Our addiction to oil is draining every last drop

Having taken oil for granted for decades, the global economy has failed to prepare for its absence. A bleak future awaits
Andrew Simms guardian.co.uk 1 Mar 11;

"Oil is the trouble, of course," wrote Gertrude Bell in Baghdad in 1921, "Detestable stuff!" It had fuelled a world war and already was causing upheaval in the politics of the Middle East. For all the conflict caused by securing supplies of oil, and the environmental damage that goes hand in hand with its use, the problem for Bell, and now the rest of us, is that oil was just too useful. Concentrated energy, easily transported and hugely versatile. In Lord Curzon's famous phrase, Britain "floated to victory on a wave of oil", which then carried before it the modern age and the whole of consumer society.

We all became, and remain, hooked on its convenience. Today's energy supplies provide the equivalent of the work of 22 billion slaves, according to former oil industry man Colin Campbell. But now the wave of oil looks set to leave us high and dry. At well over $100 per barrel, prices are climbing again to the level last reached in 2008. Since then, however, the tone of commentary has changed.

Awareness is increasing of a fundamental problem looming, in which rising demand departs from flattening supply, leading to a shortage in the supply of the global economy's life blood. Until now, false reassurance that we can carry on as we are has come from two factors. First, that there is still oil and second, that new oil fields are still being discovered.

And, of course, there is still oil and small, new amounts are being found. But the situation is like knowing there are 10 mouths to feed tomorrow, yet only food stores enough for eight. Worse, each day, less food is replaced than the amount eaten, while the number of mouths to feed increases.

New discoveries of oil peaked in the mid-1960s, and based on a range of estimates we are either very near to, or possibly living through the peak of global oil production. After that, the gap between demand and supply inexorably widens. The difficulty of knowing exactly when is heightened by the political and economic sensitivity of the size of a nation's oil reserves. Publicly available figures are open to question. WikiLeaks revealed official scorn being poured, behind the scenes, on the size of Saudi Arabia's reserves, a key producer for the west.

Understandably, some people might think this is a good thing from an environmental perspective. After all, if the oil is running out, doesn't that help solve climate change? Unfortunately it doesn't. As the price of oil goes up it makes other, dirtier fossil fuels like brown coal and tar sands more attractive. And here is a problem even for people who discount the threat of global warming. In key areas of the economy like transport, especially aviation, and agriculture, oil is hard to replace.

During the 1970s Opec crises, the worst effects were moderated by so-called "swing producers", oil exporters who replaced access lost by the west to key suppliers. Those options are no longer available. Back then, Britain turned to its own resources, which are now in dramatic decline.

Today's reality is that if you rip the oil drip from the economy's arm, the choice is economic seizure or transition. Short-term concerns are that a high oil price, pushed by upheaval in the Middle East, endangers economic "recovery". But there is a greater, systemic threat from the peak and decline of global oil production. Driving to the supermarket, the range of food on the shelves, the family holiday in the sun, even how we brush our teeth in the morning – the whole character of modern living in rich countries relies on the assumption of cheap, abundant oil. Yet that can change as fast as the price of a commodity on the stock exchange.

Both the left and the right are firmly unprepared for the disappearance of cheap oil. We have all grown accustomed to the benefits of oil. Our plans to adapt to its absence are seriously wanting.

To some degree the age of plastic, disposability and consumerism was an artefact of overproduction in the oil industry. Higher prices and harder access will usher in a different age. Oil is still the trouble, 90 years on from Gertrude Bell's words. The coalition has shown itself capable of a truly radical programme of government, but unfortunately it chose a regressive, ideological one instead of an urgent, practical one.

Whether we take the opportunity of the passing of cheap oil to make a better age, or remain spellbound by its vanishing mirage, is down to us.