Toban Black

Richard Heinberg on driving down demands for oil -

“We could reduce the price of oil just by reducing demand. If the world could be satisfied with the amount of oil that can still be produced cheaply ($30 is an arbitrary figure—by now $130 oil sounds cheap), then the price would fall to that level. We’d have to keep reducing demand to maintain that price since the cheaper oil continues to deplete.

But there’s a problem to that solution: the most likely way that global demand will be reined in is by economic contraction brought on by high prices. That’s a nice way of saying bankruptcy, unemployment, and industrial collapse. It sounds bad, but that’s not the problem; the problem is this: once the price falls by any significant amount, demand will just pick back up again and we’ll be right back where we are now—with prices aiming for Alpha Centauri.

Or, we could hope for a cheaper, more convenient source of energy that would reduce demand for oil painlessly. But since no one has invented one yet, we can’t really bank on it happening (though throwing a few extra tens of billions toward energy research is not a bad idea).

In other words, there is no existing market-based fix for the fix we’re in.

Which means there is really only one way to get the price of oil down over the long term. That is to implement some kind of global agreement to ration oil consumption by quota, so as to reduce demand artificially. Just reducing demand in one country won’t help much, because some other country will quickly take up the slack. No, we all go on a diet together.

Everyone would kick and scream—but no louder than they’re currently doing. We already have rationing after all; it’s called price rationing. And price rationing simply ensures that poorer potential buyers are priced out of the market first (that’s why countries in sub-Saharan Africa are now verging on economic oblivion: they can’t afford oil to grow crops, transport goods, or operate the diesel generators that supply municipal power grids). To rich folks, price rationing may initially sound like the better deal, but they have to live in communities too, and if Orange County is going Mad Max, daily life even in a mansion behind an electric fence starts to be a bit of a bother.

Quota rationing is something North Americans haven’t faced since the 1940s—when it worked successfully to conserve fuel for the war effort. But it has also been used in other countries when supplies of fuel or electricity or water ran seriously low. Typically, quota rationing averts cutthroat competition while appealing to people’s community spirit. Nobody has as much as they want, but everybody has enough to get by.

On a global level, the quota agreement might be as simple as this: each country would agree to reduce its oil consumption by three percent per year (which is a little more than the world oil depletion rate). Then national governments would be free to find their own ways to implement that cut domestically—whether through fuel taxes, investments in efficiency, or personal quota rationing.

A global Oil Depletion Protocol is impractical, you say? Could never be negotiated? Of course it would be a tough bargain to accept. The alternative is even tougher, though.

Imagine the world without such a Protocol. Continually soaring prices will be a given. But for an increasing number of countries and potential users, this will translate into shortages. As in: the gas station down the street doesn’t have any fuel this week because the station owner can’t afford to pay cash on delivery (this is already starting to happen right here in the wealthy US of A). Worse, perhaps: nations will be tempted to secure essential fuel by military action or covert subterfuge. Just how well this is likely to work we may judge by events in Iraq over the past few years.

How badly do we want cheaper oil? Badly enough to cooperate internationally? Badly enough to lower our consumption? As soon as we want it that badly, we’ll have it. Until then, the market rules. Welcome aboard the oil-price escalator.”

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(I’ve added the link to the Oil Depletion Protocol web site.)

Heinberg has published a book about that protocol.

As far as I know the Oil Depletion Protocol is the only proposal of its kind out there. Even so, I think that Heinberg narrows our options too much in the writing quoted above — in the second-last paragraph, in particular. There may be other ways to bring down international demands — including, perhaps, an agreement that is similiar (but not identical) to the particular protocol that Heinberg refers to here.  That Oil Depletion Protocol isn’t the only alternative to the path toward more and more fossil fuel demands and dependencies.

I certainly have reservations about rationing, but is there a better way?  I mean, can we handle those problems well without having some rationing — in tandem with other proactive and constructive responses? Rationing is undemocratic, and we mustn’t take that lightly. However, natural limits on fossil fuel supplies aren’t democratic either; no one chose to place these obstacles in the path of humanity (and, above all, in the path of more affluent and more fossil fuel dependent societies in the inter-continental ‘North’ ‘West’). Popular will (i.e. the basis of actual democracy) also couldn’t take away those natural limits.
Given how we are — or soon will be — colliding with those natural limits at a break-neck pace, maybe it would be for the best if there were some rationing, in tandem with other interventions and alternatives.

To return to the above writing from Heinberg -
He also states that “once the price falls by any significant amount, demand will just pick back up again and we’ll be right back where we are now—with prices aiming for Alpha Centauri.” It isn’t inevitable that demands would rise in that way in response to lower prices, but it is extremely likely that this would happen — given the sort of world that we live in today. This world can be changed, however. The Oil Depletion protocol is one approach to moving away from fossil fuel dependencies, but there also are other possibilities. An example: Here in London, Ontario there is a campaign against new drive-thrus. Those campaigners aren’t waiting for an international agreement like the one that Heinberg advocates.

Anyone who supports that Protocol still should support other constructive initiatives. I’m sure that Heinberg would agree with that statement about wider breadth, but in the above writing he discourages this sort of thinking about multiple possibilities.

I don’t recall seeing any other statements from Heinberg, elsewhere, that suggest that the Oil Depletion Protocol is the only positive way to go, however; and I’ve read most — if not all — of his Oil Depletion Protocol book.