Oil or gas?

Should India shift from oil to gas? Why? Let us look at some facts to begin with. At 160 million tonnes a year, the crude oil import bill stands at Rs 6,00,000 crores. Taking into consideration the cost of imported gas and one available in-house, we could have a saving of Rs 2250 crores on import bill of each million ton of crude oil substituted, say experts.


Further a switch of 50 million tonnes of crude to LNG would help in many ways besides the cost. But some policy initiatives need to be taken. Like, building infrastructure for storage and transportation of gas; remunerative prices for gas; long-term contracts for import of gas from US, Middle East, Australia, etc. Finally the automobile industry would have to come out with vehicles running on gas, instead of the popular diesel.


However, while talking big figures, sometimes the smaller, easier options tend to be neglected. Would improving the Railways help shift the core of transportation from oil to coal (electrification of all lines)? Biogas in place of kerosene and LPG for cooking? How about shifting industries from liquid fuel to coal gassifiers? But while these may take the burden away from oil bill, it would increase dependence on coal? Do we want that? Should the economy issues overrule ecology ones - it boils down to same questions!

Demand will peak, says study

Forget Peak oil that refers to peaking of oil supply, now a new study suggests that global oil demand will peak before 2020. With participation of some of the world's leading energy and technology companies and organizations, the research challenged the concept that "Peak Oil" will be a supply side phenomenon and predicts that the demand for oil may well peak before 2020 and then fall back to levels significantly below 2010 demand by 2035. It underlies a general underestimation of the future impact of government policies to improve fuel efficiency and promote alternatives to oil, according to the study.

The study findings suggest that there is a strong chance of oil demand reaching its peak before 2020, at no more than about 4 percent above 2010 levels, before falling into a long-term decline trend, with demand in 2035 back down to some 3 percent below 2010 levels.

The study predicts significant changes in future demand patterns, strongly influenced by global energy security policies, the technology change that they promote, and demographics. Evolutionary changes in automotive technology is predicted to bring revolutionary changes in fuel demand. The increasing disparity of demand between fuel types, diesel volumes are buoyed by heavy duty transportation use while gasoline declines due to increasing powertrain efficiencies and higher pump blends of bio-ethanol.

The study also predicts improved supply prospects for natural gas likely to lead to decoupling of oil and gas market.

That sure is a welcome trend if we can move with the reality of fossil fuels running out. But there are the cynics who do not believe any significant improvisation on vehicle efficiencies nor that biofuels will make any big impact. Time will tell.

Demand much ahead

Oil prices have been down and up recently. Let's look at what the prospects are. According to the International Energy Agency's Oil Market Report for September its preliminary estimate for world oil production in August was 89.1 million b/d despite the loss of 1.6 million b/d of Libyan production. The Agency, however, maintains that the demand for oil has been running ahead of global production since the second half 2010 when the demand for oil surged.

The difference between supply and demand, which for a while amounted to 1.4 million b/d, has been coming out of global stocks which have been slowly falling in recent months. It is this imbalance between supply and demand that is likely the root of our high oil and gas prices. If demand growth continues at its present or even somewhat reduced pace, demand should be pushing up against 92 million b/d by the end of next year. Any further increase in demand would come from stockpiles at much higher prices and probably much economic disruption, notes the Energy Bulletin.

There are a number of countries that will be critical to what happens in the next two or three years. The most important of these is China where demand is now approaching 10 million b/d and is forecast to grow at about 6 percent this year and next after surging to 11 percent in 2010. India which is consuming about 3.5 million b/d continues to increase its demand at about 4 percent per annum. Demand from the Middle Eastern oil producers is also an interesting story. Although Saudi oil production is now pushing 10 million b/d, much of the increase this summer is being burned domestically to produce the power and water.

Give us more!

Peak oil could happen anytime between 2012 and 2017, confessed the IEA at various times recently, and more recently its chief Fatih Birol even said that peak oil has perhaps passed us by in 2006! Which means we are now in the decline region of the bell curve.

