Legislators hear from peak-oil expert

One of the world’s leading peak-oil experts testified Monday before a Minnesota legislative energy committee.

Matthew Simmons, a Houston oil investment banker and former energy adviser to President Bush, is author of “Twilight in the Desert,” a book that warns that global oil production is leveling off and that it might soon be unable to keep up with rising demand.

That’s the premise behind peak oil. It’s not about running out of oil. It’s about running out of cheap oil. And proponents argue that we need to start planning for an oil-scarce society today if we want to avoid the chaos that could follow a dramatic, permanent spike in oil prices.

“I believe … this will be the defining challenge of the 21st century,” Simmons said.

Peak oil is more pressing than even global warming, Simmons said, and to make his case he’s got his own set of PowerPoint slides, which he shared Monday with a joint meeting of the the House Energy Finance and Policy Division Committee and the Senate Energy, Utilities, Technology and Communications Committee. .Any oil field or oil-producing country inevitably hits what’s called a peak. It’s the point where the faucet is essentially cranked to full blast and the barrels per day pumped out of the ground stops increasing. Most countries outside the Middle East, including the United States, already reached this point and now produce less oil than they did in the past.

Meanwhile, our thirst for liquid fossil fuels continues to escalate. Even $3 a gallon gasoline has hardly fazed American drivers to change their habits, and an emerging middle class in China and India is starting to buy the type of lifestyles we’ve enjoyed here for decades.

During the period when the United States added garage stalls and freeway lanes, the oil companies could simply increase production to keep up with demand. But the question concerning the peak-oil movement is how long will they be able to continue? How close are we to a global peak-oil point? Simmons and others believe we may be dangerously close.

Most energy pundits and industry insiders dismiss their concerns as fringe and alarmist. Their ideas haven’t entered the mainstream yet, but they appear to be gaining credibility. Last week, Shell Oil CEO Jeroen van der Veer told employees in an e-mail that after 2015, supplies of easy-to-access oil and gas will no longer keep up with demand and that the world has two alternatives: scramble for remaining sources or start drafting a blueprint. Regardless of the route, we have limited room to maneuver, van der Veer said.

Just how long we have to enjoy cheap oil is difficult to say, Simmons said. If an international agency had access to field-by-field oil production data, it could figure out how long we have to find alternatives. But so much of that data is closely guarded as either company or state secrets. That’s why he’s proposing global transparency agreements, where oil companies that don’t share their data would be charged a $20 per barrel transparency fee.

State Rep. Bill Hilty, DFL-Finlayson, the energy committee chairman, has introduced a resolution for Minnesota to support greater transparency in oil markets. The bill also calls for a statewide assessment to determine how Minnesota would be affected by oil shortages and higher prices. It also recommends developing a state plan of action and response to peak oil as soon as possible.

What happens if governments and societies aren’t prepared? “Social chaos,” Simmons said. “Without oil, our society shuts down.”

Ninety-five percent of our transportation relies on oil, so the ability to move ourselves, not to mention food and products, would be crippled. As people learned of shortages, hoarding would set in. Gas stations would run empty within hours and grocery stores would be hit next. Dwindling food supplies are the greatest risk, Simmons said. Travelers would be stranded, and most employees wouldn’t be able to get to their workplaces, leaving hospitals and other important institutions with only skeleton crews.

Solar, wind and nuclear power won’t solve the problem, Simmons said, because electric cars make up only a sliver of our transportation fleet. The only viable solution we have now to reduce our oil dependency is to travel less. We need to grow more food and make more products locally. We need to discourage long-distance commuting and “liberate” the workforce by promoting telecommuting. And it needs to involve international cooperation on the scale of the Marshall Plan, Simmons said.

That doesn’t mean Minnesota’s action alone on the issue wouldn’t be valuable, Simmons said.

“By addressing the issue on a state by state basis, it gets people to understand the issue,” Simmons said. “And also, you become a role model for the other 49 states.”