MuseLetter #173 / September 2006
by Richard Heinberg

Note to subscribers: The new book is out! I have a couple of cases of The Oil Depletion Protocol, so pre-publication orders are now being fulfilled; also it will soon be in bookstores. This month’s MuseLetter is one of those occasional issues that must serve stacking functions. To assist the expanding work of the Oil Depletion Protocol Project, a booklet is needed to explain the Protocol in language different from—and hopefully even simpler than—that of the book itself. This month’s essay is a draft of the booklet text. Since it is only a draft, please contact me for the final version before republishing it.

The Oil Depletion Protocol is a historically significant agreement that promises to set a global precedent for dealing with resource scarcity through cooperation and voluntary moderation rather than competition and conflict. It is inherently simple, calling for a gradual reduction in petroleum consumption according to a transparent formula. And it can be implemented at any level—internationally, as well as by individual countries, municipalities, businesses, and individuals.

The Problems of Oil Dependency and Oil Depletion

“The overwhelming thing we need is a national plan to deal with oil depletion.”
—Christine Milne, member of the Australian Senate

The need for such a protocol is becoming increasingly plain. Petroleum is a non-renewable, polluting, and depleting resource on which the world has become dangerously dependent. This in itself should be cause for nations to find ways to reduce their consumption and thus their dependency.

However, there is also the problem of uncertain future supply. Long before the last drop of petroleum has been recovered from any given reservoir the possible rate of extraction tends to peak and then fall off for purely physical, geological reasons. Today, most oil-producing countries have already reached and passed their national production peaks and are in steady decline. There is universal agreement that the world as a whole will reach its peak rate of production at some point in the next few decades—but there is controversy as to when, exactly, the peak will come. While some analysts forecast the maximum flow rate as occurring later than 2030, others say it will be achieved within the next four or five years. Once the peak has passed, global rates of oil extraction will gradually wane, even if demand for oil continues to grow. Unless societies prepare for the event by substantially reducing demand ahead of the event, this will be an oil crisis like no previous one, because it will continue inexorably for decades until rates of extraction have become trivially small. The problem will arise not at the point when oil actually runs out (that moment, everyone agrees, is in the distant future), but at the point when the rate of delivery can no longer match the expectations of consumers.

The technical literature on the subject of Peak Oil is robust; for more information please see the “Get Informed” section at www.oildepletionprotocol.org.

There is growing evidence that the rate of world oil production has already entered a plateau, indicating the approaching peak. Yet even if the forecasts that place the peak two decades ahead are correct, there is still cause for immediate concern, as analysis undertaken on behalf of the US Department of Energy indicates that twenty years at a “crash program” scale of effort will be needed prior to the peak to prepare societies adequately. This is because most of the mitigation strategies that are possible (developing supplies of alternative fuels or changing transport infrastructure to use fuel more efficiently) will require enormous amounts of investment and many years of hard effort.

The world is currently unprepared for a sustained decline in oil availability. Indeed, in nearly every recent year the world has increased its demand for oil by over a million barrels per day.

An extended and gradually worsening supply shortfall would lead to economic turmoil. Transportation of people, food, and other goods would be impacted, as would agriculture and the chemicals and plastics industries. Because each of these economic sectors is basic to modern societies, all industries and all segments of the population would feel the effects. High transportation costs would fuel inflation and reduce demand for products while undermining tourism, the automobile industry, and the airline industry. High fuel costs would bankrupt millions of farmers worldwide, leading to an agricultural crisis, while high food transport costs would also conspire to drive up food prices for consumers.

While high oil prices would be challenge enough, volatile prices would make matters much worse. Huge levels of investment in new transportation and energy-efficient manufacturing infrastructure will be required over the next few decades, but unpredictable swings in the price of petroleum would discourage both government and the private sector from taking the necessary investment risks.

At the same time, oil supply problems are likely to lead to political instability and international conflict. Oil has been a primary strategic resource for decades—the object of wars, coups, and intrigues. As petroleum becomes more scarce and expensive, competition for supplies will grow and economic turmoil could create conditions for armed struggles, perhaps on a massive scale. Civil or international conflict could in turn exacerbate shortages and undermine investment in new energy sources and technologies and the accompanying processes of transition and adaptation.

