Earlier this week George Monbiot wrote a piece in The Guardian entitled “We were wrong on peak oil – there’s enough to fry us all”. I read it, and thought ‘you’ve just not got the point!’
The point that peak oil advocates make is not that we’re running out of oil and other fossil hydrocarbons, but that “peak oil” signifies that the era of cheap oil is over.
Over the last 150 years – since the start of the ‘oil age’ – the average price of oil (in modern money) has been around $10 – $40 a barrel. For nearly 10 years now it has been over $60, mostly well over $60, peaking at nearly $150 in 2008 as the economy crashed. If this crash had not occurred, that peak would almost certainly have been higher.
In our capitalist economy, if something is both in demand and in short supply the price usually rises – and the market responds. This is exactly what has happened. As the oil industry became confident that these higher prices would stay, it began investing in oil sources that it knows will be more difficult – and therefore more expensive – to extract and process.
The modern oil industry has changed. It now has to resort to deep sea drilling and the challenge of Arctic temperatures, and extracts oil and gas from geological structures reluctant to give up their hydrocarbon load without enhanced techniques like fracking and horizontal drilling. The extra energy and technology required to achieve this mean it would not continue if cheap ‘conventional’ oil was still available in the quantities the global economy wants.
There probably is enough oil and gas and coal to ‘fry us all’ (in the words of the article) but this is not news. The expansion of development of these sources, such as tar sands in Canada and shale oils in the US mid-west is what is new. But this is no longer ‘cheap’ oil.
Confidence that higher prices will remain should also help drive forward the investment in renewable energy. However this is not a level playing field.
We know how to run our economy on oil, we don’t on renewable energy – most of which will come in the form of electricity. We have oil refineries and storage tanks. We have thousands of petrol stations and both coal- and gas-fired power stations. We have an enormous fleet of petrol and diesel-fueled vehicles and a retail system that relies on these.
What we don’t have is an electricity grid with high capacity links to where the renewable electricity will be generated. We have still to develop the equivalent energy storage mechanisms comparable to oil tanks. We don’t have electric charging points for the electric vehicles that have not yet been produced. Nor do most UK cities have public transport run on electricity (trams and tube trains are the exceptions).
Without this new infrastructure in place, the whole system costs of changing from fossil fuels to renewables are far greater than sticking with oil – despite its current price. But for how much longer? How long will it be before the next discontinuity in oil prices, and they double or quadruple again?
Much of the infrastructure investment required to become a renewable economy is energy and/or materials intensive. The longer we wait to make this investment, the more costly it is likely to be – and the UK is sadly lagging behind many other countries.
We need to invest now to wean ourselves off our addiction to oil!