30 March 2023. Oil | Octopus

The oil age is almost over // Why we eat octopus

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1: The oil age is almost over

A post by Nafeez Ahmed at his blog The Age of Transformation notes the collapsing levels of shale oil production in the USA—which could have huge ramifications for the global oil price and for the value of oil assets. We’ve been here with this story before, so it’s probably necessary to go carefully, but he makes a convincing case, and he has form on being sceptical of the claims made for US shale oil reserves, which always looked like a bit of a speculative boom driven by too much cheap money.

US industry executives are now openly acknowledging that US oil production is likely to peak within the next five or six years, or perhaps in 2030. But there is mounting evidence that the peak will come much earlier, with some industry observers pinpointing its arrival as early as within the next one or two years.... The implications are seismic. They contradict bullish overinflated forecasts of the industry made two decades ago – in 2005, for instance, Washington DC think-tank RAND Corp was forecasting that the US had enough shale oil to last some 400 years; and in 2012, a senior ExxonMobil executive claimedthat the US has “about 100 years of natural gas supply”.

Credible sources such as the Wall Street Journal and the Financial Timesare also telling the same story.

(Shale gas production. Photo via pxfuel.com)

Looking back over 20 years, it seems that the effect of American shale oil was to fill a production shortfall from conventional production sources, and—because of the recessionary global economy in the aftermath of the global financial crisis—keep global oil prices low. (At the time, this was a surprise, since many forecasters were expecting oil prices to climb and stay high).

US production has accounted for around 70% of the total increase in global oil capacity since 2019, and 75% of growth in liquified gas supplies. So as US shale oil and gas peaks, plateaus and declines, global oil and gas production will do so too very shortly after. Gulf oil and gas producers, however, will not be able to step-in to fill the shortfall. US oil production is currently averaging around 11 million barrels per day (mbd).

In an earlier piece, Ahmed argued that American shale production would peak around 2025, and Middle East production around the 2030s, and many of the industry signs seem to suggest that this is about right. But the result could be a series of deep shocks to the global economic system—unless we can accelerate the energy transition away from oil.

He suggests that there’s an eight part set of implications, which I’m going to summarise here as tightly as possible:

1. The illusion of cheap oil is evaporating: the glut of cheap oil was a function of the shale glut, not a permanent feature of the oil market.

2. The near-term beneficiaries of this will be Gulf oil and gas producers. Because they are for the moment the only people with enough capacity to do this.

3. Some capital will move into OPEC for safety, but this is a mirage. There will be bullish statements from OPEC producers to maintain confidence and attract investment, but this is only good for the short-term.

4. Oil prices will fluctuate within a higher range as US shale peaks. In other words, we will see prices move up, and also be more volatile.

5. We can expect heightened political polarisation. The fossil fuel sector, and its political friends, will double down on the need for subsidies and so on.

6. Clean energy transformation will be critical to stabilise the global economy and restore prosperity. “The only viable pathway through this crisis will be to accelerate the clean energy transformation focused on the deployment of exponentially improving technologies which are already scaling because they are cost-competitive with fossil fuels – namely, solar, wind and batteries.” Without policy intervention, the incumbent energy industries will not be viable by the 2040s—but that’s too late to avoid dangerous climate change.

7. Oil demand is going to haemorrhage, because the clean energy transformation is now unstoppable. A RethinkX report, Rethinking Climate Change, for which Ahmed was a contributing editor, concluded that “oil demand is likely to peak far earlier than incumbent energy agencies predict, and decline far more rapidly following the peak.” Economic drivers of this extend beyond energy to “the disruption of the transport and food systems by electric vehicles, autonomous electric vehicles, precision fermentation and cellular agriculture.”

8. High volatile oil prices will be followed by crashing oil prices once demand peaks and declines. The decline in the oil industry is likely to accelerate around 2030, because of a declining EROI (Energy Return on Investment) which will mean that “it will begin consuming a quarter of its own energy just to keep pumping out more oil”.

The story that’s told here is similar to the one told by Helen Thompson in her book Disorder. On the face of it, the rapid decline of the oil sector seems like a good thing, in that we need to use less fossil fuel as soon as possible to meet climate change targets:

It means that the most lucrative areas of new investments where the highest potential for returns can be found will ultimately not be in the dying fossil fuel industries but in exponentially improving technologies which are on track to transform our societies for the better.

But this relatively rapid decline will leave a lot of stranded assets in the fossil fuel sector, which could have an impact on the global financial sector. And the investment community has an under-developed understanding of the current transitional state of the global economy: Ahmed argues that the current inflation crisis is symptom of the end of the Oil Age. Traditional macro-economic tools won’t work:

Rather, we need to accelerate the emergence of the new system, which requires maximising capital flows into the major drivers, technologies and organising structures of that new system. That, at its most baseline level, requires macro-economic incentives for those capital flows.

