Re: Take a Peak, Main Dish, by Amanda Griscom Little, Nov 3 2005

If only Matthew Simmons were right, environmentalists would have a stable platform for crusading for fuel conservation, huge investment in oil alternatives, and a major restructuring of our economy and society. Unfortunately, the peak oil hypothesis is desperately naive about oil alternatives and infrastructure.

The technology already exists for turning coal into oil or natural gas on a scale that will be more than adequate to offset the decline of conventional oil and gas supplies. Even without considering numerous renewable alternatives, the vast coal reserves would allow the fossil fuel economy to keep humming (or Hummering) with only a few years of marginally higher oil prices. Instead of worrying about rising oil prices, we should strategize about directing energy investor responses to high conventional oil prices.

Some will push to drill for oil everywhere. Others will seek investment in infrastructure to convert coal. Both parties will have the upper hand because their solutions are most compatible with our existing infrastructure. Interest in these activities is already evident in rapidly escalating exploratory drilling rates, massive investments in oil and tar-sand developments, and near record share prices for fossil energy companies.

This rush to fill the shortfall will lead to over-capacity. There will be a glut in the liquid fuels market, and the price of oil will not rise beyond $100 per barrel, but will fall towards the marginal cost of production from tar sands and coal -- $20-40 per barrel. Since tar sands and coal are far dirtier and more carbon-intensive than conventional oil, and low fuel prices will encourage consumption, this scenario would entail disastrous environmental and health impacts.

"Peak oil" represents not a crisis but a cross-roads. One path leads to energy production methods that are more environmentally destructive, but easier because of our existing infrastructure. The other realizes the promise of renewable alternatives and smart growth. When focused, environmental advocacy has been successful in helping society choose the right path. To do so here, we must recognize that "peak oil" brings both threats and opportunities, and will not alone define the right path. We're still living with a six-century fossil fuels legacy prompted by "peak wood" in the UK; it is time to make sure the path chosen now is more sustainable, socially and environmentally.

Kai M. A. Chan and Hadi Dowlatabadi
Institute for Resources, Environment & Sustainability