What the Hell is Happening
With Oil Supplies Right Now?

MICHIO KAKU / Explorations in Science 27may2008 

Interviews of Thomas Mast and David Goodstein 

Transcribed by Paul Goettlich

Welcome, this is Dr. Michio Kaku, professor of theoretical physics at the City College and the Graduate Center of the City University of New York and this is Exploration. Every week on Exploration we discuss the fascinating world of science and its impact on society. And today, we’re running a special about the price of oil.

What the hell is happening with oil supplies right now?

Remember the good old days when President George W Bush took office? Believe it or not, the price of oil back then was US$28 a barrel. And just last week, the price of oil hit US$128 a barrel, in other words, a markup of US$100 since President George Bush took office.

And the question is: What are the forces behind this? — Demographic forces, economic forces, and just plain greed.

We have two very distinguished guests with us today. The first is Thomas Mast (SP?). He’s had 40 years of experience in the petrochemical industry. And he’s the author of a book called, “Over A Barrel.”

And then, in the second half of Exploration, we’re going to bring on Professor David Goodstein, Vice Provost of Cal Tech, and professor of physics at Cal Tech. And he’s the author of a book called, “Out Of Gas.”

So, today, we have two guests, Thomas Mast in the first half, and David Goodstein in the second half. We’ll try to unravel the secret of oil. We should also point out that both interviews were prerecorded, so the numbers may seem archaic when we talk about the price of oil in these interviews. But remember that, this summer, the price of gasoline could very well hit $4 a gallon. And in fact, some people are predicting that the price of gasoline could peek at $10 a gallon.

What does this mean for American society? What does it mean for the world? What does it mean for global warming when the price of oil hits, perhaps, $10 a gallon?

So, once again, today in Exploration, we’re going to devote the entire hour to The Mystery Of Oil. And also, before we begin, I’d like to make a short announcement. And that is, I’m at the end of my book tour now. For the last month or so, I’ve been traveling around the United States, talking about my latest book, “Physics Of The Impossible.” And the last stop is the Hayden Planetarium in New York City. So, if you happen to be in town on June 2nd, I’ll be speaking at the Hayden Planetarium of the American Museum of Natural History, right here in my own backyard, New York City.

So, once again, let’s begin with our first guest, Thomas Mast. He’s had 40 years of experience in the petrochemical industry. And he’s the author of a book called, “Over A Barrel.”

MK: The first question for you is: How did you get interested in the whole question of oil and energy? And what about your background?

TM: Well, I’m a mechanical engineer. I have a Master’s in mechanical engineering, and also an MBA. I grew up in west Texas, in the oil fields of the Permian Basin. And I have done some work for oil companies. I’ve roustabouted, and rough necked. And I’ve worked for an oil tool company. But most of my career, and I am retired, was spent in manufacturing and engineering management. And I think that the kinds of thinking that we need to be doing for the future are about alternatives to oil. And those are really more mechanical engineering problems than they are petroleum engineering problems and geophysics. The, to more specifically answer your question, I realized about a year ago, that the average person on the street has no understanding of this very complex issue. And I’m concerned that my children and grandchildren want to have the conveniences of cheap energy, particularly cheap transportation that I’ve enjoyed. So, I decided to write a short and succinct book that would allow the man on the street, or the woman on the street, to understand this pretty complex problem we’re facing.

MK: Well, a lot of people are angry about the fact that gasoline prices at the pump are rising. And there seems to be no relief in sight. People are thinking twice about SUVs now. So, the question is: Why? Why are gas prices so high?

TM: Well, in answer to that question, I usually say that the high prices of crude oil, and therefore gasoline, these days, are a symptom of the problem and not the real problem. The fundamental problem is that the worldwide supply of oil is having a hard time keeping up with the demand. And we’re within one or two percent of having the demand catch up with the supply, whereas we had a pumping capacity reserve of 15- or 20-percent 10 or 20 years ago. So, there’s a lot of speculation that there may be a shortage of oil caused by some interruption — a hurricane or terrorist activity. This has driven the speculators to drive the price of oil up, even before we have a real shortage. And then, when we do have a real shortage, which could come relatively soon, well then, no telling how high the price of oil may go.

MK: And some people point to the fact that, as you pointed out, that there’s more demand for oil from, for example, China and India. China and India are only going to get bigger and bigger in terms of their economies. They’re going to want to repeat all the mistakes of the West. They’re going to wan to have cheap oil.

So, what are your thoughts about China and India now joining in on this market?

TM: Well, that definitely is one of the issues. China, just last year, accounted for 40-percent of the growth in oil demand for the whole world. And why shouldn’t they have their shot at all the things that Europe and America have had over the last 100 years? — cheap energy to provide for transportation and all the other things that make our lives so pleasant. One thing that most people haven’t thought about is that, in the roughly 100-year life of the automobile, the airplane and oil industry, Europe and America, the developed parts of the world, and Japan, had to develop the technologies — the automobile, the airplane, and all the other devices that use oil-based fuel. And now, that development is now done. And China, and other developing countries can roll that technology out much more rapidly than America, Europe and Japan did 50 or 100 years ago.

