Preparing for 2014-15 “Oil Crunch” Forecast by UK Industry Group

At the state and national government level, preparations for another “oil crunch” similar or worse than 2008 and 1980 should include: 

  • Ending subsidies for oil in order to reduce economic dependence on oil-based industries.
  • Transition agriculture and food production from operations highly dependent on the use of oil-based products such as diesel fuel, fertilizers and crop treatments, while encouraging bio-regional food production from urban foodsheds for nearby population centers. 
  • Planning and support for high-speed rail networks (though this would be a longer-term preparation for post-carbon transportation era beyond 2020)

Daniel Lerch of the Post Carbon Institute authored a guidebook for cities and local government on how to prepare for an oil crisis. I have also written a study looking at US oil crisis readiness in the largest 50 US cities, “Major US City Post-Oil Preparedness Ranking” (second publication from top).

Whether, it is called “peaking oil” or an “oil crunch,” many experts see total global oil production reaching a plateau of around 91-92 million barrels a day by 2012-2014 unless, as the report says, “some unforeseen giant, and easily accessible, finds are reported very soon.”

 With fast-growing demand for oil in developing economies such as China (which overtook the US in 2009 for total automobile sales), India and the Middle East, developed nations in North America and Europe need to consider wholescale industrial and societal shifts.

The United State and Canada in particular should start reducing oil dependency now in preparation for oil price volatility and possible supply disruptions that would force such shifts without warning, with dire consequences for the economy, nationally and locally. Many cities (New York, Toronto, Vancouver, Washington, D.C.) are already somewhat prepared to make this shift because of infrastructure for public transit and other oil-free mobility options.

The world is heavily dependent on 120 oil fields that account for 50 percent of world production, and contain two-thirds of remaining reserves of fields in production. New discoveries of oil fields off Brazil’s coast, under the Arctic and elsewhere, will not be enough to replenish the “drawdown” that is occurring. Besides, many of these fields take investments that require oil to be priced over $100 or $120 a barrel, so they will not be producing for a number of years after such investments are made: in other words, far beyond 2015.

“The challenge is that if oil prices reach the levels necessary to justify these high-cost investments, economic growth may be imperiled,” says the Industry Taskforce on Peak Oil and Energy Security.

Another so-called energy “ace in the hole,” oil sands deposits in Canada, are not a viable option. Oil sands produce at least three times the amount of atmospheric carbon over conventional oil when they are processed and used, which would exacerbate global climate change significantly, while also fouling the region’s water supply.

What is being raised by this report is that the era of cheap oil is over, and that the consequences will be ugly, unless we start preparing for this profound change.

“Don’t let the oil crunch catch us out in the way that the credit crunch did,” said Virgin CEO Richard Branson and other corporate executives in the introduction to the report

Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.

Originally published February 22, 2010 at the Green Flow blog of Common Currents. Republished February 23, 2010 at Worldchanging

Leave a Reply