&ldquoHowever the oil price is historically highly influenced by factors other than production cost. In particular, perception of geopolitical risk has a major effect since production and consumption of oil have totally different geographical profiles. So oil industry profits (including tax receipts) have in fact varied widely as a result. ”
&ldquoYou are left with two distinct questions: 1) Is the price going to rise, and 2) if it does, what's the impact. Your economists appear to be addressing point (1), and their answer is a &ldquono” – and it is impossible for them to be correct in the long run while oil is (a) non-renewable, and (b) the cheapest energy source relative to competitors. The question is how far away is the long term? Historically, improved technologies, and periods of low political risk have resulting in generally falling prices for years or decades. However the long term trend has to be upwards.”
Like James Kunstler Crowley came out in favour of nuclear power, though less reluctantly than Kunstler.
To the question of when will we reach Hubbert's peak there are several answers. Lynch's reply, above, implies that if it exists at all it is a long, long way off. Hallock suggests it will come between 2004 and 2037 (Hallock 2004, 1673). Salameh predicts 2004 or 2005 (Salameh 2004, 28). At the Energy Security of Supply conference Colin Campbell played down the importance of the actual year of peak. What is important is that it be recognised as a problem.
In an interview in January's threemonkeysonline.com James Kunstler painted a bleak picture of a not too distant future without cheap oil. Some towns would just dry up and blow away, there would be massive civil unrest, electricity brownouts and blackouts, food would have to be grown locally and agriculture, starved of hydrocarbon rich fertilisers and chemicals, would be much less productive than it has been. And the private car, it seems, will largely be a thing of the past. Kunstler is not alone. A quick search of the internet will – perhaps unsurprisingly – turn up plenty of doom sayers.
Not all adherents of Hubbert's peak are quite so gloomy. At the Energy Security of Supply conference Campbell suggested there might be a silver lining in a return to local markets and regionalisation and a turn away from consumerism. In his The Coming Oil Crisis, though, he does not hold out much hope for the airline industry (trains transport people using 1/60 the fuel per person that jet planes do). While Kunstler spoke of the irrelevance of &ldquoweaning” people off their dependency on cars, Paul Roberts believes that greater fuel efficiency in cars and other relatively simple measures would lessen the impact of the peak dramatically (Roberts 2004, 14).
A look back at the oil crisis of the 1970s may be instructive. Although apocalyptic scenarios of sudden and total collapse proved inaccurate (Nye 1998, 261) there was a sharp decline in US economic growth after 1973, caused by a decline in productivity growth which in turn was influenced by high oil prices (Jorgenson 1982, 25). The oil embargo, the Iranian revolution and the Gulf War all caused oil prices to rise and recessions to follow (Roberts 2004, 13).
More alarming are the bland assumptions that when oil is too scarce or too expensive we will simply switch to another form of energy. The change, some argue, should be made or at least prepared for now, while we have a plentiful supply of cheap energy to pay for research and development and the enormous costs of changing the world's entire energy infrastructure. US policy does not currently favour renewables. Roberts reports that in recent years almost 65% of US federal production tax incentives have gone to gas production and just 1% to renewables (296), while Europe and Japan have now taken the lead in solar and wind technology over America (15).