Wednesday, February 10, 2010

Peak Oil

There's another report out predicting the end of the world as we know it; oil-addicted economies facing armageddon. You know the sort of thing.
Only this time it isn't a bunch of loony environmentlists, it is a respected group of business leaders!

The only surprise really is that this should not come as a surprise. Remember the oil price shock of 2008, which saw prices of $130/barrel? The fact that it fell back to current levels of around $70/barrel is mainly due to the recession reducing demand. World economic policy is still based around the idea of limitless growth, and both the developed and developing worlds' appetites for oil are growing. What isn't growing enough is oil supply. One effect of the recession and the reduced oil price was reduced oil exploration, and the oil yield from existing fields is less each year. You don't need a degree in economics to predict what's going to happen when the major economies emerge from the effects of recession into growth again.

Even if you ignore climate change, peak oil means we need to decarbonize our economy or face a situation where an increasing proportion of our wealth is going to countries with less than savoury regimes. In a nutshell, energy insecurity. We're a net importer of oil, having pissed our own supplies out of the tailpipes of our Range Rovers.

If we act now, we still have a prayer of limiting the worst effects of the coming oil price shock, without inflicting massive pain. The government need to act now to ensure we have a transport system fit for purpose with oil at $200/barrel or more. They need to invest in renewables, in insulation, in fact in everything that the climate change lobby has been calling for for over a decade.

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