The Quiet Road

Synonyms for austerity: harshness, strictness, asceticism, rigour (source: dictionary.com).

A little over three weeks from now the people of Ireland will vote in a referendum. At stake is Irish participation in the European Fiscal Compact, a pan-European treaty that attempts to lay down strict budgetary rules for those nations who sign up. The ‘Yes’ campaign is referring to it as “The Stability Treaty”. The ‘No’ campaign calls it the “Austerity Treaty”. While it’s true that I am ideologically opposed to the treaty, I contend that my position is grounded in reality. That is; you can demonstrate – using “facts” and everything* – that the treaty will result in austerity for Ireland, while its characterisation as a “stability” treaty is extremely dubious to say the least.

Incidentally, does anyone remember the Lisbon Treaty? At the second time of asking, we endorsed it in October 2009. The ‘Yes’ camp – the very same people urging ‘Yes’ later this month remember – characterised it as the “Jobs Treaty”. Hmmm, we’ve not had an apology from them on that one yet. But I guess we shouldn’t expect politicians to apologise for completely misleading the citizenry and promising things they’re unable to deliver. Indeed, most of them seem to think that’s actually part of their job description.

What I find really remarkable about modern politicians is their ability to maintain such a breath-taking lack of self-awareness despite living their lives in a media spotlight. They never admit to mistakes; presumably believing they never make any. In other words, believing they are fundamentally better than the rest of us (because god knows we all make mistakes). Moreover, politicians appear so completely unaware of their own limitations as to give the impression that they don’t feel they have any. The vast majority of us over-estimate our own abilities… it’s part of being human… but politicians, whether they are the Left or the Right, do so to such a degree it’s almost beyond parody. Personally I believe I’d do a better job running the country than the current lot we’ve got in the job. But – and it’s a crucial “but” – I don’t think I’d do a great job at it. Just a better one. And given the incredible importance of that job, I’d need to be a self-interested, power-hungry careerist to put myself forward for it unless I thought I could do a great job.

So either the people running the country are just a bunch of self-interested, power-hungry careerists; willing to place their own personal desires and ambitions above the collective good… or they are supremely unaware of their own limitations. Because, let’s face it, it’s hardly a secret that the job they’re doing ain’t that great.

But back to the Treaty

Yes indeed. The posters have started to go up. Far more ‘Yes’ posters than ‘No’ based on a trip into Dublin City today. But that’s to be expected given the financial muscle behind the ‘Yes’ campaign. All three major political parties support the treaty. No surprise there… any suggestion that the Labour Party might take a more nuanced position (especially given the position of the bulk of the Unions) were fanciful in the extreme. Labour donned the neoliberal uniform the moment they sold their principles to Fine Gael in return for a taste of power. Their protestations that they’ve managed to ameliorate some of the more savage cuts proposed by Fine Gael possess but the thinnest shred of truth.

Against the treaty stands Sinn Féin, the Unions (well, most of them) and the leftist parties. Oh, and Éamon Ó’Cuiv. Fair play to Éamon. He may well be the exception to my characterisation of mainstream politicians that proves the rule. And rumours abound that he’ll soon be expelled from Fianna Fáil for his stance. Remarkable really… you can run the country into the ground, you can endorse a Bank Guarantee that transfers massive private debts onto the shoulders of generations yet unborn, you can break a thousand promises to the electorate. All of these things are par for the course in modern politics – commendable even. But to stand by your principles? Apparently that’s grounds for expulsion.

Seriously, you can’t actually be cynical enough about politics any more. It has passed beyond that realm. All we are left with is disbelief, despair and contempt. And hopefully the stirrings of a genuine anger… though I see little enough of that right now in Ireland more’s the pity.

The latest polls seem to suggest the ‘Yes’ majority is being eroded slowly. Unfortunately it seems too slow at the moment to turn the tide come May 31st (though with a bit of luck the election results in France and Greece, along with the failure of the Dutch government to push through the policies of austerity, will inspire us here in Ireland). Personally I ascribe this ‘Yes’ majority to two factors… one: a shamelessly biased media (the Irish Times has been little short of disgraceful on this matter, and RTÉ not much better – once again, we should be thankful for Vincent Browne**… long may he continue to be a thorn in the side of the establishment); and two: the success of the scare-mongering tactics employed by the ‘Yes’ campaign. As I mentioned here before, the campaign was kicked off by a Fine Gael minister insisting that a ‘No’ vote would be “like a bomb going off in Dublin”. That’s the very definition of scare-mongering… comparing my ‘No’ vote to an act of terrorism; suggesting that when I place my ‘X’ in the ‘No’ box, I am metaphorically carrying out an act of extreme violence. Such undiluted nonsense from a government minister should be shameful, but these people know no shame.

On top of that we’ve had government spokespeople assuring us that a ‘No’ vote will “cut Ireland off from external funding”. It took those opposing the treaty over a week to finally wrest a statement from the “impartial” Referendum Commission that this was – in fact – a lie. Plain and simple. A lie. But the Commission’s declaration hasn’t had nearly the same media exposure as the lie it exposes.

