Island Breath: World Energy Policy

The pressure mounts (portion of article)
by John Vidal and Ian Sample on 19 October 2005 in The Guardian
Chris Skrebowski, has worked in the oil industry for almost 20 years and now edits Petroleum Review.

"Quite simply, we are consuming oil far faster than we can find it," Skrebowski says. "For the next three years, I believe we will scrape by. After that, it gets progressively more difficult." The exact timing of a global peak, and the speed at which supplies then decline, is fiercely debated. Some analysts give it 10 years or more, others suggest that we may have reached that point already.

Skrebowski, who sees oil companies struggling to hold production levels now, and knows how hard it is for the oil industry to move, estimates 2008.

"Governments are in denial about the scale of what is needed to be done," Skrebowski says. "We are moving in to a new world without maps. We are all likely to be poorer".

Michael Meacher, the former environment minister, warns that the scale of the change required in the world economy is "nothing short of apocalyptical. Our whole civilisation is overwhelmingly dependent on oil.

"Oil will start to run out, but not abruptly. The price, however, will rise rapidly. It is bound to go over $100 (£57) [a barrel], rising much further. The majority of countries do not have oil and will be forced into a tailspin of decline. It is likely that there will be violent disruptions, and mass refugee movements on a scale we have never seen."

Meacher calls for an immediate, if temporary, "bridge" economy that shifts demand from oil to gas, imposes taxes on heavy users, rebates on cars that use little, and carbon budgets for each sector.

"But gas is a risk, too," he says. "It is also declining. The UK is now a net importer of gas and is likely to import 80% of its needs by 2020, mainly from unstable countries."

Beyond that, Meacher would recommend a massive global energy conservation drive and putting more international pressure on the US to use less. "The volume of energy wasted [in the world] is almost unbelievable," he says. "US power stations discard more waste energy than is needed by the whole Japanese economy. Only 15% of energy in a car actually gets to the wheels. A 3% increase in US car efficiency would mean that no oil had to be imported from the Gulf."

While rich countries could buy time as supplies declined, that would not be an option for long, says Richard Douthwaite, a former UK government economist now working on the a study of oil depletion for the Irish government. "Business as usual will just not be possible," he says. "What do you do when a vital commodity becomes scarce? The rich cannot be allowed to take it all. The only option may be for a world rationing system for oil."

Handled correctly, he says, the lower output of oil may be environmentally and socially good. "It gives us a chance to change a lot of things that are clearly going wrong now. The climate crisis and the energy crisis are coming together."
To survive on the other side of a global oil peak, Douthwaite says, economies will have to be drastically restructured. "The real danger is that banks will jack up interest rates to stop inflation. The cost of business will inevitably rise. All prices in the economy will have to change because everything is dependent on oil. Every price in the world will have to change to reflect the carbon content of goods, and the new cost of energy."

Andrew Simms, policy director of the New Economics Foundation, says that the price hikes after an oil peak would be catastrophic for poor countries. The 1974 oil crisis laid the foundation for the Latin American debt crisis, when demand contracted, export prices collapsed, and interest rates went through the roof.

Any oil shortage would, says Tim Lang, professor of food policy at City University, effectively cause the collapse of the whole British supermarket system. The slick operation, which depends on air freight, tens of thousands of lorries, giant distribution points, intensive farming and out of season production, around the world, depends from start to finish on oil. Were prices to rise dramatically, the system would, he says, show its fragility.

What is badly needed to avert a future collapse, he says, is a plan B. "Food today travels further to our shores and further on our roads to reach supermarkets further from our homes than ever before. The result is a finely-honed system that is woefully vulnerable to oil prices.

"The entire system is incredibly fragile. Four companies sell 70% of all the food in Britain and 1,500 shops provide food for half of the country. If you remove oil, frankly, everyone is kebabbed."

But like others, he sees the potential for a much healthier food supply system emerging from a food crisis brought on by oil shortages. One plan B that might emerge in Britain, he believes, is a return to localism that could change the landscape of the country. Whether forced by rising costs or pre-empted by the prospect of them, the centralised food distribution system run by a handful of companies could give way to the microdistribution of produce grown locally and sold locally, driving a resurgence in community shops at the expense of supermarkets.

Cities, he says, would have to adapt. Many, as with London, feed themselves by bringing in produce from around the world instead of living off the surrounding land. "The land around London that once fed the city now goes to stockbrokers' ponies. It's bonkers," says Lang. "The current system is simply unsustainable."

www.islandbreath.org

Pau