Peak Oil and Denial

This is a translation of a post from 2009 on my Swedish blog, with some adaptations and updates.

Many confuse peak oil with running out of oil. This is not what it is about - in 2008 I wrote this.
What peak oil is about is instead that for more than 100 years we have lived in a world of increasing oil supply and cheap oil. This has fuelled an economic expansion unmatched in all of human history. When the peak comes and is passed we will instead have to endure a steadily diminishing oil supply and therefore more expensive oil. The biggest worry among "peak oilers" is how our global societies, completely built around cheap oil and constant economic growth, will handle this. Which economic, political and social problems will this lead to? We already see some of them, but more will come the more expensive oil becomes. Will we instead see an economic contraction unmatched in human history?
And there are no other energy sources that can completely replace fossil fuels. I've written about this in my review of the alternatives (only in Swedish).

Now this is a very drastic change that is happening. Many of the economic theories that form the base for our societies' planning will be turned topsy-turvy, since they have only been tested during periods of long term global economic growth. What happens for example to loans with interest when growth slows or turns into contraction? Or pension funds? The change is so big that it will be a severe shock to many people. So how do people react to this?

Elisabeth Kübler-Ross was a Swiss-American psychiatrist who worked with terminally ill and dying people. She created a description of the stages that a terminally ill human goes through, which can also be applied to other shocking information, e.g. when somebody realises the implications of peak oil. Kübler-Ross divided the reaction into five stages - denial, anger, bargaining, depression and acceptance.
  1. Denial. This is the first natural reaction to shocking information, which entails a loss and/or change. You refuse to accept reality as it is.
  2. Anger. When you gradually have understood that the shocking information really is true and unavoidable the denial is transformed into anger. You become raging and angry at yourself and other people, sometimes including "scapegoats".
  3. Bargaining. After the anger is over you instead try to bargain about the unavoidable that is about to happen and try to find something that can postpone the unavoidable.
  4. Depression. When you can no longer deny, see that it no longer helps to become angry, and see that you can no longer bargain to avoid the unavoidable you fall into depression. This depression can throw you back to one of the earlier stages.
  5. Acceptance. When (and if) you have managed to get through the first four stages you get to the stage where you accept the unavoidable and are ready to deal with it in the best way.
There are many examples of this from real life, for example the debt crisis of Greece, Ireland, Italy, etc., which was first denied, and then met by anger at "evil speculators". At the moment it looks like the EU leaders are in the stage of bargaining, when central banks and politicians try to find ways to "save" countries with far too large public debt.

Another example is Norway's oil production, which started contracting by several percent per year around 2001. This came as a surprise to most people, even those in the business. At first denial was the response, and they believed it was only a temporary production drop. The anger stage is often not seen so much in public in these cases, but I guess that many directors in the Norwegian oil business and oil directorate became very angry that their engineers could not keep the production up. Now it seems that Norway has reached the bargaining stage, where they try just about anything to keep their oil production from falling too fast.

So how do our politicians relate to peak oil? Where are they on the Kübler-Ross scale? Most of them still seem not to have heard of peak oil, or are in the stages of denial or bargaining, since they still mostly talk of how we should create economic growth, although global growth is no longer possible when the global oil production falls. If there are any politicians who have fully understood the implications of peak oil, they still do not want to talk about it in realistic terms, since politicians don't like problems without solutions. Besides it is politically impossible to speak about deteriorating standards for most people. The voters will demand that the politicians "do something about it".

Among other people in power (business directors, central bank directors, etc.) it seems like the situation is similar. It really isn't that strange. All people in most OECD countries who are alive now have lived the most part of their lives in a period of historically unparalleled economic growth and are completely indoctrinated that most things constantly improve.

The "average Joe" has probably never even heard of peak oil and the problems that come with it. When I speak about this with many of my friends and relations they mostly deny that there is even a problem. They start talking about electric cars and solar cells and that "they'll probably invent something new". If you try to counter these arguments you will be classified as a hopeless pessimist.

Journalists then? Well, the peak oil awareness level seems to be low here too. Gunnar Lindstedt is one of the few established Swedish journalists to write about this subject. He has also written the books "Olja" (Oil) and "Svart Jord" (Black Earth), both well worth reading.

In Sweden we happen to have one of the internationally best known researchers in peak oil, Kjell Aleklett, professor of physics at Uppsala University, leader of the Uppsala Hydrocarbon Depletion Study Group and one of the founders of ASPO, the Association for the Study of Peak Oil and Gas. In spite of this Swedish media are rather silent when it comes to peak oil.

On the World Wide Web the situation is better. The first Swedish site about peak oil was energikris.nu, which started in May 2005 but is no longer updated. Nowadays there is the news and discussion site oljepris.se. There are also a number of Swedish bloggers that often write about peak oil (apart from myself), notably Sweden's most read finance blog Cornucopia. ASPO Sweden also has a blog and news.

So it seems to me that most of society does not know about peak oil or is in denial about it.

So where are you on the Kübler-Ross scale when it comes to your view on peak oil? If you've made it to the end of this article at least you are not unaware of it.