Peak Oil is You

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Page added on November 28, 2010

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Aleklett on Peak Oil and Global Warmingl


The SMH has an article on ASPO President Kjell Aleklett’s Australian tour, looking at global warming scenarios considering peak oil and quoting ASPO Australia and TOD ANZ’s Phil Hart – Emissions scenarios are based on flawed assumptions, says energy expert.

The concept of a peak – maximum production – does not mean a date after which the world soon runs out of fossil fuels. It’s about flow rates. ”We are not running out,” says Aleklett. ”But we have a limit to supply. What we’re running out of is the possibility of increased usage.”

Aleklett, a long-time critic of the International Energy Agency’s forecasts, is looking increasingly on the money as demand figures have been wound back in the IEA’s 2010 World Energy Outlook, released this month.

The IEA stopped short of calling a peak in oil production but did lower its consumption forecasts.

In 2009, the IEA stressed the importance of oil for economic growth and concluded that 106 million barrels a day (mb/d) would be required by 2030, about 20mb/d higher than today. In 2010, the IEA only predicts 99mb/d by 2035 and avoids any discussion of economic growth.

”We can interpret this as meaning desired economic growth is not possible,” says Aleklett. He means it.

Aleklett believes high oil prices – they peaked at $US147 in 2008 – helped trigger the global financial crisis, when oil-dependent home owners in the outer suburbs of America’s cities began defaulting on their loans.

Peak oil will limit economic growth: the IEA now sees OECD oil consumption falling 15 per cent by 2035. OECD nations, including Australia, will have to revise down their consumption estimates. The Australian Bureau of Agricultural and Resource Economics has yet to bring its forecasts into line with the IEA. But Australia’s oil production is declining rapidly – by the end of the decade we could be reliant on imports for 80 per cent of consumption, says former Shell Australia and Australian Coal Association executive Ian Dunlop.

Where will that oil come from? Can we outbid the likes of China and India?

”The government’s assumption there will always be oil available on the market is nonsense, unless we’re willing to pay a fortune,” says Dunlop.

BHP Billiton’s latest quarterly crude oil production figures showed drops across the board, year-on-year, propped up only by the new Pyrenees field in Western Australia.

ABARE’s Energy Resource Assessment last year listed just two other new Australian oil projects, including Thai operator PTTEP’s Montara/Skua field – site of last year’s disastrous spill, which the government finally responded to this week.

Local ASPO spokesman Phil Hart says ABARE is in ”economic fairyland”, believing demand will always lead to supply. The same problem underpins the IPCC’s scenarios, which are modelled by economists who ”assume business as usual is possible”.

Ultimately it is irrelevant whether we have enough fossil fuels to hit 6 degrees of warming. Global temperatures are already too high at 0.8 degrees above pre-industrial levels, and climate change is already dangerous. Recent Potsdam Institute analysis concluded 75 per cent of the world’s fossil fuel reserves must be left in the ground if we are to keep warming to 2 degrees.

”There’s more than enough coal, oil and gas to get us into trouble,” says Hart. We need to stop burning fossil fuels now (and, the implication is, avoid wasting billions on carbon capture and storage, which uses extra energy and will only accelerate resource depletion) in favour of renewables.

The ramifications are profound, particularly for infrastructure spending: we need to electrify transport, and shift from private to public transport. Aviation may be a sunset industry. No more toll roads with wildly optimistic demand projections. No more hideously expensive airports.

Aleklett says politicians should welcome the concept of peak oil. ”Peak oil should be politicians’ best friend,” he says. ”It is something they cannot fix.”


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