"An 'energy-limited economy' is one where more energy cannot be had at any price. The global economy will become 'energy-limited' once global oil production peaks…." - Jay Hanson
Iraqi Oil Not Enough for U.S.
Last Days of America?
by Stuart H. Rodman
The forces of nature are poised to unleash a powerful salvo of potential kill shots at America and even if powered by all the oil in Iraq, we will be unable to stop it. Consider the following:
Tens of millions lost at sea. Not from a terror attack or in some sci-fi scareflick, but in their own homes when America’s east coast is swallowed up by a raging surge from the North Atlantic. That’s what will happen when the Cumbre Vieja volcano on La Palma erupts in the Canary Islands off the West Coast of Africa, sending a rockslide of biblical proportions splashing into the sea. And scientists agree, it’s not a question of “if” but when.
The threat from so called “mega-tsunamis” like the one awaiting us from off the coast of Africa is not the only bad news from nature. Residents of our planet’s northern hemisphere have only recently been learning about the catastrophic threat of super volcanoes like the active one in America’s own Yellowstone Park which has defoliated North America and wiped out most of the world’s food supply during its last and most likely not its final eruption. But over the last several years though, Geologists have told the UK Government that the country risks being hit by a giant wave of water that could destroy many coastal communities,
“Experts at University College London (UCL) have contacted the science minister Lord Sainsbury to warn him that a collapsing volcano in the Canary Islands could send a wall of water, hundreds of metres high, sweeping out over the Atlantic Ocean”.
The devastation would be so widespread that not only the East Coast of the United States and the Caribbean would be submerged by the event but also even parts of Great Britain would succumb to the disaster. According to the BBC,
“Dr. Simon Day, of Benfield Greig Hazard Research Centre, UCL, says the western flank of the Cumbre Vieja volcano on La Palma is unstable and could collapse during a major eruption. This might send half a trillion tonnes of rock crashing into the sea at once”.
The BBC report goes n to place the magnitude of the coming disaster into proportion,
“Modeling by colleagues in Switzerland shows that such a landslide could trigger a so-called mega-tsunami, which has an initial wave height of 650 metres (2,130 feet) and moves out over the ocean at speeds up to 720 km/h (450 mph)”
(http://news.bbc.co.uk/1/hi/sci/tech/956280.stm)
By the time such a wave crossed the Atlantic, its power would have diminished but it could still wreak havoc up to 20 kilometers (12 miles) inland.
Can’t happen? Think again. In 1958 a rockslide created wave in Alaska more than 1,500 feet high, smashed into the coastal community of Lituya Bay. The rockslide occurred along the eastern wall of the Gilbert Inlet:
“The mass of rock striking the surface of the bay created a giant splash, which sent water surging to a height of 1720 feet across the point opposite the inlet. This initial sheet of water stripped all vegetation from the point, leaving a bare rock face.”
The mega tsunami from La Palma could devastate Americans from Boston to Miami in one splash. In 1998, a huge tsunami, caused by a landslide under water, submerged large parts of Papua New Guinea, killing an estimated 2,000 people.
Will these be the last days of America?
Our Place in The Cosmos
Many are already aware that our species is under siege from comets, super volcanoes, mega tsunamis and not the least of all, ourselves. We shouldn’t be surprised about this. After all, we already know that our planet’s history is rife with species ending disasters. Otherwise we would all be dinosaurs.
According to acclaimed physicist Michio Kaku though, the rise and fall not only of enormous reptiles but of intelligent life as well may be common throughout the universe. We all must live in a troubled neighborhood. In a universe full with black holes, comets, supernovae, predatory virus, and runaway planetary forces, few civilizations survive long enough to develop technologies to harness the cosmic and planetary forces that will ultimately snuff them out.
Kaku speaks about “the laws of planetary evolution”:
“Any advanced civilization must grow in energy consumption faster than the frequency of life-threatening catastrophes (e.g. meteor impacts, ice ages, supernovas, etc.). If they grow any slower, they are doomed to extinction. This places mathematical lower limits on the rate of growth of these civilizations.”
Kaku says that to survive requires growing sources of energy just to keep pace with demand, "Specifically, we can rank civilizations by their energy consumption”
And America leads our world in energy consumption. Unfortunately, we derive most of our energy from a commodity that we don’t have enough of, oil. According to some, we can begin to find the alternative resources to build a secure energy future right here within our borders.
But others, already invested in the infrastructure of the past have another plan for us. What they don’t have for themselves, they can just steal from those who do.
America’s most giant corporations have Oil rich Islam staring down the barrels of their hired guns. But while Exxon and Unocal drool at the prospect of how they can best divie up the loot from what may later be known as History’s greatest armed robbery, it’s time the rest of us pause to think outside the box.
Consider. Our planet’s limited supply of oil was created on earth millions of years ago and will eventually either run out or become thermodynamically and economically worthless.
And remember, it takes energy to drill for oil let alone refine and transport it for market. In order for civilization to benefit from an energy resource, the finished product must be able to release more energy when put to work, than was used to prepare and develop it. As the easy to find oil is exhausted, the more difficult to extract oil that remains is less useful. Eventually, despite advances in drilling technology, the world’s oil will become less attractive than available alternatives or may simply become worthless as a source of useful energy.
As that day approaches, we live in an America long since petroformed by the oil industry from a land of independent family farms and businesses, to a nation dependent like serfs on their lord, on the barons of oil for everything from fuel to fertilizer. Today as we watch without protest, a new Feudalism is being forged worldwide by their mighty armies, our indignation subdued by the prospect of fueling our SUVs with cheap ill begotten oil.
And we will kill for them.
Finding the High Ground
The high ground of the future is wherever the net energy is. That’s the energy we can put to work without having to expend much existent energy to get it.
It’s a measurement that really matters. Kaku cites the work of a noted astronomer,
"In a seminal paper published in 1964 in the Journal of Soviet Astronomy, Russian astrophysicist Nicolai Kardashev theorized that advanced civilizations must therefore be grouped according to three types: Type I, II, and III, which have mastered planetary, stellar and galactic forms of energy, respectively. He calculated that the energy consumption of these three types of civilization would be separated by a factor of many billions.”
Will we sustain ourselves long enough to reach even the first rung on the ladder? Let’s hope so. If we don’t, we will simply join the growing list of extinct species found on our planet and thought to riddle the universe. Kaku must think we have a long way to go just to get on the first rung,
"A Type One civilization is one that controls the energy resources of its planet. This civilization can control the weather, prevent earthquakes, mine deep in the earth's crust, and harvest the oceans. This civilization has already completed the exploration of its solar system”.
A recent report by Alex Johnson of MSNBC that demonstrates that our actions in the Mideast are tailored for an energy policy catering not to the available resources on our table, but to the proprietary interests of Big Oil and their lust for other people’s resources. Johnson said, “The belief in some circles is that the heavy reliance on foreign oil, including Iraqi crude, is factored into the White House plans to take on Saddam.”
“If you think of U.S. oil production as a six-pack ... of petroleum, four of the cans are empty. We’re kind of a black hole for energy.”
Johnson also quotes George Sterzinger, executive director of the Renewable Energy Policy Project, “There are technologies that exist now [that] could replace looming shortfalls in fossil resources…R&D has paid off”
Truth? In the year 2000, U.S. energy consumption was estimated at 10^2 quadrillion Btu, a staggering figure. Incredibly though, more than 10 million more quadrillion units of solar energy hits the ground on American soil each day than we used that whole year!
We could build a better mousetrap. The ray’s of the sun could used to generate cost effective electricity, to grow biofuels, or manufacture hydrogen to fuel vehicles. In a free market, they’d beat a path to our door. Johnson wrote to his mainstream readers, “But, alternative energy advocates say, the game is rigged. They complain that those shortcomings could be surmounted with adequate federal support, and they accuse the government of talking a good game but failing to deliver.”
Talking about Big Oil, Johnson pointed out, “Since Bush took office, his administration has directed a total of $6 billion in subsidies toward conservation, fuel efficiency and renewable resources, less than a quarter of the $27 billion it has spent on fossil fuels, according to an analysis by The New York Times.”
So much for free enterprise. Fact is the deck is stacked. Someone’s already decided that what we don’t have we’ll just steal.
Speaking to the mainstream, Johnson himself admits, “The U.S. energy challenges are much more grave than the president, the Senate or the House has recognized, than anybody has ever articulated to the American people.”
And civilization’s need for energy may know no bounds. Consider these words from Kaku, “A Type Two civilization is one that controls the power of the sun itself. This does not mean passively harnessing solar energy; this civilization mines the sun. The energy needs of this civilization are so large that it directly consumes the power of the sun to drive its machines. This civilization will begin the colonization of local star systems.”
And then what?
The Death Sentence
Our present day oil economy, though more efficient than steam or whale blubber, won’t get us where we need to go and the forces of the universe may not allow us the time to find the alternative. Unless we do, our names and the names of our children will be written in some virtual graveyard of forgotten civilizations; from dust to dust.
I learned from Jay Hanson’s unrelenting study of the oil industry (http://dieoff.org), that in the '50s they could produce 50 barrels of energy for every barrel consumed producing finished products for the market. By the nineties, the ration had fallen to 5 barrels to 1. By the year 2005, the industry will just break even-it will be necessary to use as much energy to produce any given quantity.
Oil production peaked in the lower forty eight states decades ago and even with the potential production of fields in Alaska, we will still remain dependent on imports if we plan to continue selling our big cars. Soon though, because of the thermodynamic costs, it won’t be logical to look for new oil anywhere in the US because, even if you could sell oil for $500 a barrel, exploring, drilling, and transporting it to market would consume more energy than it would recover.
The Oil companies already know this. They have to try harder. They have long since outgrown the producing oil reserves in this country and they now have literally set their sights on the low hanging fruit in the Caspian Sea and the vast reserves of Iraq. Of course though, even these thermodynamically rich resources won’t be around forever amid exponentially growing worldwide demand. So they want to strike while the iron is hot.
And Unocal, Halliburton, Exxon, and their off shore clones have worked hard to install a national leadership to do their bidding for them. They had to because the cost of doing business has gotten so much higher. In this case though, they found a way to offset the high costs of acquisition. They can get to the thermodynamically good stuff with taxpayer-subsidized munitions. Once at the oil patch, the rest will be child’s play.
Fact is the oil companies have already recovered the easy stuff. Oil is simply becoming more and more thermodynamically expensive worldwide and now in order to survive, Oil companies need to concentrate on the low hanging fruit, the “elephant finds”, the ones found in other people’s countries.
MSNBC’s Johnson, quoting petro industry sources point out, “The U.S. economy runs on oil, and it does so because it is cheap and convenient — ‘it isn’t any more complicated than that,’ an industry official said.”
Simple but sad. Through the miracle of petroforming, competing energy sources aren’t as versatile as petroleum. They even invented a word for it. Johnson says,
“They’re not what the industry calls ‘fungible,’ meaning they can’t be used for a wide spectrum of applications”.
Like producing our food.
The bad news is, when the oil supply ultimately fails, absent alternative technologies, the world’s food supply will go with it. But when it comes to developing alternative technologies though, in a government controlled by former oil company kingpins, as Johnson quotes George Sterzinger, Executive Director of the Renewable Energy Policy Project, “policies don’t move in that direction.”
Food and energy go hand in glove. Since all our energy eggs have been put in the oil basket, the fate of one will determine the fate of the other. The U.S. Geological Survey has said that Oil discovery is about to peak worldwide and absent an alternative, there will be more at stake for us than just our bragging rights to being an advanced civilization. Starvation may become the rule in a world without energy. Kaku says,
“Even an advanced civilization is bound by the laws of thermodynamics, especially the Second Law, and can hence be ranked by the energy at their disposal.”
Then ours won’t even make the charts. In reality, because there is in only a dwindling supply of energy that can be sucked from the well, absent an alternative, we will be living in an "energy limited economy". Hanson offers this definition, http://dieoff.com/page185.htm
"An 'energy-limited economy' is one where more energy cannot be had at any price. The global economy will become 'energy-limited' once global oil production peaks…."
And that could happen soon but when it does, whenever it does, it could mean more trouble than just lining up at the filling station. Consider the dependency of agriculture on oil. Hanson points out, http://dieoff.org/page185.htm
"Food grains produced with modern, high-yield methods (including packaging and delivery) now contain between four and ten calories of fossil fuel for every calorie of solar energy."
Hanson adds, "It has been estimated that about four percent of the nation's energy budget is used to grow food, while about 10 to 13 percent is needed to put it on our plates. In other words, a staggering total of 17 percent of America's energy budget is consumed by agriculture!"
Again citing other sources, Hanson states, "By 2040, we would need to triple the global food supply in order to meet the basic food needs of the eleven billion people who are expected to be alive. But doing so would require a 1,000 percent increase in the total energy expended in food production."
Following the peak of oil production, absent an alternative, Hanson notes, "It will be physically impossible -- thus economically impossible -- to provide enough net energy to agriculture”
Hanson adds grimly, "Obviously the death sentence for billions of people has already been issued".
The Type One Club
The once and future lords of the realm, now stocking their counting rooms with the gold from our pockets and soon they hope from the black gold from beneath the oil fields of Arabia, may plan for survival long enough for them to bear witness to a coming die off. The demand for life sustaining resources will ultimately be balanced by the supply and there will only be so much to go around. Organic farmer, Mark Snyder states,
“Civilization will develop a new agriculture free from the petrochemicals now used for its existence or time will run out before we even understand what we have done to ourselves.”
And there’s another danger. Kaku calls it the “Uranium Boundary”. We can build bombs that could end civilization, but we are a long way from using nuclear power to produce any kind of clean net energy. Today’s fission based nuclear plants are net energy losers and the more promising fusion technologies of tomorrow require many times more energy to operate than they can currently produce. The problem is that the development of civilization sustaining energy sources requires long-term investment.
It may just be though, that Unocal has already reasoned that there’s not going to be enough time or enough food to go around for everyone, so it might as well be “them” that goes. They will stock their cupboards with whatever they need to hunker down for the long haul and they may even want to keep some of the rest of us around to till their soil along the way.
There are probably many among us that would be content to go along for that ride. It’s the old “them or us”. If that sounds good to you go for it!
Otherwise face it.
Allowing ourselves to steal oil from one another is just the most recent demonstration of the lengths a desperate few will go to remain in control. All the gasoline-fired engines in the world can’t turn back the tides of the ocean or divert the explosive fury of even the smallest volcano. Sure, that privileged few might survive, for a while at least, but for most of us, it just won’t work.
But that’s all in the future right? In this the Age of the Consumer Economy, we have been carefully conditioned to expect immediate gratification. Given the right mix of consumer products, say remote controlled cable TV and your favorite aspartame laced diet cola, we can trade worry for happiness.
Still, even school kids are taught that crime doesn’t pay. In the case of Unocal and their corporate collaborators though, it’s also a waste of our time. Granted that justice, though certain may not always seem swift. But considering there’s already an undiscovered comet out there with our name on it, time may be the one thing that we just don’t have enough of.
So for those not already numbed by neurotoxic consumables or the info warfare waged upon us by our media and the elite brokers that use them to convince us all will be OK if we just buy more of the products that make their top investors rich, there will have to be another way.
Although there may be enough oil left in the ground to keep our SUV’s speeding down the breakdown lanes of the world’s highways at least for a few more years, our chemical rockets and diesel engines will no more re-excavate the slopes of the Cumbre Vieja volcano than take humans to the reaches of our solar system.
But we can rediscover the energy of sunlight, reform agriculture, and develop an economy of efficiency. It may or may not be too late but only by doing so, can we extend the lifespan of civilization and even hope to gain admittance to some Type One Club of survivor civilizations. Of course policies don’t move in that direction though and we may just be too preoccupied now to start doing so.
In the meantime, by betting the farm on our dwindling fossil legacy we will be burning the bridge between our geological history and our long-term hope for survival. Along the way, our hands dutifully locked in a stranglehold on the wheel, we leave ourselves vulnerable to the broadside awaiting us around the next curve from the apocalyptical forces of planetary change that foretell our extinction.
The shameless taking of cheap oil from Peter to give to Paul will be making somebody else rich by the bloodshed of countless others, our own progeny included, but it too will soon run out. Fool’s gold. When the party is over, some of us may be fat and sassy but there will likely be a lot fewer humans in the world to bully around, untold collateral damage on the home front, and little else to assure the survival of our seed.
The short score?
For now at least, the petrochemical giants and the armies they command have become our masters. They have petroformed our land to forge a new feudalism from the ashes of the old realm from which they are themselves descended. Today, as the dark clouds of war gather, they know that the future world of humans will shrink and spasm but they will remain safe, hunkered down in their castles, their cupboards stocked for the centuries with the ill begotten gold of others.
As for the rest of us. The vast riches of our once and future masters will do us little or no good, save for some scraps that fall from their tables. Though they are mighty, the explosive fury of their bombs will pale compared with the unrestrained destructive forces of nature that will be left poised to annihilate our planet.
And we have been well trained to play our part. Eat, drink, and be happy. Without dumb luck though, the finite fossil fuel legacy of earth’s past will not get us through tomorrow, when humanity might die.
Kaku suggests that the universe is littered with the corpses of civilizations that failed to reach the Type One high ground of energy needed to counter-balance the unimaginable power of cosmic forces that both create and destroy.
Either we will divest ourselves of the oil-slicked bonds that chain us to our addictions and to those that foster the illusions needed to keep us dependent upon them, or we will perish. It will be one way or it will be the other.
