Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
By Matthew Simmons, John Wiley & Sons, Hoboken, NJ. (2005), 422 pp., ISBN-13: 978-0-471-73876-3
This book is a comprehensive examination of the history of Saudi Arabia's petroleum extraction and how much remaining Saudi oil can be extracted in the future. The author is Chairman and Chief Executive Officer of Simmons & Company International, a Houston-based investment bank that specializes in the energy industry, and a member of the National Petroleum Council and the Council on Foreign Relations, with an MBA from Harvard. Of the book's four parts, the first two give background and history while the last two report Simmons' detailed analysis of technical papers from Saudi Arabia.
Simmons gives the history of early Saudi oil production in considerable detail. Saudi Arabia did not become a major player in world petroleum production and politics until after U.S. petroleum production peaked in 1970 and the U.S. consequently became increasingly dependent on imported oil. The Saudis had been producing 2.5 million barrels a day in 1965, and this leaped to 8 million barrels a day by 1974. Yet these rapid increases were causing damage to the oil fields. Many experts believe that total ultimate recovery of oil from a field can be reduced by extended periods of high production. Ironically, in trying to meet its responsibilities as swing producer, Saudi Arabia probably violated the principles of good stewardship of its great oil fields. To maintain reservoir pressure, water was injected into the oil fields. By 1976, the Ghawar oil field was injecting 9.2 million barrels of water per day to produce 5.9 million barrels of oil per day.
As Simmons explains, the world knows so little about Saudi oil fields because in 1982 the Saudis ended their previous practice of publishing detailed production data. Nor have any data been released about remaining proven OPEC reserves. "Official OPEC production and reserve data have been sparse and utterly unverifiable. As a result, few oil observers trust OPEC's published petroleum data. OPEC members have many reasons not to be candid about reserves, production rates, and maximum capacities, and few incentives for being truthful."
Simmons shows in detail how this lack of information supported the belief that oil supplies in Saudi Arabia were nearly infinite, and this contributed to the collapse of oil prices in the spring of 1999 which sent the wrong message to oil "experts." Many writers with little or no background in science interpreted the price collapse as a sign that OPEC reserves were so large that OPEC could effectively pump oil at high rates forever. For just one of many such examples, M.I.T. economics professor M.A. Adelman wrote (Regulation, Spring 2004, Pg.16) that "There is not, and never has been, an oil crisis or gap. Oil reserves are not dwindling. The price of oil should be relatively stable." The collapse of petroleum prices caused the shutdown of many petroleum exploration efforts as well as shutting down development of alternative energies because they were not economically viable when compared to the low cost of petroleum.
Faced with the absence of good information from which he and other outside experts could deduce the condition of the Saudi oil fields, Simmons found an indirect source of information: some 200 technical papers on various aspects of Saudi production problems that had been published in respected refereed petroleum engineering journals. From these, and from his extensive general knowledge of the oil business, he put together a detailed picture of the current (2004) status of each of the Saudi oil fields and the results of extensive Saudi exploration for new oil fields. He concludes that Saudi oil production is very close to its "Hubbert Peak" after which production will start to decline. This in contrast to the Saudi claimed intention to pump "15 million barrels per day for 50 years even without the new oil discoveries they insist could add another 200 billion barrels of oil."
Simmons' studies do not support this optimism. He writes: "It is natural for energy optimists to take all the senior Saudi Arabian oil officials' vocal assurance at face value. As Saudi oil fields age and the world's need for oil steadily rises, the probability increases…that we are approaching an oil-curtailing twilight in the desert kingdom that has provided the greatest single contribution to the world's oil supply at the least cost. When this desert twilight arrives, the world faces an energy future, and in turn an economic future, far different from the one that all current forecasts and human expectations assume."
In an article in World Energy (Vol.8, No.2, 2005) Simmons recapitulates his studies and his conclusions, as well as giving an account of how he came to be involved in these studies. Here are some of his observations:
My hope is that [the book] will serve as a wakeup call to the urgency and importance of understanding the limits, not just to Saudi Arabia's oil, but to the entire world's oil supply, because we are clearly approaching the peaking of global oil supply at the same time as the world faces a relentless increase in oil demand.
For the past 15 years, I have become increasingly concerned that all was not well in the oil and gas world, and I have stated my convictions many times. I grew more and more convinced that the purveyors of conventional energy wisdom were peddling an energy blueprint for the 21st century that was fundamentally wrong.
Virtually every oil expert in the world has believed that Middle East oil is so plentiful that it will provide an essentially inexhaustible supply of inexpensive petroleum for the next 30, 50, or even 100 years. No one I ever met, however, had any facts to support this conclusion. The concept was based either on pure optimism or on readily available numbers that had not been audited.
