Has the ‘Peak Oil’ drama peaked?

Remember Peak Oil?  Just a few years ago Green Party leaders Jeanette Fitzsimons and Russell Norman routinely issued warnings about ‘the world running out of oil’ and told us that we needed to move freight off roads and on to shipping and rail, and commuters out of cars and on to trains, buses and bicycles.

They weren’t alone of course.  An April 2006 article in The Economist reported that:

For years a small group of geologists has been claiming that the world has started to grow short of oil, that alternatives cannot possible replace it and that an imminent peak in production will lead to economic disaster.  In recent months this view has gained wider acceptance on Wall Street and in the media.  Recent books on oil have bewailed the threat.  Every few weeks, its seems, “Out of Gas”, “The Empty Tank” and “The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel”, are joined by yet more gloomy titles.

How times change!  Just this month the following items have appeared in the international media (hat tip:  Global Warming Policy Foundation).

In the last few years, we’ve discovered the equivalent of two Saudi Arabias of oil in the form of natural gas in the United States. Not one, but two. –Aubrey McClendon, CBS, 14 November 2010

Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation. Meanwhile, another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia. Energy experts now predict decades of residential and commercial power at reasonable prices. Simply put, the world of energy has once again been turned upside down. –The New York Times, 17 November 2010

The word “revolution” is overused, but it’s truly appropriate when applied to these technological breakthroughs. Literally trillions of dollars’ worth of shale oil and gas can now be economically extracted. The implications are staggering. Oil production, too, in the U.S. will increase far beyond what experts thought possible a few short years ago. The Earth is awash in energy. –Steve Forbes, November 2010

Oil and gas will continue to be pillars for global energy supply for decades to come. The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years. — James Burkhard, The New York Times, 17 November 2010

“When wind guys talk to each other,” said Michael Skelly, president of Clean Line Energy Partners, a developer of transmission lines for renewable energy, “they say, ‘Damn, what are we going to do about the price of natural gas?’” Without a government policy fixing a price on carbon emissions through a tax or cap and trade, the hydrocarbon bridge could go on and on without end. –The New York Times, 17 November 2010

In order to avoid higher electricity prices, Prague is slowing the solar power boom and is slapping a new tax on it. It will be the death knell for smaller operators – up to 1450 companies are seriously effected by the new tax. In the neighbouring country of Slovakia, an amendment to the Energy Law was adopted in May which has severely curtailed the potential for solar energy investment.  –Christoph Thanei, Die Presse, 17 November 2010

The Spanish government has launched a new regulatory framework that will result in subsidized tariffs for ground-mounted solar energy projects drop 45% this year, killing future investment in the trade, which industry leaders expect will be frozen in the next few years. In addition, approximately 75,000 jobs have been lost with countless firms moving abroad to find new growth opportunities. -–Renewable Energy World, 15 November 2010

Danish environmentalist Bjorn Lomborg suggested in his 2003 Sir Ronald Trotter Lecture for the Business  Roundtable that oil and substitutes like shale oil could cover current energy consumption levels for 5000 years.

He also noted that “Sheik Yamani, founder of the Organisation of Petroleum Exporting Countries (OPEC), has often pointed out that the oil age will come to an end but not for a lack of oil, just as the stone age came to an end but not for a lack of stones.  Humans search constantly for better alternatives.”

Provided markets are allowed to adjust to supply and demand trends, and are not distorted by government interventions based on false ‘peak oil’ premises, there is every likelihood of an eventual smooth transition to other energy sources.


The BBC, long accused of bias in its reporting of the climate change debate, has now been ordered to deliver balanced coverage on the issue:

The BBC has been repeatedly accused of bias in its reporting of climate change issues.

Last year one of its reporters, Paul Hudson, was criticised for not reporting on some of the highly controversial “Climategate” leaked emails from the University of East Anglia, even though he had been in possession of them for some time.

Climate change sceptics have also accused the BBC of not properly reporting “Glaciergate”, when a study from the UN’s Intergovernmental Panel on Climate Change (IPCC) saying that glaciers would melt by 2035 was discredited.

But the BBC’s new editorial guidelines, published yesterday after an extensive consultation that considered over 1,600 submissions by members of the public, say expressly for the first time that scientific issues fall within the corporation’s obligation to be impartial.

The mainstream media in New Zealand should take note. We have moved ahead of our trading partners, and the vast majority of the rest of the world, by embarking on an expensive Emissions Trading Scheme. Now the BBC is saying the science isn’t settled.

‘Climategate’ and ‘Glaciergate’ were not exactly widely reported in New Zealand either. Regardless of individuals’ opinions on climate change, there is a debate raging out there and the public deserves balanced coverage.

 Read the full article here.

The increasingly lonely business of leading the world

Watching last night’s Back Benches special on our ETS, I was somewhat bemused to see a British diplomat (chapter 3 online) effusing over New Zealand’s ETS bravery, rather patronisingly assuring us that we are not alone, and challenging New Zealanders to look a Pakistani flood victim in the eye and tell him we’re not willing to raise petrol prices by a couple of cents to save him. If only it was that simple.

 I won’t go into whether it’s appropriate for a British diplomat to be commenting on New Zealand politics on a pub politics TV show.  But it’s timely to reflect on the ETS, now that the next stage has been in place for a couple of months and the costs are beginning to bite.  The decision to proceed when our major trading partners such as Australia and the US still have nothing comparable in place, remains, in my view, a dubious one, as I noted in this article published in The Spectator last March. While the government was wise to ensure the scheme was a relatively low impact one, it has nevertheless pushed up power and fuel costs for consumers, who will also be bracing themselves for the impact of the upcoming GST increase.

 Post election, the Australian position is more uncertain than ever. Both parties appeared to foreshadow little action in this area in this next parliamentary term, although the influence of the Greens may come into play. The major international milestones coming up are the UN meetings in Mexico at the end of this year and South Africa at the end of 2011.  It’s highly unlikely that the Mexico meeting will see important agreements on major issues.  If the same happens at the 2011 meeting in South Africa, there’s a real possibility that there will be no second Kyoto commitment period.  In that event New Zealand politicians will surely think twice about proceeding with further costly stages of their pledge to fight global warming.