On January 9, 2004, Royal Dutch/Shell, one of the world’s largest publicly traded oil companies, shocked the international financial community by announcing that it had overstated its oil and gas reserves by 20 percent, representing the equivalent of 3.9 billion barrels of petroleum–worth an estimated $136 billion

at then current prices of about $35 per barrel. The announcement led to an immediate plunge in the value of Shell’s stocks (shares of its two holding companies, Royal Dutch Petroleum Company of the Netherlands and Shell Transport and Trading Company of Britain, are traded separately) and the ouster of top corporate officials; it has also prompted an investigation by the Securities and Exchange Commission and equivalent bodies in Holland and England. But far more significant than the financial and corporate repercussions of the reserve overstatement were its implications for the global energy equation: In contrast to oil company claims that petroleum is abundant and will remain so for a considerable time to come, it suddenly appeared that untapped supplies may prove more limited than was once assumed.

Scarcely had the global oil community absorbed the troubling news from Shell than it received yet another powerful shock: On February 24, the New York Times reported that top US energy analysts now believe that Saudi Arabia–the world’s number-one producer–is facing the wholesale depletion of its major oilfields and may not be able to sustain its current output of 10 million barrels per day (mbd) much beyond the current decade. Were Saudi production to fall below 10 mbd for any length of time, the global energy system would simply collapse, as no other country can make up the difference on a sustained basis. But even if the Saudis do maintain this level, but fail to rise above it, the global economy will still suffer, since there is no way to satisfy rapidly growing world demand without a substantial increase in Saudi output. The US Department of Energy (DOE), for example, predicts that Saudi oil production will rise by 12.5 mbd between now and 2025, an increase of 125 percent, in order to meet anticipated world demand at the end of that period. Without this additional 12.5 mbd, there is no way the global oil industry will be able to satisfy anticipated requirements in the years ahead, and the entire world will face an acute energy crisis.

These two developments, coupled with news of declining or stagnant production in such established oil “provinces” as the United States, the North Sea, Indonesia, Nigeria and Venezuela, have directed fresh attention to claims that the world is approaching the moment of maximum or “peak” oil output, beyond which no amount of drilling or investment will result in higher levels of production.

The concept of “peak” oil derives from the pioneering research of M. King Hubbert, a prominent geophysicist who worked for many years at Shell Oil in Houston. In the early 1950s Hubbert determined that the oil output of any given field or reservoir typically follows a parabolic (bell) curve: at first, production rises very rapidly as the largest and most accessible stores of oil are developed; eventually, the rate of increase begins to decline as these stores are depleted and drilling commences on smaller, less accessible pockets; eventually, daily field output achieves its maximum attainable, or peak, level, and then begins an irreversible decline, moving ever closer to zero as all remaining supplies are exhausted. Hubbert further determined that peak production normally occurs when half of the reservoir’s original petroleum inheritance has been extracted.

This insight led to another: that the moment of peak output for a given field could be predicted in advance by estimating its net recoverable supply and using production history data to calculate when the half-way point in total extraction would be reached. Using this method, Hubbert predicted in 1956 that peak oil output in the United States (not including Alaska) would occur in or around 1970–a prediction that was met with widespread disbelief and derision at the time. But daily output in the Lower 48 did peak in 1970, and since then Hubbert’s calculations have been viewed as extraordinarily prescient.

King Hubbert did not apply his methodology to the world as a whole–data on non-US supplies were too imprecise in the 1950s to make such calculations possible –but his followers in this country and abroad have used more recent and reliable information to plot the onset of global peak oil. Using estimates of recoverable world supplies of approximately 2 trillion barrels of conventional (i.e., liquid) petroleum, and estimated recovery-to-date tallies of about 900 billion barrels, these experts believe that global peak production–sometimes called “Hubbert’s Peak”–will occur sometime during this decade. The intensive development of deep-offshore oil, polar supplies and “unconventional” sources (such as tar sands and shale oil) may extend the peak for another decade, they claim, but world oil production will eventually slacken and then turn relentlessly downward. (Readers who are interested in these calculations should consult Hubbert’s Peak by Kenneth Deffeyes. Additional information is available at the website of the Association for the Study of Peak Oil and Gas, www.peakoil.net.)

If not already aware of all this, readers of The Nation should be on notice that both the imminence and the timing of peak oil matters–big time. Because petroleum supplies 40 percent of the world’s energy–far more than any other source–and because oil powers most of the world’s cars, trucks, buses, trains, planes and ships, a permanent decline in global output will have a powerful and lasting impact on the US and world economy. Unless affordable substitutes are developed, a decline in global oil output will produce rising transportation costs, diminished economic activity, high inflation and the onset of a deep and prolonged worldwide depression. Furthermore, because modern, mechanized agriculture is wholly dependent on cheap oil–for herbicides and pesticides, as well as truck and tractor fuel–a contraction of petroleum supplies will result in reduced food production and, in all likelihood, mass human starvation.

