Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
The US Presidential campaign in which the issue of climate change has been avoided for the first time since 1988 got a last minute shake-up this week as the Northeastern seaboard was hit by superstorm Sandy. The storm which also hit the Caribbean and Canada, might just end up forcing the climate issue back onto the political agenda. President Obama remained silent as he visited affected areas, the press was however less circumspect. Most prominently Bloomberg’s Business Week magazine went with the cover story "It’s the Global Warming Stupid". Time will tell whether the moment proves significant for US energy policy.
While the big oil story in the US was New Yorkers queuing for gasoline, the publication of Q3 results for the major oil companies demonstrated that they are struggling to maintain output. The collapse in the US natural gas price is certainly having an impact on production, but there is also the fact that new oil has to come from harder to exploit resources. BG Group took the biggest hit after announcing that production in 2013 will be flat in contrast to market expectations of 10% growth.
A new IMF working paper was released this week considering the economic impact of a number of scenarios around stagnating or declining oil production. The report Oil and the World Economy: Some Possible Futures follows on from the excellent The Future of Oil: Geology versus Technology released earlier in the year, which found that the geological modelling of oil production had proved much more accurate than economic modelling. The latest report projects a number of different scenarios and responses. Interestingly, alongside the more standard economic models, which allow for substitution of oil based on cost alone, the study considers scenarios which take into account oil’s critical role as a requirement for the viability of many key technologies. The output contribution of oil is thus treated as higher than indicated by its cost share alone. The study shows once again that seeking economic solutions without considering peak oil makes no sense.
In the UK this week the circus that is government energy policy continued with a Laurel and Hardy performance in the House of Commons from DECC ministers Ed Davey and John Hayes. Recent arrival Hayes undermined the government’s credibility on renewables earlier in the week by telling the Daily Mail that "enough is enough" on onshore windfarms and suggesting that their impact on landscape and property prices were part of the government’s forthcoming review on costs. Hayes was quickly slapped down by Davey, but the split in the coalition on energy policy is becoming ever more obvious.
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Oil
IMF study: Peak oil could do serious damage to the global economy
The world isn’t going to run out of oil anytime soon. But there’s still concern among various geologists and analysts that our oil supply won’t grow as quickly or as easily as it used to. We’ll have to resort to harder-to-drill oil to satisfy our crude habits. More expensive oil. That would push prices up. And high oil prices could act as a drag on growth.
This, at any rate, is the basic idea behind "peak oil." And there’s some reason for worry. Between 1981 and 2005, world oil production grew at a steady pace of about 1.8 percent per year. All was well. But starting around 2005, oil production appeared to plateau. And, since demand for oil kept rising, especially in countries like China and India, that caused prices to soar. Oil doesn’t get much cheaper than $100 per barrel these days. And that, some economists worry, has acted as a drag on growth around the world…
Oil companies struggle to increase output
The world’s top oil and gas companies are struggling to improve output and failing to capture the full value of a resilient price for crude oil while weak gas prices in the United States take their toll.
Third-quarter results from Exxon Mobil, Royal Dutch Shell and other top international players released over the past few days mostly beat expectations thanks to a shortage of the fuels and other crude-oil based products they make…
BG Group sees £6bn wiped off its value after production warning
BG Group suffered the biggest one-day share price fall in its history on Wednesday, wiping about £6bn off the value of the company, after warning it would see no growth in its oil and gas production next year.
Analysts had been expecting growth of more than 10pc in 2013, building on anticipated growth of 5pc in 2012…
Coal
Coal resurgence threatens climate change targets
Coal is enjoying a renaissance, with the highest consumption of the fuel since the late 1960s. The unexpected development threatens to put climate change targets out of reach — and much of the reason is the rise of a supposedly "green" fuel, natural gas.
