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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

On Peak Oil



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Randall Parker, one of my favorite bloggers, is profoundly concerned about the coming of Peak Oil. I’m much less so. Rather, I share Vaclav Smil’s perspective on the issue:

Extraction of any mineral resource must decline and eventually cease, but oil will continue to be a major contributor to the world energy supply in the coming decades. Whenever it comes, news of a peak in global oil production should be greeted with calm. Energy transitions throughout history—from biomass to coal, from coal to oil and gas, and from direct use of fuels to electricity—have always resulted in more productive and richer economies. Modern society will not collapse simply because we face yet another of these grand transformations.

But it is certainly possible that rising oil prices will prompt a painful readjustment in how we live, work, and commute, and it might also lead to cascades of change in the international distribution of power. Peak Oil enthusiasts have been abuzz about a leaked report from the Germany military on the potential impact of rising oil prices on the global security environment. Robert Rapier has, with the aid of a German-speaking friend, posted an invaluable summary of the contents.

Overall, the authors expect a reduction of “free market” mechanisms in oil trade, and a rise in more protectionism, exchange deals, and political alliances between suppliers and customers, which could lead to significant geopolitical shifts. Equally, the authors expect this interdependency to shape foreign affairs of oil importers, making them more tolerant towards rogue behavior of suppliers out of sheer need.

This strikes me as the most plausible aspect of the report, and it strikes me as a good reason to find better mechanisms for making our energy supply chains more resilient. Some of the scenarios regarding domestic political turmoil, etc., seem less likely. That said, loss aversion is a very powerful force in the developed world. Who knows what will happen if mobility patterns and supply chains are seriously disrupted? Again, I agree with Smil that any transition won’t be abrupt. But I’m not willing to rule out the possibility! 



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