Waking up to the truths of oil's past, present and future

Peak oil documentary A Crude Awakening aims to get people talking

Neville Smith - Friday 12 October 2007

Parts of Baku are now toxic wasteland Parts of Baku are now toxic wasteland

THE makers of A Crude Awakening mince their words only slightly, describing their investigation of the peak oil phenomenon as “a naïve quest to examine the world’s dependency on fossil fuels” and the results as “a bit of a downer”.

But Basil Gelpke and Ray McCormack have the look of film makers who have heard all the questions before — and answered most of them — in the three years since they completed the film. But installed in a modish glass room in a London advertising agency they give every impression of being as enthusiastic about their project now as they were then.

Completed on and off as time and money allowed, the film has graduated from festival competition and critical acclaim to mainstream media interest. In the last few days they have had “everyone from The Sun and the Financial Times, to Power Engineer and the Mail on Sunday” in front of them.

Still clearly enthused about their subject, they talk over the themes of the film and the topics they only touch on: what happens next for the world and hydrocarbon man?

They also make it clear that their film contains no hard answers, merely that they have made a film that is the result of research rather than their own preconceptions, which is about as evasive as you can get while remaining engaged with the subject.

“The aim was to get people talking about the issue,” says Gelpke. “Of course if we had known when we started this three years ago that oil prices would triple, we would have put the money we spent making the film into buying oil futures.” It’s a reflection, he says, that documentary makers don’t do it for money, but for glory.

Most professionals in energy shipping will be aware of the concept of peak oil and the flurry of books forecasting the twilight of civilisation that will follow the end of the era of hydrocarbons.

Gelpke and McCormack’s film adds a little more to the pot of knowledge about the past and present and hints at the doom-laden scenario to come. But this is an admirably intelligent film — moreAn Inconvenient TruththanFahrenheit 9/11, lighter on the polemic, longer on information, albeit with an ear for soundbite.

“The business community is now interested, so that suggests that something will happen,” says McCormack. They first came across the story in a hedge fund analysis note, but even before they had finished the film investment funds and investment banks were requesting screenings for staff.

Despite its downbeat predictions, Gelpke denies that they were attracted by the chance to preach the apocalypse. “I don’t think its a political film at all. It has political implications, but to me the important thing is that it’s a film about geology.”

The film includes little input from the oil majors themselves but McCormack while admitting they didn’t always push too hard, says there are individuals they would have liked to be involved. “A couple of people we asked never said yes and never said no, but we weren’t doing a Michael Moore. We weren’t going to doorstep them with a camera on our shoulders. The film was never meant to point the finger at oil companies which are providing a valuable resource — at what has been until recently very reasonable prices.”

Rather, he says, they wanted to draw attention to consumption and how wasteful we are. “We felt we probably wouldn’t hear anything we didn’t already know. These guys’ positions have been repeated in the last couple of years. More interesting were the people who had moved on to think-tanks academia or retired and had less obligation to shareholders to toe the line.”

That included giving a former secretary general of Organisation of the Petroleum Exporting Countries the opportunity to say what he really thought, “and some other people took that opportunity”.

The film appears unashamedly aimed at curing ignorance among the majority of US consumers that they are paying far below the real price for oil and that declining prosperity will go hand-in-hand with its disappearance.

That is an easy tale to tell since the US’ own oil rush provides an encapsulated lesson in what happens when commodities are treated as if they are inexhaustible.

But they say the need for a wake-up call has declined in North America since the film was made. “People in America like conspiracy theories,” remarks Gelpke. “But a lot of people there realise instinctively how much they depend on oil. In many ways they are more vulnerable.”

McCormack picks up the theme. “In the US they struggle to a greater degree that we do here. Life is more competitive and when gas goes up by a dollar a gallon that’s tough when you’re driving 150 miles a day to a McJob.”

In the film, Republican congressman Roscoe Bartlett says that “not one in 100 people are aware of the scale of the problem”, and McCormack believes that was true three years ago. “Now we have 700 people in Toronto turning up at midnight on a Wednesday to see it,” he says. “Rental demand on Netflix has been incredible.”

Key contributor David Goodstein, from the California Institute of Technology, suggests that the growing realisation of oil dependence in the US will result in repeats of the Iraq invasion. But Gelpke and McCormack think consumers are primarily interested in the effect on their pocket. “I was there when gas went over $3 a gallon and it made the headlines,” says Gelpke. McCormack agrees there is “virtually no taxation on fuel, it is indirectly subsidised and the public don’t realise that”.

