Vital Trivia

BBC Two aired a programme late Tuesday (30/05/06) night considering a “what if the oil runs out” scenario, despite the title I don’t recall the word ‘if’ being used much. Whilst disappointingly not mentioning peak oil by name the subject was addressed reasonably well. Part documentary, part drama it took place in the run up to 2016 by which time we were beyond peak. Fuel prices were high, businesses were failing, oil companies were drilling (unsuccessfully) at the ends of the earth, crime and violence were increasing, the SUV was stranded and for sale, groceries were expensive, poorer people couldn’t heat their homes…

Matt Simmons and former Saudi Arabian Minister of Oil, Sheikh Yamani are featured in the common talking head role.

It’s encouraging to see this subject addressed on the BBC, a shame it was shown at 11:20pm but still an important step in the right direction regarding raising public awareness.

More information here: If… The Oil Runs Out

Who else saw it?

EDIT Wednesday May 31, 2006 at 11:32 PM GMT

TOD member Sangiovese has kindly provided this scan from the Daily Mail newspaper discussing the programme:

Click to enlarge.

Sadly I expect Paterson’s opinions aren’t all that far from those of the general public.

We received the sixth report from the Joint Energy Security of Supply Working Group (JESS) recently (May 06), this follows the fifth report published way back in November 04. In the third paragraph of the report they state:

In a market-based system such as the UK’s, the provision of adequate energy supplies to meet demand depends on effective market responses, which in turn rely on market players having information to inform their expectations about future supply, demand and prices.

Hopefully we won’t have to wait another 17 months for the seventh report and information to inform future supply, demand and price expectations.

The JESS report is concerned with the UK gas and electricity markets over the medium- to long-term rather than short term although some mention of the past and coming winters are made.

Gas Market

On demand JESS repeated the following information from National Grid:

It forecasts an average increase in annual gas demand of 2.2% per annum through to 2014, with peak demand growing at the marginally lower rate of 2.1% per annum; and an import dependency of 46% by the end of the decade, rising to around 80% by 2014-15.

They expect continued increase in gas demand in the face of indigenous depletion with this demand being met by imports. The magnitude and timescales of reliance on imports is surprising though, previous reports have suggested 80-90% reliant by 2020. Forecasting 80% reliant by 2014-15 is the most pessimistic outlook I have seen.

No graph is provided showing this annual supply and demand forecast but this chart showing daily demand against supply is provided

Click to enlarge.

On first glance this picture is reassuring, the demand curves are comfortably below the solid supply curves, however the text of the report admits this picture “may be overstated”.

The following assumptions are made:

• The UK Continental Shelf (UKCS) production is shown at 95% of maximum - this is optimistic since recent past performance has shown gas delivery (on days where demand exceeded UKCS supply) vary between 85% and 95% of maximum centred on 91-92%.
• All other supply sources are shown at 100% of capability. It is by no means guaranteed that all available import (pipeline and LNG) and storage infrastructure will be utilised to such an extent, I would suggest it is extremely unlikely that the volume of gas will be available to fill all possible import infrastructure or even that all infrastructure would be available simultaneously.
• Much of the required infrastructure doesn’t exist yet, the three categories are defined thus:

Proven incremental supply capability: Those projects that, on available evidence, are virtually certain to be technically and economically successful (ie better than a 90 per cent chance of being developed).

Probable incremental supply capability: Those projects which are not yet “Proven” but have a better than 50 per cent chance of being technically and economically successful.

Possible incremental supply capability: Those projects which cannot be regarded as “Probable” at present, but are estimated to have a significant, but less than 50 per cent chance, of technical and economic success.

If that graph were to be redrawn recognising that only a fraction of the proven, probable and possible supply capacity will actually end up being built, once built it would operate at below 100% capacity and UKCS is likely to deliver below 95% the picture would be very different indeed.

This graph shows the same information, including all “possible” gas supply infrastructure, now broken down type along with summer, winter and severe winter demand curves.

Click to enlarge.

