Are we heading for an Oil-Crunch?

worldofoilbybarbaradodukLeading environmentalists, major national companies and industry experts have increased calls for more action on what has been called the “oil crunch”. Environmental entrepreneur Jeremy Leggett wrote in The Guardian recently about how we are heading for an oil crunch within the next decade. Leggett heads up the UK Industry Task Force on Peak Oil and Energy Security and has warned how we could see the same crash that happened to the banks happening with global oil reserves. The task force has claimed that oil production will hit its peak in 2015 after which we will see a rapid decline in production whilst demand continues to increase, a claim supported by major UK companies such as Virgin and Stagecoach. The report by the task force highlights concerns that draw parallels with the causes of the credit crunch. They are concerned that there may be significant flaws in the oil reserve estimates by OPEC countries, similar to the flaws in the value placed on “toxic loans”. This would mean that demand would be even higher than estimated and could cause oil production to peak even earlier. The UK Government’s line on this has remained the same; that there is enough oil for the next 40 years and there is no crisis on the way, though I’m sure that’s what the Treasury and Bank of England were saying to the few economists that predicted the crash.

So what would an “oil crunch” mean? Well, as supply plummets and demand continues to increase, countries dependent on importing oil, such as the UK, would initially see increasingly large price rises, particularly for energy and fuel. On a global scale, countries that produce a lot of oil would become increasingly protectionist, particularly countries with histories of isolationist foreign policy such as the USA, China and Russia. This combined with neo-liberal (read ‘corporate influenced’) government and free-market economics pushes larger countries into conflict with oil-rich countries such as those in the Middle East.

A pretty dire future I think you’ll agree.

So, if we are plummeting towards this inevitable distopian future, is there any point in doing anything? Well, yes, or at least if we don’t do anything and we do continue to burn oil for the next 40 years, it won’t be the lack thereof that is a our biggest problem, we can kiss goodbye to staying below a 2oC rise in global temperatures. Far from being inevitable this is, in fact, evitable, very evitable. The answer is simple but, like cleaning up any mess, implementing the solution will require a huge effort and a lifestyle switch. What is the answer? Simple, we stop using oil, and there are a great many ways in which we can do this. In the UK, for example, the report from the task force suggests ending the, quite frankly absurd, £9billion tax break on fuel for domestic flights (which in a country the size of the UK are ludicrous anyway) and instead pumping it into public transport and boosting the renewable energy sector. If the subsidies that go into fossil fuel energy were put into developing sustainable, decentralised renewable energy, peak oil wouldn’t be anywhere near the problem that it is likely to be. If ever there was a good reason to look into fitting solar panels onto your roof, this is it.

And yes, I have noticed the obvious self-interest of SolarCentury owner Jeremy Leggett warning us of the perils of relying too much on oil, doesn’t make him any less right though.

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