by Russel Norman
From ABC Radio in OZ. Transcript:
COLVIN: One of the Federal Government’s top infrastructure advisers is warning of an oil crunch which could send the global economy spiralling back toward recession.
Curtin University’s Professor Peter Newman is on the Government’s Infrastructure Australia Council. He says peak oil – when demand outstrips dwindling supply – has already hit but the global downturn has kept prices low.
Professor Newman even blames oil for causing the global recession in the first place. And he’s not alone. It’s an issue being taken seriously by some local councils which have drawn up peak oil contingencies.
Jeff Waters reports.
JEFF WATERS: It was a theory which emerged in the 1990s. Proponents of the peak oil scenario said the cost of oil and therefore petrol would rise exponentially in the first decade of this century when increasing demand outstripped finite supply. With oil now hovering at about $US85 a barrel it doesn’t seem to have happened – at least in the original timeframe.
But Curtin University professor, Peter Newman, who’s a Federal Government adviser on the Infrastructure Australia Council says we’ve already reached peak oil back in 2008 when it spiked at around $140 a barrel and sent petrol prices soaring.
PETER NEWMAN: Peak oil did happen I believe in 2008. And it didn’t happen because some oil-exporting country had a revolution or something. It just happened because you couldn’t produce enough to meet the demand.
JEFF WATERS: Professor Newman largely blames the global financial crisis on oil prices.
PETER NEWMAN: Subprime mortgages were mostly out on the urban fringes miles away from work. People had to drive. And when the price of fuel tripled in American cities they couldn’t pay their mortgages.
JEFF WATERS: As the global economy has strengthened in recent months so has the oil price. Professor Newman says it doesn’t bode well for recovery.
PETER NEWMAN: As the demand increases again the supply crunch will happen and the price will go up.
JEFF WATERS: Professor Kjell Aleklett is the Swedish-based president of the Association for the Study of Peak Oil and Gas. He’s in agreement with his Australian counterpart.
KJELL ALEKLETT: The fact is that we are producing less oil now than we did in 2008. So just now we have 2008 as the peak year for peak oil.
JEFF WATERS: Professor Aleklett says he thinks the world will find a way around the problem simply because it’ll grind to a halt if it doesn’t.
KJELL ALEKLETT: I’m one of those people that believe that it’s not possible to have a very high price of oil because that will put the end of globalisation. And the fact is that a price of $200 per barrel there will not exist an airline industry any longer and we will see problems with airlines in the future.
JEFF WATERS: On the other side of the debate are academics like the University of South Australia’s Dr Vlado Vivoda.
VLADO VIVODA: What peak oil theorists miss out on is the fact that with the changes in our, with improvements in our technologies and improvements in a drop in oil production costs what is considered oil is changing as well.
I see the definition of what is exploitable oil changes with the changes in the levels of technological efficiency and with changes in the cost of exploration and production of oil.
JEFF WATERS: The question is whether we’ll adopt new technologies fast enough. Some Australian municipal councils have already drawn up peak oil strategies and Professor Peter Newman welcomes big, recent, federal spending on public transport. But he says he’d like to see a full national plan.
PETER NEWMAN: We really do need a national peak oil strategy that can take us through the next two decades of change in our infrastructure requirements.
MARK COLVIN: Infrastructure Australia Council member Professor Peter Newman ending that report from Jeff
Published in Environment & Resource Management by Russel Norman on Sat, May 1st, 2010
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on the trolls and those who are unable to keep on topic
You can see evidence of peak oil when low grade sources like the tar sands in Canada are being exploited. Less and less oil will be pumped straight from the earth and processing costs and environmental costs of excavation are going to be a growing reality (probably a few lost National Parks around the world as well).
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There are no guarantees that advancing technology can increase the amount of exploitable oil. We may get more disasters like this one: http://nz.news.yahoo.com/a/-/world/7141163/disaster-looms-as-oil-slick-reaches-us-coast/
And even if the new technology does increase the amount of oil that can be exploited, all that does is delay the day of reconning.
We need to be moving away from using oil and gas, particularly for electricity generation where there are numerous alternatives.
Trevor.
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Try
http://nz.news.yahoo.com/a/-/world/7141163/disaster-looms-as-oil-slick-reaches-us-coast/
instead.
