Peak Oil – a priority Risk Management issue.

I went to a very interesting presentation recently provided by Phil Hart who is one of the working group convenors for the Australian Association for the Study of Peak Oil and Gas and has a nice introductory overview of the issue on his website. 

The “heat” has risen in the political arena on climate change over the past 9 months so that this issue will now be important in shaping the upcoming Federal Election.  Al Gore, the drought, 4 Corners, bushfires and the water crisis have all played a role in increasing the profile of climate change.  Yet while climate change has become a hot topic, there is little public debate yet about the issue of Peak Oil.

Broadly speaking, peak oil does not refer to the running out of oil but that production capacity of extracting oil will peak.  Some people believe that we are past that peak, others that we are a couple of years away, and others who believe that it won’t happen for at least another 20 years.  But there can be no doubt that it will happen.

A Senate report last year inquired into Australia’s future oil supply and alternative transport fuels.  It concluded that the essence of the peak oil issue is risk management, particularly if economies cannot adapt quickly enough to a post-peak decline.  This is the same conclusion as that of Robert Hirsch in his reports to the US Department of Energy who states that viable risk mitigation needs to start early and that Government intervention will be required.  The uncertainty lies in whether one believes the stated reserves of oil in Middle East countries or whether one believes that these figures have been inflated to increase production quotas or for geo-political strategic advantage.

This issue has been stuck in my mind for quite some time.  As a futurist, it is the classic wild card that could cause the global economy to become unstuck and cause a radical shift in local social structures.  Outer urban areas away from public transport could see their house prices drop while increasing numbers of people choose local work places or work from home.  Frank Fisher’s article recently in The Age provides some solutions towards clean power for the future. 

The era of cheap hydrocarbons will end: it’s a matter of when, not if.  At this stage, there is no viable cheap non-polluting alternative for transport. Solar power is insufficient, biofuels are possible but will have serious implications on food production capacity.  If climate change is a major issue for the 2007 election, Peak Oil could well be similarly placed for the 2010 election.

Of course, all this could be countered if a clean, constant and free energy becomes available – sounds intriguing!  Some people like Steorn claim that they have found it!

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