The controversial use of shale gas in the US, where it now makes up a quarter of electricity generation, has brought down carbon emissions there — but the greenhouse gases have simply been exported elsewhere, meaning no net gain for the planet, research by the Guardian and other sources has found…
Shell attacks ‘ridiculous’ effects of European energy policy
Royal Dutch Shell has attacked the "ridiculous" impact of European energy policy, warning that governments are erasing the environmental benefits from expensive renewables by allowing coal use to increase.
Andrew Brown, one of Shell’s most senior executives, also warned that shale gas would not have the same impact in the UK as it has in the US, where is has been heralded as a new era of cheap energy…
Scientists cast doubt on shale gas’ low carbon credentials
Shale gas has helped the US burn less polluting coal, but any emissions savings are being wiped out by exporting the fuel overseas, researchers at the University of Manchester will say today.
In a new report commissioned by the Co-operative, the scientists will add that without a meaningful cap on global carbon emissions, the exploitation of shale gas reserves is likely to increase total emissions…
Cost of mining coal continues to climb
It’s become common to blame the flagging fortunes of coal mining companies on low natural gas prices that have convinced many U.S. utilities and industries to slash their use of coal.
But there’s another reason for the woes of mining firms: The cost of mining coal has been going up…
Nuclear
Hitachi unveils £20bn plan to build nuclear reactors in the UK
The company said on Tuesday that it would pay £696m to buy Horizon, the nuclear venture put up for sale in March by German utilities RWE and E.ON.
Hitachi said its plans could create 12,000 jobs in construction of the reactors at Horizon’s two sites, at Wylfa on Anglesey and Oldbury in Gloucestershire, and 1,000 permanent jobs in operating each site…
New nuclear reactors could be eligible for subsidies, says minister
The nuclear industry could get subsidies from the taxpayer to build new reactors, the new energy minister has said, despite opposition in the coalition agreement and repeated assurances to the contrary.
John Hayes told MPs on Thursday that new nuclear power would not receive specific government subsidy but could be eligible if other forms of electricity generation also benefited from the scheme…
Nuclear power turns to developing world as west recoils from Fukushima
A nuclear fuel pellet the size of your little finger provides more energy than 800 kilograms of coal or 650 litres of oil — and all without belching any carbon dioxide or other fumes into the atmosphere.
But the intense power of uranium, the raw material of nuclear fuel, was demonstrated to the world by the Fukushima disaster last year. Its price on global markets has collapsed, from a record $136 a pound in 2007 to just $44 last week — a slump so severe that some of the world’s biggest miners have decided they’re better off leaving the mineral in the ground…
US nuclear plant exits ‘alert’ after storm waters recede
A US nuclear plant exited "alert" status Wednesday after the storm surge from Hurricane Sandy receded, ending the flood threat at New Jersey’s Oyster Creek plant, though it remained offline.
Three other reactors were still shut down in the wake of the storm, which damaged transmission lines and other power infrastructure in the US northeast, officials said…
Renewables
Tensions clear as Energy Ministers face House of Commons
The apparent tensions within the Department of Energy and Climate Change (DECC) were made clear today, as ministers faced accusations they are watering down support for a range of low carbon technologies.
Appearing together for the first time since yesterday’s high profile row over wind farm policy, the DECC ministerial team faced questions in the House of Commons, during which MPs repeatedly attacked the contradiction between Energy Minister John Hayes’ opposition to onshore wind farms and Energy and Climate Change Secretary Ed Davey’s stated support for the sector…
Inconsistent, contradictory and anti-democratic — this is no way to run energy policy
Every time you think British energy policy can’t get any more ridiculously disorientating, another curve ball appears.
I know it is already a cliché to liken the real-life goings on in Whitehall with the fictitious events of The Thick of It, but John Hayes’ catastrophic intervention on wind farm policy would make even Peter Mannion blush…
Renewable energy will overtake nuclear power by 2018, research says
Renewable energy capacity will overtake nuclear power in the UK by 2018, if current rates of growth continue, and will provide enough power for one in 10 British homes by 2015, according to new research.