The timing of peak oil matters because it bears on the crucial issue of how much time remains to us for the development of hydrogen fuel and other petroleum substitutes. All informed energy experts agree that peak oil production will occur at some point in this century, but the optimists among them believe that it will occur later, rather than sooner–thus affording us many years in which to develop the necessary alternatives. This, in essence, is the conclusion of the Bush Administration’s energy strategy, as articulated in the National Energy Policy (May 17, 2001). Go ahead and consume more oil, the report seems to argue, reassuring us that America’s scientists will devise a new energy system for our kids and grandchildren when that far-off moment of oil depletion arrives. The fact that the large oil companies that financed Bush’s 2000 campaign will profit enormously from this advice is not, of course, something that is acknowledged in the report.

But what if peak oil arrives sooner rather than later, as predicted by Hubbert’s followers? If this is the case, we are in for extreme trauma and difficulty. While it is conceivable that hydrogen will prove the fuel of choice in the second half of this century, it is unlikely that the required infrastructure–estimated to cost several trillion dollars–will be in place by 2015 or 2020, when global oil production may begin its irreversible descent. In that eventuality, we will have to undergo several decades of punishing scarcity until a new energy regime has been put in place. Worldwide economic activity will contract during this period, billions of people will starve or suffer, and the major industrial powers will engage in ceaseless “resource wars” over any remaining pools of petroleum.

If this scenario is even somewhat credible, American and international leaders should drop whatever else they are doing and devote their full attention to preparing the world for post-peak petroleum. This means, for example, imposing tough new restrictions on the minimum fuel economy of all new cars and SUVs (say 40 mpg, an entirely achievable standard), ceasing new highway construction, building high-speed rail lines and investing hundreds of billions of dollars in the development of renewable energy supplies and other alternatives to petroleum.

This also means, of course, discarding the Bush Administration’s favored energy plan and adopting an entirely new strategy based on hydrogen and renewables. As well, it means forcing the big oil companies to invest in petroleum alternatives and persuading the big auto-makers to redesign their major production lines–costly steps that neither industry is eager to take. Hence, their evident reluctance to embrace the predictions of imminent peak production; rather, they have endorsed the more optimistic assessments of the DOE and other industry-friendly bodies indicating that the onset of peak oil is still many decades in the future.

It is against this backdrop that Shell’s January 2004 announcement of overstated reserves and the subsequent indications of declining production in Saudi Arabia must be seen. Do these events signal that predictions of an imminent peak are accurate? No one can say for sure, but they do suggest that Hubbert’s followers may be closer to the truth than the industry-backed optimists.

But this, needless to say, is contested territory, and is likely to remain so for some time. As evidence of the seriousness and significance of this struggle, the DOE hastily inserted a sidebar into its 2004 International Energy Outlook addressing the Shell and Saudi disclosures. Claiming that global reserves are substantial and will continue to grow as new technologies permit the exploitation of hitherto unaffordable or inaccessible supplies, the DOE blithely avowed that peak oil output will occur “closer to the middle than to the beginning of the 21st century.”

The DOE projection, and those proffered by other industry-friendly agencies, rest on two critical assumptions: first, that immense reservoirs of as-yet-undiscovered oil lie beneath such insufficiently explored areas as the deep Atlantic, northern Siberia and Iraq’s western deserts; and second, that higher energy prices will permit the profitable development of tar sands, shale oil and other unconventional sources. Although much of this remains speculative, the DOE sees no reason to hedge on its prediction that global oil production will rise from its present level of about 80 mbd (of which the United States consumes one-fourth) to an estimated 126 mbd in 2025. In other words, there is simply nothing to worry about.

Just how dangerous and delusional this assessment is likely to prove is the subject of five recent books on the future of petroleum: David Goodstein’s Out of Gas, Richard Heinberg’s The Party’s Over, Paul Roberts’s The End of Oil Sonia Shah’s Crude: The Story of Oil and Matthew Yeomans’s Oil: Anatomy of an Industry. These compelling and provocative books address disparate aspects of the larger problem, but all arrive at the same chilling conclusions:

§ Peak oil is already here, or will arrive soon–probably before the end of the current decade.

§ The production of deep-sea and Siberian oil and the development of unconventional sources of supply will prove too costly, too risky and too environmentally hazardous to provide a significant accretion to dwindling supplies of conventional oil.

