A major report funded by the Virgin Airlines owner and other British business leaders warned this week that the world is running out of oil and predicts shortages and price spikes as soon as 2015. A future of painful hikes in the cost of food, heating, and travel in a world unprepared for surging oil prices was forecast by the Industry Taskforce for Peak Oil and Energy Security.
"Don't let the oil crunch catch us out in the way that the credit crunch did,” wrote Mr. Branson and other business executives in a forward to the report.
But it’s not just the powerful backing from Branson and company that is suddenly giving heart to those warning of peak oil. They also point to signs that even the British government is opening itself up to the possibility of an oil drought.
"Some people see peak oil (as an) imminent and high probability threat, others say that demand will peak first,” Chris Barton, the British government official responsible for planning the country's energy security, said Wednesday at an event to mark the release of the report. “So who is right? Well, we don’t know who is right, but we do recognize that the risk of rising and volatile oil prices is real.”
In the highly polarized debate over peak oil, researchers blame the poor quality of data available to them and a lack of transparency from oil producers and corporate interests as the main reasons for why the picture remains clouded.
“It gets worse for where it really matters, such as the big Middle Eastern producers and the OPEC countries,” says Steve Sorrell, the chief author of a separate report last year by Britain’s biggest research center on sustainable energy systems, which claimed conventional oil production is likely to peak before 2030, with a significant risk of a peak before 2020. “It’s also certainly the case that those industry bodies that do have the data may deem it not to be in their interests to be fully transparent.”
A real threat?
So is ‘Big Oil’ really keeping some nasty truths from the public?
Figures like Tony Hayward, Group Chief Executive of British Petroleum, don’t deny a mix of different energy sources will be needed in the future to meet the world’s demands. BP estimates about 45 percent more energy will be needed in 2030 than is consumed today – and double what is consumed today by 2050.
But he insists that factors such as technology and drives toward energy efficiency mean demand for oil will peak before supplies do.
“The good news is that we have enough reserves of oil, and especially natural gas, to last for decades and reserve estimates are rising as we develop ways of unlocking both conventional and unconventional resources,” he said in a speech to the London Business School earlier this month.
Not so, says this week’s report, despite concerns that its impartiality may be undermined by the self-interest of business figures like Branson, whose airline and rail businesses are sensitive to volatility in the cost of crude. Mr. Branson said last year that he would seek to invest about $400 million in renewable fuel sources.
Even if energy conservation can tame the thirst for oil in western economies, the report warned that prices will rocket due to demand from the rapidly industrializing developing world and an inability to increase production above a current 85 million barrels per day.
Extracting oil from recently discovered fields such as those in the Gulf of Mexico is also deemed to be much more expensive due to the technical challenges involved.
Only recession is holding back a peak oil crisis hitting sooner rather than later, according to its authors.
“There is no denying that the opinion of the task force report is not the majority opinion,” concedes Jeremy Leggett, an environmental campaigner and founder of a renewable energy firm that was involved in the report. “The danger is that the wider culture, including governments, is accepting the conventional analysis of the problem in the way that they trusted investment bankers before the credit crunch.”