We need Austerity

See, this is the weird thing. Europe – like the rest of western civilisation – actually needs to radically reduce its consumption. We have created an unsustainable society that we should be scaling back right now (because if we don’t do it, then resource depletion will do it for us pretty soon anyway… and chances are it’ll involve less suffering if we take matters into our own hands on this issue). But, to jump back to the synonyms which opened this post, we need the austerity of ‘rigour’. And what’s being foisted upon us is ‘harshness’. That’s how it is, no matter what the ‘Yes’ campaign might claim (and each time they claim otherwise, remember the same people also claimed Lisbon was the “Jobs Treaty”).

The policies being adopted by our government; the policies that will be enshrined in the Irish Constitution if we pass this dangerous treaty; the policies that Angela Merkel has announced are “non-negotiable” (can someone please tell me who the hell gave the German government the right to tell the rest of Europe what we may or may not negotiate?); these are policies that will be unnecessarily harsh on the vast majority of Europe’s citizens, precisely so that the financial institutions of Europe don’t need to adopt a rigorous approach to their affairs.

This treaty places the interests of European banks above the interests of European people (and those who say those interests are synonymous need to cop on to themselves). It imposes austerity without addressing sustainability. Europe needs a sustainable alternative. It needs a radical alternative. An alternative based on social justice (a radical proposal in itself in these days of neoliberal greed and casino capitalism)… an alternative based on human decency and human dignity. I believe that alternative can be found in a flight away from capitalism. I believe that we should be looking towards the ideas of Bertrand Russell, Pierre-Joseph Proudhon, Lucy Parsons, Gregory Bateson, Albert Einstein and so many others. People who realised that capitalist society has been shaped by the few, for the few. And that this has to change if we are to create a world worthy and capable of long-term survival.

A ‘No’ vote on May 31st won’t bring the words of those wise few to life. It won’t bring about a Golden Age of social progress. It carries risks and will certainly be met with a punitive reaction from the financial institutions that currently run Europe. A ‘No’ vote will not bring back the Celtic Tiger, because the Celtic Tiger is never coming back. But it will strike a blow against the forces of injustice and inequality. It will halt our own government’s headlong rush into the abyss. And it will demonstrate that – just like the French and the Greeks – we in Ireland are fed up taking orders from the very bankers who destroyed the global economy. Vote ‘No’.

The boys are back in town. Sadly not them wild-eyed boys referred to by Phil and the rest of Thin Lizzy. Nope, it’s the guys from the IMF, EU and ECB that are tearing up the city. And while they may well be dressed to kill, I doubt they’ll be spending much time down at Dino’s bar and grill. Instead it’s the Department of Finance and the luxurious Merrion Hotel where these boys will be spending their time. And the destruction they’ll wreak will make the best efforts of the wildest rock band pale into insignificance. What Phil and the lads might have done to a couple of hotel rooms, our current visitors will do to the whole country.

The reason for their visit is to “oversee the progress” being made by Ireland. That’s right; they’re checking up on us. They want to make sure that we’re following orders. Otherwise they’ll deny us access to the “bail-out” funds. The standard response to any hint of indignation about this is, “Well, it’s only fair. They are giving us money to keep the country afloat and in return we agreed to some conditions. They have every right to visit every three months and make sure we’re keeping to our end of the deal”.

Except it’s not fair. Not in the slightest. They’re not giving us money, they’re lending it to us. And one of the conditions we agreed to (or rather, our political classes agreed to) is that a huge chunk of those loans be used to pay off the debts run up by private financial institutions. And who are those institutions indebted to? Why, it’s the French and German banks (among others). So private corporations run up debts. The EU and IMF loans the Irish State money to pay back those debts. Leaving the Irish State in debt. What is described as an IMF/EU “bail-out” of Ireland is nothing more than a mechanism to trick the Irish public into bailing out French and German banks. It’s farcical. It’s obscene. And it’s as far from fair as you’re likely to get. How is heaping private debt on the shoulders of as-yet unborn Irish citizens even remotely fair?

The fathers have eaten bitter fruit and the children’s teeth are set on edge. The whole point of that proverb is as a metaphor for injustice!

And look, I’m not saying the Irish State didn’t run up debts of its own. I’m not saying the financial policies of our governments for the past decade haven’t been a bloody disaster. They have been. What I’m saying is that a combination of IMF and European bureaucrats along with the Irish political establishment, driven by an ideology that seeks to redistribute wealth from poor to rich, have decided to compound those disastrous years of financial irresponsibility with the worst possible response. A response that will ruin this country unless we resist it strenuously.

And the first line of resistance should be to prevent the sale of State assets. That’s the next stage in the process, you see. We’ve borrowed the money and are paying off the gambling debts of fools. Fools, incidentally, who show no remorse for their actions. Seán Quinn, David Drumm and the rest of them shouldn’t be in the bankruptcy courts, they should be in the criminal courts for the reckless behaviour that drove this country over a cliff. That they “didn’t technically break any law” is only because our law-makers were criminally incompetent. The very first article in the Irish Constitution states:

The Irish nation hereby affirms its inalienable, indefeasible, and sovereign right to choose its own form of Government, to determine its relations with other nations, and to develop its life, political, economic and cultural, in accordance with its own genius and traditions.