MK: Now, the current generation of people alive has always had oil — relatively cheap oil. And of course, we like to think it’s going to last forever. However, we do have something called proven oil reserves. And in one hand, they sound very comforting. However, other people say, “Bah humbug. These proven oil reserves are nothing but numbers you by shooting a dart at a dart board.”

The question is: How much oil do we really have?

TM: There is some disagreement on how much we have. And there’s some science involved. There’s also some art involved. And another factor is that increasingly, the countries that have oil are playing their cards close to their chest and not revealing their reserves as forthrightly as they might. And again, that’s their privilege.

But most people feel that the world has used approximately half of the conventional oil that was there for us to use, that was crated over 100 million years ago. And we used it in roughly 100 years.

My mother dies recently. And she was 91-years-old. And during a single life time, we developed the automobiles and the airplanes and the oil industry, and used up about half of the oil — conventional oil — that the world has. And now we have four times as many people in the world, and almost infinitely more cars and planes. And we’re going to go through the second half of that oil fairly quickly.

You can argue about whether the remaining reserves are 1 trillion barrels, as some people say. Or whether there’s 1½ trillion barrels. But I don’t think anybody would argue that the supply of oil is not finite, and sooner or later is going to cause a shortage situation around the world.

MK: Now, explain to us: What is Hubbert’s Peak? Because that, of course, is the center of a lot of controversy right now.

TM: Well, a man named Dr. M. King Hubbert worked for Shell Oil in a research position. He was a geophysicist. And he predicted in the late-1950s I believe, that the production of oil in the United States would peak and begin to decline about 1970. And sure enough, that’s exactly what it did.

Then he went on to predict the peak for the world oil production. And he predicted that, I believe initially in the 1990s. And that time has come and gone. And other people have subsequently used his same techniques to predict the peak of worldwide oil production. And their estimates run all the way from 2000 to 2020, with many of them grouped around the 2005 to 2010 time period. There are some international organizations and the U.S Dept. of Energy, who don’t feel that the worldwide peak of oil is going to come that soon. So, there is some disagreement. But my feeling is that it’s going to come soon relative to the time that it takes to decide on the alternatives to oil and then to convert them into massive industries.

Oil provides 38-percent of the world’s energy. It’s by far the number one source of energy in the world. And for transportation here in this country, oil-based fuels provide 97-percent of our transportation fuels.

And so, it’s not a simple task to phase in alternatives to oil, once we know what they are. And we don’t even know what they are very well. So, we do have a challenge ahead of us.

MK: Now, you mentioned that the nations that have most of the oil reserves play it very close to the chest. And isn’t it true that there’s a lot of politics involved? Because of course, the estimates of proven oil reserves will affect whether or not investors invest money in your country. And isn’t it true therefore, as some people have charged, that these so-called proven oil reserves are nothing but made-up numbers, fabricated by nations interested in protecting their economy and their level of investment?

TM: Well, that’s true. One thing that happened, not so very many years ago, was that OPEC decided that among the among the OPEC nations, the fraction that each country got of the allowable production was based on their reserves. And once they made that decision, all of the OPEC nations instantly, or within a year, greatly increased the reserves that they had announced having. And they had nothing to back it up. They just had an increase in reserves, which to my recollection, was around 50-percent. So, many people feel that those increases were made out of whole cloth. [The implication is that a thing made from whole cloth has no previous history or associations, that it is created from a blank sheet in the same way that a total lie is invented.]

MK: And also, some people say that we will always find new deposits of oil. But isn’t it true the rate at which we find new deposits of oil has been going down? So, even if we do continue to find new deposits, they’re not going to be like they were in the past. We would have to discover a whole Middle East in the future in order to just maintain the status quo.

TM: Well, that’s right. All the fields that we are pumping out of now are declining. When people mention that we found oil in the past and we’ll use new technologies to find more oil, I usually point to a curve that’s in my book. And it shows the new oil discoveries worldwide by decade for the last 60 or 70 years. The worldwide discoveries of new oil fields peaked in the 1950s and 1960s. By the decade of the 1990s, worldwide discoveries of new oil fields were down to less than 25-percent of what they were in the late-1950s.

So, one ahs to be very optimistic to think we’re going to develop technologies for finding new oil fields so vastly superior to the excellent technology that we have had in the last two or three decades, that we can turn that curve around and start finding more oil than we did even 50 years ago.

MK: Well, some people are saying that we’ll drill in Alaska, in the wildlife refuge there, and that will help us prevent an oil crisis in this country. But isn’t it true that even if we do pump out a lot of oil from there that it’s just a drop in the bucket compared to what it would really require just to maintain the status quo indefinitely?