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You can see “peak resources” more generally when we start looking at the cream of the crop national parks for mining, also. That is the bigger picture
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Trevor,
Would you know if the US ship gasoline or oil to enzed? The BP stuffup in Mex Gulf could well short out supply options down here if gasoline.. certainly over time and so far as I know they’ll need plenty of time to plug that leak..
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Tom Farmer,
It wouldn’t really matter where the oil was shipped to. In all likelihood it is refined and used in the US, but if this source of oil (a single platform) drops out, they’ll try and replace it with oil from somewhere else, which may well be oil which would have otherwise gone elsewhere.
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http://arabnews.com/economy/article49153.ece
Comparison Peak oil / Peak demand
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si – it is hard to know how much credibility to give to that report about peak demand, given that it was written by a reporter for the Arab News and therefore could have an obvious bias.
I don’t know what they have to worry about – oil field production is declining in many of the non-OPEC countries so even if overall demand peaks, demand for their oil will continue rising for some time.
Trevor.
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Trevor,
Appreciate your response, I was just thought it was an interseting point to add balance, though I agree about possible bias. That being said try finding someone who doesn’t editorialise these days.
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In any case, isn’t this exactly what we want: demand for fossil fuels to peak (as soon as possible) and then fall off (as rapidly possible)?
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samiuela – yes, that is what we want. However saying that demand will peak but not because of a supply shortage encourages the opposite. People will worry less about their car’s fuel consumption and companies will do less to cut their consumption or switch to alternatibes if they don’t see a supply squeeze as likely.
Trevor.
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Most of our oil comes from Singapore, either crude or refined.
I`ve just been in Papeete. Everyone has a car – mostly SUV`s which cost less than $40,000 new. Petrol is $1.20/litre. Subsidised by France.
Most people live within 1 metre of sea level.
Now in Tokyo where a 5 day holiday started Saturday. Some motorways had queues of 50 km`s, as people escaped the city in their cars.
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Mmm …. Dr Newman (or Cardinal Newman as some call him) has a long standing hatred of the car and regular suburban living and an equally long standing history of cooking the statistical books. He is the Aussie equivalent of Kunstler the ranter par excellence. He may be on a committee or two but he is not a top rated policy adviser on the international side.
For example this statement from Newman is an absolute fiction:
PETER NEWMAN: Subprime mortgages were mostly out on the urban fringes miles away from work. People had to drive. And when the price of fuel tripled in American cities they couldn’t pay their mortgages.
American’s in the lightly regulated urban markets living on the fringes had the cheapest housing and the shortest trips to work. Newman is one of those odd people who believe that everyone in an urban area drives to the CBD every morning. They don’t. Another one of his “odd” arguments is that people who live in the highest density cities use less energy than people in low density cities.
The graph looks good until you see that the strong correlation is between low income and high density (ie Mexico city vs average income) and people on low incomes do tend to use less energy (and indeed less of everything) than people on high incomes. That is why the people in the inner city neighbourhoods of wealthy developed nations have the largest carbon footprints. They are richer and spend more.
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Peak “cheap” oil’s ripple effects through the economy will be interesting and unpredictable, I am hopeful the market will move us to greener places and we will de-link energy growth and GDP growth…
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This is like reading Grimm’s Fairy Tales over & over again. Hasn’t anyone read the latest report of the International Energy Agency which clearly states that we have reached the peak of oil production. This is despite years of denial because of influence from Bush’s regime, the facts speak for themselves.
All these points about low & high density living, sub-prime mortgages, blow outs in the Gulf of Mexico, new technology saving the day etc., are just so much hot air & not relevant to the discussion. For example reference the fact that ‘new technology’ was apparently the cause of this latest fiasco. Well Head Blow-out technology ‘did not work as it was supposed to’ – (MD of BP to the BBC).
As far as developing new methods to extract previously uneconomic oil – witness the fact that ‘oil sands & shale extraction’ even now requires an oil price somewhere above $75 per barrel to even look like breaking even, which also ignores the vast environmental destruction which results (largely water pollution & CO2 release, two things we can ill afford )
Deep water extraction also is difficult & expensive, and apparently alive with high risk to economic viability & the environment.
I’m interested to hear what ‘way around it’ we are bound to find. In fairy tales it’s usually a magic wand or a handsome Prince. Oh well, back to Grimm’s wonderful tales.