Whenever our society faces a major crisis, a loud cry arises from Congress to investigate in order to determine who was at fault. We can expect this to be repeated when world oil production peaks and gasoline prices continue their rapid rise. Already it is clear that much of the blame and responsibility will have to be assigned to the Congress. Simmons describes a1979 New York Times article that reported on closed-door hearings in the U.S. Senate in 1974 in which the "senators were told that the Saudi oilfields were being worked so hard that a cutback in output would soon be mandatory." On my desk, my "bible" is a 1974 report, U.S. Energy Resources, A Review as of 1972 authored by M. King Hubbert and presented as a background paper prepared at the request of Henry M. Jackson, Chairman of the Committee on Interior and Insular Affairs of the U.S. Senate. In this 265 page report (Serial No. 93-40 (92-75), Part 1), Hubbert sets forth his methods of analysis and applies them to U.S. and to world oil, as well as to other fossil fuels. He predicts production peaks in the U.S. and world oil production. The report's forecasts have proven to be pretty much correct. When the global oil crisis becomes apparent to all, it will be interesting to see if the Congress will acknowledge its failure to act responsibly in the 1970s and in the many decades since. Quite recently Congressman Roscoe Bartlett (R-MD) (we are not related), who is a scientist, has been trying valiantly to educate his colleagues about the Hubbert Curve and its predictable imminent global effects. I have not seen signs that his colleagues are paying attention.
While I can't evaluate Simmons' claims, I find the presentation thoughtful, coherent, well-presented, and scientifically convincing. He stresses the topics on which information is unavailable or uncertain, and he carefully expresses his conclusions in terms that reasonably reflect the uncertainty in the input information. The Saudis have disputed Simmons' claims, so the ball is now in the Saudis' court. If they wish their claims about their projected future high levels of their oil production to be taken seriously, they must unveil their data for the world to evaluate. And we scientists need to be aware of the great anti-scientific efforts of those who would have us believe that resources such as petroleum are effectively infinite.
This is an impressive book. On the book jacket is an endorsement by Nobel Laureate (Chemistry 1996) Richard Smalley who writes, "This book is likely to be the most important ever written about oil."
Albert A. Bartlett,
University of Colorado
The End of Oil: On the Edge of a Perilous New World
by Paul Roberts, Houghton Mifflin, 2004, 389 pp., $26, ISBN 0-618-23977-4.
The Hydrogen Economy: The Creation of the Worldwide Energy Web and the Redistribution of Power on Earth
by Jeremy Rifkin, Putnam, 2002, 295 pp., $24.95, ISBN 1-58542-193-6..
This review is reprinted from the Teachers Clearinghouse Newsletter on Science and Society, Spring 2005, with permission.
When I set out to read these books, I expected from their titles that they would cover two different aspects of energy sources in our history, that the first would paint a gloomy picture of life on Earth as its oil resources are depleted and that the second would focus on what life would be like in a future fueled by hydrogen. Although these expectations were borne out to some extent, I was struck more by how much these two books had in common.
For example, they both characterize the ages of societal development by their energy sources: hunter-gatherer stage by human energy, agricultural stage by solar and animal energy, industrial stage by fossil fuels. They both warn of the impending peak of global oil output and of the dangers of "holding on" to our present fossil fuel reliance rather than planning for alternatives. They both see the world oil picture in light of expenses to maintain the royal family of Saudi Arabia, Islamic fundamentalism, and China's growing appetite for oil. They both see global warming as a further danger posed by continued reliance on fossil fuels, with greater danger posed by the possibility that insufficient oil will lead both China and the United States to burn coal or oil substitutes (like oil from shale and tar sands), all of which will emit even more carbon dioxide. They also note that the first advocacy of hydrogen as a fuel came from geneticist J. B. S. Haldane in a 1923 Cambridge University lecture.
That said, let us now turn to how the books differ. One of the reasons they differ is the backgrounds of their authors. Roberts is a journalist, who in turn is dependent upon those he interviews and reads for his expertise. Because of the huge investment tied up in our fossil fuel infrastructure, a phenomenon Roberts calls "asset inertia," he confesses in his conclusion that the onset of writing his book found him pessimistic about continuing "business as usual" with fossil fuels. This comes through in several statements:
• "The real question, for anyone truly concerned about our future, is not whether change is going to come, but whether the shift will be peaceful and orderly or chaotic and violent because we waited too long to begin planning for it." (p. 14)
•"The real question is not whether oil is going to run out (it will) but whether we have the capacity, the political will, to see that outcome soon enough to prepare ourselves for it." (p.65)
• "An even more important question: whether we can produce enough energy by any means to provide a decent standard of living for the entire planet and at the same time satisfy our emerging criteria for climate and energy security. . . ." (pp. 210-212)
Yet, Roberts admits that writing the book has left him with a "more complex perspective." Because natural gas can be converted to liquid fuel and shows promise for generating electricity with lower carbon dioxide emissions than coal, he sees natural gas as a "bridge fuel" to what he calls the "next energy economy," but he concedes that it is not clear where the "bridge" will lead. However, because the global peak in natural gas output is expected to follow the global peak in oil output by about 20 years, this "bridge" cannot last long.
