Robert Hirsch on peak oil mitigation (transcript)

MediaRobert Hirsch on peak oil mitigation

Transcribed by Miranda Huey

David Room: This is David Room for Global Public Media interviewing Robert Hirsch, PhD and senior energy program advisor at Science Applications International Corporation, on November 17, 2005. Tell me about the Hirsch Report and how it came to be.

Robert Hirsch: The report grew out of a study that I did, something like two years ago, where I was aiming at trying to identify and evaluate the major factors that might influence the course of energy events in the future. And one of the six topics that I considered was the peak in world oil production. The more I looked at the problem, the more difficult and threatening the issue really became. So as a result of that work, I proposed to the department of energy that my colleagues and I, two economists, energy economists, that I work with, have worked with in the past, do a more careful analysis of what it would take to mitigate the problem of peaking. We recognized that there was great controversy on when the data peaking was, so we left that date open and just looked at what could be done if one waited or if one started early. We wanted to get an idea of how difficult the problem was.

David Room: Is it true that the report was somehow prematurely leaked?

Robert Hirsch: No, it was not prematurely leaked. It took a little while to go through reviews in the Department of Energy, which is an appropriate thing. They wanted to be sure that what was being said there stood up to careful scrutiny. We had a number of people review it, colleagues, simply because we wanted to be sure ourselves that what we were saying made sense and was within the bounds of reasonable estimation. But there was no leak that I know of.

David Room: This report addresses the timing and mitigation relative to peak rather than directly addressing the timing of peak. Why this framing?

Robert Hirsch: What we tried to do in this study was to keep things as simple as possible without assuming away the problem. And that's very difficult because this problem has a number of very complicated dimensions. With respect to the data peaking, I know enough from my own experience in the oil industry many years ago and from study I've done recently that no one really knows the data peaking. It is simply not knowable because we have incomplete data. We don't know and we don't have assurances about what oil is out there in the world available to be produced. And then, of course, we don't know the extent to which countries are going to produce the oil that they have. So, by leaving the date open, we avoided the controversy that's associated with date selection. And our results are robust because we didn't choose a date and because, the way we frame the problem gives results that are essentially independent of when the date might be.

David Room: Given that oil is a key feedstock for a multitude of products including plastics, pesticides, lubricants, etc., how do you justify framing oil peak as a liquid fuels problem?

Robert Hirsch: Oil is a very special material, and it's something that we're blessed with an enormous amount of, and we've used it in very productive ways to move the civilization along dramatically, particularly during the last century. The hydrocarbon molecules that exist in oil are just marvelous. They're capable of providing us a fuel for transportation, pharmaceuticals, fertilizers, feedstocks for plastics, it's just remarkable material. And the problem is, at some point, we're going to reach maximum oil production, which is called the peak, and of course, when that occurs, then we're really in a pickle. The question is what are we going to do about it? Some people suggest that we conserve our way out. We analyzed that. You simply can't do it. Conservation, it will be an important part of new direction, but conservation alone will not solve the problem. So we have to find alternate hydrocarbons until we can phase over to a different kind of a future, a more sustainable future.

David Room: Tell me about the methodology used in the study. That is, risk management. What are its principles and what does it aim to achieve?

Robert Hirsch: We pose the problem as one of risk management because there are a number of unknowns and because the world is basically playing a risk management game. Not a game in the sense that people are playing, a game in the sense that that's the hand that we're dealt. It may not be the best terminology, but that's a way to think about the problem. The optimists out there are saying there's plenty of oil, technology will solve all of our problems, higher prices will make a difference and there'll be abundant amount of oil available. Part of that is simply not true. Geologically, that is just simply not true. Other people are pessimistic and are concerned that the oil may be peaking in the very near future. They have some very solid points, but they're also dealing with the same kind of data and they're viewing it more conservatively. All of that boils down to a matter of risk. And so we see the problem as one of risk management, as a problem of whether or not we want to hide our head in the ground and pretend and hope that peaking doesn't occur for a long time, or whether we want to do the prudent thing, which is what one does in high-risk situations, and begin to take action early. Probably the best thing that could happen is that we take action worldwide and we get ahead of the problem, so when the problem actually occurs, the damage is minimized.

David Room: To what extent is risk management used in the context of public policy in the United States?