Monday, April 16, 2007
The Vanishing
by Sharon Levy
This man's bees are in grave danger. So is our food supply. Why something so small matters so much.
ees crawl all over my body. I sit in the mud of a road embankment, watching the throngs that have landed on my legs. At the peak of one knee, three worker bees stand in urgent conference, sniffing: They stroke one another rapidly with their antennae, which house their organs of smell.
All around them, their sisters tumble. Pairs of bees seize each other around their minuscule midsections and wrestle. Others go about their private business in the midst of the crowd, using their forelegs to groom their furry faces and long tongues.
I watch, calm and safe inside my borrowed beekeeper's gear: white coverall, veiled pith helmet, protective gauntlets. Just down the road, Jeff Anderson and his three assistants methodically pry the lid off each of hundreds of hive boxes to check the health of the colonies inside. As the day wears on and the March sunshine warms this little-used ranch road in California's Sierra foothills, more and more bees take flight.
Wild buckthorn bushes lining the road carry clusters of tiny white flowers, their anthers bright with pollen. Bees work the blossoms, packing the yellow grains into smooth depressions on their hind legs, specially designed to carry this fuel (pollen is a high-protein food) back to the hive. On their travels, they transfer pollen from plant to plant, flower to flower, fertilizing the blossoms and allowing them to set fruit. This ancient partnership of pollinator and plant is essential to life as we know it. One-third of the food we eat comes from crops that need animal pollinators, a role often filled by bees but sometimes by butterflies, beetles, birds, or bats. Bee-pollinated foods include squash, tomatoes, peppers, apples, and pears. Unfortunately, the honeybees surrounding me are members of a threatened tribe, whose loss would have a dire effect on farmers, not to mention everyone who eats fruits and vegetables.
Bees became the focus of Jeff Anderson's life 30 years ago when he married his wife, Christine, a beekeeper's daughter. He joined his father-in-law, Joe Tweedy, in the family business. Ever since, he's been shuttling a carefully tended stock of honeybees cross-country, following the bloom of crops from California's early spring fruit orchards to Minnesota's summer fields of clover. Anderson's grown son Jeremy, working beside him, represents the fourth generation of beekeepers in the family. Without the services of managed honeybees, provided by migratory beekeepers like the Andersons, billions of dollars' worth of crops across the United States would fail.
I join Anderson as he opens another hive. Inside, eight wooden frames hold honeycomb whose surface is crowded with bees, all in constant motion though there seems to be no room to move. Speaking with an upper-midwestern lilt -- Anderson grew up on a Minnesota dairy farm -- he points out the queen, about 30 percent larger than the thousands of her worker-bee daughters who feed, build, and clean the hive. One or two black drones, males whose only function in life is to mate with a queen, stroll among the busy workers.
As he moves through the bee yard, Anderson can tell at a glance how each colony is doing. If all is well, the frames of honeycomb will be thick with bees giving forth a contented hum. But sometimes half the frames are bare and the bees just don't sound right. Sometimes the ground beneath a hive box is covered with bee carcasses.
Since Anderson began, in 1976, raising healthy bees has become more and more difficult. In the 1980s, two non-native species of parasitic mite infested North American honeybees. One of the species, Varroa destructor, has proved especially deadly. Meanwhile, safe pastures where bees can forage without being poisoned by pesticides are becoming increasingly rare.
The domesticated European honeybee was introduced to North America 400 years ago by colonists at Jamestown and Williamsburg to provide their settlements with honey; few bees native to the continent produced enough honey to make harvesting viable. Since then, the honeybee has spread into every farmable corner of North America. The cultivation of honey is an age-old pursuit: To maximize its production, beekeepers in Egypt during the time of the pharaohs floated their hives down the Nile to areas of abundant bloom, with some success. Early American beekeepers also transported their colonies -- on buckboard wagons, Mississippi River steamboats, and trains -- also with mixed results; the hives could not always be moved at the right times, the wax in the honeycombs often melted, the worker bees were sometimes left behind while their homes drifted downriver. In the 1940s, when new interstate highways and reliable long-haul trucks made it practical, beekeepers began regularly migrating long distances with their hives, following the flow of nectar as crops bloomed with the changing seasons.
In the boom years following World War II, large swaths of natural habitat across the United States were devoured by suburban development and agriculture. Patches of wild woodland, shrubs, and flowers that had supported native bees dwindled. The common practices of modern agriculture -- the widespread use of pesticides and the tendency to wipe out every wild flowering plant in sight -- began to destroy the pollinators that make farming possible. Beekeepers, accustomed to paying farmers for the privilege of stationing their beehives on land with blooming crops, started to receive payment from farmers for their pollination services. Today, migratory beekeepers follow this trail of money back and forth across the country as pollination fees continue to rise.
The United States and Canada are home to at least 4,500 species of native bee, from the sleek, iridescent blue mason to the plump, lemon-yellow bumblebee. All are at risk. "Where we live in Minnesota," says Anderson, "the local farmers will let their second cutting of alfalfa or red clover bloom, to feed the bees. A number of those people will tell you that the native bees just aren't there anymore."
With the accelerating decline of native bees, honeybees are becoming ever more critical to farmers. American agriculture is addicted to honeybees -- and in the past few years has begun to run short of them. Anderson's spring starts in February, when the almonds in California's Central Valley come into bloom. California has more than 580,000 acres planted in almonds, though commercial beekeepers living full-time in the state hold enough bee colonies to pollinate only about half that acreage.
In the spring of 2005, many of the migratory beekeepers who work the California almond bloom discovered that their colonies had suffered heavy losses during the winter. Across the country, about one-third of all commercial honeybee colonies died out. The result was a pollinator panic in the Central Valley. Fees for renting beehives shot up from about $48 to as much as $140 per colony, a previously unheard-of amount. Beekeepers traveled from as far away as Florida and North Carolina to service California's almond groves. For the first time in 50 years, U.S. borders were opened to honeybees from New Zealand and Australia. The fate of a $1.2 billion crop -- more than half of all almond production worldwide -- rested on the slender back of the embattled honeybee.
Many bee experts assumed varroa mites were a major cause of the severe die-off in the winter of 2005. Yet when researchers from the U.S. Department of Agriculture (USDA) Bee Research Laboratory in Beltsville, Maryland, traveled to Oakdale, California, where Anderson and a number of his fellow beekeepers spend winter and spring, they could find no correlation between the level of varroa mite infestation and the health of bee colonies. "We couldn't pin the blame for the die-off on any single cause," says Jeff Pettis, a research entomologist at the lab.
Anderson has his own ideas about what caused the almond pollination crisis, and what is most responsible for wiping out honeybees across the United States. "Varroa is a bit of a red herring," he says. "One of the biggest problems is irresponsible use of pesticides and the failure of regulators to enforce the rules meant to protect bees from poisoning."
Over the past few years, Anderson has become a reluctant expert on one particular pesticide, Sevin, and the quirks of the system meant to govern its use. In the summer of 1998, Anderson's hives were stationed on farmland next to hybrid poplar groves managed by the Minnesota Department of Natural Resources and the International Paper Company. Both sprayed the trees with Sevin to control infestations of the cottonwood leaf beetle, which damages poplars. Soon after, Anderson's bees began to die. He videotaped sick ones as they lay twitching, just outside their hive boxes, in the throes of nerve poisoning from the insecticide. The poisonings would continue long after a Sevin application, he says, because worker bees carried contaminated pollen back to the hive, where it affected the colony for months. More than 50 percent of his bees died.
"I can't comment on the specifics of Anderson's case," says Pettis, "but I do know that Sevin and honeybees do not mix. What he purports could certainly happen. If the bees are storing Sevin in the pollen, when they get to California and feed on it over the winter, it's going to be as toxic as it was when they first picked it up."
In 2001, Anderson and two neighboring beekeepers filed a lawsuit against the Minnesota Department of Natural Resources and International Paper seeking $2 million in damages. Anderson has found himself enmeshed in the strange world of pesticide law. He's learned to speak fluent pesticide legalese, committed to memory whole sections of FIFRA (the Federal Insecticide, Fungicide, and Rodenticide Act), and has become both cynical and stubbornly hopeful about the state of pesticide regulation in the United States. "The law is not broke," he says. "It's the lack of enforcement that's the problem."
A district court judge initially dismissed Anderson's suit. But in January 2005, the Minnesota Supreme Court breathed new hope into the beekeepers' case, noting that by allowing the use of Sevin, Minnesota state policy seemed to conflict with the federally mandated bee caution on the pesticide label, which states that the chemical is highly toxic to bees and warns, "Do not apply this product . . . to blooming crops or weeds if bees are foraging in the treatment area."
The latest court decision makes it possible for the lawsuit to go forward, but Anderson is still hoping for the case to be heard by a jury. The Minnesota Department of Natural Resources reached an out-of-court settlement with the beekeepers, in which it agreed to stop using Sevin, but International Paper continues to spray its more than 30,000 acres of poplars, which it harvests to manufacture paper pulp and fiberboard.
Unable to keep their hives healthy near the sprayed poplar groves, many beekeepers have moved away from Eagle Bend, Minnesota, where Anderson and his family have summered for decades. After a particularly disastrous series of die-offs in 2002, Anderson moved his hives to fields far from the sprayed poplars, and he now makes a long commute every time he works his bees in the summer. Since the move, the survival rate of his colonies has improved. Even last spring, when many of his colleagues suffered major losses, his colonies did relatively well. He sees this as confirmation that Sevin contamination is finally fading among his hives.
"I'm standing my ground," Anderson says. "If I pick up and move to another state, they'll just blast me with some other pesticide." He's familiar with the chemical disasters that struck beekeepers in Nebraska, Colorado, North Carolina, and Washington in the 1990s, when the insecticide Penncap-M became popular as a defense against corn rootworm, the larval form of a beetle that attacks the roots of corn plants. Penncap-M, a microencapsulated form of methyl parathion, could have been designed as the ultimate bee-killing weapon: a highly toxic, long-lived nerve poison enclosed in tiny, pollen-size beads. Foraging bees packed these pellets into their pollen sacs along with the real thing and carried them home, devastating their colonies.
Corn is easily wind-pollinated, so although bees gather corn pollen, growers don't need them. They see Penncap-M as the cheapest, most efficient answer to their rootworm problem, and its impact on bees has not convinced them to give it up. Significant honeybee die-offs due to Penncap-M are on the wane, but not because of pesticide regulation. Beekeepers who weathered major losses from Penncap-M now keep their hives far from anywhere the pesticide is used. Some beekeepers, however, were driven out of business by massive bee kills, becoming statistics in the long-term decline of commercial honeybees in this country. In the late 1940s, U.S. beekeepers held about 5 million colonies; gradually that number has dropped to about 2.3 million.
At the compound in Oakdale, California, where Anderson and his family spend the winter, his two youngest children, dressed in Confederate gray, are staging a very small-scale reenactment of a Civil War battle beneath tall valley oaks. Anderson walks with me to my car as I get ready to leave. A wry smile creases his face, ruddy from long days out in the weather. "You know," he says, "it's a catch-22. If my bees are nowhere near the poplars anymore, then International Paper can claim it's OK to spray Sevin. So those bee pastures, which we've depended on for so many years, may be lost forever."
The decline of honeybee populations has brought the agricultural community to the brink of a pollination crisis. The best hope for the long-term survival of many American farmers may be the revival of native bees. Yet they, like their domesticated cousins, face some daunting obstacles.
California's Central Valley, one of the most productive agricultural regions in the West, is a forbidding wasteland for native bees. Endless acres of orchards, fields, and suburban ranchettes are kept clear of anything that's perceived as a weed -- and that includes wild shrubs like ceanothus, buckthorn, and redbud, whose flowers are rich pollen sources for bees in early spring.
A few dozen honeybees patrol the dazzling purple-pink blossoms of a redbud growing in a small arboretum, tucked along the banks of a creek that crosses the campus of the University of California, Davis. Flying among them is a single native bumblebee, insulated on this chill afternoon by her thick lemon-yellow fur. She's loading pollen onto her corbiculae, hair-rimmed, basket-like structures on her back legs that hold the bright grains for transport to her colony.
Robbin Thorp waves his net like a magic wand and extracts the bee from the tangle of twigs where she's been foraging. With expert movements, he guides her into the pointed end of the net and pops her, unhurt, into a glass tube where I can study her up close. Thorp, an emeritus professor of entomology, has devoted a long career to native bees. As a graduate student in the 1950s he identified five species previously unknown to science. Now, though his beard has turned snow white and he's been officially retired for a decade, Thorp continues to spend time in the field. But these days he's more likely to be tracking the decline and disappearance of once-abundant bees.
When Claire Kremen, a conservation biologist at the University of California, Berkeley, set out in 1999 to study the contribution of native bees to crop pollination in the Central Valley, she called on Thorp to train her research crew in the art of identifying bees on the wing. Under his tutelage they learned to tell the common local species of bumblebees apart, to recognize the narrow yellow-black striping and streamlined shape of a squash bee and the blue-green iridescence of a metallic bee.
Kremen's study focused on watermelon, because the blossoms need a lot of pollen -- about 1,000 grains per flower -- to produce a marketable fruit. If native bees can do well pollinating watermelon, they're likely to succeed with just about any other crop. She and her field assistants spent long summer days walking transects in watermelon fields, counting the numbers of each kind of native bee they saw working the flowers. Kremen's research, among the first to examine the status of native bees on agricultural land in the United States, produced dramatic results.
Farms with no nearby oak woodland or chaparral have too few native bees to succeed without the services of rented honeybees. But those near remnants of wild habitat host native bees of many species, in numbers high enough to pollinate even a demanding crop like watermelon. The farms that fell into this category were all organic operations set on smaller plots of land tucked into hillsides where native vegetation survives. By contrast, conventional farms not only use a variety of pesticides but are set in the midst of the Central Valley's hostile landscape.
"Pollination is a valuable service that we're destroying through our land management practices," says Kremen. But she points out that there are many ways conventional farming could change to support bees. One is to grow cover crops like rye and clover, which aren't harvested but instead plowed under to enrich the soil after they've flowered. Farmers could also use roadsides and ditches to restore native plants and create bee-nesting areas. They could reduce their use of pesticides or apply them at night, when bees aren't flying. Growers ought to do these things, Kremen believes, not out of selfless concern for threatened bees but because, in the end, it will protect their own bottom line. Since honeybees -- which now pollinate up to $14 billion worth of crops annually in this country -- are in steep decline, native bees are needed as a backup. The costs of managing bee habitat could be offset by reductions in the amount a farmer spends on renting honeybees, a cost that continues to increase for many crops. In 1999, for example, U.S. plum growers paid about $6.4 million for honeybee pollination.
Kremen was able to discover which species are most efficient by "interviewing the bees." This involved shrouding watermelon blossoms in bee-proof veils, uncovering them just long enough for a single bee to visit, and measuring the pollen left behind. Some of the natives, including two species of bumblebee and the squash bee, do a far better job of delivering pollen than do honeybees. Kremen also noted that over the two years of her study, the numbers of native bees shifted. In one year, a few types of high-efficiency bees accounted for most of the pollination. The next, many species contributed. That finding argues for the need to maintain a diversity of bees, leaving enough flexibility for crops and their pollinators to survive shifting conditions.
"We need to have a balanced pollinator portfolio, and we don't right now," says Stephen Buchmann, founder of The Bee Works, an environmental consulting firm specializing in pollination issues. "Just like in investing, we need to have a balance between short- and long-term risk."
Buchmann acknowledges that honeybees are indispensable to modern agriculture, but he points out that they can't carry the burden of crop pollination alone. He believes that protection of native bee habitat and active management of native species must also be part of the solution to the pollinator shortage. The rise and fall of the alkali bee, recounted in his book The Forgotten Pollinators, coauthored with Gary Nabhan, illustrates both the great agricultural potential of native bees and the threats they face.
The native alkali bee, a solitary creature that digs its nest near seeps in the alkaline soil of western deserts, is a champion pollinator of alfalfa (alfalfa hay is a staple food for dairy cattle and other livestock). The plant's flowers are typical of legumes: The sexual parts are held under tension, and to gather pollen a bee must trigger their release, receiving a smack on the head in the process. Alkali bees, which are particularly well suited to pollinate wild legumes like lotus and locoweed, are unfazed by this experience. European honeybees avoid it.
In the 1950s, alfalfa farmers in Nevada, Idaho, California, eastern Oregon, and Washington began to create artificial nesting areas for alkali bees, seeding them with plugs of soil from natural bee beds. One result was a lasting expansion of the alkali bee population in the places where humans needed them most. Another was a boom in alfalfa seed production in the American West. With alkali bees working the blossoms, the yield of seed used to replant hay fields skyrocketed.
Then, during the 1970s, managed alkali bee populations began to crash. Some alfalfa growers believe that a shift in pesticide use on neighboring crops did the bees in: Alkali bees will fly a mile or more in a day and forage on a variety of flowers, so they could easily have picked up poisons beyond the alfalfa fields. Or perhaps alfalfa farmers' own use of insecticides to combat a common pest, the lygus bug, destroyed the bees. In any case, the lion's share of the U.S. alfalfa crop, worth $5 billion a year, now depends on the alfalfa leafcutter bee, a nonnative species. Canadian farmers produce the bees, which feed on the pollen of canola and alfalfa, and sell loose cocoons by the gallon to growers in the United States. About $30 million worth of leafcutter bees are purchased each year; efforts to raise them in this country sputtered when infectious diseases wiped out the young bees. One such disease, chalkbrood, is now hitting the Canadian industry. A collapse in the leafcutter bee population could wipe out most alfalfa production in the United States, with serious consequences for the dairy industry.