TM: Absolutely. The ANWR Field [Arctic National Wildlife Refuge] that’s discussed in Alaska is a big field and would make some difference, perhaps supplying 7-percent or so of the U.S. needs, even though it won’t come online for 5 or 10 years, once the decision is made to start drilling there. But the United States only has 2- to 3-percent of the world’s oil reserves. So, having a national policy to see how fast we can those remaining 2- or 3-percent out of the ground and use them up doesn’t seem to be a good long-range strategy. We need to come up with some alternatives to oil so that we can save the oil that we have left for petrochemical industries and lubricants, and some things that are more difficult to replace than for fuels.

MK: We mentioned the fact that even if we discover an entire new Middle East — another Saudi Arabia out there, which is highly unlikely — that would only push back the date of when we reach Hubbert’s Peak just by a little bit, right? So, we still have to face the inevitable.

TM: It’s inevitable that oil production worldwide will begin to decline some time, and probably soon. And incidentally, natural gas and coal are also hydrocarbons which were created hundreds of millions of years ago. Natural gas probably will begin a worldwide decline not too much later — perhaps a decade or two after oil. We do have 200 or 300 years supply of coal around the world. But, as you know, it’s the dirtiest of the hydrocarbon fuels. It puts out about 1.8 times as much carbon dioxide per unit of energy as natural gas.

MK: Now, let’s talk about the future and consequences. If the price of oil skyrockets, that’s going to put a real crimp on people who depend on the automobile. And that could in turn dampen the economy. So give us an indication of what might happen in the future if nothing is done.

TM: Prices of fuels no doubt will escalate. And that’s inflationary. It causes not only the personal transportation costs to go up, but the cost of trucking groceries and almost everything else you buy. And so, it will be inflationary in the beginning. Whatever happens is going to happen worldwide. If it makes businesses less efficient and less attractive, then after an inflationary period, we may have a recession or a depression effect, not only in this country, but perhaps around the world.

MK: Let’s translate that in terms of things that people can understand. If the price of oil rises dramatically in the next several years, that means the prices of goods and services begin to skyrocket. It means that people are not going to be able to buy the things they’re accustomed to buying. They’re not going to commute to the suburbs like they used to. A huge chunk of their wallet is going to be taken out, essentially, right? So, you’re talking about basically sending the economy into a tail spin, right?

TM: That’s a definite possibility. And that’s why the stakes are so high. And that’s why we need to be betting on something other than just oil. But, in addition to the things that you mentioned, there are international implications. If we were to move into a true shortage of oil, then there’s going to be increased contention among counties for the remaining supplies. And 63-percent of those supplies are in the Middle East. As China gets larger and more powerful, we may have to argue with China about who gets what share of oil. And then, in addition to that, we’re already sending out of this country about US$230 billion a year just to purchase oil. It’s 35- or 40-percent of our balance of trade problems. And if the price of oil were to double or quadruple, you can see what would happen to our balance of trade and the effects that it might have on the dollar.

MK: So, you’re saying that there could be international tensions, right? Especially because the oil reserves are in the Middle East, which is a very volatile region. And it makes us even more dependent upon the politics of a very volatile region, right?

TM: That’s absolutely right. And if we don’t develop some alternatives to oil and/or conserve what we’ve got — use less of it — I think it’s inevitable that there’ll be increased international tension.

MK: And, very soon. You’re saying that hitting Hubbert’s Peak either now or perhaps 2005, but definitely perhaps in this decade, right? So, we’re not talking about an emergency that’s going to happen 30 years from now, but something that could happen very soon.

TM: That’s a definite possibility. And, to me, it seems foolish to gamble. Let’s say that the world didn’t hit Hubbert’s Peak until 2020. But let’s say we were to get serious this year or next year and have a moon-landing kind of a program to reduce our dependence on oil. That would strengthen the dollar, reduce our exposure to the Middle East, and have some positive effects on our country even if oil didn’t peak for another 15 years. So, it seems to me that we have very little to lose by assuming that oil is going to become short in 2 or 3 years. And if it doesn’t — if it takes 10 or 15 – I see that we’ve lost anything by reducing our dependency on oil.

MK: OK, well now let’s bite the bullet and ask the question: What will it take to gradually have a program to phase in other kinds of technologies? And of course, nothing is going is being done at the present time by the current administration. [George W. Bush administration] So, let’s take these one at a time.

First of all, you mentioned coal. We have lots of coal. But what about the politics of coal?

TM: Well, ah, coal is a nasty substance to burn environmentally. It puts out a number of nasty pollutants. And then it puts out huge amounts of carbon dioxide, which contribute to global warming. And there’s not much way around that. There’s been talk about sequestering the carbon dioxide underground. But I think everyone agrees that would be very expensive. And nobody’s made any really serious moves to head in that direction. And again, coal is a hydrocarbon, which would become short in 200 or 300 years even if we don’t use it aggressively. That may not affect you and me, but it will affect our descendants. We need to come up with something other than these hydrocarbons to form the base of our energy economy.

