Crawling from the Wreckage (22 page)

This is where the discussion usually veers off into a condemnation of the arbitrary borders drawn by the old colonial powers, which paid little heed to the ethnic ties of the people within them, but the point is that at least half of the fifty-three African countries have greater ethnic diversity within their borders than all of China, and a few, like Nigeria, approach India in the sheer range and diversity of their languages, religions and ethnic identities.

You
cannot
draw rational borders for Africa that give each ethnic group its own homeland. Even if you refused that privilege to groups of less than half a million people, you’d end up with over two hundred countries. So the old Organization of African Unity decreed that the colonial borders must remain untouchable, because the only alternative seemed to be several generations of separatist ethnic wars.

The problem is that quite a few of the separatist ethnic wars happened anyway, and many other African countries, to avoid that fate, became tyrannies where a “big man” from one of the dominant ethnic groups ruled over the rest by a combination of patronage and violence. Time was wasted, lives were lost and things went backwards. It was nobody’s fault, but Africa needs to change this system.

There are more than two hundred ethnic groups in Africa that have over half a million people each, and
none
(except the Arabs of North Africa) that amount to even 5 percent of the continent’s population. Only three languages—Mandarin Chinese, Hindi and Japanese—account for half the population of Asia. Even in Europe, eight languages account for 75 percent of the continent’s population. Africa is different, and maybe the national state (or, rather, the pseudo-national state) is not the answer there.

The African federalists imagine a solution that jumps right over this problem: a single African Union modelled on the European Union, but
where no ethnic group is even 5 percent of the population. Then politics stops being a zero-sum ethnic competition (at least in theory) and starts being about the general welfare. And also, in theory, the continent starts to fulfil its potential.

We will all be a good deal older before the United States of Africa, or whatever it will eventually be called, becomes more than a dream, but as Alpha Oumar Konaré, former president of Mali and head of the African Union, said at the start of the summit: “The battle for the United States of Africa is the only one worth fighting for this generation—the only one that can provide the answers to the thousand-and-one problems faced by the populations of Africa.”

Let’s face it, though: creating the United States of Africa will be a lot harder than founding the United States of America, and it will never work as smoothly, precisely because of that multitude of ethnic groups. There were still about five hundred different ethnic groups on the territory that would eventually be included in the U.S. when that country was created in the 1770s, but almost all of them except the English-speaking one had lost 90–99 percent of their numbers since the European invaders arrived two centuries before, mainly due to European diseases against which they had no immunity. The United States of America began as an ethnically homogeneous society—except for the slaves—that totally dominated its territory numerically, and it remains a culturally homogeneous society today. Africa, by contrast, is the most ethnically and culturally diverse part of the planet
.

The linguistic problem in Africa is eased a bit because the elites everywhere have taken to using the language of whichever European empire conquered their area, but the sheer ethnic and tribal diversity of African countries is little less than it was at first contact with the Europeans. If you stand back far enough, this is cause for celebration, not lament. The five hundred cultural genocides that made the United States of America such a comparatively simple place to govern, and consequently so rich and powerful, did not happen in Africa
.

Africans cannot take personal credit for that, but their immune systems can. Because there was constant north-south trade across the Sahara and down the East African coast for many centuries before the European empires arrived, Africans had already been exposed to all the lethal quickkiller diseases that had evolved in the mass civilizations of Eurasia
.
Unlike the native inhabitants of the Americas and Australasia, the Africans survived
.

As a result, Africa is the only continent that retains anything close to the ethnic diversity of early human populations. Some day that may be a source of great pride and strength, but in the present it is why African states are so weak, poor and corrupt
.

There’s a bit of an arc to this section, because I was still quite conventional in my approach to the oil question at the start of the period. At the beginning, I’m pretty offhand in my treatment of the relationship between oil consumption and climate change, too—or maybe ignorant is the better word. Although, to be fair to myself, it was probably cutting-edge commentary at the time
.

“We ran out of $2 oil in 1973,” said Henry Groppe of Groppe Long and Littel, at seventy-nine the oldest active oil consultant (and one of the most respected) in the business. “Then we ran out of $8 oil, then $15 oil. Now we’re running out of $40 oil.” It’s a different way of looking at what is happening to the price of oil, and a much more useful one.

Last week the price of a barrel of oil reached sixty-five dollars. Oil has doubled in price in the past eighteen months, and oil-industry experts freely speculate that the price might hit eighty dollars, even one hundred dollars a barrel before year’s end, hugely depressing world economic growth.

But here’s an interesting fact: oil companies still decide whether a new field is worth developing by calculating whether they would turn a profit from it when the price per barrel falls to only twenty-five dollars. Do they know something that the rest of us don’t?

Not really. They just know that prices always fluctuate, that swings in commodity prices tend to be much wider than in other goods—and therefore that “running out of forty-dollar oil” doesn’t mean that the oil price will never fall below forty dollars again. It won’t stay down there for good, but as John Maynard Keynes once remarked, “markets can remain irrational longer than you can remain solvent.” You have to be able to make a profit from your new field when oil drops to thirty dollars per barrel (even if it is for the last time) and stays there for a couple of years.

The price of oil may hit eighty or even one hundred dollars this year, but if it does it will be due to an extreme market fluctuation, not a new average price. After all the current turmoil is past, the important thing is that the median oil price for the next half-decade—or until we run out of
all
the forty-dollar oil—will be in the mid-forties. That is good news in terms of the real crisis, climate change.