§ Hydrogen and renewables may, at some point, prove viable alternatives to petroleum, but their development is proceeding far too slowly to substitute for disappearing oil during the next few decades. (Two of these authors, Goodstein and Heinberg, question whether these alternatives will ever prove an adequate substitute for petroleum.)

§ Continued reliance on petroleum and other fossil fuels (coal, natural gas) for the majority of our energy supply–90 percent, in the case of the United States–will intensify the buildup of heat-trapping greenhouse gases in the atmosphere, thus hastening the onset of relentless droughts, heat waves, sea-level surges and other cataclysmic climate changes.

§ America’s political leaders, like those of most other countries, are far too committed to the industrial status quo to provide the energetic and visionary leadership needed to commence the global transition to a post-petroleum economy. Moreover, the large US energy companies–which often exercise great influence over the nation’s political leaders–are determined to prevent this transition for as long as they possibly can.

§ By not embarking immediately on a major program of conservation and change, we will sink deeper into dependency on oil and thus find ourselves increasingly vulnerable to the devastating consequences of post-peak energy scarcity. If we start now on the transition to hydrogen and other substitutes, we have a fighting chance of averting total economic collapse when oil begins to disappear; but the longer we wait, the greater the likelihood that the needed alternatives will not be ready in time, and so we (or our children) will be condemned to extreme deprivation.

In articulating these alarming and critical points, the authors of these books bring to bear a great deal of research and expertise. Drawing on his many years of experiences as a teaching scientist, Goodstein, a senior professor and vice provost of the California Institute of Technology, shows in plain, easy-to-understand language why our current reliance on petroleum and other fossil fuels cannot persist for more than another generation or two. Explaining that petroleum was formed over many millions of years under unique geological conditions that cannot be duplicated by human means, he avers that the most promising sources of oil have already been substantially depleted and that what remains will prove increasingly difficult to extract. “The followers of King Hubbert may or may not be correct in their quantitative predictions of when the peak will occur,” he observes. But they have taught us a critical lesson: “The crisis will come not when we pump the last drop of oil but rather when the rate at which oil can be pumped out of the ground starts to diminish.” And that critical point, he warns, “is much closer than we previously imagined.”

Goodstein also evaluates the relative potential of other sources of energy, including coal, natural gas, hydrogen, solar, wind and nuclear. Each, he explains, has certain advantages and disadvantages; but none, at current levels of development, are capable of sustaining the energy-intensive life we have become accustomed to. Coal and natural gas are the most abundant and affordable, but both are nonrenewable fossil fuels and so, like oil, will eventually disappear; both, moreover, contain substantial carbon and so their use will contribute to the atmospheric buildup of greenhouse gases (unless some safe, inexpensive way is found to bury or “sequester” the unwanted carbon). Hydrogen offers great promise as an alternative source (or conveyor) of energy, but most of the existing supply is derived from natural gas, with all the problems that entails, and other plausible means of obtaining it (e.g., through electrolysis, using solar, wind or nuclear power) are too costly, undeveloped and problematic. We can make the transition to a post-petroleum economy, Goodstein suggests, but only if we move swiftly to “kick the fossil fuel habit” and develop environmentally friendly alternatives. This, in turn, “will require global political leadership that is both visionary and courageous”; unfortunately, “it seems unlikely that we will be so lucky.”

Matthew Yeomans, a former columnist for The Industry Standard, comes to a similar conclusion but approaches it from a somewhat different perspective–by examining the evolution, present character and deep-seated pathologies of the global oil industry. Rather than exercise enlightened stewardship over a precious and finite resource, the oil companies have sought to maximize its exploitation for short-term profit–often trampling upon indigenous communities, fragile ecological areas and democratic systems in the process. “Environmental pollution, human rights abuses, political murder, and civil war–these are legacies of too many nations that possess oil,” he asserts. Although less well versed in the science of energy than Goodstein, Yeomans shows how oil-company megalomania and greed have contributed to the exhaustion of existing reserves and hastened the onset of peak oil.

For Yeomans, it is the political rather than the economic and environmental consequences of depletion that are most worrisome. As petroleum becomes more scarce and valuable, powerful states will fight over its possession rather than cooperate in its conservation. “Oil addiction is America’s Achilles’ heel,” he argues. “To remain dominant in the world, the U.S. must be sure that oil flows freely and consistently onto the global market.” Accordingly, the Bush Administration “has made the protection of global oil supplies an equal partner with the war on terrorism in guiding U.S. foreign and defense policy.” The invasion and occupation of Iraq, he claims, is but one expression of this overarching principle.