MK: Doesn’t coal also release mercury in the air? And also acid rain?

TM: Yes, those are some of the pollutants that I mentioned earlier.

MK: Now let’s talk about natural gas. You mentioned that there’s also a Hubbert’s Peak for natural gas as well. And it also creates carbon dioxide. But what are your thoughts about natural gas?

TM: Natural gas is a relatively clean fuel to burn compared to both oil and coal. But is still does create carbon dioxide. We’ve been importing natural gas from Mexico and Canada. But we’ve about reached the point where in North America we don’t have enough natural gas. So we’re beginning to import liquefied natural gas (LNG). Unfortunately, importing natural gas from overseas is more difficult than importing oil because oil in its natural state is a liquid and natural gas is a gas. So it has to be liquefied before it can be shipped over here, and that’s an expensive and inefficient process, and also a very dangerous one.

So again, we have these social issues. We have technological issues and we have social issues. The social issue of natural gas is the same as the social issue of refineries. Everybody wants the benefits of cheap energy, but nobody wants a refinery or a liquefied natural gas port anywhere near where they live.

MK: What conservation? Some environmentalists say that we waste an enourmous amount of energy in this country. And even modest attempts to increase fuel efficiency would have tremendous dividends. What are your thoughts?

TM: My thoughts are absolutely that we should be conserving. Some people mention nothing but conserving. And even if we were only burning half of the oil that we’re burning, we still, sooner or later, would run into a shortage situation. So what conservation of oil does, and I’ll concentrate on oil for the moment, is give us more time to develop these alternatives, be they nuclear, hydrogen, batteries or whatever. And we do need that time because there are some pretty difficult technical and social problems that have to be solved. And we have the technologies to conserve. Europeans drive cars that get about twice the gas mileage ours do because they’ve had their gasoline prices at about triple our level for a decade. The technologies to build and drive much more efficient personal transportation vehicles already exists. We don’t have to wait for the research and development to be done there. And of course, hybrids are existing technology. And they roughly double the fuel mileage that a car will get. [ Consumer Reports article on hybrids]

MK: And isn’t it true that simply by increasing fuel efficiency in cars we could vastly reduce the consumption of oil in this country? . . .by simply mandating an increase in fuel efficiency?

TM: Absolutely right. And the administration just hasn’t been able to convince itself that it should do that. And that’s one of the reasons why I wrote the book, because I don’t believe the lawmakers are going to pass these difficult pieces of legislation unless they feel they have more backing from the people than they have. People need to understand the whole oil situation so that they’re willing for their lawmakers to pass some medium- to long-range legislation that will cause some conservation, but it might be a little bit painful to people’s pocketbooks or cause them to have to get rid of their SUV and drive a car they don’t like as well.

MK: And what about wind power? Wind power in Europe is enjoying a tremendous boom right now. What about wind power, which seems to be underutilized, especially in the Midwest?

TM: Wind power is definitely an example of something we should be pushing harder than we are. We’ve had some incentives from the Federal level for wind power. But, as I understand it, they’re off again, on again. There’s no consistency, and this has caused it to be a little bit difficult for companies to make the kinds of long-term investments that are needed.

In this part of Exploration, we’re going to bring on the Vice Provost of the California Institute of Technology — Caltech for short. He’s a professor of physics: David Goodstein. And he’s the author of a book, “Out Of Gas.” And once again, both interviews were prerecorded, so the numbers may seem a little bit archaic. Remember that when President Bush took office, the price of a barrel of oil was US$28. Now it’s US$128 a barrel, and it’s rising. And also the price of gasoline could easily hit $4 a gallon. Some people are even predicting that it may eventually hit $10 a gallon.

What’s behind the price of oil and what are we going to do about it?

Once again, our special guest in this segment of Exploration is Dr. David Goodstein, professor of physics and Vice Provost at Caltech, author of the book, “Out Of Gas.”

MK: Now, let’s get into the heart of your book. You use a methodology that is not commonly known by most people, and that’s Hubbert’s Peak. Could you slowly walk through the methodology by which you arrive at some rather stunning conclusions?

DG: Let me tell you a little about the history of it first.

In the 1950s, the United States was the world’s leading producer of oil. Much of our military and industrial might depended upon our giant oil industry. And most people, but also, most people in the business, expected that to go on forever. But there was one, very clever geophysicist who worked for Shell Oil in Houston, whose name was Marion King Hubbert. And he predicted at the time that U.S. oil production — the rate at which we could extract oil from the ground in the lower 48 United States — would peak around 1970 and decline forever after that. He was virtually booted out of his profession at the time. But when 1970 came along, he turned out to be quite precisely right. And that’s what’s called Hubbert’s Peak. That was Hubbert’s Peak for the lower 48 United States. We peaked in 1970 and we have been declining rapidly ever since. And I’d put it. . . of oil from below the soil of the United States.

