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Many comments on energy futures (ranging from catastrophic predictions of an imminent oil drought to unrealistic forecasts of future biomass energy uses) betray the fundamental lack of understanding of the nature and dynamics of the global energy system. The three key facts for this understanding are these: We are an overwhelmingly fossil-fueled civilization; given the slow pace of major resource substitutions, there are no practical ways to change this reality for decades to come; high prices have concentrated worldwide attention on the availability and security of the oil supply, but coal and natural gas combined provide more energy than do liquid fuels.

As coal's relative importance declined, its absolute production grew roughly sevenfold between 1900 and 2005, to more than 4 billion t of bituminous coal and nearly 900 million t of lignites. Yet this prodigious production was only about 0.6% of that year's fuel reserves, the share of mineral resources in the Earth's crust that can be recovered profitably with existing extraction techniques. This means that coal's global reserves/production (R/P) ratio is nearly 160 years, and new extraction techniques could expand the reserves. Coal production is thus constrained not by resources but by demand, and by old (particulate matter and sulfur and nitrogen oxides) and new (emissions of CO2, the leading anthropogenic greenhouse gas) environmental considerations.

Natural gas produces the least amount of CO2 per unit of energy (less than 14 kg C/GJ, compared to about 25 kg C/GJ for bituminous coal and 19 kg C/GJ of refined fuels); hence it is the most desirable fossil fuel in a world concerned about global warming. But until recently long-distance pipeline exports were limited to North America; Russian supplies of Siberian gas to Europe; and pipelines from Algeria and Libya to Spain and Italy. Rising prices have led to new plans for longdistance pipelines and to renewed interest in liquefied natural gas shipments. As with coal, the fuel's resources are abundant, and in 2005 the reserves (at 180 Tm3) were twice as large as in 1985.

A small army of experts has disseminated an alarmist notion of imminent global oil exhaustion followed by economic implosion, massive unemployment, breadlines, homelessness, and the catastrophic end of industrial civilization (Ivanhoe 1995; Campbell 1997; Laherrere 1997; Deffeyes 2001). Their alarmist arguments mix incontestable facts with caricatures of complex realities, and they exclude anything that does not fit preconceived conclusions in order to issue obituaries of modern civilization.

Their conclusions are based on a lack of nuanced understanding of the human quest for energy. They disregard the role of prices, historical perspectives, and human inventiveness and adaptability. Their interpretations are anathema to any critical, balanced scientific evaluation, but, precisely for that reason, they attract mass media attention. These predictions are just the latest installments in a long history of failed forecasts but their advocates argue that this time the circumstances are really different and the forecasts will not fail. In order to believe that, one has to ignore a multitude of facts and possibilities that readily counteract their claims. And, most important, there is no reason that even an early peak to global oil production should trigger any catastrophic events.

The modern tradition of concerns about an impending decline in resource extraction began in 1865 with William Stanley Jevons, a leading economist of the Victorian era, who concluded that falling coal output must spell the end of Britain's national greatness because it is "of course . . . useless to think of substituting any other kind of fuel for coal" (Jevons 1865, 183). Substitute oil for coal in that sentence, and you have the erroneous foundations of the present doomsday sentiments about oil. There is no need to elaborate on how wrong Jevons was. The Jevonsian view was reintroduced by Hubbert (1969) with his "correct timing" of U.S. oil production, leading those who foresaw an early end to oil reserves to consider Hubbert's Gaussian exhaustion curve with the reverence reserved by Biblical fundamentalists for Genesis.

In reality, the Hubbert model is simplistic, based on rigidly predetermined reserves, and ignoring any innovative advances or price shifts. Not surprisingly, it has repeatedly failed (fig. 3.3). Hubbert himself put the peak of global oil extraction between 1993 and 2000. The Workshop on Alternative Energy Strategies (WAES 1977) forecast the peak as early as 1990 and most likely between 1994 and 1997; the CIA (1979) believed that global output must fall within a decade; BP (1979) predicted world production would peak in 1985 and total output in the year 2000 would be

Failed forecasts of global peak oil production: Hubbert (1969), WAES (1977), and Campbell and Laherrère (1998). From Smil (2003).

nearly 25% below that maximum (global oil output in 2000 was actually nearly 25% above the 1985 level).

Some peak-of-oil proponents have already seen their forecasts fail. Campbell's first peak was to be in 1989, Ivanhoe's in 2000, Deffeyes's in 2003 and then, with ridiculous specificity, on Thanskgiving Day 2005. But the authors of these failed predictions would argue that this makes no difference because oil reserves will inevitably be exhausted in a matter of years. They are convinced that exploratory drilling has already discovered some 95% of oil that was originally present in the Earth's crust and that nothing can be done to avoid a bidding war for the remaining oil.

