Our world is naturally one of considerable risk. We cannot avoid it; although we can try to minimize it as much as possible. Sadly, it appears that in a world where information is largely under the control of corporations and investors; and where short-termism appears to be the main driver of human affairs – we end up becoming exposed to huge mounting risks.
For the members of working individuals in the industrialised world who do have the privelege of access to the internet – there is the daunting problem of the sheer scale of information on offer via worldwide journalistic sources that can often conflict, obfuscate and spin. The daily flood of information and news really is quite intimidating; and would take dedicated individuals with considerable time-resources to piece-together cogent narratives. In the case of the 9/11 attacks on the United States – there was a detailed mainstream news timeline constructed by researcher Paul Thompson and his colleagues at the website historycommons.org. What they found was that the research conflicted the official narrative concerning the events surrounding 9/11; and many important unanswered questions remain. How many members of the public are aware of credible websites like these? And can we even begin to contemplate the implications of the sort of risks that industrial civilization imposes on the masses - when very important information is buried fast? It really is deeply frustrating. And, if you add in the tendency of ideological biases to become reinforced even in the face of conflicting facts - it makes you wonder if there is any hope for us at all.
I consider myself to be a blogger focussing primarily on macroeconomics and (more recently) the impact of Peak Oil. As a human being, and as someone with my own biases - I am well aware that my work is likely subject to the occasional error. Regardless, I do write opinion-pieces as an unpaid author - so the consequences of my mistakes are considerably less than that of a professional. I do endeavour, however, to be as intellectually honest and as accurate as possible. I'm sure all the other writers and contributors in the Peak Oil and sustainability community are dedicated and careful with their work - although I do feel that the more well-known contributors are also prone to making mistakes. Recognising the implications of potentially inaccurate predictions is something that Peak Oil people and economists need to consider; when trying to spread their main message. We all know how notorious the media can be in terms of obfuscating, attacking or burying the truth about Peak Oil (and a host of other crucial topics).
In terms of media attacks - it has lately come to my attention that peak oil economist Jeff Rubin has received some strong criticism from a journalist at the Canadian National Post. The article describes Rubin's oil price forecast in April 2008 - which predicted crude oil priced as "$130 a barrel in 2009, $150 in 2010, $190 in 2011 and a terrifying $225 in 2012". Of course, these forecasts turned out to be wrong, and the author of the piece points out that Rubin failed to predict that those sorts of prices would be totally unsustainable in a highly globalised economy. This sort of failure suggests that Jeff Rubin was either not aware of the concept of the "bumpy plateau"; or that he just failed to predict a price-collapse even as prices exceeded $140 a barrel. Despite this, Jeff Rubin has regularly produced articles and conference speeches concerning the unfeasibility of triple-digit oil prices being sustained in a global economy. His visions of de-centralisation and local food-growing - are positive and welcoming; although they may ultimately turn out to be naive in a world of increasing political risk.
Nicole M. Foss is a former editor of The Oil Drum in Canada, who now co-edits a blog titled "The Automatic Earth" - which focusses primarily on the global financial crisis as well as connections to energy and a variety of socio-economic variables. She also has some notable disagreements with Jeff Rubin concerning his predictions of triple-digit prices, as well as disagreements with Peak Oil analysts regarding the reasons for the 2008 oil price spike. She discussed her views on the Financial Sense NewsHour - stating that the 2008 price-spike was essentially a speculative bubble created from speculators flooding hot money into the commodities-sector and hence prices had got “ahead of themselves” and the “next move was going to be very sharply down”. Unlike Jeff Rubin, she correctly forecast a price-collapse after the $140 price-spike. However, she went on to state (regarding the price-increase heading into October 2010) that the next move on oil prices would be “down” - and sadly, she has turned out to be incorrect in this regard. Her insights on financial deflation, however; suggest that absolute crude oil prices may well become damaging for the global economy at lower prices than those seen in 2008. She also stated that credit-expansion (via speculation) "brings demand forward" and is followed by a "demand crater" and hence she criticised Jeff Rubin for not realising this back in early 2008. Nicole's view (in that October 2010 interview) was that we will NOT see triple-digit oil prices in the next few months. However, since then - oil prices have risen to $91 a barrel (at the time of writing), and various predictions of triple-digit oil prices have been made by Goldmann Sachs, Morgan Stanley, JP Morgan, as well as some OPEC members. Should we trust these banks? No, we should be cautious of anything they say given their connections to leverage-fraud. Regardless, this sort of agreement from these American banks with OPEC members (as well as with independent traders in Asia and the Gulf countries) is rather interesting to say the least. Are they conspiring? Maybe, maybe not.
