Oil: Its status and options

Recently, Eric Britton of ecoplan (and the dynamo behind the Kyoto World Cities 20/20 Challenge) asked some of us for comments regarding possible long-term energy policy issues and options. His specific request was:

Given what you know about the long term needs, trends and prospects, (and please do specify a bit, is that out to 2020, 2030, 2050 and/or beyond), would you help us to understand what you think governments and policy makers at various levels, the key industrial and financial groups, and others should be concentrating their attention on in the next 3-4 years, say from 2007 to 2010?

Here’s my initial response to Eric’s request:

Although I no longer work for any of the [energy prognostication] agencies, I have been studying these issues for a few decades. The data available from a variety of sources seem fairly consistent. The situation is straightforward:

  1. We are now at or near the peak of world oil production.
  2. Most of the oil produced goes for transportation.
  3. Demand for oil is increasing, especially in the developing world, and especially especially in China. Unless major new sources of oil are discovered, if somehow production can just keep up with the current level of demand then the world will run entirely out of oil in the mid 2040s.
  4. There will be a major collision between supply and demand in the next few years. Both prices and political pressures, some quite violent, will escalate. Serious impacts on the global economy can result.
  5. Substitute fuels will increasingly alleviate some of the pressures–but not fast enough.
  6. New vehicle fuel efficiency standards will add another component to oil demand reduction; but also not fast enough.
  7. The difference must be made up by behavior modification–or a great plague to eliminate the transportees.

Items 5 and 6 are constrained by technological and/or economic factors and are only partially influenced by policy. Still, responsible policy makers must continue to press for faster prosecution of the opportunities. Item 7 (demand management) is not very well addressed by policymakers because people do not want to change their ways. However, rules and regulations forcing travel reduction must take higher priority than is now the case–even in the face of the huge sums spent by lobbyists promoting transport. However, I suspect that fuel rationing, either policy- or market-induced, is what will finally be needed to get people’s attention.

I have been harping on telework as an automobile demand reduction approach because it is less expensive than some other options and requires no great capital investments, although it does involve culture shifts in some cases. Nevertheless, the fundamental issues summarized above apply to all TDM approaches. Our fear of falling doesn’t allow us to outlaw gravity.

The good news is that, when we do run out of oil, there goes a major culprit in global warming.

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