The future Roberts would like to see, as expressed in his last chapter, is one in which a carbon-emissions tax is imposed in order to discourage further contribution to global warming. If utilities can be taxed for the sulfur dioxide, he asks, why can't they be taxed for the carbon dioxide they emit? (An initial amount of $10/ton is suggested, with a ramping up to ten times that in 15-20 years.) Another part of Roberts' vision is raising the Corporate Average Fuel Efficiency (CAFE) standards for automobiles, which remain unchanged since President Reagan froze them in 1987. He would facilitate this by a "feebate" system -- extra fees for gas guzzlers (up front, so the prospective purchaser would think about the total cost before buying), and rebates for vehicles getting more than 40 miles to the gallon. He would also subsidize Detroit (which he acknowledges is saddled with the most asset inertia) to compensate for the advantages foreign manufacturers already enjoy at the high end of the fuel efficiency scale (a provision he sees as justified in the name of national security). Raising the CAFE standards by 4 miles/gallon, he points out, would save twice the oil that could be pumped from the Arctic National Wildlife Refuge.
But Roberts feels that the United States needs to do more to show its commitment to a more positive energy future. To match Denmark's leadership in wind technology and Japan's leadership in solar energy technology, he would like to see the U.S., as the world's leading holder of coal reserves, develop leadership in clean-coal technology -- and give it to China and India if it is necessary to prevent catastrophic global warming.
If Roberts is not sure what the energy future will bring, Rifkin, writing as the president of the Foundation on Economic Trends in Washington, DC, is very clear about what it should bring. Rifkin's answer is hydrogen, which he calls the "forever fuel," largely because of its abundance in the universe. He sometimes mistakenly associates it with the "power of the sun" (where there is hydrogen fusion, not hydrogen combustion). And while on p. 180 he finally acknowledges that hydrogen fuel is "a secondary form of energy that has to be produced," nowhere does he confront the consequences of this requirement in a quantitative way.
When Rifkin characterizes the ages of societal development by their energy sources, he does so with a particular bent to the type of society necessitated by the energy source. He maintains that "the greater the horizontal flow of energy from environment to society, the greater the vertical flow of societal power from the top down needed to secure the process." (p. 41) He adds on p. 89 that this also means greater production of entropy, which he consistently miscues as energy "no longer able to perform useful work." (p. 44) He applies "thermodynamic" arguments to assert that "Collapse sets in . . . when a mature civilization reaches the point at which it is forced to spend more and more of its energy reserves simply maintaining its complex social arrangements while experiencing diminishing returns in the energy enjoyed per capita." (p. 56) "The complex, centralized infrastructure we have created to manage a high-energy fossil-fueled economy [which Roberts refers to as "asset inertia"] -- once our greatest asset -- is fast becoming our biggest liability," he adds on p. 144. And on p. 173 he writes that "We are living through the senescent stages of a mature energy regime, with all the problems that go with it." Elsewhere (at the beginning of Chapter 7) he states that we risk danger by paying more to maintain access to Middle Eastern oil than the value of the oil itself.
Rifkin argues that we need to get out from under our present system characterized by corporate domination and vertical control. To argue for the next stage, he goes back to his characterization of societal development stages in terms of energy resources and adds a correlated form of communication. For the industrial stage characterized by dependence on fossil fuels he cites the printing press, telegraph, and telephone, all of which, like the entire industrial age, have relied on central points of dissemination (publishing houses and telegraph and telephone companies are centralized just like electric power plants). But the most recent form of communication, Rifkin observes, is the Internet, which is not centralized, and he sees hydrogen playing the same role as our next energy source as a "Hydrogen Energy Web." This Web will be run as an interconnected system of hydrogen-fueled fuel cells by cooperative DGAs (distributed-generation associations), for which he sees Community Development Corporations, Community Development Credit Unions, public not-for-profit utilities, Common Interest Developments, and cooperatives as either models or candidates. Rifkin sees the Hydrogen Energy Web as "democratizing" energy, and no more so than on the international scale, particularly in terms of "empowering" the developing world, in a double sense of the word, by bringing a source of energy which does not require going into hock by having to pay for ever more expensive oil imports. But he does not confront the problem of how he is going to generate the hydrogen fuel for all these interconnected fuel cells.
