Oregon DOT Report - Only Question On Oil Peak Is When

In theory, there are few things less terrifying than an Oregon Department of Transportation report detailing a pilot program to tax motorists by mileage driven.

But tucked into the 55-page report on the possibility of trading taxes by the gallon for taxes by the mile (see "Back-Seat Big Brother," May 25, 2005) is one passage that-if you like highway travel and the American Way of Life-is more than a little frightening. "Some petroleum industry experts predict that before 2010 the world production of conventional oil will crest and enter a permanent decline," the report states under the heading "Peak Oil."

Peak oil is the theory that, due to a finite supply of petroleum, the world's production must soon fall. With rising gas prices and China's growing petroleum demand, peak oil has become an increasingly hot topic. Books and websites declare the end of the oil era, while Big Oil says the peak could be at least 100 years away.

The ODOT report released this month takes a more pessimistic tone. "There's no controversy over the idea of a peak," says the report's author, James Whitty. "The question is: When will it happen?"

EDIT

http://www.wweek.com/story.php?story=6550

I can't get my head around taxing by mileage. It's fuel consumption that needs regulating, which seems like it would imply a tax on fuel used, not miles traveled.

We do not have the required mass transit infrastructure to eliminate automobiles. We must therefore make policy that will encourage conservation and penalize waste. It's fine to increase taxes on fuel to achieve that goal. But it is totally idiotic to tax by mile where a guy who drives alone in his gas guzzling Hummer pays the same amount as the person who ride pools with his Prius.

Oregon DOT needs to review this and make the necessary change to ensure our energy future, because taxing by mile only penalizes driving, not wasting. I've never heard of a more stupid policy.

Fuel taxes are a useful, but not perfect, proxy for an accurate 'user fee' for road use. Mileage is more accurate.

If the goal is to pay for roads, mileage is best (or tolls, or congestion charges); if the goal is to pay for military intervention for the oil industry, fuel taxes are best. If the goal is to reduce oil use, oil taxes are best.

the roads are populated by everything from muscle cars to electric hybrids to natural gas vehicles to motorcycles.

So how is mileage tax equitable? Where's the balance when the asshole alone in the Hummer pays the same tax as the responsible guy car pooling in his Prius?

There is no equity in that. If you want people to save gasoline, you need to either tax the gasoline, or the use of the gasoline. Mileage does not equate linearly to usage, so it is totally unsuitable for the basis of taxation.

Where force = mass x velocity squared. Well the Hummer and the Honda
Del Sol are going to both be going traffic speed so velocity on any given road is basically a given (averaged).

Therefore the defining factor as to how much a vehicle damages a road as it passes over it is....MASS!!! The simplest way to get an estimate of how many tons have driven how many miles...tax fuel.

A mileage tax is simply a tax break for the wealthy. They get to drive their big ass SUV's and pay the same tax per mile as a Miata. Not fair at all.

if the goal is to pay for roads, fuel is only a reasonable proxy. Mileage (and GVW) are better.

If the goal is to reduce oil use, then a gas tax is better.

I'm the first person to support an oil (or better, a carbon) tax; I think it's the ONLY way to reduce consumption; however there's not a politician out there who wants to raise prices at the pump.

I tend to support the idea of a carbon tax, with about half the revenue returned as a per-person 'energy credit', and the other half used to reduce sales and/or wage taxes.

I reject the idea that an energy consumption / pollution tax should be used to pay for alternative energy: it's economically inefficient, and very likely to be spent on 'alternative energy pork', like ethanol and PV. I support the idea of public transit, but prefer it to be funded by a value capture tax: a tax against the very land values it creates.

just recently, talking about Peak Oil. They're a Big Oil company - I'd say they're trying to break it to us gently.

I'd be interested in knowing what they're trying to say.

but I can't find it (search isn't working well). Here's a copy of an e-mail I received. The ad is listed in here, as well as some commentary by Dale Allen Pfeiffer. (Hope it's ok to post the entire thing.)

Begin e-mail:

The Oil Industry's Bid for Leadership:
a commentary upon a recent ad from Chevron Chairman & CEO, David J. O'Reilly

by
Dale Allen Pfeiffer

© Copyright 2005, From The Wilderness Publications, www.fromthewilderness.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.

