Act now on peak oil or curtail mobility, says Commission

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The European Commission's director-general for transport and mobility policy has warned at a conference on peak oil that it would be a "fatal mistake" for the EU to postpone measures to reduce oil dependency.

"If action is delayed, in the not-too-distant future we may be forced to drastically reduce all our mobility and import technological solutions from other part of the world," Marjeta Jager told a Green Party conference in the European Parliament. 

The European Commission's Transport White Paper famously said that "curbing social mobility is not an option".

Peak oil is the point at which half of the world's original oil reserves have been used up and production enters a period of terminal decline, characterised by soaring prices and supply disruptions. 

Despite being initially laughed off by the oil industry, a consensus now holds that the world is reaching – or has just reached – peak oil.

Last week, the chief economist of the International Energy Agency, Fatih Birol, said that peak oil production was actually reached in 2006.

"The existing [oil] fields are declining so sharply that in order to stay where we are in terms of production levels in the next 25 years, we have to find and develop four new Saudi Arabias," he said.

Birol expected oil prices to rise by almost a third in the next three years as a result.

Since the Arab Spring began, oil prices have crashed though the $100 a barrel price ceiling for the first time since the credit crash. But a lack of transparency among oil producers about the scale of their reserves has also fed a more systemic uncertainty.

In February, leaked US cables revealed that Washington fears that oil reserves in Saudia Arabia, the world's largest crude oil exporter, have been over-estimated by around 40%.

Credit bubble resemblance

Jeremy Leggett, the founder of Solar Century, the UK's largest solar solutions company, and a former renewables advisor to the British government, warned the Brussels conference that the peak oil risk paradigm closely resembled the credit bubble shortly before it burst in 2008.

"Our worst-case fear is that this will be experienced as a form of energy famine that – in a 'just-in-time' delivery world – could descend surprisingly quickly," he said.

But Jan Panek, head of the coal and oil unit at the EU's energy directorate, said that 2009's Oil Stocks Directive, which obliged member states to maintain minimum stocks of oil products, had equipped Europe to deal with any immediate oil shortages.

"We have not had many in the past but could have more in the future," he said.

"There are uncertainties about the numbers on [oil] reserves and the availability of oil that are currently in the public domain."

But he declined to comment on how far the official estimates of oil reserves held by Gulf countries, including Saudi Arabia, had informed EU models and contingency planning.

Another panellist, Lord Oxburgh, wryly noted that Saudi Arabia's King Abdullah had ordered new oil discoveries to be left in the ground for future generations.  

"They are going to release it as slowly as possible, at as high a price as possible," he said. "It's the strategy of a wine merchant who has got a vintage."

The greatest damage from peak oil would be felt in the developing world, Oxburgh said.

In 2009, an Oil Stocks Directive revised the European Commission's existing stockholding system. It mandated minimum oil stocks that member states must hold – at around 90 days of average daily net imports or 61 days of average inland consumption – and brought the system into line with the existing rules of the International Energy Agency. It also put in place emergency procedures for use in the event of an oil shortage.

In 2010, Europe spent €210 billion on oil imports, largely because the continent still depended on oil and oil products for 96% of its energy needs. But climate obligations - and the discovery of massive shale gas reserves in the US - are both expected to make oil a less attractive fuel supply in the second part of the decade

By 2020, the EU is committed to a 20% reduction in greenhouse gas emissions - and a 20% increase in the share of renewables in its energy mix, both measures against 1990 levels.

Environmentalists are less enthusiastic about an increase in the use of natural gas, which emits about half as much carbon as coal, but still exponentially more than renewables. Recent research suggests that shale gas may actually emit more climate-changing gases than either coal or oil.         

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