Moving beyond oil [TRANSCRIPT]
Hello and welcome to Grist Talks. I’m your host Mary Bruno, and I’m joined today by my guests:
Lisa Margonelli, author of the 2007 book Oil on the Brain and currently the director of Energy Policy Initiative at the New America Foundation where she explores the promise and possibility of a post-oil world.
Severin Bornstein, an economist and professor of Business Administration and Public Policy at the University of California, Berkeley, who studies renewable energy, economic policies around reducing greenhouse gases, and equity in the pricing of electricity.
And Geoffery Styles, a chemical engineer, MBA, and former longtime Texaco executive, who is now the Managing Director of his own consulting firm — GSW Strategy Group – which specializes in energy and environmental strategy.
Welcome to all of you and thank you for joining us.
We’re going to be talking today about — you guessed it — oil. Specifically, about the status of our transition away from this powerful, efficient, valuable and, let’s face it, addictive source of energy. The world has been running on oil for about 150 years now. It’s the source for nearly 40 percent of America’s power. But oil is also a finite resource and it comes with some pretty sobering downsides: environmentally devastating leaks in the Gulf of Mexico and in Michigan’s Kalamazoo River, greenhouse gas emissions that are altering the Earth’s climate and, now and again, wars fought to secure oil fields around the world. So, let’s start with Lisa Margonelli.
Mary Bruno: Lisa, fossil fuel critics talk about oil as a dwindling resource found only in ever harder to get at places, hence deepwater drilling rigs and tar sands. But where are we really in the lifespan, if you will, of oil? Is it a middle-aged resource, or a doddering senior resource?
Lisa Margonelli: We’re probably in the late middle age of oil, but that doesn’t mean that we don’t have a very extended senior moment coming. I’m just going to back up and say where I think we are.
For many years, the oil price was very predictable. Up through the early ’70s, gas prices were literally rusted to the signs at gas stations in the U.S. That’s how rarely the price changed.
Then we went through a period — during the 1980s, ’90s, and early 2000s — where the oil market basically fluctuated in long waves over a long period of time. In the early ’80s, we paid around $70 a barrel, in the equivalent of today’s dollars. By 1998-99, it went all the way down to $9 a barrel. Then it slowly crawled back up.
Now, prices are a lot more volatile. Price can go very high very quickly, because a Nigerian warlord made a phone call.
We’re also in a time of political volatility. Reserves in non-OPEC countries — countries that have not nationalized their oil resources — have peaked, which means the balance of power has shifted to countries that have oil resources which they control. You have more countries thinking in terms of maximizing revenue for themselves. And this behavior is not particularly predictable.
So we are in a time where oil is going to cost us more environmentally, politically, strategically and, of course, economically.
As the price gets higher, or fluctuates more frequently and wildly, we will start to feel that we are going through a transition to less predictable oil, regardless of how much actual oil there is on earth. And I think we are in the midst of that transition now.
MB: Severin, where are we in oil’s lifespan?
Severin Bornstein: I am an economist. I don’t do geology. I’m not a supporter or proponent of the peak oil folks. I do know history. There’s been lots of discussion over the years about running out of oil, and it hasn’t born out. Yes, we’re running out of conventional oil. But the technology is getting better at reaching oil. When people ask me [whether we’re running out of oil], I look at history and at the oil futures market, and they both say “no.”
MB: But we take more risks to get that oil, don’t we?
SB: We are tilting more and more towards the Middle East and towards unstable governments for oil supplies. That creates real geo-political and macro-economic problems for the United States, because we’re producing less and less of our own oil. Realistically, we’ll never be able to produce enough oil to come close to the level of demand we’re at right now.
As long as we’re using oil as a primary transportation resource, we’re going to have to rely on imports from economies that are quite separate from ours. So when the price of oil goes up, a lot of wealth flows out of our economy. And then of course, there is an environmental impact.
I don’t think finding oil is going to be the constraint that moves us away from oil; I think it’s going to be all of these other factors that are going to make us face up to the fact that we need to find a different resource to power our economy. That’s not going to happen overnight. It’s going to happen over many decades. We’re starting to move in that direction. But it’s going to be a very long change.