UK Government to develop Oil Shock Response Plan

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.

Specifically, Huhne agreed that DECC and ITPOES would work together on peak oil threat assessment and contingency planning.

Details on the collaboration are yet to be agreed, but the group is expected to be tasked with modeling some of the impacts that could result if, as growing number of experts fear, global oil supplies peak within the next five years.

Members of the taskforce said they would also explore steps that would need to be taken now to protect the UK economy “if we knew that the oil price would soar to $250 in 2014”.

Oil prices have remained above $100 a barrel for much of the past few months, driven by rising demand and supply fears related to continuing unrest in Libya and the Middle East.

The elevated prices yesterday prompted the International Energy Agency to take the unusual step of calling on the OPEC cartel to increase production in an effort to bring down prices and protect the fragile global economic recovery.

However, there are growing numbers of experts in and outside the oil industry who have voiced fears that there is insufficient spare capacity for oil producers to respond easily to growing demand, with even figures such as IEA chief economist Fatih Birol suggesting that global oil supplies could peak in the near future.

The taskforce members also revealed that Huhne had called on them to present their concerns to the Chancellor and Treasury – a meeting that the group is now seeking.

A DECC spokesman told BusinessGreen that the department will publish a formal “call for evidence” from interested parties in the near future as it works to develop the new Oil Shock Response Plan.

Business Green