Crude
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Had, say, biologists been the scientific experts at oil companies, at least some sectors of the industry might have been more easily convinced of the potential dangers of climate change. Ecologists study the fragile balance eked out in niche ecosystems and how seemingly tiny variations can have broad devastating effects. In the language of ecology, extinction is real, final, and heartbreaking. Under geology’s macroscope, extinctions happen all the time.
While Baliunas and other industry-sponsored experts made their rounds on the lecture circuit, evidence of irreversible climate change mounted. Warm winters and retreating sea ice had stalled the pumping of heavy cold waters into the deep seas off Greenland.
This was disquieting news. Ocean circulation is one of the key regulators of the planet’s climate, as the seas absorb more than half of the heat the sun provides to the planet, distributing it around the globe.
Many factors drive ocean circulation, but one of the most important ones is the “thermohaline circulation.” In just a handful of patches of ocean, cold seas freeze into ice, leaving behind masses of dense salty water. Being salt-laden and thus heavier, these waters drop down to the depths, as far as four kilometers down. Warm surface waters rush in to replace the cold, salty sinking waters. In this way, the cold saline waters of the north slip southward, while above, the warm waters of the tropics rush northward. It is a thousand-year-old circulation that regulates weather on land, and originates in just four regions of the planet, including the waters around an alternatively freezing and melting tongue of ice off the east coast of Greenland.45 The news came out in 1995 that this vital pump had been stilled.46 The dense salty water mass has thinned to the point that it only drives surface water down a single kilometer.
Late that year the IPCC announced that “the balance of evidence” indicated a “discernable human influence on the global climate system.” International pressure for a treaty requiring legally binding cuts in greenhouse gas emissions intensified. The showdown would come at the third annual review of the UNFCC in Kyoto, Japan, scheduled for 1997.
This time, indusstry execs focused on a principle that had been long agreed upon: that Western countries, not developing ones, would pay for any new low-carbon economic infrastructure. “This is a wealth-transfer scheme between developed and developing nations,” railed ExxonMobil’s Bob B. Peterson. “And it’s been couched and clothed in some kind of environmental movement. That’s the dumbest-assed thing I’ve heard in a long time.”47
Robert Priddle, as the former executive director of the International Energy Agency, advised government leaders from twenty-six oil-consuming nations around the world on how to control oil markets. He delivered his clipped assertions with all the smooth certainty of the British elites who steered the empire decades before him. For him, unrestrained consumption of finite stores of petroleum make eminent sense; the real problem for the climate is that poor Third World people keep burning carbon-sucking trees down.
After delivering a twenty-minute soliloquy on the inevitability and necessity of the world’s continuing consumption of oil and gas for a gathering of oil executives, Priddle projected an image upon the screen behind him, showing a wrinkled brown woman, hunched under her basket of twigs, presumably gathered for the small fire that would cook her meager meal. He frowned. “This,” he admonished, pointing his finger at the woman, “is unsustainable!” Environmentalists who pointed their fingers at the oil industry often misrepresented the facts, he sniffed, describing himself as “appalled.”
Priddle and other oil-industry insiders often deflected blame for climate change by painting overpopulation and deforestation in developing countries as the real sources of the problem. Every year, nearly sixty thousand square miles of tropical forest disappear from Latin America, Africa, and Asia. According to the IPCC, the destruction of the world’s forests, among other land use changes, accounts for between 10 and 30 percent of global carbon dioxide emissions, as decomposing and burning trees bequeathed their carbon back to the air and disappeared, never to absorb carbon again.48
Yet, the equation between population growth and deforestation wasn’t so simple. India’s rate of deforestation had declined since 1980, despite the relentless forward march of its population. The pressure to chop down the forests came from more than just hordes of locals.49
Logging companies, cattle ranchers, and other industries felled large chunks of the world’s rainforests to produce luxury items for consumers in the industrialized world. The paper industry boils and presses 40 percent of all the world’s harvested wood to turn it into paper, two-thirds of which is consumed by Europeans, Americans, and Japanese.50 Every year the United States imports about 300 million pounds of beef from cows raised in Central America, each quarter pound of that beef requiring the clearing of 55 square feet of rainforest, releasing 500 pounds of carbon into the air.51 The oil and gas industry itself posed grave threats to rainforests around the world. A single oil project in Ecuador, for instance, resulted in the loss of almost 8,000 square miles of rainforest.52
In fact, according to the IPCC, local people excessively harvested wood for fuel only in a few African countries. In other places, when local people chopped down trees to use as fuel or building materials, they often reduced overall carbon dioxide emissions. If they hadn’t used wood, the logic goes, they would have used energy-intensive cement, steel, oil, or coal instead, combusting a lot more carbon.
