Peak Oil Means Much Higher Prices

It’s something we’ve all heard before-oil prices are going up and reserves are being depleted. Usually, the people talking about it are environmentalists-sometimes easy targets for those who are in favor of continued production and consumption of petroleum. However, there is another, and in many ways more effective voice crying wolf. Jeffrey J. Brown, a petroleum exploration geologist from West Texas, has been studying oil production for years and his message is simple-despite increasing consumption, the production of oil around the world is on the decline.

Invited by the UCSB Energy Club and the Bren School for Environmental Science and Management, Brown held the rapt attention of a crowd of over 100 people at UCSB’s Corwin Pavilion last night. Listening to him speak in his calm, unexcited West Texas drawl, one would expect him to begin extolling the virtues of industrialized society and the many hidden reservoirs of black gold that the world can rely upon. On the contrary, Brown stated very plainly that world consumption of oil-particularly in America-is unsustainable, and is embarked upon a crash course with falling production. Comparing the current decline in Saudi Arabian production-Saudi Arabia is currently the number one exporter in the world-with the early 1970s decline in West Texas’ production, Brown’s facts and figures indicated that not only will production continue to fall ever more rapidly, but that increasing use will cause a major crisis at some point in the not-too-distant future-some of the estimates indicated within the next 20 years. While some might call for drilling in the Alaska National Wildlife Refuge to beef up the U.S. oil supply, Brown’s model shows that the amount of oil there is only a minute fraction of what is needed to push forward a production peak that already passed years ago. “It’s just a rounding error,” he said.

According to Brown’s data, when production falls, the price of oil within the producing country rises. The rise in price spurs an increase in drilling, which yields lower production. As a result, exports decrease, causing the price to increase more, thereby taking away the economic benefit of a formerly exportable commodity. Brown said that this is the situation currently forming up in Saudi Arabia, and that it has already occurred in the major oil reserves in the North Sea and Mexico-two of the world’s largest oil producers. Essentially, the occurrence of peak oil production doesn’t mean that we stop finding oil, it just means that production decreases, making it difficult to keep up with demand.

Although the figures looked dim, Brown said that a change in lifestyle for Americans and other consumers is necessary. “I don’t think the suburban way of life is worth living,” he said. “Our energy consumption is at such a gargantuan level that I don’t see any way we can continue with the status quo.” Pointing out that many European populations have figured out ways to cope with extremely high energy costs, Brown noted that better mass transit options combined with wind and solar energy is needed in the U.S. “In a lot of cases the Europeans live a superior lifestyle. In a lot of ways the American lifestyle is very limiting. We spend a lot of time in our cars.”

Although it’s the number one producer of carbon emissions in the country, Brown’s home state of Texas is also the top producer of wind and solar energy. Brown is an outspoken proponent of wind energy, saying that if a wind farm were placed on Santa Cruz Island, it would supply 100 times the energy needed by Santa Barbara. “I assume the reason you haven’t seem more wind generators along the coast here is because people think they’re ugly, but if you consider the alternative, they’ll get a lot prettier.”

Brown extended the implication of his production and consumption projections into the global political arena, referencing the current U.S. involvement in Iraq and our devolving relationship with Iran. He speculated that World War III could come out of a dispute for oil rights. “I would equate a U.S. attack on Iran to the Nazi attack on Poland in World War II,” he said. “It’s what would coalesce the attack on the aggressor.”