Jeremy Leggett Interview - Culture Problem in the Oil Industry?
What follows is four questions from an interview recently filmed in London by ASPO-USA’s Dave Bowden and Steve Andrews. Jeremy told us of his three careers. First he taught oil geology and consulted for the industry. Then he “jumped ship” and for six years worked in around the climate negotiation process for Green Peace International. His third and most recent career is as a solar energy entrepreneur, serving as executive chairman of Solar Century, the UK’s fastest growing and largest solar company . “So I worry about peak oil. I worry about climate change. And I need no persuasion of the power of the alternatives to do something about both problems.” He has written at least three books about these three issues from his base of operations in London, plus served as the lead author on the UK Industry Task Force on Peak Oil and Energy Security (October, 2008); his video-taped comments on the latter will be shown at the ASPO-USA conference next week.
Question: When did you first learn about the peak oil issue?
Leggett: I came late to the peak oil issue. I read the original Campbell-Laherrere paper in Scientific American in 1998 and I think, like many creatures of the geological community, I was vaguely concerned by it but then I thought with great acuity that this can’t possibly be right and with the benefit of hind sight, that was the limit of my scientific analysis at the time. It was the Shell reserves fiasco in 2004 that gave me a mental slap around the face, and I thought “there is a chance, son, that you are not paying attention here. Why don’t you do a bit of homework on this issue,” and that’s when I started digging and that’s when I went through the process of having my peak oil moments. And I think there’s an important point here, I think cultures are very, very big in the issue. The geological community, many of them just don’t want to accept this. There is a real denial, a cultural resistance to it. I see it in my former friends. I have lots of friends and former contemporaries in the oil industry, some of them in impossibly senior positions and when I talk to them about this issue, that’s what I see. I see a process of denial and I think it’s quasi institutionalized.
Question: But since some know, why aren’t more people in the oil industry talking about the peak oil issue?
Leggett: I think there’s a cultural problem in the oil industry at the top tables. There is just simply a social silence. It’s what the anthropologists studying the financial crunch have called a social silence that was erected around the bonus system. They discouraged, institutionally in individual conversations right through to institutional behavior, any discuss of the risk of these financial issues. In the same way, the leadership in the oil industry really frowns, in most cases, on any sensible discussion about peak oil. Former colleagues in BP tell me that it’s almost like an act of treason to talk about peak oil in that company. And so I think that’s a real issue.
That said, I had a debate with a former chief geologist of BP at a major oil industry conference here in London a few months ago. We debated the issue of whether or not peak oil had gone away as a problem. He argued, yes it has gone away as a problem—that was the motion. I argued against it and I expected to be roundly defeated. There were 500 or so practicing oil men in the room at an industry, and more than 2/3 of them voted against the motion. So there is an understanding in the industry that there’s a problem and I think ultimately that will come to the help of the whistle blowers. We could imagine a tipping point where there’ll actually be so much pressure from within the industry for a fair and accurate portrayal of the situation that the leadership has to get in. In the same way as they had to get in, in BP and Shell, on climate change. They gave in on arguing the costs over global warming simply because of the guilt and disgust of their own membership, their own workers as it was described to me in both companies, and I think it ultimately will be the same with peak oil.
Question: Now when it comes to the economists and the peak oil story…
Leggett: I think it’s entirely appropriate for the entire economics community, with the notable exception of the very few economists who saw the financial crash coming, to go back to the drawing board. I mean they got that whole thing catastrophically, systemically wrong. And I was shocked but pleased to see on British television news the other night the head of the economics faculty at the University of Chicago saying, when asked, what are the implications of the financial crash? He said, we have to go right back to the drawing board, I’m paraphrasing, but he was as strong in his wording as this. “We got everything wrong at a systemic level. We should be full of humility and by golly we’re going to do it. Our whole discipline has been has been on flawed assumptions.” And that’s what they have to break.
We hear this from the economists now about peak oil: that the price mechanism works, that simply when oil prices go up, they’ll go out and they’ll find more oil; it’s there under the ground isn’t it? Economics will find the oil. Wrong, wrong, wrong. And we know this. But they have to take some of the humility that is absolutely required of them as a result of the financial crisis and bring it to a re-examination of what they’re saying about peak oil.
Question: As a leader in the renewables industry, what do you see as the pros and cons of this plateauing of world oil production for both the renewables industries and the oil industry?
Leggett: I think it would be a mistake for renewables advocates to in any way celebrate what peak oil is going to do for the renewables industries because the bigger issue is that our economies are going to be gravely stressed, right down to the challenge of keeping social cohesion together, and this is a huge challenge. That’s said, there’s no doubt that when we get off the peak, or mini plateau or whatever it is, and we go down the decent, and the shock hits the system, we’re going to have to mobilize clean tech, energy efficiency and renewable technologies as fast as we mobilized tanks and aircraft and all the rest in the run up to World War II, and faster if we can. And the good news here is that at that point, people who work with these technologies day-to-day, like myself, feel very strongly that they can be mobilized faster than most supposed energy pundits would suggest. That’ll be the good news.
