Thoughts On Peak Oil And What It Could Mean For Us Living In Japan

A flurry of emails followed the last release of an important report on oil from International Energy Agency (IEA), led by Nobuo Tanaka. Blogger Panda Bonium and myself have discussed this topic before, but the latest report seems to confirm that so-called peak oil has already happened:

Peak oil is not just here — it’s behind us already.

That’s the conclusion of the International Energy Agency, the Paris-based organization that provides energy analysis to 28 industrialized nations. According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil — the black liquid stuff that rigs pump out of the ground — probably topped out for good in 2006, at about 70 million barrels per day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests.

Now, curiously, the above comment was hidden away on a blog over at New York Times, called Is "Peak Oil" Behind US? Soon, a much less serious take on the report from the IEA would appear in the NYT.

Just three days later, the same newspaper published a huge article enthusiastically called There Will Be Fuel, basically telling its American readers that all is well, nothing to worry about. They even quoted "experts" who said, the US can achieve "something that very closely approximates energy independence..." Well, that is assuming either that the oil consumption in the US goes way down, or that noone else in the world (China, Japan, Korea, EU, etc. etc.) will import much oil.

The following is an exchange of emails, as Panda Bonium and myself looked through the latest news about oil. And it isn't pretty, if you live in Japan, that imports all of its oil.

Nov. 16 Kurashi wrote:

Very good program on Swedish TV yesterday about peak oil. You can start
from around 8.30, there are some interviews in English, including Colin
Campbell and Kjell Ahneklett.

Nov. 16 Panda Bonium wrote:

> Excellent. The topic is going public at last - as usual, too late to change
> the outcome, but perhaps in time to prepare people for the crash which is
> upon us. Here is a NYT article about the 2010 IEA report (ever the
> optimists) in which they admit peak has already occurred. Look at the graph
> and note how much of it is "yet to be found" or "yet to be developed". In
> fact, I think that in order for business as usual to go on, the world needs
> to come up with a new Saudi Arabia every 3 years or so. Ain't gonna happen.
> by the way, how does one (an English speaker) pronounce "Kjell"? Some
> years ago I sent him a question by email and he very nicely sent a reply.
> Seems like a very well grounded guy (like you). I don't share his
> enthusiasm for nukes, but he makes his decisions rationally rather than with
> some market/political bias it seems to me.

Nov. 17: Kurashi wrote:

Thanks for the link. Wow, NYT really is so clueless...

The Swedish TV program talks to IEA's Birol (in English) and he goes to great lenghts to try to explain what he can say and what he cannot say. Also, the other people they talk to say what you mention here, about finding a new Saudi Arabia every 3 years. The point of the program is clear - there can be no economic growth under these conditions. The party is over. I was surprised how frank they are.

They mention that in the US, some 50 million people may have to go back to farm to be able to feed the population, the guy they talk to is an author of several books about the end of the economic growth (they show one of his books on his desks, translated to Korean). Again, this is a very serious TV program, and I do agree that this is excellent...

Kjell is (ironically in his case) pronounced "Shell"

I do love that graph, it is so hilarious. It looks just like how I think of my income ;)

Nov. 17: Panda Bonium wrote:

> Hah! LOL. Classic!

Nov. 17: Kurashi wrote:

Sorry, I take back what I just said about NYT. Today they are running a big energy special, and the message is "There Will be Fuel" - I have never read such drivel in a long time. Hopeless.

There Will Be Fuel

Nov. 17: Panda Bonium wrote:

> Oh, barf.
> There has been much discussion on "The Oil Drum" site about the gas shale
> nonsense for sometime now. Basically it boils down to the fact that it
> takes constant drilling to exploit the shale as the production curves drop
> off like a cliff on these well. Not to mention the environmental disasters
> caused by "fracking" the rock. Many articles have exposed this "resource"
> as a fraud.
> Oh, well. The beat goes on. I get upset every morning listening to NHK
> radio quote Kan as he talks about "sustainable growth". What an obvious
> oxymoron that is!
> By the way... I can't make head or tails of his talk of "reforming"
> agriculture in Japan. What the hell is talking about doing? If it is to
> change the law to make it easier for people to farm and/or to stop paving
> over good soil then I'm all for it. But if the plan is to expose local
> farmers to competition from poor countries and plan on importing our food
> from halfway round the world, well, you know where I'd stand on that. So
> much BS in the news that is not explained and goes right over the heads of
> the public who by and large an unaware.

