Peak Oil is the global term used to describe an eventuality when world oil production reaches a maximum, and then relentlessly falls. Such "peak" models are based on an inexorable rise in demand for oil, against an infrastructural lack by which to meet that demand (i.e. you can't pump out more). Supply-demand gaps are to be expected en route but once the peak is reached, the shortfall in supply is catastrophic. As a rider to this, it should be noted that while "global peak oil" is a numerical reality - i.e. the maximum sum of barrels of oil ever produced in the world in total, in a given year - the processes of it are rather more subtle, since different fields, under the control of various regimes will peak at different times, thus shifting the emphasis of economic and political control across the globe. Those without oil will become weak and those with plenty of it will become strong - or targets for other nations who want to grab their oil.
Now, the assumption of relentless demand has been called into question in a new report entitled "The Beginning and End of Oil" by Peter Hughes, who is a director of Arthur D. Little's global energy and utilities practice. The main issues surrounding oil, climate change, security of supply, and an amplitude of market volatility that could bring economic ruin to nations and then the world, are lucidly clear. Rather than simply waiting in a spirit of foregone conclusion for these calamities to unfold, it is likely that governments will be forced to act preemptively to anticipate and provide alternatives, which will curb demand for oil.
It is a global energy-mix that is to be contrived, rather than a single solution, which there is not. The recent hike to $150 and then a crash to $30 for a barrel of oil hand in hand with the credit crunch, makes it clear to most governments that deliberately reducing our demand on oil is a policy imperative. Of all the energy-resources, oil is especially vulnerable since more than half of the world's 30 billion barrel annual count goes to fuel transportation. The absence of alternatives to oil-based fuels has cemented the outstanding stature of oil as literally empowering the engines of progress.
However, a chain of policy initiatives spanning the globe is encouraging more energy-efficient technologies throughout the transportation sector - whether on the road or in the air. High efficiency diesel engines and hybrid and regenerative breaking systems can extract more than twice the tank to wheels miles that conventional spark-ignition/petrol engines can. Meanwhile there are aircraft fuselage designs that promise savings of 30% on fuel costs, and high-temperature aircraft engines that recover energy more efficiently from fuel, so long as sufficient quantities of metals such as hafnium can be recovered to bring them to a proficient reality.
Peter Hughes, a director of Arthur D. Little's global energy and utilities practice, said:
"As the number of new policy measures implemented to reduce reliance on hydrocarbons for transportation reaches critical mass over the next 10 years, the world could see downward pressure on demand for oil and oil-products materialize much sooner than the [oil] industry would currently concede. Depending upon how quickly the transportation sector begins its migration away from oil, we could find ourselves at a tipping point in which demand for oil peaks much earlier than the industry currently anticipates, before going into long-term decline."
In the wavering scales of the energy-balance, (the report says that) oil and gas companies should reconsider the sustainability of their business models and accelerate their moves to spread into other sectors of the "energy value chain" (not a phrase I would use but is "management speak"). A greatly increased contribution from coal, natural gas, nuclear power and "other alternatives to hydrocarbons" (whatever they may prove to be) is to be expected.
The report concludes that electricity is likely to be the main supply vector for delivering energy to customers which will "create demand for multiple sources of clean power as well as the infrastructure to deliver it."
All in all, it is better to close the stable door before the horse bolts, rather than after. We will need to make the kind of changes outlined eventually, so let's begin making them now, while we still have enough conventional energy in hand to establish new paths. Probably we are involved in a game of "tag" between reducing demand and falling supply. Whichever comes first will win-out.