WSJ com As Prices Soar Doomsayers Provoke Debate on Oil s Future Page 1 of 6 September 21 2004 PAGE ONE Dire Prophesy DOW JONES REPRINTS As Prices Soar Doomsayers Provoke Debate on Oil s Future This copy is for your personal non commercial use only To order presentation ready copies for distribution to your colleagues clients or customers use the Order Reprints tool at the bottom of any article or visit www djreprints com In a 1970s Echo Dr Campbell Warns Supply Is Drying Up But Industry Isn t Worried Charges of Malthusian Bias By JEFFREY BALL Staff Reporter of THE WALL STREET JOURNAL September 21 2004 Page A1 See a sample reprint in PDF format Order a reprint of this article now HOT SUMMER 2 BALLYDEHOB Ireland As he sat last month in his book lined study Colin Campbell got a phone call that made him shriek with joy Chart the rise3 in oil prices through the summer months U S Can Free Itself From Oil Report Says4 Holy Mother he yelped after he put down the receiver The good ol moment s arrived The call had brought word that the price of crude oil was shooting up a climb that in the days that followed would take it to near 50 a barrel To Dr Campbell a 73 year old retired oilindustry geologist who lives in this coastal Irish village this was sweet vindication It meant that the moment he had been predicting for about 15 years the beginning of the end of the age of oil might finally be at hand Dr Campbell is at the center of a small but suddenly influential band of contrarians known as the peak oil movement They see cause for alarm in the fact that since the early 1980s the world has been pumping more oil out of the ground than it s been finding By as early as next year they say humanity will have reached a point of reckoning It will have extracted half the oil it will ever get Once that peak is reached Dr Campbell says global oil production will start falling never to rise again The peak would mark the end of cheap oil Although people would probably keep using oil for another century or so prices would steadily rise To maintain economic growth the world would have to become radically more energy efficient shifting quickly to alternatives such as solar and nuclear power If the switch wasn t fast enough an outcome Dr Campbell thinks more likely the global economy would screech to a halt The perception of this decline changes the entire world we know says Dr WSJ com As Prices Soar Doomsayers Provoke Debate on Oil s Future Page 2 of 6 Campbell whose wife affectionately calls him Mr Doomsday Up till now we ve been living in a world with the assumption of growth driven by oil Now we have to face the other side of the mountain People have been incorrectly predicting oil s demise since the industry s early days and the peakoil movement has yet to make a serious dent in the energy policies of the U S and other developed nations But the debate is flaring up with new intensity because of some powerful forces changing the geopolitics of oil among them the rise of an oil guzzling China and persistent instability in the Middle East and Russia The oil industry calls Dr Campbell a crackpot Since he began writing about a looming peak the industry notes he has progressively postponed his predicted date from 1995 to 2005 This roughness of the numbers the industry says points to a more fundamental problem with the peakoil theory It underestimates the power of technology to find more oil indeed to broaden the concept of oil itself That this debate can occur points to a striking fact Nobody really knows how much oil exists More to the point nobody knows how much can be gotten out of the ground Much of the oil lies in places with volatile politics including the Middle East Russia and Africa Further complicating the calculation Beyond the pool of conventional oil that the industry can easily extract today lie vast stores of hydrocarbons that until recently haven t been thought of as oil Among them tarsoaked sands in Canada and oil laden shale rock in places including the western U S So far over the approximately 150 years since the first oil well was drilled the world has burned through about 900 billion barrels Dr Campbell thinks the world will be able to pump out about that much more The industry however contends Dr Campbell is being far too pessimistic Exxon Mobil Corp for instance estimates there are something like 14 trillion barrels of fossil fuel still in the ground including the tar soaked sands and other nonconventional forms It figures the industry can extract a good chunk of that If Dr Campbell and his colleagues are right then nations should rush to promote fuel efficiency to minimize economic upheaval If they re wrong but the world follows their advice anyway then huge sums of money could be wasted jumping to alternative energy sources that while environmentally friendly would be more expensive than oil We re running out but not in any important way We re running out so slowly it doesn t matter says Michael Lynch an oil industry consultant who has emerged as a leading critic of the peak oil theorists At some point the world will shift from oil to other energy sources Mr Lynch agrees But he says there s plenty of oil to ensure that transition will happen smoothly long before the world hits the last drop The world he notes changed from horses to cars and we didn t run out of oats For years Dr Campbell has been visited in Ballydehob a village of about 300 people southwest of Cork by a stream of visitors he describes as fringes among them a Louisiana woman who drives a van powered by vegetable oil and a British couple moving to Australia to live off the land Mainstream Attention WSJ com As Prices Soar Doomsayers Provoke Debate on Oil s Future Page 3 of 6 But suddenly Dr Campbell is receiving mainstream attention In the past few months he has spoken before a joint committee meeting of the British House of Commons and addressed about 200 J P Morgan Chase Co investors by conference call from Ballydehob This month two officials from AB Volvo the truck and engine maker visited from Sweden His theory if right would force vehicle makers to revamp their lineups Also this month PFC Energy a respected Washington energy consulting firm released a report essentially endorsing Dr Campbell s gloomy prediction PFC puts the peak a bit further out than Dr Campbell does sometime between 2010 and 2015 But Michael Rodgers the PFC senior director who coordinated the report agrees with Dr Campbell that the precise