End of the oil age in sight?

by David Howell

LONDON — First there was wood. Then it was replaced by coal. Then coal was replaced by oil. Is it now the turn of oil — which currently accounts for some two-thirds of the world’s primary energy — to be pushed aside by other energy sources and devices?

In the mid-1980s, the last time oil prices peaked dramatically and global oil supplies were put in doubt, there was a dramatic dash by consumers and corporations for more energy-efficient vehicles and devices in both factory and home for using less oil.

But at the same time, as demand for oil fell around the world, governments pushed for more supplies, the oil-producing countries turned on the taps and new and more remote (and costly) oil fields were opened up, encouraged by the high price for a barrel of crude oil.

With greater supply and smaller demand, no Ph.D. in economics was needed to work out the consequence — namely that oil prices crashed, suppliers went bankrupt, investments in alternatives were frozen, all plans for a post-oil age were put on the back burner and the world went back with a sigh of relief to dependence on cheap oil.

Could the same thing happen this time? There are grounds for thinking that this time, at last, we really could be at the end of the oil age. This hesitant optimism rests on the amazing and enormous coincidence of two forces, or trends, that have happened to come together at this moment in world history: growing preoccupation with energy security and growing concern about climate change.

Of course, the time scale in each case is quite different. Threats to energy supplies exist here and now. Oil-importing nations are worried that dangerous political and security threats are looming in many oil-exporting countries that could not only jack up oil prices further but also interrupt the flow any moment.

One only has to think of turbulent hot spots such as Saudi Arabia, Iran, Sudan, Angola, Venezuela or Nigeria to perceive the risks.

By contrast, threats of global warming and climate disruption are very long term matters indeed. The chief scientific adviser to the British government has said that while these threats are serious, it is probably too late to do anything that will affect climate change in this century.

The good news is that steps to increase energy security, by cutting down dramatically on oil dependency — and maybe in due course on all fossil fuels — are also steps in the right direction with regard to climate change issues. Pursue one objective and you pursue the other. But the question is whether oil-thirsty societies are ready to take the further necessary steps, and that in turn depends on whether consumers really see, and demand, cheaper and better alternatives to heavy use of oil.

That such cheaper and better alternatives have existed for some years is not in doubt.

For instance, transport consumes well over 60 percent of America’s oil needs. Ultra-light cars and trucks, fuel-efficient aircraft constructed of revolutionary new materials, hybrid vehicles with fantastically high mileage per liter of fuel — all these things are already rolling forward. It needs only a few well-placed incentives and tax breaks to unleash a vast cascade of innovations and inventions that could reduce oil demand dramatically in the advanced world, either through large efficiency gains — simply not using nearly so much oil — or through substituting other fuel sources, such as natural gas, clean coal, eventually hydrogen and, at the margin, wind and solar power.

This process of replacement will be mainly driven not by government strategies or laws but by profit-seeking enterprise. Immense new opportunities for wealth-creation, plus new markets, many new jobs and whole new industries are undoubtedly on offer for those smart enough to see the way things are going.

Political leaders are just beginning to understand that if they want to get elected, or re-elected, they will need to spell out how they are going to unlock this potential. They will also need to understand that the very large amount of resources spent on trying to safeguard oil sources — through big military commitments in the Middle East, for example — could be saved and far better used in tax incentives for innovation and enterprise, in better targeted support for development, and in campaigns to raise health standards in poorer societies.

Lifting the burden of oil costs, including these hidden costs, from Western societies, by the obvious method of using (and therefore importing) less oil is by far the best and most practical route to greater energy security in all the main oil-consuming countries, especially in the United States, Japan, China and India. More than that, it paves the way for a carbon-free future one day and for better lifestyles and environment.

Since this future will also involve deriving substantial quantities of fuel from crops, such as ethanol and bio-diesel, it will also see a partial solution to one of the biggest social problems in Western societies — namely, how to keep farmers happy without too much costly protection.

As for the oil-producing regions — they may fear the loss of their main revenue source, but in fact they will grow into far more balanced and stable societies without the corrupting “curse of oil.”

The Middle East might well become a calmer place. Even the big oil corporations could become more profitable if they relied less on finding and selling more and more oil, and turned to other energy sources and profitable innovations instead.

This could mean winners all round — a happy change from the present global climate of conflict and violence.