Now this is an extraordinarily important report that, even though I didn't help author this report, I want to hammer on it for a few minutes because I think it's something that everyone should be talking about and virtually no one is. It was commissioned by the U.S. Department of Energy, paid for by the U.S. Department of Energy. Science Applications International Corporation compiled the report. Robert L. Hirsch was the project leader, and the title of it is "Peaking of World Oil Production Impacts Mitigation and Risk Management."

Now U.S. DOE asked ASIC basically two questions: is global peak oil a real problem, and, if so, what should we do about it? Now this is the executive summary that they came up with, and I'll read it to you. "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached , liquid fuel prices and price volatility will increase dramatically, and without timely mitigation the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."


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Now this report is extraordinary because, well among other reasons, economists have been telling us for some time that peaking of world oil production, even if we need to be thinking about it at all, is really a very small issue because as prices increase, they'll stimulate more exploration. They'll stimulate the production of alternative fuels, and they'll stimulate conservation. And with the combination of all three of those factors, we should make a very smooth and easy transition so that 25 or 50 years from now, we'll all be driving hydrogen cars down the street. No one will know that anything even happened. There won't even have been a bump on the road. We'll look back, and we'll say, what was that all about?

Well, the Hirsch report says that, in fact, those price signals will come at least 10 years too late and maybe 20 years too late to make a real difference. In other words, yes, we can make a transition, but it takes time to prepare that transition before the price signal arrives. For example, we all know we could be driving more fuel efficient cars right now as was mentioned. There are European cars that are already getting 100 miles to the gallon and more. Problem is it takes time to change over the U.S. car fleet.

First of all, U.S. manufacturers have to retool and start making those much more highly efficient cars in large quantities. That will take probably four or five years. Then, not everyone buys a new car every year. I happen to drive a 25-year-old Mercedes diesel that I run on biodiesel, but that's not too uncommon. A lot of us drive cars that are 1-, 2-, 5-, 10-, 15-years-old. So that's going to take 15 to 20 years to change out the entire U.S. car and truck fleet. So we're looking at a process of transition there that will likely take 20 to 25 years.