The alkali bee is not the only native with impressive agricultural talents. The blue orchard bee, an opalescent creature native to the western United States, can pollinate almonds, cherries, and other orchard crops far more efficiently than honeybees can. Since it's adapted to local conditions, it's hardier, too: It will fly at lower temperatures than the honeybee and work blossoms in the rain. In a four-year experiment at a cherry orchard in Utah, William Kemp of the USDA Northern Crop Science Laboratory in Fargo, North Dakota, found that fruit production doubled when blue orchard bees (affectionately known to bee fanatics as BOBs) were used in place of honeybees. Kemp and his colleagues are encouraging fruit growers to nurture BOBs on their land. A few entrepreneurs have begun to trap the bees in the wild and rent them to growers.
There can be risks in the commercialization of native species, however. When alfalfa farmers began to manage for alkali bees on their land, they were working within the bee's natural range. But when tomato growers discovered the power of bumblebees to increase their yields, the bees were treated like any other product in a globalized economy and were shipped from continent to continent, with disastrous consequences.
For decades, hothouse farmers used electric vibrators to pollinate their tomatoes, an expensive and sometimes labor-intensive process. The flowers of certain crops -- notably tomatoes and members of the tomato family including potatoes, eggplant, and peppers -- hold their pollen inside chambers with tiny openings. The grains are trapped, like salt in a saltshaker. For a bee to release the pollen, she must vibrate her body like a violin string, grasping the flower while using rapid-fire contractions of her flight muscles to produce a high-intensity buzz. Honeybees don't do this.
But bumblebees are masters of buzz pollination -- a fact that farmers did not think to exploit until Roland de Jog, a Belgian medical doctor and bumblebee enthusiast, came up with the idea of placing his pet bees among a friend's tomatoes. The experiment was a huge success, and in 1987 de Jog founded Biobest, a company based in Westerlo, Belgium, that rears bumblebees and sells them to tomato growers in both Europe and the United States.
In the early 1990s, a U.S. breeder shipped American bumblebee queens to Biobest. The resulting colonies were shipped back to the United States, carrying with them an infectious disease to which native American bees had no resistance. "That exotic disease wiped out Bombus occidentalis," says Robbin Thorp, who has documented the disappearance of the species, which was once commonly found everywhere from central California to British Columbia. The USDA restricts the use of bumblebees shipped from Europe, in an effort to keep them inside greenhouses and out of the wild. But the bees still escape, carrying infectious diseases with them. A recent study in Canada showed that levels of infectious disease are much higher among wild bumblebees near tomato greenhouses. Mistakes like these could cause other species to follow B. occidentalis into oblivion.
In the long run, our own survival is deeply entwined with the lives of bees. And the bees' survival depends on the ways we manage not only rural farms, but also city parks and gardens and the landscape of suburban America, where native bees can survive in even small patches of habitat, such as native shrubs and plants. "There's an economic benefit to taking care of native bees," says Thorp. "But until people understand this, they won't spend time and effort on it."
Full Belly Farm, an organic operation where Kremen and her research team spent five years studying pollination, has begun to plant hedgerows of native shrubbery to nurture native bees. Other organic farmers in California's Yolo and Solano counties are following Full Belly's lead. Convincing conventional farmers that it's worth their while to do the same -- and to limit their use of pesticides as well -- poses a greater challenge, requiring major shifts in attitude and focus.
In his time, Thorp has seen many acres of native bee habitat vanish beneath plows and under pavement. Some of the data he gathered as a young man are now being used by a new generation of scientists as a baseline to measure the bee diversity that has been lost. Yet Thorp is not a pessimist. He describes a recent trip to the southern Central Valley, a place now dominated by vast fields of cotton, safflower, and alfalfa. For much of the year -- when the crops are not blooming -- these fields, devoid of flowering weeds, are about as welcoming to pollinators as the surface of the moon. Yet in cracks in the ground, in the ditches between crop rows, Thorp found what he had not dared to hope for: the nests of wild sweat bees.
by Sharon Levy
This man's bees are in grave danger. So is our food supply. Why something so small matters so much.
ees crawl all over my body. I sit in the mud of a road embankment, watching the throngs that have landed on my legs. At the peak of one knee, three worker bees stand in urgent conference, sniffing: They stroke one another rapidly with their antennae, which house their organs of smell.
All around them, their sisters tumble. Pairs of bees seize each other around their minuscule midsections and wrestle. Others go about their private business in the midst of the crowd, using their forelegs to groom their furry faces and long tongues.
I watch, calm and safe inside my borrowed beekeeper's gear: white coverall, veiled pith helmet, protective gauntlets. Just down the road, Jeff Anderson and his three assistants methodically pry the lid off each of hundreds of hive boxes to check the health of the colonies inside. As the day wears on and the March sunshine warms this little-used ranch road in California's Sierra foothills, more and more bees take flight.
Wild buckthorn bushes lining the road carry clusters of tiny white flowers, their anthers bright with pollen. Bees work the blossoms, packing the yellow grains into smooth depressions on their hind legs, specially designed to carry this fuel (pollen is a high-protein food) back to the hive. On their travels, they transfer pollen from plant to plant, flower to flower, fertilizing the blossoms and allowing them to set fruit. This ancient partnership of pollinator and plant is essential to life as we know it. One-third of the food we eat comes from crops that need animal pollinators, a role often filled by bees but sometimes by butterflies, beetles, birds, or bats. Bee-pollinated foods include squash, tomatoes, peppers, apples, and pears. Unfortunately, the honeybees surrounding me are members of a threatened tribe, whose loss would have a dire effect on farmers, not to mention everyone who eats fruits and vegetables.
Bees became the focus of Jeff Anderson's life 30 years ago when he married his wife, Christine, a beekeeper's daughter. He joined his father-in-law, Joe Tweedy, in the family business. Ever since, he's been shuttling a carefully tended stock of honeybees cross-country, following the bloom of crops from California's early spring fruit orchards to Minnesota's summer fields of clover. Anderson's grown son Jeremy, working beside him, represents the fourth generation of beekeepers in the family. Without the services of managed honeybees, provided by migratory beekeepers like the Andersons, billions of dollars' worth of crops across the United States would fail.
I join Anderson as he opens another hive. Inside, eight wooden frames hold honeycomb whose surface is crowded with bees, all in constant motion though there seems to be no room to move. Speaking with an upper-midwestern lilt -- Anderson grew up on a Minnesota dairy farm -- he points out the queen, about 30 percent larger than the thousands of her worker-bee daughters who feed, build, and clean the hive. One or two black drones, males whose only function in life is to mate with a queen, stroll among the busy workers.
As he moves through the bee yard, Anderson can tell at a glance how each colony is doing. If all is well, the frames of honeycomb will be thick with bees giving forth a contented hum. But sometimes half the frames are bare and the bees just don't sound right. Sometimes the ground beneath a hive box is covered with bee carcasses.
Since Anderson began, in 1976, raising healthy bees has become more and more difficult. In the 1980s, two non-native species of parasitic mite infested North American honeybees. One of the species, Varroa destructor, has proved especially deadly. Meanwhile, safe pastures where bees can forage without being poisoned by pesticides are becoming increasingly rare.
The domesticated European honeybee was introduced to North America 400 years ago by colonists at Jamestown and Williamsburg to provide their settlements with honey; few bees native to the continent produced enough honey to make harvesting viable. Since then, the honeybee has spread into every farmable corner of North America. The cultivation of honey is an age-old pursuit: To maximize its production, beekeepers in Egypt during the time of the pharaohs floated their hives down the Nile to areas of abundant bloom, with some success. Early American beekeepers also transported their colonies -- on buckboard wagons, Mississippi River steamboats, and trains -- also with mixed results; the hives could not always be moved at the right times, the wax in the honeycombs often melted, the worker bees were sometimes left behind while their homes drifted downriver. In the 1940s, when new interstate highways and reliable long-haul trucks made it practical, beekeepers began regularly migrating long distances with their hives, following the flow of nectar as crops bloomed with the changing seasons.
In the boom years following World War II, large swaths of natural habitat across the United States were devoured by suburban development and agriculture. Patches of wild woodland, shrubs, and flowers that had supported native bees dwindled. The common practices of modern agriculture -- the widespread use of pesticides and the tendency to wipe out every wild flowering plant in sight -- began to destroy the pollinators that make farming possible. Beekeepers, accustomed to paying farmers for the privilege of stationing their beehives on land with blooming crops, started to receive payment from farmers for their pollination services. Today, migratory beekeepers follow this trail of money back and forth across the country as pollination fees continue to rise.
The United States and Canada are home to at least 4,500 species of native bee, from the sleek, iridescent blue mason to the plump, lemon-yellow bumblebee. All are at risk. "Where we live in Minnesota," says Anderson, "the local farmers will let their second cutting of alfalfa or red clover bloom, to feed the bees. A number of those people will tell you that the native bees just aren't there anymore."
With the accelerating decline of native bees, honeybees are becoming ever more critical to farmers. American agriculture is addicted to honeybees -- and in the past few years has begun to run short of them. Anderson's spring starts in February, when the almonds in California's Central Valley come into bloom. California has more than 580,000 acres planted in almonds, though commercial beekeepers living full-time in the state hold enough bee colonies to pollinate only about half that acreage.
In the spring of 2005, many of the migratory beekeepers who work the California almond bloom discovered that their colonies had suffered heavy losses during the winter. Across the country, about one-third of all commercial honeybee colonies died out. The result was a pollinator panic in the Central Valley. Fees for renting beehives shot up from about $48 to as much as $140 per colony, a previously unheard-of amount. Beekeepers traveled from as far away as Florida and North Carolina to service California's almond groves. For the first time in 50 years, U.S. borders were opened to honeybees from New Zealand and Australia. The fate of a $1.2 billion crop -- more than half of all almond production worldwide -- rested on the slender back of the embattled honeybee.
Many bee experts assumed varroa mites were a major cause of the severe die-off in the winter of 2005. Yet when researchers from the U.S. Department of Agriculture (USDA) Bee Research Laboratory in Beltsville, Maryland, traveled to Oakdale, California, where Anderson and a number of his fellow beekeepers spend winter and spring, they could find no correlation between the level of varroa mite infestation and the health of bee colonies. "We couldn't pin the blame for the die-off on any single cause," says Jeff Pettis, a research entomologist at the lab.
Anderson has his own ideas about what caused the almond pollination crisis, and what is most responsible for wiping out honeybees across the United States. "Varroa is a bit of a red herring," he says. "One of the biggest problems is irresponsible use of pesticides and the failure of regulators to enforce the rules meant to protect bees from poisoning."
Over the past few years, Anderson has become a reluctant expert on one particular pesticide, Sevin, and the quirks of the system meant to govern its use. In the summer of 1998, Anderson's hives were stationed on farmland next to hybrid poplar groves managed by the Minnesota Department of Natural Resources and the International Paper Company. Both sprayed the trees with Sevin to control infestations of the cottonwood leaf beetle, which damages poplars. Soon after, Anderson's bees began to die. He videotaped sick ones as they lay twitching, just outside their hive boxes, in the throes of nerve poisoning from the insecticide. The poisonings would continue long after a Sevin application, he says, because worker bees carried contaminated pollen back to the hive, where it affected the colony for months. More than 50 percent of his bees died.
"I can't comment on the specifics of Anderson's case," says Pettis, "but I do know that Sevin and honeybees do not mix. What he purports could certainly happen. If the bees are storing Sevin in the pollen, when they get to California and feed on it over the winter, it's going to be as toxic as it was when they first picked it up."
In 2001, Anderson and two neighboring beekeepers filed a lawsuit against the Minnesota Department of Natural Resources and International Paper seeking $2 million in damages. Anderson has found himself enmeshed in the strange world of pesticide law. He's learned to speak fluent pesticide legalese, committed to memory whole sections of FIFRA (the Federal Insecticide, Fungicide, and Rodenticide Act), and has become both cynical and stubbornly hopeful about the state of pesticide regulation in the United States. "The law is not broke," he says. "It's the lack of enforcement that's the problem."
A district court judge initially dismissed Anderson's suit. But in January 2005, the Minnesota Supreme Court breathed new hope into the beekeepers' case, noting that by allowing the use of Sevin, Minnesota state policy seemed to conflict with the federally mandated bee caution on the pesticide label, which states that the chemical is highly toxic to bees and warns, "Do not apply this product . . . to blooming crops or weeds if bees are foraging in the treatment area."
The latest court decision makes it possible for the lawsuit to go forward, but Anderson is still hoping for the case to be heard by a jury. The Minnesota Department of Natural Resources reached an out-of-court settlement with the beekeepers, in which it agreed to stop using Sevin, but International Paper continues to spray its more than 30,000 acres of poplars, which it harvests to manufacture paper pulp and fiberboard.
Unable to keep their hives healthy near the sprayed poplar groves, many beekeepers have moved away from Eagle Bend, Minnesota, where Anderson and his family have summered for decades. After a particularly disastrous series of die-offs in 2002, Anderson moved his hives to fields far from the sprayed poplars, and he now makes a long commute every time he works his bees in the summer. Since the move, the survival rate of his colonies has improved. Even last spring, when many of his colleagues suffered major losses, his colonies did relatively well. He sees this as confirmation that Sevin contamination is finally fading among his hives.
"I'm standing my ground," Anderson says. "If I pick up and move to another state, they'll just blast me with some other pesticide." He's familiar with the chemical disasters that struck beekeepers in Nebraska, Colorado, North Carolina, and Washington in the 1990s, when the insecticide Penncap-M became popular as a defense against corn rootworm, the larval form of a beetle that attacks the roots of corn plants. Penncap-M, a microencapsulated form of methyl parathion, could have been designed as the ultimate bee-killing weapon: a highly toxic, long-lived nerve poison enclosed in tiny, pollen-size beads. Foraging bees packed these pellets into their pollen sacs along with the real thing and carried them home, devastating their colonies.
Corn is easily wind-pollinated, so although bees gather corn pollen, growers don't need them. They see Penncap-M as the cheapest, most efficient answer to their rootworm problem, and its impact on bees has not convinced them to give it up. Significant honeybee die-offs due to Penncap-M are on the wane, but not because of pesticide regulation. Beekeepers who weathered major losses from Penncap-M now keep their hives far from anywhere the pesticide is used. Some beekeepers, however, were driven out of business by massive bee kills, becoming statistics in the long-term decline of commercial honeybees in this country. In the late 1940s, U.S. beekeepers held about 5 million colonies; gradually that number has dropped to about 2.3 million.
At the compound in Oakdale, California, where Anderson and his family spend the winter, his two youngest children, dressed in Confederate gray, are staging a very small-scale reenactment of a Civil War battle beneath tall valley oaks. Anderson walks with me to my car as I get ready to leave. A wry smile creases his face, ruddy from long days out in the weather. "You know," he says, "it's a catch-22. If my bees are nowhere near the poplars anymore, then International Paper can claim it's OK to spray Sevin. So those bee pastures, which we've depended on for so many years, may be lost forever."
The decline of honeybee populations has brought the agricultural community to the brink of a pollination crisis. The best hope for the long-term survival of many American farmers may be the revival of native bees. Yet they, like their domesticated cousins, face some daunting obstacles.
California's Central Valley, one of the most productive agricultural regions in the West, is a forbidding wasteland for native bees. Endless acres of orchards, fields, and suburban ranchettes are kept clear of anything that's perceived as a weed -- and that includes wild shrubs like ceanothus, buckthorn, and redbud, whose flowers are rich pollen sources for bees in early spring.
A few dozen honeybees patrol the dazzling purple-pink blossoms of a redbud growing in a small arboretum, tucked along the banks of a creek that crosses the campus of the University of California, Davis. Flying among them is a single native bumblebee, insulated on this chill afternoon by her thick lemon-yellow fur. She's loading pollen onto her corbiculae, hair-rimmed, basket-like structures on her back legs that hold the bright grains for transport to her colony.
Robbin Thorp waves his net like a magic wand and extracts the bee from the tangle of twigs where she's been foraging. With expert movements, he guides her into the pointed end of the net and pops her, unhurt, into a glass tube where I can study her up close. Thorp, an emeritus professor of entomology, has devoted a long career to native bees. As a graduate student in the 1950s he identified five species previously unknown to science. Now, though his beard has turned snow white and he's been officially retired for a decade, Thorp continues to spend time in the field. But these days he's more likely to be tracking the decline and disappearance of once-abundant bees.
When Claire Kremen, a conservation biologist at the University of California, Berkeley, set out in 1999 to study the contribution of native bees to crop pollination in the Central Valley, she called on Thorp to train her research crew in the art of identifying bees on the wing. Under his tutelage they learned to tell the common local species of bumblebees apart, to recognize the narrow yellow-black striping and streamlined shape of a squash bee and the blue-green iridescence of a metallic bee.
Kremen's study focused on watermelon, because the blossoms need a lot of pollen -- about 1,000 grains per flower -- to produce a marketable fruit. If native bees can do well pollinating watermelon, they're likely to succeed with just about any other crop. She and her field assistants spent long summer days walking transects in watermelon fields, counting the numbers of each kind of native bee they saw working the flowers. Kremen's research, among the first to examine the status of native bees on agricultural land in the United States, produced dramatic results.
