Insight/Opinion

The Genius in your Tank/Bank is running out – Have we passed 'Peak Clever'?

By Dr Garth Cambray

We take a look into the future of our global intelligence market and find that we may have passed Peak Clever.

Peering into the energy future is a difficult task – but quite necessary. Nobody is able to make accurate predictions about where we are going in terms of liquid fuels and what impact this will have on the world economy. The recent spikes in oil prices up to US$147 a barrel, and the current drop back to about US$45/barrel demonstrate this. This volatility has impacts that require a more detailed analysis. In this article we look at whether we have passed Peak Clever – the point at which powerful brains begin to run out. To do this we need to look at a few things.

Oil pumping costs

The cost of getting oil out of the ground – currently ranges from about US$5 to US$60. As wells age pumping costs rise. Methods exist to encourage oil out but these all cost money and require intelligence and skill.

Replacement Oil Prospecting Costs

As easily developed oil wells run out new more expensive wells have to be developed in more difficult places. In many cases the cost per barrel of developing new production can range from US$30 to as high as US$60 per barrel. Complicated technologies require highly skilled and intelligent developers and operators.

Unconventional Oil supplies

Synthetic oil replacement products such as those produced by coal gasification, and gas to liquids technology based on Fischer-Tropsch synthesis have been expanding with new plants being developed. These plants have more predictable input costs than oil wells, and also have more predictable plant lives – coal reserves are easily determined, and natural gas, although it tends to run out from some sources, can be relatively inexpensively piped over long distances to processing plants. A good example of this is the importation of natural gas from Mozambique to the SASOL synthetic fuel plants in South Africa. These plants require intelligent developers and operators.

The Canadian Tar sands and similar unconventional deposits globally are energy intensive, environmentally less friendly alternatives to conventional oil. Extractions costs tend to be in the region of US$30 or so per barrel – excluding the costs of rehabilitation and the impacts on the human population of heavy metals released. As an example, Canada is predominantly a knowledge economy – it develops marketable technology, and also exports oil derived from tar sands – the process to do this releases heavy metals, which get into water supplies and the atmosphere – heavy metals impair childhood mental development, so, although Canada may make money from both its brain power and tar sands currently, in 20 years time it may find that it produces less geniuses to drive its knowledge economy, leading to an unexpected long term hidden cost not factored into the barrel cost. The Tar Sands require highly intelligent people to develop exploitation technology, and highly skilled labor to run the plants.

Alternative Energy

Wind, solar, biofuels and others all chip away at global energy supply markets. The impact of these on global energy supply is currently small, but significant – converting corn to ethanol as an example increases food costs. Converting waste agricultural products to fuels does not. Alternative energy has to be developed responsibly to ensure that it does not damage the economy, and therefore our long term ability to develop the technologies and profits needed to fix the planet. These all require skilled developers and operators.

How much energy developed and developing countries use

Developed countries have generally achieved a situation close to stagnation where most people who have a chance of achieving a specific standard of living considered average, have, and those that have not probably cannot, and those that are living above that standard won’t die if they revert to an average status. Hence vehicle energy consumption tends to grow quite slowly in countries such as the US, Canada, Japan and Europe. The US uses about 21% of global oil production, and the most likely scenario is that increased oil costs and government policy and public sentiment will make Americans drive more fuel efficient vehicles, leading to decreased liquid fuel demand in America, which will eventually mirror that in countries such as those in Europe where the trend to more fuel efficient vehicles began far earlier.

Developing countries on the other hand will gradually, and in some cases quite rapidly, use more fuel. In India and China fuel growth has grown rapidly as the billions of people in these two countries begin to rely more and more on liquid fuel for transport. Hence, what America saves by driving more fuel efficient cars is likely to be absorbed by hundreds of millions of Indians and Chinese buying small, fuel efficient cars.

Developing energy efficient cars and technologies requires highly intelligent technologists and skilled assistants.

The status of global shipping

Ships and marine vehicles use a substantial proportion of global fuel production. If the economy in the developed world remains in recession, far fewer ships will be moving raw materials to the developing world manufacturing powerhouses such as China, and moving processed goods to the rest of the world, leading to a drop in fuel use. Many of the gadgets we buy are invented and developed by highly intelligent people and assembled by very skilled labor.

The case so far

For the oil industry to remain healthy and the economy to survive, a price per barrel of US$80-US$90 is required. Hence it is clear that at current prices of US$45, oil companies will have to be financing development of new capacity based on the prediction that at some point oil prices will rise to allow this investment to be recouped. To do this oil companies have to recruit the best engineers, chemists and technologists.

How do we make an exceptional brain?

Exceptional brains change our world – the rest of us help these brains do their job.

A brain is produced by a combination of education, stimulation, environmental inputs such as pollution and good or bad food, genetic factors, medical care, cultural factors and many others. If these factors are all in tune, we could produce exceptional positively beneficial people such as Einstein, Mandela or Newton, and if some of these factors are out of balance, well, history is peppered with those characters who will be less favourably remembered. In most cases, if some of these factors are not favourable, learning and behavioural disorders can certainly dampen the prospects of whole communities.

It is therefore clear that to develop the sorts of minds that will allow us to advance our society, we have to invest a lot in making sure that young people have unpolluted environments, good education, factors which favour the uninhibited pairing of intelligent mothers and fathers, cultures which don’t degrade our minds, medical care and many other factors. Many countries have done this, and, produce a few exceptional people a year, a number of highly competent people and generally skilled supporting populations. Some countries have failed at this completely, or nearly completely and mooch technology and systems from those that have invested and developed their populations.

As heavy metal and other pollution increases in severity globally, many factors conspire against the maximum development of young minds.

Have we reached Peak Clever?

Many people speak about Peak Oil – the point at which global oil supply cannot meet demand growth and the world goes into recession. Many people suggest that new technologies will be developed to continue extracting oil to meet growing demands. This requires minds to do this.

Oil exploitation investments run on long term budgeting – up to 40 years. Banking runs on shorter cycles. Hence an oil company, expecting increased highly intelligent brain requirements will hand out bursaries and develop bright young minds to develop technologies to maximize profits. Banks on the other hand do this a lot less. Hence, the world economy may be able to continue expanding oil production, but will run out of the sort of vision needed to sustainably finance the world as the brightest young minds are recruited elsewhere. This was recently demonstrated by a bunch of under competent bankers deluding the world into a monstrous recession through sub-intelligent banking practices.

We don’t know if we have reached Peak Oil, but, the current global recession is definitely a result of underinvestment in developing our capacity to produce top minds and it looks like we have probably passed Peak Clever – the point at which we don’t have enough great minds to drive our planet forward as profitably anymore.

More information:

 Dr Garth Cambray holds a PhD in biotechnology. He is the CEO of Makana Meadery which has empowered over 370 people in rural South Africa.

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