On July 15th, 2005, the following paid, two-page ad appeared in The New York Times, The Sacramento Bee, The San Francisco Chronicle, and who knows how many other newspapers.

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

http://www.chevron.com/about/advertising/docs/real_issues_print_02.pdf

AD BEGINS HERE
It took us 125 years to use the first trillion barrels of oil.

We'll use the next trillion in 30.

So why should you care?

David J. O'Reilly
Chairman & CEO
Chevron Corporation

Energy will be one of the defining issues of this century. One thing is clear: the era of easy oil is over. What we all do next will determine how well we meet the energy needs of the entire world in this century and beyond.

Demand is soaring like never before. As populations grow and economies take off, millions in the developing world are enjoying the benefits of a lifestyle that requires increasing amounts of energy. In fact, some say that in 20 years the world will consume 40% more oil than it does today. At the same time, many of the world's oil and gas fields are maturing. And new energy discoveries are mainly occurring in places where resources are difficult to extract, physically, economically and even politically. When growing demand meets tighter supplies, the result is more competition for the same resources.

We can wait until a crisis forces us to do something. Or we can commit to working together, and start by asking the tough questions: How do we meet the energy needs of the developing world and those of industrialized nations? What role will renewables and alternative energies play? What is the best way to protect our environment? How do we accelerate our conservation efforts? Whatever actions we take, we must look not just to next year, but to the next 50 years.

At Chevron, we believe that innovation, collaboration and conservation are the cornerstones on which to build this new world. We cannot do this alone. Corporations, governments and every citizen of this planet must be part of the solution as surely as they are part of the problem. We call upon scientists and educators, politicians and policy-makers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy.

Signed,

Dave


COMMENTARY BEGINS HERE
Without a doubt, this is the boldest public admission of Peak Oil to date by a sitting oil executive. Oil company CEO's have not been known for their candor, particularly where the availability of oil resources is concerned. And so it is very momentous that Chevron Chairman and CEO David O'Reilly has made such a public statement. This is a warning light flashing in the face of the public. Mr. O'Reilly must really be concerned.

The cynic in me wonders if perhaps Mr. O'Reilly is just covering his butt. Animosity towards the oil industry is climbing, and will continue to do so with each rise in gasoline prices. Does Mr. O'Reilly foresee a day when angry mobs will roam the countryside looking for oilmen to lynch? Perhaps that is a little too paranoid, but I'm sure Mr. O'Reilly can see a day coming when he will have to address a Congressional investigation into the energy crisis. Undoubtedly, without efforts such as this advertisement, the investigating committee would want to know why Mr. O'Reilly gave no warning. Now the Chevron chairman has a way out. He can say that he did give warning once he was aware of the problem. And, when asked why he did not sound a warning sooner, he can say that he was truly unaware of the seriousness of this problem. He can point to the US Geological Survey, the EIA and the IEA and say, "How could I know that such a problem was on the horizon, when the scientists and the agencies who were supposed to be monitoring the situation painted such a rosy picture?" He can even say that, with this ad, he gave the public its warning of the problem in advance of those agencies.

This could be just the beginning of an oil industry ad campaign to make us aware of Peak Oil. Perhaps we will soon see television ads from Exxon and BP warning us that we must cut our consumption, and promising to lead us into a new energy future. Such an ad campaign would help prepare the public for shortages and rationing, and might even help to take the edge off any ensuing economic panic. Such statements might help to keep the public pacified until such a time as martial law (or some shoddy, ineffective version of it) is instituted.

Okay, let's back up and give Mr. O'Reilly the benefit of the doubt. Perhaps he has only now become aware of this problem, and is performing a public service by warning us all. Perhaps, at the worst, the oil industry has been guilty of wearing rose colored glasses. Maybe the mindset of the oil business is such that employees have disregarded or misinterpreted any evidence that there might be a problem with oil stocks and consumer demand. Maybe it is only now dawning on them that such a problem could exist.

Let's not spend too much time pointing fingers at the oil companies. In the end that gets us nowhere. And we must all take a share of the blame. After all, no one held a gun to our heads and told us to consume, consume, consume.