MK: I understand from your book that Hubbert’s Peak not only works for oil, but other valuable minerals as well.

DG: Yes. The basic idea is a very simple one. For any mineral resource, the rate at which the supply of it. . . the rate at which you can extract it from the ground, starts out as zero, rises up to some maximum, after which you’re depleting your resource faster than you can find new sources of it. And the supply starts to decline.

So, the history of the supply of any natural resources is a bell-shaped curve. It reaches a maximum and the maximum is never attained again. It just falls after that. And that’s what Hubbert’s Peak is all about.

MK: I understand that you can apply it to other minerals and other resources as well.

DG: The same thing happened to copper in northern Michigan; to coal in Pennsylvania; to coal in England; and any mineral resource. Now, it doesn’t have to be a perfect bell-shaped curve, of course. These things are always very noisy. But, crudely speaking, it rises from zero to maximum and declines again. And of course, exactly that happened to oil in the lower 48. By now we know that is precisely what happened.

MK: Tell us when you reach 50-percent of the known reserves.

DG: Right. The maximum occurs roughly when you’ve used up half of what nature supplied to you, because roughly it’s a metric bell-shaped curve. On the way up, you use up half of it. You reach the maximum, and then half is left, but the rate at which you can pull it out of the ground is declining, even though the need for it, in the case of oil, is will be increasing.

MK: Now let’s assume that he’s correct with regards to the world resources, when might we being to see disruptions?

DG: Nobody can really answer that question, although many people have tried, because the evidence on which it has to be based — the numbers — are very soft numbers. They’re not very well understood. They’re not very well known. They depend on something called proved reserves of oil and other things like that, that are not proved at all, that are largely inventions, and really can’t be depended on.

There are some who reason to believe that it may have already begun. There are others who think it won’t happen until some time later in this decade. And it may not happen until some time in the next decade.

The difference between those predictions are very important to those of us who are living now and would like to enjoy life for a few more years. But [they] really have no importance at all on the scale of human history. It’s going to happen. It’s going to happen relatively soon, by human historical standards. We, or our children, or maybe our grandchildren are in for some very bad times.

MK: By that, you mean on the scale of one to three decades? Or four, five, six decades?

DG: No, I don’t mean four, five, six decades. I mean on the scale of one to two decades.

MK: One to two decades. So many of the people listening to this program could see their life disrupted as we see the fulfilling of Hubbert’s Peak.

DG: Hubbert’s Peak. That’s precisely the point. Yes.

MK: Now, let me play devil’s advocate. Because of course, if you talk to the oil industry and the U.S. Geological Survey, they say something different.

Well, first of all, they say, “We’re never really going to run out of oil because we’ll simply find more oil.” So what do your thoughts about whether or not we can simply find new oil?

DG: Well, the U.S.G.S. did an exhaustive survey of world oil supplies. The survey lasted from 1995 to about 2000. And it’s been published. You can get it over the web. And they came to the conclusion — this is done by a combination of geologists, who know something about geology, and statisticians who know nothing about geology. It was the statisticians, apparently, who came up with the final conclusion. And the final conclusions say that with 90- or 95-percent certainty, there were at least 2 trillion barrels of oil when we started drilling. Just for reference, we’ve used up about 1 trillion barrels of oil. So, if there were 2 trillion barrels of oil, we are now at the halfway point. OK? But they say with 50-percent probability, there may have been as much as 2.7 trillion. And with lower probability, correspondingly, there may have been even more.

Now, may experts are more than a little sceptical of those assumptions, which are based not on how much we know to be, but on predictions of how much will be discovered in the future. You must understand the Hubbert’s Peak for worldwide oil discovery — not production, but discovery — those are two different bell-shaped curves. You have a bell-shaped curve for discovery that reaches a maximum and declines forever. And then later, decades later, you have a bell-shaped curve for production, which reaches a maximum and declines forever.

The peak for discovery occurred around 1960 — more than 40 years ago. Oil discovery has been declining ever since. Nevertheless, for reasons that are unclear to the outside world, U.S.G.S. predicted a high rate of discovery for another 30 years. And on that basis it is said that there’s a 50-percent chance that there will be 2.7 trillion barrels of oil in the ground.

The difference between the 2 trillion number, which is what most people who expect Hubbert’s Peak very soon are using, and the 2.7 trillion that the U.S.G.S estimated, that’s all the oil in the Middle East. In other words, they’re predicting that we discover the Middle East all over again.