Robert Hirsch: That's a very hard question. Typically, what happens, as I think you and many others recognize, we wait until a problem is acute, and then take action. We rarely, on very big items, anticipate the problem and take major action prior to a problem being obvious. Think back to the Second World War. There were clear indications that there were storm clouds on the horizon, in Europe and in the Far East, and yet people didn't want to get involved, they hoped that the problem would go away, and it wasn't until Pearl Harbor that people woke up and recognized the problem. That's true in a number of other cases. One can argue, one way or another, about what President Bush did in terms of raising the question about the solvency of social security. He was exactly right. There is a huge problem looming on the horizon. The solutions and the proclivity of people to take action now just simply didn't allow action, and so, that problem will get worse. And its partly because people pay attention primarily to what's going on today, and don't like to think about serious problems that are looming on the horizon in the future.

David Room: So, if I'm to interpret you, it sounds like you're saying that risk management is not effectively used in our public policy, usually?

Robert Hirsch: I wouldn't make a blanket statement that risk management isn't involved, but on very, very large issues, our track record in the United States and elsewhere in the world is not very good at taking action well before nature problems it.

David Room: So when you started this project, what were your expectations?

Robert Hirsch: Our expectations were to be able to simplify the problem down so that a large number of people, including ourselves, could understand what the character of the problem really was. We went into it recognizing a number of issues, but we didn't go into the analysis knowing what the answer would be. Rather, we did what we think was the honest thing to do, namely, pose the problem, simplify it to the extent possible and reasonable, and then, see what the numbers tell you. And that's the way we approached the problem, and what we found out was very surprising. It was much worse than we anticipated. We had thought, for instance, that conservation could play a bigger role, much faster, than the numbers finally indicated. We knew it would take time to build substitute fuel plants, but we didn't really appreciate the magnitude of the challenge until we laid out the numbers and we laid out what could physically be done under the most optimistic conditions. And the conclusions were simply overwhelming. What we did was to assume three scenarios in order to illuminate a range of possibilities. One scenario was that definitive action would not be taken until the problem is evident. As we have said in this conversation, that's often times the way decisions are made on very large problems. Second scenario was one where we assumed that the world gets smart and anticipates the problem and begins definitive action 10 years before the problems strikes. And the third scenario is similar, but assumes that the world takes action 20 years before the problem strikes. Our purpose there was to get an idea of how the numbers fit with likely production decline after peak in order to see how big the problem really was. And our conclusion is that the world would have to take crash program action on a broad scale with basically everything that's available commercially or near commercially, and would have to start 20 years before the problem strikes in order to be able to avoid dire economic consequences for the world. Now the problem, of course, is that there are a number of people who feel that peak oil may occur in 5 or 10 years, and if that's the case, we're already too late. But the relatively safe scenario of 20 years from initiation of the project.

David Room: Right. Tell me what mitigations were considered.

Robert Hirsch: What we did was to ask the question: “What is available that is commercial or near commercial today that has the potential to have world-scale impact and we identified, first, conservation, and a particularly improved vehicle performance, much higher fuel economy. That's one of the first things one ought to think about. Then we looked at producing substitute fuels from coal. United States in particular has a large amount of coal, as do other countries in the world. We looked at the possibility of converting remote natural gas, and there is an abundance of that in the world, converting that kind of gas to the kind of liquid transportation that we use now. And we looked at enhanced oil recovery, using carbon dioxide, in particular in the large reservoirs of the world, that would help to slow the decline of production of conventional oil. Those technologies are available already to go, and they're not something that one has to wait for improvements out of the laboratory or even demonstrations out of the laboratory. And we felt that that was necessary because the key to mitigating the peak oil problem is implementation of a variety of things at very large scale.

David Room: You mentioned higher fuel economy. Could you tell us the value you are using for the average US fleet?

Robert Hirsch: What we did was to use a number of well-established studies, some from the National Academies' analysis on fuel economy. And we looked at how fast one could possibly go if one dramatically changed the industry. One required the industry to convert over immediately to much higher fuel economy and then, within a matter of years, take yet another step towards higher levels of fuel economy. So, initially, we assumed an improvement of 30% in fuel efficiency, starting within three years. That would be a very large task, and a huge requirement for the auto industry. Then we looked at increasing that to 50% 8 years later. All of that is within the bounds of the range of what could be on a crash program basis within the auto industry. One can't snap their fingers and expect things to change overnight. The other thing, of course, is that the vehicles that are on the road today have very long lifetimes, of the order of 15 years and longer, and so one is talking about a relatively slow introduction of new vehicles and a lot of vehicles that will continue to be in service simply because nobody can afford to discard the vehicles that they have. That's why it takes a long time to phase the fleet over.