Farms with no nearby oak woodland or chaparral have too few native bees to succeed without the services of rented honeybees. But those near remnants of wild habitat host native bees of many species, in numbers high enough to pollinate even a demanding crop like watermelon. The farms that fell into this category were all organic operations set on smaller plots of land tucked into hillsides where native vegetation survives. By contrast, conventional farms not only use a variety of pesticides but are set in the midst of the Central Valley's hostile landscape.
"Pollination is a valuable service that we're destroying through our land management practices," says Kremen. But she points out that there are many ways conventional farming could change to support bees. One is to grow cover crops like rye and clover, which aren't harvested but instead plowed under to enrich the soil after they've flowered. Farmers could also use roadsides and ditches to restore native plants and create bee-nesting areas. They could reduce their use of pesticides or apply them at night, when bees aren't flying. Growers ought to do these things, Kremen believes, not out of selfless concern for threatened bees but because, in the end, it will protect their own bottom line. Since honeybees -- which now pollinate up to $14 billion worth of crops annually in this country -- are in steep decline, native bees are needed as a backup. The costs of managing bee habitat could be offset by reductions in the amount a farmer spends on renting honeybees, a cost that continues to increase for many crops. In 1999, for example, U.S. plum growers paid about $6.4 million for honeybee pollination.
Kremen was able to discover which species are most efficient by "interviewing the bees." This involved shrouding watermelon blossoms in bee-proof veils, uncovering them just long enough for a single bee to visit, and measuring the pollen left behind. Some of the natives, including two species of bumblebee and the squash bee, do a far better job of delivering pollen than do honeybees. Kremen also noted that over the two years of her study, the numbers of native bees shifted. In one year, a few types of high-efficiency bees accounted for most of the pollination. The next, many species contributed. That finding argues for the need to maintain a diversity of bees, leaving enough flexibility for crops and their pollinators to survive shifting conditions.
"We need to have a balanced pollinator portfolio, and we don't right now," says Stephen Buchmann, founder of The Bee Works, an environmental consulting firm specializing in pollination issues. "Just like in investing, we need to have a balance between short- and long-term risk."
Buchmann acknowledges that honeybees are indispensable to modern agriculture, but he points out that they can't carry the burden of crop pollination alone. He believes that protection of native bee habitat and active management of native species must also be part of the solution to the pollinator shortage. The rise and fall of the alkali bee, recounted in his book The Forgotten Pollinators, coauthored with Gary Nabhan, illustrates both the great agricultural potential of native bees and the threats they face.
The native alkali bee, a solitary creature that digs its nest near seeps in the alkaline soil of western deserts, is a champion pollinator of alfalfa (alfalfa hay is a staple food for dairy cattle and other livestock). The plant's flowers are typical of legumes: The sexual parts are held under tension, and to gather pollen a bee must trigger their release, receiving a smack on the head in the process. Alkali bees, which are particularly well suited to pollinate wild legumes like lotus and locoweed, are unfazed by this experience. European honeybees avoid it.
In the 1950s, alfalfa farmers in Nevada, Idaho, California, eastern Oregon, and Washington began to create artificial nesting areas for alkali bees, seeding them with plugs of soil from natural bee beds. One result was a lasting expansion of the alkali bee population in the places where humans needed them most. Another was a boom in alfalfa seed production in the American West. With alkali bees working the blossoms, the yield of seed used to replant hay fields skyrocketed.
Then, during the 1970s, managed alkali bee populations began to crash. Some alfalfa growers believe that a shift in pesticide use on neighboring crops did the bees in: Alkali bees will fly a mile or more in a day and forage on a variety of flowers, so they could easily have picked up poisons beyond the alfalfa fields. Or perhaps alfalfa farmers' own use of insecticides to combat a common pest, the lygus bug, destroyed the bees. In any case, the lion's share of the U.S. alfalfa crop, worth $5 billion a year, now depends on the alfalfa leafcutter bee, a nonnative species. Canadian farmers produce the bees, which feed on the pollen of canola and alfalfa, and sell loose cocoons by the gallon to growers in the United States. About $30 million worth of leafcutter bees are purchased each year; efforts to raise them in this country sputtered when infectious diseases wiped out the young bees. One such disease, chalkbrood, is now hitting the Canadian industry. A collapse in the leafcutter bee population could wipe out most alfalfa production in the United States, with serious consequences for the dairy industry.
The alkali bee is not the only native with impressive agricultural talents. The blue orchard bee, an opalescent creature native to the western United States, can pollinate almonds, cherries, and other orchard crops far more efficiently than honeybees can. Since it's adapted to local conditions, it's hardier, too: It will fly at lower temperatures than the honeybee and work blossoms in the rain. In a four-year experiment at a cherry orchard in Utah, William Kemp of the USDA Northern Crop Science Laboratory in Fargo, North Dakota, found that fruit production doubled when blue orchard bees (affectionately known to bee fanatics as BOBs) were used in place of honeybees. Kemp and his colleagues are encouraging fruit growers to nurture BOBs on their land. A few entrepreneurs have begun to trap the bees in the wild and rent them to growers.
There can be risks in the commercialization of native species, however. When alfalfa farmers began to manage for alkali bees on their land, they were working within the bee's natural range. But when tomato growers discovered the power of bumblebees to increase their yields, the bees were treated like any other product in a globalized economy and were shipped from continent to continent, with disastrous consequences.
For decades, hothouse farmers used electric vibrators to pollinate their tomatoes, an expensive and sometimes labor-intensive process. The flowers of certain crops -- notably tomatoes and members of the tomato family including potatoes, eggplant, and peppers -- hold their pollen inside chambers with tiny openings. The grains are trapped, like salt in a saltshaker. For a bee to release the pollen, she must vibrate her body like a violin string, grasping the flower while using rapid-fire contractions of her flight muscles to produce a high-intensity buzz. Honeybees don't do this.
But bumblebees are masters of buzz pollination -- a fact that farmers did not think to exploit until Roland de Jog, a Belgian medical doctor and bumblebee enthusiast, came up with the idea of placing his pet bees among a friend's tomatoes. The experiment was a huge success, and in 1987 de Jog founded Biobest, a company based in Westerlo, Belgium, that rears bumblebees and sells them to tomato growers in both Europe and the United States.
In the early 1990s, a U.S. breeder shipped American bumblebee queens to Biobest. The resulting colonies were shipped back to the United States, carrying with them an infectious disease to which native American bees had no resistance. "That exotic disease wiped out Bombus occidentalis," says Robbin Thorp, who has documented the disappearance of the species, which was once commonly found everywhere from central California to British Columbia. The USDA restricts the use of bumblebees shipped from Europe, in an effort to keep them inside greenhouses and out of the wild. But the bees still escape, carrying infectious diseases with them. A recent study in Canada showed that levels of infectious disease are much higher among wild bumblebees near tomato greenhouses. Mistakes like these could cause other species to follow B. occidentalis into oblivion.
In the long run, our own survival is deeply entwined with the lives of bees. And the bees' survival depends on the ways we manage not only rural farms, but also city parks and gardens and the landscape of suburban America, where native bees can survive in even small patches of habitat, such as native shrubs and plants. "There's an economic benefit to taking care of native bees," says Thorp. "But until people understand this, they won't spend time and effort on it."
Full Belly Farm, an organic operation where Kremen and her research team spent five years studying pollination, has begun to plant hedgerows of native shrubbery to nurture native bees. Other organic farmers in California's Yolo and Solano counties are following Full Belly's lead. Convincing conventional farmers that it's worth their while to do the same -- and to limit their use of pesticides as well -- poses a greater challenge, requiring major shifts in attitude and focus.
In his time, Thorp has seen many acres of native bee habitat vanish beneath plows and under pavement. Some of the data he gathered as a young man are now being used by a new generation of scientists as a baseline to measure the bee diversity that has been lost. Yet Thorp is not a pessimist. He describes a recent trip to the southern Central Valley, a place now dominated by vast fields of cotton, safflower, and alfalfa. For much of the year -- when the crops are not blooming -- these fields, devoid of flowering weeds, are about as welcoming to pollinators as the surface of the moon. Yet in cracks in the ground, in the ditches between crop rows, Thorp found what he had not dared to hope for: the nests of wild sweat bees.
Tuesday, April 10, 2007
Matthew Simmons
Chairman, Simmons & Company International
and Author of "Twilight in the Desert"
"The GAO Report on Peak Oil"
TRANSCRIPT OF AUDIO INTERVIEW
JIM: In February of this year the General Accounting Office released a report on crude oil. Uncertainty about the future oil supply makes it important to develop a strategy for addressing a peak and a decline in oil production. Joining me on the program this week is Matt Simmons, he’s Chairman of Simmons Intl.
Matt, when I saw this report I thought: finally, somebody in Washington is taking this issue seriously. I found that at least encouraging.
MATT SIMMONS: Yeah, I did too. I knew that the report was going to be released in a press conference last Thursday. Congressman Udall, and Congressman Bartlett, I think are two really remarkably great Americans. Bartlett’s basically an 18-year veteran Republican from Frederick, Maryland, and a PhD in science. And Tom Udall is a Democratic Congressman from Albuquerque. He’s the son of Stewart Udall, probably the last great Secretary of the Interior. So these are two very special people. They happen to also be the co-chairmen of the Peak Oil Caucus. And I felt it was like basically finally the first real official cannon going off saying we really screwed up. [1:35]
JIM: What I find fascinating is the range of estimates that they used in their study. It was as wide as the Grand Canyon. If you take a look at some of the optimistic side which says peak is not reached until 2040, yet we get more evidence – I don’t care if it’s hearing about Burgan, Cantarell; and especially, we knew that Cantarell had peaked but the decline that they announced earlier this year is much greater than expected; Ghawar. You know, that seems to me to point out that this is closer than we think.
MATT: Well, also, if you look at the GAO table that they have where they have 20 different groups that basically gave them their sort of forecast, most of them don’t have a single point in time (which is probably wise) – they have a range. Two or three have a range of 40 years, so you say why even have them in, other than to say they obviously don’t have any idea. But it’s interesting you can turn that around and say that if you draw a line down with now being the start of 2007, eleven of the twenty have their peak oil arriving within a timeframe that’s within now. So the now actually has far heavier weight than 2037 – it’s just that basically the outlier was 2037. And so I think they appropriately said that they also said that it takes so long to basically prepare for what we do after that, that even if it turns out that it’s 2037, America is remiss at not having a Plan B in place today.
But they also said is that the reason for the uncertainty is that the data is so fuzzy – of course, this has been a hot-button issue of mine for the last five years – that unless we have urgent data reform and start getting field-by-field production reports then we’ll actually discover peak oil the old-fashioned way through the rear-view mirror. And the fact they say there are 14 entities within the government, spread out across the face of the government, that are sort of collecting bits and pieces of the sort of data you need to have – so one of the strong recommendations to the Secretary of Energy is pull all of those together in one tight coordinated monitoring and look at this like a hawk because it’s going to happen. [3:40]
JIM: They talked about peak oil being dependent on multiple factors: they talked about the amount of oil still in the ground; how much can be recovered; technology costs; environmental challenges; and global demand. However, they are not getting at – in terms of how much we’re consuming and how much we’re finding – what is the present rate of depletion. I would have expected to see more in that vein.
MATT: Well, the problem is: to do a good job – I mean, I know the team of three people that were working on this came down to Houston and spent really pretty well all afternoon in my office and they had a long, long list of things, and we had a long serious discussion, and I applauded them for having their questions so well thought through – but to do an honest job they’ve got to plow through Exxon’s people, and the USGS’ folks, and Cambridge Energy’s folks. And I think they were bewildered as they started putting it together by what…I mean people are all over the map on this. But what I find so increasingly interesting is that all the people that have data come to the same conclusion. All the people that basically pooh-pooh the idea have a bunch of fabulous theses but they don’t have any data. [4:46]
JIM: Wishful thinking.
MATT: Yeah, it’s really wishful thinking. And it starts right at the very top of the CEOs of virtually all the major oil companies, but they have no data. They just have a really pleasant feeling that bad things don’t happen to good people. [4:59]
JIM: What I also found fascinating – they alluded to the fact and highlighted how much we, as a country, are spending for gasoline each year. I think they pointed out like one year we spent 38 billion more. In California, right now, Matt, super is at $3.52. However we’re still making assumptions that that present consumption trends will continue. For example, in this report they are talking about 118 million barrels a day will be required by 2030, but no real answer as to how we get there.
MATT: Well, the International Energy Agency and their World Energy Outlook 2006 book had one page that was hand-written by Fatih Birol, the Chief Economist, who shares with me the belief that this is the worst issue of the 21st Century. The fact is that we don’t have the most important missing ingredient in the supply outlook which is what the average decline rate is of the existing fields today. And they say that we think it ranges probably from 2 or 3% in some fields or areas, to 11 or 12% in others. In their models showing that you go basically to 118 million by 2030, they assume an average of 8%. If you take that through a calculator, what it assumes is that the current 85 is down to 10. So we only have to find 105 million barrels a day between now and the next 23 years to get there, which has a statistical likelihood of happening of zero. [6:26]
JIM: It’s amazing when you consider the size of this country and the amount of energy that we consume.
MATT: How about the size of the world. It’s not just this country – this is a global issue.
JIM: They talk about how vulnerable we are now because we are importing 66% of our energy needs – and that figure is only going to get worse.
MATT: Yes, and I’ve been saying for quite some time that basically the United States was so energy secure in 1970, the year we peaked in our oil supply, and the country that was held out to dry turned out to be Japan. Well, we’re Japan of 1970, in circa 2007. In that short period of time the United States has become far more energy vulnerable than Japan was – because we consume so much. [7:09]
JIM: One of the difficulties I think that we have when we discuss the peak oil issue is they talk about the amount of oil that is left in the ground, and it ranges from one trillion to three trillion. Isn’t the real problem that we have here is equating reserves with production? For example, they use figures like there’s 170 billion in reserves in the Canadian oil sands, but the Canadian oil sands are never going to produce at the rate that Saudi Arabia does.
MATT: If the Canadian oil sands ever got to 3 million barrels a day, you would have basically destroyed Alberta. It is so unbelievably energy intensive and water intensive to do that. That’s why we should just toss – reserve data is now so worthless that it’s meaningless. You mentioned Cantarell. I spent a week ago yesterday, pretty well all day at his request, visiting with the new Director General of Pemex, and Mexico thought they had 50 million barrels of oil 7 years ago – they now think they have 13. And what they now know because it’s happening in front of their eyes is that the world’s second largest producing oil field, Cantarell – that has accounted for 6 out of every 10 barrels of oil that Mexico’s produced for the last 40 years – finally went into a tertiary recovery program. They went from 40 producing wells to 440 producing wells. The 40 producing wells from 81 to 96 produced a million barrels a day without a hiccup. They now have 440 producing wells and they nitrogen injected the gas cap which was like stepping on a tube of toothpaste, and it ramped the production all the way up to 2.2 million barrels a day. And all of a sudden it’s in decline, and it’s declined by 20% the first year. They are hoping that the decline rate slows down to 14% - but it’s just a hope. And my commentary was if you look at the production profiles of all sorts of publicly available data on giant producing fields that have now done sort of the most aggressive sweep of their oil, it doesn’t slow down until you’re down to about the last 10%. Then it slows way down when you manage the tail. [9:08]
JIM: Yet the remarkable thing, as you’re describing what’s happening with the second largest oil field, there are similar problems with the world’s largest oil field.
MATT: There are similar problems with the world’s third largest; there are similar problems with the world’s fourth largest. You can go down the top twenty producing oil fields and there might be one or two that are still in their ascendancy – but the rest are all in irreversible decline. That’s what makes it so hard for me to fathom why some people can so casually say that peak oil is an event that won’t happen for decades, and then we’ll have an undulating plateau for decades. And I say, “give me a break, where are they coming from?” They have access to the same data I do. [9:44]
JIM: Is it just something that is optimistic because I mean if you take a look at – and this gets back to the reserves data – and you look at, okay, we have the tar sands, and maybe we have shale oil, we have deepwater oil, and the assumptions out there that we have all this stuff, maybe not in the conventional form, and we’ll just substitute that stuff.
MATT: Yeah, that’s exactly what they are doing. And Dan Yergin at CERA, along with Exxon, have probably become the two loudest voices that we have no problems. He basically loves to go back and remind people over the last one hundred years we’ve had several times when we were basically worried that it seemed like we had run out of things to find – he always said “run out of oil” but it’s never been that, it’s run out of things to find – and then, bingo, we find a new oil basin. Well, he’s actually correct, as we started from no idea what was there to now we’ve basically swept the world. What he is basically assuming is if you do that for one hundred years you can do it for another hundred years. And it’s a terrific economist sort of thesis – but you can also go back and say that Cantarell in 1975, 76 was the last oil field that we’ve ever found that basically produced over a million barrels a day; and the North Sea fields were the last fields that we ever found that produced over 500,000 barrels a day. And now we basically have Thunder Horse may be coming on in 2009, as opposed to 2005, that may be it will produce 250,000 barrels a day – that’s the biggest deepwater field we’ll ever do. And so the average new field today – you know, giant field – produces about 40- or 50,000 barrels a day for a couple of years and then goes into rapid decline. That’s just real numbers. [11:25]
JIM: I guess I see one of the real challenges here, as we’re talking about these statistics, is developing alternatives as soon as we can but the alternatives are going to depend on the price of oil remaining high. But yet, Matt, I watched a program this morning where you had a bunch of economists and they were talking about, “well, the US economy is going to slow down, as that happens we’re going to have demand destruction and the price of oil is going back below 50.”