This time JESS is even more open about the optimistic nature stating:

…with the exception of UKCS production, it shows all supply sources at 100% of delivery capability. This is likely to be considerably overstated since there is no guarantee that that this volume of gas will be supplied, even if the infrastructure is built.

What I find most surprising is even after adding such a caveat to the graph they felt no need to attempt a more realistic forecast.

Norwegian production is sure to collapse in a similar fashion to UKCS with the impact on exports to UK likely to be exaggerated from the total decline. Other imports sourced from Russia and the Middle East (via an energy scarce continental Europe) are unlikely to maintain such magnitudes as indicated and with supply excluding storage barely above even summer demand (remember the 100% build and utilisation) when will `spare’ gas be available to recharge the storage infrastructure clearly needed for the winter?

There is neither analysis of export availability nor competition for imports from other countries included in this report. This omission from a report stating the UK will be heavily dependent on imports is inexcusable.

Electricity Market

Regarding electricity the most significant factor is the decommission schedule of the nuclear fleet which we have discussed previously: Nuclear Britain

Also covered is the impact of the Large Combustion Plants Directive on the coal-fired fleet. The LCPD imposes restrictions on emissions including sulphur dioxide (SO2) and nitrogen oxides (NOx). Individual plants can either elect to opt-in, in which case they have to meet the LCPD by burning cleaner coal or employing technology to scrub emissions or opt-out in which case they have to close completely after 20,000 hours operation or by the end of 2015, which ever comes earlier.

The opt-in/opt-out decisions were finalised on 3rd Feb 06 with the following results; of the total 28.8GW coal generating capacity 20.6GW have opted in with 8.2GW (28.5%) opting out.

Whether the opted out plant run flat out for just over two years or chose to run with a low (less than 30% activity factor) is a decision left to the plant owner and determined by the economics of the situation and any additional environmental and technical limitations.

Together this means by the end of 2015 the UK will lose 28.5% (8.2GW) of coal fired and 59.5% (7.1GW) of nuclear generation capacity.

Taking this into account the following forecast for electricity generation by fuel type is made with the decrease in coal and nuclear output more than compensated for with new gas and renewable build:

Click to enlarge.

It is assumed that eligible renewables reach a market penetration of around 8% in 2010, though there is a great deal of uncertainty about the likely outcome. Penetration is assumed to reach 15% in 2015, remaining at the same absolute level of supply in 2020.

This statement illustrates how the target of 10% by 2010 and aspiration of 20% by 2020 is not expected to be met.

The report goes on to detail some 11,990MW of combined cycle gas turbine (CCGT), 1,211MW of combined heat and power (CHP)and 10,680MW of renewable infrastructure currently planned although the vast majority of this new build has not yet received planning approval

Summary

In summary I think this report has failed in its objective to provide the market with future supply, demand and price information. The quantitative data presented is so optimistic to be virtually worthless with qualitative caveats that don’t adequately describe the risk.

Encouragingly their future work plan for the coming year does include this long overdue point:

examination of international aspects of security of supply e.g. impact of global markets in LNG and coal

Interestingly in 61 pages of discussion about the medium- to long-term UK energy security of supply there isn’t a single mention of new nuclear build except to list it amongst the things that the Energy Review would consider.

We are still waiting for the JESS Report. Steve Davies, JESS Secretariat promised it to us week commencing 01-May-06 yet it never appeared, then Malcolm Wicks himself told us from the floor of the house that it would be published week commencing 08-May-06 and yet we still haven’t seen it.

In a similar vein however the Office of Gas and Electricity Markets (Ofgem) have responded to the government’s energy review, the full document is available here.

The response considers UK gas and electricity, specifically addressing security of supply.

Ofgem see markets as key when it comes to energy security, able to deliver security of supply but only if there aren’t external constraints on their operation like licences and permits. Ofgem fail to mention the most significant external constraint - resource depletion, preferring to concentrate on financial investment.

Clearly it will remain important for the Government and Ofgem to monitor investment and the supply/demand balance to make sure that the energy markets are bringing forward projects in a timely way. The JESS Group, which produces regular published reports, provides an appropriate mechanism for keeping the situation under review.

It would appear that this “appropriate mechanism” has broken down over the last year.

