May 1, 2008  

Running on empty

We are likely standing today on the precipice of a radical shift. The U.S. must therefore prepare to endure — or to survive — the arrival of the event that will signal this shift: the peak in production of conventional crude oil.

Crude oil took millions of years to create, and thus, in the lifespan of the human race, it is a finite resource. The Oil Age began roughly in the middle of the 19th century. At that time, the total global endowment of petroleum products was a finite value; a consensus of global petroleum experts today believes this number to be about 2 trillion barrels. Once half the endowment has been pumped from the ground, a “peak” in production will have been reached. From that point forward, each barrel of oil will be progressively harder to retrieve and more expensive to extract. More concerning is that despite the best efforts of technology, a progressively smaller and smaller yield will be possible until someday, well in the distant future, the oil runs out.

Of immediate concern, however, is that we are likely to hit this peak just as global demand rises to an all-time high. Current evidence suggests we may have already hit the leading edge of the peak. Though many realize that such an event would raise the cost of a gallon of gas, most are unaware of the extraordinary impact crude oil has on our daily lives and how dependent the global economy is on the continued flow of plentiful, cheap crude oil.

On the obvious level, it fuels our ability to transport people and goods all across the world. But on less apparent levels, it is also directly responsible for the explosion in mankind’s ability to produce an ever-growing amount of food: fuel to produce and then run farm machinery; to transport the goods to market; to run irrigation pumps; and probably most significantly, to manufacture petroleum-based pesticides and fertilizers without which farmers could produce only a fraction of today’s crop yields. A reduction in the supply of crude oil and its derivatives would have a devastating effect on the world’s ability to produce enough food to feed its burgeoning population.

Two troubling major milestones were reached this year that have already caused civil unrest in parts of the world: corn and rice, two of the most crucial food staples in the world, both jumped to all time record highs in April as demand has outstripped supply and – in the case of rice – caused Asian nations that were previous exporters to issue emergency decrees banning such sales.

Some dismiss fears of the peak of oil by pointing to new and emerging alternatives, such as biofuels. However, there are unexpected consequences. The price of corn in America shot to a record high in April as a significant portion of the crop was diverted to ethanol production. This increase in price has also increased the price for a whole host of other goods and products that rely on corn as a base, and caused a shortage of the grain for export to developing nations where it is desperately needed. This shortage and price increase of rice and corn has occurred in the absence of a shortage of crude oil. When that dynamic is added to the equation, the potential for serious shortages rises dramatically — and along with that, the danger of widespread civil unrest.

In congressional testimony earlier this year, Robert Hirsch, the author of two Energy Department studies on the potential impacts of peak oil, warned of these consequences when he said, “To me, the worst kind of disaster is hordes of people out of work, out of their homes, and desperate, which is what world oil shortages will deliver.” To put the global consequences in perspective, he explained: “World oil production is about to reach a maximum, after which it will go into decline. When decline begins, world oil prices will leap much higher, and oil shortages will worsen year after year.”

The populations of China and India are well over a billion each. Over the past several decades their economies have grown dramatically and standard of living increased markedly. The U.S. and Europehave enjoyed an extraordinary quality of life for over half a century. When finite resources begin to put all that in peril, there will be little concern outside the borders of those countries for the welfare of other countries. Civil populations will demand of their respective governments solutions to ever-increasing problems. When “hordes of people” are out of work and hungry, as Hirsch pointed out, there will be enormous pressure on governments to provide solutions. Though it would be nice to wish that the world would come together in a spirit of harmony and develop solutions that would benefit everyone, the history of mankind suggests the more likely scenario would be that nations and peoples will look out first for their own needs. This has ominous ramifications for global security. With the help of intelligent solutions, the Oil Age could be extended for many decades, but the possibility exists that people will panic and act irrationally on an individual and national basis once the reality of a peak has set in.

Evidence suggests that we may be at this peak now.

The Energy Department’s Energy Information Agency (EIA) released data in April revealing that for 44 consecutive months — from June 2004 through January 2008, the last month for which the EIA has data — the global daily production of crude oil has plateaued at between 84 and 85 million barrels per day. Though virtually all major oil experts during the first decade of this century have predicted a 1 percent to 3 percent annual increase in production, it has not materialized. Given evidence that the peak of oil may have been reached, and considering the global ramifications to that peak once its effects are felt, the U.S. should give serious consideration to re-examining its near-term and long-term defense plans.

Many of today’s defense elite suggest that anticipated decades of persistent conflict — during which the U.S. military is expected to face a number of peacekeeping operations, such as Kosovo and Bosnia, or insurgencies, such as Iraq and Afghanistan — requires us to reorganize our force to be more capable of handling stability operations, while still maintaining a “core” competency in high-end conflict. But in practice, this has meant focusing on the lower end of the spectrum of conflict at the expense of our ability to prepare for and handle major combat operations. Given the likelihood of peak oil and the equal likelihood of the international chaos it will spawn, we must move toward a more balanced approach.

Certainly the possibility that the U.S. will have to conduct stability operations in the future seems a virtual certainty, and few would argue that sufficient attention was paid to it in years past. But a sober analysis of the future global security environment would argue that stability operations ought not to occupy an equal place at the table with major combat operations. A more appropriate split in focus might be 25 percent to 75 percent in favor of major combat operations . But focus isn’t the only issue: the physical makeup of the force is also critical.

There have been arguments put forward by many of today’s most respected defense thinkers suggesting that when the Cold War ended so too did the requirement for a sizable heavy force. Since there was “no more Fulda Gap” why, many rhetorically asked, should we continue fielding large numbers of M1 tanks? Further, diplomatic, political, and economic experts suggested that as a result of the deepening interdependence nations have on each other as a result of economic globalization, no major power will go to war with another because it would work against their self-interest. This rationale has been used before and proven spectacularly wrong (Japan 1941 comes to mind), but it becomes even more shaky should the global economic stability upon which this argument is based begin to founder.

What if, after the peak of oil becomes evident and global demand rises well above supply, and faced with civil unrest that could threaten to bring down their governments, China and India took what the U.S. would consider irrational action and seized access to a number of oil fields ostensibly to “protect” the “free flow” of oil? What if, in the face of a skyrocketing rise in the price of a barrel of oil, Venezuela, feeling greatly empowered as a result of the oil it possesses, held the U.S. hostage by threatening to cease selling oil to us and instead sell it elsewhere (as it has already threatened)? It doesn’t take much of an imagination to conceive of many such troubling scenarios occurring on the international stage that would turn the rationale for war and peace — upon which the world has stably relied for the past 60 years — on its ear.

The U.S. should heed the warnings of Rep. Roscoe Bartlett, R-Md., who is the lone voice in Congress beating the warning drum of the peak of oil and its national security ramifications. We should begin immediately investing billions of dollars in the mitigation efforts Hirsch outlines in his reports, and we should begin an international dialogue at the highest diplomatic levels to develop mutually beneficial solutions to the peak oil problem. But the Defense Department must not wait for others to act. We must ensure that our force structure remains capable of engaging in major combat operations and is of sufficient size to safeguard our country if our vital national interests are threatened.