John L. Roeder
The Calhoun School
Catastrophe: Risk and Response
By Richard A. Posner, Oxford University Press, 2004, 265 pages text, 48 pages notes and references, ISBN 0-19-517813-0
Richard Posner is a judge of the U.S. Court of Appeals for the Seventh Circuit. As such, Catastrophe: Risk and Response is a book intended primarily for the legal community and looks principally at the relationship between the law, science, and technology. Although the book is extremely well documented, Posner is not a scientist and most of his references are not from scientific sources. Exceptions are a few references from Physical Review, Science and Nature. Curiously, even though Posner himself is not a scientist, he often criticizes the opinions of other people on the basis of their being non-scientists.
Posner begins by reviewing various risks to society and categorizing them as either “catastrophic” or “not catastrophic.” For the purposes of this book, catastrophic risks are those risks that threaten to kill most or all of human life. Given that definition, the principal catastrophes Posner identifies are the following: (1) collision with an asteroid (as presumably led to the extinction of the dinosaurs 65 million years ago); (2) runaway global warming; (3) a strangelet accident (as was feared might result from the creation of exotic particles at the Relativistic Heavy Ion Collider [“RHIC”] at Brookhaven National Laboratory); (4) a bioterrorist attack of global proportions; and (5) nanomachines capable of self-replication leading to the destruction of all life.
Risks Posner identifies but concludes are not catastrophic (in the sense that they wouldn’t destroy most or all of human life) include the following: (1) runaway genetically modified plants; (2) overthrow of the human race by superintelligent robots; (3) pandemics (natural epidemics as opposed to epidemics induced by bioterrorists); (4) major volcanic eruptions; (5) exhaustion of natural resources; (6) loss of biodiversity; (7) overpopulation of Earth; (8) “nuclear winter” resulting from a global nuclear war; (9) cyberterrorism (including computer viruses); and (10) loss of privacy resulting from extreme surveillance and concealment activities.
Of course, most of these risks are interdependent. In both lists, Posner emphasizes the “double-edged sword” of technology; technology often is both the cause but also the potential cure. Probably the only risk that lies almost entirely outside human control is the risk of a collision with a large asteroid. Even in that case, however, Posner explores the possibility of a weapons defense system that could conceivably destroy or at least deflect an asteroid on a trajectory of intersection with Earth.
Posner also considers some “disasters” that many readers probably would not label as such. In particular, he discusses what he calls “moral disasters.” Posner seems to deplore the change in the social role of women in recent decades, along with increases in divorce rates, extramarital sex, the status of homosexuals, and safe and effective contraception. It remains unclear to me why these topics were included in this book, and I suspect that many readers would disagree with Posner’s stance on these subjects.
A second stance Posner takes that many readers (especially of this newsletter) would probably disagree with is in regards to RHIC. Posner asserts that high-energy particle research offers no benefit to society, so he asks why the federal government even funds such research. In regards to the strangelet scenario, he argues that the construction of RHIC could have been postponed without any ill consequence to society until there was a completely unbiased verdict that a strangelet scenario cannot possibly happen.
A third stance Posner takes that many readers also would probably disagree with is his recommendation to restrict certain foreign students from access to security-sensitive graduate programs in the United States. He says, “… citizens of foreign countries that are hostile to the United States, and citizens of countries (mainly Muslim) in which a significant fraction of the population is deeply hostile to the United States…should not be admitted to advanced study of dangerous technologies, such as nuclear engineering, nanotechnology, molecular biology, computer science, and artificial intelligence.” Posner does state, however, that he recognizes that any restrictions more stringent than what have already been imposed since 9/11 are unlikely to be implemented.
The sections of Catastrophe that deal with true catastrophes are well-documented and are worth reading by an audience unfamiliar with any or all of these catastrophes and who would like an introduction to these topics. However, a major part of the book deals with Posner’s efforts at providing a cost-benefit analysis of each situation. I found this section tedious to read and largely unproductive in its conclusions. The estimates of the worth of human lives are too subjective, and the estimates of the probabilities or frequencies of occurrences of disasters are too speculative to be of much value.
Posner’s principal recommendation of how to deal with possible catastrophes is to establish national or international science courts composed of lawyers and other public-policy makers. Members of these courts would conduct thorough analyses of the risks involved and the costs of attempting to avert those risks, and would then recommend to government agencies suitable courses of action to take. Rather than leaving these analyses to the scientific and technical community, Posner argues for the establishment of a scientifically literate legal profession, largely on the grounds of presumed greater impartiality. I’m sure that professional scientists reading this book would be unlikely to agree with Posner’s recommendations.
Overall, Catastrophe is probably of greater value to the legal profession and to the general public than it is to the scientific community. However, even general readers of Catastrophe should feel free to be selective in which portions they read. Probably the greatest benefit to them of reading the book would be derived by following up on the references that are given. The scientific community may be better served by the peer-reviewed scientific literature.
Dr. Brian H. Nordstrom
Embry-Riddle Aeronautical University