Crude Awakening

So what happens then? Do we revert to coal?

It's possible for us to revert either to natural gas or to coal or both. Among consequences are the increasing global climate change. But another consequence is, let us suppose you tried to substitute coal for oil. Natural gas is a good substitute and it will last for a while but it will have its own peak one or two decades after oil, so it's only a temporary solution. If you turn to coal, we're now using twice as much energy from oil as we are from coal. So if you want to liquefy coal as a substitute for oil in transportation-which is its most important application-you would have to mine coal at a rate that's many, many times at the rate of what we're doing now. But the conversion process is very inefficient. So you'd have to mine much more than that. If you put that together with the growing world population and the fact that the rest of the world wants to increase its standard of living, you realize that the estimates that say we have hundreds of years worth of coal in the ground are wrong by a factor of ten or more. So we will run out of all fossil fuels. Coal will peak just like any natural resource. We will reach the peak for all fossil fuels by the end of the century.

You mentioned transportation as one of oil's greatest uses. Doesn't alternative technology already exist?

Not exactly, no. We tried electric cars and that was sort of more or less withdrawn from the market. I think there was plenty of demand. But when I tried to buy an EV1 some years ago, they said that the car had a range of 50 to 100 miles, but there was an onboard computer that always told you what your range was and when it was freshly charged, it had a range of about 30 miles. And they only sold them in California and Arizona because they were useless in colder climates. So that's not the solution. There are advanced batteries-the kind of batteries that we use now in our cell phones and laptops are lithium ion batteries and they have about five times the energy density of the old lead acid batteries. So if you could imagine something like an EV1 with five times the range, that starts to become believable. But nobody is showing that you can scale up the lithium ion batteries to use in transportation.

And another alternative is nuclear.

Nuclear is an alternative, but remember you're not going to have any nuclear cars and nuclear airplanes. Nuclear is not a substitute for oil. There's a lot of talk about hydrogen because of the president's initiative-the governor of California has also announced an initiative. I think what people don't understand about hydrogen is that it is not a source of energy. You have to use energy to make hydrogen-it's just a way of storing and transporting energy. And with today's economics and today's technology, it takes the equivalent of six gallons of gasoline to make enough hydrogen to replace one gallon of gasoline.