by Warren Karlenzig
A new report by a United Kingdom industry taskforce predicts steep oil price rises and gasoline supply shortages by 2014-2015, which will put the global economy at similar risk to the 2007-2008 rapid rise in oil prices that helped trigger the Great Recession.
"The time period would be 2014-2015 when the oil market would be starting to experience rapidly rising prices and tightening oil supplies...It is notable that the CEO of Total, Christophe de Margerie, is already warning of such an outcome in the 2014/15 period," says the report, "Industry Taskforce on Peak Oil & Energy Security," funded by Virgin Group, Arup Engineering, Foster and Partners, and Scottish and Southern Engineering.
What can cities, businesses and individuals do to prepare for such energy price volatility, buy hybrids? Actually, the report asserts, "there is real danger that the focus on technological advances in cars is making consumers and government complacent."
More urgent steps need to be taken by policymakers in particular to avert this impending crisis:
With fast-growing demand for oil in developing economies such as China (which overtook the US in 2009 for total automobile sales), India and the Middle East, developed nations in North America and Europe need to consider wholescale industrial and societal shifts.
The United State and Canada in particular should start reducing oil dependency now in preparation for oil price volatility and possible supply disruptions that would force such shifts without warning, with dire consequences for the economy, nationally and locally. Many cities (New York, Toronto, Vancouver, Washington, D.C.) are already somewhat prepared to make this shift because of infrastructure for public transit and other oil-free mobility options.
The world is heavily dependent on 120 oil fields that account for 50 percent of world production, and contain two-thirds of remaining reserves of fields in production. New discoveries of oil fields off Brazil's coast, under the Arctic and elsewhere, will not be enough to replenish the "drawdown" that is occurring. Besides, many of these fields take investments that require oil to be priced over $100 or $120 a barrel, so they will not be producing for a number of years after such investments are made: in other words, far beyond 2015.
"The challenge is that if oil prices reach the levels necessary to justify these high-cost investments, economic growth may be imperiled," says the Industry Taskforce on Peak Oil and Energy Security.
Another so-called energy "ace in the hole," oil sands deposits in Canada, are not a viable option. Oil sands produce at least three times the amount of atmospheric carbon over conventional oil when they are processed and used, which would exacerbate global climate change significantly, while also fouling the region's water supply.
What is being raised by this report is that the era of cheap oil is over, and that the consequences will be ugly, unless we start preparing for this profound change.
"Don't let the oil crunch catch us out in the way that the credit crunch did," said Virgin CEO Richard Branson and other corporate executives in the introduction to the report
Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.
Interesting article, right on spot!
In Denmark, where I come from, the decline of national oil & gas from the North Sea has finally caught the public attention, including media. The reply from DONG, the major oil&gas player: It will be easy to level off the decline from oil and gas bought on the world market. Yeah, right - and to what price??