On Aviation, Oil and Tourism: Glimpses of the Future

By Karim Jaufeerally – Institute for Environmental Studies
Published in Le Mauricien, September 2016

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Modern mass tourism became a reality in the sixties due to the convergence of a number of factors that mainly arose during World War Two. The victorious allies acquired experience in the design, construction and operation of vast fleets of heavy bombers used in devastating air campaigns against Nazi Germany and Imperial Japan. The simultaneous invention of the jet engine in Germany and Great Britain during the war meant that very powerful engines could be used for long distance air travel. The invention of radar by the UK and Germany enabled safe air traffic control. The allied war effort also required the supply of large volumes of abundant and cheap oil provided by an increasingly sophisticated and capable oil industry. In view of the above, it is striking how tourism owes so much to modern warfare.

After more than 50 years of safe, fast and affordable air travel, Governments, industry and people world wide take the airline industry for granted: readily available and affordable as any modern convenience can be. It is assumed that this will remain so for the foreseeable future. Indeed, Governments across the planet have high hopes for air travel and tourism as engines of future growth.

Our understanding of energy and technical issues does not allow us to have the same optimistic view of the future of air travel. Here is why: Oil is essential for air travel as there are few substitutes given the volumes of liquid fuel required each day. Indeed, during World War II Nazi Germany successfully used coal to produce significant quantities of aviation fuel. But the process was expensive, required large scale industrial facilities fed by abundant coal, water and cheap labour and produced lower quality aviation fuel compared to oil. Furthermore, Nazi Germany never managed to produce enough fuel for its vast armies, a significant factor in its final defeat.

After the War, Apartheid South Africa set up a coal to liquid fuel industry (that still exists); in part to circumvent the oil embargo it was subjected to from Oil Producing and Exporting Countries (OPEC). In both cases, those inhumane regimes never managed to produce enough liquid fuels for their own uses. Recently there have been efforts to use vegetable oils as feedstock for aviation fuel. Although technically successful the volumes produced are so minute that even if production were to steadily increase over the years and adding liquid fuels from coal from South Africa (and soon from China which intends to set up such an industry there) the world will most probably never produce enough alternative fuels to offset even a modest percentage of its current oil based aviation fuel needs.

On and off there is talk in some quarters about the use of liquid hydrogen as transportation fuel. Alas there are no known safe and economic ways to store and carry large volumes of liquid hydrogen. Also note that it is highly unlikely that there can ever be technological substitute to jet turbines which have proven their worth since World War 2. Hence, it is reasonable to assume that in the coming decades there shall be no substitutes for oil fueled jet turbines in aviation. The fate of aviation and tourism here and elsewhere resides with oil. It is ironic that the capacity of humans to fly to the blue skies depends on oil that gushes forth from the dark hells of the subterranean worlds.

We should therefore ask ourselves what will be the state of oil supply, demand and prices in the coming years. Although it is very difficult to answer those questions precisely, we can shed some light on oil dynamics that may lead to a greater understanding of the situation. Oil, coal and natural gas are finite and non-renewable resources created by natural processes millions of years ago from the slow transformation of biomass buried deep within the earth’s crust. Coal for instance comes mainly from fossilized trees, whereas oil and natural gas from fossilized algae. These natural processes have created immense but finite volumes of coal, oil and natural gas. Each ton of coal, oil or natural gas extracted from within the bowels of the Earth inevitably reduces the remaining volumes.

As volumes in Earth’s crust diminish, a point will be reached thereby the resource is unable to sustain current volumetric production which therefore begins to drop. It is a physical inevitability. As the resource is depleted, production slips year by year until extraction is abandoned for being either economically or technologically non-viable. Production declines can be reversed if new resources are discovered and exploited or if new technologies are used on previously costly and difficult to exploit resources.

An excellent case study is the history of oil production in the US over the last 150 years. The US was one of the first countries to extract oil during the nineteenth century. At first production was on land and from easy to drill oil fields of Pennsylvania or Texas and later on to many other places making the US a leading oil producer. In the forties, oil was extracted from the shallow waters of California. In the sixties, technology enabled oil production in the deeper waters of the Gulf of Mexico and in Alaska.

