Peak Oil Goes Mainstream

Commentary By Ron Beasley

One of my first posts at my old blog was on peak oil, Oil, Half Way To Empty. That was almost six years ago and at that time anyone suggesting that the oil might run out was branded as crazy.  Well, it's 2010 and as Chris Nelder  points out peak oil is accepted by nearly everyone.

When I began writing about peak oil professionally in 2006, it was
generally considered a tinfoil hat theory. The notion that oil
production might peak around 2012 (plus or minus) was only taken
seriously by a few analysts who were considered extremely pessimistic.

Official forecasts had no cognizance of it whatsoever. All were
confident that oil supply would continue to grow steadily to 130 million
barrels per day (mbpd) and beyond, at prices that would be considered
astoundingly cheap by today's standards. Oil companies rarely mentioned
peak oil, and when they did, it was in a casually dismissive way.

But over the last four years reality has overrun blind optimism. Now both the oil industry and energy officials are taking peak oil seriously.

The first bombshell was actually dropped on February 10, when the UK Industry Task Force on Peak Oil and Energy Security issued a report called "The Oil Crunch: A wake-up call for the UK economy." I only mentioned it in passing at the time, but it was a stern warning that "oil shortages, insecurity of supply and price volatility will destabilise economic, political, and social activity potentially by 2015."

It only made the news because Sir Richard Branson personally endorsed it; but the fact that the task force comprised top UK executives and energy experts lent it enough weight to be rather widely circulated in the press.

The British government, including energy minister Lord Hunt, responded by staging a closed-door summit meeting with the taskforce on March 22. As the UK's Guardian reported, the government intended to develop an action plan to contend with a near-term peak, and to "calm rising fears over peak oil."

Veteran peak oil analyst and taskforce member Jeremy Leggett explained: "Government has gone from the BP position � '40 years of supply left, the price mechanism works, no need to worry' � to 'crikey'." He urged the assembly to properly assess the risks of peak oil, and to immediately begin preparing for the end of globalization and an era of oil shortages in the West.

According to reports from attendees, the summit yielded some important conclusions:

• Peak oil is either here, or close
  enough.


• Prices will have to go higher as demand outstrips
  supply.


• Governments will be forced to intervene to maintain
  critical levels of oil supply, and limit volatility.


• Rationing
  measures may be unavoidable.


• Electrification of
  transport must be pursued in order to reduce demand.


• Communities
  will need to work quickly to reorganize around walking instead of
  driving, producing food and energy locally instead of importing,
  and generally try to reduce their need for oil.

However, the notion that peak oil will mean the end of economic growth, as I have argued, apparently fell on deaf ears. Still, the very fact that the government has engaged with the peak oil community and formed a parliamentary group to study the issue offers a sliver of hope that, at least in the UK, we'll have some measure of consciousness about the issue and an idea of what to do about it as we drive off the peak oil cliff.

While peak oil denial may be a thing of the past there is still a great deal of denial about the impact.  I covered Nelder's predictions here.  One of his most alarming predictions is that the fuel and financial resources may not be available to make a smooth transition from an oil economy.

All of which begs a final question: If the answers are
transition to
renewables, and rebuilding our infrastructure for high efficiency, then
where will the money and energy to do it all come from? And lastly, how
long will it hold out?

Without cheap energy to fuel the growth
that is hoped to pay off the
accumulated debt, austerity will become an everyday reality � not a
short-term fix. A reality that slowly sinks in for the rest of our
lives, as net importers become progressively poorer.