It’s not as if Americans shouldn’t be aware — mass oil consumption is a product of the American century and the green revolution that allowed increasing food production to feed an increased population. But the US is not the only territory with the ghost of an oil industry. Baku fed the modernisation of Soviet Russia and is now a rusting, toxic wasteland. Lake Maracaibo in Venezuela looks little better.

The US even had its own storm crow in M King Hubbert, who in 1956 predicted that US crude production would peak in the late 1960s to the early 1970s. Derided at the time, he was lauded when the prediction came true in 1970 and was accepted officially in 1975. In 1974, he predicted that global oil production would peak in 1995.

So have the warning signs been ignored? Experts including consultant Colin Campbell, former Opec secretary general Fadhil Chalabi and Matt Simmons, suggest that the inflation of reserves by the main producer countries is to blame, since high reserves mean a bigger Opec quota. But it also means that those countries have become prisoners of their budgets.

Thus, the world has sleepwalked into a new energy crisis by refusing to accept that replaceable reserves must be dwindling as consumption increases. McCormack thinks that concern at this, rather than adopting a purely political position, is the right response. “It’s such important substance and you get the feeling that no-one is keeping an eye on our consumption levels. Everyone has their ‘peak oil’ moment when they hear someone discussing the subject intelligently, but the question is what happens when demand overtakes supply. What happens next? That is the real question.”

Agreeing that global oil consumption figures are “more or less out there” the fact that the IEA predicts the future based on the past suggests things will change dramatically when the price goes up in earnest.

The fact that crude is being extracted from oil sands should be enough to demonstrate that the era of cheap oil is over. Next year the UK becomes a net importer and North Sea oil will be exhausted by 2030. Consumption growth demand from the countries that more of less sat out the 20th century as oil consumers, goes far beyond the protection potential of known reserves.

This leads in two directions — the hunt for alternatives and securing access to the remainder.

The outlook for the former is not good and the latter is little better. The hydrogen economy promises much, but currently consumes more energy than it produces. Ethanol, thanks to its inefficiency, is no better. Replacing hydrocarbon power generation with nuclear might require the equivalent of 10,000 power stations, exhausting global uranium deposits in 20 years. Solar and tidal power appear the only alternatives, but depend on huge advances in technology to generate power consistently.

McCormack suggests that “the foremost thing we can do is increase energy efficiency in certain parts of the world — the US in particular. We can do an awful lot more”, he says.

Gelpke agrees. “What is worrying is how dependent food production is on cheap oil and that one calorie of food output equals 10 calories of hydrocarbon input. That’s pretty worrying”. Part of what happens next is coal — the environmentalists’ nightmare since it is abundant and relatively cheap. For all the talk of China’s growing oil demand, its industrial revolution is a coal-fired one.

“The question that gets us into trouble is coal, because it is not the energy of choice,” says Gelpke.

The film suggests that with the average US car consuming 10 miles per gallon, the price of petrol should be something like $75 a gallon if drastic energy-saving measures are going to work. Serious queues at the pumps — for which America had a dry run in 1973 — will be the norm in 10 years or less.

The looming fear is of “decade-long resource wars” and a reckoning with the Middle East. Having traded protection for energy with its proxies and allies since the end of the Second World War, the US might in future not limit its intervention to rogue states, but rather step in as necessary to guarantee the flow of remaining oil by taking direct control in its client states.

If the viewer hasn’t experienced a downer yet, then the closing predictions might: the end of oil will cause a seizing of the global economy so severe as to create a depression at least as serious as that in the US in the 1930s, but on a global scale, potentially cutting the global population to 1.5bn-2bn.

Prices will rise to and stick at unheard of levels so that consumers will begin to see the conveniences of their modern lives replaced by the realties of the post-hydrocarbon economy.

For many, that seems a long way away. But Gelpke and McCormack leave me with two final thoughts — that the latest estimates predict a steeper fall-off from peak production than was previously thought and that the decline of the world’s most important resource coincides with the industrialisation of the world’s two most populous countries. Just the former would be bad enough, but the interdependence of the two creates a far greater long-term problem, and despite his upbeat approach Gelpke can’t help admitting “that’s what worries me most”.

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