True, there is an unfortunate absence of rigorous international standards in reporting oil reserves, and many official totals have been politically motivated, with national figures that either do not change at all from year to year or take sudden suspicious jumps. But this uncertainty leaves room for both under- and overestimates, and until the sedimentary basins of the entire world (including deep offshore regions) are explored with an intensity matching that of North America and the U.S. sector of the Gulf Mexico, I see no reason to prefer the most conservative estimate of ultimately recoverable conventional oil (no more than 1.8 trillion barrels) rather than the substantially higher totals favored by other geologists, although not necessarily the highest values estimated by the U.S. Geological Survey, whose latest maximum is in excess of 4 trillion barrels.

Even if the amount of the world's ultimately recoverable oil resources were perfectly known, the global oil production curve could not be determined without knowing future oil demand. We have no such understanding because that demand will be shaped, as in the past, by shifting prices and unpredictable technical advances. Who would have predicted in 1930 a new huge market for kerosene, created by commercial jets by 1960, or in 1970 that the performance of an average U.S. car would double by 1985? As Adelman (1992, 7-8), who spent most of his career as a mineral economist at MIT, put it, "Finite resources is an empty slogan; only marginal cost matters."

Steeply rising oil prices would not lead to unchecked bidding for the remaining oil but would accelerate a shift to other energy sources. This lesson was learned painfully by OPEC after oil prices rose to nearly $40/bbl in 1981, and it led Sheikh Ahmed Zaki Yamani (2000), the Saudi oil minister from 1962 to 1986, to conclude that high prices would only hasten the day when the organization would be left with untouched fuel reserves because new efficient techniques would reduce the demand for transport fuels and leave much of the Middle East's oil in the ground forever.

And yet, as noted, price feedbacks are inexplicably missing from all accounts of coming oil depletion and its supposedly catastrophic consequences. Instead, there is an assumption of demand immune to any external factors. In reality, rising prices do trigger powerful adjustments. Between 1973 and 1985 the U.S. CAFE (corporate automobile fuel efficiency) was doubled to 27.5 mpg, but further improvements were not pursued largely because of falling oil prices. A mere resumption of that rate of improvement (technically easy to do) would have automobiles averaging 40 mpg by 2015, and a more aggressive adoption of hybrids could bring the rate to 50 mpg, more than halving the current U.S. need for automotive fuel and sending oil prices into a tailspin.

And although oil prices are still relatively low (adjusted for inflation and lower oil intensity of modern economies, even $100/bbl is at least 25% below the 1981 peak), they have already reinvigorated the quest for tapping massive deposits of nonconventional oil as well as the development of new gas fields aimed at converting the previously "stranded" reserves into a massively traded global commodity (liquefied natural gas). Technical advances will also make possible the conversion of that gas (and coal) into liquids, and increasing recoveries of coalbed methane and extraction of methane from hydrates will supply more hydrocarbons. But even if the global extraction of conventional crude oil were to peak within the next two decades, this would not mean any inevitable peak of overall global oil production, and even less so the end of the oil era, because very large volumes of the fuel from traditional and nonconventional sources would remain on the world market during the first half of the twenty-first century.

As oil becomes dearer, we will use it more selectively and efficiently and intensify the shift from oil to natural gas and to renewable and nuclear alternatives. Finally, it must be stressed that fossil fuels will retreat only slowly because the dominant energy converters depend on their supply. The evolution of modern energy systems has shown a great deal of inertia following the epochal commercial introduction of new prime movers. All those overenthusiastic, uncritical promoters of new energy techniques would do well to consider five fundamental realities.

First, the steam turbine, the most important continuously working high-load prime mover of the modern world, was invented by Charles Parsons 120 years ago, and it remains fundamentally unchanged; gradual advances in metallurgy simply made it larger and more efficient. These large (up to 1.5 GW) machines now generate more than 70% of our electricity in fossil fueled and nuclear stations; the rest comes from gas and water turbines and from diesels.

Second, the gasoline-fueled internal combustion engine, the most important transportation prime mover of the modern world, was first deployed (based on older stationary models) during the same decade as the Parsons machine, and it reached a remarkable maturity in a single generation after its introduction.

Third, Diesel's inherently more efficient machine followed shortly after the BenzDaimler-Maybach design, and it matured almost as rapidly. As I explain later, it is entirely unrealistic to expect that we could substitute most of the gasoline or diesel fuel by fuels derived from biomass within a few decades.

Fourth, the gas turbine, the most important prime mover of modern flight, is now entering the fourth generation of service after a remarkably fast progression from Frank Whittle's and Pabst von Ohain's conceptual designs to high-bypass turbofans (Smil 2006). Again, conversion of biomass could not supply an alternative aircraft fuel at the requisite scale for decades (even if that conversion were profitable).

Fifth, Nikola Tesla's induction electric motor, commercialized during the late 1880s, diffused rapidly to become the dominant prime mover of industrial production as well as of domestic comfort and entertainment. Renewable conversions should eventually be capable of supplying the needed electricity for these motors by distributed generation.

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