But is that scaring anyone? None. As governments continue to be in denial, the demand for oil has skyrocketed in 2010. Itncreased 2.7 million barrels per day to a new record high of 87.4 mbd -- however, increases in global oil production fell short of that by 900,000 barrels per day.

This means rising supply isn't keeping pace with rising demand. Exactly what the peak oil researchers have been saying. But again, no one wants to hear the scary truth.

The new oil production rankings now have Russia leading the world (10.27 mbd) and Saudi Arabia in second (10 mbd). The US produces 7.5 mpd (and consumes a bit under three times that). China is now in fifth place, seeing the largest increase in production, with a bit over 4 million barrels per day.

Oil Leaks

The most recent Wikileaks cable released by the Guardian has revealed that US diplomats are convinced that Saudi Arabia has overestimated its vaunted oil reserves by a stunning 40%. The warning from a senior Saudi government oil executive said that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels.

Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then -possibly as early as 2012 - global oil production would have hit its highest point.

Saudi Arabia is the world's largest oil supplier, and is widely believed to be sitting atop the largest supply of the stuff in the world. But this latest revelation shows that the country may not have enough oil to keep prices from rising drastically over the next couple years.

Hitting peak oil as soon as next year would have a momentous impact on the global economy, which is still extremely dependent on oil. Oil prices are already creeping above the $100 a barrel mark. Analysts have counted on the Middle Eastern nation to pump additional oil if the prices rise high enough, and threaten to choke off demand.

But perhaps the time when Saudi Arabia can stabilize oil demand is well past. As to how equipped the world is, we know. Very poorly. There are no alternatives to take on the role of oil. Will it mean a grinding to halt of the world economy? Do we still have time to start saving up by reducing consumption? But, who will start?

Alarm bells sounded again

The International Energy Agency (IEA) is forecasting world oil demand will set a new record next year when is smashes through 2008’s pre-recession high – and warned that the “era of cheap oil is over.”

According to the IEA’s latest Oil Market Report, published August 11, global demand will reach 86.6 million barrels per day in 2010, and then 87.9 million barrels per day in 2011, assuming a continuing global economic recovery. This means demand is set to pass the all-time high of 86.9 million barrels per day established in 2008 before the global economic downturn.

Opec's spare capacity, was as low as 2 million barrels a day in July 2008 when price peaked. Opec claims to have a 6.6 mb capacity but IEA warns this could fall to around 3 mb a day by 2015. No wonder IEA's Fatih Birol said recently again, “The era of cheap oil is over. Each barrel oil that will come to market in the future will be much more difficult to produce and therefore more expensive. We all - governments, industry and consumers - should carefully choose the type of car we want to buy in the future and should be prepared for oil prices being much higher than several years ago.”

The market power of a few Mid east iol producing nations will increase largely and economy of oil buying nations will be affected. As Birol has said, even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030.

As Opec becomes the sole operator, its spare capacity will play a big role and if as IEA says, that is going to decrease, well then... economic chaos will start building up.

Better that nations start decreasing reliance on oil. Easier said than done but, tough times demand tough decisions, right?

Shortage of metals predicted

Not just Peak oil, we are entering an era of Peak everything. Peak water, Peak metals! Failure to advance metal recycling, especially of rare metals used in high-tech products, could produce a global shortage of many metals within two decades, according to a series of reports by the United Nations Environment Programme (UNEP).

Thomas Graedel, a member of UNEP’s International Panel for Sustainable Resource Management and a Yale University professor, cited the example of indium, a metal used to create transparent electrodes used in liquid crystal displays, touch screens, semiconductors, and photovoltaic cells. Global demand for the metal is expected to grow from 1,200 tons this year to 2,600 tons next year, he said. Yet, like most specialty metals, recycling rates for the metal are below 1 percent, he said.

Graedel cited information from microchip maker Intel Corp. that the number of elements it used for computers rose from 11 in the 1980s to around 60 now, indicating that it would be hard to maintain current levels of computer performance if newer specialty metals became unavailable.

Other metals whose recycling rates the panel said needed to be improved included neodymium, used in wind turbine magnets, and gallium, used for light emitting diodes in indicator lamps and lighting.

