Can We Survive the New Golden Age of Oil?

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Just months after an enormous discovery of natural gas off the coast of Israel, a local company has reported another potentially big strike — an estimated 1.4 billion barrels of oil, in addition to more natural gas. The company, Israel Opportunity Energy Resources, says it will start drilling by the end of the year. All of a sudden, Israel has found itself a focus of the world’s hydrocarbon interest.

Energy experts are tittering about a prodigious new golden age of oil and gas in the Eastern Mediterranean, where Israel and Cyprus could become substantial oil and natural gas exporters, in addition to some other surprising places including French Guiana, Kenya, North Dakota, and Somalia. All in all, say increasingly mainstream projections, the world is moving into a period of petroleum abundance, and not the scarcity that most industry hands embraced just months ago. Plus, the United States, or at least North America, may be on the cusp of energy independence while OPEC’s days of über-influence are numbered.

What these experts have not said, however, is that while this new golden age may indeed shake up the currently rich and powerful and create new regional forces, it could also accelerate the swamping of the planet in melted Arctic ice. So much new oil may flood the market that crude and gasoline prices might moderate and lessen consumer incentives to economize. "In the absence of U.S. leadership, I tend to agree with NASA’s James Hansen that it is ‘game over for the planet,’" Peter Rutland, a professor at Wesleyan University, told me in an email exchange.

This unspoken flaw in the golden-age scenario suggests it might not unfold so smoothly. The projected turnaround of oil’s sagging fortunes may indeed herald economic salvation for the U.S. and global economies. But the environmental consequences could also trip up its full realization.

Hansen famously made his apocalyptic remark (and repeated it last month in the New York Times) while discussing Canadian plans to expand exports of Albertan oil sands to the United States through a new Keystone XL pipeline to the Texas Gulf coast. Significant as they are, however, the sands are only one component of the projected global flood of new oil. Excluded from his appraisal are millions of additional barrels per day expected in the next decade and beyond from North Dakota’s Bakken shale oil, plus the deep waters off Angola, Brazil, Ghana, the U.S. Gulf Coast, and elsewhere.

In that context, Hansen’s staunch opposition to Keystone resembles less a strong defensive position than the proverbial finger in the dike. Two weeks ago, the International Energy Agency (IEA) said that carbon dioxide emissions last year already neared an important line: the point at which the probability of global temperatures sticking to a maximum 2 degree Celsius rise above pre-Industrial Revolution levels dips below 50 percent. Carbon emissions reached a record 31.6 gigatons in 2011, just under the targeted 2017 maximum of 32.6 gigatons, the point at which the IEA wants emissions to start dropping. If the new oil finds are developed fully, you will instead "blow through your emissions targets," says Frank Verrastro, director of energy and security at the Center for Strategic and International Studies.

Intentionally or not, the golden-age scenario seems tailored for the current international political and economic landscape. In the United States, President Barack Obama’s administration is muddling along in climate change discussions, as emissions containment has been out of political favor since the 2009 congressional failure to pass cap-and-trade legislation. The Republican Party has by and large branded climate change a hoax, and Democrats barely discuss it. World leaders are due to gather in two weeks in Rio de Janeiro for the 20th anniversary of the first Earth Summit, the precursor to the landmark 1997 Kyoto talks on climate change. But Obama, British Prime Minister David Cameron, and German Chancellor Angela Merkel have already sent their regrets. After the disappointment of 2009 Copenhagen climate change conference, they seem to have little stomach for another go at climate talks in an atmosphere of economic crisis and political dissonance. And in an election season, Obama hardly has the political strength to do much other than embrace the golden-age scenario.

The question now is whether the issue of global warming will remain marginalized in the United States and abroad for another year, or two, or three — or decades? The golden-age projections suggest a lengthier time frame. But the nature of cyclical politics argues differently. The accepted mainstream climate change science remains bruised but not demolished. And the absence of any detailed analysis of environmental risk from golden-age enthusiasts, as well as their frequently dismissive attitude toward the issue when it is raised, lends them a surreal political quality. By failing even to suggest how the forecast bonanza squares with exhaustive reporting of rising temperatures, the projections seem aspirational rather than objectively data-driven.

Where the oil-age theorists seem likely to experience almost no pushback is in the revolution in natural gas, with a flood of the fuel already flowing or on its way from Australia, Mozambique, Qatar, Tanzania, the United States, and elsewhere. In both China and the United States, this gas glut is leading utilities to convert coal-fired power plants to natural gas fueling, which burns far cleaner. "We’re already seeing coal being pushed out due to low gas prices, which is undoubtedly having a positive impact on greenhouse gas emissions," says Paul Faeth, a senior fellow at CNA, a Washington think tank. Stacy VanDeveer, a professor at the University of New Hampshire, told me that both the gas and oil could be viewed as net positives by climate change groups to the degree that they serve as bridge fuels "to a much more efficient and mostly renewable energy future."

Ultimately, we can expect a middle ground — neither unfettered development of every hydrocarbon asset on the planet, nor a shackling of the most prized reserves in the service of climate change targets. John Hofmeister, former president of Shell Oil Co., is an unapologetic golden-age proponent, but also argues for emissions reductions. The cutbacks, he told me, must happen over multiple decades, and not faster — any quicker pace would invite a backlash.

"The proponents of dramatic reduction in greenhouse gases too soon and faster than economies can absorb will actually create a more severe and longer lasting and more difficult future for the environment because of the negative reaction they will create, leading to prolonged adherence to carbon fuels for political reasons," he says.

For the same reasons, the new golden age may be good, but not as great as the forecasters suggest.