Magazine 2015
International Peer-Reviewed Journal
RESEARCH HORIZONS, VOL. 5 JULY 2015
ECONOMICS
‘PEAK OIL’ANDALTERNATIVE FORMS OF ENERGY: NEED TO
TRANSIT TOWARDS GANDHIAN ECONOMIC THINKING.
Gaurang Yajnik
ABSTRACT
The alarming and persistent global economic and financial failures of the last few years and the alarmingly
increasing climate change situations have raised the eyebrows of many thinkers. Some attribute them to
mere faulty decision making and misplaced economic directives leading to manipulation by vested interests
but the reality is different. Modern industrial society and its growth model is based on oil, a finite non-
renewable energy resource; which has reached its peak according to Hubbert’s Peak Oil theory. ‘PEAK
OIL’ is a well-argued controversial theory. ‘Peak oil’ and other climate change situations are predicaments
which need to be combated. We shall have to design our future course of action to cope up with them
sustainably. Part I of this paper critically discusses ‘Peak oil’ situation. The alternative forms of energy in the
above context and the question of the viability of each alternative forms of energy is discussed in part II of
this paper as many of them are directly or indirectly oil-dependent in nature. This paper also foregrounds
the possible inevitable transition towards sustainable economic growth based on sustainable consumption
pattern in the light of Gandhian Economic Thinking.
Key Words: Peak Oil, Climate change, Alternative forms of energy, Gandhian economic thinking.
Introduction :
The modern industrial revolution and its sparkling initial results of exponential growth and prosperity has
led us to think or has conditioned us in such a manner that we look at world affairs in a particular
dimension while ignoring their dangerous implications. Our vision is hypnotised to the extent that we
decide economic course of action based on expectations of only permanent exponential growth and
prosperity which is economically neither viable nor sustainable. We expect infinite exponential economic
growth based on finite/limited non-renewableresources which is not at all sustainable.
I
Dr. M. King Hubbert was a geophysicist and awell-known authority on the estimation of energy resources
and on the prediction of their patterns of discovery and depletion. He is known for this shocking prediction
regarding depletion of fossil fuel in 1949. In 1956, he made prediction regarding US Oil production
would peak in about 1970 and decline thereafter, which was looked at with derision. But the fact that His
theory cannot be denied even today. According to him:
“
When we consider that it has taken 500 Million years of geological history to accumulate the present
supplies of fossil fuels, it should be clear that, although the same geological processes are still operate,
the amount of new fossil fuels that is likely to be produced during the few thousand years will be
inconsequential. Therefore, as an essential part of our analysis, we can assume with complete assurance
that the industrial exploitation of the fossil fuels will consist in the progressive exhaustion of an initially
fixed supply to which there will be no significant additions during the period of our interest.” (Hubbert, 4)
He analysed the production trends of fossil fuels to study the history of exploitation of fossil fuels during
th
late nineteenth century to mid-20 century. He found that rates of production of fossil fuels increase
exponentially with time against its finite supply. According to him world production of fossil fuels during
that period increased at a rate of 7% per year, resulting in with that rate output doubling every 10 years.
So he felt that:
“
These facts alone force one to ask how long such rates of growth can be kept up. How many periods of
doubling can be sustained before the production rate would reach astronomical magnitudes? That the
number must be small can be inferred from the fact that after n doubling periods the production rate will
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International Peer-Reviewed Journal
RESEARCH HORIZONS, VOL. 5 JULY 2015
n
be increased by a factor of 2 . Thus in ten doubling periods the production rate would increase by
thousand fold; in twenty by a million fold. For example, if at a certain time the production rate were 100
million barrels of oil per year – the US production in 1903- then in ten doubling periods this would have
increased to 100 billion barrels per year. No finite resource can sustain for longer than a brief period such
a rate of growth of production; therefore, although production rates tend initially to increase exponentially,
physical limits prevent their continuing to do so.” (Hubbert, 8)
According to his theory, when production increases exponentially then the production doubling time
constantly decreases. e.g. petroleum has been produced in the United States since 1859, and by the
end of 1955 the cumulative production amounted to about 53 billion barrels. The first half of this required
from 1859 to 1939, or 80 years, to be produced; whereas, the second half has been produced during the
last 16 years. (Hubbert, 9)
Hubbert was not a fortune teller. He was a scientist specializing in geology. He did a statistical analysis
based on data regarding discoveries Vs. Production of oil within US. He projected that the time between
the discovery and production peks would be approximately 40 Years. (Khan, 85) According to his
projections oil discoveries in US peaked round 1930 and therefore US oil production would peak after 40
years that is round 1970. And indeed US oil production did peak around 1971. (Khan, 85).
The following figures Show How did Hubbert Predict US Peak Oil? (Khan, 84-85)
Again in 1974 he projected that Global Oil production will peak between 1995 to 2000 but the Peak in
fact, was delayed several years beacause of political setback called the Arab Oil Embargo, when the oil
producing countries of the Middle East withheld oil from the rest of the world for a couple of years…..ever
since (around 2005) we have been at the top of the curve at roughly 85 to 86 million barrels/day. This is
Global Peak of Oil production.(Khan, 86).