The fact is that oil geologists have gone to the ends of the earth looking for oil. There are only a few places on earth that have not been fully explored. One of them is the South China Sea, where there are overlapping planes from seven different countries. And so, nobody wants to drill there. It’s considered promising but not spectacular. [inaudible]

The second is Central Siberia, which has enourmous access problems.

And a third is the deep oceans, which are extremely problematic for a variety of reasons.

And some say Antarctica as well.

Otherwise, there are no possibilities. And so, the probability, the likelihood that we’re going to discover another 700 billion barrels of oil somewhere is seen extremely remote.

MK: OK, to play devil’s advocate again, some people bring out a certain ratio where they claim that if you take a look at how long it will take to exhaust certain reserves, we’re talking about many, many, many decades before we exhaust — fully exhaust — certain reserves of oil. What are your thoughts?

DG: This is called the RP ratio in the industry — the reserves-to-production ratio, which means that you take what are called the proved reserves, you divide it by the amount we used last year, and you get a number of years that we can go on using oil at the same rate without any problem. The RP ratio, depending on who’s numbers you believe, whether you believe BP, which does its own estimate, or the USGS. . . it’s somewhere between 40 and 100 years.

But that number is absolutely meaningless. The proved reserves are fictitious numbers. For example, the proved reserves of the OPEC countries took a sudden jump of between 300 and 400 billion barrels — about 40-percent of al the oil we know to exist on earth — sometime in the 1980s. And there were no significant discoveries during that period. That is to say politicians discovered 400 billion barrels of oil without drilling a hole in the ground. And the reason is because it’s just a game that the oil people play.

The so-called proved reserves have very little to do with what’s going on in the oil field. They are numbers that are manipulated for economic and political reasons by either oil companies or oil-producing countries.

We recently saw that Royal Dutch/Shell had to reduce its proved reserves, and correspondingly the price of its stock shares because an outside auditor said, NO, you’ve been lying.”

Of course, nobody applies that kind of logic and scrutiny to the Middle Eastern countries, for example, who claim most of the world’s oil.

So, those numbers are pretty meaningless. And besides, we just don’t go on using oil at a constant rate. The rate at which we use oil historically has risen for more than a century, [it] will continue to rise as long as the oil is available, particularly since more than a billion Chinese people are just beginning to learn how to drive. The world population is increasing, and so on. So, no, the RP ratio is not very useful.

MK: And the United States consumes about 25-percent of the world’s resources in energy.

DG: . . . with 5-percent of the world’s population.

MK: That’s right. And what happens when the Chinese, and other developing countries, want the American lifestyle?

DG: I think that’s virtually a rhetorical question. It’s obvious what will happen, which is the demand of oil will just zoom way, way up.

MK: Now, let me again play devil’s advocate.

Other people say that capitalism will correct all the problems. As the price of oil rises, there’s more incentive to: A) explore for more oil, and B) look for alternatives. What are your thoughts?

DG: We’ve already discussed exploring for oil. I think exploring for oil is . . . [inaudible] We’ve have pretty much discovered most of the oil that there is to discover.

The other point of view — the extreme example of the other point of view — is that all fossil fuels are functional. In other words, you can turn coal into oil, which chemically is true. One can turn coal into oil. And there is an enourmous amount of chemical energy stored in the ground in the form of coal. So, you run out of oil, you just use something else.

And that’s where the laws of economics come in. Once the light crude oil — the kind of conventional oil that we’ve been using up to now — starts to become expensive enough and other sources of hydrocarbons become economically competitive. And that’s already happening.

For example, oil sands in Alberta are being mined now at a profit. Of course, these are solid deposits. They don’t gush out of the ground. You have to strip mine them and extract the oil from the ore. And so, they are not going to flood the market any time soon. They come on very slowly. But still, they are being mined at a profit.

And there are many others. There’s a long list of hydrocarbons that can be turned into fuels — a price.

So, what we’re talking about is not the end of the availability of fuels. We’re talking about the end of the availability of cheap fuels. But you have to understand that our civilization has evolved into the form that it has because of the availability of cheap fuel, not just because of the availability of fuel.

Another point that’s extremely important to understand is that if we go on burning fossil fuels with complete abandon, we risk doing irreversible damage to the climate of our planet. It just happens to be the only planet we have.

MK: Now, some people say that we have enough coal to last several hundred years. . .

DG: . . . or thousands of years even.

MK: Right.

DG: Yes, but that’s a foolish estimate. Estimates of how much coal we have range from hundreds to thousands of years. The very fact that the estimates range over a factor of ten tells you that nobody has any idea. These are just wild guesses. But even these wild guesses are dependable compared to . . . at the present rate of use . . . (inaudible) . . . of why we have that many years to go.

If you try to substitute coal for oil, the first thing you have to know is that we use twice the twice as much energy from oil as we do from coal. So, just in order to mine enough coal to replace the oil, you’d have to mine much more coal. But the conversion process is extremely inefficient. So you have to mine not 3 times as much coal, but 6 or 7 or 8 times as much coal. Then the world population is increasing. The Chinese want to learn how to drive. Or to put it more cogently, the poor nations of the world would like to live more like us, which means use more energy and so on.