MATT: Yeah, they’re crazy. As a group they are so flippant, they’ve been so discredited on the price of oil is going to go back. It was going to go back at 25, go back at 30, going to go back at 40; $30 oil creates a recession – everybody weighed in on that. We blew through $30 like a warm knife through butter. Interestingly today, this morning when the Iranians said we’re going to let the sailors go, oil prices collapsed by a dollar. Well, at the end of the day, I just checked spot prices around the world, and Tapis grade (which is South East Asia’s light sweet grade) is basically $73.75 today – cash market. Cusiana is $71 – that’s Colombian light sweet crude; Mayan crude in Mexico is $51. So there’s a $20 spread today between heavy oil and light oil. So we’re back to $70 a barrel, it’s just basically not there in WTI even though the forward price it got, the price crossed 70 for December crude. All we need is just a little bit of a hiccup – a little bit of spurt in demand and supply not growing – and we’re likely to have the same thing that happened yesterday in Colorado where a lot of service stations ran out of gas. And that’s a temporary problem because one of their refineries in the Rocky Mountains had some maintenance problems and so they are out of gas. But the world is right on the verge of being out of – run out of oil. But we’re in basically have demand outstrip supply. [13:11]
JIM: You know, I think one of the problems that we have here, Matt, and especially in this country we were so fortunate to have large oil reserves. We were self-sufficient and when our oil ran out we just simply went overseas and bought it from somebody else. So all these economic models that they talk about – the financial guys, the economists, and the Wall Street people – well, typically that held true: if you went into a recession in the past, demand would go down, the price of oil would come down. But we’re not there anymore.
MATT: Yeah, it’s just all the old formulae got thrown out the window. And to basically say, “well, this will be just like the 70s, we’ll have a spike, and then go down.” I say, that’s like somebody saying at the outbreak of World War II, “well, this is just going to be like the Civil War.” It turned out basically it was about the same length, and it was just as awful in its region, but it had nothing to do with the Civil War. [14:01]
JIM: As I went through the GAO report, another problem is that – as they address – a lot of these government agencies they spoke with in putting this report together, their efforts were not specifically designed to address peak oil. In fact, the Department Of Energy said there is no formal strategy for coordinating and prioritizing Federal efforts dealing with peak. And right now, the hot topic in Washington is global warming. It’s like putting the cart before the horse.
MATT: It’s amazing how this one report from the United Nation’s study group, and Al Gore’s movie, finally just put the icing on the cake that, “oh my gosh, let’s all acknowledge global warming’s here.” And I say that climate change is probably a very important issue. I do not pooh-pooh that at all. I think we need far better data to understand the implications of whether it’s CO2, or methane for instance. There’s a lot of data in that same report that methane is three times more lethal – it’s just that we don’t know how to capture it, and so it’s easier to pick on CO2. But peak oil is far more real. The data is far more compelling, and the impact on our lives in the next three years is utterly awful if we ignore it and it happens. [15:14]
JIM: It surprises me, and maybe it’s because of these old paradigms we’re asking the wrong questions. I mean, I am still to this day floored every week when they report these inventory numbers on Wednesday and Thursday. I think something more meaningful might be: what is happening to the depletion rates of the oil fields – as you mentioned; what is happening to car sales in China – some of those things; and how much did we find last year compared to what we consumed? That seems to me more relevant.
MATT: I couldn’t agree with you more. And then the pundits that follow the inventory reports like they’re racing forms don’t have any idea how to properly read the data. You can have ten million barrels more inventory than you did five years ago, but if your demand is way up on a day’s supply you’re in the hole. So we’re operating right now as close to a just-in-time supply as you could possibly get. I’ll tell you what’s most alarming – I’ll go back to Mexico for a minute – is that if it turns out that the 20% decline rate is correct, that it doesn’t moderate (and there’s no earthly reason that it would moderate in my opinion other than just phenomenal good luck), then sometime between now and 2010, Mexico fails to be able to export any oil. And from a US Gulf coast refinery standpoint that is basically a Pearl Harbor day event. And then it puts us unbelievably at the mercy of Hugo Chavez in Venezuela – other than the fact that his oil is basically probably in as big a disarray, other than the synthetic crude projects that he just nationalized. So we have some problems right now that are on our doorstep that are not decades away – they are basically between now and 2010. [16:49]
JIM: One of the things I think should get more coverage in the press – one thing that strikes me – is despite spending tens of billions of dollars in Saudi Arabia they’ve been unable to really increase their production.
MATT: Moreover, there are now a growing number of oil sleuths who are plumbing through…I don’t know if you’ve ever gone on The Oil Drum, which is the most sophisticated energy blog on the internet?
JIM: Sure do.
MATT: They’ve had some fabulous exchanges of guys who basically have gone back and lined up all the right data you can get on these new fields that came on in Saudi Arabia, and the fact that they didn’t basically increase production. They did come on. So what we don’t know is where is Ghawar today – is it basically under four, is it under three? We don’t have any idea. Is Saudi Arabia producing nine or eight? We don’t have any idea. What they say is they have 11 million barrels a day of productive capacity, but if we have oil prices up in the 80 or 90 or $100 a barrel this summer because we have too high a demand, they are going to look awfully silly if they basically say, “well, we have 11 million barrels a day but no one wants our oil.” [17:54]
JIM: I was going through the report they were talking about our deepwater oil, and they estimate that will peak in 2016. But if you really boil it down – and this relates back to Saudi Arabia – they conclude that US demand for oil will need to be fulfilled by increases in production from the rest of the world. But here, Matt, you and I are talking about the largest producer in the world, and they can’t increase their production.
MATT: The reality – it would be nice to think otherwise – but the reality of the Middle East oil is that there were 35 giant fields that were discovered, and they were all discovered in a very narrow area. If you sit in the EXPEC center of Saudi Aramco in Dhahran and watch this really well put together 3D movie, the movie starts out with a depiction of the earth cracking and the creation of the Rift Valley and the Red Sea; and what they show is that basically effectively scraped the whole Arabian Peninsula of several thousand feet of what was once rich swampland over until it hit the Zagreb [phon.] mountains – and that’s why these 35 fields are lined up perfectly North to South like they are tankers on a radar screen coming out of the Straits of Hormuz. That’s all the oil that basically got created in the Middle East because of that one event.
What I found out to my unbelievable amazement as I went back and read some SPE papers about Cantarell before going to Mexico last week, was that in the mid-90s they discovered the most amazing fact that they basically through magnetic surveys the largest meteorite crater that’s ever been discovered was this meteorite they believed hit earth 45 to 60 million years ago and created a ten-by-ten mile crater – that’s the Bay of Campeche. Within that crater floor is every giant oil field of Mexico.
So two acts of God created two of the most prolific basins the world has ever known. And yet for a half a century we sort of assumed oil was kind of dispersed around the world equally, and if we just had two million rigs at work we’d basically be producing 200 million barrels a day. No one ever quite said that, but that was sort of the implication of the architecture that we created for the world we now have. [19:57]
JIM: Another issue I find absolutely fascinating in this whole debate, and I’ve interviewed authors who think peak oil is a myth, some think it is far out in the distance, but when I take a look at it and you boil it down, you’ve got about 75% of the world’s oil lies within OPEC, and another 10% in Russia – their reserves are unaudited, so how do we know what they have are real? They increased by 300 billion in the 80s with no major discovery. Then many OPEC countries, their reserves remained constant.
MATT: Well, they produced another 350 billion barrels of oil.
JIM: Yeah. And you know, the government report even acknowledged this. They said, “wait a minute, Kuwait has not changed its reserves in the last two decades, and yet we know that they produced 8 billion barrels of oil.” The fact that nobody questions this is just remarkable.
MATT: I find it so utterly naïve for people to just say, “you’re stupid, just look at the 265 billion barrels that Saudi Arabia has.” And I say, yes, I know because of the research I did that the senior executives at Aramco under oath told the same GAO entity that there were basically 110 billion barrels in 1979 (of proven reserves under SEC standards) and basically since then they’ve produced down to where that same number would be probably today 18 to 20 billion left. And yet they say they have 265 billion, and they have another 200 billion sitting in reserves if we ever need it. And people say, “thank you, I didn’t realize that.” I can tell you on your program that, trust me, my net worth will exceed Bill Gates’ by 2030, and you’d be a fool to believe it unless Bill Gates had a terrible financial collapse. There’s nothing illegal about me telling you that. I can want that – and that’s kind of what the world has done. [21:52]
JIM: But see – they talk about the US government’s assessment of world oil regions and they talk about there’s the potential there for 2.3 trillion; and they’re talking about 890 billion current; and then a 1.4 trillion potential to be added. Where does it come from? I mean, is there a place we haven’t looked at?
MATT: Yeah, there are – the Arctic and the Antarctic.
JIM: But how do we get it?
MATT: Well, we don’t. But if you want to basically be optimistic, it’s like me saying I’m going to be as wealthy as Bill Gates. There is nothing illegal about me wanting that. And that’s the same reliability of these numbers of the USGS. The USGS is a fine group of computer modelers, and there are some trained geologists there. But unless you drill for oil and find something there have been estimates all the time and through the history of the industry of an area that has so much oil, and the sad history of the industry is that most of the new field wildcats we have drilled have always been dry holes. No one has ever intentionally drilled a dry hole. It was just basically an optimistic assessment that went wrong. [22:53]
JIM: You know the other issue too I think that even if you talk about unconventional oil, deepwater oil, the tar sands and shale, is nobody is estimating, for example, the amount of energy input compared to the energy output, which is the real issue I think I have with ethanol. Right now, it’s a real net energy loser.
MATT: We just didn’t ever develop any data to be able to do that. And for years it wasn’t very relevant. Here’s an interesting number that I got out of a really well done report of The Future Of Geothermal Energy by MIT. There are nine producing states in the United States that produce 4.8 million barrels of oil, but those same wells produce 128 million barrels of brine. So basically the United States has gone from the world’s biggest oil producer to the world’s biggest producer of brine stained with oil. We’re just pretty good at getting the stains out. And these are real facts. [23:47]
JIM: Let’s talk about something that surfaced last year that everybody was very optimistic – let’s talk about that Jack well by Chevron. I don’t think people realize that when you get to deep water, oil, number one, how expensive it is – you’ve got drill ships in the Gulf today that are costing companies half a million dollars a day; and then you have that Jack well as I recall, wasn’t it close to 100 million to drill that well?
MATT: I think it was probably closer to 150 million because they hydraulically frac the well which is the only way on earth that it would have any way to flow because those reservoir rocks of the Lower Wilcox are very, very tight rocks – they just don’t produce unless you frac them. The folly of the Jack well hype is they could only afford to flow test it for 30 days. Well, you talk to any oil operator that’s drilled in tight, deep formations where you have to do a very expensive hydraulic fracture – and they only stay open for so long until the pressure cracks the proppings and they are tight again. So what we don’t have any idea is because they couldn’t have afforded to let that well flow with an expensive meter going on of a very, very expensive rig – so they basically hardly know anything about the Jack reservoir. And Chevron basically says it probably maybe 300 million barrels, or 500 million barrels. But how that got translated within a day to, “oh, we found a new Prudhoe Bay,” is saying, “well there are 180 miles of lower Tertiary trend and if you found 60 Jack fields, you’d be at Prudhoe Bay.” I say we don’t have any idea yet realistically whether the Jack field will ever be produced. [25:24]
JIM: Given the things that we are talking about here, not only the difficulty that Saudi Arabia and other countries are having keeping up – having to run faster to keep up with demand – Matt, we haven’t even discussed the political risk factors because if you take a look at the majority of the world’s oil it’s inaccessible and held in very unstable, political areas of the world. For example, Hugo Chavez may not have the same incentive as Exxon to develop Venezuela’s oil reserves. So you have 85% of the world’s oil reserves in countries with medium to high investment risk; and three countries – Saudi Arabia, Kuwait, and Mexico – that prohibit foreign investment.
MATT: There’s also an issue that as the visibility of the Cantarells of the world, and how fast they can decline becomes reality because there’s such good transparency within Pemex because it’s so utterly important for the Mexican economy, that you’re starting to see for the first time loud, important musings by some of the oil producers – and this is Russia, in particular – who are saying: “We don’t think it would be prudent to actually continue producing oil even at our current rate. Until we have discovered a new generation of oil fields – which we haven’t had happen since the late 60s – why don’t we basically lower the rate of these fields’ production so we don’t risk becoming Cantarell too.” And that is a very legitimate issue. If I were Mexico today – as painful as this would be temporarily – I would lower Cantarell’s production rate to about 800,000 barrels a day, and keep the other sister fields next to it from going into a nitrogen injection – or do the nitrogen injection but then don’t let those oils flow as fast as they can. Cap it – and let it last at a lower rate for 10 years while they try to figure out what in the world do we do once we are basically no longer a major producer because otherwise they have no Plan B, just like we have no Plan B. [27:16]
JIM: And speaking of Plan B, as we look at alternatives, one fact as the GAO report talked about, their development – and let’s assume we start this right away – are dependent on not only high oil prices but they are only going to be part of this solution. The best case scenario under the GAO is they would only make up 34% of our needs by 2025 – and I don’t think we have till 2025.
MATT: Yeah, I don’t think we have till 2010. It’s a pretty grim picture. Now, I can turn around and turn into a very optimistic person saying that the minute we acknowledge peak oil is an enormous risk, it might have already happened, we need to have oil prices go way up from where they are today. We’re still giving this stuff away. And $65 a barrel, I keep reminding people – I know I’ve said this on your show before – is 10 cents a cup. Anybody that thinks 10 cents a cup [is reasonable] for an irreplaceable, extremely capital intensive resource is stupid. So if we basically end up having very high oil prices and we unleash the biggest wave of technology we’ve ever done, to try to invest in some sustainable biofuels (which is not corn-based ethanol), and some forms of energy that actually scale (which is not wind and solar – they are going to be fabulous but they are going to be very limited in their scope) it’s possible over the next five to seven years that we actually open the door to some forms of energy. I’ve spent a lot of time over the last year and a half working on trying to better understand the broad concept of ocean energy which is about nine forms of energy that come in our oceans and we sort of tap those. That’s the one thing we know that we’ll never run out of which is sea-water. And I think it’s amazing how little we’ve ever done in some of these areas that aren’t even vaguely as capital intensive as fuel cells or corn-based ethanol, but we haven’t worked on them. If we basically use very high oil prices to take our rusty infrastructure and totally rebuild it the next 10 years we’ll have the best economy we’ve ever seen. But if we sit on our duffs and keep saying, “oh, don’t worry about it, we have plenty of oil,” then we’ll basically have the worst collision you can ever imagine. [29:23]
JIM: That was something that they reached in their conclusions. They said what happens as peak oil arrives will depend on our preparedness, and also if it comes without warning, and it comes sooner, we’re in deep trouble.
MATT: Yeah. That’s why I thought the GAO report was such an important first step – I mean it was a baby step in a lot of senses, but at least it’s the first step, and it’s going to be hard to basically just ignore that. And I’m sure that Sam Bodman who’s our Secretary of Energy, who’s a very smart guy, well, he actually had read it and endorsed it. Congressman Bartlett and Congressman Udall are now just getting started in trying to really just wake the Congress up to saying this is really a serious issue. The UK, the European Union are finally saying it looks like this is an unbelievably serious issue. It’s too bad we didn’t start ten years ago. [30:11]
JIM: I heard you say this before, and you said it last time you were on the program that your prediction in the next year and a half, right now, Washington is abuzz with global warming – that’s the hot political topic du jour but as we move past $80 a barrel and maybe towards $100, peak oil becomes the number one issue. Do you still hold to that prediction?
MATT: Yeah, I sure do. It sounded a lot more outlandish when I said that a year and a half ago – I think it was maybe first on your program.
JIM: I can remember that. I think it was 2005 when we talked about Twilight.
I want to talk about something that to me is ignored, and to me is part of the solution and can offer a wonderful opportunity for Americans in terms of jobs – let’s talk about the energy infrastructure because whether you’re looking at drilling rigs, our pipeline system, gas plants, the condition and age of our refineries, our coal and nuclear plants, let’s talk about where we stand there, and what the opportunities are.
MATT: Well, first of all, the one thing that we know about this is everything that you can visibly see, it might have a nice paint job, and oftentimes it does, but if you scrape behind the paint it’s very rusty old iron. And iron doesn’t last forever; and iron in contact with oil corrodes because oil is a very corrosive agent. When you get brine combined with oil it’s basically one of the most corrosive things and we barely have anything that’s new because for thirty years we couldn’t afford anything that’s new – other than a few new pipelines going to areas that we didn’t have any before. But 95% of the world’s energy infrastructure my guess is – from refineries to rigs to tankers to pipelines – basically beyond it’s original design life. If we don’t start to replace that then with a very high likelihood because we are basically racing against the clock, ten years from now we can easily have the indignity of finding that our oil and gas production is down to 80% of what it is today – but our delivery has basically pushed it down another 30 to 40%. That would be an inconvenient truth. [32:22]
JIM: I’ve asked you this before but given the fact that we now have this report coming out of the General Accounting Office – so it’s getting visibility – if you were made energy czar: number one, what would you do right now, what would you start today; and number two, given what you know is going on in Washington, is there anything along the lines that you’re thinking that they are working on?
