Peak Oil in Australia

ABC’s Four Corners program had an excellent story last night on Peak Oil: what flows from the fact that world oil production is peaking and that the ‘low hanging fruit’ of cheap and easily accessible oil is running out?

The main messages I took away:

• Global oil production will inevitably peak and start declining in the coming years or few decades at the most;
• There is still plenty of oil but what remains is getting more and more expensive to extract;
  Some of that increased expense will be offset by improving technologies as higher oil prices encourage investment in oil production;
• Oil consumption is rising;
• Oil prices will rise;
• Rising oil prices will make alternatives commercially viable. These alternatives include biofuels, tar shales and coal liquefaction (renewable energy and nuclear didn’t get much of a mention). These alternatives all have disadvantages, including serious environmental impacts.
• There is a substantial lead time in developing alternative liquid energy sources. This leads many analysts to fear that we won’t respond quickly enough to the peak oil problem, possibly leading to large and sudden price hikes, shortages and economic dislocations like those seen in the 1970s oil shocks, but potentially on a larger scale.
• Working on the demand side of the issue – ie, reducing our need for oil consumption through more efficient technologies and urban planning – is necessary to reduce the likelihood and severity of economic shocks.

After seeing some of the alternatives to oil such as oil sands / tar shales and coal liquefactions, and their destructive environmental impacts, I take David Roberts’ point that peak oil is not a silver bullet that will save us from global warming via reduced oil consumption. It’s probably more a crossroads, where we can choose a renewable-energy-dominated or a coal-dominated energy future. My guess is that we’ll muddle through with a bit of both – things won’t be as bad as we fear but nor will we grasp the opportunity to make much of a transition out of fossil fuels and into renewables.

Nevertheless, there’s certainly a lot of commonality to the peak oil and global warming issues. And I think that a carbon tax – which will encourage investment in energy efficiency and renewable energies – and discourage consumption of fossil fuels and greenhouse gas emissions – is looking more and more sensible from an energy security perspective as well as an environmental one. The single most effective way to position ourselves for a future where energy is more expensive must be to price it more appropriately now.