The Constitution of Ireland | Article 1

These men and their ilk have undermined the most basic principle of Irish nationhood. In a very real sense, their actions subverted the constitution. Haul them up for treason and throw them in Mountjoy for 20 years. No, it won’t get the money back, but it might just give pause to those in our banks and governments who even as I write are dedicated to continuing this madness.

And there’s a real urgency about this. Not only because each day that passes sees more debt piled onto the Irish people. But because we are soon to sell off our stake in our own energy infrastructure, our ports, our stake in our airline… even our forests and natural resources. All at fire-sale prices.

This massive wave of privatisations is being done at the behest of the international puppet-masters now pulling the strings of the Irish government. Not content with heaping a mountain of debt on the shoulders of future generations, they intend to take the family silver with them when they leave. I’ve said it before and I’ll say it again; the outcry about this should not be confined to these shores. Because if these thieves are allowed to get away with this in full view – as is happening – they will not stop with Ireland. You will be next, wherever you live, and they won’t be satisfied until they have laid waste to the world.

In my previous post I argued that the inequities within western society are nothing next to the inequity that exists when you compare the west to the rest. But I also made it clear that I fully support opposition to that inequity (I’m just not keen on all of the language used by those doing the opposing). We can do little about the greater problems of the world if we’re forced to our knees at home. To solve the larger problem we need the power to do so. And whatever small amount of power we may have had is being systematically stripped from us.

My solution is a radical one. And one that will be popular with nobody. So we clearly need to find a different solution.

But if it came to it… sure, sell off the assets. Then once the cheque has cleared (metaphorically) announce a huge wave of nationalisations. Just take it all back (and that includes the offshore resources we let go for a pittance). Implement a hefty wealth tax. Raise income tax for everyone above €60,000; with increasing levels as you rise above €100,000. Cut whatever public spending we can afford to without putting anyone into poverty. Essentially, balance the budget in one fell swoop. Then unilaterally default on our debt and leave the euro. Hell, leave the EU if we’re forced to. Devalue our new currency and begin large training programmes in agriculture and engineering. Get back to basics. Make sure we can feed ourselves and maintain our national infrastructure. Expand our renewable energy and public transport systems. By all means continue interacting with the global economic system, but on our own terms.

Yeah. As I say, popular with nobody. It’s a strategy that will produce hardship and require sacrifice. Crucially though, those who can afford to contribute the most will be expected to. Given Ireland’s population and resources, I don’t believe that anyone need go hungry or without shelter; but we’ll have to say goodbye to most of our luxuries for the foreseeable future. And let me just say this while you’re thinking of a better solution… such a manifesto will be a far better preparation for the future than anything being proposed by any political party, or by the IMF, the EU or any financial institution. It would offer unborn generations a sustainable society instead of an unsustainable debt.

In my previous post (Against High Speed Rail) I questioned the wisdom of investing in a High Speed Rail (HSR) system in a world facing an impending energy crisis. Ultimately, if we wish to maintain a society in which travel is relatively easy and affordable, then we need to be investing in the most energy-efficient transport infrastructure available. And while HSR is more efficient than private cars or air travel, it is less efficient than conventional rail or coach travel (and significantly less efficient in the case of coaches).

In the comments to my post, both John B and Ryan disagreed with my position. Knowing them from their web writing over the years, they are both intelligent and fair-minded people. I believe they accept the logic of my argument (broadly speaking) but disagree with the initial premise; that we face a serious energy crisis; which of course rather undercuts the whole thing. Indeed, Ryan says quite clearly:

I really don’t see too many signs of this energy crisis arriving any time soon. With the massive quantities of tar sands, shale gas, arctic oil etc which suddenly look economically viable […]

Ryan’s comment

It’s this specific statement I wish to address right now. You can read my response to the rest of Ryan’s comment beneath the previous post (here). Also, I should be clear that while Ryan posted the comment to my blog, he is essentially putting forward a widely held view. So my response is not necessarily directed at him personally but is intended to counter that mainstream position… that the decline in conventional crude oil can be offset by a rise in non-conventional oil production (or other energy sources). It’s a position that cuts right to the heart of peak oil theory and one where the technical issues are not widely understood.

Let me start by suggesting that if someone doesn’t “see too many signs of this energy crisis arriving any time soon”, it may be because they’re not actually looking for the signs. I have been looking for them and I can confidently say that they are there. Quick survey: raise your hand if you have read any feasibility study carried out into the exploitation of tar sands and their ability to mitigate a decline in conventional crude oil? I’m fairly confident that you don’t have your hand raised, dear reader, though perhaps I’m doing you an injustice?

The reason I ask is because that’s the sort of place where “signs of this energy crisis” can be found. They tend not to show up in the mainstream media (on the rare occasions they do, they’re well-disguised) and even when they appear in market signals they are dismissed with inaccurate explanations because they fail to fit an existing narrative. But I want to avoid media and market analysis in this post as much as possible, and concentrate on the technical details, so I’ll just say that if you’re not reading the technical literature on the subject (like almost everyone on the planet) then it’s no surprise you don’t see the signs.

