Despite this week’s news that the price of oil dropped below $126 a barrel, summer vacationers are undoubtedly still worried that they’ll be paying $4 for a gallon of gas before the season is over—if they aren’t already. Even if speculation that the current oil market “may have peaked” is correct, however, there is a more ominous peak looming. Increasingly, energy experts and journalists are starting to talk about what will happen when the rate of petroleum production tops out and begins to slide toward zero. It is uncertain when that apex will come and how quickly the ensuing decline would play out. CJR contributor Katherine Bagley invited two journalists who have covered the “peak oil” question to debate how the press should approach this contentious issue. This is the third of a four-question series that will be posted this week.
Lisa Margonelli is an Irvine fellow at the New America Foundation and writes about the global culture and economy of energy. Her book about the oil supply chain, Oil On the Brain: Petroleum’s Long Strange Trip to Your Tank, was published by Nan Talese/Doubleday in 2007. Recognized as one of the 25 Notable Books of 2007 by the American Library Association, Oil On the Brain also won a 2008 Northern California Book Award for general nonfiction. Margonelli’s work has appeared in The Atlantic, The New York Times online, The Washington Post, the Los Angeles Times, Wired, and Discover, among other publications.
Ed Wallace holds a Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA. His column heads the Sunday Drive section of the Fort Worth Star-Telegram, and he is a member of the American Historical Society. The automotive expert for KDFW Fox 4 in Dallas, Wallace hosts the top-rated talk show Wheels, Saturdays from 8 a.m. to 1 p.m. on 570 KLIF AM in Dallas.
Katherine Bagley: What types of articles necessitate a mention of peak oil and which do not, and how do reporters tell the difference?
LM: It’s the responsibility of the reporter and the editor to educate themselves and then to apply a practical, oily version of Occam’s razor to developing stories. “Oily” because Occam’s razor requires the simplest explanation, while with oil sometimes the answers are complex, but generally the conspiracy theory is wrong.
Here are a few cases where I think Peak, or Difficult, oil could be mentioned:
• Where it’s the topic.
• Where a subject mentions it. (Present the basis for the subject’s expertise and do a bit of digging to see whether the subject has anything financial or otherwise to gain from one position or another.)
• Where “peak,” “changing balance of power in the oil market,” or “the National Petroleum Council Report” are mentioned as drivers of either market or corporate behavior. When talking with oil company executives, say Chevron, we should be asking why executives have said things like, “We’re going to need every molecule and every electron going forward.” It’s also important to ask them if this is mainly a slogan or is it something they’re really applying, and what it would mean in terms of risks and potential benefits for shareholders.
• When discussing strategies for alternative fuels in which either rising oil prices or scarcity are seen as the primary drivers.
• When discussing the dismal lack of a forward-looking national energy policy in the U.S.
• When discussing the impact of Internet groups on market behavior and legislative agendas. (As a cultural trend, the peak oil Internet discussion groups are fascinating. Why and how did it become a popular issue, after more than a century of leaving oil policy to political, industry, and geological “experts”?)
But peak oil is not the only topic. To name a few more: greenhouse gas policies, infrastructure issues, air quality, and the role of stolen and smuggled oil in funding violence in Iraq, Nigeria, Chechnya, Colombia, and the Straits of Malacca, which in turn sends futures prices higher.
EW: When a person brings up peak oil with the media, there should be only one question: What’s their motivation? For years, oilman T. Boone Pickens has discussed peak oil as a fait accompli, but he is heavily invested in oil futures and therefore has a strong interest in the future price of oil. If one assumes that exceptional reporting is the art of bringing “accurate testimony” to the public on important issues, one should ask whether that sentence also explains why so many people invested in oil futures love to talk peak oil with the media. This quote certainly does:
“There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self-fulfilling prophecy.” —U.S. Senate Permanent Subcommittee on Investigations’ report, “The Role of Market Speculation in Rising Oil and Gas Prices,” June 27, 2006.
Others who regularly bring up peak oil include environmentalists, city planners, and entities pushing alternative fuels. But they, too, have ulterior motives—either trying to force people from their automobiles or using the media to push the government for more tax breaks and grants to break our oil addiction.
The only valid reporting on peak oil would be to determine on what date it might actually happen. That important story we haven’t yet seen.
LM: I think we share a skepticism of the extremist peak oil position that world oil production will peak on a certain day or month and everything will be downhill from there. I also share your questions about the motives of some proponents of the idea.
However, to me it’s a certainty that oil from here on out is a more difficult, economically and environmentally expensive game than it has been in the past. The task for journalists is how to cover this evolving new reality, whatever it is, while it’s taking shape, without latching onto the easiest idea that comes along. For example, it’s become common to complain that China’s growing oil demand is a financial, ecological, and diplomatic catastrophe that will lead to a confrontation between the U.S. and China, more mayhem in Sudan, and higher oil prices even if U.S. consumers reduce consumption. All of that may come to pass. But it’s also true that the U.S. currently imports a million barrels of oil a day through China, in the form of finished goods, which means we’re not competing with China so much as collaborating with and benefiting from their policies while underestimating our own oil dependence. The complexities of the global oil market demand more initiative from reporters.
Tomorrow’s debate question: Has the press effectively described the science and scientific uncertainty behind charting a peak oil supply curve? How could they do better?