MATT: What I would do today – I would only take the job of energy czar if I basically had that with total authority for a week around the world because it’s not a US deal anymore. And the first thing I would do is order all of the owners of the top 250 producing oil fields to cough up within a week their historical field-by-field production over the last 60 quarters (5 years) to some global supply office, and start reporting that every 45 days. And anybody that basically wants to stay in the dark and hide under the veil of “we don’t want transparency,” if they want to export their oil outside their host country, or particularly inside the member countries of the IEA, I would slap a $10 a barrel transparency fine on the oil and use that fine to basically create an army of people to basically go figure out what the real answer is anyway. Because without that data we can basically argue and argue and argue on what is the average decline rate, and how much longer, and how much unconsumed oil. And the next thing I would do – that would be day one.
Day two would be to organize a group of people to start in to creating the finest oil basin the world will ever actually create and that field is called conservation. And this is basically a plan to attack the way we transport people and goods because 70% of the oil barrel does that; and liberate the workforce and let people work when they want, and where they want and pay by productivity; and stop shipping goods long distances by truck and put it all on water; and ultimately, figure out a way to end what we casually call globalization which is taking parts and finding sweatshop economies where there are people willing to work at 50 cents a day and having parts made and then zigging them all the way around the world, and zinging food all the way around the world. That’s how we actually consume 85 million barrels a day of oil. And if we put together a sort of plan that has some teeth in it within five-to-seven years we could theoretically lower the energy intensity by maybe a third – maybe even slightly higher. We’ll never do that by a new suite of even more fuel efficient automobiles – it takes 30 years; we’ll never get there by turning all our light bulbs off because that doesn’t have anything to do with oil use in the first place. And then I’d basically retire and go back to basically speaking out on energy issues and how healthy the economy is going to be seven years from now if we get the job done. [35:05]
JIM: Well, let’s take the first issue you would have done which is 85% of the world’s oil is non-transparent and it seems like there’s an incentive for that 85% to keep it that way.
MATT: Well, there isn’t an incentive because nobody gets hurt by producing the data. They might get embarrassed – they don’t get hurt. In the North Sea it’s been a mandatory requirement that we have field-by-field production reports monthly – it still didn’t prevent all the operators from missing the fact that they were peaking because they didn’t look at their own data. But at least we had the data. I could figure it out ten years ago, and publicly spoke out and wrote written reports that I can go back and point to that said the North Sea is likely to peak between 98 and 2000. And I threaded the needle pretty well because it peaked in 99 because we had field-by-field production data. And anyone that wants to hide behind the transparency can basically pay a transparency fine – even make it $20 a barrel. If you get the fine high enough they’ll cough the data up. [35:57]
JIM: Why do you think they’re reluctant to do so. I mean what do they have to gain by doing it – just avoiding embarrassment?
MATT: I don’t have any idea, other than embarrassment. The public companies don’t want to do it because they say, “God, if people knew how old our oil fields were they’d basically sell our shares.” And I basically say to the contrary – if they know basically that we’re going into production decline that means prices are going way higher. Your stock price will probably go up, guys. [36:19]
JIM: And is it maybe revealing for like Saudi Arabia to say, “well, gosh guys, we don’t have 260, it turns out we maybe only have 25 and 30 left.”
MATT: It would be embarrassing, but it doesn’t mean Saudi Arabia loses their stature in the world. It basically means that we’re basically being more poignant about how fragile the supply is. Right now by posturing that they have 265 billion barrels they make people madder than hell. Why don’t you lower the damn price then. So I think they have caught themselves in their own rhetoric in kind of a nasty corner. But it’s not my problem.
JIM: How do you see this realistically unfolding. I mean we are having some people in Washington that are more cognizant of the issue; we have some very heroic figures like Udall and Bartlett who are moving to educate Congress in this area. But it seems to me like we’ve gone beyond avoiding a crisis; it seems like a real crisis is what’s going to help get us to the area where we start thinking about conservation and start thinking about the way we run our economy.
MATT: Yes, and you know a real crisis is likely to be just around the corner because take 2007 for instance, I think it is really, highly unlikely that we will have any significant supply increase in 2007. And I can’t imagine that demand isn’t going to basically jump another million or two million barrels a day; and we’ve taken our usable inventories down to such a low level that there’s a high risk that basically demand outstrips supply and usable inventory – and that spells shortages. And you know, when I saw the news yesterday and a significant amount of service stations in Colorado were now out of gas because one refinery went down, it just reminds you we are living on the edge of basically a precipice. And so a crisis could happen any day – we just don’t know the day.
If you go back to two of the great crises the United States has been involved in – I’d actually argue probably the two greatest – they were the Civil War and World War II. You could have said with great certainty, within two or three years of both events, that if you were looking at the big picture correctly that war is inevitable – we just don’t know when it’s going to start. [38:24]
JIM: If you were addressing a group of our listeners in a room today regarding this issue, where would you tell them to look, what would you tell them to do, what would you tell them to read?
MATT: Well, I would basically say that just clamor for energy data reform so we get this field-by-field production data. You know, tell your Congressmen that it’s the most important thing; tell your mayors it’s the most important thing. I would basically try to get each community to prepare a contingency plan for what are you going to do when oil peaks. What I wouldn’t do is sit and home and mope. I would basically become a very loud advocate. I would probably avoid reading all of the optimistic reports zigging around because they just make you feel good – they don’t have any good data. I’d go on some of these unbelievably informative blogs like The Oil Drum. And let me focus on YouTube. I didn’t even know what YouTube was other than remembering that Google paid a fortune for whatever this thing is. I was on CNBC last Thursday afternoon to talk about the GAO report, and I was surprised when someone informed me to go on YouTube the next morning and they had the 10 minute interview live on YouTube, and there were 676 people that had seen it. Last night I checked and there were almost 10,000 people that had seen it. People are listening. [39:38]
JIM: Absolutely amazing. Well, Matt, as we close why don’t you bring us up to date on Twilight. I know last time I talked to you it was being printed in Chinese; it’s out in paperback form; and in German.
MATT: Yup. It’s been really remarkable. I guess it was 9 weeks ago now that I spent four days in Beijing for the book launching and I couldn’t believe the elegant job that the East China Normal University Press had done. And the praise it got within some really senior people in China, as being maybe the most beautifully translated book from English into Chinese, was really unbelievably neat. I was told last week that it has now sold 3700 copies in the first 6 weeks, and that almost every senior energy planner has read the book. The praise I got for basically doing this, and then helping the Chinese translators make sure that they properly was just unbelievable for a country that has a lot to lose by missing this. And I found to my surprise that some of their senior energy people were far more alert to peak oil. There was a program on the Saturday I was there at the Chinese Academy of Social Science, and after I spoke, Professor – somebody – I should remember his name, it was in Chinese, gave a talk in Mandarin that was simultaneously translated. And towards the end of his talk he said, “two hundred years ago, Mozart created this unbelievably beautiful music that we still love listening to today.” I thought, “where is he going with this?” And he said, “the reason for that is that it was so perfectly harmonious. There is nothing harmonic about peak oil. Its high notes are too shrill.” [41:11]
JIM: Wow.
MATT: That’s a really profound statement. I think the English copies – I’ll get a report at the end of April – but I think we’ll probably cross 100,000 books which I didn’t realize how few books ever do that. So the book in German through an intermediary was delivered to Pope Benedict the 16th. I have a lovely framed letter now from the Secretary of State’s Assistant to the Vatican thanking me for the efforts of alerting the world to peak oil. That’s pretty neat stuff.
MATT: That’s something to be really proud of. Well, Matt, I appreciate you joining us on the program, and I appreciate the efforts you put in to alerting the world to this very issue because as we started this conversation I think it will be one of the defining issues of the 21st Century.
MATT: Well, I thank you for the time you’ve taken on your program – your articulation of the issues is fabulous.
JIM: Well, once again I want to thank you for joining us on the program and please come back and talk to us again in the future.
Chairman, Simmons & Company International
and Author of "Twilight in the Desert"
"The GAO Report on Peak Oil"
TRANSCRIPT OF AUDIO INTERVIEW
JIM: In February of this year the General Accounting Office released a report on crude oil. Uncertainty about the future oil supply makes it important to develop a strategy for addressing a peak and a decline in oil production. Joining me on the program this week is Matt Simmons, he’s Chairman of Simmons Intl.
Matt, when I saw this report I thought: finally, somebody in Washington is taking this issue seriously. I found that at least encouraging.
MATT SIMMONS: Yeah, I did too. I knew that the report was going to be released in a press conference last Thursday. Congressman Udall, and Congressman Bartlett, I think are two really remarkably great Americans. Bartlett’s basically an 18-year veteran Republican from Frederick, Maryland, and a PhD in science. And Tom Udall is a Democratic Congressman from Albuquerque. He’s the son of Stewart Udall, probably the last great Secretary of the Interior. So these are two very special people. They happen to also be the co-chairmen of the Peak Oil Caucus. And I felt it was like basically finally the first real official cannon going off saying we really screwed up. [1:35]
JIM: What I find fascinating is the range of estimates that they used in their study. It was as wide as the Grand Canyon. If you take a look at some of the optimistic side which says peak is not reached until 2040, yet we get more evidence – I don’t care if it’s hearing about Burgan, Cantarell; and especially, we knew that Cantarell had peaked but the decline that they announced earlier this year is much greater than expected; Ghawar. You know, that seems to me to point out that this is closer than we think.
MATT: Well, also, if you look at the GAO table that they have where they have 20 different groups that basically gave them their sort of forecast, most of them don’t have a single point in time (which is probably wise) – they have a range. Two or three have a range of 40 years, so you say why even have them in, other than to say they obviously don’t have any idea. But it’s interesting you can turn that around and say that if you draw a line down with now being the start of 2007, eleven of the twenty have their peak oil arriving within a timeframe that’s within now. So the now actually has far heavier weight than 2037 – it’s just that basically the outlier was 2037. And so I think they appropriately said that they also said that it takes so long to basically prepare for what we do after that, that even if it turns out that it’s 2037, America is remiss at not having a Plan B in place today.
But they also said is that the reason for the uncertainty is that the data is so fuzzy – of course, this has been a hot-button issue of mine for the last five years – that unless we have urgent data reform and start getting field-by-field production reports then we’ll actually discover peak oil the old-fashioned way through the rear-view mirror. And the fact they say there are 14 entities within the government, spread out across the face of the government, that are sort of collecting bits and pieces of the sort of data you need to have – so one of the strong recommendations to the Secretary of Energy is pull all of those together in one tight coordinated monitoring and look at this like a hawk because it’s going to happen. [3:40]
JIM: They talked about peak oil being dependent on multiple factors: they talked about the amount of oil still in the ground; how much can be recovered; technology costs; environmental challenges; and global demand. However, they are not getting at – in terms of how much we’re consuming and how much we’re finding – what is the present rate of depletion. I would have expected to see more in that vein.
MATT: Well, the problem is: to do a good job – I mean, I know the team of three people that were working on this came down to Houston and spent really pretty well all afternoon in my office and they had a long, long list of things, and we had a long serious discussion, and I applauded them for having their questions so well thought through – but to do an honest job they’ve got to plow through Exxon’s people, and the USGS’ folks, and Cambridge Energy’s folks. And I think they were bewildered as they started putting it together by what…I mean people are all over the map on this. But what I find so increasingly interesting is that all the people that have data come to the same conclusion. All the people that basically pooh-pooh the idea have a bunch of fabulous theses but they don’t have any data. [4:46]
JIM: Wishful thinking.
MATT: Yeah, it’s really wishful thinking. And it starts right at the very top of the CEOs of virtually all the major oil companies, but they have no data. They just have a really pleasant feeling that bad things don’t happen to good people. [4:59]
JIM: What I also found fascinating – they alluded to the fact and highlighted how much we, as a country, are spending for gasoline each year. I think they pointed out like one year we spent 38 billion more. In California, right now, Matt, super is at $3.52. However we’re still making assumptions that that present consumption trends will continue. For example, in this report they are talking about 118 million barrels a day will be required by 2030, but no real answer as to how we get there.
MATT: Well, the International Energy Agency and their World Energy Outlook 2006 book had one page that was hand-written by Fatih Birol, the Chief Economist, who shares with me the belief that this is the worst issue of the 21st Century. The fact is that we don’t have the most important missing ingredient in the supply outlook which is what the average decline rate is of the existing fields today. And they say that we think it ranges probably from 2 or 3% in some fields or areas, to 11 or 12% in others. In their models showing that you go basically to 118 million by 2030, they assume an average of 8%. If you take that through a calculator, what it assumes is that the current 85 is down to 10. So we only have to find 105 million barrels a day between now and the next 23 years to get there, which has a statistical likelihood of happening of zero. [6:26]
JIM: It’s amazing when you consider the size of this country and the amount of energy that we consume.
MATT: How about the size of the world. It’s not just this country – this is a global issue.
JIM: They talk about how vulnerable we are now because we are importing 66% of our energy needs – and that figure is only going to get worse.
MATT: Yes, and I’ve been saying for quite some time that basically the United States was so energy secure in 1970, the year we peaked in our oil supply, and the country that was held out to dry turned out to be Japan. Well, we’re Japan of 1970, in circa 2007. In that short period of time the United States has become far more energy vulnerable than Japan was – because we consume so much. [7:09]
JIM: One of the difficulties I think that we have when we discuss the peak oil issue is they talk about the amount of oil that is left in the ground, and it ranges from one trillion to three trillion. Isn’t the real problem that we have here is equating reserves with production? For example, they use figures like there’s 170 billion in reserves in the Canadian oil sands, but the Canadian oil sands are never going to produce at the rate that Saudi Arabia does.
MATT: If the Canadian oil sands ever got to 3 million barrels a day, you would have basically destroyed Alberta. It is so unbelievably energy intensive and water intensive to do that. That’s why we should just toss – reserve data is now so worthless that it’s meaningless. You mentioned Cantarell. I spent a week ago yesterday, pretty well all day at his request, visiting with the new Director General of Pemex, and Mexico thought they had 50 million barrels of oil 7 years ago – they now think they have 13. And what they now know because it’s happening in front of their eyes is that the world’s second largest producing oil field, Cantarell – that has accounted for 6 out of every 10 barrels of oil that Mexico’s produced for the last 40 years – finally went into a tertiary recovery program. They went from 40 producing wells to 440 producing wells. The 40 producing wells from 81 to 96 produced a million barrels a day without a hiccup. They now have 440 producing wells and they nitrogen injected the gas cap which was like stepping on a tube of toothpaste, and it ramped the production all the way up to 2.2 million barrels a day. And all of a sudden it’s in decline, and it’s declined by 20% the first year. They are hoping that the decline rate slows down to 14% - but it’s just a hope. And my commentary was if you look at the production profiles of all sorts of publicly available data on giant producing fields that have now done sort of the most aggressive sweep of their oil, it doesn’t slow down until you’re down to about the last 10%. Then it slows way down when you manage the tail. [9:08]
JIM: Yet the remarkable thing, as you’re describing what’s happening with the second largest oil field, there are similar problems with the world’s largest oil field.
MATT: There are similar problems with the world’s third largest; there are similar problems with the world’s fourth largest. You can go down the top twenty producing oil fields and there might be one or two that are still in their ascendancy – but the rest are all in irreversible decline. That’s what makes it so hard for me to fathom why some people can so casually say that peak oil is an event that won’t happen for decades, and then we’ll have an undulating plateau for decades. And I say, “give me a break, where are they coming from?” They have access to the same data I do. [9:44]
JIM: Is it just something that is optimistic because I mean if you take a look at – and this gets back to the reserves data – and you look at, okay, we have the tar sands, and maybe we have shale oil, we have deepwater oil, and the assumptions out there that we have all this stuff, maybe not in the conventional form, and we’ll just substitute that stuff.
MATT: Yeah, that’s exactly what they are doing. And Dan Yergin at CERA, along with Exxon, have probably become the two loudest voices that we have no problems. He basically loves to go back and remind people over the last one hundred years we’ve had several times when we were basically worried that it seemed like we had run out of things to find – he always said “run out of oil” but it’s never been that, it’s run out of things to find – and then, bingo, we find a new oil basin. Well, he’s actually correct, as we started from no idea what was there to now we’ve basically swept the world. What he is basically assuming is if you do that for one hundred years you can do it for another hundred years. And it’s a terrific economist sort of thesis – but you can also go back and say that Cantarell in 1975, 76 was the last oil field that we’ve ever found that basically produced over a million barrels a day; and the North Sea fields were the last fields that we ever found that produced over 500,000 barrels a day. And now we basically have Thunder Horse may be coming on in 2009, as opposed to 2005, that may be it will produce 250,000 barrels a day – that’s the biggest deepwater field we’ll ever do. And so the average new field today – you know, giant field – produces about 40- or 50,000 barrels a day for a couple of years and then goes into rapid decline. That’s just real numbers. [11:25]
JIM: I guess I see one of the real challenges here, as we’re talking about these statistics, is developing alternatives as soon as we can but the alternatives are going to depend on the price of oil remaining high. But yet, Matt, I watched a program this morning where you had a bunch of economists and they were talking about, “well, the US economy is going to slow down, as that happens we’re going to have demand destruction and the price of oil is going back below 50.”
