UK govt to prepare Oil Shock Response Plan

Not sure if this is 'better late than never' or 'closing the stable door after the horse has bolted'... Anyway, it is at least promising that the UK govt has finally admitted that peak oil is something that it needs to respond to:

Energy and Climate Change Secretary Chris Huhne yesterday agreed to develop an 'Oil Shock Response Plan', following a meeting with the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES).

The group, which was formed by Arup, B&Q, Buro Happold, Solarcentury, SSE, Stagecoach and Virgin, and campaigns for greater awareness of the economic threat presented by dwindling oil supplies, said that the meeting had proved "constructive" and had helped to advance the energy security dialogue.

source

Of course, what's needed is not just a plan, but for it to be put into action immediately. Perhaps the government didn't notice that we've already had the third oil shock, with prices peaking in 2008, and we've actually having a fourth one already with prices spiking close to the same levels a few weeks ago.

The spike in 2008 contributed to causing the financial crash by pushing up prices of daily necessities to the point that sub-prime mortgage holders had to default (though that day would have come at some point anyway), but that arrived at the end of a period of strong economic growth. The current price spike arrives as the UK barely scrapes out of recession and during a period of government spending cuts and rising taxes, so I dread to think what the outcome will be.

Let's hope the UK government will make this a matter of urgency, but at the same time this is too important to be left to government. It's up to each individual and family to recognise that there's a different future ahead, where energy is much more expensive and in short supply, economic growth is a distant memory and bank collapses are the norm. Preparations need to be made. It's time to become less materialistic and get our enjoyment of life from the things that have been around since before we had oil: family, friends, good food, beer and live music. Sure, there will need to be some drastic changes too, not all of them easy, but the later we leave the smaller the chance of us holding on to the things that make life worthwhile.

Mike

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Humanity can and must do more with less: UNEP

Today the United Nations Environment Programme (UNEP) launched a new report on decoupling economic growth from natural resource use and environmental impacts.

The press release says:

Already the world is running out of cheap and high quality sources of some essential materials such as oil, copper and gold, the supplies of which, in turn, require ever-rising volumes of fossil fuels and freshwater to produce.

When it comes to oil, the report says:

Oil production has already peaked and declined in the majority of individual oil producing nations, and in large regions such as North America and Europe (Hirsch, 2008). Thus ‘peak oil’ is an empirically verifiable phenomenon (Sorrel et al., 2009, p.vii). Evidence suggests that the world is rapidly approaching a world oil production peak. Global new oil discoveries reached their height in the 1960s and have been on a declining trend ever since (see Figure 2.10), despite remarkable improvements in exploration, drilling and extraction technologies, and episodes of high prices in the 1970s and 2000s (ASPO, 2009).

Several scenarios are covered in the report, but the key point made is that 'business as usual' cannot continue - there simply isn't enough raw material on the planet for that to happen, whether that's oil, gas, metal ores or topsoil. One scenario considered includes a contraction in resource use by developed countries of two thirds, while other countries remain the same. The report acknowledges that this scenario is so restrictive that no politician will ever accept it as a goal, yet it would still leave CO2 emissions at the same level as in 2000, not to mention the resources needed - which simply won't be there.

A few challenges are identified in the press release that relate to the oil debate:

• Policymakers and the general public aren’t yet convinced of the absolute physical limits to the quantity of resources available for human use.
• The best and most easily accessible mineral ores and fossil fuels are being exhausted. New sources are generally more remote and of lower quality. Finding and extracting them takes more energy and increases the environmental impact. About three times more material needs to be moved for the same ore extraction as a century ago, with corresponding increases in land disruption, water impacts and energy use.
• Resource extraction increasingly occurs in countries with lower legal and environmental standards, meaning “environmental impacts per unit of extracted material might become more severe.”
• A “rebound” effect often leads to increased consumption after energy or manufactured goods become more efficient as consumers take advantage of cost savings to buy something else, or use a device more often – for example: putting more kilometres on a fuel-efficient car.

There are two key issues that come out of it for me:

1. Economic growth cannot continue in the long run. The report does mention this in a roundabout way, but what it comes down to is that if people get more wealthy they consume more resources, whether it’s a larger house/car, eating more meat, going on more holidays, etc. This clearly isn’t possible with finite resources, as the report makes clear. However, this doesn’t mean we can’t redistribute what we have globally, and within nations, to deal with poverty. It’s a hard one for a politician to sell though!

2. The second point isn’t mentioned in the report. It is that if global economic growth (in a physical sense) cannot continue, then our system of money will break down at some point. This is because debt needs interest paying on it, and the money to do this can only come from growth. If we have economic growth in a financial sense without any growth in a physical sense, that’s just inflation, and the money system still falls apart eventually. There’s an excellent video covering this topic here. Once again, it’s not a topic that’s easy to convince voters on, even if it is an inevitability that we will have to shift (or collapse...) to a new system of money at some point. There are a lot of vested interests that will be hurt by the shift/collapse when it happens. I suspect this is part of the reason commodity prices in general are so strong – people with money to invest are realising that their money is safer in ‘stuff’ then cash or stocks.

As Mark Twain said

"Buy land. I hear they're not making it any more."

...but make sure it's well above sea level and not too far from home, given the contents of this UNEP report!

The full report will be available for downloaded here soon.

Mike

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Update on UK gas prices - going up again soon

In a post a couple of weeks ago I highlighted some issues with UK gas supply that were pointing to likely further price increases. Well, now the news is out:

The owner of British Gas, Centrica, has warned that customers may face higher energy bills.

Centrica said "end-user prices" did not reflect the price it was paying for gas on the wholesale market.

...

"In the UK, the forward wholesale prices of gas and power for delivery in winter 2011/12 are currently around 25% higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment," the statement said. Full story

So there you go, more expensive gas, coming soon to a meter near you. If that concerns you, take a look at some pages on my other blog for ideas to cut your bills:

• Installing the wood stove
• Plumbing and testing the wood stove
• Installing solar water heating
• Insulating the cavity walls
• Insulating the loft

Mike

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