In July 1997, just months ahead of the climate talks in Kyoto, Congress passed a nonbinding resolution, by 95 to 0, urging then-President Clinton not to sign any international agreement that didn’t require developing countries to cut emissions as well.53 Meanwhile, oil execs bolstered the resolve of developing countries to disown the climate treaty. “It would be tragic indeed if the people of this region were deprived of the opportunity for continued prosperity by misguided restrictions and regulations,” Exxon’s Lee Raymond argued to the Asian government officials gathered at the World Petroleum Congress in Beijing in 1997. The science was “far from airtight” and any regulations to rein in the problem would be “administered by a vast international bureaucracy responsible to no one.”54
In the final hours of the Kyoto conference, the clause describing how developing countries would participate in Kyoto’s mandates was stricken from the protocol. President Clinton signed the doomed Kyoto Protocol, in full knowledge that without any mandates regarding developing countries’ emissions, the Senate would never ratify it.
“The alliance between oil and auto companies is one of the most powerful alliances in the world,” admitted the head of the UN environmental program. “It can paralyse governments.”55 It did. The treaty that finally emerged from Kyoto had been so watered down that it called for the year 2012 to see a cut in carbon emissions equal to just 5.2 percent less than 1990 levels; if loopholes were exploited, the 2012 carbon emissions could be as little as 3 percent lower.56
In the United States, carbon indulgence reigned. A week after Clinton signed the protocol, the EPA exempted suvs and pickup trucks from its new air-quality regulations. The biggest of the light trucks would be allowed to emit more than five times more smog-causing gases than cars; the smaller light trucks would be allowed over three times more emissions than cars. American drivers, frightened by the increasingly unsafe roads dominated by suvs and light trucks, and egged on by automakers’ advertising that subtly and not-so-subtly suggested that cars were less safe than suvs, stood in line to buy the giant gas-guzzlers.57
In Europe, where consumers were considerably more worried about the changing climate, oil companies assuaged fears with clever PR. British Petroleum, for instance, embarked on a $200 million rebranding effort, throwing out its old corporate logo, a green and yellow shield, for a “green, yellow, and white sunburst that seemed to suggest a warm and fuzzy feeling about the earth,” as the New York Times put it. They shortened the company name to simply “BP,” and the new slogan for the outfit that produced several billions of barrels of oil a
nd gas every year was, slyly, “Beyond Petroleum.”58 The gas stations that BP refitted with solar panels sold more gasoline, too.59
In 1998, the mysterious scourge of 1987 returned with a vengeance. This time, the corals didn’t survive. Warming seas killed 16 percent of the corals in the world’s tropical oceans. Almost half of the corals in the Indian Ocean died. Between 60 and 95 percent of the Great Barrier Reef’s corals bleached; 5 percent died.60
“Once the corals have died,” commented one distressed reef activist, “the combined effects of changes in ocean chemistry, increased cyclones from climate change, and more species that bore into corals predominating, means that eventually the reef will collapse.” The coral reefs of the world could wash ashore as rubble, a loss as devastating to life in the ocean as the loss of rainforests for terrestrial ecosystems. More fisheries would fold, as the open seas washed over broken reefs, disturbing once-calm nursery waters. Erosion would devastate coastlines.61
Some coral experts, like Ove Hoegh-Guldberg, a sunburned diver whose retreating hairline gave him the look of a creature more marine than terrestrial, watched these underwater genocides unfold in slow motion. He’d get the NOAA reports of approaching warm weather and know, with a sinking feeling, that about a month later he’d watch the reefs off the Australian beaches outside his offices start to pale.