On top of all this there is the fact that burning oil or releasing it into the environment in the form of petrochemicals produces a range of pollutants. Carbon monoxide, sulfur dioxide, and nitrogen oxides from oil combustion contribute to lung cancer, asthma, and cardiovascular problems. Sulfur dioxide and nitrogen oxides contribute to acid rain, damaging the plant life that would otherwise help to clean pollutants from the air. Pesticides, plastics, and chemical components of plastics also make their way into many parts of the natural and built landscapes, causing damage as they go. Some of best-known pollutants, DDT and polychlorinated biphenyls (PCBs), are endocrine-disrupting petrochemicals that affect reproduction and development. Other petrochemicals in common use today also display endocrine disruption effects; for example, bisphenol A (BPA), used to make polycarbonate plastics, is an estrogen imitator and can disrupt the balance of sex hormones in living things that come in contact with it, including humans. Some scientists have linked amphibian population crashes to the presence of BPA.

However, of all chemical pollutants issuing from the use of oil and other fossil fuels, perhaps none has more worrisome potential consequences than the greenhouse gas carbon dioxide (CO2). Burning fossil fuels releases CO2, which traps heat from the Sun, gradually warming the oceans, the atmosphere, and the Earth’s surface. The consequences of this warming effect are likely to be a less stable climate, worse storms, the disruption of agriculture, rising sea levels, and pressure on species to adapt to changing habitats. Carbon dioxide is naturally present in the atmosphere in such small quantities (0.036%) that the massive amounts released through the burning of fossil fuels have already measurably altered the Earth’s climate.

Recent studies have shown that global climate impacts are appearing more quickly and severely than was predicted only a few years ago. A five-year European study of Antarctic ice cores found that current CO2 levels are 30 percent higher than at any time in the past 650,000 years. Moreover, the rates of increase are also extremely high—200 times faster than anything seen in the ancient past. The study, released in November 2005, also found a “very tight” correlation between CO2 levels and global temperatures.

Meanwhile Greenland’s glaciers, once stable, are now retreating rapidly. Ohio State University’s Byrd Polar Research Center has found that the Jakobshavn glacier, one of the major drainage outlets of Greenland’s interior ice sheet, is thinning over four times faster than was the case during most of the 20th Century; at the same time, the rate at which the ice moves is accelerating. When the Greenland ice sheet melts entirely, as it is projected to do perhaps before the end of the century, the world’s oceans will rise by 20 feet, drowning coastal cities such as London and New York.

In short, our current reliance on oil is unhealthy and unsustainable. It is imperative, for a variety of compelling reasons, that societies find ways to wean themselves from petroleum dependency as quickly as possible.

The Protocol

“The proposal to cut oil imports to match depletion rate seems to be simple common sense.”
—The Right Honourable Michael Meacher, Member of Parliament, UK

The Oil Depletion Protocol is perhaps the simplest and most straightforward agreement imaginable to help nations, and the world as whole, reduce oil dependency. It calls for a reduction in both extraction and imports of oil, with the rate of reduction tied to the rate of depletion. The world depletion rate for conventional oil is currently approximately 2.6 percent per year (this is simply the amount being extracted yearly divided into the amount left to extract). The Protocol essentially calls upon signatory nations to reduce their petroleum consumption by that amount annually.

This would provide a target, a gauge of progress, and a cooperative framework for a task that will require many years of sustained effort. The Protocol itself need not specify how nations would make the transition away from oil. Presumably they would rely on some combination of two strategies—developing supplies of alternative fuels, and conservation in their use of petroleum and its products. But because each nation has a unique pattern of consumption and a unique alternative-energy resource base, it would not be helpful to mandate a single set of practices or priorities to be implemented universally.

The terms of a draft Oil Depletion Protocol were initially suggested by petroleum geologist Dr. Colin Campbell, founder of the Association for the Study of Peak Oil and Gas (ASPO), in 1996. They include, principally:

  • Reduction in extraction by each producing country according to its depletion rate;
  • Reduction in imports by each importing country according to the world depletion rate;
  • The creation of a Secretariat to monitor reserves, production, and imports, and to calculate depletion rates.

