High oil prices will not lead to the end of fossil feul use as some hope, says Prof. Dowlatabadi – photo by Darin Dueck
UBC Reports | Vol. 52 | No. 4 | Apr. 6, 2006
By Hadi Dowlatabadi
Professor, Canada Research Chair in Applied Mathematics and Global Change, Institute for Resources, Environment & Sustainability
The world’s production of oil has peaked and is on its way down, meanwhile the awakening of new economies like China and India has deepened the thirst for the stuff. This is popularly referred to as the Peak Oil crisis.
Many have interpreted this as the death knell to fossil fuels and the dawn of a new era of energy conservation and alternative energy. Unfortunately, those who have pinned their hopes for such changes on high oil prices will be disappointed to learn that we are simply at another energy crossroads. Beyond conservation and renewable resources, there are plenty of fossil fuels yet to exploit. And the nuclear industry, in phoenix-like resurrection from the glowing ashes of Chernobyl, is also in the running as our savior.
History has seen humanity cope with many past Peak Oil equivalents. In the fourteenth century, the UK had their “Peak Wood” crisis. Wood demand had changed the landscape, destroyed ecosystems, and the shortage promised disruption of society. However, the rising price of wood led to the emergence of coal as the new fuel of choice and even greater energy use. At the turn of the twentieth century, whale oil was the lighting fuel of choice. With the demise of large whales the price of fuel for lighting rose tenfold to over one hundred dollars per barrel and the era of petroleum was born. In the 1920s, Henry Ford was building his cars to run on renewable fuels (ethanol). Agricultural productivity could not keep up with demand when yields were poor, the price of ethanol rose with each draught and blight, this opened the door to petroleum products to captured the motorized transportation market.
Today, we are at a crossroads again. Our options include: renewables, nuclear, non-conventional oils and coal. Unfortunately, none of these options are free from vice. Hydro dams are by far the most established renewable energy resource. However, even the existing dams are opposed by environmentalists on the basis of their ecological impacts. Wind is the next most competitive option in the marketplace. However, in generating power from the flow of energy in the atmosphere, wind turbines change the climate too. The nuclear option scares the public because of fuel processing and radioactive wastes that will be with us for thousands of years. They are also of concern because security around nuclear infrastructure is socially oppressive.
Renewable alternatives such as bio-diesel and ethanol are being ramped up rapidly, but at most can contribute 20 per cent of our liquid fuel needs before 2020. The “smart money” is on infrastructure to convert coal and tar sands into liquid fuels. These options will have the upper hand because their fuel is most compatible with our existing infrastructure. This rush to fill the shortfall will lead to over-capacity. There will be a glut in the liquid fuels market, and the price of “oil and its equivalents” will not rise beyond $100 per barrel as predicted, but fall towards the marginal cost of production from tar sands and coal at between 20 to 40 dollars per barrel. This will not be conducive to energy conservation in the long run. And while we can be chastised for being profligate, we cannot deny the rest of the world the needs that only greater energy consumption can fulfill.
There is a silver lining to this seemingly gloomy tale. As recently as five years ago, the spectre of oil at $60 per barrel would send politicians scurrying. Environmentalists urging for pollution controls and carbon mitigation to prevent further climate change were dismissed for their unacceptable cost. Since we have now lived through oil at these high prices without economic and social crises, the environmentalists can now remind politicians that their fears were groundless and that we as a society can afford to meet our seemingly unquenchable thirst for energy while dramatically reducing its harmful effects on the environment.