Conventional Vs. Non-conventional oil

Before I get into the details of tar sands (which I will take as my basic case study, but a very similar post could be made about shale gas, while Arctic oil has problems of its own), let me say a few words about the difference between conventional oil and non-conventional. Because it’s pretty important to get your head around it if you want to understand why it is that although the “massive quantities of tar sands” may exist, they are not quite what they seem.

Over the past hundred years or so humanity has consumed a lot of oil. At a rough estimate, about 1.5 trillion barrels of the stuff. That’s a huge quantity make no mistake. And of that, the vast majority has been what we call “conventional” oil. Unfortunately that’s a bit of a slippery term as it’s used both as a classification of oil, and also to describe the source of the oil. So, in the first instance conventional oil is a combination of crude oil and condensates which can be fed directly into conventional oil refineries to produce petrol, diesel, jet fuel, etc. Generally this stuff is sourced from shallow water (less than 180m) and land-based wells.

Unconventional oil is stuff that cannot be fed directly into conventional refineries and requires pre-processing of some kind. So we’re talking about tar sands, shales, gas-to-liquid products and coal-to-liquid products.

Complicating matters a bit, however, is the fact that the term “unconventional” is sometimes applied to oils that are sourced in deep water wells and Arctic regions despite the fact they can often be fed directly into conventional refineries. The thinking behind this classification is that both deep water and Arctic wells involve levels of expense (both financially and in energy expenditure) that place them closer to unconventional sources from both an economic and energy-return perspective than they are to – for example – crude oil from a Saudi land-based well.

Complicating matters even further is the fact that deep water oil is sometimes chemically different to shallow water oil due to the additional pressures involved. Therefore, to simplify matters it is normal to classify deep water and Arctic oil as unconventional along with tar sands, etc. Whether you agree or disagree with that classification isn’t really important so long as we clearly define our terms up front so everyone’s speaking the same language.

And it’s important because when we talk about peak oil, we are talking about an initial peak in conventional oil production followed by a subsequent peak in overall production. This detail almost never makes it into the occasional peak oil stories that appear in the mainstream media because… well, because the mainstream media has a pathological aversion to covering anything of importance in enough depth to actually explain the issue properly. The assumption is that the public is basically a bit thick and possesses the attention span of a gnat. And given the reading habits of the public and the way they vote… that may not be an entirely unjust assumption. But I digress.

If you read the more scholarly of the peak oil theorists (such as Dr. Colin Campbell of ASPO) you’ll find they tend to suggest that we can expect a peak in overall oil production between 10 and 15 years after a peak in conventional oil production. And given we now believe the peak of conventional oil was in 2006 or thereabouts (the International Energy Agency suggests it was 2009, but their optimism is renowned) we should prepare ourselves for the peak in conventional plus unconventional*. The reason for the lag of course, is because unconventional sources – such as tar sands, gas-to-liquids and biofuels are indeed coming on stream to meet a rise in demand that can no longer be met by conventional oil.

“But why”, you may ask, “can unconventional sources not continue to rise in line with a decline in conventional production? And why does conventional production need to decline right now anyway?”. After all, don’t peak oilers admit that we still have as much conventional oil underground as we’ve used in the past 100 years? Well, that’s true. A peak in conventional oil production means we probably still have about 1.5 trillion barrels of the stuff accessible to us. And when you add that to the new unconventional sources just coming on-stream now (those “massive quantities of tar sands” for example) it seems absurd to suggest that we’ve reached one peak and are nearing the next. And yes, it does seem absurd. That is, unless you know something about petroleum geology and the engineering challenges surrounding the pre-processing of unconventional oil sources. Most people don’t. Through a quirk of fate, I know a little.

Massive quantities of tar sands

Let’s take tar sands as an example. Ryan uses the phrase “massive quantities of tar sands […] which suddenly look economically viable”. Now, it’s worth pointing out that strictly speaking I dispute the notion that they are economically viable, though they can be made look that way (in the same way as sub-prime mortgages looked economically viable for a while) but I’m going to ignore that in this post. For the sake of discussion, let’s concede that they are indeed “economically viable” (i.e. some people might make a profit out of their exploitation, which – when all is said and done – is what that phrase means). It’s neither here nor there really, because they suffer from two huge flaws which makes them completely inadequate for filling the gap left by diminishing conventional oil production.

You see, despite having only extracted half the conventional oil from the ground, we cannot produce the remaining half at a rate of our choosing. As much as some economists might like to dispute this fact, oil production capacity is not exclusively determined by market demand. A drop in demand will certainly see a drop in production. But a rise in demand is not necessarily followed by a rise in production. Historically speaking that has been the case; and economics – of course – is essentially the mapping of past behaviour onto the future, so it’s no surprise economists believe rising demand will lead to rising production (for years the IEA merely relabelled demand forecasts as production forecasts!) However, when circumstances change within the physical systems upon which the economic system is based, then the historical model no longer applies and economics as a discipline gets blind-sided. This also explains why the markets are so bad at relaying the signs of the looming crisis… on the rare occasions those signs manifest, they get relabelled as something else.