MATT: Yeah, they’re crazy. As a group they are so flippant, they’ve been so discredited on the price of oil is going to go back. It was going to go back at 25, go back at 30, going to go back at 40; $30 oil creates a recession – everybody weighed in on that. We blew through $30 like a warm knife through butter. Interestingly today, this morning when the Iranians said we’re going to let the sailors go, oil prices collapsed by a dollar. Well, at the end of the day, I just checked spot prices around the world, and Tapis grade (which is South East Asia’s light sweet grade) is basically $73.75 today – cash market. Cusiana is $71 – that’s Colombian light sweet crude; Mayan crude in Mexico is $51. So there’s a $20 spread today between heavy oil and light oil. So we’re back to $70 a barrel, it’s just basically not there in WTI even though the forward price it got, the price crossed 70 for December crude. All we need is just a little bit of a hiccup – a little bit of spurt in demand and supply not growing – and we’re likely to have the same thing that happened yesterday in Colorado where a lot of service stations ran out of gas. And that’s a temporary problem because one of their refineries in the Rocky Mountains had some maintenance problems and so they are out of gas. But the world is right on the verge of being out of – run out of oil. But we’re in basically have demand outstrip supply. [13:11]
JIM: You know, I think one of the problems that we have here, Matt, and especially in this country we were so fortunate to have large oil reserves. We were self-sufficient and when our oil ran out we just simply went overseas and bought it from somebody else. So all these economic models that they talk about – the financial guys, the economists, and the Wall Street people – well, typically that held true: if you went into a recession in the past, demand would go down, the price of oil would come down. But we’re not there anymore.
MATT: Yeah, it’s just all the old formulae got thrown out the window. And to basically say, “well, this will be just like the 70s, we’ll have a spike, and then go down.” I say, that’s like somebody saying at the outbreak of World War II, “well, this is just going to be like the Civil War.” It turned out basically it was about the same length, and it was just as awful in its region, but it had nothing to do with the Civil War. [14:01]
JIM: As I went through the GAO report, another problem is that – as they address – a lot of these government agencies they spoke with in putting this report together, their efforts were not specifically designed to address peak oil. In fact, the Department Of Energy said there is no formal strategy for coordinating and prioritizing Federal efforts dealing with peak. And right now, the hot topic in Washington is global warming. It’s like putting the cart before the horse.
MATT: It’s amazing how this one report from the United Nation’s study group, and Al Gore’s movie, finally just put the icing on the cake that, “oh my gosh, let’s all acknowledge global warming’s here.” And I say that climate change is probably a very important issue. I do not pooh-pooh that at all. I think we need far better data to understand the implications of whether it’s CO2, or methane for instance. There’s a lot of data in that same report that methane is three times more lethal – it’s just that we don’t know how to capture it, and so it’s easier to pick on CO2. But peak oil is far more real. The data is far more compelling, and the impact on our lives in the next three years is utterly awful if we ignore it and it happens. [15:14]
JIM: It surprises me, and maybe it’s because of these old paradigms we’re asking the wrong questions. I mean, I am still to this day floored every week when they report these inventory numbers on Wednesday and Thursday. I think something more meaningful might be: what is happening to the depletion rates of the oil fields – as you mentioned; what is happening to car sales in China – some of those things; and how much did we find last year compared to what we consumed? That seems to me more relevant.
MATT: I couldn’t agree with you more. And then the pundits that follow the inventory reports like they’re racing forms don’t have any idea how to properly read the data. You can have ten million barrels more inventory than you did five years ago, but if your demand is way up on a day’s supply you’re in the hole. So we’re operating right now as close to a just-in-time supply as you could possibly get. I’ll tell you what’s most alarming – I’ll go back to Mexico for a minute – is that if it turns out that the 20% decline rate is correct, that it doesn’t moderate (and there’s no earthly reason that it would moderate in my opinion other than just phenomenal good luck), then sometime between now and 2010, Mexico fails to be able to export any oil. And from a US Gulf coast refinery standpoint that is basically a Pearl Harbor day event. And then it puts us unbelievably at the mercy of Hugo Chavez in Venezuela – other than the fact that his oil is basically probably in as big a disarray, other than the synthetic crude projects that he just nationalized. So we have some problems right now that are on our doorstep that are not decades away – they are basically between now and 2010. [16:49]
JIM: One of the things I think should get more coverage in the press – one thing that strikes me – is despite spending tens of billions of dollars in Saudi Arabia they’ve been unable to really increase their production.
MATT: Moreover, there are now a growing number of oil sleuths who are plumbing through…I don’t know if you’ve ever gone on The Oil Drum, which is the most sophisticated energy blog on the internet?
JIM: Sure do.
MATT: They’ve had some fabulous exchanges of guys who basically have gone back and lined up all the right data you can get on these new fields that came on in Saudi Arabia, and the fact that they didn’t basically increase production. They did come on. So what we don’t know is where is Ghawar today – is it basically under four, is it under three? We don’t have any idea. Is Saudi Arabia producing nine or eight? We don’t have any idea. What they say is they have 11 million barrels a day of productive capacity, but if we have oil prices up in the 80 or 90 or $100 a barrel this summer because we have too high a demand, they are going to look awfully silly if they basically say, “well, we have 11 million barrels a day but no one wants our oil.” [17:54]
JIM: I was going through the report they were talking about our deepwater oil, and they estimate that will peak in 2016. But if you really boil it down – and this relates back to Saudi Arabia – they conclude that US demand for oil will need to be fulfilled by increases in production from the rest of the world. But here, Matt, you and I are talking about the largest producer in the world, and they can’t increase their production.
MATT: The reality – it would be nice to think otherwise – but the reality of the Middle East oil is that there were 35 giant fields that were discovered, and they were all discovered in a very narrow area. If you sit in the EXPEC center of Saudi Aramco in Dhahran and watch this really well put together 3D movie, the movie starts out with a depiction of the earth cracking and the creation of the Rift Valley and the Red Sea; and what they show is that basically effectively scraped the whole Arabian Peninsula of several thousand feet of what was once rich swampland over until it hit the Zagreb [phon.] mountains – and that’s why these 35 fields are lined up perfectly North to South like they are tankers on a radar screen coming out of the Straits of Hormuz. That’s all the oil that basically got created in the Middle East because of that one event.
What I found out to my unbelievable amazement as I went back and read some SPE papers about Cantarell before going to Mexico last week, was that in the mid-90s they discovered the most amazing fact that they basically through magnetic surveys the largest meteorite crater that’s ever been discovered was this meteorite they believed hit earth 45 to 60 million years ago and created a ten-by-ten mile crater – that’s the Bay of Campeche. Within that crater floor is every giant oil field of Mexico.
So two acts of God created two of the most prolific basins the world has ever known. And yet for a half a century we sort of assumed oil was kind of dispersed around the world equally, and if we just had two million rigs at work we’d basically be producing 200 million barrels a day. No one ever quite said that, but that was sort of the implication of the architecture that we created for the world we now have. [19:57]
JIM: Another issue I find absolutely fascinating in this whole debate, and I’ve interviewed authors who think peak oil is a myth, some think it is far out in the distance, but when I take a look at it and you boil it down, you’ve got about 75% of the world’s oil lies within OPEC, and another 10% in Russia – their reserves are unaudited, so how do we know what they have are real? They increased by 300 billion in the 80s with no major discovery. Then many OPEC countries, their reserves remained constant.
MATT: Well, they produced another 350 billion barrels of oil.
JIM: Yeah. And you know, the government report even acknowledged this. They said, “wait a minute, Kuwait has not changed its reserves in the last two decades, and yet we know that they produced 8 billion barrels of oil.” The fact that nobody questions this is just remarkable.
MATT: I find it so utterly naïve for people to just say, “you’re stupid, just look at the 265 billion barrels that Saudi Arabia has.” And I say, yes, I know because of the research I did that the senior executives at Aramco under oath told the same GAO entity that there were basically 110 billion barrels in 1979 (of proven reserves under SEC standards) and basically since then they’ve produced down to where that same number would be probably today 18 to 20 billion left. And yet they say they have 265 billion, and they have another 200 billion sitting in reserves if we ever need it. And people say, “thank you, I didn’t realize that.” I can tell you on your program that, trust me, my net worth will exceed Bill Gates’ by 2030, and you’d be a fool to believe it unless Bill Gates had a terrible financial collapse. There’s nothing illegal about me telling you that. I can want that – and that’s kind of what the world has done. [21:52]
JIM: But see – they talk about the US government’s assessment of world oil regions and they talk about there’s the potential there for 2.3 trillion; and they’re talking about 890 billion current; and then a 1.4 trillion potential to be added. Where does it come from? I mean, is there a place we haven’t looked at?
MATT: Yeah, there are – the Arctic and the Antarctic.
JIM: But how do we get it?
MATT: Well, we don’t. But if you want to basically be optimistic, it’s like me saying I’m going to be as wealthy as Bill Gates. There is nothing illegal about me wanting that. And that’s the same reliability of these numbers of the USGS. The USGS is a fine group of computer modelers, and there are some trained geologists there. But unless you drill for oil and find something there have been estimates all the time and through the history of the industry of an area that has so much oil, and the sad history of the industry is that most of the new field wildcats we have drilled have always been dry holes. No one has ever intentionally drilled a dry hole. It was just basically an optimistic assessment that went wrong. [22:53]
JIM: You know the other issue too I think that even if you talk about unconventional oil, deepwater oil, the tar sands and shale, is nobody is estimating, for example, the amount of energy input compared to the energy output, which is the real issue I think I have with ethanol. Right now, it’s a real net energy loser.
MATT: We just didn’t ever develop any data to be able to do that. And for years it wasn’t very relevant. Here’s an interesting number that I got out of a really well done report of The Future Of Geothermal Energy by MIT. There are nine producing states in the United States that produce 4.8 million barrels of oil, but those same wells produce 128 million barrels of brine. So basically the United States has gone from the world’s biggest oil producer to the world’s biggest producer of brine stained with oil. We’re just pretty good at getting the stains out. And these are real facts. [23:47]
JIM: Let’s talk about something that surfaced last year that everybody was very optimistic – let’s talk about that Jack well by Chevron. I don’t think people realize that when you get to deep water, oil, number one, how expensive it is – you’ve got drill ships in the Gulf today that are costing companies half a million dollars a day; and then you have that Jack well as I recall, wasn’t it close to 100 million to drill that well?
MATT: I think it was probably closer to 150 million because they hydraulically frac the well which is the only way on earth that it would have any way to flow because those reservoir rocks of the Lower Wilcox are very, very tight rocks – they just don’t produce unless you frac them. The folly of the Jack well hype is they could only afford to flow test it for 30 days. Well, you talk to any oil operator that’s drilled in tight, deep formations where you have to do a very expensive hydraulic fracture – and they only stay open for so long until the pressure cracks the proppings and they are tight again. So what we don’t have any idea is because they couldn’t have afforded to let that well flow with an expensive meter going on of a very, very expensive rig – so they basically hardly know anything about the Jack reservoir. And Chevron basically says it probably maybe 300 million barrels, or 500 million barrels. But how that got translated within a day to, “oh, we found a new Prudhoe Bay,” is saying, “well there are 180 miles of lower Tertiary trend and if you found 60 Jack fields, you’d be at Prudhoe Bay.” I say we don’t have any idea yet realistically whether the Jack field will ever be produced. [25:24]
JIM: Given the things that we are talking about here, not only the difficulty that Saudi Arabia and other countries are having keeping up – having to run faster to keep up with demand – Matt, we haven’t even discussed the political risk factors because if you take a look at the majority of the world’s oil it’s inaccessible and held in very unstable, political areas of the world. For example, Hugo Chavez may not have the same incentive as Exxon to develop Venezuela’s oil reserves. So you have 85% of the world’s oil reserves in countries with medium to high investment risk; and three countries – Saudi Arabia, Kuwait, and Mexico – that prohibit foreign investment.
MATT: There’s also an issue that as the visibility of the Cantarells of the world, and how fast they can decline becomes reality because there’s such good transparency within Pemex because it’s so utterly important for the Mexican economy, that you’re starting to see for the first time loud, important musings by some of the oil producers – and this is Russia, in particular – who are saying: “We don’t think it would be prudent to actually continue producing oil even at our current rate. Until we have discovered a new generation of oil fields – which we haven’t had happen since the late 60s – why don’t we basically lower the rate of these fields’ production so we don’t risk becoming Cantarell too.” And that is a very legitimate issue. If I were Mexico today – as painful as this would be temporarily – I would lower Cantarell’s production rate to about 800,000 barrels a day, and keep the other sister fields next to it from going into a nitrogen injection – or do the nitrogen injection but then don’t let those oils flow as fast as they can. Cap it – and let it last at a lower rate for 10 years while they try to figure out what in the world do we do once we are basically no longer a major producer because otherwise they have no Plan B, just like we have no Plan B. [27:16]
JIM: And speaking of Plan B, as we look at alternatives, one fact as the GAO report talked about, their development – and let’s assume we start this right away – are dependent on not only high oil prices but they are only going to be part of this solution. The best case scenario under the GAO is they would only make up 34% of our needs by 2025 – and I don’t think we have till 2025.
MATT: Yeah, I don’t think we have till 2010. It’s a pretty grim picture. Now, I can turn around and turn into a very optimistic person saying that the minute we acknowledge peak oil is an enormous risk, it might have already happened, we need to have oil prices go way up from where they are today. We’re still giving this stuff away. And $65 a barrel, I keep reminding people – I know I’ve said this on your show before – is 10 cents a cup. Anybody that thinks 10 cents a cup [is reasonable] for an irreplaceable, extremely capital intensive resource is stupid. So if we basically end up having very high oil prices and we unleash the biggest wave of technology we’ve ever done, to try to invest in some sustainable biofuels (which is not corn-based ethanol), and some forms of energy that actually scale (which is not wind and solar – they are going to be fabulous but they are going to be very limited in their scope) it’s possible over the next five to seven years that we actually open the door to some forms of energy. I’ve spent a lot of time over the last year and a half working on trying to better understand the broad concept of ocean energy which is about nine forms of energy that come in our oceans and we sort of tap those. That’s the one thing we know that we’ll never run out of which is sea-water. And I think it’s amazing how little we’ve ever done in some of these areas that aren’t even vaguely as capital intensive as fuel cells or corn-based ethanol, but we haven’t worked on them. If we basically use very high oil prices to take our rusty infrastructure and totally rebuild it the next 10 years we’ll have the best economy we’ve ever seen. But if we sit on our duffs and keep saying, “oh, don’t worry about it, we have plenty of oil,” then we’ll basically have the worst collision you can ever imagine. [29:23]
JIM: That was something that they reached in their conclusions. They said what happens as peak oil arrives will depend on our preparedness, and also if it comes without warning, and it comes sooner, we’re in deep trouble.
MATT: Yeah. That’s why I thought the GAO report was such an important first step – I mean it was a baby step in a lot of senses, but at least it’s the first step, and it’s going to be hard to basically just ignore that. And I’m sure that Sam Bodman who’s our Secretary of Energy, who’s a very smart guy, well, he actually had read it and endorsed it. Congressman Bartlett and Congressman Udall are now just getting started in trying to really just wake the Congress up to saying this is really a serious issue. The UK, the European Union are finally saying it looks like this is an unbelievably serious issue. It’s too bad we didn’t start ten years ago. [30:11]
JIM: I heard you say this before, and you said it last time you were on the program that your prediction in the next year and a half, right now, Washington is abuzz with global warming – that’s the hot political topic du jour but as we move past $80 a barrel and maybe towards $100, peak oil becomes the number one issue. Do you still hold to that prediction?
MATT: Yeah, I sure do. It sounded a lot more outlandish when I said that a year and a half ago – I think it was maybe first on your program.
JIM: I can remember that. I think it was 2005 when we talked about Twilight.
I want to talk about something that to me is ignored, and to me is part of the solution and can offer a wonderful opportunity for Americans in terms of jobs – let’s talk about the energy infrastructure because whether you’re looking at drilling rigs, our pipeline system, gas plants, the condition and age of our refineries, our coal and nuclear plants, let’s talk about where we stand there, and what the opportunities are.
MATT: Well, first of all, the one thing that we know about this is everything that you can visibly see, it might have a nice paint job, and oftentimes it does, but if you scrape behind the paint it’s very rusty old iron. And iron doesn’t last forever; and iron in contact with oil corrodes because oil is a very corrosive agent. When you get brine combined with oil it’s basically one of the most corrosive things and we barely have anything that’s new because for thirty years we couldn’t afford anything that’s new – other than a few new pipelines going to areas that we didn’t have any before. But 95% of the world’s energy infrastructure my guess is – from refineries to rigs to tankers to pipelines – basically beyond it’s original design life. If we don’t start to replace that then with a very high likelihood because we are basically racing against the clock, ten years from now we can easily have the indignity of finding that our oil and gas production is down to 80% of what it is today – but our delivery has basically pushed it down another 30 to 40%. That would be an inconvenient truth. [32:22]
JIM: I’ve asked you this before but given the fact that we now have this report coming out of the General Accounting Office – so it’s getting visibility – if you were made energy czar: number one, what would you do right now, what would you start today; and number two, given what you know is going on in Washington, is there anything along the lines that you’re thinking that they are working on?
MATT: What I would do today – I would only take the job of energy czar if I basically had that with total authority for a week around the world because it’s not a US deal anymore. And the first thing I would do is order all of the owners of the top 250 producing oil fields to cough up within a week their historical field-by-field production over the last 60 quarters (5 years) to some global supply office, and start reporting that every 45 days. And anybody that basically wants to stay in the dark and hide under the veil of “we don’t want transparency,” if they want to export their oil outside their host country, or particularly inside the member countries of the IEA, I would slap a $10 a barrel transparency fine on the oil and use that fine to basically create an army of people to basically go figure out what the real answer is anyway. Because without that data we can basically argue and argue and argue on what is the average decline rate, and how much longer, and how much unconsumed oil. And the next thing I would do – that would be day one.