This comment highlights a concern I have running through this report:

Production from the North Sea is now in decline. The market has responded by announcing plans to invest over £10bn in new gas import infrastructure. This will provide capacity to supply 94 bcm of gas by 2010, equivalent to 87% of forecast UK demand.

It mentions “capacity to supply” measured in pipeline and LNG import capacity. This is however only one part of the problem, security of supply needs two things, physical capacity to import (which this document suggests will be in place) and an exporter with the ability and willingness to export gas to the UK at a price we can afford. That latter point is not subject to rigorous analysis in this report. What use is import capacity if there isn’t anything to import?

This graph illustrates the point:

Click to enlarge.

Whilst UK extraction is expected to decline, the imports are expected to remain unchanged. There seems to be no distinction between the capacity (size of pipe) and the actual volume of gas it is reasonable to expect to receive - is it reasonable to expect Norway to export 50bcm of gas to the UK in 2015 when UK indigenous extraction will have fallen by more than two thirds to just 30bcm a year? What consideration is being made of Norway’s depletion and the impact on ability and willingness to export?

Can anyone suggest what “other imports” represents? Where is the UK going to import over 40bcm from in 2013/14 excluding Norway, Continental Europe or LNG?

Also note the forecast increase in gas demand by over 20% in the 10 years shown.

Here are two other graphs from the report, the first nicely illustrating the make up of UK gas storage. The Rough storage facility is the largest accounting for 82% of the storage capacity and provides 37% (when the 50mcm for ~5 days of LNG is also considered) of peak deliverability. The Rough facility still hasn’t been fully repaired after the accident earlier this year.

Click to enlarge.

This second graph illustrates the series failures in forecasting North Sea decline rates. It is this failure by the market of make accurate forecasts that Ofgem blames for the price spikes we have seen during the last two winters.

Click to enlarge.

Ofgem don’t suggest this is a systemic failure of the market however:

Whilst, therefore, it is the case that the market did not foresee the speed with which the deliverability of the UKCS would decline, there is no reason to believe that a central planning process would have had ‘better foresight’. Moreover, now it is clear that there is a requirement for additional infrastructure, the market is responding with very significant infrastructure investments, including:

• Interconnectors - 58 bcm/year by 2008;
• LNG - 43 bcm/year by 2010; and
• Storage - 5.4 bcm of additional capacity by 2010

When responding to the question of what further steps government should take to develop a market framework for delivering reliable energy supplies as we become a net energy importer over the next 20 years, Ofgem said:

Despite recent concerns about high and volatile energy prices and security of supply, the Government should not make any significant changes to the existing market and regulatory framework.

Perhaps this is to be expected from the market regulator itself but it would seem that Ofgem believe we currently have the market framework to ensure security of supply over the next 20 years. I am not so convinced. It seems unlikely to me that the framework developed when the UK was a net exporter would also be optimal for the transition period and long term future as a net importer.

The New Statesman has published a supplement titled Heat & light: UK energy and climate policy in context (hat tip Energy Bulletin). There is no mention of peak oil but lots of interesting stuff none the less.
The complete pdf of the 32 page supplement is available here.

Whilst talking about the New Statesman it’s worth mentioning again their supplement from Oct 2005 titled Life Beyond Oil which did specifically cover peak oil. It can be downloaded here.

The Energy Minister Malcolm Wicks has recently responded to a letter from energy awareness organisation PowerSwitch. The letter directly addresses peak oil, dismissing peak before 2030 provided the necessary investments are made. On discovery he believes the decline in discovery since the sixties was due to lack of drilling in the Middle East and FSU caused by the large proved reserves but he expects this trend to change, with more and larger fields being discovered as drilling picks up.

There are weaknesses with this position. It is clear that Wicks is subscribing to the flawed ‘Economic View’ of oil supply as described by Roger Bentley here. Although Wicks doesn’t state how much investment would be needed, a government report from the Foreign and Commonwealth Office recently stated $17 trillion would needed by 2030, can/will this investment be made?