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According to ABC News (US) BP ‘fought safety measures for years’. They successfully lobbied Bush & his Oil Cronies to not require recommended safety measures, whilst conning some people that they were ‘ Beyond Petroleum’. Beyond the Pale more like it !
http://abcnews.go.com/Blotter/bp-fought-safety-measures-deepwater-oil-rigs/story?id=10521078
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Peak Oil is a shonk Russel – an excuse for a price hike
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Peak Oil is no shonk.
Nor is it a reason to raise prices.
Prices reflect supply and demand – of every commodity – even houses.
Grimms is for fantasies. Reality is no fantasy, no matter how it is dressed.
Just look at the weather. In Tokyo right now (I`m there now) today`s high is 25C which is normal for July.
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gehji – your point re 25 degrees ? Are you claiming an unusually warm spring in Tokyo is directly connected with Climate Change or ‘peak oil’.
The UK is having a very late & cool Spring – Climate Change anyone ?
The quality of this debate seems particularly low, or is it just me ?
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We have not. Moreover, at the prices we have now we will not even try. Price is suppressing demand and supply has had its effect on price and will no longer grow. Not because economies will not grow, but because the price of oil means that they must look elsewhere for CHEAP energy to do so.
Some of you are looking at the symptoms of peak-oil and saying it ain’t happened because they don’t look like you think they should, but we aren’t pumping more oil and prices have become erratic (they are thoroughly gamed) but higher.
So Mark… are we going to go back under a buck a liter anytime soon? Not unless we all get electric cars and demand goes in the toilet. Prices are up because supply is short. They are gamed extensively so they can overshoot wildly in either direction, but on average up and not even a recession can bring them down. Are we going to have a production surge from the new deep water pools we’ve discovered? Not so fast. It appears that the technology isn’t cheap or particularly reliable yet, and if it costs BP 15 billion (as it appears it will) to clean up (if it can at all), it also means that Arnie is telling the “drill baby, drill” morons to get lost… which means more resistance to faster exploitation of the resource.
In short, we’ve seen the peak, we’re on the downslope, and the ride is rough enough thanks very much. In time the price will go higher still, but for the present, it is holding steady just short of the point where national economies blow up violently. The train-wreck is slow-motion, practically frame-by-frame, but it is occurring.
BJ
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“Drill, baby, drill” is still a good idea, except that they are aiming at the wrong target. They should be aiming at geothermal energy – hot stuff for processes and electricity generation, merely warm stuff for hot water heating and space heating.
Unlike oil, geothermal energy won’t run out any time soon.
Trevor.
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I don’t ‘know’ any more than reliable research teaches….however it’s an interesting scenario set.
No, prices will not substantially come down in the west.
Oil Companies are planning massive new sales to India and China – at the highest possible price!
Marketing principles ain’t rocket science – they are unilaterally greed driven.
Enjoyed your comment BJ and, like any major issue, I guess there are a great many truths that apply.
I feel that electric cars could be a good thing for nz where distances are comparatively short.
Will we see the widespread use of locally manufactured electric cars? (think of the Savings to the Economy!)
I’d like to think so – but it’s not a serious conversation here yet.
Have Oil Prices precipitated the Global Recession as posited in this Article?
Again, my opinion only, but I would say that statement is largely true.
Is it in the interests of the Financial status quo to keep prices as high as possible? – certainly, unless, as you say demand falls away – something thats hard to see from where I’m sitting.
regards
Mark
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Meanwhile, “House Republicans have chosen Lord Christopher Monckton, a non-scientist with a penchant for outrageous remarks, as its sole witness at tomorrow’s hearing in front of the Select Committee on Energy Independence and Global Warming.”
http://www.huffingtonpost.com/brendan-demelle/gop-chooses-lord-hitler-y_b_565126.html?utm_source=twitterfeed&utm_medium=twitter
Fuckwits!
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http://upload.wikimedia.org/wikipedia/commons/3/36/Melodica_red.jpg
(makes as much sense as choosing the Monck!)
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This is the sort of project that can help us cope with peak oil:
http://www.awatea.org.nz/docs/CHIME-Media-Release-20100415.pdf
CHIME is Chatham Islands Marine Energy Limited, and the proposal is a 20kW LIMPET style device similar to the one on the Scottish Isle of Islay.
Now add a vanadium redox flow battery to smooth peaks in demand and supply and they might reach 90% renewable electricity generation before the rest of New Zealand.
Trevor.
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Correction to the above – it is a 220kW device. (My “2″ key is unreliable
)
Trevor.
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