The rate at which fuels are going to be used is going to increase extremely rapidly. The alternative to that is war and famine and almost unimaginable chaos.

The numbers that say that there is enough coal to last for hundreds to thousands of years at the present rate of use has to be divided by at least a factor of ten, and maybe even more to reflect the fact that the current rate of use is not going to last very long if we try to substitute coal for oil.

So, the bottom line is that if we just burn up all the fossil fuels we can in order to keep our civilization going, we will start running out of all fossil fuels, coal included, probably by the end of this century.

MK: And what about natural gas?

DG: Natural gas is an extremely good fuel because it is cleaner than either coal or oil as far as (inaudible) the planet is concerned. But the Hubbert’s Peak for natural gas is not far behind the Hubbert’s Peak for oil, maybe ten years at most.

MK: Now, some people when they say that we have enough oil to last 60 to 100 years, don’t they assume that we are going to be using all the oil? It’s not reaching the halfway point, but it’s using all the oil at the same price.

DG: That’s right. They are using what we call before the RP ratio. There are 1 trillion barrels of oil. . . Let’s suppose we started with 2 trillion barrels of oil. Remember that is what some people said. OK? And we have used nearly 1 trillion — maybe 800 billion barrels.

To people who believe in that figure, they say, “Alright, there’s a trillion barrels of oil in proved reserves. We know where it is. All we have to do is poke a drill into the ground and the oil will come out. And since we use about 25 billion barrels a year, that gives us a 40-year supply. No problem at all. We can go tranquilly ahead for 40 years.

But that is just not the way it works. We don’t use it at the same rate. And we can’t extract it at the same rate. The rate at which we extract it will start to decline when we reach that maximum. There will still be plenty of oil in the ground. That trillion barrels of oil will still be there. But the rate at which we can extract it from the ground will be declining at the same time that the demand — for all the reasons we have already discussed — will be increasing.

MK: OK. Let’s take a look at some other alternatives. Other people say, as a long shot, let’s take a look far in the future [at] fusion power. They say that the sun is a fusion reactor, therefore it is in principal possible to build a fusion reactor. But what about the possibility of putting a piece of sun on the earth?

DG: That’s quite correct. And I know at least five or six different technical scientific schemes for accomplishing that. And people have been working on it 50 years. Unfortunately, success in that field has been 25 years away for 50 years, and it is still 25 years away today. And so, we don’t know whether the technical problems that prevent us from using that source of energy will ever be solved. But, if they are solved, it will solve the problem definitively because the fuel for that kind of power would probably never be exhausted.

MK: The fuel for fusion power comes from sea water, right?

DG: One component of it does. The deuterium is one of the components that would be needed for the first kind, the easiest kind of fusion. And there is an almost endless supply of that in the sea.

The other fuel is lithium. And lithium is a light element that is found in many common minerals. But I don’t think we have any estimate at all of how much there is available on earth.

MK: And isn’t it also true that break-even — that is getting more energy out than you put in — is very illusive for a fusion reactor? So they are not very economical at the present time.

DG: Well, that’s the Holy Grail. But we have been able to create fusion energy in reactors on the earth. We just haven’t been able to create them fast enough to catch up with the amount of energy it takes to make them happen.

The best we have done, up to now, is about 50-percent. We get about half the energy out that we put in. If you hit break-even, then you could start thinking about ways that we can use up the excess as a power source. But break-even is still decades away.

MK: And what about hydrogen power? Hydrogen fuel cells have been getting a lot of news because they don’t create carbon-based waste. They just create water as waste. But what are your thoughts about hydrogen?

DG: Well, they create only water as waste at the point at which they use in a hydrogen fuel cell or simply by burning it as the fuel. But hydrogen is not a natural resource. Hydrogen is just a means of storing and transporting energy. You have to use energy to make hydrogen. And today, all hydrogen is made out of fossil fuels. There are basically two ways of making hydrogen out of fossil fuels.

One of them is to make hydrogen out of methane. Now, that’s a fairly efficient process. But you may as well burn the methane. There is very little point unless you really need the hydrogen in the form of hydrogen; there are more reasons why people need it. It doesn’t really help much to use up methane, which is the fuel, to make hydrogen, which is a different fuel — at some loss of efficiency.

The other possibility is to use electrical power, which is generally generated by burning fossil fuel — coal-fired power plants, for example — and electrolyzing water. The economics of that is that it takes the equivalent of 6-gallons of gasoline to make enough hydrogen to replace 1-gallon of gasoline.

