Last week they took a poll here in Virginia on how the race for US Senate was shaping up. The poll showed the candidates in a dead heat, but the issues section of the story caught my eye. Twenty-three percent said the most important issue was Iraq, followed by terrorism at 19 percent; the economy, 16 percent; health care, 10 percent; immigration, 9 percent; taxes, 9 percent; moral and family values, 8 percent; and dead last was gasoline prices and energy, 1 percent. So much for voter concern about gasoline prices.
A lot has happened since last winter when President Bush pronounced us addicted to oil and Congress was falling all over itself introducing bills to lower our gas prices and reduce our dependence on the Middle East. What a difference a 60-cent drop in the price of gasoline makes these days.
Unless there is a major disaster in the next few weeks, it is unlikely oil depletion will have much impact on the 2006 mid-term elections. People may have nagging doubts about dependence on foreign oil, but it is doubtful that many candidates are going out on the limb and starting to talk about conservation, sacrifice, life style changes and all that will come with peak oil. It’s too depressing and still a great way to lose an election. This is too bad because even if it turns out that we have the resources to make it through to a post oil-age world and into some semblance of life-as-we-know it, it is going to take 20 or more years of severe economic hardships. The sooner the debate begins, the better.
Since the 2006 election seems like a lost opportunity to debate oil depletion, what about 2008? From the vantage point of 25 months away, there is obviously much about the 2008 political landscape that, as yet, we haven’t a clue. Which party will be controlling which house of Congress? What will the status of US involvement with Iraq and perhaps other Middle Eastern countries be? What will crude be selling for and what will be the price of gasoline? Where will the Dow-Jones be? Will the housing bubble have burst? Will it be obvious or murky that worldwide oil depletion has started or is near at hand?
There are, however, some parameters of 2008 that seem reasonably certain. On the first Tuesday after the first Monday in November we will be electing a new President of the United States. No matter how much oil is currently left in the ground, there will be 62 billion barrels less of it when we get around to voting. We can also be sure that US reliance on foreign oil and products, which is currently about 66 percent of our consumption, will increase a bit as US oil supplies continue to deplete.
The experience of the last year and the lesson of the poll referred to above is that voters will only be moved by high gas prices. All of the logical arguments, trend lines, statistics and speeches in the world won’t persuade a critical mass that there is serious trouble ahead until it is driven home by the sign over the gas pumps.
From a geological standpoint, several of the world’s largest exporters contributing significantly to US oil supplies are suspected of being in or very close to going into depletion. Mexico, Kuwait, the UK and perhaps even Saudi Arabia, are almost certain to export less oil two years from now. Should any of these exporters go into rapid depletion the consequence is likely to be the higher gas prices voters understand.
The impact of political instability on gas prices two years from now is much harder to foresee. Unless some miracle intervenes, Iraq is in a death spiral and the likelihood of Baghdad continuing to export oil at current levels is not good. The spread of the Sunni-Shiite hostilities to other Gulf States in the next two years is possible.
Nigeria has to get through its Presidential elections in 2007 and tensions are already building in the country. Whether Nigeria will be producing oil at projected, or even current levels, in 2008 is a very open question.
There is little doubt that as oil supplies become tighter, nationalism will grow, as oil producers want a bigger share of the pie at the expense of the International Oil Companies (IOCs). Currently Venezuela and Russia are the most active in bringing their petroleum resources firmly under state control just as the Middle East did 20-30 years ago. The problem is that, as oil gets harder to produce, it is the IOCs that are the only organization with the resources and technical expertise to find and produce oil under difficult conditions. Continuing friction between the IOCs and host states could easily result in significant delays in the development of new projects.
What does all this tell us about the possible impact of high oil prices on the 2008 Presidential election? There are many situations shaping up in the world today that potentially could reduce oil production. These range from major civil wars in Iraq and Nigeria to Hurricanes and sudden drops in production from aging reservoirs. Considering the range of possible problems and the tightness of world oil supplies, it is difficult to imagine that one or more will not start putting pressure on US’s ability to import oil during the next 24 months.
The most pessimistic of the analysts trying to calculate the balance among new oil supplies, world demand, and oil depletion talk about 2008 as the earliest serious shortages could develop. A fair guess would put the chances at about 50-50 that high gasoline prices will be playing a major in the 2008 elections.
There are simply too many variables to speculate in a meaningful manner about the parameters of a 2008 energy debate. A major stoppage of production or imports in the next two years could force the current administration to take drastic measures —forced conservation, rationing— in spite of itself. Alternatively, a gradual increase of gasoline prices to new highs could bring out renewed waves of demagoguery — "lower taxes," "forget air quality," "hydrogen cars"— that we saw earlier this summer.
Even if all goes well and oil production manages to keep up with demand during the next two years, oil depletion does not stop. By the 2012 election the world will have gone through another 180 billion or so barrels of oil and the odds are very good that world oil production will have peaked. Whoever we elect president the next time around is likely to be facing problems fully equivalent to those faced during the Great Depression, the Civil War and the American Revolution.