WHILE Congress is consumed with such pressing matters as the use of steroids in Major League Baseball, an economic crisis looms on the horizon that could dwarf any that this world has seen since the Great Depression.
If you listen to the growing number of geologists and executives at petroleum corporations that advocate a theory known as "peak oil," the recent rise in gas prices could signal the beginning of chronic petroleum shortages that will shackle the world with debilitating levels of inflation and unemployment for decades to come. Because this issue could have such grave consequences, Congress must lead the world into a comprehensive survey of the long term prospects for growth in petroleum production, and take action to correct the problem if the survey determines that the world's oil-fuelled economy is unsustainable.
The central problem in the view of peak oil theorists is that the world's finite supply of oil cannot keep pace with its skyrocketing demand. Indeed, a Department of Energy report released in 2004 stated that demand for oil will rise from 77.1 million barrels a day in 2001 to 120.9 million barrels a day in 2025.
While the world's demand for oil has been rising, oil discover has been declining for decades. This trend has caused production in 50 of the world's oil producing nations, including such traditional powerhouses as Great Britain and the United States, to go into a state of chronic decline, according to a January 2004 report from the Christian Science Monitor. This trend was underlined in an article in The Washington Post last June that reported that for every two and a half barrels of oil the world consumes, it only finds one to replace it.
One expert who has been particularly alarmed by this trend is Matthew Simmons, who was once a key advisor to the current Bush administration on energy issues and now holds the title of the CEO of Simmons & Co. International, the worlds largest energy investment banking firm. After reviewing the state of the world oil stocks, the BBC cited him as saying, "Peaking is at hand, not years away. If I'm right, the unforeseen consequences are devastating."
While the potential for a long-term decline in oil production may not be the most thrilling subject for a special on the nightly news, it would impact the lives of every person on the planet. Because modern economies depend on cheap oil not only for virtually all of their transportation needs but also for the manufacturing of plastics and fertilizer, shortages in the supply of oil will lead to tremendous increases in costs for businesses that will force them to cut back on production and raise prices for consumers.
This situation has played itself out on a smaller scale with the Arab oil embargo of 1973 and the Iranian revolution in 1979, both of which caused oil shocks that sent inflation and unemployment into the double digits. However, while these crises abated as political tensions cooled and other producing nations stepped up production levels, a worldwide decline in oil production would lead to shortages that would get continuously get worse from year to year, creating increased levels of inflation and unemployment at the same time.
Although the impassioned half-hour speeches by Reps. Roscoe Bartlett and Wayne Gilchrest, R-Md., made on the floor of the House of Representatives on March 14 indicate that certain officials are taking notice of the problem, the government has taken no substantive action. With this in mind, President Bush should try to work with the leaders of all major oil producing nations to create a comprehensive report that would catalogue the remaining oil left in existing well and take stock of the possibility for future discoveries.
If this report concludes that an energy crisis is imminent, an international effort must be launched to raise fuel efficiency standards and to dramatically increase the scale existing programs that research alternative energy technologies.Such steps would delay the onset of declining oil production and help to build a bridge to energy sources that could sustain the world's prospects for continued economic growth and prosperity.
The Department of Energy characterized the need for action in a February 2005 report that stated, "World oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action."
Hopefully, leaders around the world will heed the Department of Energy's advice and take steps to avoid this potential crisis.
Adam Keith is a Cavalier Daily associate editor. He can be reached at akeith@cavalierdaily.com
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