barrels to 27.5 million barrels per day amid record-high crude prices.

Veronica wanted to hear from him about the future of oil. She was asked to follow it up when Minister Naim returned to Riyadh. I did get a chance to talk to him when former Speaker Jose de Venecia gave a reception for him. I asked about rumors that there was a developing oil crisis that would not be solved by simply ‘increasing’ its production of oil. What crisis? The markets were already abuzz with reports that an oil crisis the likes of which we had never seen before would soon be with us, not in decades, but within years.

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With yesterday’s headlines in US newspapers about “a staggering rise in the price of oil up a record $10.75 a barrel to more than $138", “thousands of jobs lost” and a “feverish sell-off on Wall Street”, it may be that the predicted moment of gloom has been reached. It is not the figures that can be frightening but the picture it evokes of millions of Americans struggling to pay bills, losing jobs, food and fuel costs rising and more and more houses being foreclosed.

No one was sure what would happen three years ago except for one man, oil expert and geologist Colin Campbell.  He met with Swiss bankers to warn them as far back as March 2005. This was reported in the Guardian by John Vidal. He said “the end of oil is closer than you think.”

Based on Campbell’s projections, oil production could peak next year (2006), John Vidal wrote. The bankers called Colin Campbell, who had retired in Ireland to hear directly from him when the end of the oil age will begin. That would signal to international bankers the coming of the Second Great Depression that they were loathe to face.

He said companies seldom report their true findings for commercial reasons, and governments – which own 90% of the reserves – often lie. Most official figures, he says, are grossly unreliable: “Estimating reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a good idea of what a field contains. Reporting [reserves], however, is a political act.”

Companies, says Campbell, “under-report their new discoveries to comply with strict US stock exchange rules, but then revise them upwards over time”, partly to boost their share prices with “good news” results. .

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from “if” there is a global peak to “when”.

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I did write a column on some of the predictions Campbell made but predictions are predictions – they are of the future. Now that it is here with us I commend that we revisit and learn why it is important that we heed those warnings and how it will affect our lives by the political decisions we make.

The Guardian published the article in 2005 but Michael Ruppert reported on an interview with Campbell as early as 2002. He said then in an article  “Perhaps the world’s foremost expert on oil and the oil business confirms the ever more apparent reality of the post-9-11 world.”

But why should we kiss the end of our lifestyle?

Campbell answered, “Because oil profoundly affects all modern life, we need to understand several critical factors about oil and oil production. All of these factors affect how much you or industry pays for oil, how much is available, and what this life-essential commodity can do. Almost every current human endeavor from transportation, to manufacturing, to plastics, and especially food production is inextricably intertwined with oil and natural gas supplies. Commercial food production is oil powered. All pesticides are petroleum based, and all commercial fertilizers are ammonia based. Ammonia is produced from natural gas. In 100 years mankind has used half of all the oil on the planet, oil that took billions of years to produce and is the result of climactic conditions that have existed at only one time in the earth’s 4.5 billion-year history. Oil is a non-renewable resource.”

“The key event in the Petroleum Era is not when the oil runs out, but when oil production peaks, especially as demand and population are rising. World per capita oil production peaked in 1979 and has been in decline since. The peak in volume of total world oil production is upon us right now, even as the demand or better said — the need — for oil is increasing rapidly.”

“Oil price spikes invariably lead to recession. The world’s economy is based upon the sale of products that are either made from oil or which need hydrocarbon energy (including natural gas) to operate, either via internal combustion or via electricity.”

Asked what would happen when oil reaches the downslope of production? Campbell replied “Simply stated: war, starvation, economic recession, possibly even the extinction of homo sapiens, insofar as the evolution of life on earth has always been accomplished by the extinction of over-adapted species (when their environmental niche changed for geologic or climatic reasons) leaving simpler forms to continue, and eventually giving rise to new more adapted species. If Homo sapiens figures out how to move back to simplicity, he will be the first to do so.

He adds that dwindling oil reserves are already upon us, signaled by the threatened US invasion of the Middle East. The US would be importing 90 percent of its oil by 2020 to hold even current demand and access to foreign oil has long been officially declared a vital national interest justifying military intervention.

“The simple solution is to use less. We are extremely wasteful energy users. But it involves a fundamental change of attitude and the rejection of classical economic principles, which were built on endless growth in a world of limitless resources. Those days are over, exacerbated by the soaring population, itself now set to decline partly from energy shortage.”

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? “There is no company on the stock exchange that doesn’t make a tacit assumption about the availability of energy,” says Campbell. “It is almost impossible for bankers to accept it. It is so out of their mindset.”