Under the terms of this draft Protocol, production and import restrictions would apply only to regular conventional oil, a category that excludes deepwater oil (defined as greater than 500 meters depth); heavy oil (with a cutoff of 17.5 API); natural gas liquids; synthetic oils from tar sands, oil shale, coal, and natural gas; and biofuels such as ethanol and biodiesel.

Oil-producing nations would agree, upon adoption of the Protocol, to submit to an independent audit of their reserves and an ongoing monitoring of production. Importing nations would submit to an ongoing monitoring of imports.

Some of the terms of this draft agreement are debatable (it may be preferable, for example, to include deepwater oil in the definition of “conventional” oil, rather than excluding it). And further terms may be necessary, for instance, to specify economic penalties for cheating on production or imports. However, the essence of the draft agreement is clear, simple, and non-arbitrary, and is thus likely to be preserved in any accord actually implemented.

Why Is It In Any Nation’s Interest to Adopt the Protocol?

“Peace and prosperity for your children and grandchildren may be ensured or squandered depending upon whether world leaders commit to work together to overcome the challenges of global peak oil. The Oil Depletion Protocol provides leaders and citizens a model for discussion and implementation of cooperative steps to reverse the unsustainable trend of increased depletion of the world’s rapidly shrinking oil reserves.”
—Roscoe G. Bartlett, Member of US Congress

At first thought, it may seem that the adoption of the Oil Depletion Protocol would run strongly counter to most nations’ economic interests.

It is true that a voluntary reduction in oil extraction and imports will impose challenges to nations that choose to abide by these terms. However, it must be emphasized that a reduction in the global availability of oil is inevitable in any case, and that if nations simply wait for the peak in production to occur before engaging in mitigation efforts, the negative social, economic, and political consequences are likely to be “unprecedented” in scope (this according to the US government-sponsored Hirsch Report).

Three nations have already embarked on a transition away from oil even before being presented with the opportunity to adopt the Oil Depletion Protocol.

  • Sweden: In December 2005, Swedish Prime Minister Göran Persson acknowledged that the global oil peak is a problem that needs to be addressed now, and announced the appointment of a National Commission on Oil Independence with the objective of making Sweden oil-independent by 2020.
  • Iceland: With its enormous geothermal energy resources, Iceland in 2001 officially adopted the goal of making the country oil-free by 2050. This small nation of about 270,000 people has a high per-capita rate of greenhouse gas emissions—despite the fact that about 70 percent of its energy needs, from home heating to electricity for aluminum smelters, are met by abundant geothermal or hydroelectric power. Only Iceland’s transport sector is still reliant primarily on oil and gas. The nation’s leaders plan to run its cars, buses, trucks, and ships on hydrogen produced from electrolysis of water.
  • Cuba: The Cuban parliament has passed a measure declaring 2006 to be the year of the Energy Revolution. President Fidel Castro, in a speech delivered November 17, 2005, discussed the goal of reducing all energy use in the country by two-thirds. That nation has already dealt successfully with a dramatic forced reduction in oil consumption, consequent upon the collapse of the USSR in the late 1980s.

Kuwait, a major exporting nation, is contemplating a voluntary reduction in extraction rates. Questions have arisen regarding the size of the country’s actual oil reserves, and the opposition party in the Kuwaiti parliament has called for production to be cut to a percentage of actual reserves so as to preserve some of the resource and its economic benefits for future generations. This is essentially what is proposed for signatory producing nations under the terms of the Protocol.

Some other countries are already in compliance with the Oil Depletion Protocol, or nearly so, and could therefore adopt and implement the agreement with little effort. For example, nations already experiencing steeply declining production are, in that respect, in compliance with the terms of the Protocol, whether they wish it or not. Much the same could be said for poor importing nations that cannot afford to purchase oil at current high market prices. By adopting the Protocol, these nations could make a virtue out of necessity and pave the way toward the global adoption of a policy that would work to the advantage of all nations by stabilizing prices and reducing competition.

