December 15, 2007

The mother of all energy crises

Robert L. Hirsch, PhD

Addressing inevitable change

Dealing with a peak in world oil production will be extremely complex, involve trillions of dollars, and require decades of intense effort under the best of conditions.

A framework for planning the mitigation of oil shortages was recently developed and presented in the Hirsch report. To estimate potential economic impacts, the potential relationship between percentage decline in world oil supply and percentage decline in world GDP was estimated to be roughly 1:1, meaning that a 1% decline in world oil supply would create a 1% reduction in world GDP. Even recognizing the fact that precision is impossible in such matters, it is sobering to contemplate the impact of world oil shortages growing 2% to 5% per year over a long period.

Technologies are ready to mitigate peak oil, such as coal liquefaction, enhanced oil recovery, and gas-to-liquids, to name a few. They will be necessary because the fleets of liquid-fueled vehicles and machinery worldwide have lifetimes measured in decades, and they cannot be quickly replaced under the best of conditions. First, the public will have to become more aware of the problem; second, we will have to replace our current, cumbersome method of decision-making—worldwide; and third, major commitments will have to be made and followed through on. The tasks ahead will be daunting; there will also be remarkable opportunities to contribute and profit.

—Robert L. Hirsch, PhD is a senior energy advisor for Management Information Services Inc. Hirsch has run the U.S. Department of Energy’s fusion program, headed the Washington office of the Electric Power Research Institute, and was chairman of the National Academies’ board on energy and environmental systems.