In a separate report, the U.N. panel detailed what it said was a substantial shift in metals stocks from underground ores to existing products. "These 'mines above ground' have growing potential for future metals supply," it said.

Above-ground copper amounts to about 50 kg (112 pounds) for every person on earth, compared with more than two tons of iron, the panel said. The recycling rate for steel is about 75 percent but for copper between 25 and 50 percent, it found.

After the frenzied discovery of the magic materials has come the discovery that everything is limited. Reduce and reuse has to become more than a fad. A dedicated workforce for recycling could be among the major changes in the way we do sustainable business in future.

Volcanic message

The eruption of the Eyjafjallajokull volcano last week and the crippling of air traffic across Europe serve as a reminder of how vulnerable our civilizations remain to forces of nature. It is not just peak oil considerations but natural calamity which could force us to rethink our fuel policies.

The last time Eyjafjallajokull erupted was in 1821-1823 and the eruptions continued for over a year. Even more alarming is that 60 years later a sister Icelandic volcano called Laki erupted for 8 months. It sent 3.4 cubic miles of lava, 8 million tons of hydrogen fluoride and 120 million tons of sulfur dioxide into the air. This eruption created environmental havoc around the earth for many years. In Britain, some 30,000 were killed by the toxic gases and in many countries still more perished from the extremes of heat and cold. There were famines in Europe, Africa and the Far East. North America underwent one of the longest and coldest winters on record.

In a telling example of how everything is interrelated, scientists tell us that the melting of Iceland's glaciers reduces pressure on the rock and allows the "hotspot" of magna below the island to break through more frequently. Thus the long-term trend is for increasing volcanic activity over the Icelandic "hot spot."

While Eyjafjallajokull is still erupting vigorously, the ash is no longer being blown as high into the air and much of the magna is being ejected in the form of molten lava. However, should the volcano resume spewing ash high into the atmosphere for an extended period, there will obviously be serious economic disruptions - first in Europe and eventually all over the world.

Patterns of energy demand will be affected and slowing economic activity could temporarily reduce the demand for oil products. In the last week some 100,000 flights were cancelled and the demand for jet fuel fell by two thirds. Losses in the first five days of restricted air travel are currently estimated to be on the order of $1.2 billion and are likely to grow as the travel situation will take many weeks to return to normal.

On the other hand, the crisis shows the ridiculous, unsustainable waste in transporting completely ‘unnecessary crap’ around the world in airplanes. In Boston, they are running out of certain kinds of fish. BMW is having problems putting cars together in South Carolina; they fly the transmissions in from Germany. In Kenya, the greenhouses by the shores of Lake Naivasha, flowers are being fed to the animals since they can't be shipped to Europe.

Purple orchids. Fish for Boston (which is beside an ocean). Car Transmissions! Now while all that may comprise business for some people, when we know the carbon footprint of flying, should we be flying orchids and fish around the globe? Time to give up on some comforts would you agree? Think global, act local?

Shut down time

New research out of Kuwait, using a new method of calculating the crude oil production potential of 47 of the world’s largest oil producing countries, has found that peak oil will come much sooner than expected… 2014!

The scientists’ new method for evaluating world peak oil timing stems from the well-tested, popular and generally accurate Hubbert method — which was the first model to accurately predict when oil supply would peak from United States oil fields in the 1970’s. However, the Hubbert model has been scrutinized as not accurately depicting individual, widely-varying, country-specific items such as changing technology and politics.

To address these criticisms, the researchers modified the Hubbert model to calculate oil production trends that also include individual variations from country to country, and then applied it to the 47 largest oil producing countries in the world.

Not only did the researchers find that world crude oil production would peak in 2014, they discovered that the world is already depleting its oil reserves at a rate of 2.1% per year.

The planet, or rather the human race, seems like it is hurtling towards catastrophe of one form or the other. The deniers may well close their eyes and enjoy the present moment, but 2014 is too close for comfort!

Mum's the word

An interesting debate on a website brings to attention the old conspiracy theories! This one is on Peak Oil. Ask people in the energy arena and chances are that 50 percent will blink. They haven’t heard the term!