Other countries, while not on track to implement the terms of the Protocol, are at least beginning to contemplate ways to reduce oil dependency. In the United States, for example, there is widespread and growing concern over increasing dependence on oil imports. The US House of Representatives has asked its Subcommittee on Energy and Air Quality to investigate a motion proposed by Representative Roscoe Bartlett of Maryland “that the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency that was incorporated in the ‘Man on the Moon’ project to address the inevitable challenges of Peak Oil.” In Ireland, Forfás, the national board responsible for providing policy advice to the government on enterprise, trade, science, technology and innovation, has released a report titled “A Baseline Assessment of Ireland’s Oil Dependence: Key Policy Considerations.” This report examines the extent to which the Irish economy is vulnerable to oil production peaking, as well as the policies required for preparing for the event. Other countries such as Germany, Japan, Spain, and the Netherlands have made important strides in implementing renewable energy technologies (primarily solar and wind). China and India are also investing heavily in renewables, though their consumption of fossil fuels is also growing.

Depletion-based and Emissions-based Agreements

“The very idea of accepting oil depletion protocols and treaties to guard against irresponsible levels of emissions may not be popular or easily endorsable. Yet, in the annals of history it is clear that epochal crises must be faced. The question is whether they are met with intelligence, resolve, and sacrifice or whether decision makers procrastinate to everyone’s eventual peril and suffering.”
—The Rt. Hon. Edward Schreyer, former Premier of Manitoba, Governor General of Canada, and High Commissioner to Australia and the South Western Pacific

As noted above, scarcity is not the only reason for voluntarily reducing oil consumption; the environmental impacts of emissions from petroleum use are arguably far more important motivators. An emissions-based treaty (Kyoto) already exists. How is the Oil Depletion Protocol different, and why is it needed in addition to the Kyoto accord?

The Oil Depletion Protocol differs from emissions-based protocols (e.g., Kyoto) in emphasis and method. Emissions protocols focus on end-of-pipe outcomes from fossil fuel usage, while depletion protocols focus on the supply of those fuels. For both, the goal is a transition away from the use of fossil fuels.

Emissions-based protocols require us to change our consumption of energy resources in order to avert environmental harms, which will in turn impact human society. Depletion-based agreements require us to change our consumption of energy resources in order to adjust to the geological reality of declining extraction rates.

Emissions-based protocols begin by creating emissions rights and then ration those rights. The Oil Depletion Protocol more simply rations supplies, starting at the wellhead.

Throughout much of the world the general public finds it difficult to understand the science of global warming; therefore, even though there is a general, vague understanding that dangerous climate change is somehow related to human activity, there may be insufficient motivation among the general populace in many countries to endure sacrifice, change habits, or support bold energy policies.

Oil depletion is inherently easy to understand. Oil is not a renewable resource; only so much exists, and we began depleting the supply when the first barrel was extracted from the ground. We are at the point now, globally, where the cheap, “easy” oil is gone, and what is left will be more expensive to produce and probably cannot continue to be produced at rates that would match demand under “business-as-usual” growth scenarios.

With emissions-based agreements there is little advantage to any given individual nation in adoption if other nations that are major emitters do not likewise sign on: the climate for the one nation adopting the agreement won’t be improved much, because climate change is a global phenomenon. The real advantage only comes if all nations that are major emitters join the accord.

This is not as much the case with the Oil Depletion Protocol. While this plan will yield its greatest benefits (in terms of stabilizing oil prices and reducing competition for supplies) if all nations sign on, any single nation will be much better off adapting proactively to the new regime of scarce oil and higher prices than it would be if it simply continued attempting to use petroleum at existing or increasing rates. And the Oil Depletion Protocol will help significantly with that proactive process of adaptation.

However, depletion-based transition plans do not do away with the requirement for emissions-based agreements: the latter will be needed to ensure that nations do not substitute low-grade hydrocarbon resources for oil as they reduce their reliance on the latter, thus worsening the global climate crisis.

Depletion-based agreements will help create an economic environment in which emissions-based accords can function. If the world approaches and passes the point of peak oil production without having a proactive depletion-based transition plan in place, the resulting economic and political turmoil will reduce societies’ ability to respond to environmental problems resulting from global warming.