The bad news is there’s no scenario I think where they can be mobilized fast enough to make the difference. So there’s going to have to be behavioral change, structural change in society to wrestle with that problem. But then when we get going, provided that people don’t make a suite of stupid decisions and go to the longer flash-to-bang time technologies like coal to liquids, tar sands, nuclear power and really zero in on where Silicon Valley is putting its money today, which is clean tech, then who knows. Maybe we have a chance then of engineering a real renaissance in society, because you get all the rolling fringe benefits of renewables then–the local production, the local economies, the enhanced security, the air quality, the whole suite of things that just happen to spring from the innate characteristics of renewables. And that’s an upside that I describe in “Half Gone.” I’m not going to say it’s going to happen, but I do believe it could happen. And frankly, that’s one of the things that gets me out of bed every morning.
Comments
By Bill Simpson of Slidell LA. on October 5th, 2009 at 3:04 pm
People used to pray to be spared the terrible wrath of pillaging Vikings. Today, the Vikings have been replaced in my prayers, by the economists, whenever they prognosticate on anything to do with oil.
I hope I’m wrong, but I can’t help but think that as soon as world oil production can no longer meet the demand, the price of oil products will rise so rapidly as to cause financial chaos, long before the actual physical oil product shortages, either cripple the economy, or become life threatening problems. Just as during WW II, rationing can deal with the physical shortage of fuel for a while. Likewise, carpooling can lower the overall demand for fuel. And new, fuel efficient cars will also help.
I have no idea how long such physical fuel saving measures can keep civilization functioning. But long before that day arrives, ecomomists and government officials should ask themselves what will happen to the economy, as more and more of people’s income is used to buy fuel, essential for mobility due to the physical sprawl of our cities. As people are forced to spend a greater and greater portion of their income on gasoline to get to work, demand for a lot of other items, the manufacture, transport, storage, and sale of which employ many millions of Americans, will evaporate. I trust that numerical models are being developed so as to be able to understand the magnitude of this coming problem, and develop strategies to manage it. Who, do you suppose, in Washington is in charge of that? The Peak Oil Apocalypse Czar? Can you see President Obama announcing that appointment in the rose garden! I’ll bet that would get people’s attention focused on peak oil.
By Bill Simpson of Slidell LA. on October 5th, 2009 at 8:32 pm
The Independent UK, on Oct. 6, 2009 on its website reported, in their business section, in an article entitled ‘Demise of the Dollar’, that Arab oil exporting countries are in secret talks with the Communist Chinese, Russians, Brazilians, and others about pricing oil using a basket of currencies and gold instead of dollars. Thanks Wall Street & Washington.
By Don Hirschberg on October 6th, 2009 at 1:05 pm
So Jeremy Leggett, a geologist, didn’t wake up to Peak Oil until 2004. This tells much about our dilemma. Those of us who have been awake and vocal since the 1970s hold our heads and weep. At that time we had half as many people and lots more oil on this planet – and lots more time. Alas, I fear that solutions that might have been possible then are no longer possible.
By JeffM on October 7th, 2009 at 6:42 pm
When oil production begins to significantly diminish, when rising oil prices become problematic, perhaps governments will see fit to allow new drilling of known deposits, and exploration for new deposits. That would buy the time needed to avert financial disaster while inventors, using price incentives, develop replacement energy sources. Government should consider offering an “X-Prize” for creation of, say, a commercially viable fuel cell that could power entire communities.
Presently, all government wants to do is forge ahead with reduction of fossil fuel use without any viable alternatives. Fossil fuel energy cannot be adequately replaced by solar power, since the sun doesn’t always shine. Wind is unreliable, too. Burning feed stocks has already shown to be a bad idea. Of course there’s much money to be made by corporations that build solar panels and windmills, or convert crops into Ethanol, but these energy sources are clearly not what is needed to replace fossil fuels. If an energy crisis is brewing, government has its head in the sand.
By JeffM on October 15th, 2009 at 9:19 am
I had to comment when I read Leggitt’s:
“We hear this from the economists now about peak oil: that the price mechanism works, that simply when oil prices go up, they’ll go out and they’ll find more oil; it’s there under the ground isn’t it? Economics will find the oil. Wrong, wrong, wrong”.
Has the known, untapped oil in ANWAR, and/or the Bakken Formation, and/or the Gulf of Mexico (adjacent to areas where the Chinese are drilling) been taken into account by Mr. Leggett? When the price of oil goes up, we have these readily available means to jump start the drilling for huge quantities of new oil…if our Federal governmant sees fit and allows it, and if the environmentalists don’t stonewall it with lawsuits.
Not only is there oil out there, in known locations waiting to be tapped, but there is still oil yet to be discovered, somewhere. Given a profit incentive, more of this oil will be discovered over time.
I wonder if “Peak Oil”, from a practical, contemporary standpoint, is a phenomenon created by government. Perhaps by popularizing the notion that the world is almost out of oil, government stands to gain support for converting to alternative energy sources. This would help save the planet from burning up from manmade fossil fuel emissions, right?
By Ron Swenson on October 19th, 2009 at 5:50 pm
JeffM, it would be in our best interests if Peak Oil would become a phenomenon created by governments, or at least acknowledged by them — something which we haven’t seen yet. It could be argued in the contrary that up until now, government leaders are endangering all of us by ignoring peak oil, thereby postponing the inevitable and as a consequence not putting aside enough resources for the transition to a world beyond oil.