The irony—that Guldberg’s cherished reefs could themselves turn to oil after sinking deep into the seabed—was something the loquacious scientist preferred to keep to himself. While the American public dithered about why the climate was changing, and U.S. leaders stood jowl to jowl with oilmen, Guldberg, with an arrogant certainty, knew who was responsible, openly deriding oil execs as “idiots” and their rationales as “crap.”62
By 2002, the industry coalition formed to disrupt the Kyoto talks disbanded. It had “served its purpose,” as its ghostly Web site put it. Within a year, more than 750 billion tons of carbon would infuse the air,63 compared to about 580 billion tons of carbon in the pre-industrial atmosphere. Some of Tuvalu’s islands shrank to just half their original size, the water-logged garbage in the pits dug by American soldiers decades ago overflowing practically into islanders’ homes.64 Planners at the Pentagon envisioned a world of “endemic warfare,” drowned cities, and a frozen Europe in a secret report on abrupt climate change.65
The crisis for the industry had effectively ended. BP retreated from its rebranded persona, by way of explanation noting to its investors that “the impact of the Kyoto agreements on global energy (and fossil fuel) demand is expected to be small.”66 In the new post-Kyoto environment, ExxonMobil along with a consortium of oil and other companies openly greenwashed their corporate grant to Stanford, dubbing the $20 million, ten-year program the “Global Climate and Energy Project,” despite the fact that it would be led by a petroleum engineer and revolve around technofixes to enable decades of continued oil drilling.67 Even Jeremy Leggett decided it was time to move on, starting up what would become the biggest solar power company in Britain.68
Former oilman President George W. Bush defended his retreat from Kyoto. He called it a “plan” that involved “cuts,” but this was essentially linguistic trickery. Instead of reducing greenhouse gas emissions, the Bush plan would reduce greenhouse gas intensity, that is, the amount of greenhouse gases emitted per dollar of GDP. Polluting industries would be free to keep expanding, but would be asked to aim to use a bit less carbon to do it.69 Bush advocated cuts in greenhouse gas intensity of a whopping 18 percent from present levels. In fact, according to the World Resources Institute, the U.S. greenhouse gas intensity had already fallen by almost 17 percent over the preceding decade. Bush’s plan was, therefore, essentially no different from business- as-usual.70 Environmentalists saw through the ruse but for those not following the arcane twists and turns of the climate change talks, it may have sounded soothingly bold.71
In fact, in some cases, Bush’s plan was even worse than the status quo.
Inspired by Bush’s challenge, the electric power companies, who together emitted 40 percent of the United States’ carbon dioxide, pledged to reduce their greenhouse gas intensity by up to 5 percent—2 percentage points less than what the Department of Energy had predicted even without the benefit of the Bush plan.72 While the signatories of the Kyoto Protocol would be cutting their emissions levels to 3 to 5 percent below 1990 levels by 2012, the Bush scheme would allow U.S. emissions to rise by up to 28 percent over the same period.73
In December 2005, U.S. negotiators stormed out of international climate talks once again. This time, they agreed to return to the table to discuss a post-Kyoto future only after winning a stipulation from the other delegates: not to discuss anything that might require the country to cut its emissions.74
CHAPTER NINE
Running on Empty
BY THE EARLY 2000s, it seemed clear that escalating oil consumption would surpass available oil supplies before long. The ever-growing American thirst for oil, the cars taking over Beijing’s bicycle paths and India’s decrepit, cow-clogged roads, the growing hordes of global elites eager to mimic the high style of the petrolife were projected to send oil and gas demand marching forward by around 2 percent every year, zooming to nearly 120 million barrels a day by 2025, over 50 percent more than the amount the world consumed in 2001 and nearly six times the amount the world consumed in 1960.1