But the physical systems have changed, and this has not been incorporated into the models used by economists, and by extension, those used by policy-makers. The geology of oil fields combined with the physics of fluid dynamics place certain limitations upon how fast we can pump the stuff. And crucially, once we have extracted roughly half the oil from a given field, the rate at which the rest can be extracted begins to steadily drop. This is simply down to internal field pressure. And while this pressure can be increased to an extent by pumping gas into the field, it should be noted that, with very few exceptions, Enhanced Oil Recovery (EOR) techniques** are already being used in every major oil field where they might be helpful, and have been for the past couple of decades at least.

Interestingly (and perhaps worryingly) while EOR can sometimes increase the amount of oil recoverable from a field, it also succeeds in recovering the stuff faster. So once half the oil has been extracted from a field without EOR, it might see a 2% per annum decline due to a drop in pressure. But for fields that make intensive use of EOR (i.e. almost all of them) that decline could be as much as 6% per annum post-peak (it varies from field to field). This is not a trivial point when it comes to the question of how far unconventional sources can make up for a drop in conventional.

So that’s one half of the picture… sometime between 2006 and 2009 (depending on whose figures you accept) we reached a peak in conventional oil production. That global peak may one day be represented as a 3 year plateau, or a 5 year plateau, or something like that… by definition the height and length of the peak can only be accurately described in retrospect. What we do know, however, is that during this peak in conventional oil production, unconventional sources are having great difficulty meeting additional demand. As a result, oil prices are rising once again.

Of course, oil price is determined by myriad factors of which production levels is but one. However, it is my contention that the situation in Iran – as one example of what’s being blamed for the price volatility – is, in part at least, an example of the “relabelling” I mentioned. In November 2011 OPEC increased output marginally – mostly down to Libya’s production coming back up to speed – but still managed to squeeze out less than a million additional barrels per day despite a huge effort and despite rising demand – the world is currently consuming about 90 million barrels per day (mb/d). And we know that this increase failed to meet demand because global industry stock (strategic reserves of already-produced oil) declined steeply in October and November.

So why are unconventional oil sources not ramping up to meet increased demand?

The two fatal flaws in tar sands

Let’s assume we don’t give a damn about the environmental consequences of our resource consumption. We do, of course, because the species that destroys its environment destroys itself. But for a moment let’s forget the fact that tar sands have been (accurately) described as the most environmentally damaging source of oil known to man. This photograph is of one of the numerous “tailing ponds” springing up in the Alberta region of Canada as they exploit their massive reserves. These lakes of effluent are growing rapidly and nobody seems very sure what to do with them (best not to do an Image Search for “tar sands” if images of ecological madness freak you out).

But for now, although we don’t care about that, it might be worth bearing environmental consequences in the back of our minds as we compare the processes of producing a barrel of oil from Canadian tar sands to the process of producing a barrel of Saudi crude oil.

In the case of the Saudi oil, we drill a hole into the ground above the oil field. The internal field pressure then pushes the oil up to the surface where we catch it and send it to refineries. After a while the pressure drops a little and we expend energy to pump gas into the field and keep the oil flowing. Ultimately we get far more energy from the oil gushing out of the ground than we consume during the drilling and refining processes. If it weren’t for the crap produced when we burn the stuff, it’d be free energy near as dammit.

With tar sands, the first part of the extraction process generally consists of chopping down a forest. After that’s been done, we begin the extraction not by drilling, but by mining. It takes approximately two tons of tar sand to produce every one barrel of oil. And in order to access the two tons of tar sand, we must first excavate roughly two tons of soil and peat. We then need to heat three to six barrels of water (this heat tends to be generated by burning natural gas) which is passed through the tar sand to remove the bitumen. That polluted water is what makes up the growing tailing ponds. Three to six times the volume of the oil produced.

So I’m sure you can see the fatal flaws, right?

Firstly, the mining and pre-processing of the tar sands cannot be done at anything like the rate that conventional oil gushes from the ground. According to one peer-reviewed feasibility study (A Crash Program Scenario for the Canadian Oil Sands Industry) from Uppsala University,

Unfortunately, while the theoretical future oil supply from the oil sands is huge, the potential ability for the Canadian oil sands industry to meet expectations of bridging a future oil supply gap is not based on reality. Even if a Canadian crash program were immediately implemented it may only barely offset the combined declining conventional crude oil production in Canada and the North Sea. The more long-term oil sands production scenario outlined in this report, does not even manage to compensate for the decline by 2030. […]

A Crash Program Scenario for the Canadian Oil Sands Industry | Page 41

The study goes on to point out that the IEA (who are nothing if not optimistic about future projections) forecast that the drop in global conventional oil production means unconventional sources will need to make up a shortfall of 37 mb/d by 2030, and that

Canada has by far the largest unconventional oil reserves. By 2030, in a very optimistic scenario, Canada may produce 5 mb/d. Venezuela may perhaps achieve a production of 6 mb/d. Who will be the producers of the remaining 26 mb/d? It is obvious that the forecast presented by the IEA has no basis in reality.