One could argue that the issue of price predictions in a post-peak world are all rather petty. After all, we have an admission by the International Energy Agency (via their 2010 report) that conventional oil reached its all-time peak in 2006. The IEA has also stated that the "age of cheap oil is over". It will be hard to predict the specific landscape of volatility in the post-peak world; although I do want to point out that communicating the issue to the general public will require great care. The Canadian National Post article that attacks Jeff Rubin's credibility (concerning his price predictions) does have implications for those in the Peak Oil awareness movement. While Jeff had repeatedly made calls for oil prices to continue rising; there is a credible possibility that his triple-digit call for 2011 may come true. But does that also mean that Peak Oil economists become dismissed by many for crying wolf? After all, there are other arguments out there that muddy the waters by pointing to speculation (rather than demand) causing the price-spike in oil into 2008. This conflicts with a 2008 report by the futures market regulator in the US (i.e. the US Commodity Futures Trading Commission) which stated that there was no evidence that speculative activity had "systematically driven" oil price hikes. Such conflicting information only serves to confuse the public; and confusion is certainly not good for alleviating the great risks of political, financial and social instability (and possible nuclear warfare) that the post-peak world entails. Importantly, predictions concerning price rises need to be done via peer-review amongst energy experts and financial analysts alike (economists and energy experts don't communicate enough); and Nicole M. Foss rightly pointed this out in her October 2010 interview on the Financial Sense Newshour. Unfortunately, however, she did make a prediction concerning a downward movement on oil - and that may have undermined public perception of her credibility. That would be unfortunate, because she is a highly credible and knowledgable analyst in the area of energy and finance and her perspective remains very valid.
The mainstream media continues to muddy the waters surrounding the issue of rising oil prices. Interestingly, we have a piece on the website oilprice.net that acknowledges an impending world oil crisis as well as potentially dire geopolitical implications. Sadly, the article culminates with a dangerous conclusion that invests hope in hydrogen and nuclear as an energy that can somehow replace oil in an industrial society. It is dangerous because the transition to hydrogen could take "several decades to achieve" according to the US government. And what does the world do in the meantime? Also (and most importantly of all) hydrogen is not an energy-source, and has a negative Energy Return On Energy Invested. As for other "solutions" to fuelling our current global industrial society - I have critiqued this at considerable length in the context of the UK government energy policy paper (that was issued before they came to power as a coalition).
The oilprice.net website did subsequently publish a piece titled "Do Rising Oil Prices Predict Another Economic Recession?". The article starts off by saying that economists initially claimed that the 2008 economic crash was caused by the collapse of the subprime and real-estate market. The article specifically states "more and more financial experts came forward with another, more accurate reason for the financial crash. The reason put forward and accepted widely was that the market financial crash was caused by the high oil price rise which shot to an all time high of $147 per barrel in the year 2008". The article sources a study by Professor James Hamilton of the University of California which linked high oil prices (caused by rising demand) to the collapse of the US housing sector, and subsequently - the financial markets. The article also references economist Nouriel Roubini, who went on to state in 2009 that "oil at $100 would have the same negative effects on the global economy as oil did at $145 (in 2008)".
If oil peaked in 2006 (as the IEA now claims and as a German energy-group claimed in 2007) - perhaps this impacted the US real-estate financial markets in 2006 too? Indeed, we had the chief economist and co-founder of Moody's (a credit rating agency) testifying before the US government that "Private bond issuance of residential and commercial mortgage-backed securities, asset-backed securities, and CDOs peaked in 2006 at close to $2 trillion". A 2007 Wall-Street Journal article stated that "By early 2006 it was widely recognized the boom was likely over, and by mid-2006 it was beyond question. In June 2006, sales of existing single-family homes were 9% below their year-earlier level, sales of new homes were down 15% and framing lumber prices were down 19%". In 2006, Nouriel Roubini warned of the impending crisis as well as an oil shock. He was laughed at. However, he has been vindicated. The title of "Dr.Doom" certainly doesn't help the perceived public image of economists - but one could argue that is beyond his control thanks to the media. Additionally, the people in the media who argue about "speculators" being purely behind the oil price-rise need to explain why there wasn't any significant hoarding going on at the time. An article in The Economist at the time stated "inventories are not especially full just now and there are few signs of hoarding". Or, how about the former senior British army official in Iraq claiming in April 2008 that “The reason that oil reached $117 a barrel last week was less to do with security of supply… than World shortage"?
A mere google search using the words "oil price" produces oilprice.net as the first search result; and the articles mentioned are on the frontpage of the site. The general public could well read this and realise that the implications for economic growth are really bad and an oil-supply crisis is coming; however - they may also erroneously invest hope in unlikely solutions (such as nuclear and hydrogen). They may be convinced by claims that unconventional oil can address the peak of conventionals. However, is there enough economically-recoverable deep-ocean, tar-sands or oil-shale out there to meet the shortfall? Indeed, when it comes to economic-recoverability - bitumen or tar-sands oil (such as that in the Venezeulan Orinoco and Alberta region of Canada) are highly dependent on natural-gas supplies and the price of conventional oil. The IEA World Energy Outlook of 2010 seemed to have an overly rosy view of unconventional energy sources to somehow step up and address the peak of conventional oil. However, we have petroleum experts at sites like The Oil Drum telling us that things such as shale gas have "limited commercial value". The same views concerning the cost and net-energy limitations of unconventionals are echoed by both Jeff Rubin and Nicole Foss (despite their other disagreements). The issue concerning deep-ocean oil also has serious cost-issues (with respect to energy return on energy invested). Tom Whipple, a retired 30-year CIA analyst and member of the Post Carbon Institute has written (concerning deepwater oil) that "The industry hype says there is at least 100 billion barrels or even more. Keep in mind that this is only three years of global oil consumption and even in the best of circumstances; it would take decades to extract". Are there any peer-reviewed studies from independent energy experts refuting what the likes of Whipple et al have found about the economic recoverability and net energy issues surrounding unconventionals? I am yet to find any.
