ASPO-5 Day 1: Colin Campbell and the Second Half of the Age of Oil

Colin kicked off the conference this morning under the main tent in the balmy seaside park of San Rossore, painting the big picture of The Oil Age. We’re entering the second half of it, he says, an era in which all the conventional rules of economics and politics won’t apply.

Conventional economics says that one supply of energy always replaces another. The high price of oil are supposed to conjure up new supplies. But that’s old school thinking, he says, and a new wave of economists is on the rise that is beginning to recognize –- and factor into their models -- the natural limits of the earth's resources.

We’re facing a bumpy ride down the far side of Hubbert’s curve, Campbell says, an era characterized by a devastating ratcheting up of oil prices that triggers successive recessions or worse, easing prices for awhile, until the next cycle of depressing price spikes sets in.

High oil prices amounts to “simple profiteering from shortage,” he says, because costs haven’t changed materially.

Peak oil is driving a new geopolitical configuration, with energy rich Russia on the one side, energy depleted US and Europe on the other, an energy hungry China and a newly independent South America in the middle. In this new configuration, the power to control money is now shifting because the Middle East is pumping out petrodollars at a massive rate. But this is a “false liquidity” Campbell says, based on nothing but shortage.

Politicians don’t like to talk about peak oil and the recessions that will follow in its wake. “If they mention it, they will assume responsibility for not having stopped it. It is a strange world of half truths that we live in.”

Ironies abound these days: The better the world gets at extracting oil, the faster we accelerate depletion. Iraq shows us that we can’t produce oil on a battlefield, but that’s ironically good, he says, because it leaves more in the ground for future generations. “It’s the silver lining,” he quipped.

Ultimately, the new world spawned by energy descent will see the return of power to regions and nation states. “Economic and political power may return to places like Tuscany and Scotland, and indeed local currencies are now appearing, and the old idea of barter my return.”

Intelligent responses include “depletion protocols” that require importers importers to cut imports to match world depletion rate, now 2.5% a year. Prices would thus be forced to match costs and put an end to profiteering which is destabilizing the world financial system.

Step one is to inform people, Campbell told the conference. Perhaps a healthy shock—like a weeklong power outage—could do some good in the long run by spreading awareness in the clearest way possible.

Cutting waste is the next step, and this includes a combination of energy rationing and turning to new renewable resources such as solar, tides, geothermal, wind, waves and biomass. And a return to nuclear is likely in the offing, for all its failings. Personally, Campbell has no position on nuclear.

We must live differently in the second half of the oil age, the retired oil geologist said. We’ll need to redefine happiness. As an example he showed a picture, circa 1954, of a smiling man working toting peat in a wheelbarrow in the 1950s, and compared this simple mode of work with the typical airport worker that he sees so often today: the x-ray screeners, for example, simultaneously bored and stressed. “Are we happier today?” he asked the crowd.

By the 22nd century, Colin concluded, we can imagine a bishop in a “new benign age” thanking god for “having lifted the curse of oil from the world.”