David Room: What do you see as the key assumptions and major limitations of the study? What did not get addressed that might have been addressed in a more comprehensive study?

Robert Hirsch: There's much more detail that can be done. What we think we did, and others agree, is we captured the essence of the problem. We stayed away from estimating the cost. The costs are clearly in the $10-and-more trillion range worldwide. Somebody could do a careful analysis and come up with costs, and the numbers will be shocking. There's no question about it. That's something that remains to be done. Greater analysis of how fast things can actually get done is also important because one of the things that's painfully obvious is that the world does not have the engineering and industrial capacity to do a number of things, beginning overnight, on a crash program basis. The industry, the people are simply not there. So, crash programs represent the very best that's possible, but it's quite clear that there aren't enough people available to do what's necessary. So there's a requirement to train a large number of people very quickly. And there's also a requirement to scale up a lot of factories in order to be able to produce the components and the systems that are needed. Something else that is quite obvious is that the current system of permitting or new energy plants in the United States and elsewhere in the world would not allow a crash program to be implemented. Right now it takes something like four years to get permitting and clearances to build something. In a crash program, you'd have to collapse that down to four weeks. And that means dramatic change in what people expect. It means that governments would have to take control and dictate what was going to happen where. That's very uncomfortable for a lot of people. In addition to that, there are issues related to environmental impact, because they will undoubtedly have to be a number of environmental compromises made along the way in order to be able to do the kind of job that we're talking about. That compromise, for people, is going to be difficult. I was asked recently about some of the environmental effects associated with these activities, and particularly global warming, and I said that, in my opinion, the biggest pollution problem that people would worry about is people out of work, losing their homes, losing their cars, losing their possessions because economies are going into recession or worse. Under those conditions, people are going to worry much less about the environment and worry much more about getting economies back onto a reasonably even keel.

David Room: If one was to take into consideration global warming, might there be a whole new set of mitigations that could be included in the study as well?

Robert Hirsch: No. Very simply, no. We have no choice. We have an economy that runs on hydrocarbons, particularly in transportation. There is no way that we can jump to hydrogen or some other undeveloped idea without having the deepest of economic depressions in the world. There's simply no way to do that. And pragmatic people won't do that. Global warming is a concern, there's no question about it. There's much that we don't know about global warming. There's much that we don't know about how fast it will happen and how severe it will be. In that respect, it is somewhat of an abstract problem. And there are a number of scientific uncertainties in the whole global warming business. There is no uncertainty when your neighbor loses his job and loses his house. There is no uncertainty when that kind of thing hits your family, and maybe hits very close to home. That's really hurt, and that's the kind of hurt that people haven't felt in a very long time. That's the kind of hurt that we're talking about if peak oil is not mitigated on a timely basis.

David Room: More so than hydrogen, I was thinking of the possibility of rebuilding local economies and reconfiguring cities so that much less transport would be needed.

Robert Hirsch: There are a lot of things that we could do in terms of rebuilding our cities and our transportation system, and so forth. The problem is that that all takes time, and by the way, it takes liquid transportation fuel to build things and move things around. It's going to take a tremendous effort and a tremendous amount of money and a tremendous amount of time to cut back on the suburbs and to move people closer in or to reconfigure the suburbs into business centers and then connect by, say, electric transportation of some sort. All of those things are possible. I would not have any doubts that longer term, that's what will happen in the United States and elsewhere in the world. But those things take time, take money, and simply cannot be done overnight.

David Room: What was the average world depletion rate used in the study?

Robert Hirsch: We used a 2% decline in world production based on the very good database that exists for the United States, lower 48 states. That number, in many respects, is optimistic. There are a number of good studies and very senior people that estimate that the decline rate may be 4% or 5%, maybe even up to 8%. If that's the case, then the results that we got simply won't manage the problem in any reasonable period of time.

David Room: When you say that, the results that you got won't manage the problem in any reasonable amount of time, what do you mean? How do you mean that?

