Peaked oil?

Steep decline in oil production brings risk of war and unrest, says new study

· Output peaked in 2006 and will fall 7% a year
· Decline in gas, coal and uranium also predicted

Ashley Seager
Guardian October 22, 2007

World oil production has already peaked and will fall by half as soon as 2030, according to a report which also warns that extreme shortages of fossil fuels will lead to wars and social breakdown.

The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected. The report, which predicts that production will now fall by 7% a year, comes after oil prices set new records almost every day last week, on Friday hitting more than $90 (£44) a barrel.
"The world soon will not be able to produce all the oil it needs as demand is rising while supply is falling. This is a huge problem for the world economy," said Hans-Josef Fell, EWG's founder and the German MP behind the country's successful support system for renewable energy.

The report's author, Joerg Schindler, said its most alarming finding was the steep decline in oil production after its peak, which he says is now behind us. The results are in contrast to projections from the International Energy Agency, which says there is little reason to worry about oil supplies at the moment.

However, the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels - equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.

Global oil production is currently about 81m barrels a day - EWG expects that to fall to 39m by 2030. It also predicts significant falls in gas, coal and uranium production as those energy sources are used up. Britain's oil production peaked in 1999 and has already dropped by half to about 1.6 million barrels a day.

The report presents a bleak view of the future unless a radically different approach is adopted. It quotes the British energy economist David Fleming as saying: "Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society."

Mr Schindler comes to a similar conclusion. "The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life."

Jeremy Leggett, one of Britain's leading environmentalists and the author of Half Gone, a book about "peak oil" - defined as the moment when maximum production is reached, said that both the UK government and the energy industry were in "institutionalised denial" and that action should have been taken sooner. "When I was an adviser to government, I proposed that we set up a taskforce to look at how fast the UK could mobilise alternative energy technologies in extremis, come the peak," he said. "Other industry advisers supported that. But the government prefers to sleep on without even doing a contingency study. For those of us who know that premature peak oil is a clear and present danger, it is impossible to understand such complacency."

Mr Fell said that the world had to move quickly towards the massive deployment of renewable energy and to a dramatic increase in energy efficiency, both as a way to combat climate change and to ensure that the lights stayed on. "If we did all this we may not have an energy crisis."
He accused the British government of hypocrisy. "Tony Blair and Gordon Brown have talked a lot about climate change but have not brought in proper policies to drive up the use of renewables," he said. "This is why they are left talking about nuclear and carbon capture and storage. "

Yesterday, a spokesman for the Department of Business and Enterprise said: "Over the next few years global oil production and refining capacity is expected to increase faster than demand. The world's oil resources are sufficient to sustain economic growth for the foreseeable future. The challenge will be to bring these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy."

The German policy, which guarantees above-market payments to producers of renewable power, is being adopted in many countries - but not Britain, where renewables generate about 4% of the country's electricity and 2% of its overall energy needs.

Energy Watch Group website for full text and diagrams of their report:
http://www.energywatchgroup.org/Oil-report.32+M5d637b1e38d.0.html

International Energy Agency reports: http://www.worldenergyoutlook.org/

King Abdullah quotation re oil (see EWG report) : http://www.csmonitor.com/2007/0815/p09s02-coop.htm (actually made in 1998)

Robelius thesis: Giant Oil Fields - The Highway to Oil: Giant Oil Fields and their Importance for Future Oil Production 2007: full text: conclusion is that peak oil may be between 2008 and 2018.

End of low-carbon emissions?

China’s drive for wealth means end of our low-carbon dreams

The Times 17 October 2007

Hu Jintao wants to make every Chinese twice as rich by 2020. He has done it once – in just five years, income per capita doubled to $2,000 (£983) - and the only obstacle in the Chinese President’s path is the fuel needed to stoke the boiler in China’s locomotive.

The president needs more copper, iron ore, zinc and natural gas. Above all, he needs more coal to keep the power stations humming nicely and more oil for Chinese cars and lorries. China accounts for more than a third of world demand for coal and the price in Australia soared this year as the People’s Republic switched from being an exporter to being an importer. If Mr Hu had a message for the world in his address to the Communist Party National Congress, it was this: we will burn our coal and, if we have to, we will burn yours, too.

What does this mean? Put bluntly, it means that the Kyoto treaty on greenhouse gas emissions is dead and so is any prospect of persuading Beijing to bind itself to other curbs on carbon emissions. We can stop kidding ourselves that China will sign up to any green thingy that hinders his party’s ten-year plan to get rich quick. Instead, the ravenous demand for minerals and metals will continue and the desperate land grab by Chinese state companies in their pursuit of resources in Central Asia, Africa and Canada will become more politically embarrassing.

Until now, we in the West have been able to sit back and watch the global energy game passively on our Chinese-made flatscreen television sets. We could pretend that wind farms and wave machines could really make substantial contributions, that carbon trading could somehow make the cost of green energy disappear. We did not understand that the real cost of our affluent, energy-intensive lifestyles was being defrayed by sweated labour in a Chinese factory. While the price of clothes, fridges, TVs and toys was plummeting, we could ignore that petrol, transport and even bread and milk were in the grip of an inflationary spiral.

That is about to change because China’s rate of consumption is beginning to have internal consequences for the People’s Republic. Skilled labour is becoming a more scarce commodity for Chinese businesses and the cost of living is bearing down on Chinese consumers with increases in fuel and food prices. Inexorably, Chinese inflation will feed through into the cost of goods that China sells to the world.

That means that competition for resources will ratchet up in intensity. In Europe, we have not even begun to consider the consequences for our half-hearted strategy of pursuing a low-carbon economy. In an effort to rein in the cost of electricity, British power generators have been switching from natural gas to coal, traditionally a cheaper fuel. However, it is rapidly losing its lower-cost allure, the European price having doubled to $100 per tonne. Even so, analysts at Société Générale calculate that the cost of carbon permits is still so low that, on the basis of current gas and coal prices, it remains cheaper to burn coal than to switch to cleaner natural gas.
For Mr Hu, this is a race for prosperity. Of course, he said a lot of other things about “the excessively high cost in resources and the environment” and about a restructuring of the economy away from heavy industry to services and high technology. That may be a sensible objective in Shanghai, where inflation in manufacturing wages is already causing problems, but a doubling of the incomes of peasants in western China will not be achieved by turning them into estate agents. Industrialisation will move west and that has been the Communist Party’s objective for more than a decade. Mr Hu knows that disparities in wealth between east and west are a huge political risk. The party needs growth if it is to survive for another decade and that means it must build homes, factories, hospitals and sewage plants.

Removing huge disparities in wealth means a massive acceleration in the burning of hydrocarbons. The four great energy companies of the West – ExxonMobil, Shell, BP and Total – have quietly turned their backs on the low-carbon option. Alternative technologies simply do not deliver the power required to achieve the economic growth targets of China and India. These companies are investing tiny sums in alternative energy. They know full well that the nations of the West depend heavily on the profits, taxes and dividends that accrue from an efficient hydrocarbon economy. A failure to invest in oil and gas extraction will leave Europe and America poor, technologically disabled and unequipped financially to cope with climate change.

The feeble intellectual response of Europe and America to this energy challenge is becoming a matter not of concern but alarm. The use of food crops for biofuels, the hobbling of energy companies with the obligation to use unreliable and expensive alternatives and the lack of investment in nuclear power is frightening.

Those whom the gods wish to destroy, they first make mad. It is not in our power to stop the Chinese locomotive; we should leave our fantasies behind, acknowledge that carbon emissions will continue to grow and plan accordingly.