Oil and Gas

Peak Oil Caucus chairs Bartlett, Udall comment on National Petroleum Council report

Last week, the National Petroleum Council released its new report, "Facing the Hard Truths about Energy," stressing the increased development of alternative energy sources in order to meet global energy demand -- a demand that will likely not be met solely through global oil and gas production. During today's E&ETV Event Coverage, Reps. Roscoe Bartlett (R-Md.) and Tom Udall (D-N.M.), co-chairmen of the Congressional Peak Oil Caucus, discuss the NPC report and explain why they believe it hides the truths about global energy.


Tom Udall: The first thing that I'd like to note on this peak oil situation is that there have been two recent reports, the one we're here on today, the National Petroleum Council report, and then there was a report by the International Energy Agency. Now, that one is put out by 26 European countries. And I think the remarkable contrast there is that we're talking about the 26 European countries, the United States is only one of them, have basically said what needs to be said, that we're probably going to peak in the next couple of years. This could cause some very severe economic consequences and the world needs to start organizing and dealing with this. On the other hand, we have the National Petroleum Council report, which Secretary Bodman asked specific questions to the petroleum industries. We know the National Petroleum Council is executives from the oil companies. And Secretary Bodman asked the right questions, but the National Petroleum Council didn't directly answer those questions. And that's one of my major problems with this report.

The issue here is not the resources, the issue is resource deliverability. And they actually say that in the final paragraph, I think on page 40, but they don't address it directly. And what I think we need at this point in time is a clarion call that peak oil is going to be here in several years. And I think the American public is entitled to answers on these questions from somebody like the National Petroleum Council when gasoline cost $70 to fill up with a tank of gas. So that's the situation we're dealing with.

The one other thing I'd like to note is that in looking at this report, a retired Aramco executive, this is the oil company that runs the Saudi oil operations, said there has been a dramatic paradigm shift in terms of the production of oil worldwide. He said, "Oil producers no longer are inclined to rapidly exhaust their resource." And, to me, what they're doing is they're taking the time that's necessary to develop their resources because they see that time is value to them, which, once again, put us in a precarious situation in terms of peak oil. And so, with that, why don't I just go to questions so that we can deal with this in the middle of both and have Mr. Bartlett be able to make his statements too.

Question: So part of your concern here is that there might be a false sense of complacency because of this report, this National ...

Tom Udall: That's the first issue, is a false sense of complacency. That here you have these oil executives basically saying, well, we're going to be able to do this. We don't have any problem. Buried in the report are the realities that when we really hit the wall we're going to be in a very bad situation and none of us want that to happen. What our Peak Oil Caucus is all about is getting out in front of this. It's saying, let's admit it's coming and let's get out in front of it.

Question: If there weren't that sense of urgency, based on the current makeup of the House, do you think there'd be a willingness among members in both parties to break out of the usual positions, the usual boxes? For example, for most Democrats, if they thought there was urgency would they change their position on, for example, oil development off the Atlantic Coast or on federal lands that are currently difficult to develop.

Tom Udall: I think the first thing that could break the logjam in the House and Senate would be for the facts to come out in a powerful way from groups like the National Petroleum Council. Now, the IEA report, which is a significant report, probably doesn't have that kind of clout. But I think that it's there for those of us to read. But, if you come out in that kind of solid, strong way from a reputable organization, I don't think there's any doubt that you would start to see some bipartisanship, you'd start to see the lines breaking down, and you'd start people saying how do we work with each other to get solutions?. But right now I don't see that happening with this report, which is more than anything a status quo report.

Question: When do you think your next opportunity will be to kind of change the paradigm or to shake up people's views of this complacency?

Tom Udall: I would like the contrast, and Representative Bartlett is here so we're going to get him right in, between the IEA report and the national petroleum Council to be - that one is really sending that clarion call, the other has disappointed us and really let us down. And with that, Representative Bartlett, the other stellar half of the Peak Oil Caucus, come on in here.

Roscoe Bartlett: Thank you all for coming. This, of course, is the fourth entity that's done a report on this subject. I think SAIC actually did three reports, but if you lump those into one we've had SAIC, we've had the Corps of Engineers, and we've had the Government Accountability Office. And all the other three said essentially the same thing in different terms, that peaking is either present or imminent with potentially devastating consequences. This is a very interesting report because whatever mindset you had when you started reading the report, the report will support that mindset. If you thought that we were going to have some problems in the future facing the hard truths about energy in the title, yeah, so that supports my conviction. If you thought that there's no problem in the near-term future that you need to worry about and probably the long-term future will take care of itself. You can find words in this to support that too, like the world is not running out of energy resources. That's all you need to read to put the thing down and say, "I don't need to worry anymore. This is the National Petroleum Council. The world is not running out of resources." That is a true statement, but, but they didn't put any 'but' after it. The world is running out of its ability to get these resources as quickly and as cheaply as it will need to meet the demands.

Certainly this report did not deliver the clarion call for action that we had hoped that it would deliver. For those, and it's true of most bureaucrats, that would like to just continue to coast, this will give them the evidence that they need that they don't really need to do anything because the world is not running out of energy resources. That is a true statement. Of course, half of all the oil that was ever recoverable is still recoverable. And in addition to that there will be additional oil from unconventional sources and from enhanced oil recovery and so forth. But the context in which that statement is made, it just gives a person who started reading this with the notion that, gee, there's not any problem, that he can find in here are all sorts of support for that position. So I think that it does a great disservice. It really didn't answer the question that the secretary asked. The secretary asked tell us when we're going to have peak oil. Is this a problem? And the report really didn't answer that question.

Fortunately, as my colleague Mr. Udall just said, this is the International Energy Agency has out a report at just about the same time saying, gee, there is really going to be trouble, because in the next relatively few years we believe that the supply will not be able to meet the demand. Now, you can read that into this report too if you wish, but you can also read anything you wanted to this report. It's a good report for bureaucrats. Whatever position you want to take you can find support in this, in this report for us. And what we had hoped was that it would corroborate the convictions the other three reports and to call our leaders to action, which I think we, as a people, regret didn't happen in the future. Because I think that we face a really challenging future with energy. And we will ask ourselves, with all of this evidence that there was a pending problem, why didn't we do something? And we had hoped this report would help, unfortunately, I think that for those who don't want to do anything they'll find plenty of justification here for not doing anything.

Question: Do you think the authors of that report know the answer to that question about when the peak might be and that they didn't want to reveal it to the public?

Roscoe Bartlett: Well, they're own graphs, I think, show that for the last 30 months there has been no increase in oil. It's been flat for the last 30 months. And the price has gone up in 30 months, from what, $40 a barrel to $75 a barrel at one time today. And I think there's been some, I know there's been some demand destruction. There's some Third World countries that just can't afford the price of gasoline, which is why it's cheaper in our country, because the ships that were carrying there have now turned around and they are coming here. And so the gas prices, you've noticed oil has been going up and gas has been going down, which is counterintuitive, but that's simply because there's, I'm glad to see that these are moving independently by the way, because that means that market forces are working. And temporarily there is a bit of a glut of gasoline and so it's down.

Question: You mentioned market forces. Do you believe that when it costs the consumer $70 or more to fill the tank in their vehicle, that consumers will begin to respond in a rational way? For example they'll say maybe we can get by with one car instead of two. Or, maybe when we decide where to live, we should move closer to the job rather than having a long commute. Do you trust consumers to be able to respond these market signals?

Roscoe Bartlett: Well, I think that they will respond. But I think that still energy is so cheap, gasoline at $3 a gallon is cheaper than water in the grocery store. And as long as gasoline is cheaper than water there is not going to be any real incentive to conserve gasoline. But still, I was in Paris during the last election and it was €1.3 or €1.4 per liter. That's over $8 a gallon.

Question: So what's the implication of that? Would we be better off as Americans ...

Roscoe Bartlett: Well, they have made a conscious decision in all of those countries to make energy more expensive. And they do it by taxing the displacement on the car. They do it by having a higher tax for license each year. If your car has more displacement they do it with huge taxes on gasoline. They pay the same thing for oil that we pay. Our gasoline is $3 a gallon. Theirs is $8 a gallon. The additional $5, pretty much mostly, some of it, we are very efficient in our country, so we've saved a little bit through the efficiency, but most of that has to be taxes, doesn't it? And they've done that because they want to reduce the carbon footprint, because they want to be less dependent on foreign oil. There are a number of reasons they've done that. But now we've developed an infrastructure in our country where it's going to be essentially impossible for us to do this because we have got a widely dispersed population that commutes long distances to work. If that's the bell, I've got to run. We have two minutes.

[End of Audio]



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