Robert Hirsch: What I mean is that if it's going to take 20 years to mitigate a problem that involves peaking at a 2% decline, then you can do it in your head once you've seen the relative numbers. If the number is 4%, then you're probably talking about 30 years of advanced crash program mitigation. And if the number is 8%, you'd probably have to start 40 or 50 years before the problem. And there's no question in my mind at least that peaking is likely to occur in maybe the next 10 or 15 years. So if depletion is as high as some people think it could be, we're in a very serious, serious problem. Much worse than the worse that we could think of. This problem is truly frightening. This problem is like nothing that I have ever seen in my lifetime and the more you think about it and the more you look at the numbers, the more uneasy any observer gets. It's so easy to sound alarmist, and I fear that part of what I'm saying may sound alarmist, but there simply is no question that the risks here are beyond anything that any of us have ever dealt with. And the risks to our economies and our civilization are enormous. And people don't want to hear that. I don't want to think about that. That's a very uncomfortable thing to think about. And I will tell you that it took some time after that realization set in to be able to emerge and try to be positive and constructive about this problem. This is a really, incredibly difficult, and incredibly severe problem.

David Room: Yes, it seems like there is a nonzero likelihood that oil peak will happen within ten years, and that the depletion rate that you've assumed may be lower than what might be experienced. And in that case, do you have any suggestions, other than, that we just need to get started now?

Robert Hirsch: I don't think there's any way out. I think we've got to build things and do things on a scale that has never been done before. It has to be done worldwide. What it does to economies in the process is open to question. It's not difficult to come up with some pretty dire predictions. But that's up to economists and people to take a serious role. As you may know, there was an exercise done here in Washington earlier this year called “Oil Shockwave”. The idea was to look at what terrorism might do in terms of interrupting oil flow. They did some computer simulations. They hypothesized that terrorism cut 4% of world oil production, and they considered what that would do to the United States economy. 4% is not a big number. What they determined was that oil prices would jump to over $160 a barrel, and that US economy would go into recession and there would be millions of jobs lost. And that's just with a 4% reduction. And we're talking about numbers that are much, much bigger than that. The difficult problem was to analyze. It isn't difficult in analyzing them, though, to see dire consequences even with some of the most optimistic assumptions that somebody could make.

David Room: With respect to starting mitigation, how does the cost of starting too soon compare to the cost of starting too late?

Robert Hirsch: If the peaking of world oil production occurs anytime in the next 20 years, which I think is quite likely, then there is no such thing as starting too soon. And if we start too late, then we're in for dire economic changes. Certainly recession, and it could be much worse than that.

David Room: In the report, you had talked about the social cost of starting too soon. I found that quite interesting when you compare that to the actual cost that would be incurred if we started too late.

Robert Hirsch: I think that the cost situation is skewed to being too late. And I think that really fits with what both the optimists and the pessimists are saying. The reason for that is that we're unlikely to step quickly into a crash program, but more likely to begin to scale off slowly. If that's the case, that puts off being in a sound position for a long, long time.

David Room: What happens if things go along as they have been, not much getting done, and it's 2007 or 2010 and we find out that we have just peaked. What do we do then?

Robert Hirsch: I don't think anybody really knows because we would be entering into a situation where anything that we say in advance is strictly speculation. Some of the things that are reasonably certain is that oil will become scarce, and so its price will go up dramatically. That will mean dramatically higher costs to consumers, and dramatically higher costs to consumers is going to have an increasing impact on the economy. And, the problem is that it's very hard to see any way that that can turn out in a painless manner. Every person that I know that thinks about it in a reasonable way thinks in terms of very high prices for fuel, and all the places that we use fuel in the economy, comes to a very negative conclusion.

David Room: What do you think about transportation demand restraint strategies that are outlined in the IEA report saving oil in a hurry, such as carpooling, telecommuting, rationing, etc.?

Robert Hirsch: I think they've identified a number of things that are possible and reasonable, but the problem is, just like any of the mitigation opportunities that we have, they're unlikely to be implemented until people are feeling pain.

David Room: Tom Whipple of the Falls Church News Press reported the other day that the highlight of the first ASPO-USA conference may have been when Congressman Roscoe Bartlett asked if we really want to mitigate by spending all our treasure to produce oil substitutes after peak oil arrives. And he follows, “Would we not be better off if we started moving towards a world with minimal consumption of liquid fuels as soon as possible?” Any comments?

Robert Hirsch: Well, the idea of moving towards a world that is less dependent on liquid fuel is a good one, and eventually, that's what going to have to happen simply because we are depleting the liquid fuels that are available or are going to be available from coal or shale or other sources. The problem is that we have an enormous infrastructure that's dependent on liquid fuels now. We all have our cars and we get our food from trucks, and trains, and we fly around in airplanes, and so forth. And to change that infrastructure in a dramatic way is going to take a great deal of time because that equipment has long lifetimes, and it's going to cost a lot of money.

