Oil on the slide as politicians
face the mother of all crises

By Jeremy Leggett
The Guardian UK

Warnings by oil industry insiders recently reached a new pitch that should be sounding alarm bells in every capital in the world. We have had plenty of warnings about the consequences of an early peak in global oil production, but no one in Westminster seems to be listening.

"Peak oil informs everything," Zac Goldsmith said recently. "People ought to know about that, but they don't." He is right. A premature topping point in global oil production would wipe out most if not all economic and policy plans on offer at the party conferences. This is because the plans universally assume growing supplies of generally affordable oil. But as Goldsmith's quality of life report recently described, a surprised world could instead soon be facing rapidly falling supplies of increasingly unaffordable oil.

The other main parties seem barely aware of this. Liberal Democrat concerns are led by John Hemming, who chairs the 32-member all-party parliamentary group on peak oil. Their voice is barely heard in Westminster. Labour concerns are led by Michael Meacher, who predicts a rocky road ahead to all who will listen. Few do. This is one issue where the Conservatives can yet grab leadership for themselves. An early peak in global oil production is certainly a big enough issue to determine who governs Britain a few years from now.

Warnings by oil industry insiders recently reached a new pitch that should be sounding alarm bells in every capital in the world. At the annual summit of the Association for the Study of Peak Oil, experts on the issue heard the former US energy secretary, James Schlesinger, conclude that "we can't continue to make supply meet demand much longer. It's no longer the case that we have a few voices crying in the wilderness. The battle is over. The peakists have won." Lord Ron Oxburgh, the former chair of Shell, was no less clear, when conflating peak oil with climate change. "Today I believe is the end of cheap energy. It's essential that we move away from fossil fuels as fast as possible. The boat is sinking and we have to do everything we can to plug the hole."

Peak production by 2011

Chris Skrebowski, editor of Petroleum Review, offered his latest estimate for the timing of the peak based on a summary of the largest oil industry projects. This suggests peak production in 2011, maybe 2010. Because it now takes the industry an average of 6.5 years to bring oil to market after a discovery, "the die is cast until 2014," Skrebowski concludes. More conservative industry insiders were a little less gloomy. Ray Leonard, of Kuwait Energy, a geologist who previously headed exploration for Yukos in Russia, analysed the Middle East and Russia, where so many hopes lie for continuing ability to match demand with supply. There is certainly potential to enhance recovery in existing fields, he said, but there is very little chance of major new discoveries. Global oil production will peak just nine to 13 million barrels per day higher than today's 86mbd, he concluded. This will happen in five to eight years' time. Mike Rodgers of PFC Energy, a flagship oil industry consultancy, agreed. "The real crisis will come around 100 million barrels a day, in the next decade."

Schlesinger is correct that analyses like these are no longer the work of isolated whistleblowers. Leonard described how, at a recent closed industry gathering on supply, speaker after speaker predicted a coming crunch, prefacing their conclusions with words to effect that "this is not my company's view, but here is what the data suggests to me".

The main potential escape clauses for peaking conventional oil supply are mining of the vast Canada tar sand deposits, and coal-to-liquids technology. Industry projections show production from the tar sands adding just 2.5mbd by 2015. This figure, included in the projections of overall peak oil above, contributes little to a world depleting conventional oil at up to 4-5mbd. Moreover, using the tar sands will require massive amounts of water and gas to melt the tar. "Forget agriculture, forget industry, forget everything," Leonard warned, if the more ambitious proposals are pursued.

Coal-to-liquids technology is similarly greenhouse-gas profligate, though here — as with regular coal burning — advocates hold up the prospect of carbon capture and storage, where emissions are pumped to oilfields and buried underground. This may be a good idea if we can make it work, but as Schlesinger concluded, "it will take at least 15-20 years to introduce, if then."

Politicians face the mother of all crises. Yet the warnings, clear as they are, barely register on the radar screen. Politicians almost everywhere, and the vast majority in the civil service and industry, remain locked in an increasingly breathtaking process of institutionalised denial. This is an issue that needs a Churchill: a leader to warn about the coming clouds, to win the hearts and minds of the British as the threat becomes ever clearer, and make history by leading the mobilisation to survive it.