Day two would be to organize a group of people to start in to creating the finest oil basin the world will ever actually create and that field is called conservation. And this is basically a plan to attack the way we transport people and goods because 70% of the oil barrel does that; and liberate the workforce and let people work when they want, and where they want and pay by productivity; and stop shipping goods long distances by truck and put it all on water; and ultimately, figure out a way to end what we casually call globalization which is taking parts and finding sweatshop economies where there are people willing to work at 50 cents a day and having parts made and then zigging them all the way around the world, and zinging food all the way around the world. That’s how we actually consume 85 million barrels a day of oil. And if we put together a sort of plan that has some teeth in it within five-to-seven years we could theoretically lower the energy intensity by maybe a third – maybe even slightly higher. We’ll never do that by a new suite of even more fuel efficient automobiles – it takes 30 years; we’ll never get there by turning all our light bulbs off because that doesn’t have anything to do with oil use in the first place. And then I’d basically retire and go back to basically speaking out on energy issues and how healthy the economy is going to be seven years from now if we get the job done. [35:05]
JIM: Well, let’s take the first issue you would have done which is 85% of the world’s oil is non-transparent and it seems like there’s an incentive for that 85% to keep it that way.
MATT: Well, there isn’t an incentive because nobody gets hurt by producing the data. They might get embarrassed – they don’t get hurt. In the North Sea it’s been a mandatory requirement that we have field-by-field production reports monthly – it still didn’t prevent all the operators from missing the fact that they were peaking because they didn’t look at their own data. But at least we had the data. I could figure it out ten years ago, and publicly spoke out and wrote written reports that I can go back and point to that said the North Sea is likely to peak between 98 and 2000. And I threaded the needle pretty well because it peaked in 99 because we had field-by-field production data. And anyone that wants to hide behind the transparency can basically pay a transparency fine – even make it $20 a barrel. If you get the fine high enough they’ll cough the data up. [35:57]
JIM: Why do you think they’re reluctant to do so. I mean what do they have to gain by doing it – just avoiding embarrassment?
MATT: I don’t have any idea, other than embarrassment. The public companies don’t want to do it because they say, “God, if people knew how old our oil fields were they’d basically sell our shares.” And I basically say to the contrary – if they know basically that we’re going into production decline that means prices are going way higher. Your stock price will probably go up, guys. [36:19]
JIM: And is it maybe revealing for like Saudi Arabia to say, “well, gosh guys, we don’t have 260, it turns out we maybe only have 25 and 30 left.”
MATT: It would be embarrassing, but it doesn’t mean Saudi Arabia loses their stature in the world. It basically means that we’re basically being more poignant about how fragile the supply is. Right now by posturing that they have 265 billion barrels they make people madder than hell. Why don’t you lower the damn price then. So I think they have caught themselves in their own rhetoric in kind of a nasty corner. But it’s not my problem.
JIM: How do you see this realistically unfolding. I mean we are having some people in Washington that are more cognizant of the issue; we have some very heroic figures like Udall and Bartlett who are moving to educate Congress in this area. But it seems to me like we’ve gone beyond avoiding a crisis; it seems like a real crisis is what’s going to help get us to the area where we start thinking about conservation and start thinking about the way we run our economy.
MATT: Yes, and you know a real crisis is likely to be just around the corner because take 2007 for instance, I think it is really, highly unlikely that we will have any significant supply increase in 2007. And I can’t imagine that demand isn’t going to basically jump another million or two million barrels a day; and we’ve taken our usable inventories down to such a low level that there’s a high risk that basically demand outstrips supply and usable inventory – and that spells shortages. And you know, when I saw the news yesterday and a significant amount of service stations in Colorado were now out of gas because one refinery went down, it just reminds you we are living on the edge of basically a precipice. And so a crisis could happen any day – we just don’t know the day.
If you go back to two of the great crises the United States has been involved in – I’d actually argue probably the two greatest – they were the Civil War and World War II. You could have said with great certainty, within two or three years of both events, that if you were looking at the big picture correctly that war is inevitable – we just don’t know when it’s going to start. [38:24]
JIM: If you were addressing a group of our listeners in a room today regarding this issue, where would you tell them to look, what would you tell them to do, what would you tell them to read?
MATT: Well, I would basically say that just clamor for energy data reform so we get this field-by-field production data. You know, tell your Congressmen that it’s the most important thing; tell your mayors it’s the most important thing. I would basically try to get each community to prepare a contingency plan for what are you going to do when oil peaks. What I wouldn’t do is sit and home and mope. I would basically become a very loud advocate. I would probably avoid reading all of the optimistic reports zigging around because they just make you feel good – they don’t have any good data. I’d go on some of these unbelievably informative blogs like The Oil Drum. And let me focus on YouTube. I didn’t even know what YouTube was other than remembering that Google paid a fortune for whatever this thing is. I was on CNBC last Thursday afternoon to talk about the GAO report, and I was surprised when someone informed me to go on YouTube the next morning and they had the 10 minute interview live on YouTube, and there were 676 people that had seen it. Last night I checked and there were almost 10,000 people that had seen it. People are listening. [39:38]
JIM: Absolutely amazing. Well, Matt, as we close why don’t you bring us up to date on Twilight. I know last time I talked to you it was being printed in Chinese; it’s out in paperback form; and in German.
MATT: Yup. It’s been really remarkable. I guess it was 9 weeks ago now that I spent four days in Beijing for the book launching and I couldn’t believe the elegant job that the East China Normal University Press had done. And the praise it got within some really senior people in China, as being maybe the most beautifully translated book from English into Chinese, was really unbelievably neat. I was told last week that it has now sold 3700 copies in the first 6 weeks, and that almost every senior energy planner has read the book. The praise I got for basically doing this, and then helping the Chinese translators make sure that they properly was just unbelievable for a country that has a lot to lose by missing this. And I found to my surprise that some of their senior energy people were far more alert to peak oil. There was a program on the Saturday I was there at the Chinese Academy of Social Science, and after I spoke, Professor – somebody – I should remember his name, it was in Chinese, gave a talk in Mandarin that was simultaneously translated. And towards the end of his talk he said, “two hundred years ago, Mozart created this unbelievably beautiful music that we still love listening to today.” I thought, “where is he going with this?” And he said, “the reason for that is that it was so perfectly harmonious. There is nothing harmonic about peak oil. Its high notes are too shrill.” [41:11]
JIM: Wow.
MATT: That’s a really profound statement. I think the English copies – I’ll get a report at the end of April – but I think we’ll probably cross 100,000 books which I didn’t realize how few books ever do that. So the book in German through an intermediary was delivered to Pope Benedict the 16th. I have a lovely framed letter now from the Secretary of State’s Assistant to the Vatican thanking me for the efforts of alerting the world to peak oil. That’s pretty neat stuff.
MATT: That’s something to be really proud of. Well, Matt, I appreciate you joining us on the program, and I appreciate the efforts you put in to alerting the world to this very issue because as we started this conversation I think it will be one of the defining issues of the 21st Century.
MATT: Well, I thank you for the time you’ve taken on your program – your articulation of the issues is fabulous.
JIM: Well, once again I want to thank you for joining us on the program and please come back and talk to us again in the future.
Primary Sources: The President's Proposed Energy Policy
Jimmy Carter delivered this televised speech on April 18, 1977.
Jimmy Carter, "The President's Proposed Energy Policy." 18 April 1977. Vital Speeches of the Day, Vol. XXXXIII, No. 14, May 1, 1977, pp. 418-420.
Jimmy Carter delivered this televised speech on April 18, 1977.
Tonight I want to have an unpleasant talk with you about a problem unprecedented in our history. With the exception of preventing war, this is the greatest challenge our country will face during our lifetimes. The energy crisis has not yet overwhelmed us, but it will if we do not act quickly.
It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century.
We must not be selfish or timid if we hope to have a decent world for our children and grandchildren.
We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us.
Two days from now, I will present my energy proposals to the Congress. Its members will be my partners and they have already given me a great deal of valuable advice. Many of these proposals will be unpopular. Some will cause you to put up with inconveniences and to make sacrifices.
The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation.
Our decision about energy will test the character of the American people and the ability of the President and the Congress to govern. This difficult effort will be the "moral equivalent of war" -- except that we will be uniting our efforts to build and not destroy.
I know that some of you may doubt that we face real energy shortages. The 1973 gasoline lines are gone, and our homes are warm again. But our energy problem is worse tonight than it was in 1973 or a few weeks ago in the dead of winter. It is worse because more waste has occurred, and more time has passed by without our planning for the future. And it will get worse every day until we act.
The oil and natural gas we rely on for 75 percent of our energy are running out. In spite of increased effort, domestic production has been dropping steadily at about six percent a year. Imports have doubled in the last five years. Our nation's independence of economic and political action is becoming increasingly constrained. Unless profound changes are made to lower oil consumption, we now believe that early in the 1980s the world will be demanding more oil that it can produce.
The world now uses about 60 million barrels of oil a day and demand increases each year about 5 percent. This means that just to stay even we need the production of a new Texas every year, an Alaskan North Slope every nine months, or a new Saudi Arabia every three years. Obviously, this cannot continue.
We must look back in history to understand our energy problem. Twice in the last several hundred years there has been a transition in the way people use energy.
The first was about 200 years ago, away from wood -- which had provided about 90 percent of all fuel -- to coal, which was more efficient. This change became the basis of the Industrial Revolution.
The second change took place in this century, with the growing use of oil and natural gas. They were more convenient and cheaper than coal, and the supply seemed to be almost without limit. They made possible the age of automobile and airplane travel. Nearly everyone who is alive today grew up during this age and we have never known anything different.
Because we are now running out of gas and oil, we must prepare quickly for a third change, to strict conservation and to the use of coal and permanent renewable energy sources, like solar power.
The world has not prepared for the future. During the 1950s, people used twice as much oil as during the 1940s. During the 1960s, we used twice as much as during the 1950s. And in each of those decades, more oil was consumed than in all of mankind's previous history.
World consumption of oil is still going up. If it were possible to keep it rising during the 1970s and 1980s by 5 percent a year as it has in the past, we could use up all the proven reserves of oil in the entire world by the end of the next decade.
I know that many of you have suspected that some supplies of oil and gas are being withheld. You may be right, but suspicions about oil companies cannot change the fact that we are running out of petroleum.
All of us have heard about the large oil fields on Alaska's North Slope. In a few years when the North Slope is producing fully, its total output will be just about equal to two years' increase in our nation's energy demand.
Each new inventory of world oil reserves has been more disturbing than the last. World oil production can probably keep going up for another six or eight years. But some time in the 1980s it can't go up much more. Demand will overtake production. We have no choice about that.
But we do have a choice about how we will spend the next few years. Each American uses the energy equivalent of 60 barrels of oil per person each year. Ours is the most wasteful nation on earth. We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan and Sweden.
One choice is to continue doing what we have been doing before. We can drift along for a few more years.
Our consumption of oil would keep going up every year. Our cars would continue to be too large and inefficient. Three-quarters of them would continue to carry only one person -- the driver -- while our public transportation system continues to decline. We can delay insulating our houses, and they will continue to lose about 50 percent of their heat in waste.
We can continue using scarce oil and natural to generate electricity, and continue wasting two-thirds of their fuel value in the process.
If we do not act, then by 1985 we will be using 33 percent more energy than we do today.
We can't substantially increase our domestic production, so we would need to import twice as much oil as we do now. Supplies will be uncertain. The cost will keep going up. Six years ago, we paid $3.7 billion for imported oil. Last year we spent $37 billion -- nearly ten times as much -- and this year we may spend over $45 billion.
Unless we act, we will spend more than $550 billion for imported oil by 1985 -- more than $2,500 a year for every man, woman, and child in America. Along with that money we will continue losing American jobs and becoming increasingly vulnerable to supply interruptions.
Now we have a choice. But if we wait, we will live in fear of embargoes. We could endanger our freedom as a sovereign nation to act in foreign affairs. Within ten years we would not be able to import enough oil -- from any country, at any acceptable price.
If we wait, and do not act, then our factories will not be able to keep our people on the job with reduced supplies of fuel. Too few of our utilities will have switched to coal, our most abundant energy source.
We will not be ready to keep our transportation system running with smaller, more efficient cars and a better network of buses, trains and public transportation.
We will feel mounting pressure to plunder the environment. We will have a crash program to build more nuclear plants, strip-mine and burn more coal, and drill more offshore wells than we will need if we begin to conserve now. Inflation will soar, production will go down, people will lose their jobs. Intense competition will build up among nations and among the different regions within our own country.
If we fail to act soon, we will face an economic, social and political crisis that will threaten our free institutions.
But we still have another choice. We can begin to prepare right now. We can decide to act while there is time.
That is the concept of the energy policy we will present on Wednesday. Our national energy plan is based on ten fundamental principles.
The first principle is that we can have an effective and comprehensive energy policy only if the government takes responsibility for it and if the people understand the seriousness of the challenge and are willing to make sacrifices.
The second principle is that healthy economic growth must continue. Only by saving energy can we maintain our standard of living and keep our people at work. An effective conservation program will create hundreds of thousands of new jobs.
The third principle is that we must protect the environment. Our energy problems have the same cause as our environmental problems -- wasteful use of resources. Conservation helps us solve both at once.
The fourth principle is that we must reduce our vulnerability to potentially devastating embargoes. We can protect ourselves from uncertain supplies by reducing our demand for oil, making the most of our abundant resources such as coal, and developing a strategic petroleum reserve.
The fifth principle is that we must be fair. Our solutions must ask equal sacrifices from every region, every class of people, every interest group. Industry will have to do its part to conserve, just as the consumers will. The energy producers deserve fair treatment, but we will not let the oil companies profiteer.
The sixth principle, and the cornerstone of our policy, is to reduce the demand through conservation. Our emphasis on conservation is a clear difference between this plan and others which merely encouraged crash production efforts. Conservation is the quickest, cheapest, most practical source of energy. Conservation is the only way we can buy a barrel of oil for a few dollars. It costs about $13 to waste it.
The seventh principle is that prices should generally reflect the true replacement costs of energy. We are only cheating ourselves if we make energy artificially cheap and use more than we can really afford.
The eighth principle is that government policies must be predictable and certain. Both consumers and producers need policies they can count on so they can plan ahead. This is one reason I am working with the Congress to create a new Department of Energy, to replace more than 50 different agencies that now have some control over energy.
The ninth principle is that we must conserve the fuels that are scarcest and make the most of those that are more plentiful. We can't continue to use oil and gas for 75 percent of our consumption when they make up seven percent of our domestic reserves. We need to shift to plentiful coal while taking care to protect the environment, and to apply stricter safety standards to nuclear energy.
The tenth principle is that we must start now to develop the new, unconventional sources of energy we will rely on in the next century.
These ten principles have guided the development of the policy I would describe to you and the Congress on Wednesday.
Our energy plan will also include a number of specific goals, to measure our progress toward a stable energy system.
These are the goals we set for 1985:
--Reduce the annual growth rate in our energy demand to less than two percent.
--Reduce gasoline consumption by ten percent below its current level.
--Cut in half the portion of United States oil which is imported, from a potential level of 16 million barrels to six million barrels a day.
--Establish a strategic petroleum reserve of one billion barrels, more than six months' supply.
--Increase our coal production by about two thirds to more than 1 billion tons a year.
--Insulate 90 percent of American homes and all new buildings.
--Use solar energy in more than two and one-half million houses.
We will monitor our progress toward these goals year by year. Our plan will call for stricter conservation measures if we fall behind.
I cant tell you that these measures will be easy, nor will they be popular. But I think most of you realize that a policy which does not ask for changes or sacrifices would not be an effective policy.
This plan is essential to protect our jobs, our environment, our standard of living, and our future.
Whether this plan truly makes a difference will be decided not here in Washington, but in every town and every factory, in every home an don every highway and every farm.
I believe this can be a positive challenge. There is something especially American in the kinds of changes we have to make. We have been proud, through our history of being efficient people.
We have been proud of our leadership in the world. Now we have a chance again to give the world a positive example.
And we have been proud of our vision of the future. We have always wanted to give our children and grandchildren a world richer in possibilities than we've had. They are the ones we must provide for now. They are the ones who will suffer most if we don't act.
I've given you some of the principles of the plan.
I am sure each of you will find something you don't like about the specifics of our proposal. It will demand that we make sacrifices and changes in our lives. To some degree, the sacrifices will be painful -- but so is any meaningful sacrifice. It will lead to some higher costs, and to some greater inconveniences for everyone.
But the sacrifices will be gradual, realistic and necessary. Above all, they will be fair. No one will gain an unfair advantage through this plan. No one will be asked to bear an unfair burden. We will monitor the accuracy of data from the oil and natural gas companies, so that we will know their true production, supplies, reserves, and profits.
The citizens who insist on driving large, unnecessarily powerful cars must expect to pay more for that luxury.
We can be sure that all the special interest groups in the country will attack the part of this plan that affects them directly. They will say that sacrifice is fine, as long as other people do it, but that their sacrifice is unreasonable, or unfair, or harmful to the country. If they succeed, then the burden on the ordinary citizen, who is not organized into an interest group, would be crushing.
There should be only one test for this program: whether it will help our country.
Other generation of Americans have faced and mastered great challenges. I have faith that meeting this challenge will make our own lives even richer. If you will join me so that we can work together with patriotism and courage, we will again prove that our great nation can lead the world into an age of peace, independence and freedom.
Jimmy Carter, "The President's Proposed Energy Policy." 18 April 1977. Vital Speeches of the Day, Vol. XXXXIII, No. 14, May 1, 1977, pp. 418-420.
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