How to Kick the Oil Habit

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At the same time, oil companies, worried that these changes could leave them behind, are starting to think of themselves instead as broad-based energy companies. "Shell and BP are already headed in that direction," says Amory Lovins, director of the Rocky Mountain Institute, a think tank that advocates a radical restructuring of the energy economy. Shell has become the largest seller of biofuels, he says: "We're talking about new processes for turning woody, weedy plants like switch grass and poplar--also crop waste like wheat straw--into cellulosic ethanol."

If this explosion of innovation has a problem, however, it may be that the developments are coming too late to allow a smooth transition to the postpetroleum era. Hydrogen fuel cells, ethanol from vegetable matter, solar cells, wind power, synthetic gasoline from coal--all could make a dent once they are available in sufficient quantities. But that won't be for years, maybe decades, says Richard Heinberg, a professor of culture, ecology and sustainable community at the New College of California in Santa Rosa and the author of The Party's Over: Oil, War and the Fate of Industrial Societies. Twenty years in the future, he argues, "regular old oil will still be the dominant fuel. We'll just end up paying more for it."

As consumers, we need time to make adjustments--often very expensive ones--to the new technologies. Not everyone can afford to junk a two-year-old SUV to buy a new hybrid. Most people can't afford to abandon houses built in developments 100 miles out in the countryside when oil was cheap. And although energy and power companies are investing in new technologies, they can't create a massive new infrastructure overnight. Coal liquefaction, nuclear power, wind power--"all of these things need an enormous lead time," says Heinberg. The problem with the free market, in short, is that while it may sort things out over the long run, people have to cope in the short run. "Price signals," he adds, "come much too late, and we will endure a tremendous amount of economic and social hardship that could have been averted if we'd acted sooner. We could see the equivalent of the Great Depression, fueled by extreme oil and natural-gas prices."

Things would have been different if we had been pouring money into alternative energy for the past couple of decades, as we did in the aftermath of the oil shocks of the 1970s. Back then, despite the ribbing Jimmy Carter got for appearing on TV in a cardigan and calling for sacrifice, there was a clear sense of national emergency. That crisis receded, thanks in part to conservation and investments in energy efficiency and in part to the worldwide recession the oil shocks helped trigger. As a result, a barrel of oil costs 30% less today, in inflation-adjusted dollars, than it did at its peak in 1981. This is not the first time the world has run out of oil. Yergin says it's the fifth or sixth.