To everyone’s collective enormous relief, the IEA’s 2010 World Outlook reassured the world that while oil prices may rise and conventional crude oil production may have peaked in 2006, we don’t have to worry about dramatic, longer-term energy-price increases. IEA predicts a gradual creep towards $113 per barrel by 2035. By 2015, we do have to worry that we might get up to $90 per barrel, with the high costs that imposes on ordinary people and the burdensome effects on the economy, but we’ve got five years, we are assured.

The oil price needed to balance oil markets is set to rise, reflecting the growing insensitivity of both demand and supply to price. The growing concentration of oil use in transport and a shift of demand towards subsidized markets are limiting the scope for higher prices to choke off demand through switching to alternative fuels. And constraints on investment mean that higher prices lead to only modest increases in production. In the New Policies Scenario, the average IEA crude oil price reaches $113 per barrel (in year2009 dollars) in 2035 – up from just over $60 in 2009. In practice, shortterm price volatility is likely to remain high.

Of course, as of the day that I wrote this, oil futures were, in fact, trading at $88 barrel – thankfully, we have the certainty of that $2 breathing room – phew! This must be that “volatility” they spoke of – I wonder how long oil has to trade above $80 before it becomes a price increase?

We are also assured that we definitely don’t have to worry about the peak of conventional crude oil being a significant problem, because the IEA emphasizes that unconventional oil sources will absolutely make up the difference. They spend little time, however, discussing the high economic and environmental costs of these unconventional sources, merely reassuring us that if governments act, peak oil won’t matter.

The IEA is also confident that Saudi Arabia will be able to maintain and increase production significantly, to compensate for declining rates in other nations farther down the depletion curve. Worries about Saudi production that have been floated for years are either dismissed or ignored in the Executive Summary.

The IEA focuses its optimism, however, on unconventional oil sources: heavy crude, tar sands and a mix of other lesser resources, all of which they predict will replace light crude proportionally, and without any deep effect on projected price. The summaries indicate both optimism about the prices at which these unconventional oil and other sources can be developed and also optimism about rates of development and extraction that the IEA suggests are possible if governments just put their minds to it.

In many ways the latest IEA report, which is, at least in terms of oil prices, clearly obsolete already, has a lot in common with the 2007 IPCC Climate report. The IPCC, afraid of sounding alarmist, chose to use optimistic and mid-range scenarios that turned out to be wild understatements. Within six months of its release, for example, the IPCC’s predictions about Arctic sea ice, which predicted summer disappearance of ice sometime around the beginning of the 22nd century, turned out to be 80 years out: New results showed that Arctic sea ice might be gone in summer before 2020. Within the year of the report’s release, Climate Equity’s “Climate Code Red” report documented that climate sensitivity was actually much greater than the IPCC had credited, and we began to talk about 350ppm, rather than the 450 or 550ppm that were used for much of the recommendations portion of the IPCC report. Meanwhile, the IPCC, as we all know, was accused of alarmism anyway.

Both the IPCC and the IEA have suffered losses of credibility by attempting to steer a middle path, to write a narrative of “oh, there’s a problem, but we don’t want to appear alarmist.” In the case of the IEA, there’s some reason to believe this may not be purely a problem of scientific reticence. In 2009, an IEA whistleblower reported that the agency had bowed to pressure from the US to distort figures on world oil reserves. In the case of the IPCC, the result of their perhaps more honest commitment to moderation is that climate-change deniers slackened their attacks not at all. But the approach meant that most people missed the real story: that in fact, climate change was occurring more rapidly in most places than even the IPCC predicted.

Whatever the choices made by both agencies, the critical point is that both offer up clear evidence that you cannot simultaneously raise an alarm and not appear alarmist. The ambiguous middle path in which you acknowledge what is happening and then minimize the danger of the situation does not save you from attack by those who wish to undermine your basic message. Instead, it muddies the waters. The IEA report’s acknowledgment that the peak of world-crude-oil supplies has indeed occurred ought to be big news, particularly given the recent warnings by international military and strategic agencies about the implications of peak oil. Instead, buried in between caveats, it was missed by many news sources entirely.

It turns out that walking a middle course isn’t as easy as it looks – reassuring and alarming simultaneously tend to create only muddles – and doesn’t result in much sparing of criticism. In the end, the takeaway message may be that there are worse things than being accused of alarmism, when there’s actually something to sound an alarm about.

Sharon Astyk is a writer, farmer and member of the ASPO-USA board of directors.

(Note: Commentaries do not necessarily represent the ASPO-USA position.)

3 thoughts on “The Problem of the Middle Way By Sharon Astyk”

  1. So that’s why nobody’s been building refineries … the massive increase in production of alternatives to easy oil have been known for decades; no need for refineries.

  2. $113 a barrel oil in 2035? Nobody can be THAT stupid. Someone is getting paid off. Try $1,113 a barrel, unless Bolivia and China soon decide to give all their lithium away. (I won’t hold my breath.) A nuclear war might keep it that low, since there would be a lot less demand for the stuff after all the heat, blast, and lethal radioactive fallout killed everything but the roaches.
    The scary thing is that these dumb oil price predictions get published in the mass media, and the public thinks that they are correct. That is why we hear people make brilliant statements like, “The stone age didn’t end due to a lack of stones, and the oil age won’t end due to a lack of oil.” Rocket scientists.
    But I could be wrong. I’m wrong a lot. Maybe these IEA folks have done what the smartest economists have yet to do. Maybe they KNOW that the world financial system is getting ready to collapse and, as a result, billions of people in the developed world will starve to death. (NOTHING works without a functioning banking system anymore. That is why they HAD to bail out the ‘to big to fail’ banks.) That might keep the price down to $113 in 25 years. Or maybe the IEA has developed a way to predict solar storms, and know that a massive CME will destroy the electric grid. Without electricity, 80% of the US population would be dead within 2 months from lack of food. Like Katrina, only nation wide. That would do it.
    It’s comforting to know that the fall in production of all that cheap, light oil won’t be a problem. I was worried that when all those billions of barrels of that cheap oil started to disappear from the world oil market, that the price might creep up just a little. Who knew Venezuela was going to let all the supermajors go in and sell all they can? I could have sworn that a lot of their assets just got ‘nationalized’. It shows how far out of the mainstream I am. Just last night on CNBC Asia, I heard the head of mining giant BHP Billiton hint how hard it is getting to develop new projects in much of the world, because of nationalism, or some such. It is good to know that new oil wells and pipelines will be an exception to that global trend.
    And did they hear the king of Saudi Arabia say NOT to expect any great increase in oil exports from his country, a few months ago? I did. He said that they needed to save some oil for their own use. Maybe the IEA plans on changing the government over there. That is about as likely as $113 constant dollar oil in 2035.
    I seem to remember the US EIA, a few years back, predicting a $30 a barrel price for today. Inflation must be a lot worse than I think.

  3. I often have wondered why it is so difficult for people to grasp Peak Oil. After all, the world’s dependence on oil is obvious as the nose on our faces. After much mulling, I have come to the conclusion it is not Peak Oil people cannot understand, but rather the end of economic growth. To the extent oil is equated with economic growth, people deny the reality of Peak Oil. People just cannot believe our modern civilization, which has reached such heights of sophistication and power, can be brought down by a humble barrel of oil.

    For the want of a nail, the shoe was lost. For the want of a shoe, the horse was lost. For the want of a horse, the rider was lost. For the want of a rider, the cause was lost.

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