This is a ‘comment’ piece for The Ecologist magazine, linking together the issues of energy, economics and growth in order to try and define the likely future for Britain’s economy…. needless to say, it’s not ecstatically joyful! – as illustrated by the graph below:
There may have been much debate over the last few years about “peak oil theory”, but in Britain we cannot talk in terms of a “theory” as our own energy production has demonstrably peaked; Britain’s oil production peaked in 1999, our natural gas production in 2003, and coal production peaked around 1925. The loss of this production means that the Government is losing billions of pounds each year in tax and production royalties, and simultaneously the economy is also being stretched by the growing cost of importing fuel to replace the lost production. As a result our economy is now experiencing, in microcosm, the effects that a peak in world-wide energy production might have on the global economy over the next two or three decades.
If we look at how Britain’s energy economy has changed over the last two centuries we can see an interesting trend emerging – one that demonstrates the evidence for a link between energy sources and the well-being of the general economy. Throughout its history, up to the Second World War, Britain was largely self-sufficient in energy. Then from the 1950s, on the back of the post-war consumer boom, this historic trend ended as imported oil gained a wider role in the economy and indigenous coal production declined. By the 1970s, when we imported about 50% of our energy needs, the imbalances in the national economy caused a whole range of economic problems; essentially because Britain was trying to spend more than it could create through its national income. What resolved this crisis, from around 1979/1980, was increasing energy production from the North Sea (not simply, as is often stated, the economic realignment of the Thatcher era). Once again Britain became a net energy exporter, and once again the strength of the national economy improved.
Less than a decade after being a net energy exporter, today we import about 30% of our energy supply. This means that, from producing a trade surplus of around £7 billion in 2000, in 2008 our use of energy created a deficit of £8 billion. The Government’s own forecasts predict that we could be importing up to 60% of our energy needs by 2020. As a result our dependence upon imported energy is not just an issue of “energy security”, these trends are redefining the basis on which the economy operates; and unless we act to change it the economic difficulties of the 1970s are likely to return over the course of this decade.
The Ecologist couldn’t publish the piece in its original format, so I’ve put the full length and referenced version on-line at the FRAW site in HTML and PDF formats: