My history teacher was an intimidating person. It seemed that there was nothing in his field he did not know. He was a Prussian institution, equipped with a PhD in history, which catapulted him above every other teacher at my high school in small-town Germany.
One day in the spring of 1989, we discussed in class the division of Germany into East and West, and whether we thought that this would ever change in our lifetimes. "Sure enough it would," some of us thought. How could it not, over the course of a human lifetime? Political systems come and go, rise and fall, and, after all, Germany had at least four different political systems in the 20th century, depending on how you look at it.
"Those of you who think that they will one day see the wall come down are naïve, ignorant, and understand very little about politics!" That was our teacher's forceful reply. Six months later, East Germans were standing on the wall and taking it apart with whatever tools they had at their disposal. Needless to say, when I asked my teacher a few days after this colossal event whether he could repeat what he had said earlier, I lost a few marks.
What I learned from that one lecture was more than I have ever learned in years of history classes. The world can change faster than you would think, no matter how unlikely it might appear at the time. This has been reflected by the fall of the Berlin wall, by 9/11, and now possibly by Hurricane Katrina. Why is that?
When The End of History was proclaimed by Francis Fukuyama after the decline of communism, I thought that this was a controversial statement, unlikely to come from a European. However, I must admit that I could not foresee any event or development in the 1990s that might have led to a major shift away from the dominating Western capitalist system. What was there to replace our seemingly democratic society? Climate change in 2100? After all, we had brought the Soviet Union to its knees by sheer economic power, or so we were told.
Emmanuel Todd, a French intellectual, might know better. In the 1970s, he studied a range of social indicators, including low fertility rates, which, in combination with its dire economic situation, led him to believe that the Soviets had seen their best days and that collapse was imminent (La Chute finale, 1976). He was right spot on, which is remarkable, given the lack of Europeans who would have supported his theory at the time.
In 2002, he published After the Empire: The Breakdown of the American Order, a book which is leading to similar conclusions about the demise of the American Empire. A combination of trade deficit, budget deficit, lack of an adequate welfare system, increasing poverty, and, ultimately, the falling dollar would plunge the United States into a downward spiral.
I had a hard time crediting Todd's hypothesis, until I began to study the issue of Hubbert's Peak--the peak in world oil production. There is a whole range of scientists, activist groups, petroleum engineers, and economists who promote the idea that the world will see a peak in oil production within the next 10 years, possibly earlier. Moreover, the peak would only be noticed in retrospect, i.e., you cannot tell that you have reached the peak until you have passed it and find yourself on the downhill slope of the production curve.
There are many convincing arguments in favour, and counter-arguments against, an imminent peak. However, the longer the high-oil-price regime lasts and the price continues to rise, the more the situation resembles such a scenario. In addition, the invasion of Iraq is increasingly regarded as a strategic move by the US and the UK to secure interests in the world's largest oil region. The fact that the UK will become a net importer of oil this year or next further fuels the fire of such arguments.
In order to clear the smoke, Matthew Simmons, a world-leading energy investment banker, decided to study the key country with respect to a potential world oil shortage: Saudi Arabia. In Twilight in the Desert, he draws a depressing picture of Saudi's oil situation. Its ageing gigantic oil fields, which make up such a large proportion of world oil production, are being pushed towards the end of their lifetime.
Is this it? Will a shift in global power be triggered by a world energy crisis that will bring the inefficient, gas-guzzling, energy-wasting U.S. infrastructure to its knees? I thought it was meant to be anything but that: climate change, public debts, falling dollar, over-stretched military. After all, there are experts like Jared Diamond (Collapse: How Societies Choose to Fail or Succeed) who try to link collapsing civilizations such as Easter Island or the Mayas to a degradation in environmental conditions. But running out of energy, i.e., oil?
Faced by this scenario, many Canadians and economists seek reassurance in Alberta's tar-sands. With estimated reserves near the size of Saudi Arabia's, it seems that Canada is well-positioned to save the world from such an oil crisis. Unfortunately, the recent numbers published by the Canadian Association of Petroleum Producers (2005 Canadian Crude Oil Forecast; www.capp.ca) tell a different story. While production of oil from the tar-sands might increase from 1.0 million b/d (barrels per day) to almost 2.7 million b/d by 2015, conventional oil production is likely to drop by 0.4 million b/d. In other words, the current total Canadian oil production of 2.6 million b/d might only rise to 3.9 million b/d by 2015, an increase of less than 2% of today's world oil production. Since world oil demand typically grows at 2% annually, this is a mere "drop of water onto a hot stone," as my old history teacher would have said.
According to Chevron, the era of easy oil is over. While non-conventional oil production becomes increasingly popular, conventional oil production might soon be on a steep decline (if it is not already), and this is what worries experts like Matthew Simmons.
Moreover, a globalized world economy ruled within the frameworks of WTO and NAFTA will not even allow countries such as Canada to determine their own oil future.
If an oil crisis does materialize, the big question is whether the United States will cede power in the British or Soviet way--in other words, without a succession of armed conflicts. History will tell--and history is far from over.
(Peter Berg--peter.berg @ uoit.ca--is an assistant professor of physics at the University of Ontario Institute of Technology.)