Why? How can such a serious issue not be heard of? Those of us who know about Hubbert’s bell curve know the world could soon run out of oil, as sson as 2020. After all, fossils are limited, so how can fossil fuel be unlimited?

The author examines if governments the world over are ignorant or hiding the issue from the public. Or worse, as some believe, the world can get along without natural resources!! An unbreakable faith in technology and the market mechanism's capacity to provide substitutes for declining fossil fuel energy services does seem to be the answer. Many officials seem to believe that all the world need is more investment which will translate to more oil production.

Or, is it simply that the human race exhibits certain cognitive biases that prevent us from acting on complex or frightening subjects outside of our day to day realities, including death. Simply by refusing to accept a painful truth, we choose to dismiss it? Sadad al-Husseini (former VP of Saudi Aramco) feels that those “who are not expressing a concern [publicly]... are doing that with a good intention: they feel like somehow this is a reality that the public at large can't handle... ”

Or do we really believe in an abundant future? As Albert Bartlett (1994) noted: There will always be popular and persuasive technological optimists who believe that population increases are good, and who believe that the human mind has unlimited capacity to find technological solutions to all problems of crowding, environmental destruction, and resource shortages.

Should governments aware of the problem speak out, or quietly plan for the future? Do you believe technology will do the rescue act, forever?

Needed: new ways to farm

Coming after the International Energy Agency’s new World Energy Outlook published last week which expects the global demand for oil to rise from 85m barrels a day in 2008 to 105m in 2030, a paper published by the Uppsala University in Sweden in the journal Energy Policy, anticipates that maximum global production of all kinds of oil in 2030 will be 76m barrels per day.

As the UK Energy Research Centre noted, the date of peak oil will be determined not by the total size of the global resource but by the rate at which it can be exploited. New discoveries would have to be implausibly large to make a significant difference. A field the size of all the oil reserves ever struck in the USA can delay the date of peaking by only four years. Clearly, if we fail to replace oil before the supply peaks then crashes, the global economy is doomed.

A report commissioned by the US Department of Energy shows, an emergency programme to replace current energy supplies or equipment to anticipate peak oil would need about 20 years to take effect. Columnist George Monbiot is among those who sees no hope for world economy, “but at least we could save farming”.

According to farm scientists at Cornell University, cultivating one hectare of maize in the United States requires 40 litres of petrol and 75 litres of diesel. The amazing productivity of modern farm labour has been purchased at the cost of a dependency on oil, says Monbiot. “Unless farmers can change the way it’s grown, a permanent oil shock would price food out of the mouths of many of the world’s people.”

What are the solutions? He cites two possible options: either the mass replacement of farm machinery or the development of new farming systems, which don’t need much labour or energy.

Labour is of course not as much an issue as energy in the developing world.

How fast all this can be done depends on whether we and our policy makers believe the crash will happen, and soon.

Share your ideas on how to wean farming from energy and water.

Slippery grounds

If one is to believe a whistleblower at the IEA, the world is much closer to running out of oil than official estimates admit. The International Energy Agency has been deliberately underplaying a looming shortage for fear of triggering panic buying as also displeasing the US, he said.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The organisation’s World Energy Outlook on oil demand and supply is soon to be published and forms the basis for many governments’ actions and policies. The prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels, is being questioned by many. There is no firm evidence to prove this and the world has already passed its peak in oil production, they claim.

The Americans fear the end of oil supremacy because it would threaten their power over access to oil resources, was what the source said.

The growing consensus that we are close to the peak or even crossed over makes it even more important that nations make some deal at Copenhagen. A shift in economy which is not so carbon dependent is imperative to avoid severe economic dislocation, it would seem.

Just juxtapose that with the ADB report on energy demand in the Asia-pacific. Energy demand across the region is growing at an annual rate of 2.4%, compared with the world average of 1.5%. And nearly 80% of this energy need will have to be met by fossil fuels. The region currently consumes about a third of the world’s total energy supply, says the report.