What is the contingency plan in event that this investment isn’t made and the peak occurs far sooner? Surely if the best case sees peak extraction rates within 24 years we had better get on with an aggressive mitigation strategy rather than building new airport infrastructure?

Complete letter:

Thank you for your letter of 24 February regarding the issue of “Peak Oil”. The Government is aware of the arguments surrounding this issue that global oil (and gas) production will one day peak, which cannot be disputed. However, we believe that such a peak is not imminent and will not be reached until some time after 2030, provided the necessary investments in expanding and replacing production capacity are made.

The International Energy Agency is currently developing detailed medium-term (to 2010) projections for global oil production based on field-by-field analysis of active development projects and existing decline rates. Full results will be published later this quarter, but provisional findings were presented in the IEA’s December 2005 Monthly Oil Market report (available at http://omrpublic.iea.org). Rather than showing any imminent decline in production, these findings showed global oil production capacity rising steadily to 2010 (by around 2 million barrels per day each year).

Further into the future, new oil discoveries will be needed to renew reserves. While discoveries of new oilfields have fallen sharply since the 1960s, this fall has been most dramatic in the Middle East and the former Soviet Union and is largely the result of reduced exploration activity in those regions with the largest reserves, and also of a fall in the average size of fields discovered. Exploration drilling in the Middle East has been minimal for many years because existing proven reserves are very large. Rather, drilling has been concentrated in North America and Europe, which are both mature regions. Only 3% of wildcat wells drilled in the ten years to 2002 were in the Middle East, even though the region is thought to hold over a quarter of the world’s undiscovered resources of oil and gas. However, we are already seeing signs of a rebound in exploration and appraisal drilling in the Middle East, which can be expected to accelerate in the coming decades. Not only will this help to renew reserves, but it will also increase the average size of fields discovered. In addition to the Middle East and former Soviet Union, North and West Africa, deepwater Gulf of Mexico, and Latin America are also regions where new oil discoveries can be expected. It is also worth noting that reserves growth - increases in the estimated size of reserves in discovered oilfields as they are developed and produced - would also add to global reserves.

Notwithstanding this, however, the Government is putting in place a broad range of policies - as set out in the Energy White Paper 2003 - that will help move the UK economy away from power supplied primarily through fossil fuel supply. The Prime Minister has reportedly spelled out his objective that the UK should lead the global shift to the low-carbon economy. This will not only provide environmental benefits but will also improve UK energy security.

I would like to reassure you that the Government remains actively engaged in the debate on the issue of global oil reserves, and continues to pursue a number of areas of work in this area. For example, throughout the UK’s Presidency of the G7, Finance Ministers endorsed the need for the development of a global common standard for reporting oil reserves in order to improve transparency and reduce uncertainty. DTI officials and those from other governments and relevant international organisations are already working through the United Nations Economic Commission for Europe (UNECE) to take this forward. One of my officials, Claire Durkin (Head, Energy Markets Unit, DTI) also participated in an Energy Institute debate on “Oil Depletion - Facing the Challenges” in November 2005. Ms Durkin’s presentation, along with those made by other speakers, can be found at the following web address: http://www.energyinst.org.uk/index.cfm?PageID=1037. Furthermore, officials are in contact with the U.S Government Accountability Office (GAO), which has been asked by Congress to examine issues related to the potential peaking of world oil production.

Finally, as you may be aware, the Government is currently conducting a wide-ranging review of UK Energy Policy announced by the Prime Minister in November 2005. The Review has a broad scope and will consider aspects of both energy supply and demand focussing on policy measures for the medium and long term. A consultation phase for the review recently finished and details can be found at: http://www.dti.gov.uk/news/newsarticle-230106.html. The Review will report in early summer.

Yours sincerely

Malcolm Wicks

As fuel prices rise everyone seems to be talking about the price we pay at the pump. However it also seems that many people don’t really understand how that price comes about. Hopefully this short piece will help.

There are three main components to the price at the pump:

• Price of the product
• Excise duty
• Value Added Tax (VAT)

The price per litre at the pump is simply:

Price of the product + Excise duty + VAT

We’ll work backwards from the recent record price of 96.13p per litre of petrol reported Thursday, 27 April 2006 (BBC News). The average price of April was a little lower at 94.6p, significantly up on March’s price of 90.0p (link).

