Silver lining in black gold's decline

These two books add to the growing library of works addressing the realisation that the world's oil supply is close to peak. Oil discovery has been falling since the 1960s despite a worldwide search and many technological advances. The world started using more than it found in 1981, and the gap is widening. In short, the first half of the "age of oil" comes to an end. It lasted 150 years since the first wells were drilled on the shores of the Caspian and in Pennsylvania.

The cheap and convenient energy oil provided made possible the rapid growth of industry, transport, trade and agriculture, allowing the population to increase sixfold, exactly in parallel with oil. These developments in turn generated a huge amount of new financial capital in a system that not only created economic growth but depended on it. The subject of economics offered a way to understand and manage the resulting wealth. The second half of the age of oil now dawns and will be characterised by the decline of oil, and all that depends on it. The decline of gas will follow soon afterwards. This is an unprecedented discontinuity of historic magnitude, changing the world we know in unimaginable ways. The transition will likely be a time of great tension, as consuming countries vie with one another for access to remaining supplies, much lying in the Middle East. It may even spell the end of economics as understood and practised.

Matthew Yeomans's book charts the history of oil and its influence on society, including the role of the car. Writing in a plain, easy style, he moves on to cover the Organisation of Petroleum Exporting Countries, its objectives, successes and failures. He draws attention to the polarity of oil, which distinguishes it from other minerals. It is either there in profitable abundance or not there at all, giving the industry and all that depends on it a "boom or bust" character. Yeomans perhaps unfairly accuses oil companies of excessive corruption, exploitation and neglect of environmental responsibility. In terms of morality, the industry is probably no worse than any other, but the wealth oil conveys exposes it to specific pressures. The book ends with a critical review of US foreign and energy policies, including the oil agenda behind the Iraq invasion. Yeomans proposes a move to hydrogen made by renewable energies.

Michael Klare, in a more erudite book, is more interested in the geopolitical responses to the peak of production, making special reference to US foreign policy and resource wars. George W. Bush often mouths the words "freedom and democracy" in the tone of a messiah. In reality, they come to describe a form of dollar supremacy, with many underdeveloped countries bowed under weight of servicing foreign debt and offering near-slave labour to foreign firms exporting profits while the local elite profits. The shift of manufacturing to such countries has eroded indigenous industry in consuming countries, leaving them ever more reliant on their control of the world financial system.

Klare is explicit in cataloguing what he identifies as a deliberate US foreign policy to control foreign oil supply, with the establishment of military bases worldwide and intervention to protect pipelines. Of particular interest is his description of the attempt to control the Caspian countries after the fall of the Soviets when they were perceived to be awash with oil. It involved dollar loans, military aid and the establishment of bases, suggesting a progression through the events of September 11, 2001 to the invasions of Afghanistan and of Iraq, the latter prompted when Caspian exploration failed to come up to expectation.

The US imports more than 60 per cent of its needs on a rising trend, as its own production continues to decline from a peak in 1970. It has also developed a voracious appetite, consuming barrels per head per year, compared with 15 in Europe. Its tax regime curiously encourages the use of large, inefficient vehicles. Klare sees the invasion of Iraq as the culmination of a long-planned policy to control the Middle East not only for its oil but also to bring it within what could be called the dollar orbit, delivering a hidden tribute to Washington. This prompts the question of whether the colossal US "defence" establishment, supporting in turn a vast industrial complex, making everything from landmines to B-52 bombers, is justified by any real threat to the US mainland. Both books end with recommendations of how America might wean itself off its oil addiction.

Klare concludes with a call to "repudiate the Bush-Cheney energy plan and select a path of autonomy, self-restraint and innovation".

One wonders, however, if indeed the second half of the age of oil may not call for more fundamental changes. We might even come to see peak oil as a blessing, albeit in heavy disguise. Those identifying the "curse of oil" welcome a localisation of communities and markets, bringing people to live within their own natural environment, freed from malign financial manipulation. We might end up in better harmony with ourselves, one another and the environment we live in.

It sounds perhaps Utopian, but both books pave the way for a new and better realisation of what is at stake. They are relevant to just about anyone with concerns for their future and that of their children.

Colin J. Campbell is chairman, Association for the Study of Peak Oil.