A Crash Program Scenario for the Canadian Oil Sands Industry | Page 41

As if that weren’t enough, it’s worth mentioning that the ERoEI (Energy Returned on Energy Invested) for tar sands currently tends to be between 1.5 and 4 (industry forecasts suggest it might rise as high as 7 when the process is running at maximum efficiency). That’s as compared with between 30 and 100 for conventional crude. So even taking a best-case tar sand versus a worst case crude, the net energy content of a barrel right now is between 7 and 8 times less. And even if industry forecasts are correct, that number won’t dip much below five.

And then there’s the second fatal flaw with tar sands. Exactly where is all the fresh water and natural gas required to process the stuff going to come from? These are not superabundant resources. Not any more at least. And a significant acceleration of tar sands production will have a very serious impact on Canadian water tables and gas supply. When Uppsala University describe Canadian tar sand production as reaching 5 mb/d as being “very optimistic”, they are being very generous. Alberta’s natural gas production has already peaked. So in order to ramp up production of tar sands – even by a little bit more than the current 1.5 mb/d – Canada will have to export less gas to the United States. And this presents serious economic and legal problems given the terms of NAFTA and the long-term contracts into which Canada has entered.

And natural gas supply may not even be the major constraint. Currently (at 1.5 mb/d) the Canadian tar sands industry is draining in the region of 50 billion gallons of water from the Athabasca River every year. That accounts for about 10% of the total water consumed by the North American oil industry. From a water perspective it is staggeringly inefficient, and is roughly 30% of the water that environmental surveys suggest is available for use and for which they are licensed to use. So there are very good reasons to suggest that Canada’s tar sands production can never rise above 4.5 mb/d and is likely to remain significantly below that level.

So don’t believe the mainstream media hype about the “massive quantities of tar sands” and their role in making up for losses elsewhere. It doesn’t matter if there are 1.7 trillion barrels of the stuff in central Canada. The fact is that due to well-understood if under-publicised physical constraints, it seems extremely unlikely those sands will ever be capable of providing more than about 4% of current demand (and a far smaller proportion of forecast demand). And given how much hope is being invested in those sands to mitigate our looming oil shortage, I would suggest, that’s a pretty clear sign “of this energy crisis arriving soon”.

It started in New York in July 2011 with a group of angry and disillusioned people, though it has roots going back much further. They descended on Wall Street to protest the ongoing decimation of American society by the institutions who lurked within those imposing skyscrapers. But it wasn’t just American society being decimated by those institutions. It was happening everywhere. It didn’t matter if it was Goldman Sachs in New York, Barclays in London, Deutsche Bank in Frankfurt or the similar institutions that had made their home in every city in the world; the process was the same… wealth and resources were being transferred away from the wider population and into the coffers of these institutions, and from there into the pockets of those who ran them. And it was happening at such a rate and to such an extent that it was completely destroying the lives of millions of ordinary people.

And to make matters worse, this process was being sanctioned – indeed facilitated – by the governments who had been elected to represent the interests of those ordinary people. Most of those who initially gathered on Wall Street to protest had voted for Barack Obama. They had elected him for many reasons, but his explicit promises to “bail out Main Street, not Wall Street” and to build a healthcare system that placed the interests of the people ahead of the interests of healthcare and insurance corporations were surely high among those reasons. But with a political system that offers a choice every four years between two parties who promise slightly different things but act identically; a system that marginalises alternative political parties and has convinced even the most fervent critics of the status quo that a vote for a third-party candidate is a shameful waste of the franchise; with that system firmly in place, the only option that remained was to take to the streets.

This is why the often expressed criticism (in the media and around the dinner table) that “the Occupy Movement doesn’t have a coherent alternative plan” rather misses the point. What is happening on the streets of New York, London, Dublin and elsewhere is a protest against the unholy alliance of corporations and government that has left the vast majority of us without any representation. Over time we can hope that an alternative to the status quo will emerge from these movements, but the initial instinct of the protesters was to raise their voice in opposition to a terrible injustice being perpetrated on the world.

That’s not enough of course. But it is a place to start. The only logical first step.

In fact, it goes beyond even the corporations and governments. In London the Occupy Movement took up residence in the grounds of St. Paul’s Cathedral. Traditionally the church was a place of sanctuary for the persecuted. Or at least, that was romantic myth carefully cultivated by the church. Was it ever true? Perhaps, though I have my doubts. Is it true now? Well, how’s this for a list…

• Lloyds TSB Group plc
• Goldman Sachs International
• UBS Investment Bank
• N M Rothschild & Sons Ltd
• J.P. Morgan
• American Express
• The London Stock Exchange

All appear on the website of St. Paul’s Cathedral, London as “financial supporters” of the Cathedral. Lloyds plc and the London Stock Exchange are also listed as “Corporate Partners” of St. Paul’s along with four other financial services companies. It seems clear that however many deans or canons resign, if the Occupy London Movement has demonstrated anything at all, it’s that those who run St. Paul’s Cathedral have not only allied themselves with the enemies of the people; they have quite consciously and explicitly abandoned the teachings of Jesus Christ.

And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.