To summarize: Both emissions-based and depletion-based agreements are necessary, and they will work well together.

Adopting the Protocol: The World, the Community, the Individual

“Over-reliance on petroleum continues to contribute significantly to the emission of greenhouse gasses that are harmful to our environment and human health, and that must be curbed if we are to avoid serious consequences in the future. Foreign oil’s undeniable ties to terror, to global instability and to continued environmental degradation make immediate, decisive action to reduce our petroleum consumption absolutely critical.”
—George Pataki, Governor of New York State

“The Oil Depletion Protocol represents a straightforward route to minimizing human misery and is one that is easy and practical to apply.”
—Chris Skrebowski, Editor of Petroleum Review

The Post Carbon Institute, working in concert with several funding organizations, has founded the non-profit Oil Depletion Protocol Project, which is currently gathering a small staff. The Project’s purpose is to promote the Protocol worldwide in every way possible—by making copies of this booklet available to policy makers, by maintaining a robust website (www.oildepletionprotocol.org) explaining the Protocol, and by undertaking the lobbying effort that will be needed to obtain adoption. We are also seeking to obtain written endorsements of the Protocol from nongovernmental organizations and prominent individuals. The Protocol Project welcomes the help—financial and otherwise—of the general public in its efforts.

National Efforts

We recognize that we must seek to educate top-level decision-makers not just in government but also in industry, as well as members of the general public, because without pressure from the business community and from the public, government leaders will be unlikely to take the political risk of proposing or supporting the Protocol. In some countries longstanding political interests related to the fossil fuel and automobile industries might discourage influential politicians from supporting mandated limits on petroleum imports or exports. Also, doctrinaire free-market economists are likely to argue strongly against government interference with the unfettered flux of supply and demand.

Adoption of the Protocol within any given nation will require initially that just a few policy makers have the courage to champion it and bring it before their parliament or congress. We hope to identify those specific politicians and to assist them in persuading their colleagues. Simultaneously, the mobilization of widespread public support can embolden other leaders to join in the push toward adoption, until finally a majority of legislators in a given country have been won over and the Protocol gains official acceptance.

Municipal Efforts

Cities around the world are beginning to assess their vulnerability to Peak Oil and are planning to reduce it. Some examples:

Kinsale, Ireland was the first town to undertake a comprehensive Peak Oil assessment and response scenario, titled “The Kinsale Energy Descent Energy Action Plan.” This 25-year report with a year-to-year plan of action has since been adopted as policy by the Kinsale town council.

In November, 2005 the city of Denver, Colorado hosted a World Oil Forum, sponsored by ASPO, at which Mayor John Hickenlooper—together with industry experts, political leaders, and others—addressed both global and local issues related to energy scarcity. The Denver International Airport uses alternative fuels for all non-flight vehicles, and Denver is changing land-use policy to promote high-density zoning areas in conjunction with a new public transit system. The city also promotes full or partial telecommuting to use less fuel.

During the past two years the cities of Willits and Sebastopol, California; Portland, Oregon; and Burnaby, British Columbia, and Hamilton, Ontario in Canada have created Peak Oil task forces to identify key short-term and long-term vulnerabilities to petroleum shortages and price spikes, and to develop recommendations for addressing these vulnerabilities. Municipal, citizen-led efforts now under way in the US include ones in Tompkins County, New York; the San Francisco Bay Area in California; Boulder, Colorado; Plymouth, New Hampshire; Bloomington, Indiana; Port Townsend, Washington; and Eugene, Oregon, among many others.

In countries that have not yet adopted the Oil Depletion Protocol, municipalities, provinces, and citizen groups could leverage their Peak Oil preparation efforts by publicly agreeing to reduce their oil consumption by 2.6 percent per year according to the terms of the Protocol. Many cities and some states in the US are already taking this kind of proactive approach with regard to the Kyoto greenhouse emissions accord, implementing the terms of the accord locally even as the nation as a whole delays ratifying it. This strategy will be most effective if the municipalities, groups, or regions concerned announce publicly that they are abiding by the Protocol and recommend its adoption to national political leaders.

