At the end of May, in the UK Guardian newspaper, a left-leaning organ that the right-listing New Labour normally avoids like the plague, Brown says in no uncertain terms that the world is in trouble – we are "facing the third great oil shock", and it is now time to find alternatives to oil. "We must all act together" is the headline. A noble sentiment indeed. This is a most generous 'all', because it includes the OPEC cartel, who are no doubt thrilled to be called upon in this way, notwithstanding the fact that calling someone a nasty name ('cartel') is an unusual method of procuring favours from them.

In case the term 'balloon goes up' is unfamiliar, it derives from the First World War, when it was found that sending a balloon up was a good way of signaling over a long distance so that everyone could get synchronized in whatever it was they were trying to do. This was before text messaging and Facebook of course. I should admit that the purpose of this synchronization was not swimming or dancing but the launching of an artillery barrage, but that was not the balloon’s fault.

If the peak oil balloon really is going up, we should expect to see world leaders, politicians, business chiefs and the mainstream in general realizing and admitting that something new is happening. Years of dismissing the rising oil price as part of the normal economic cycle should now suddenly give way to an understanding that cheap oil is dead. We should also see business leaders and the UN begin to grapple with the implications of a permanently declining oil supply.

When this happens, it might well be called the tipping point. And like the balloon going up, it really ought to be a trigger too. If we really are at these new points, which surely will be looked back on as extraordinary moments in history, it might be instructive to consider the nature of such changes and look for some of the signs that we are indeed tipping, triggering or ballooning.

A tipping point is the moment when a large change takes place as the result of a seemingly small change. What is often actually happening is that a long period of incremental change has brought us to a threshold, so that one further small change of the same type then suddenly causes a big shift. The metaphor refers to the plank on a fulcrum like a teeter-totter or a see-saw.

Metaphors and analogies can be both useful and misleading, but one thing that we won’t be doing is tipping the see-saw back the other way once we really start going into energy decline. It is quite possible that there will be self-reinforcing mechanisms which will tend to speed the decline up though there will also be tremendous efforts to slow the decline down. There will doubtless be some surprises in both directions and firm predictions will be hard to make with any certainty.

But are we really at the tipping point for peak oil? Well, yes, no and maybe.

It is true that the mainstream media are certainly in a lather about oil prices. On Friday, 6 June 2008, oil ended at $138.54, after leaping nearly $11 in one day, on the back of a $5 hike the previous day. Speculators were blamed by many, but this explanation is rather weak in any longer timeframe since if one buys an oil future then in the end it will be delivered to you unless you sell it to someone else. Ultimately that 'someone else' must be a refinery, since crude oil is virtually useless to anyone else.

The highest jump (0.5%) in U.S. unemployment figures for 22 years to 5.5% (exactly what it was this time four years ago – another U.S. election year [1]) has also been blamed for the oil leap, though it is a curious driver: higher unemployment should mean that the U.S. economy will weaken so that it will reduce demand which should in turn reduce the price of oil (the U.S consumes just under a quarter of all oil produced); but with the mess that the US economy is in, ironically a weaker economy also pushes the price up. Some mishtake, shurely?

In fact it is all quite logical: higher unemployment constrains the US Federal Reserve from raising interest rates (higher rates equals yet more unemployment), which means that the dollar weakens against the euro (and often against gold), which raises oil prices, since oil is priced is dollars, which are consequently worth less to those living outside the dollar zone, which includes most oil exporters. Two things make matters worse for the dollar: the Europeans are seriously considering raising their interest rates and the market is betting that the Fed won’t raise interest rates before the US presidential election (on November 4th). One of the things that has greatly excited Americans lately is the glow derived from understanding European culture much better. It is not that there has been a sudden desire to listen to Wagner and Ravel, but rather that the average price of petrol or gasoline has just risen above $4 a gallon for the first time in U.S. history. This is causing Americans to drive less for perhaps the first time ever without there being a direct military trigger.

What concerns fewer North American drivers is the price of diesel. In many parts of America, this is now above $5. We know that Europeans would love to pay such low prices for petrol and diesel, but the two diverse continents do have one thing in common - the price of diesel has shot up much faster than petrol, and since diesel powers so much of the freight network in so many countries, this really should be a cause for anxiety everywhere.

In Europe, it is not just trucks and lorries that use diesel, but many passenger cars too. Currently over half of all new cars are diesel. So diesel hitting $10 a gallon in Europe is starting to cause personal behavior change in motorists in Europe as well as in the United States, where gasoline consumption has actually been falling markedly since late 2007.

Two other major causes of the price leap were literally just words, showing how powerful rhetoric really is – rhetoric being the art of persuasion, in some ways perhaps the most important tool in human life. On this newly historic June 6th, a well known banking house, Morgan Stanley, opined that oil would hit $150 by July 4th, which few will need reminding is US Independence Day. I suspect that the irony of hitting a new milestone in oil dependence on that day was not lost on the troubled bank. Why should a few words from a bank make any difference? It turns out that several of the larger financial houses have quite a good record in predicting general oil price rises, and it is very likely that the market was responding in part to this forecast.

Finally, perhaps the most powerful overt driver of the historic price leap was generally the least mentioned, namely the potential for an attack on Iran’s nuclear installations by Israel. Media reports varied rather wildly, but there is no doubt that a storm erupted when Israel’s transport minister said in an interview that "If Iran continues its nuclear arms program — we will attack it." The Israeli government backed away from the statement, which was apparently the minister’s personal opinion, but the Israelis did bomb an unfinished Iraqi nuclear reactor in 1981, so such threats are not to be taken lightly. This might be shaking the cage (mainly inside Washington DC) rather than real sabre rattling, but it certainly had a powerful effect.

So all in all, it is evident that oil is getting plenty of attention. However, with the honourable exception of a good article in Canada’s Macleans magazine, very few of the mainstream media that I looked at had any mention of the geological fundamentals, even some of the most realistic business media, such as the radio programme Marketplace. Once the mainstream media – particularly television news 'shows' – and global leaders talk of peak oil and decline the way they now do about greenhouse gases (such as CO2) causing global warming, then we can be more sure that we are really at the tipping point, and possibly ready for the trigger. When that balloon goes up we must be ready to synchronise an enormous effort to adapt to a world that one day rather soon will be playing musical oil chairs. That musical appears to have begun: the consumption of petroleum has actually been falling in the United States since 2005. But it is not clear that we have reached our 'causal CO2 moment' yet for global petroleum supply.

So this is what I mean by yes, no and maybe: Yes, oil is in the news and people are getting anxious about it, but No, we are not yet at the peak oil tipping point, because the real and 'fundamental' underlying cause of the growing energy crisis is hardly ever mentioned. Maybe however we have entered the peak-oil-tipping-point plateau, from which we shall more easily be able view the peak oil balloon when eventually it does go up good and proper.



[1] The Unemployment Level in May 2008 was 8,487,000 according to the U.S. Department of Labor Bureau of Labor Statistics – see  http://postcarbon.org/us-unemployment-level-1998-may2008