In other words, policy is going to matter: markets won’t be enough on their own.

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2: Why we eat octopus

Octopus. Or octopi. Either way, we shouldn’t be farming them, as a Spanish business is currently proposing to do. And the reason we shouldn’t be farming them is because they are sentient creatures who show every sign of consciousness. Lindsay Hamilton has a piece in The Conversationthat explains both why farming them might be attractive, and why we might overlook their sentience (which is not just because of the money).

(Underside of an Octopus. Photo by Betty Wills/Wikimedia. CC BY-SA 4.0.)

The economics of octopus farming are grimly attractive. Demand is high across Europe, and rising. And they can add 5% of their body weight in a day. On the downside, they are notoriously difficult to grow in captivity. But this hasn’t stopped proposals from the food processing company Nueva Pescanova to build an octopus farm that would produce 3,000 tonnes of octopus a year.

Nueva Pescanova had a billion euros in sales in its last financial year, and is, apparently, synonymous with frozen fish in Spain. The company has thrown up the usual ethics-washing arguments in favour: it will reduce pressure on wild fishing grounds, trawling for octopus brings its own hazards, etc etc etc.

We know that octopuses are both intelligent and playful (more on this below). A piece in The Conversation last year reported on the discovery of ‘octopus cities’ in waters off the Australian coast:

In Octopolis, numerous octopuses share — and fight over — a few square metres of seabed. In these watery towns, octopuses form dominance hierarchies, and they’ve started developing new behaviours: male octopuses fight over territory and, perhaps, females by throwing debris at one another and boxing .

I also wrote here a couple of years ago about the Oscar-winning South African documentary My Octopus Teacher, in which an underwater cameraman developed a friendship with an octopus.

This sentient behaviour is why animal activists have protested against the plans. Dartmouth College researchers have also questioned the proposed way of killing them:

Their research raises concerns about methods of slaughter proposed by Nueva Pescanova: placing octopuses into an ice slurry to reduce their temperature to the point of death. They question the appropriateness of this for a species that has sophisticated capacity for processing information, rudimentary tool use, complex visual pathways and, not least, the capacity for pain.

Conveniently for Nueva Pescanova, and unlike the UK, Spain doesn’t have legislation in place that prevents this type of farming or killing of sentient creature.

Lindsay Hamilton reflects all of this, but also asks why it doesn’t seem to make that much difference. She concludes that it’s because octopuses just seem so alien to us. There’s no ‘Bambi’ effect:

One possibility is our difficulty in relating to octopuses: their personalities are hard to read and their water-dwelling bodies resemble miniature sea monsters with multiple tentacular limbs and bulging eyes. As with so many sea animals, the charisma of the octopus lies in its other-worldliness , with centuries of myth and legends about these mysterious others in the songs and stories of fishermen.

And she thinks that this makes them easier to eat:

It is something that researchers have called speciesism : the thinking that, somewhat arbitrarily, justifies how some animals are perceived as pets or valued co-workers and others simply as food-in-waiting . Our trouble in relating to these mysterious others may well be the ethical justification required to make eating them acceptable: something I have researched in the context of farmed mammals .

I’ll admit that I was primed for a piece about octopuses. I’ve been reading John Higgs’ book The Future Starts Here, and he has a section on octopuses that is completely engaging:

The philosopher Stefan Linquist had trouble when he worked with octopuses because they would deliberately plug the outflow valve of their tank with their arms, raising the water level and ultimately flooding the lab. As he explained, '...They know that they are inside this special place, and you are outside it. All their behaviours are affected by their awareness of captivity.'

But I also liked this account of an octopus fending off an attack by a shark:

When the BBC filmed a shark attacking an octopus off the coast of South Africa for an episode of the TV series Blue Planet II, they were amazed to see the octopus deliberately inserting its arms into the shark's gills. Unable to breathe, the shark had no choice but to break off the attack. The octopus then covered itself in shells from the sea floor and hid from the shark.

Of course, Nueva Pescanova’s arguments only stand up if you believe that humans have a right to eat anything that’s not on the endangered list. (This, of course, is one of humankind’s deep myths). But there’s no real reason why we need to eat octopus at all. There are plenty of other protein sources out there. As Hamilton concludes:

food is also bound up with cultural values, sociability and ideas of good taste. At least science can better inform us about the implications of what and how we eat... While companies like Nueva Pescanova promise solutions to problems like overfishing, there will always be a price paid by the countless sentient beings ensnared in complicated industrial food systems.

But at multiple levels, this story might be beginning to come to an end. We are more sceptical of industrial food systems, and we are becoming more concerned about the ethics of the more-than-human world.

As it happens, the bank that owns most of Nueva Pescanova is keen to sell it. The various activists organising petitions might want to ask the investors in the companies said to be interested in acquiring some or all of Nueva Pescanova how the potential octopus farm sits with their ESG policies, or whether they have considered the reputational risk.

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