The Role of Business

Most businesses are highly vulnerable to the impacts of oil shortages or major price hikes leading to higher transport costs for raw materials, finished products, employees, and customers; and in some cases to higher costs for feedstock materials (such as for plastics). Businesses can therefore benefit by gradually preparing themselves for steeper oil prices by proactively reducing their reliance on petroleum and petroleum products. They can do this, for example, by providing alternative transportation options for employees and by reducing the use of petrochemical-based plastics in manufactured products produced or used.

Those businesses that take such steps will benefit not only by improving their long-term ability to adapt to future energy price increases, but also by improving their public image.

The Oil Depletion Protocol would help coordinate such efforts, and would provide both yearly targets and a gauge of progress.

Personal Efforts

Just as municipalities and businesses can help enact the Protocol, with the Protocol also helping them meet their own Peak-preparedness goals, individuals and small groups can do something similar. Instructions are provided in the accompanying sidebar.

How to Personally Implement the Oil Depletion Protocol

First, create an oil inventory. Where and how are you using both petroleum and the products and services derived from it? If you drive a personal automobile, it will be a simple matter to keep track of how many gallons of gasoline you use. Also, keep track of how many miles you fly in a typical year, and assume a fuel usage for those miles approximately equal to your fuel usage while driving. The greater challenge will be in tracking indirect petroleum usage in food, plastics, and chemicals. On average, for a typical urbanite in an industrialized country, nearly half of oil consumed goes toward transportation, one-third toward food provisioning (including agriculture, transportation of product, storage, and processing), and the rest toward the production of plastics and chemicals.

Next, make a plan, in year-by-year stages, covering at least the next ten years, to reduce your oil consumption. During those ten years, find a way to reduce your consumption of oil by a total of 25 percent at a minimum. With some effort, it may be possible to make that entire 25 percent reduction in the first year.

If transportation is most people’s area of greatest dependence and vulnerability with regard to petroleum, it is also the area in which it is easiest to make measurable reductions in oil usage. Reduce driving, and make your travel more efficient by trading an existing car for a smaller and more fuel-efficient model. Or, better yet, find a way to do without a car. Ride a bicycle or electric scooter. Take public transportation where it is available, and, where it isn’t, help organize other options, such as a car co-op or a community-supported hitchhiking program. Reduce your air travel to a minimum.

Reduce oil dependence with regard to your eating habits by buying local, organic food. Shop at farmers’ markets or join a community-supported agriculture program. And if you live where this is possible, grow a vegetable garden and plant fruit and nut trees.

Avoid using plastic wherever possible, especially in the form of packaging. Carry reusable cloth bags with you when you go shopping, and do not buy water in throwaway plastic bottles. If you do these things consistently, you can credit yourself with a two-percent reduction in oil dependence.

More details are available at www.oildepletionprotocol.org.

These efforts will be of much greater value if they are undertaken in the context of a well-publicized, cooperative local program:

• Explain to your friends and family the problem of Peak Oil and the benefits offered by the Oil Depletion Protocol, and let them know how your personal efforts are contributing to the necessary energy transition.
• Form a support network within your community and hold periodic public events to promote efforts to reduce oil consumption.
• Inform your local officials about Peak Oil and the Oil Depletion Protocol through letters, and request meetings in order to explain further.
• Work with your community officials to establish a commission to assess community oil supply vulnerability and to design a transition plan.
• Seek to obtain endorsement of the Oil Depletion Protocol from your municipality, and from organizations of which you are a member.
• Document your efforts at www.oildepletionprotocol.org.

Finally, please help spread the word about the Oil Depletion Protocol by distributing copies of this booklet.

* * *

The next few years may offer humankind its last, best opportunity to avert resource wars, terrorism, and economic collapse as it enters the second half of the Age of Oil. If we grasp that opportunity and succeed, we could set a precedent for cooperative, peaceful approaches to all of the resource problems we are likely to encounter during the coming century. The choice we face is between competition and conflict on one hand, and voluntary moderation and mutual assistance on the other. The first steps toward the latter can be readily taken by endorsing and adopting this simple agreement