The amount of electricity supplied by wind energy alone is up by a quarter since 2010, in a surprisingly good year for the renewables industry. While the government has notably cooled on wind power — more than 100 Tory MPs signed a statement this year opposing new windfarms, and the chancellor of the exchequer, George Osborne, has queried the future of subsidies — the industry has continued to grow, with investment in offshore wind up by about 60% to £1.5bn in the past year. Planning approvals for onshore windfarms also rose, up by about half, to reach a record level, according to the trade association Renewable UK…
Government pumps £3.2m into social housing green heating programme
Over 40 social housing projects across the UK are to install renewable heating systems designed to slash carbon emissions and energy bills, after the government awarded £3.4m in new funding to the projects.
The funding awards were made today as part of the third phase of the government’s Renewable Heat Premium Payment social landlord competition, providing 44 projects with around £156,000 each in direct grants…
UK
UK energy investment hits 20-year high
Investment in the UK’s energy sector is currently running at a 20-year high, with over £43bn invested by energy companies over the past four years, according to a major new industry-backed report.
The report, entitled Powering the UK, was undertaken by consultancy Ernst & Young and commissioned by industry body Energy UK. It found that total energy investment exceeded £10bn last year, with investment in renewable energy generation capacity dominating the market…
Water professionals urge caution over shale gas
Proposed shale gas projects in the UK should face mandatory environmental risk assessments, according to a water industry body that has become the latest organisation to warn the government it must tread carefully in developing the controversial energy source.
In the UK, there is currently a moratorium on the process used to extract the gas, known as fracking, until more is known about its potential impacts, which campaigners say extend to earth tremors, landscape degradation, water contamination, and the release of methane emissions…
Climate
It’s Global Warming, Stupid
Yes, yes, it’s unsophisticated to blame any given storm on climate change. Men and women in white lab coats tell us—and they’re right—that many factors contribute to each severe weather episode. Climate deniers exploit scientific complexity to avoid any discussion at all.
Clarity, however, is not beyond reach. Hurricane Sandy demands it: At least 40 U.S. deaths. Economic losses expected to climb as high as $50 billion. Eight million homes without power. Hundreds of thousands of people evacuated. More than 15,000 flights grounded. Factories, stores, and hospitals shut. Lower Manhattan dark, silent, and underwater…
EU energy chief backs new renewable goal post 2020
The European Union needs new binding goals on renewable energy and on cutting carbon emissions to succeed green policy targets that expire in 2020, the EU’s energy chief said, omitting any mention of replacing the current energy savings target.
His comments added to a debate about whether the three existing green goals should be followed by another three, with some EU nations and industry opposing what they see as too much regulation…
Transport
Spain’s empty highways lead to bankruptcy
At the Leganes toll booth outside Madrid, the workers scan the horizon for cars. In Spain’s recession, the stream of paying drivers has slowed to a trickle and the toll road is all but bankrupt.
Like the housing bubble, pumped up until it burst in 2008, and its speculation-funded phantom airports, the folly of Spain’s road-building boom too is now being laid bare in vast stretches of tarmac…
Government mulls simplified road-pricing with ‘two-tier’ road tax
The government is reportedly considering a simplified version of road-pricing that would see the introduction of a "two-tier" road tax regime, allowing motorists to pay reduced Vehicle Excise Duty (VED) if they agree not to drive on the motorway network.
Both the Telegraph and the Sunday Times reported that the proposals are being investigated as part of the joint feasibility study into new ownership and financing models for the road network being undertaken by the Department for Transport (DfT) and the Treasury…
French supermarket uses Paris canals to reduce fuel costs
Franprix has become the first French supermarket to reinstate waterway deliveries to the heart of Paris, with the aim of bypassing traffic-choked roads and saving costs.
The supermarket group, part of the Casino chain, is supplying 100 of its city centre stores via barges which are unloaded by crane on the River Seine near the Eiffel Tower, a short truck ride away from the shops…