David Room: What I'm hearing is the efforts to transition our infrastructure need to occur simultaneously with mitigations that will enable us to have a robust economy through the transition.

Robert Hirsch: Well, we have to take care of ourselves in the near-term in order to get to the longer-term, and I think that there are a variety of things that can be done, some aimed at the longer term, and some aimed at the immediate problems that we're going to have. And it makes sense to do both in some reasonable proportion. Because we are eventually going to have to do a transition over to technologies and ways of conducting our lives that are much more sustainable than what we have today. The problem is we can't jump immediately to a sustainable future. That's just simply impossible. But we ought to be striving in that direction while at the same time taking care of our near-term needs.

David Room: Given what you know now about the breadth of the ramifications, how might you reframe the study or follow-on work?

Robert Hirsch: I wouldn't reframe the study. I think that, after a great deal of scrutiny, the study stands well. And, of course, we feel good about that, very good about that. A lot of very capable people have looked at the data and no one has found anything that's fundamentally wrong. Some people have suggested that maybe conservation can move more and more quickly, and we've said, “Please go do a more detailed study and show us how one could be more optimistic.” In terms of follow-on studies, we are doing a new study for the Department of Energy looking at just the United States, and what the United States could do by itself with a crash program, and those technologies that we could manage within our border. The first one, again, is conservation. Dramatic improvement in corporate average fuel economy of new vehicles. The second is enhanced oil recovery, which we can do within our borders. The third is converting coal to clean, transportation liquid, and indeed, we have a tremendous resource that we could tap for those purposes. And the fourth is to assume that the shale oil that we have such a rich endowment of in the West, could be brought into commercial production to make clean liquid fuels on a rapid basis. We're looking at that, all of those technologies in terms of what the cost would be, what the employment effects would be, and how something like that might be actually implemented. That includes an identification of problems like the permitting problem, which would stand as a major impediment, at least the way present laws exist.

David Room: How is DOE using this report, or likely to use this report, in the follow-on work that you've outlined?

Robert Hirsch: I'm not aware of how the report has impacted at the higher levels in the Department of Energy. I simply have no information.

David Room: Do you have any feedback that you can share about how the levels within DOE that you've been working with have received the report?

Robert Hirsch: The people that I've been dealing with are good, solid people who have never had to face anything like this before, and they are taking it very seriously, and within the realms that they operate and they're trying to effectively carry the message forward.

David Room: Fabulous. Have you received any feedback on your report from US policymakers or anyone in Congress?

Robert Hirsch: The answer to that is: Yes, I had discussions recently with James Schlessinger who was the first Secretary of Energy, who was my boss back in the days of the Atomic Energy Commission. He was also the head of the CIA and the Department of Defense. He's retired now, and has gotten interested in the peak oil problem, and is terribly concerned. He testified before the Senate Foreign Relations Committee on this subject yesterday, and he has written a number of articles that will be published here in the near future. In terms of people in the Congress, Congressman Roscoe Bartlett from Maryland, who has a technical background, became interested and then concerned very quickly about the peak oil problem, I think well over a year ago, and has been very active it trying to get people to pay attention. It turns out that last night, he gave a special presentation on the floor of the House where he described what we did in our report and made additional comments about what he thinks is appropriate. The subject is moving along and is being more seriously considered. How fast that actually happens in the political world is anybody's guess. This is not a pleasant subject. It's an extraordinarily unpleasant subject. People tend to not want to deal with very unpleasant subjects. The other thing is, is that the subject is incredibly complicated, and people do not understand energy. They simply do not understand the difference between liquid fuels and windmill, between nuclear power and tractors. They simply don't really understand how things work. I don't mean that as a criticism, it just is part of the problem of education. It's going to have to go along with people, realizing the severity of the problem, and what the important answers and useful answers are likely to be.

David Room: Richard Heinberg and Colin Campbell have said that the Hirsch report is the best tool for educating policymakers about peak oil, and a local group, Toronto Post-Carbon, has initiated a campaign to get North American citizens to send your report to policymakers. Would you be willing to do a follow-up interview based on questions they get from the policymakers?

Robert Hirsch: I'm happy to help. I'm happy to do whatever I can within the realm of rationality and professionalism. I feel very strongly that people have got to pay serious attention to the problem, and I'll do everything that I can, within reason, to be part of the solution rather than part of the problem.

David Room: All right. Thanks a lot, Bob. I really appreciate it.

MediaRobert Hirsch on peak oil mitigation