The region will have to invest from $7 trillion to $9.7 trillion between 2005 and 2030 to meet the growing energy demand. Oil makes up more than 35 percent of the global energy pie.

Between optimism & realism

The UK's Energy Research Centre recently released a study entitled "Global Oil Depletion - An assessment of the evidence for near-term peak in global oil production." (The report is available for downloading at the UKERC's website.)

The main conclusion of the British report is that there is a "significant risk" that conventional oil production will peak before 2020, and that forecasts which delay the event beyond 2030 are based on assumptions that are "at best optimistic and at worst implausible."

The IEA had in its reevaluation last year said that while conventional world oil production will peak around 2020, production of alternative fuels such as natural gas liquids and extracts from the Alberta tar sands will increase rapidly enough so that total liquid fuel production can keep growing through 2030.

It was the Deutsche Bank that last sent out a caution.

Going by conference-talk, a consensus has emerged that global convention oil production plateaued at the end of 2004 and is unlikely to ever grow very much again; that we are in brief period of balance between depletion from existing fields and production and this will last for another two to five years before world production starts to fall inexorably.

How prepared is the world today to tackle oil scarcity? How near do we need to reach before we apply the brakes?

Goodbye to oil soon

Deutsche Bank’s new report, “The Peak Oil Market” talks of a Peak oil scenario causes by underinvestment by the oil industry in finding new supplies. This will send oil to $175 a barrel by 2016—and will simultaneously put the final nail in oil’s coffin and send prices plummeting back to $70 by 2030.

That’s because of a global peak in oil demand. Deutsche Bank notes: US demand is the key. It is the last market-priced, oil inefficient, major oil consumer. We believe Obama’s environmental agenda, the bankruptcy of the US auto industry, the war in Iraq, and global oil supply challenges have dovetailed to spell the end of the oil era.

Deutsche Bank expects the electric car to become a truly “disruptive technology” which takes off around the world, sending demand for gasoline into an “inexorable and accelerating decline.”

Won’t cheaper oil in the future just lead to a revival in oil demand? No. Says the bank: Just as the explosion of digital cameras made the cost of film irrelevant, the growth of electric cars will make the price of oil (and gasoline) all but irrelevant for transportation.

Meanwhile ‘The Global Peak Oil Survey 2009’, carried out by the UK focused peak oil group Powerswitch suggests the effects of peak oil suggested will be wide ranging, with increases in crime, war and nationalism, and decreases in urban working, health and global population levels. A strong concern about climate change exists but the view is that peak oil will have much more of an impact on society over the next 25 years. But at the individual level, there is optimism.

The initial findings can be read at http://tinyurl.com/gpos2009-results-page, the raw data of the results have also been made available on the PowerSwitch website, www.powerswitch.org.uk.

Resource wars and rising nationalism. Governments unprepared. A reverse migration from cities. What do you think will be the consequences?

Peak oil in 10 years

How long will oil last? Or, when will see it peak? A few decades? Maybe earlier, going by what IEA chief Fatih Birol says. Oil will peak in ten years, he says in an interview.

The first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago.

"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Dr Birol said. "The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously," he said.

The IEA estimates that the decline in oil production in existing fields is now running at 6.7 per cent a year compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges to be wrong.

In its first-ever assessment of the world's major oil fields, the IEA concluded that the global energy system was at a crossroads and that consumption of oil was "patently unsustainable", with expected demand far outstripping supply.

How equipped are we for a shift to other fuels?

Double trouble

It smacks of irresponsibility of the highest kind what Russia plan to do. It is prospecting for oil in the caving Arctic ice and doing it, using floating nuclear reactors! The United Industrial Corporation is planning to build a series of such floating stations to extract oil and gas offshore in some of the remotest oil and gas fields in the world in the Barents and Kara seas. To go into operation by the end of 2012, the ship will accommodate two 35 MW reactors.

After the collapse of the Soviet Union in 1991, the Russian Federation dumped radioactive waste from more than 160 decommissioned nuclear submarines into the Arctic. In 1993, per Nuclear Power Daily 16 nuclear reactors and 10,000 containers of nuclear waste were dumped in the Kara and Barents sea.