Nov. 17: Kurashi wrote:

Kan eyes more money for farmers

I think this must be the news you are referring to. I don't think they have
any clear plan how to "protect" farmers from cheap imports. CUJ is of course
opposed to the TPP, even going as far as saying the WTO rules are actually
better, because they allow for some protection and tariffs (the TPP wants
zero tariffs for all products and services). That doesn't mean the WTO rules
are what we want either...

A case in point are lemons. My supermarket has both domestic and imported
ones (from the US and a few other countries) and they are bigger, cheaper -
and labelled with the names of the pesticides and surfactants that are used.
Nasty stuff, yet most people use cut lemons, peel and all, for many dishes
and even in lemon tea. The Japanese lemons are mostly from Hiroshima
prefecture, and are not sprayed or treated (but not organic either, so it is
difficult to know how much is left on the peel). The domestic ones are not
available year-round. How will they be able to compete? Of course they
basically can't, and my (educated) guess is that the number of lemon farmers
are declining. How to get young people to become lemon farmers when the odds
are stacked against them?

And that is not even mentioning the water issue in California, or the oil
price... So, by the time peak oil and/or severe water shortages hit the
growers elsewhere, there will be almost noone left in Japan with the
knowledge how to grow lemons. And that includes the breeding, pruning,
picking, storage...

It would be nice if they did a few things, like more support for "new
entrants" i e people who would love to start to learn how to farm properly.
The JA should be reformed as well. Supermarkets also need to get funding for
campaigns to promote domestic, organic stuff in more systematic ways, with
long-term projects and experts who can talk about these issues and debate
the pros and cons.

It would also be great if they did proper support programs for organic
agriculture (which is what I will speak about tomorrow). Even if the organic
sector doesn't grow fast, in terms of % or $, they can at least help the
people who want to do it that way. I think many young people would try
farming if they saw it as "clean" and "pesticide-free" which gives
conventional farming a "dirty" image.

I'm told that it is actually easy for foreigners to buy land in Japan,
wheras many other countries like Thailand have strict rules that prohibit
it. I don't see how I could do it right now, but it is something I am
thinking of. Some of the bloggers make it sounds like a good challenge!

Nov. 17: Panda Bonium wrote:

> Thanks. That's what I was afraid of... The plan still
> seems to be to rely on other countries for food while decimating local
> farmers. And this will look good in the short term as it puts downward
> pressure on prices. In the longer term, as peak oil bites and oil goes to
> triple digits again, those "cheap" foreign products will become expense and
> meanwhile Japan will have lost its own ability to grow food. Really stupid
> policy. Really stupid, with a capital pid!

Nov. 18: Panda Bonium wrote:

> Excellent comments on The Oil Drum regarding the NYT article:

> One guy knows the author at NYT and gives a copy of the response he sent
> directly to him calling on believing CERA.

PS: To that, dear Kurashi readers, I would like to add just 2 links found on Ken Elwood's excellent blog:

November 7. New from Dmitry Orlov, the best essay I’ve ever read on “peak oil”. He’s right – we need to prepare, double-time. I printed out the Japanese translation {pdf} and gave it to my wife.


Anonymous said…
Hi, good exchange between you and PB.

Since oil production peaked in early 2006, a lot of the conversation has shifted from just expensive oil and goods and services to Export Land Theory, which basically says that oil exports will decline at a far faster rate than the decline in oil production alone.

As a maj-importing Island Nation, I think this is what the people (not leadership) should be pondering.

Pandabonium said…
What Ken said.

Also, new on - an excellent rebuttal by geoscientist David Hughes to the NYT Clifford Krauss article: There Will Be Fuel? An Open Letter to the New York Times

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