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RESEARCH HORIZONS, VOL. 5 JULY 2015
Dr. Colin Campbelljoined the oil industry as an exploration geologist after completing his Ph.D. Heis noa
Trustee of the Oil Depletion Analysis Centre (“ODAC”), a charitable organisation in London that is dedicated
to researching the date and impact of the peak and decline of world oil production due to resource
constraints, and raising awareness of the serious consequences. He wrote in July 2002 regarding the
inevitability of Peak Oil in Hubbert Center Newsletter no. 2002/3:
“
Oil discovery in the United States peaked in 1930 with the discovery of the East Texas field. Peak
production inexorably followed forty years later, but no one particularly noticed as cheap imports made
up the difference. Since then, the same pattern of peak and decline has been repeated from one country
to another, save for the Middle East, and the time lag from peak discovery to peak production is falling
thanks to modern technology. Given that peak world discovery was passed in 1964, it should be no
surprise that the corresponding peak of global production is now getting close. Exactly when it will
come depends on many short-term factors, not least of which would be military intervention in the
Middle East. The base-case scenario points to 2010, but it could come sooner if economic recovery
should drive up the demand for oil. The question is not WHETHER, but WHEN oil production will peak.”
Moreover, while explaining his theory, Hubbert opined that the world’s present industrial civilization is
handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems:
the accumulated knowledge of the last four centuries of the properties and interrelationships of matter
and energy; and the associated monetary culture which has evolved from folkways of prehistoric
origin.(Andrews of worldnet.att.net). Both these intellectual forces have inherent incompatibilities and
exponential growth as their fundamental common feature. That is, for matter-energy the exponential
growth is not possible because of its finite supply and monetary system growing exponentially. This
leads to financial instability in the world economy. In spite of these he is not a pessimist, he believes that
by overhauling our culture and finding alternative to money can solve the problem and mankind is
capable of doing so because he emphasizes that:
“
‘We are not starting from zero.We have an enormous amount of existing technical knowledge. It’s just a
matter of putting it all together. We still have great flexibility but our manoeuvrability will diminish with
time”
II
Part I discusses the controversial Peak Oil Theory. We may agree or disagree with the hypothesis but one
thing is certain about the theory is that fossil fuel is a finite non-renewable resource. So we have to
acknowledge the crisis and without being pessimist mankind should find the alternatives to combat the
crisis. Let us consider alternative sources of energy in the wake of oil crisis.
For any alternative to be considered, it must have certain attributes like:
-
-
-
-
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An alternative should be viable.
An alternative should not be dependent on Oil or oil prices.
An alternative must contain same or more energy density which oil contains.
An alternative must be scalable.
An alternative must be in position to give us by products of oil.
We can discuss three categories of types of Alternative energy option.
1)
Liquid fuel alternatives like Bio-fuels, Fuels extracted from Tar sands or Oil Shale.
2)
Electricity alternatives Like Solar, Wind, Hydro, Nuclear, Geothermal, Waves, Tides, Fusion and
Fuel Cells.
3)
Other fossil fuels like Coal, Natural Gas.
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) Liquid Fuel Alternatives:
RESEARCH HORIZONS, VOL. 5 JULY 2015
1
Liquid fuel alternatives like ethanol, tar sands and shale oil are nowadays considered as a potent alternative
to oil because the outcome from these is actually liwuid fuel and can be replaced for petroleum directly.
These oils are also unconventional as they are derived from organic matter or deposits like plants and
food grains, tar-sands and shale deposits. They are also labour intensive, resource intensive and energy
intensive in nature. On the other hand the cost of production and greenhouse emissions from some of
these alternatives are assumed to be very high compared to per barrel oil production. Moreover, ERoEI
(Energy Return on Energy Invested) is very marginal or very small for these alternatives. It is also observed
that the production of these oils is oil dependent.
Those who are sceptic about the Bio-based economy stresses the fact that it can have a large impact on
food prices, land use and deforestation, poverty and hunger etc.. On the other hand, the advocates of
Bio-based economy have different argument. They advocate Bio-based economic policies for the simple
reason that it reduces the use of fossil fuels. Their rationale for implementing Bio-based economic policies
is to limiting the dependency of fossil fuels and their exporters. It facilitates a diversification of energy
sources. It was also aimed at reducing GHG emissions. The most importantly it provides options for
regional and rural development in both developed and developing countries. (Langeveld, 6) In short, the
transition towards Bio-based economy may be desirable but is a very complex task.
2
) Electricity Alternatives:
Electricity alternatives are Solar, Wind, Hydro, Nuclear, Hydrogen, Fuel Cells, Geothermal, Waves, Tidal,
Fusion and Fuel Cells. All these are widely discussed and advocated alternatives to get freedom from Oil
dependency.
Solar energy, as it is sourced from The Sun, is considered as an unlimited source of energy.Solar energy
has problems of scalability, low density compared to oil, more expensive, Oil dependency, intermittency
etc. Solar energy can work at micro or small level to some extent but Modern Industrial world cannot be
run on Solar Energy. Solar and Wind Energies are sun based and can be affected by weather patterns,
locational factors and availability of Sun light, seasonal factors and latitudinal factors etc.