First the VAT at 17.5%, which on 96.13p is 14.32p (96.13-96.13/1.175).

Second the duty. This is a little more complicated, the BBC article above states petrol has 47.1p duty on a litre. This came into force on the 1st Oct 2003 (link).

From 21st Sept 2004 this was meant to increase to 49.02p (link) but I don’t believe this ever happened.

The 2005 budget said that from 1st Sept 2005 the duty would increase by 1.22p (+2.59%) to 48.32p in line with inflation (link) . This never happened.

The 2006 budget said that from 1st Sept 2006 the duty will increase by 1.25p (+2.65%) to 48.35p in line with inflation (link). This hasn’t happened yet so we are still paying the 1st Oct 2003 duty of 47.1p on a litre.

This 31 month freeze in duty could be interpreted as a cut of 2.0p that was due against inflation (4.3% inflation 31 months Aug03-Mar05 (link).

So going back to our litre of petrol at 96.13p we have 14.32p of VAT and 47.1p of excise duty leaving 34.71p per litre for the actual product. In percentage terms that is 14.9% VAT, 49.0% excise duty and 36.1% product.

So 63.9% (61.43p) of the sticker price on that record Thursday went to the government.

The 34.71p for the product has to cover the crude oil itself (discovery, extraction etc), the refining, the additives, the transportation, the marketing, the forecourt etc…

Just for ease of comparison, based on the exchange rate on Thursday, 27 April 2006 of $1.80 to the pound and 0.2642 US gallons to the litre:
The total price of 96.13p/litre = $6.55 per US gallon
The product price of 34.71p/litre = $2.36 per US gallon

Response to product price change

It’s interesting to see what happens when the price of the product changes.

If the product were to increase in price by 20% from 34.73p to 41.68p what would happen?

The sticker price would become 41.68p + 47.1 + 17.5% = 104.32p. An increase of only 8.5% and the rate of tax would fall from 63.9% to 60.0% (62.34p), albeit increasing by 0.91p per litre.

Similarly if the product were to decrease in price by 20% from 34.73p to 27.78p what would happen?

The sticker price would become 27.78p + 47.1 + 17.5% = 87.99p. A decrease of only 8.5% and the rate of tax would increase from 63.9% to 68.4% (60.20p), albeit falling by 1.23p per litre.

A feature of a high fixed taxation, the excise duty, is this damping effect of product price variations on the sticker price. In countries with little or no element of fixed duty such variation in the product price would have a much greater affect at the pump.

We should also revisit the impact of the frozen level of duty against inflation for the last 31 months. The government should increase duty by 2.0p to 49.1p to correct for inflation. However the duty isn’t the only tax. The price of petrol in Oct 2003 was 81.3p (link) of which 12.11p was VAT, 2.21p less than the VAT on our 96.13p litre. The increasing product price has enabled the VAT proportion of the tax to compensate for frozen duty. It should also be said that correcting that 12.11p VAT for inflation would add another 0.5p of which only 0.21p is left over after covering inflation on the duty so it could be said government is taking 0.3p per litre less now than in Oct03.

Prices around Europe

This map from the International Fuel Prices 2005 report shows the price of petrol and diesel across Europe in 2004.

Click to enlarge.

It should be noted that whilst the UK is amongst the most expensive with only Iceland, Netherlands and Norway featuring a higher price, the following major countries are within 7% of the UK price: Finland, Italy, Sweden, Denmark, Belgium and Germany.

Roger Bentley has written Global Oil and Gas Depletion - A Letter to the Energy Modelling Community, published by the Energy Economics Education Foundation (The IAEE’s education affiliate) and available to download here (.pdf, page 6).

Bentley addresses this letter to the energy modelling community, it is a brief summary of the various approaches and highlights the problems of the past. A fundamental difficulty surrounds the two different data sets of P50 and proved reserves, the use of proved reserves in the mistaken belief they are a reasonable measure of the remaining oil being chiefly responsible for the difficulties.

