A general view shows an oil production plant near Dammam in Saudi Arabia's eastern province.
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In the near term, the global economy needs to significantly reduce its oil intensity. Because 70% of the world's oil is used as transportation fuel, that would be the place to start. We need to create new forms of transportation fuels as well as reduce the quantity of goods and people moved by cars and large trucks. If a high percentage of products now transported by large trucks were shifted to the global rail system, an efficiency savings of three- to tenfold could be realized. If those goods could be shipped over water rather than rail, even greater efficiencies would be realized. While such changes will take time, they have to succeed.
We also need to pull out all the stops to find new oil supplies. Actions like drilling in the controversial Arctic National Wildlife Reserve and exploring for more oil and natural gas on the outer continental shelf of North America suddenly take on a sense of urgency. They would not cure the problem but could buy time to offset shrinking supply.
A second change would come through embracing "distributed work." Most commercial businesses still operate on a concept that all employees need to work in the same office building to communicate. That was a necessity 20 to 40 years ago, but now faxes, e-mail, telephones and video conferencing allow people to work where they live, eliminating several hours of daily commuting time. And we need to manufacture more products and grow more food close to markets where they will be consumed.
None of these changes are technically difficult. Collectively they could dramatically reduce the oil intensity of developed countries' economies while serving as role models for the rapidly emerging new economies that cannot afford to use oil as wastefully as we have used it.
If a master plan is quickly adopted on a global scale, the world can safely cope with a peak in oil production and create a more sustainable and enjoyable economy at the same time. If we ignore these changes and peak oil does occur, the unforeseen consequences could create a far darker world.
Matthew Simmons is the author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (John Wiley & Sons)