This is a well-researched document. It’s all here: the growing demand for energy within the Middle East, China and India; the scramble for oil in Africa and Central Asia; the growing importance of Russia as a source of oil and natural gas (“EU depends on Russia for 33 per cent of its imported oil and 42 per cent of its gas”); the rise of coal and natural gas as transition fuels, and question over their long term availability; the Deepwater Horizon explosion and subsequent oil slick, and the inherent risks of deepwater operations; the lack of investment in the oil industry; and the latest on unconventional sources of hydrocarbon. As it states on shale gas:
But the full impact is highly uncertain. Production from shale gas wells seems to peak much faster than conventional gas, and data is limited. Assessments of the Barnett wells in the US using horizontal drilling showed that most of the recoverable gas is extracted in the first few years.
Is the US experience set to become a global phenomenon? Some suggest that resources in OECD Europe are large enough to displace 40 years of imports of gas at the current level, assuming recovery rates in line with those in North America. Exploration is already under way in Europe (including in France, Germany, Poland and the UK) to assess this potential.
The document even enters into some speculation over oil prices, quoting a range of views. The highest, and most immediate, oil price is suggested by Chatham House’s own professor Paul Stevens: “A supply crunch appears likely around 2013 … given recent price experience, a spike in excess of $200 per barrel is not infeasible.”
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This is highlighted in the document and referred to in Dr Richard Ward’s introduction. It subsequently states that while there is a “huge variety of opinion on how high the oil price will rise, and when it will reach these figures, most commentators agree that the trajectory is upwards”.
An interesting aside on the importance of fuel to the modern economy comes from a brief flashback to a September 2000 fuel tax protest in Britain, during which an informal coalition of truckers and farmers blockaded oil depots around the country, stopping deliveries to gas stations. Sustainable Energy Security states:
As supermarkets tend to keep only two-three days worth of perishables on their shelves, a transportation fuel disruption lasting just a few days would affect availability. This happened during September 2000 when protests over fuel price rises prevented the distribution of fuel from depots to the rest of the country. Supermarkets were obliged to put the government’s priority user scheme in place at its petrol stations. They also faced “panic-buying” which in some cases ran down stocks before replacements arrived. Several stores decided to implement rationing of basic goods like bread and milk. Companies that prepare and deliver fresh goods to retailers daily were particularly vulnerable. UK food group Geest announced that its deliveries would be unlikely to reach the supermarkets if fuel supplies were not restored in a matter of days. The chief executive of Sainsbury’s wrote to the Prime Minister to warn that the petrol crisis was threatening Britain’s food stocks and that stores were likely to be out of food in “days rather than weeks”. Fuel disruptions in other parts of the world also affects transportation of goods to markets, and higher energy prices could push up the price of basic food commodities, such as rice, soya and wheat - as they did in 2008.
(I’ll declare an interest: working as a journalist in Derby, England, at the time, I was given a pass to enable me to buy fuel - most cars were off the road after only a couple of days. I guess the government wanted to keep the presses running; if we’d stopped printing, people would have thought civilisation was ending … And yes, there was panic buying; I seem to remember bread ran out first, then milk.)
Time and space considerations prevent me from looking at the climate change sections in Sustainable Energy Security, but needless to say, they are equally well put together.
I cannot recommend this report highly enough. It’s a complete introduction to the whole peak debate. Sustainable Energy Security is an essential, must-read document. In the words of Rob Hopkins of Transition Culture it’s “the Hirsch Report for British business … and provides the perfect case for the work that Transition Training and Consulting are now doing with businesses.” (Now that’s damning it with faint praise, considering the Hirsch report is one of the most neglected government documents about a contemporary issue of all time.)
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I’ll leave you with just two of the document's conclusions:
Traditional fossil fuel resources face serious supply constraints and an oil supply crunch is likely in the short-to-medium term with profound consequences for the way in which business functions today. Businesses would benefit from taking note of the impacts of the oil price spikes and shocks in 2008 and implementing the appropriate mitigation actions. A scenario planning approach may also help assess potential future outcomes and help inform strategic business decisions.
Energy infrastructure will be increasingly vulnerable to unanticipated severe weather events caused by changing climate patterns leading to a greater frequency of brownouts and supply disruptions for business. This throws out a critical challenge to energy providers, investors and planners in terms of choosing the location of new infrastructure and fortifying existing plants and networks. Those businesses for which uninterrupted access to energy is of fundamental importance should actively consider investing in alternative energy supply systems.
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