‘P50’ designates 50% probable, and is an industry estimate at a given date for the most likely size of a field’s reserves. P50 estimates are often approximated quite well by ‘proved plus probable’ reserves.

[Proved reserves] are quite unusable for calculating future oil production as they exhibit serious errors of under-reporting, over-reporting, and non-reporting. These data problems have not been adequately recognised by much of the energy modelling community, leading to serious errors of analysis.

The problems Bentley identifies have led to the ‘Economic View’ of oil supply:

• Price, investment and technology are the main drivers of supply, not resources.
• Past forecasts failed because they assumed the resource base to be fixed.
• Should supply difficulties approach, they will be signalled by rising price and falling proved reserves.
• Any supply difficulties are most efficiently corrected by the market - short-run increases in price will limit demand and bring on adequate new supplies.

It is belief in this view which Bentley believes prevents the IEA from accepting the peaking arguments, instead favouring the position that reserves are abundant given enough capital investment.

The UK government is also of this opinion, the Foreign and Commonwealth Office writing in March 06, in a document titled: Active Diplomacy for a Changing World, The UK’s International Priorities Link (pdf):

Existing conventional oil reserves are projected to meet global demand until 2030, but investment of around £10 trillion (US$17 trillion) will be needed to turn resources in the ground into supplies for consumers.

Jess isn’t the name of my cat but rather the UK government’s Joint Energy Security of Supply Working Group (JESS).

This organisation was set up in July 2001 by the Department of Trade and Industry (DTI) and the Office of Gas and Electricity Markets (OFGEM) to “to assess risks to the UK’s future gas and electricity supplies”.

Their terms of reference are:

• To assess the available data relevant to security of supply, to identifythe gaps in that data and develop appropriate indicators;
• To monitor at a strategic level, over a timescale of at least seven years ahead:
  a) The availability of supplies of gas;
  b) The availability of supplies of electricity and fuels used for electricity generation;
  c) The adequacy of generating capacity; and
  d) The adequacy of the UK’s gas and electricity infrastructure;
• To assess whether appropriate market-based mechanisms are bringing forward timely investment to address any weaknesses in the supply chain that are anticipated;
• To identify relevant policy issues and consider implications;
• To report twice yearly to the Secretary of State and the Gas and Electricity Market Authority.

Given the goings on in the UK gas and electricity market over the last couple of years I expect they have been very busy indeed. Their remit nicely covers the supply side of the looming energy gap crisis. Strange then that despite an obligation to deliver twice yearly reports they haven’t published anything since November 2004.

There should have been a report published in the spring and autumn of 2005 and another around about now.

I’ve been chasing them for the autumn 2005 report for some months now, here’s a summary of communications:

11th Jan 2006
Could you please either email to me a .pdf or mail me a hard copy of the November 2005 JESS (Joint Energy Security of Supply) report?

11th Jan 2006
Please note that the release of the JESS Report that was due out in November 2005 has been delayed until late February 2006 and will not be be available in hard-copy or for download in PDF format until then.

————

14th Feb 2006
I am looking for the 2005 JESS report which I was expecting in November, it’s now mid-February and the report still isn’t available on the DTI website. Could you let me know when this report will be published and the reason for the delay?

14th Feb 2006
Please note that the release of the JESS Report that was due out in November 2005 has been delayed until late February 2006 and will not be be available in hard-copy or for download in PDF format until then.

————

16th Mar 2006
I have still not received the November 2005 JESS report subsequently delayed to late February. Can you update me on the expected publication date and the reason for the new delay.

17th Mar 2006
Thank you for your e-mail, which has been passed to the DTI Publications Team for reply.
The sixth JESS report has been delayed due to pressure of work. Subject to clearance by DTI Ministers and OFGEM, it should be published by the end of this month.

Two members of PowerSwitch have also been following this up and have recently received the following:

The sixth JESS report has been delayed due to pressure of work. Subject to clearance by DTI Ministers and OFGEM, it should be published by mid to end of May.

————

20th Apr 2006
We were promised a JESS report last November, then it was February, then March, still no sign of it appearing. What has happened?