It’s high enough to encourage energy conservation and drive people towards alternative, preferably non-carbon energy sources, but it doesn’t actually paralyze the economy. We will need more pressure from a higher price later on to avoid a global climate disaster, but the economy can only respond so fast. Just the same, we are practically guaranteed a higher price later on—another doubling of the average price by 2010 or 2012, say—because we are probably at “peak oil” production right now.

Seventy percent of the world’s oil comes from big fields that were discovered before 1970, and they are almost all in decline. The new discoveries are mostly smaller and more expensive to develop, and Henry Groppe recently predicted that oil production worldwide will decline by a million barrels a day each year from now on.

We can take no credit for it, but maybe we are on the best available glide path for a soft landing on climate change. Whether that will be good enough is, of course, another question.

Well, the price of oil did go back down for a while—but it touched $147 in mid-2008, and the new median seems to be in the high $70s or the low $80s. As a prophet, I’m not doing too well: as the Chinese say of Mao, seven parts good, three parts bad. (Although that’s not really true of Mao, of course.)

What follows is a more serious attempt to understand what’s actually happening
.

If a diplomat is “an honest man sent abroad to lie for the good of his country” (Sir Henry Wotton, 1612), then oil-industry executives used to be the business world’s equivalent of diplomats. The big international companies were chronically optimistic about the extent of their reserves, and state-controlled oil companies were even more prone to exaggeration. But now we have the spectacle of oil companies telling the truth about oil supplies—or at least more of the truth than usual.

The occasion was last week’s Oil and Money conference in London, and the most spectacular truth teller was Christophe de Margerie,
CEO
of the French oil company Total, one of the international “big five.” He said that “100 million barrels [per day] … is now in my view an optimistic case” for the maximum global output of oil that will ever be attained.

He was implicitly challenging the International Energy Agency’s estimate that world oil output would reach 116 million barrels per day by 2030, and the slightly more optimistic U.S. government prediction that it will reach 118 million barrels per day by that date. Even these acts of faith are really a forecast of crisis, since calculations based on current trends (like a 15 percent annual growth in Chinese demand) suggest that 140 million barrels per day will be needed by 2030.

The implication of de Margerie’s remarks is that the crisis is coming a lot sooner than that. World oil output is nearing ninety million barrels per day now, but it is never going to reach one hundred million barrels per day. Peak oil may be just a few years away, or it may be right now. (You will never know until after the fact, since it is the point at which global oil production goes into gradual but irreversible decline.)

Peak oil was first forecast by an American petroleum geologist, M. King Hubbert, who noticed that the curves for oil discoveries and oil production were a very close match, but with a lag of thirty to forty years between the discovery curve and the production curve. At that point, in 1956, Hubbert was the director of research for Shell Oil, and the focus of his research was American oil production, then still the biggest in the world.

At that time, American oil output was still rising rapidly, but Hubbert noticed that the shape of the rising output curve closely fitted the curve plotting the growth of American oil reserves during the years of the great discoveries in Texas, Oklahoma and California. However, there had been no other huge discoveries since then, so the annual amount added to American oil reserves had peaked and begun to decline in the late 1930s.

Hubbert simply assumed that the production curve would continue to match the discovery curve with a three- or four-decade lag, in which case, he predicted, U.S. oil production would peak and start to decline in 1970. That is exactly what happened, and American oil production is now down to about half of output in that peak year. So, “Hubbert’s Curve” became famous in the industry, and was duly applied to global discovery and production rates as well.

Oil discoveries worldwide peaked in the 1960s, and Hubbert’s forecast was that peak oil production worldwide would arrive in the 1990s. The discovery of two giant new oil fields in the 1970s (probably the last two) in the North Sea and the Alaskan North Slope pushed that date back a bit, however, and one of Hubbert’s successors as chief of research at Shell, Colin J. Campbell, subsequently calculated that peak production globally would not arrive until 2007. Now, in other words.

It is still deeply unpopular in the oil industry to talk about peak oil, but essentially what de Margerie was saying, albeit in a cautious and coded way, is that it is here or nearly here. The same sort of talk is coming from Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, who told the
Financial Times
earlier this year that he believed oil production from sources outside the Organization of Petroleum Exporting Countries could see “a little more growth” but would soon level off. And
OPEC
is generally assumed to be pumping very close to maximum capacity.

It will get a lot worse if de Margerie is right, and he almost certainly is.

Nobody in the business actually believes that the reserves claimed by the members of OPEC are accurate. During the years 1985–90, when OPEC’s declared reserves grew by a massive three hundred billion barrels, no major new oil fields were brought into production. The “growth” was achieved by recalculating existing reserves, and the incentive for exaggeration was provided by OPEC’s decision to set production quotas in proportion to the total size of each member’s reserves. More than a quarter of the world’s total “proven” oil reserves of 1.1 trillion barrels may be no more than an accounting fiction
.

And there’s another thing to worry about: Hubbert’s Curve may no longer describe our situation. He was using a symmetrical curve, where oil production rose gently before the peak, and fell gently afterwards. It matched the reality of the time, and we could probably deal with that. The problem is that the “enhanced oil recovery” methods they now use to prolong the life of aging oil fields extend the peak production—and are followed by a much steeper fall in production afterwards
.

Worried about peak oil? The International Energy Agency’s annual report, the
World Energy Outlook 2008
, admits for the first time that “although global oil production in total is not expected to peak before 2030, production of conventional oil … is projected to level off towards the end of the projection period.” When the
Guardian
‘s environmental columnist, George Monbiot, pressed
IEA
director Fatih Birol on that opaque phrase, the actual date turned out to be 2020.