Matthew 21:12-13 | King James Version

Having said all that, I must admit to being a little ambivalent about the Occupy Movement. I don’t expect a detailed manifesto of action or a complete, coherent new political philosophy to emerge from such a disparate movement within a few short months. But I do find many of the statements emerging from the movement (and here I shift specifically to the Occupy Dame Street Movement in Dublin, for that is the one I’ve paid most attention to – though from what I can tell it is not hugely dissimilar to the others) to be over-cautious, and occasionally even self-contradictory. And that’s a problem in my view.

It’s my honest opinion that we need massive change; far greater than that being called for by Occupy. We need a wholesale rejection of the profit motive and an end to private corporations. We need to radically reconsider our relationship with material consumption and to come to terms with the reality that greater consumption does not equate to greater happiness; indeed it appears to produce an epidemic of psychological and physical health problems… from cancer to depression and beyond. I believe that economic growth must be abandoned, even demonised – for that is what it has become, metaphorically speaking. I believe we need to renew Nietzsche’s call for a “re-evaluation of all values”, though not necessarily in precisely the manner he envisioned.

Most of all, I believe we need to re-imagine the world from an ecological perspective… and I mean “ecological” in the broadest sense of the word… and to place physical sustainability at the heart of every social and economic policy. And all this extreme upheaval must be done in such a way as to cause a minimum of suffering and degradation, because the whole reason for doing it is precisely because we seek to minimise suffering and degradation. We are not doing this to “save the world”; the world will be just fine and will recover from pretty much anything we throw at it. No, we are doing this to save ourselves.

Unfortunately the Occupy Movement, by making demands they feel are reasonable and achievable, run the risk of having their demands met and yet achieving nothing. Leastways nothing of substance.

And now let me leave you with an interview with the inspirational Chris Hedges. He’s a supporter of the Occupy Movement, though he too sees it as potential fertile ground from which a more radical movement may spring. The interview is almost three hours long which is probably about 2 hours and 58 minutes longer than the average modern attention span. Nonetheless, I urge you to watch as much as you can. He speaks more sense than pretty much anyone else I’ve encountered on the internet (yes, yes, that’s a low bar, but he clears it by some margin).

If you know me at all, you can probably imagine that I keep a watchful eye on energy related news stories. And what with google alerts and RSS feeds, that’s not all that difficult to do. Over the past few weeks, however, a difficulty has arisen. Put simply, there’s just not enough hours in the day to keep up with the recent flurry of activity in the sector. In fact, there are considerably more “peak oil”, “renewable energy”, “tar sands” and “gas pipeline” stories right now than at any time I can remember. More even than when oil prices were rising towards $150 per barrel a couple of years back. So what’s the reason for all this activity?

Well, it seems as though the reality of peak oil is finally beginning to sink in. Not that it’s made it onto the front page of The Sun yet… but while the popular media is obsessing about the Royal Wedding, furrowed brows are appearing elsewhere as what was once a fringe theory preached by a handful of lunatics has finally been accepted by those who once derided it.

Ugly as the words may sound and however petty they may make me seem, I’m going to say this once and then move on… I told you so!

Ahhh… it feels good to get that off my chest, even if it implies some terrible things.

Welcome aboard: IEA

The International Energy Agency has been hmm’ing and hah’ing about their forecasts over the past couple of years. Roughly three years ago, even as oil prices rose to unprecedented levels, the IEA was predicting a steady rise in oil production until at least 2030. Careful analysis of their production forecasts seemed to suggest, according to ASPO (the Association for the Study of Peak Oil and gas) that the IEA was essentially relabelling oil demand projections between now and 2030. Think about that… the international agency that advises the majority of major governments on energy policy was simply asking “how much oil do we want?” and then telling everyone that’s how much oil would be produced. There was apparently no attempt to match their production forecasts to the real-world capabilities of the oil industry. Their projections were based purely on economic data rather than geological or engineering data. And unsurprisingly these projections turned out to be even more optimistic than those coming out of BP, which if you’ll recall are little more than political artefacts designed by OPEC nations to maximise oil revenue.

Recently this has begun to change. And now the IEA is back-pedalling furiously and seems to be sounding alarm bells – albeit rather quiet and diplomatic alarm bells. Dr. Fatih Birol is the Chief Economist at the International Energy Agency. In a recent interview, Birol stated that he believes global crude oil production peaked in 2006. Yes, you heard that right. We passed peak about 5 years ago according to the the IEA.

An Australian TV company made a short film (it’s a shade over 12 minutes) about peak oil which includes that interview. I recommend you take the few minutes to watch it; it’s sobering stuff. I’m particularly gob-smacked by his final remark, right at the end of the film, when asked how urgent the problem is. He responds by suggesting that “time is running out […] I think it would have been better if governments had started to work on this at least ten years ago”. This from a man who was insisting, up until three years ago, that there was no problem!

Don’t get me wrong, I’m happy that the man and his agency have seen the light, but frankly I think a Mea Culpa might be in order given that plenty of people were arguing this very point ten years ago and the IEA was lambasting them as fools while cautioning governments to ignore them.

And welcome aboard: IMF

Yes indeed. It’s not just the IEA who has suddenly realised “whoops!” During the past seven years or so we’ve had an acknowledgement of a serious problem from the US Department of Energy (see the graph on this page for their latest projections), the US Defence Department and at least two specific branches of the US military. The Irish and Swedish governments both received comprehensive reports detailing the problem (the Swedes acted on it, the Irish built a motorway system and had a property bubble) and about a dozen other non-fringe organisations have sounded caution. A few days ago these organisations were joined by one of the heavy hitters… the International Monetary Fund.

