Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
In an interview with the Independent this week Fatih Birol, Chief Economist of the IEA bemoaned the ignorance of the governments he serves: “Many governments now are more and more aware that at least the day of cheap and easy oil is over… [however] I’m not very optimistic about governments being aware of the difficulties we may face in the oil supply”. As if to prove his point, Britain published ‘The Wicks Report’ on energy security, from former Minister of State for Energy Malcolm Wicks.
Mr Wicks scarcely acknowledges the very real global risks to oil supply, despite forecasts of a renewed supply crunch early in the next decade from the IEA and many others, instead presenting Britain’s ever-deepening import dependency as simply another chapter in a long history of changing fuel mixes. Peak oil is dismissed in a couple of paragraphs rich in ignorance, untruth and irrelevance. Non-OPEC peak is conceded but played down on the basis that there’s lots left in OPEC and the Canadian tar sands, blithely ignoring the well-founded doubts that either can make good the deficit.
Mr Wicks seems to imagine high oil prices will save the day. But the fact is there is no correlation between the oil price and discovery of oil. Even if there were, we are now in an era of intense oil price volatility, which will do as much to discourage as encourage investment: 2 million barrels of daily production capacity has been deferred or cancelled since the collapse from last year’s peak of $147 per barrel. Worse, the marginal barrel is now the Canadian oil sands, and these are never likely to make good the fast-depleting “easy oil”. One gushes, the other must be wrung out of sand, demanding massive application of capital, energy and water, all of which are constrained.
Since the oil supply is evidently not an issue, Mr Wicks concentrates on gas and power generation, and proceeds to recommend the government carry on with its current policies. His widely reported conclusion that markets cannot deliver energy security is banal, and only echoes what Ed Miliband said shortly after becoming Climate and Energy Secretary.
His demand for more gas storage is – as the Tories correctly pointed out – a massive admission of failure. Mr Wicks was himself Energy Minister in 2006 when the Russians first cut off the Ukraine, and Britain’s vulnerability was made plain.
His “aspiration” to increase the share of nuclear power to 35-40% of electricity generating capacity by 2030 – alongside increased efficiency, coal with carbon capture, and renewables – is meaningless without any hint as to how this might be achieved.
The report received a fairly dismal reception in the energy industry, which criticised its failure to acknowledge threats to the oil supply, or the inadequacy of the current carbon price.
The Wicks Report rightly contends that energy security should be a ‘national priority’, but the document displays astonishing ignorance and complacency. With echoes of Jim Callaghan and the Winter of Discontent, Wicks declares “There is no crisis”. A more egregious case of famous last words would be hard to find.
Warning: Oil supplies are running out fast
Jeremy Leggett: Another crunch is coming – but will the world act?
Crude Oil Falls as Equities Decline Renews Fuel-Demand Concerns
OPEC’s Production Rose a Fourth Month in July, Survey Indicates
Shell takes to high seas to escape oil gloom
Clinton Seeks U.S. Africa Gains as China Expands Oil Purchases
Nigerian militant amnesty starts
Iran: New confrontation looms
UK’s watchdog silent after oil industry meeting
US regulator steps up pressure for limits on oil futures trading
EU reaches gas deal with Ukraine
Call for more intervention on energy
UK should lock in gas contracts as supply wanes, says PM’s aide Malcolm Wicks
Tories warn on nuclear power plans
Ofgem says electric companies must spend £6.5bn upgrading network
China hints at softer line in climate talks
India sets out ambitious solar power plan to be paid for by rich nations
Bank to inject extra £50bn in drastic move to end slump
Signs point to Britain being on the cusp of economic fightback
China moves to internationalise its currency
Buoyant markets lead to renewed fears of commodity speculation