Sonia Shah, in Crude, extends this analysis, deftly showing how the oil companies’ relentless pursuit of new fields to exploit has led them to drill for oil in some of the most impoverished and unstable areas of the world. Shah, an occasional contributor to The Nation, is particularly eloquent on the despoliation of the Delta region of southern Nigeria, where efforts by the minority Ogoni people to gain even a small fraction of the revenues derived from crude production in their environmentally ravaged homeland have been systematically and brutally repressed by military elites in the capital, who routinely seize the nation’s vast oil wealth for their own private enrichment. “And so,” she laments, “despite the billions of dollars worth of oil under their feet, the people of the Niger Delta lived in poverty and darkness.”

Paul Roberts, a regular contributor to Harper’s Magazine, combines the scientific analysis of Goodstein with the political acumen of Yeomans and Shah to provide a comprehensive and frightening assessment of our current energy dilemma. Once again, we are treated to an explanation of the depletion curve devised by King Hubbert and a review of the evidence for an imminent peak in production. But Roberts goes beyond this to examine the social, economic and environmental consequences of our dependency on petroleum and to identify the powerful obstacles to radical change. Petroleum has proved to be such a cheap and versatile source of energy that we have constructed our entire civilization around its unrestrained consumption, he argues; hence, we perceive few incentives for abandoning oil in favor of more costly and inconvenient fuels. Practical alternatives do exist, but we will not embrace them so long as the existing political-economic system retains its deep-seated addiction to cheap oil.

More than the other authors, Roberts examines the relative utility of alternative energy paths, ranging from natural gas and hydrogen to the renewables like wind and solar. None of these paths, he argues, currently offer a blanket, truly affordable substitute for petroleum. Hydrogen may, in time, provide such an option, but not without a lot more research, experimentation and investment. In the meantime, we need to adopt a “bridging” strategy based on the increased use of natural gas, enhanced conservation and fuel efficiency, greater reliance on wind and solar power, and the gradual introduction of hydrogen-powered devices. But, like the other authors, Roberts worries that time is running out. “Each year that we fail to commit to serious energy research and development or fail to begin slowing the growth of energy demand through fuel efficiency…is another year in which our already unstable energy economy moves so much closer to the point of no return.”

Of all these authors, Richard Heinberg is the most pessimistic about our capacity to take the necessary steps in time. A professor at the New College of California in Santa Rosa, he argues that the rapid development and exploitation of petroleum has created a bubble economy that is sure to burst once the moment of peak production has passed–a moment, he believes, that is soon upon us. “Industrial societies have been flourishing for roughly 150 years now, using fossil energy resources to build far-flung trade empires, to fuel the invention of spectacular new technologies, and to fund a way of life that is opulent and fast-paced. It is as if part of the human race has been given a sudden windfall of wealth and decided to spend that wealth by throwing an extravagant party.” But all too soon, “the party itself will be a fading memory–not because anyone decided to heed the voice of moderation, but because the wine and food are gone and the harsh light of morning has come.”

Unlike Roberts, Heinberg has little faith that the development of hydrogen, natural gas and other “bridging” technologies can spare us from a painful economic contraction. All these approaches, he suggests, depend on the perpetuation of a high-cost, energy-intensive industrial leviathan that will not survive the disappearance of cheap oil. What is needed, he insists, is not so much technological innovation as profound life-style adjustments, obliging us to use less energy, consume fewer industrial goods, grow more of our own food and rely on locally based, renewable energy sources. This will not be an ongoing “party” of the sort that most Americans now enjoy, but it will provide some attractions of its own–particularly in terms of greater community sharing and participation.

Together, these five books make a persuasive argument that the era of cheap and abundant petroleum is fast drawing to a close and that we are entering a new period of growing scarcity, high prices and economic trauma. They also demonstrate, with unshakable logic, that the longer we put off the transition to a post-petroleum energy system, the worse off we’ll be. They should be required reading for all who care about the future of this country and the planet as a whole.

Unfortunately, it does not appear that our leaders are prepared to accept this new reality. Rather, they prefer to shield themselves–and the rest of us–from the wrenching adjustments that will inevitably be required. For some officials, of course, these adjustments will prove detrimental to the profit intake of their friends and associates in the oil business, and so they eschew any changes in the status quo; others are simply worried about the political risks of speaking the truth to the American public, and so advocate only the most timid sorts of initiatives. (At the risk of oversimplification, one can say that the Bush camp falls into the first category, the Kerry camp into the second.) But inaction will only bring us closer to catastrophe, and timid steps will not immunize us from the dangers ahead. As these books make so painfully clear, we must liberate ourselves from our addiction to cheap petroleum and begin the transition to a sane and sustainable alternative.