21st Apr 2006
You are quite right that we had been intending to publish the next JESS report earlier in 2006 than has come to pass. The report is in a final draft state and is merely awaiting clearance at Ministerial and Ofgem Board level (which has taken rather longer than I had anticipated). I expect to be able to publish in next few days - I’ll send you a notification by e-mail as soon as I have done so.
Steve Davies, JESS Secretariat

So what’s going on?

My suspicions, although I can’t substantiate them are that the report was drafted before the winter and it came to the worrying conclusion that things might be tight (as suggested August last year). This isn’t the kind of news that gets published lightly and it would have been in disagreement with Ofgem’s own winter outlook report. It wasn’t published.

For the last few months the draft report has been sitting on the desks of the Energy Minister and Ofgem director whilst they wonder what to do about it. The seven year electricity supply outlook probably has a difficult graph showing nuclear and coal generation decline through decommission with the slack being picked up by new gas. The difficulty being due to the pervious graph having shown rapid decline of indigenous gas extraction. This is not dissimilar to what the 2004 report said except that North Sea gas has declined somewhat quicker than imagined in 2004, we are closer to the problem now and the harder we look at just where the expected imports are going to come from the more unconvincing they appear.

As we get closer to the Energy Consultation publication date I expect the sixth JESS report might get swallowed up in the new energy white paper and forgotten.

It is a shame that as we enter this era of difficulty, the public bodies whose job it is to carry out the kind of analysis that we need to see, fall silent. How can the market-based approach the government seems so determined to pursue function in absence of the information organisations like JESS were created to provide?

Newsnight, the BBC’s late night news programme mentioned peak oil last night (25/04/206). Almost a cross between news and current affairs the programme tends to tackle the issues of the day with more depth and analysis than a regular news broadcast. Asking questions rather than just presenting facts.

Last night covered the $75 oil story in some detail including an interview (reproduced below the fold) with Stephanie Flanders, their economics editor. This interview actually mentioned peak oil and displayed some graphs to illustrate the point.

Of course the economists conclusion was that current high prices would encourage us to conserve energy and also makes a lot of alternative and additional sources of energy more financially viable.

The full video of the programme is available for a short period from the Newsnight website: link.

This isn’t the first time Newsnight has covered peak oil.

In December 2005 they hosted ‘The End Of Oil Debate’ featuring:
* James Howard Kunstler, author of The Long Emergency
* Sonia Shah, author of Crude: A History of Oil
* Richard D. North of the Institute of Economic Affairs in London
* Tom Burke of Imperial College London
* Prof. Paul Ormerod, author of Why Most Things Fail
* Prof. Felipe Fernandez-Armesto, author of Ideas that Changed the World

The 39 minute video is available from Global Public Media.

Transcript:

Jeremy Paxman: Stephanie Flanders our economics editor is here now. I don’t understand why people like you aren’t worried?

Stephanie Flanders: Partly because we’ve seen this, in the last couple of years, everybody’s been worried about the impact of these high prices and the economy has kind of carried on trundling on quite well. It has slowed the economy a bit and it has pushed inflation up a bit. But given in real terms the price of oil is now actually quite close to where it was in the late seventies and it’s gone beyond where it was in the first oil shock, it’s in a way surprising it hasn’t done more damage.

Now one reason in the UK is that we still produce a lot of oil so it benefits us. I think more broadly though the richer economies now find this more easier the handle because thanks to conservation they use less energy per 1% of economic growth than they did before.

The increase in prices as Paul was saying is coming from economic strength and rising energy demand, it hasn’t come from a false cap on supply like it did in the seventies and that’s made a difference. There’s also the extra thing, you’ve got hundreds of billions of dollars of oil profits sloshing around the world economy that these oil exporters have and don’t really know what to do with. A lot of that’s actually going through the city and helping to keep interest rates lower than they would be. So although it’s not very pretty for us at the pump, there is reason to be cheerful.

JP: That also led to a lot of trouble in the past as we all, the older ones among us can recall. I suppose it also encourages people not to be so profligate with oil I suppose.

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