Hydro Electricity has also its share of positives and negatives. Though considered one of the green,
clean and environment friendly option, it has its share of limitations like oil dependency, scalability etc.
Moreover, it is considered as a silent environment killer, as it kills rivers downstream and problems of
silting and sedimentation are very certain. According to Khan “They generate electricity at a huge economic,
environmental and social cost while permanently killing complete river.” (Khan, 185)
Nuclear disasters of recent times have remove the mask of Nuclear Energy as clean and safe alternative
to Oil. If we consider radioactive side effects, Cost of Construction, the problem of nuclear waste disposal
etc., then Nuclear Energy can’t be considered as an alternative to Oil. Moreover, Its Oil dependency and
problems of by products, cost of tackling environment hazards being generated by it are also going
against it and making ERoEI very marginal.
Hydrogen, Fuel cells, Geothermal, Waves, and Tidal Powers are also non-viable players as an alternative
to Oil as they all have problems of Oil dependency, scalability of different degrees and lastly, Fusion,
which powers the sun is only a hypothetical and unrealistic alternative till date.
3
) Other Fossil Fuels:
Coal and Natural Gas are so called considered as an alternative as they are already used in many places
as an energy source. They are at present holding significant share and burden of running modern day
industrial setups. They are also waiting for their peaks. Moreover, As Khan remarks regarding side effects
of Coal:
“
- Radioactive material released by a large coal burning electric plant would be enough to build two
atomic bombs.
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RESEARCH HORIZONS, VOL. 5 JULY 2015
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Mercury Pollution is another one of the main consequences of burning coal and is blamed for 60,000
annual cases of brain damage in new-born in the U.S.” (Khan, 143)
On the other hand, Natural Gas has low energy density, High well depletion rates and inability to substitute
liquid fossil fuels. The process of fracking for producing Natural Gas can adversely affect the stock of
ground water and can pollute it with chemicals.
Conclusion:
The discussion in the foregoing sections reveals the issue of contemporarycrisis which has been framed
in terms of our relationship between development and environment. Therefore, leads us to think seriously
and compelling us to redesign our course of action for our and future generations’ betterment. Our too
much dependence on monetary system and attachment towards exponential economic growth needs to
be readdressed.It is the modern economics which is directly or indirectly at the root cause of all this. We
are at the situation where finite resources are depleting and sound, viable and sustainable alternative to
it is yet to be discovered. What we can do is we have to redesign our present pattern of consumption in
accordance with our limits.
The Sure solution for this lies with Gandhian economic thinking. Which advocates harmony with nature
rather than competition with it and vision of human life rooted in cooperation and contentment, peace
and non-violence and in harmony between man and man, and between man and nature. Gandhian
economics is the economics of permanence. He advocated limiting human wants. Gandhiji emphasised
austerity and the moral principle in development. In development his priorities focused on the poor,
antyodaya, the poorest of the poor, because poverty is the greatest polluter of the environment. He
believed in denying oneself what couldn’t be shared with the least. (Mishra, 57).
In the Present day our lifestyles are based on high level of consumption which leads to high environmental
damages. We have to change the basic axiom of economics of ‘unlimited wants and limited ends’ to
‘Limited wants and unlimited ends’. This is possible only by following Gandhian way of lifestyle of reducing
human wants at minimum level, acting as a Trustee rather than an Owner of our natural as well as personal
resources. One may argue that following Gandhian way of lifestyle may lead to economic shrinkage.
Even otherwise in the wake of modern crisis economic shrinkage cannot be averted. Gandhian way of life
style may be initially look like an economic shrinkage but it won’t be disastrous in any way. In the long
run it will have more equitable, harmonious, sustainable allocation of natural as well as human resources
leading to sustainable state of prosperity. It may be what Hubbert suggests- an alternative to modern
monetary system.
Refrences
Hubbert M. King (1956). Nuclear Energy and The Fossil Fuels, Publication No. 95, Shell Development
Company, Houston, Texas, USA.
Khan Mansoor (2013). The Third Curve: The End of Growth as We Know, Mansoor Khan, Printed in India
at Trikkon, Lower Parel, Mumbai, India.
Langeveld Hans, Sanders Johan, Meeusen Marieke (2012). The Biobased Economy: Biofuels, Materials
and Chemicals in The Post-oil Era,Earthscan, Routledge, UK.
Mishra Anil Dutta, Narayanasamy S. (2009).World Crisis and The Gandhian Way, Concept Publishing
Company, New Delhi, India.
Web Resources :
Compbell Colin J. (2002) “Forecasting Global Oil Supply 2000-2050,” Hubbert Centre Newsletter no. 2002/
3
, M. King Hubbert Center, Colorado School of Mines, Golden Co, USA.
Stephen B Andrews Interview with M. King Hubbert (1988), Sb Andrews at worldnet.att.net, on March 8,
988.
1
Mr. Gaurang Yagnik, Associate Professor, Dept. of Economics, Shri Sahajanand Vanijya Mahavidyalaya,
Ahmedabad.
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