In the April 2011 World Economic Outlook report, the IMF have starkly stated that they expect global oil shortages “within a year”. This tallies with the predictions of the US Defence Department who claimed that we would see “significant supply constraints” by the middle of 2012. The IMF report tries not to sound too downbeat and claims that so long as the oil supply falls gradually it won’t be too big a problem. I have two points to make regarding this claim… first, it won’t drop gradually. Once the reality of the situation kicks in there will be a variety of dramatic responses (producer nations hoarding, rich importing nations trying to buy up available supply on long-term contracts, invasions and wars) which will prevent a gradual reduction in supply. I would suggest that this has already begun in some quarters and we’ve not seen the half of it. Second… even if it did drop gradually, it would still be a big problem.

So although – like over at the IEA – some of this is starting to sink in at the IMF, they still can’t see beyond their free market ideology. And I’m afraid it simply does not work in the arena of essential non-renewable resources. Future generations will view the free market in natural resources as possibly the single most stupid thing ever to have emerged from the human mind. I know some intelligent, decent people who read this blog and subscribe to the notion that a free market in non-renewable natural resources is a good idea. It’s perfectly possible for smart people to have some stupid ideas. And selling natural resources into the open market for profit is a stupid idea.

Anyway you can read more about the IMF’s eleventh hour conversion over at crudeoilpeak.com (IMF warns of oil scarcity and a 60% oil price increase within a year). And here’s a link to the original (and lengthy) World Economic Outlook report (PDF, see Chapter 3).

And joining us tonight: GMO Capital

If you thought the IEA and IMF were surprise guests at the peak oil awareness gig, an even bigger surprise – in its own way – is GMO Capital. These guys are a global investment management firm controlling over a hundred billion dollars in assets. While the IEA and IMF are international agencies that advise governments and proselytize about the wonders of the free market, GMO Capital pretty much are the market. Or a bit of it anyway. In a sense. Oh, you know what I mean.

Anyway, one of the most remarkable essays I’ve read over the past while comes from Jeremy Grantham, the Chief Investment Officer of GMO Capital. Not because of what is says per se, but because of who is saying it. You can read the article at the GMO website (PDF). In essence the article claims that the past 100 years of market-led growth and prosperity is about to come to a crashing end. It’s remarkable stuff considering who wrote it and the audience it’s aimed at (GMO Capital’s investors). Well worth your time to read, or even just skim.

And so it goes

Elsewhere in the news we read about wind farms being paid to shut down because the national grid cannot absorb the power they are producing. The first thing to be said about this is that these payments represent a clear failure in grid management and this needs to be addressed. The second thing that needs to be said is that the BBC should be ashamed of itself for allowing almost half the article to be dominated by the REF. The REF (Renewable Energy Foundation) is a lobbying organisation founded by… wait for it… Noel Edmonds, and has been described as “an anti-wind lobbying organisation”. It’s been suggested that “they actually exist to undermine Renewable Energy – in that respect their name is a deceit”.

In reality we have two choices… we can either embrace a mix of renewable energy solutions (wind, wave, tidal, solar, etc.) or we can resign ourselves to a life without electricity. Whatever George Monbiot and others might claim, nuclear power is simply not the solution to our energy problems. The reasons for this are outside the scope of this blog post, but essentially it is not a sustainable solution, and replacing one unsustainable energy system with another unsustainable energy system is sheer madness. Especially given the massive energy expenditure it would take to do so. We have one more roll of the dice with regards to building a new electricity supply system (the problems of transport and the other uses of petrochemicals still seem insoluble to me, but we can at least keep the lights on and the refrigerators running) and wasting our remaining fossil fuels building a network of nuclear power stations destined to fail is a recipe for disaster.

Instead we need to rethink our consumption patterns. We need to build far more storage into the grid to cope with excess production. We need to massively increase the geographical spread of our renewable energy infrastructure to reduce the “calm day” effect. And we need to ignore the petty grievances of TV presenters with a personal axe to grind. I accept that, aesthetically speaking, wind farms aren’t to everyone’s taste (I think they look great, but that’s just me). But if we want to keep the lights on in a world faced with Climate Change and fossil fuel depletion we need to get past that.

The last thing I want to say here is that I expect to be hearing a lot more about “shale gas” over the coming months. Already China is looking towards it (PDF) as a solution to a decline in global oil supplies (once again, the notion that replacing one unsustainable resource with another, albeit a slightly more abundant one, is being described as “a solution” dismays me). Few things, however, give me the screaming heebie-jeebies as much as the thought of a massive expansion in shale gas production. It may well be the only fossil fuel that’s ecologically worse than tar sands from an extraction and production standpoint. Both tar sands and shale gas production have the potential to massively accelerate fresh water depletion, as well as lay waste to vast areas of the planet.

Fact is, in the face of peak oil we need to start looking at reducing our energy consumption. Every other option leads to disaster.