Drying up of oil could mean sticky problems

  • Article by: H.J. CUMMINS , Star Tribune
  • Updated: April 16, 2007 - 9:14 AM

The world is at its "peak oil" production, some say, and it's time to think of running an economy on what's left.

In the category of worrisome developments -- probably sometime between avian flu and an asteroid striking the planet -- will be the energy turning point futurists are calling "peak oil."

That is when the world's oil production hits its highest point -- when the bell curve of supply tops out for good, and then keeps dropping until there is no more.

Prognosticators see everything from doomsday to good, old human ingenuity saving the day. There is also plenty of disagreement among them on the timing of the global oil peak, including: 1995, 2004, 2005, 2006, 2010, 2015, 2040 and beyond.

There are others -- including officials in several countries -- who see this as a nonissue for now, pointing out that some predicted dates have passed with no peak, and some are 100 years out.

But the dates suggest a growing belief that peak oil is at hand. There is a global Association for the Study of Peak Oil & Gas (ASPO). The subject is all over the Web, including www.lifeaftertheoilcrash.net.

For the world of work after the peak, early problems will be getting people to and from jobs and making workplaces more energy efficient. Shipping costs could mean focusing more on local markets. And employers will get more politically active in land use, public transportation and local energy production, conservationists say, all part of another trend with another name: "new urbanism."

"A peak in world oil production has the potential to rock the economy, and a peak in combination with other geopolitical events has the potential to rock the world," said Randy Udall, co-founder of ASPO-USA and director of CORE, a Colorado-based promoter of renewable energy. "It behooves a business person to at least understand what the term means" and begin now to pay more attention to energy-related issues.

Two-thirds of the oil Americans consume is in transportation, said Steve Andrews, a retired energy consultant in Colorado and the other ASPO-USA co-founder. So, he predicts more telecommuting and teleconferencing. He also wants employers to promote employees' energy conservation. Maybe renting a spot in the company parking lot should be pricier for a Hummer than for a hybrid?

Because transportation is such an energy guzzler, Andrews believes employers and politicians should promote denser development, mixed-use development and public transit systems. An early example locally is the Hiawatha light-rail line and clusters of "transit-oriented development" along it.

Rising transportation costs will shift today's global economy to a more local concentration, Andrews said. Shipping lettuce from California to Toronto -- "the 3,000-mile salad," he called it -- will make less sense. But he expects this "relocalization" to be gradual, over decades, he said, because the costs will have to change dramatically before it makes more sense to have a dressmaker in your neighborhood than a dress manufacturer in Asia.

Some industries would be particularly hard hit as petroleum becomes scarce: agriculture, defense, and manufacturers of things as varied as medicine and iPods.

On the other hand, finding alternatives could become a growth industry of its own.

Andrews and Udall put themselves outside the camp of alarmists. "It isn't as if when oil production peaks somebody will ring a bell, and we run out overnight," Andrews said. "It does mean having perhaps 2 percent to 3 percent less oil available one year to the next. For the individual it will mean higher prices, maybe less convenience, and some rationing."

Udall expects energy shortages to force creativity.

"When oil is $10 or $20 a barrel, nobody uses it efficiently," he said. "In the future we'll develop an energy ethic. And all of those adaptations, tens of thousands of them, are going to play out in the business sector in ways that are difficult to predict."

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