INTRO: 3 years ago, gas in America hit $4 a gallon. Then it went back down. It was hard to find voices in the media saying get ready for gas to jump to $5 dollars a gallon or $6. But a Kalamazoo man was one of those few voices. He argues that pain at the pump will get worse. He’s self-published a novel about it. It’s called Prelude– Secrets, Treachery and the Arrival of Peak Oil. Michigan Now’s Chris McCarus reports.
Peak oil means the point in time when the maximum amount of oil has been produced. After that, the world’s supply will get smaller and smaller. No astronomical price will make it worth anyone trying to get more from the land or the sea. Some oil will remain. But people will let it stay where it has been for millions of years. That’s the backdrop of Kurt Cobb’s novel.
“It’s not an accident that we start 2,000 feet above the boreal forest going a couple hundred miles an hour. Because I’m thinking that would be a good way to start a movie. I’ll start that way.”
Cobb wrote a book hoping that it will get turned into a movie. He says a couple hundred million people might get his message that way. So what is he trying to say?
“We’re having a crisis a duel crisis. Not only an energy crisis but we’re having a crisis of capital.”
The price of energy is going up. Supply is going down. Same with money. The worldwide recession that began in 2008 was caused by many things: oil that hit $150 a barrel, real estate developments built farther from central cities that required more use of cars, and then banks that financed the real estate boom. They collapsed under the weight of loans where everybody was borrowing from everybody else. No one had any real money. Now in 2011, just try to get a bank loan. Banks hesitate to lend. Kurt Cobb says:
“None of the underlying issues with excessive debt and excessive leveraging have been dealt with. None of the regulatory issues have been dealt with. So I think we’re gonna have this crisis of capital that’s just gonna go on. What does that mean? You’re gonna have these wildly gyrating prices as the economy goes up and down and up and down.”
And fluctuating prices will discourage drillers from looking for more oil. In the 2008 election, Republican Vice-Presidential candidate Sarah Palin said “drill baby drill.” Bumper stickers said ‘Drill Here. Drill now.’ It didn’t make sense.
“There’s this notion among the public that there’s oil sitting underneath the ground. And that it’s like in a swimming pool. And that you just have to stick a straw in it. They have no conception that it’s in these little tiny microscopic droplets in shale and in sand. And that it only comes out as a liquid because it’s under pressure. And then that pressure nowadays, because we’re getting to the stuff that’s at the bottom of the barrel, you gotta start pumping. That adds extra cost and energy.”
Cobb spent years in Texas covering the oil industry as a reporter. He says if you’re an oil company executive you only drill when you know you can make money.
“Or if you’re reasonably sure that you can get it out of the ground quickly at prices that will allow you to pay back your investors and your shareholders. So it’s nonsense to think that you can just sink a drill bit someplace. I know what it takes–years of seismic analysis and finally someone says I think we should drill there. And then you’ve gotta secure the lease whether it’s offshore or onshore. Then you have to get the equipment.”
So, even if the world has enough oil, companies need stable prices and plenty of money for investment. He says the world might not have reached peak oil yet but as for the companies:
“They won’t be able to justify the kind of drilling that we need to have consistent supply growth. So even if there is not a geologic peak we’re going to have a finance peak in this decade.
Less financing, less production, even higher gas prices at the pump. Kurt Cobb’s novel about peak oil is called Prelude. He says a Hollywood movie producer has contacted him. Whether or not the book becomes a movie, Cobb will be planning his life around the consequences of peak oil.