During the Cold War, the Soviet arctic was a nuclear test zone with pollution from the Soviet military program leaving a “slow-motion Chernobyl” in excess of 3 billion curies of radioactivity. (By comparison, Chernobyl itself released only 100 million curies)

Will this be return to the Cold War times? Will dwindling energy be the driving force for the next big conflict on the planet? What will be the effect of drilling the Arctic for oil?

Good or bad?

And while on Nano, how about looking at the pros and cons. One, it is cheap, small, gives good mileage and good emission standards. It is a better alternative to the millions of Indians who commute by two-wheelers. It is affordable, safe transport!

So why are environmentalists dubbing it a nightmare? Simply because of the numbers. At least 25 percent of the 50 million who use two-wheelers are expected to shift. As disclosed by the company, the bookings are expected to exceed records and random lots will be resorted to, to allocate the cars. As more and more people buy the cars, the emissions will multiply, however low they are for a single car.

And then, imagine the traffic jams and the idling it will cause? And not to forget the demand on energy, i.e petrol.

News reports say Nano potentially could expand the country's auto market by 65 percent and spur a 20 percent increase in auto sales in its first year. Honda, Toyota and Fiat too are developing competitors to the Nano.

India is the world's fourth-largest overall producer of the greenhouse gas and its carbon emissions are expected to triple by 2020, according to the United Nations. A car like Nano will affect climate projections drastically, say experts.

Tata claims that the Nano is cleaner than the scooters it will replace and claims the car's catalytic converter cuts emissions by 80 percent. The Nano supposedly emits 30 grams of carbon dioxide per kilometer, well below the 160 g/km average of Europe's cars and far less than the 130 g/km standard the European Union will adopt in 2012. Even if half a million Nano's hit the road and each of them travels 5,000 miles a year, they will be responsible for less than 8 percent of India's annual CO2 emissions.

On the energy side, the International Energy Agency has said "alarming" growth in worldwide energy needs could, among other things, bring worldwide shortages. It said India's motor vehicle fuel consumption will triple by 2030.

What when the prices go up again as we said in our earlier post? Will a few more million cars on the roads spell trouble? Or do we look at the new Nano as the way out of the squeeze, small and efficient? As the rich west continues to opt for big SUVs, can it afford to point fingers at the new kid on the block?

Share your views.

The next big hump coming soon

Tata’s Nano couldn’t have timed it better. According to a report on oil prices, it is time to think small, especially when it comes to cars.

The new report from the McKinsey Global Institute, called Averting the Next Energy Crisis: The Demand Shock, that considers a global economic recovery in2010, warns of another oil-price shock between 2010 and 2013. Prices will rise above $100 a barrel.

The energy demand that has stagnated during the recession will pick up and while the supplies of coal and gas ‘appear to be plentiful enough’ to prevent long-term price inflation, McKinsey expects demand for oil to outpace supply.

Energy demand, it says, will grow by 2.3% per annum from 2010 to 2020 even if, as expected, energy consumption in the U.S. and Japan remains virtually flat. Especially in developing markets, where carbon dioxide emissions will also grow by 2 percent mostly thanks to the growth in air transport, steel and petrochemicals. Much of this will be from China and India.

Among the suggestions it makes are, removal of subsidies that keep oil prices low in places like Saudi Arabia, Iran and Venezuela; improving efficiency of cars and trucks, more flexi-fuel cars, etc.

Nano could be your answer?? Or better still, a truly effective public transport system?

Population, oil production nexus

Food production is increasing but food per person is not. Oil production is increasing but oil per person is not. The population figures in a big way when one looks at the big picture.

Overpopulation and oil depletion are two gigantic forces that will define the course of the human civilization, according to an expert.

Try this one for understanding the close relation between population and oil production as one of cause and effect. While human population was always matched to the planet’s carrying capacity, the age of oil tilted the balance. Before the year 2050 there will be about 3 billion deaths above normal, with a grand total of about 4 billion by the end of the century.

The skyrocketing of population is caused by the skyrocketing of oil production, he argues. Abundant oil means a large population. And the opposite too!