Now, very far in the future, when we have limitless power from nuclear fusion, if we ever solve that problem, or limitless power from huge solar arrays, if we ever manage to accomplish that, then you will be making hydrogen from renewable sources. And hydrogen may become the staple for transport. You will never have nuclear or solar transport — that is cars that run on nuclear energy or solar energy. You have to use the nuclear and solar energy to make something that you can use for transportation. And that might very well be hydrogen at some time in the future.

As a solution right now, Governor Schwarzenegger’s hydrogen highway [and] President Bush’s hydrogen car, those are not very convincing.

MK: So, in other words, hydrogen and batteries do not create energy, they simply transport energy, right?

DG: You take energy in the form that that we make it, either from fossil fuels or hydroelectric power or whatever source of energy we use, and use that to make either charged batteries or hydrogen. They both have the same effect.

MK: To elaborate on a point that you just made, nuclear energy is not used for cars. We don’t have atomic cars. And perhaps hopefully we will never have atomic cars. But nuclear energy is used to produce electricity, not for transportation, right? Could you elaborate?

DG: Well, we do use nuclear fission rather than nuclear fusion. It’s a different kind of nuclear reaction. That is a well-developed technology. There are hundreds of nuclear power plants in the world. Some countries like France generate most of their electricity from nuclear power. Much less — 20-percent or so in the United States. Zero in Italy, where nuclear power has been outlawed.

But when the oil starts to run out, the opposition to nuclear power is likely to soften. But nuclear power is not the magic bullet that will solve all of our problems.

Just to give you a benchmark, the rate at which we are burning fossil fuels today — all fossil fuels — oil, gas and coal is 10 terawatts — 10 trillion watts. In order to create the nuclear sources of energy equivalent to what we are burning in fossil fuels today, the largest nuclear fission plant that would be practical is about a gigawatt, which is a billion watts. 10 trillion watts is ten times that much. So you’d have to build 10,000 brand new power plants of the largest you can possibly build in order to replace the fossil fuel that we burn today. That would be one a day opening somewhere around the world for 30 years. It’s not impossible. But it is a staggering number. And if you did that, and burned up the nuclear fuel at that rate, the known reserves of uranium — if we use the uranium the way we use it today, which means we use only the rare isotope U-235 — the know reserves of uranium at that burn rate would only last from 10 to 20 years.

MK: And plus, you have the waste problem and. . .

DG: And you have the waste problem and all the other problems that are (inaudible) with nuclear energy.

Consumer Reports article on hybrids

MK: OK. Before we get into solar, let’s talk about hybrids; let’s talk about conservation. First of all; hybrids. Of course, that is not going to be a cure-all. However, won’t that help to slow down the consumption of gas?

DG: Yes. It sure will. And in fact, we can conserve energy in many other ways. I drive a hybrid. I have been driving a hybrid since they first came out. I’ve been teaching my students for 30 years that that’s the only sensible way to build a car. So yes, hybrids will help. Other conservation methods will help. But they will only slow down the process. They won’t turn it around.

MK: However fuel efficiency, won’t that make a dent in the rate of consumption? Because the United States consumes such a fabulous amounts of energy.

DG: Yes, it will. And the fact is that worldwide, we have been using fossil fuel energy faster than we have been discovering it for the past 20 years. But as the supply curve rises and the discovery curve falls . . . they crossed around 1980. It’s almost 25 years now that we have been using up oil faster than we have been finding it. We could slow that down by turning to hybrids various other means at conserving energy, and that would certainly help. It would put the really critical problem further off into the future. And that would be good for all of us. And so, yes, conservation is one contribution. You have to remember that there is no simple solution to this problem. It is not that that the problem is insoluble. But we have to pursue every possible path. And conservation is one of them.

MK: Now let’s take a look at solar. Some of the critics say that solar is not yet ready for prime time. Its proponents say that we are making leaps and strides, in terms of efficiency. But what are your thoughts about solar power?

DG: Well, once again, to put that into perspective. To replace the fossil fuel that we are burning now — those 10 terawatts I spoke about before — with the most common and usable technology that we have at the present, which is 10-percent efficient silicone solar cells, you would have to cover 220,000 square kilometers of land to generate that much power.

220,000 square kilometers is roughly half the State of California, just to give you the order of magnitude. That much land is probably available distributed around the world. But that is not the big problem. The big problem is that all the photovoltaics that have been made up to now — all the silicone cells that have been made up to now — probably would not cover more than 10 square kilometers. So, the challenge of building the solar power plants we are talking about — big enough to make a real dent in the world’s energy problems is simply a staggering problem.

MK: And that concludes our interview with Professor David Goodstein, Vice Provost at Caltech, also professor of physics, and author of the book, “Out Of Gas.” And in the first half of our show, the special guest was Thomas Mast. He has had 40 years of experience in the petrochemical industry and he is the author of the book, “Over A Barrel.” And if you want a copy of today’s program, call the Pacifica Program Service at 1-800-735-0230.