Can we trust institutions such as the IEA when whistleblowers have seemingly come forward and claimed that oil reserves were "inflated" as a result of US pressure? If oil reserves are highly politicized; then what sort of implications does this have for global security? And if the former UK Environment Minister linked the post-9/11 "war on terror" as an excuse to fight for the "remaining" hydrocarbon energy reserves on the planet - what does that suggest about our future? An escalation of oil and gas wars? Even senior members of the US Joint Forces Command seem to think so; as they mentioned the potentially dire consequences of energy shortages in their 2010 report. Is most of this information being pieced together and disseminated to the general public? Certainly not. It appears to have been buried under a lot of distractions and misleading statements.
An example of a misleading article lies in a piece published by Reuters on the 23rd December 2010, titled "Oil price rise unlikely to slow developing growth". A paragraph reads "But economists don't expect the rise in oil prices to hit growth in emerging economies, where in the past it sparked inflation spikes and slowed developing economies in oil-importing nations as costs rose". The article does not give any credible reason as to why another triple-digit oil price spike would cause different effects this time round. The article cites an analyst that states that current prices are not restraining "emerging economies in any way". Yet, specific countries are not specified. It can be argued that OPEC countries may well benefit from higher-prices; but non-OPEC countries will likely suffer. The analyst (from IHS Global Insights) claims that emerging economies (presumably including China and India) have fuel subsidies which will ease manufacturing, transportation and consumer costs. Yet, another analyst quoted in this article states that "High oil prices will likely reduce subsidies as governments cannot afford to cover the costs". Yet, that analyst claims that a price exceeding $100 will not be enough to offset internal growth. No reasoning is given to support this assertion. Indeed, there is nothing in the article that talks about the dangers of surplus oil capacity dissapearing entirely by 2012 (as the US Joint Forces Command 2010 report warns).
In terms of the current oil price (at the time of writing on the 27th December 2010); we have reports that market sentiment has driven prices up based on optimistic 2011 growth forecasts (but also down to factors such as cold-weather heating-oil demand and expectation for millions to travel on holiday). The article from "The Star" states that "analysts pointed out that prices could stabilise should Opec members decide to increase production in order to support the still weak global economic growth". Yet, no mention of the supply-constraints affecting production increases as a result of Peak Oil. Also no mention of the fact that unconventionals have failed to step up at affordable levels to meet rising demand.
There was an article (from an Arab newspaper) that came out on Christmas day 2010 with the title "World economies can handle $100 a barrel for oil". Yet, in a post-peak world and with compelling evidence of oil-price demand causing the global economic crisis - why should the public trust the words of these political officials? After all, some analysts state that the OPEC nations are likely to benefit from higher prices at the expense of other nations.
Interestingly, there was an article by The Sun newspaper (in Malaysia) that stated that rising oil prices were fuelling inflation worries in Asian economies. This conflicts with the Reuters article quoted above. The lack of credible evidence of capacity-increases (to cushion demand-based price pressure) in the oil market may also add to the very real danger of another triple-digit price-shock, and subsequent price collapse.
In the face of all of this.....what can we expect the general public to do?
Do we expect them to join Transition Towns groups and initiatives and actively take part in securing their economic security? Certainly not. The media has proven that it is incapable of doing its job to present the most credible and consistent narrative concerning the post-peak world and its dangers.
As Peak Oil and sustainability activists; we should try and do our best to reach as many people as possible and to always endeavour to be intellectually honest with our information. We need to sound credible and avoid making specific predictions at the risk of being discredited. Being honest with ourselves also includes a willingness to admit mistakes. The dangers of confirmation bias are always there when it comes to reading behind the news headlines - and so are exaggerations and egoistic claims concerning how "right" we perceive ourselves to be. We also need to try and approach the issues that we care about in a way that sidesteps the traps of "liberal" or "conservative" political ideologies. If people perceive our position as being influenced by any political ideology - they will likely increase their resistance to even the most technically solid and cogent arguments. Hopefully, movements such as Transition Towns and CollapseNet can gain more adoption amongst the general public as people become increasingly angry and disillusioned with governments, economists, bankers and corporate media spin-doctors. Even if some of us have character flaws, egos and moments of blatant inaccuracy - I think there is a compelling case that actions and precautions need to be taken to deal with a world which is addicted to economic growth, debt-based money and insecure fossil-fuel supplies.