Providing enough oil to meet growing world demand, the president of London’s Institute of Petroleum, Dr. Pierre Jungels, told industry officials in 2003, would require $1 trillion in capital investment, plus “the work of some 350,000 engineers and scientists and advances in technology at least as great as those of the last 30 years.” It seemed to Jungels practically insurmountable. “The industry faces huge challenges to find and produce the hydrocarbons required over a twenty-year horizon,” he said. “Even if technical, financial, human resource and political issues can be resolved, there is no escaping the fact that the industry needs to . . . manage the transition . . . when the hydrocarbon inventory is depleting fast whilst demand keeps on growing.”2
Faced with such doom-and-gloom scenarios, many looked to oil giant Saudi Arabia for relief, believing that Saudi’s mighty wells would easily pour forth extra crude from its bountiful reserves. All one had to do was to twist the taps. But signs appeared indicating that even Saudi Arabia’s much vaunted “surplus capacity” could be more mythical than real. Saudi Arabia’s Ghawar oilfield, providing 60 percent of the country’s total oil output had started to spurt increasing volumes of water. By 2003, Ghawar was producing 1 million barrels of water along with its nearly 4.5 million barrels of oil, analysts noted.3 According to Department of Energy insiders, all of Saudi Arabia’s oilfields were pumping large amounts of water.4 Small amounts of water generally infuse the oil that wells unearth, but the wells are dug so that they can siphon the oil beneath the buoyant water floating on top. When large amounts of water come flowing out of an oil well, it generally means that the oil is nearly gone.
The modest discoveries of new oil would be of little help. The top five oil companies, ExxonMobil, BP, Shell, TotalFinaElf and ChevronTexaco, had spent $110 billion looking for new oil between 1999 and 2001, but for all that money only pumped out 500,000 more barrels of oil or oil equivalent every day. “These are extraordinary sums merely to keep production flat,” energy investment banker Matt Simmons wrote.5 New oil finds in places like Angola and Gabon added just under 4 billion barrels to the planet’s known reserves of oil. Although gargantuan for the lucky oil companies that happened upon them, the world’s oil-hungry machines could burn through that much in less than three months. Industry analysts estimated that production from oil and gas fields would continue to decline at an average rate of 3 to 5 percent every year.6
The dreaded peak in the world’s production of oil, that point when about half of the reserves are gone, approaches.
Former Shell geologist Kenneth Deffeyes retired from teaching at Princeton in 1998 with plans to buy a
small oil well. He figured that world oil production would be peaking in a few years, so the investment would be well worthwhile. “But nobody believed it! People who were well informed, had money to invest, they were spectacularly uninterested,” he recalls. Shocked at their complacency, Deffeyes spent six months applying Hubbert’s calculations to world oil production. When he reached his result, he knew better than to confine the news to industry insiders. In 2001, he released Hubbert’s Peak: The Impending World Oil Shortage, defiantly stating that the world’s oil production would peak within a few years. “An unprecedented crisis is just over the horizon,” he warned. “There will be chaos in the oil industry, in governments, and in national economies. Even if governments and industries were to recognize the problem, it is too late to reverse the trend. Oil production is going to shrink.”7
Never mind the oil spills, the various asthma epidemics, the perils of blasting carbon into the air—here was a threat that could actually arrest the march of Big Oil.
As demand starts to outstrip declining supplies, the oil market has entered a period of volatile oil prices. Cautious consumers, especially in industries, will reasonably be expected to start shopping around for energy sources with prices around which they can shape their budgets. Prudent ones have already started to shun oil-burning machines, opting instead for more expensive electric ones, so as to avoid enslavement to the unpredictable costs of oil. Oil companies themselves have become less willing to invest in expensive projects, lacking any ability to predict what their future, oil-price-dependent income might be. By 2003, energy consultants had noticed some of the biggest companies’ cold feet when it came to pricey new investments. The fear alone of wildly fluctuating prices froze them stock-still.8