Oil Depletion Protocol


There may be as much chance of getting nations to sign onto this as there is for America and Australia to voluntarily sign onto the Kyoto Protocol — but this is the great dream or “Holy Grail” of peak oil campaigning. This may be our only chance to side-step the Carter Doctrine and avoid real oil wars.

Why is it so good?

As Jeremy Leggett says on page 228 of Half Gone,

The result would be impressive: modest prices that even poor countries could afford, minimal energy needs met, and profiteering avoided. Best of all, consumers everywhere could be educated and prepared to face the reality of a changing world.

How would it work? What is an Oil Depletion Protocol?
Think of the Kyoto protocol — and agreement to reduce carbon emissions — and then apply it to oil consumption. Essentially nations sign on and agree to cut their oil use by an internationally acknowledged oil depletion figure determined by a new oil agency. (Maybe it’s 3% per year for example.) Participating nations choose to voluntarily reduce their consumption by this amount each year.

How would it play out in the public and with consumers? This is the brilliant bit.

Citizens and businesses are issued with an oil quota or allowance for the year — tracked through a card system at the point of purchase. You pay for the oil as normal, and every time you buy your oil as well as handing over your credit card you hand over your oil card. That day’s purchase is deducted from your oil quota. If you are frugal with your allowance, then you can sell your surplus oil quotas on a new oil trading market. If you can live locally on a bike, then you are laughing — and can sell your entire year’s quota. If you need more oil than your quota, as well as buying your own oil you would then have to top up your oil quota. You’d buy someone else’s right to extra oil, AND then have to also buy the oil itself.

It would be a fantastic way to spread the word — it’s time to wean off the stuff. Then the next year everyone is issued with another year’s allowance, slightly less than the first year (in line with the world depletion rate.)

Yes it’s harsh but there are worse alternatives! And it gives us a bit more time to get used to the idea of living without oil. It gives the marketplace clear signals, and could reduce the most deadly problem of them all, public panic.

This will hopefully moderate the price of oil some — allowing a consistently high oil price but not skyrocketing oil one year then cheaper oil the next. We need to prevent some of the “boom and bust” cycle. If we left it completely to market forces there would be chaos. This bumpy plateau (Kunstler’s term) would be disastrous.

  1. a spike in oil prices causes,
  2. a severe recession, which reduces demand and brings
  3. oil prices down some, which causes
  4. confused market signals as people to switch back to oil,
  5. causing the price to spike again,
  6. rinse and repeat.

This crazy boom and bust cycle would confuse consumers, baffle businesses, and infuriate industry because it sends conflicting expectations and market signals every year or half yearly cycle. Imagine trying to start an alternative energy business in such an unpredictable energy environment? Imagine the public one year driving to work, the next year catching the train, the next year thinking they can go back to their cars? We need to think long term. This is one way the government can send a very clear signal.

Economic rationalists will no doubt be horrified that I am suggesting big government regulation of oil use like this — they should get over themselves! Peak oil is just too big and too serious for so called “market forces”. Imagine an enemy tank division parading down the main street of your city and some lunatic is shouting, “Don’t worry, market forces will deal with this!” That’s your economic rationalist, whose whole world-view is about to come crashing down. The market did not anticipate peak oil. Much worse, the market has built an entire civilization on the foundations of a vanishing resource. The Oil Depletion Protocol is the only way to provide clear guidance to the governmental systems, marketplace, legal framework, and cultural attitudes.

I congratulate Richard Heinberg on his presentation of the Oil Depletion Protocol opposite Sydney’s NSW Parliament house — 700 Aussies turned up for that first night Richard, and most of them were very impressed, especially our Greens member Ian Cohen. Thank you.

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