Perspective - October 2010

Talking Crude

Talking Crude

Peak oil is here. Or maybe it isn’t. Depends on who you ask, really, but the experts seem to agree that prices are bound to climb. If the cost of travel hinges on the cost of a barrel, how do meeting professionals offset the consequence of yet another inconvenient truth?

I have never once made tuna salad without having to wash my hands afterward. The mayo always seems to migrate up the spoon or fork or spatula and grease up my fingers. I’m careful, but it happens anyway. That’s the thing about oil; somehow it gets into everything – even when you’re careful. And when you’re not, well – just ask Tony Hayward what happens. Or the good people of the Gulf Coast, for that matter.

In fact, oil is so ubiquitous it doesn’t even have to be physically present to get into everything. Our entire economy swims in it. It affects the price of gasoline, sure, but also the price of strawberries. And school supplies. And yes, probably tea in China, too.

So comes the discussion of “peak oil.” The principle was first presented by M. King Hubbert, a geologist who worked for the Shell Oil Corporation in the 1960s, but you don’t need to be smarter than a 5th grader to understand it. Simply put: If you have a can of oil and you use it, you are going to run out. Hubbert applied this concept to the world as a whole.

“It’s not a profound statement,” says Richard Worzel, futurist, professional speaker and consultant for IF Research, “but it does lead us to some implications that perhaps people hadn’t thought of before. Eventually, sooner or later, we’re going to get to a point where we’ve reached the peak of production and it’s downhill from there.”

The Fear

Estimations as to when peak oil will occur – and what will happen when it does – vary tremendously; some experts predict economic difficulties while others proselytize about the decline and fall of modern civilization.

“The main expectation about peak oil is that it will drive fuel costs up in the direction of $150 to $200 per barrel, compared to about $77 today,” says Mitchell Beer, founder and president of The Conference Publishers, a leading content capture specialist. “From there, prices are expected to swing wildly and unpredictably enough to create a whole lot of uncertainty in an economy that is already shaky.”

As the law of supply and demand is sacrosanct, we can see why the concept of peak oil can easily drive a stake of fear into the hearts of meeting professionals.

“One way or another, energy and oil are a part of just about everything we do onsite, everything we need to orchestrate a successful event,” says Beer. “The majority of meeting facilities runs on some kind of non-renewable fuel and only a small proportion of them are terribly deliberate or efficient about the way they use – or waste – that fuel.”

Add to that the time spent traveling to a given event and costs rise astronomically. “Every time a participant steps into a plane, train or automobile, [he or she is] consuming a petroleum-based fuel – a problem that is particularly acute for air travel.” With so many airlines already struggling, potential price-hikes spurred by peak oil could [possibly] deliver a death blow to those floundering in the tides of a tough market.

“Our industry’s biggest problem with peak oil is that most meeting professionals don’t see it coming and can’t know exactly when or how it will affect us,” says Beer. Conflicting information leaves people with no sense of what to believe. “Any number of factors beyond the industry can affect the price and supply of oil. Some can bring very large changes overnight. If or when that occurs, very few people will have the training or background to see it coming… Most of us will be unprepared.”

The Facts

While there has been some speculation that the travel industry would be among those fueling the post-peak production decline, neither Beer nor Worzel believes that to be the case. The most significant factor, says Worzel, comes from developing nations. “It’s not just China and India, but also Brazil and Malaysia, Indonesia and Mexico. They are adding incremental demand to the already huge demand from developed countries.”

This relatively small uptick, he says, is what’s currently driving the price of a barrel; demand is rising faster than supply. “The recession had knocked it back,” he says, “but when the developed countries come back, oil will be shooting back up again.”

There has been some notable speculation about how limited oil resources would be divided, says Beers. “If airlines are one of several players trying to get their hands on a shrinking fuel supply, it isn’t likely they’ll get none, but they will probably get less.” The likely result? Seats dwindle to short supply, prices climb and travel becomes less convenient, less prudent.

The Fix

Oil will remain a big part of the world’s energy equation for a long time, but fewer things make alternatives to the status quo more attractive than a morbidly obese price tag that eats away at the bottom line.

“There’s a lot of substitution that can go on,” says Worzel. “You can start conserving, using energy more efficiently, etc. … As oil prices are raised, the attraction of biofuels increases – algae, cellulosic ethanol, biobutanol – increases; it’s a self-curing process.” New technology, in the form of new fuels or new ways to extract additional oil from fields previously thought exhausted, are bound to develop.

In the meantime, planners need to understand the issues.

“Industry associations can help,” says Beer, who was pleased about the inclusion of a Peak Oil panel at the recent World Education Conference in Vancouver. “Next, we can all look for ways to reduce our energy use. The less fuel we use, the less vulnerable we become when prices begin to rise or fluctuate.”


Make sure the meetings you’re planning are worth it.

“Your content should be top-notch,” says Worzel, “and there should be ample opportunities for people to wander around and get to know each other. The real advantage of a face-to-face conference over something like a webinar is that you get to meet people you never imagined you’d meet and develop relationships.”

Say you have a meeting with great content, but no informal content. Or a meeting where attendees spent the entire time schmoozing. Would these events be as valuable? “No,” says Worzel. “And people wouldn’t come! The content has to be worth the travel, in both time and expense.”

Has the price for your company’s national conference gone through the roof? “How about doing five regional conferences and tying them together with telecommunications?” Worzel suggests. “People fly 200 miles instead of 1,000; they mix and mingle with 500 instead of 4,000. It offers many of the same benefits as the larger conference, but with greatly reduced costs.”

Worzel also proposes an industry-approved ‘green index.’ “If MPI were able to adopt a policy, a standard, where each event had to show resources used per conferee, it would be a start.” Comparing resources used in previous years would help set new goals for the next event: How much travel occurred? How much water was used? How much heat was generated? “If we had an index – a uniform standard where everyone used the same yardstick – that showed conferees that they’d be able to be more responsible by going to one event over another…it might help them make a decision.”

Suppliers could use the index to tout their region, city, property or venue, as well. “It would be the same type of thing you’d do with a carbon calculator,” says Worzel. “It would allow you to gauge, from one conference to another, ‘Am I being responsible?’”

Along the way, going green could be promoted in a way that’s a little less Haight and a little more FiDi.

“It would be a huge win for meetings and events if peak oil helped us understand that sustainability is a matter of opportunity, not compliance,” Beers says. “For the most part, people in our industry tend to treat green meetings and corporate social responsibility as a new set of obligations. The reality is that saving energy can often save money, and the experience we generate along the way can help us build new products, services or markets. I know of no other area where you sometimes have to twist arms to persuade people to cut costs and increase profits.”

Worzel agrees wholeheartedly. “Waste is the enemy of profits. By making your operations more efficient, you are actually increasing your profitability. And that is, in my mind, a whole lot better way to get people to live a green lifestyle than by trying to guilt them into it.”

Make fuel efficiency, being green, the most selfish thing possible.

“Then you won’t have to push people,” he says plainly. “They’ll race you for it.”