Source: Rock Merch Universe
Last week, writing in the Cleantech Blog, Richard Steubi asked if "In the wake of the BP oil spill in the Gulf, is this time different? Will the U.S. finally be able to change its stance on petroleum? Will the petroleum industry itself be irrevocably altered?" (See The Petroleum Industry: Past the Tipping Point?, July 5th)
He proceeded to answer the question with a resounding no, laying the blame on "ineffective posturing and inane bickering in Washington", which he concludes is driven by the vast amounts of cash that the petroleum industry is willing to spend to defend the status quo.
[Any discussion of U.S. energy policy has to include current efforts to craft some kind of climate bill - any kind of climate bill. Pew Center's Eileen Claussen for one seems to have accepted that the best that can now be achieved is a bill that caps only utility emissions.]
Steubi's skepticism leads him to look for change as a result of energy prices and from their he begins to riff off of Jeff Rubin's arguments, that in a world of Peak Oil its only a matter of time before oil prices are back in the triple digits. With the return of $150 plus oil, Rubin sees the need for a re-engineering of the global economy, driven not by policy makers in Washington (where they can't) or Ottawa (where they won't) or elsewhere, but by the micro-economic decisions that businesses and consumers will have to make to allow them to adjust to the market for declining supply.
Both Steubi and Rubin see a silver lining in the coming of Peak Oil -and the high energy prices that would accompany Peak Oil. A silver lining based on their view of a more sustainable global economy, including:
- Reversal of the globalization of manufacturing, bringing manufacturing jobs back to North America and Europe;
- Emergence of local economies, including more farmers markets (???); and
- Greater investment in national infrastructure, particularly public transportation infrastructure.
Jeff Rubin develops this theme in his book, Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization. And since I have not yet read it, I have to temper my comments. However, a couple of thoughts do jump out at me.
First, while I can see how a partial retrenching of globalization away from the current energy-intensive model may make for a more robust world (i.e. more resilient to spiking oil prices, reduced trade imbalances, particularly between the U.S. and China), any judgment of greater sustainability may only be from the point of view of the western economies. A significant loss of manufacturing might not look like a sustainable path to China.
Second, how much manufacturing would really come back in the face of increased energy prices. With dramatically lower labor costs available in China and other Asian economies such as India, Bangladesh, Burma, etc. it might take a very large energy price differential to lead to repatriation of manufacturing jobs.
Finally, while their arguments sound kind of plausible if you say it all fast, the transition costs to a less globalized economy could be devastating - trillions of dollars have been spent over the past few decades in China alone to build up the manufacturing capability they currently enjoy. That would not be easily reversed.
So cycling back to Steubi's original question(s) about the effect of the BP Deepwater Horizon disaster on the petroleum industry, I would have to suggest that yes, the industry will undoubtedly be affected. I would expect to see significant changes in operating practices and in the risks drillers are willing and/or able to take on. However, in the face of reduced potential supply and higher costs, the real question should be whether our society, in which the petroleum industry exists, can change.
Will we be capable of developing the alternative energy infrastructure, be it efficiency, renewables, nuclear, etc. that would allow us to meet the challenge of significantly higher oil prices when they come. If we are unable to anticipate change, then I think we will pay a high price. Unprepared, we would enter a very painful transition period on the way to Rubin's sustainability nirvana.
I don't disagree that we could find nirvana - but I don't think we can sit back and wait for higher oil prices to take us there. As a result, I think I am a lot less sanguine about the current inability of Washington, Ottawa, etc. to lead the energy policy changes that will be required.