June 26, 2008

High Fuel Prices – Get Used To It!

The latest edition of New Scientist magazine just landed on my desk. The cover shows a barrel of oil morphed into a bomb and proclaims "Oil Shock – You ain't seen nothing yet". This issue includes three articles about peak oil.

The subhead in the print edition of the editorial is

We can no longer kid ourselves that our addiction to oil is sustainable

The conclusion of the editor is that:

We are presented with a choice: use the incentive created by high oil prices to push our transport systems towards low-carbon technologies, or remain at the mercy of speculators, saboteurs and the economic uncertainty that comes with high energy prices

Tailpipe CO2 accounts for some 17 per cent of the world's energy-related emissions and is set to nearly double by 2050, but we're doing little to reduce it. We know from opinion polls that people want cleaner cars. We also know that many countries, especially the US, are concerned about their over-reliance on imported oil.

Democratic presidential candidate Barack Obama has suggested a windfall tax on oil companies, but perhaps a more constructive approach would be to compel the companies to invest this money in clean technologies. “Oil companies are investing in green technologies but, like the car companies, they may need an extra push”.

Such measures may seem extraordinary, but we live in an extraordinary time. Preparing for a world without oil is a colossal task, for which we will need a commitment to change and to take bold action.

Elsewhere in the issue Matthew R. Simmons, one of the world's leading experts on peak oil and author of the book “Twilight in the Desert", concludes that pumping more oil won't get us out of our current mess.

On 1 February 2006, the day after his state of the union address, President George W. Bush was discussing his 2006 agenda with the press when he made one of the most far-reaching statements of his presidency. "America," he declared, "must end its dependence on oil. When you're hooked on oil from the Middle East, it means you've got an economic security issue and a national security issue."

Based on the best data on country-by-country oil production, the chances are high that, in practical terms, sustainable global oil output did indeed peak in 2005.

The bottom line is that the US must now wean itself off oil and also help to teach the rest of the world how to successfully and rapidly retreat from its addiction to the stuff. How well the world does in beating a hasty and forced retreat from oil consumption will very likely determine whether the remainder of the 21st century will be relatively peaceful. The stakes could not be any higher.

As if all this isn't gloomy enough for you a long article by Ian Sample, science correspondent for The Guardion newspaper, tells us that:

Bankers Goldman Sachs and Morgan Stanley have both suggested that the crude oil price could rise from the high of $139 a barrel to $200 or more, while the financial speculator George Soros predicts that rising oil prices could send the US economy into recession.

According to Cutler Cleveland, director of the Center for Energy and Environmental Studies at Boston University:

Finding a replacement fuel for transport is the biggest challenge. So far all the alternatives have hit the skids. For example, hydrogen, which could potentially replace oil as a green fuel if made using renewable sources of energy, has storage and distribution problems. While biofuels, which could be an easier replacement for fossil fuels, require feedstocks that compete with food crops for water and agricultural land. "To get these alternatives close to what oil can do, you have to invest a lot of money", something most governments and energy companies have done reluctantly, and at pathetically low levels. "These aren't insurmountable problems, but they suggest the transition has some formidable challenges"

So there you have it. Get used to high fuel prices at best, and a recession at worst if George Soros' fears are realised

P.S. The online version of New Scientist only allows subscribers to see the full version of most articles. The links above will only show the first couple of paragraphs if you're not a paid subscriber.

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Comments on High Fuel Prices – Get Used To It! »

June 28, 2008

CherylTheWriter @ 5:28 pm

This is only too true. Thankfully, at least some of big oil's profits are being invested in greener energy sources; Shell and BP are both financing wind farms in West Texas and off the Galveston coastline. See http://www.247wallst.com/2008/04/west-texas-wind.html and http://www.renewableenergyworld.com/rea/news/story?id=38618.

However, lowering worldwide dependence on foreign oil will not bring peace in the Middle East. Their entire economy is centered on this one commodity, and if nobody buys it, their finances will soon crater.

I'm bookmarking your blog to keep in touch.

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