But as carrying capacity of the planet does not increase, as population rises, the strain on the environment too rises. Hence, a job that required only 1 barrel per person in 1940 required 4 barrels per person in 1990.

The problem of oil depletion then turns out to be ‘a sudden catastrophe’.

Interestingly, he brings in the results of urbanization with ‘forgotten pockets of habitable land abandoned as urbanites regarded rural life as too difficult, and traded their peasant smocks for factory overalls.’

There are still areas of the planet’s surface that are sparsely occupied although they are habitable or could be made so. ‘Over the next few years, human ingenuity must be devoted to refining our understanding of these geographic and demographic matters, so that at least a few can escape the tribulation’.

A lesson for India there?

Can our cities handle any more? Should we impose barriers to this growth or deploy funds in the rural scenario?

Now look at some of these statistics:
v America represents 5% of the world’s population and consumes 24% of the world’s oil.
v Middle East oil use is growing more rapidly than China’s.
v China now uses 8 million barrels per day versus 3.5 million barrels per day in 1997.
v China now consumes 2 barrels per person versus 24 barrels per person in the U.S.
v The U.S. has 220 million automobiles for 305 million people. China has 32 million cars for 1.3 billion people.
v Peak supply of 86 million barrels of oil per day has been reached. Demand will grow to 115 million to 125 million barrels per day in the next 20 years.

Finally, supply has topped out at 86 million barrels per day. Mature oil fields throughout the world are in decline. Projects can take decades to bring on-line.

How ready are we to face tomorrow? What will we do with all our automobiles when there is no oil? Yes perhaps there will be other fuels but do you see the same bodies being used? Or will there be mountains of waste?

Gorging on the common menu

Oil prices are going down and will continue to. This is mostly due to a combination of inflation and cut in production. However, lulled by this, people are back to splurging on road travel and buying cars, not only in India but also in ‘depressed’ US!

This is where we need farsighted leaders to act in unpopular ways and impose bigger taxes on oil and automobiles. Not only will this reduce oil consumption but also help slowdown global warming. Oil is a fast depleting resource and making it cheap will only see it vanish faster. Do we leave some for the future generations or drink it all up?

As Daryl Siry, former marketing officer with Tesla Motors, puts it, ‘Global warming and concern about CO2 emissions is a global, social problem that has extraordinary long term impacts but when you look at it on an individual level, the marginal returns that a selfish individual can gain by ignoring the greater good far exceeds the marginal cost to that individual in the short run. In the long run, though, everyone pays more.’

He gives a very apt analogy that hits the hammer on the nail! ‘For those not familiar with this concept of economics, an example that everyone has experienced is the group dinner where everyone agrees to split the bill. Relieved of their individual accountability to pay for only what they use, each person orders more than what they would normally order, knowing that the additional costs will be borne by the group. The individual also reasons that if they alone behave responsibly, they will not be rewarded with a lower bill but rather will still have to bear the higher cost of the average bill.

‘The predictable result is that the average bill is much higher than if each paid their own way. A nasty side effect is paranoia and suspicion, as people watch what their friends are ordering and get angry at the irresponsibility of each other.’

He goes on to conclude on a pessimistic (but realistic) note why the coming months will see environmentalism buckling under popular pressures, as every one proceeds to gorge on the planet’s resources.

There is no dearth of climate science nay-sayers even today. Petitions by scientists and their following are passé.

Somehow these people seem to be missing a bigger point. The path of unrestrained consumption they promote is just not sustainable, climate included or not! It simply will not be enough for too long unless we cut down our consumption and waste.

On the subject of tax, and why consumption taxes are better than income taxes, read what a professor of economics at Harvard University has to say in his blog. ‘Gas is a component of consumption. An increased reliance on gas taxes over income taxes would make the tax code more favorable to growth. It would also encourage firms to devote more R&D spending to the search for gasoline substitutes.’

Should the price on petrol and diesel be slashed or taxed further? Would it not be a good idea to slash personal income taxes and up the consumption gas on fuel? Let us know what you think.