Then in 1970 US oil production began to slip as depletion gripped many of the large oil fields. It is interesting to note that as US production slipped, the first oil shocks occurred (1973, 1979) with large increases in oil prices that impacted the world economy. But with new production coming on line from the North Sea, Alaska and Siberia during the eighties, prices dropped to acceptable levels for the next 20 years. In the meanwhile US oil production continued to slip relentlessly.  From 2004 prices began an upswing that brought them to stellar heights unheard of before, breaking earlier records in constant US $ terms.

In all probability, the high oil prices of the period 2004 to 2014 contributed to the economic crisis of 2008/2009. At the same time, something happened to US oil production as unexpectedly it began to rise steadily from 2008 till 2015 whilst oil prices tumbled by 50% in 2015. This reversal of fortune can be explained by the fact that US oil industry began exploiting massively a difficult oil resource known as shale oil or light tight oil. This resource had been known about and exploited since the fifties but its production began to rise spectacularly as from 2008 because of improvements in technology and large influxes of financial capital attracted by high oil prices. After an eight years bonanza, oil production from these fields are expected to flatten off about now (2016) and begin to decline by 2020 as depletion sets in. It will probably drag US oil production down with it.

The point of this story is that eventually oil depletion always wins in spite of immense technical and scientific expertise, capital and will power from oil companies. What happened in the US also happens elsewhere and eventually oil depletion takes over the show world wide. But it does not happen overnight, depletion as an implacable foe wins battle after battle flattening out world oil production, creating price swings, impacting economies the world over and eventually dragging down world oil production.

To some extent, this is what has occurred since the seventies when US oil production dropped, oil prices shot up and economic crisis appeared, to be followed by price collapses in the eighties that lasted 20 years. A new cycle began in 2004 with sharp increases in prices, followed by crashes whilst world oil production flattened out. With the help of shale oil, production is once more increasing. In all probability we are now in the midst of a price lull of unknowable duration but future violent price swings are inevitable given that depletion never sleeps. Slowly but surely a period of maximum production will be reached followed by a slow and uneven decline stretched over many decades.

Although it is difficult to establish the time frame over which oil production reaches a maximum and subsequently declines, the majority of studies place that event over a 2010 to 2020 period. Very few studies push it to 2030 or beyond. Nevertheless, it is clear that a peak and decline in world oil production occurring within a narrow time frame is extremely likely. We have seen how air travel is irremediably tied to cheap oil; the consequence of this is that as world oil production stagnates and begins its decline, oil prices may become increasingly volatile, rising rapidly to high levels and then crashing just as quickly as demand is destroyed, then the cycle will begin anew as depletion bites further. The impact on air travel will be profound and long lasting. Highly volatile oil prices will cripple air travel and tourism; long haul flights will become increasingly expensive and affordable to the majority.

In time, only the very wealthy will be able to fly frequently over long distances, for the majority long haul flights will be rare events. Long haul mass tourism will contract significantly and tourists will probably seek destinations closer to home. We can imagine that in such a context fewer European tourists will travel to far away places like Mauritius but rather opt for Mediterranean destinations. Chinese and other Asian tourists also may opt for closer places to visit like Vietnam, Burma and the Philippines for instance. Indians may still come to Mauritius but in fewer numbers. We do not believe that East Africa will ever become a major source of tourists as poverty is still an issue there and middle class East Africans may not be particularly interested in visiting beaches here similar to what they have in their home countries. The Middle East is in upheaval due to rampant American, European and Israeli interventionism and aggression. Alas, it seems likely that these factors will not abate any time soon and thus it is best not to expect many tourists from that region.

In conclusion, we believe that long haul mass tourism is irremediably tied to cheap and abundant oil. Expensive and less abundant oil spells deep trouble for the tourism industry. Eventually, tourism will return to what it was in the sixties, the privilege of the wealthy upper classes. We do not believe that the tourism industry can face and withstand such a seismic change in oil dynamics. It is bound to end up severely dislocated, a shadow of its current self. Indeed we are currently living in the golden age of mass tourism; enjoy it while you can for it is not destined to last for very long.

Karim Jaufeerally – Institute for Environmental Studies

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