So let us look at Mr. O'Reilly's statement itself. On the surface, it is a very frank and open statement of our energy situation. My problem with this statement is in what it implies and what it leaves out.

It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30.

This is a very bald statement of the situation, which should make it quite plain to every reader just where we stand with regard to oil. However, the likelihood is that we will never use up that next trillion barrels. Prices will rise and production will diminish in such a fashion that we will never get to the last barrel of that next trillion barrels. And before that point, our civilization will likely collapse.

Mr. O'Reilly does clarify this a little in the following paragraph.

Demand is soaring like never before. As populations grow and economies take off, millions in the developing world are enjoying the benefits of a lifestyle that requires increasing amounts of energy. In fact, some say that in 20 years the world will consume 40% more oil than it does today. At the same time, many of the world's oil and gas fields are maturing. And new energy discoveries are mainly occurring in places where resources are difficult to extract, physically, economically and even politically. When growing demand meets tighter supplies, the result is more competition for the same resources.

Perhaps Mr. O'Reilly is trying to avoid wild speculation about the effects of rising demand and falling production. But it is not wild speculation to say that this 40% rise in consumption within the next 20 years is, in reality, quite impossible. The prediction that "in 20 years the world will consume 40% more oil than it does today" is the result of economists juggling with numbers and projecting demand graphs upward into the future without taking any other factors into account. The fact is that present demand will be unsustainable once production begins to diminish.

It is an understatement to say that the result will be more competition for the same resources. That competition is already underway with the US militarily taking possession of energy resources while China is trying to outbid us monetarily. What remains to be seen is, will the US consolidate its imperial hold on energy resources for US use first and foremost, or will blind capitalistic avarice leave us guarding the oil spigots while the product is sold to China, the highest bidder? Or will China eventually react to continuing US military imperialism by dumping the dollar and calling in their markers on the US?

Mr. O'Reilly avoids this sort of speculation entirely. And who knows, maybe it is for the best that he does so, focusing instead on a simple message of supply and demand. It is probably best not to muddy up the waters too much at this point.

Mr. Reilly's next paragraph echoes something which I and others have been saying for several years now: we cannot wait for the crisis to hit us; we must act now.

We can wait until a crisis forces us to do something. Or we can commit to working together, and start by asking the tough questions: How do we meet the energy needs of the developing world and those of industrialized nations? What role will renewables and alternative energies play? What is the best way to protect our environment? How do we accelerate our conservation efforts? Whatever actions we take, we must look not just to next year, but to the next 50 years.

The only problem here is that I am afraid it is already too late. Where was Mr. O'Reilly 30 years ago when we had time to research and implement possible solutions? Where was Mr. O'Reilly - or, to be fair, his colleagues of equal rank in the industry - when Ronald Reagan had the solar panels taken down from the White House? I would imagine he was enjoying the party on the front lawn, rubbing elbows with policy makers in Washington and building his own fortune. And so, now that the crisis is upon us and Mr. O'Reilly cannot profit anymore by denying it, he is preparing to lead us to a new solution - and no doubt squeeze out every bit of personal profit that he can along the way.

Finally, we come to his call that everyone should help Chevron to profit from this venture.

At Chevron, we believe that innovation, collaboration and conservation are the cornerstones on which to build this new world. We cannot do this alone. Corporations, governments and every citizen of this planet must be part of the solution as surely as they are part of the problem. We call upon scientists and educators, politicians and policy-makers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy.

Standing shoulder to shoulder, we can all make sure that Chevron will survive this coming crisis.

Conspicuous in its absence from this ad is any mention of irreversibly diminishing oil production; much less the fact that none of the known alternatives, either alone or in combination, is capable of replacing oil. To state this would be to admit that our current socio-economic system is doomed. Far from the continued growth that our economy requires, it must now begin to shrink, constricted by diminishing energy input. We are looking toward the ultimate failure of capitalism and the American Way. And, given that the history of industry and policy makers so far has been a story of personal aggrandizement at the expense of the environment and common people, why should we trust Mr. O'Reilly and his associates to lead us into the next era of energy?