Peak oil could hit soon, report says

Energy Matters0


A report by the UK Energy Research Council (UKERC) said worldwide production of conventionally extracted oil could “peak” and go into terminal decline before 2020 – but that the government was not facing up to the risk.

Falls in production will lead to higher and more volatile prices, and could encourage investment in even more polluting fossil fuels, such as tar sands, which “need to stay in the ground” to avoid dangerous climate change as a result of carbon emissions, the researchers said.

The new report said there was too much geological, political and economic uncertainty to predict an exact date for peak oil, which would not lead to a sudden decline but a “bumpy plateau” with a downward trend in extraction.

But Steve Sorrell, chief author of the report, said while those who forecasted an imminent decline had underestimated oil reserves, more positive forecasts suggesting oil production will not peak before 2030 were “at best optimistic and at worst implausible”.

The world has used less than half of the planet’s conventionally extracted oil, but the remaining resources will be more difficult and expensive to get out of the ground, slowing production and increasing prices of crude.

With exploitation of the world’s reserves running at more than 80m barrels a day, even major new discoveries such as the oil fields recently found in the Gulf of Mexico by BP would only delay a peak by a few days or weeks, the report said.

Robert Gross of UKERC said: “The age of easy and cheap oil is coming to an end. It doesn’t suddenly come to an end; obviously it’s a gradual change. But we’re moving away from easy and cheap oil to increasingly difficult and expensive oil.”

The public should expect to see more higher and more volatile petrol costs in the future, with long-distance travel becoming pricier.

Britons should invest in the most energy-efficient vehicles and put pressure on the government to take the issue seriously, the researchers urged. With long time-scales and large investment needed to move away from a reliance on crude oil – particularly in the transport sector, which uses the lion’s share of fossil fuel – the report said governments needed to take action now.

Sorrell said the UK government had no contingency plans for oil peaking before 2020, but officials needed to increase and speed up measures already being taken to cut climate emissions, such as improving vehicle fuel efficiency, shifting to electric cars and investing more in public transport.

Though high oil prices could encourage investment in renewables and technological changes, they could also do the same for more polluting and energy-intensive forms of oil. These include tar sands, where extraction of fuel becomes viable when the oil price hits around $70/barrel – its current level – and converting coal to a liquid, which requires a great deal of energy.

“Most of these unconventional resources need to stay in the ground, but [there are] such strong incentives to exploit them,” he said.

The consequences in terms of carbon emissions of unconventional sources of oil could be “catastrophic”, Gross said.

“The danger is, high oil prices push us into high carbon resources just as much as they might help push us towards renewables. The challenge for policymakers is to make sure, on a global scale, that that isn’t the response to more difficult and expensive oil.”

A spokesman for the Energy and Climate Change Department said: “Already, our climate change, energy efficiency and energy security policies outlined in the UK low carbon transition plan are not only reducing the UK’s carbon emissions, but are consistent with the need to reduce our use of fossil fuels.

“This will help to ease demand for oil in the UK and internationally. In addition, the UK government is investing and supporting research on renewable and clean transport technologies – which is the UK sector that consumes most fossil fuels.”