Peak Oil

As fuel prices go on increasing, the idea of Peak Oil is finally starting to be discussed in the media. Climate Change used to suffer from the same lack of exposure and now it is being recognised for the enormous challenge that it is - in the same way, expect to hear more and more about Peak Oil over the coming years.

So, what is Peak Oil?

First of all, a note on what Peak Oil is not, as there is a common misconception that Peak Oil is about “running out of oil”. This isn't what Peak Oil is about at all – oil will continue to be extracted to some degree for many decades to come. In fact, we'll never run out of oil - there will always be some oil left in the ground because either it's too hard to reach or it takes too much energy to extract.

What Peak Oil is about is the end of cheap and plentiful oil, the recognition that the total volume of oil being pumped into our economies will at some point peak and then inexorably decline. It’s also about recognising that our industrialised way of life, and the growth in global economic activity over the past century has been absolutely dependent on the ever-increasing supply of cheap oil.

The "Petroleum Interval"

As the graph above illustrates, we are currently living through a relatively short "blip" in history that you could call the "petroleum interval" - a period when large quantities of oil were extracted from the Earth to fuel human activities.

From the start of the 1900s, plentiful oil allowed a coal-based industrialised society to massively accelerate its “development”. From that time, each year there has been more oil brought to the global market (apart from during the two oil shocks in the 1970s, when Middle East crises caused worldwide recessions). Fuelled by increasing oil production, each year society has increased its complexity, its mechanisation, its globalised connectedness and its energy consumption levels.

The problems start when we’ve extracted around half of the world's recoverable oil. As oil is extracted from each oil field, the oil flows quickly at first and is of a high quality, then generally gets increasingly expensive to extract (in cash and energy terms), is slower flowing and of a lower quality. Eventually a point is reached for each field where peak production occurs, and in the same way, this process happens for whole countries and the world (see graph below). Peak oil production occured in the USA in 1970, in the UK in 1999, and has already occured in 33 of the largest 48 oil producing countries.

At the point of global peak production, for the first time in history, we are not able to increase the amount of oil that's coming out of the ground, being refined and reaching the market. Global oil supply plateaus and then declines, with massive ramifications for industrialised societies and the global economy.

For oil importing countries such as the UK, the situation is even worse - as global production declines, oil exporting countries are likely to begin to keep more oil to meet their own needs, reducing the amount of oil available for export markets. This is likely to lead to an earlier peak in energy avaiable to the UK economy from oil, followed by a sharper decline in oil availability.

When will Peak Oil happen?

Unfortunately, nobody is sure of the exact date, as reliable information on oil reserves and plans for new production are not available in the public domain. However, a consensus is forming amongst independent oil experts and oil geologists that the peak will occur between 2006 and 2012, and certainly within the next decade (a few years of hindsight is required in order to confirm the peaking point).

Despite this growing evidence, many governments (including the UK government) still deny that there is a problem. When asked for their estimate of the date of Peak Oil early in 2008, the UK government responded that they didn't have one, and that they felt that supplies of gas and oil to the UK "are sufficient to sustain economic growth for the foreseeable future". Based upon the evidence, we'd disagree.

What does this mean for Leicester?

The principal impact of Peak Oil will be sharply increasing prices for fossil fuels along with increased price volatility. This will seriously challenge the viability of motorised transportation within and serving the city, have a severe impact on the city’s energy-intensive businesses, and on the ability of householders to heat and power their homes. Conventional agriculture is also heavily reliant on energy from oil and other fossil fuels, so food prices are likely to increase significantly.

A further key impact is on the stability of our current financial system, which needs a growing economy to remain viable. Economic growth has been shown to be closely correlated with energy use. Oil shocks in the 1970s triggered recessions in the UK and around the world as the supply of available energy from oil declined. Economists have argued that an impact of Peak Oil could therefore be a profound and long-lasting economic depression.

What should we do?

Transition Leicester believes that the city should be looking to rapidly increase its resilience to increasing fossil fuel prices and a potentially substantial economic downturn, so that as much as is feasible, Leicester can provide for its own essential needs.

This will require a wide range of changes, such as:

  • significantly increasing the quantity of food produced locally using organic agriculture, including growing food within the city wherever possible.
  • developing renewable energy sources within the city.
  • improving infrastructure for cyclists so that the city can be safely navigated by cyclists of all ages.
  • planting food-producing trees in the city, such as fruit and nut trees.
  • undertaking a massive program of energy efficient refurbishment for the city’s dwellings and buildings.
  • redesigning the economy in the city, so that Leicester businesses increasingly use local resources and local labour to provide services to local people

Does Peak Oil mean that we'll manage to avoid dangerous climate change?

Not necessarily, unfortunately. Even though production of oil and gas is likely to decline sharply over the coming decades, there is a significant risk of Governments seeking to maintain current levels of energy use by increasingly using more-polluting fossil fuel sources, especially coal.

If coal production increases to attempt to fill the energy gap, carbon emissions could comfortably reach levels that would virtually guarantee dangerous climate change. In the UK there are already plans to build new coal fired power stations, with the first proposed power station being at Kingsnorth in the south east of England. The consequences of this course of action are spelled out in a letter by climate change researcher James Hansen sent to Gordon Brown in late 2007, urging the Prime Minister to not give permission for new coal fired power stations to be constructed.

Further Reading

Online Reading

Colin Campbell - The End of Cheap Oil
Seminal paper from 1998 outlining the Peak Oil argument
George Monbiot - The Last Straw
Recent article on the UK Government's lack of action on the issue
The Hirsch Report
A major 2005 report commissioned by the U.S. Department of Energy on Peak Oil
The All Party Parliamentary Group on Peak Oil and Gas
This group, founded in June 2007, is made up of MPs and Lords from the UK Government.
Energy Bulletin
An outstanding clearing-house for current information on Peak Oil.
David Strahan's Website
Useful information for Peak Oil beginners and experts alike.
The Oil Drum (europe)
Publishes carefully thought-out articles discussing our energy future.
ASPO, the Association for the Study of Peak Oil and Gas
Authoritative source of Peak Oil information.
PowerSwitch
British site with lots of information and several good primers on the subject.
Peak Oil Blues
All a bit too much? This friendly site is run by professionally trained psychotherapists to help those trying to come to terms with Peak Oil and its impact on their life and plans.

Online Viewing

Peakoil Films
Links to the various Peak Oil films, documentaries and features available online.
Richard Heinberg on One World TV
A 7 minute interview extract in which Heinberg outlines the basics of Peak Oil.
Simmons and Kilduff on CNBC
An American video which clearly highlights many of the basic issues.
Rob Newman's History of Oil
Some light relief with some oil history thrown in.

Books

Richard Heinberg - The Party’s Over
Seminal introduction to Peak Oil
Richard Heinberg - Powerdown
Exploration of strategies for responding to the oil peak
Jeremy Leggett - Half Gone
An introduction to the topic by an environmentalist with an oil industry background
David Strahan - The Last Oil Shock
A highly readable introduction to Peak Oil, with a UK focus

Films

The End of Suburbia
A Crude Awakening
Crude Impact
The Power of Community
Escape from Suburbia


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