Suppressed UK Government Peak Oil Report Released

A report from the UK government's Department of Energy and Climate Change dated 1st June 2009 has just been released and is available to download here.

According to the report, the domestic policies that increase our resilience to peak oil are

• Investment in alternative technologies and renewable fuels for transport (i.e. biofuels and electric vehicles) and heating (through among others the Renewable Energy Strategy, the Heat and Energy Saving Strategy and support for research into new technologies)
• Pursuit and legislation on higher energy efficiency standards (for example new car CO2 standards in the transport sector)
• Regular monitoring and reporting on energy supply, demand, price and other market developments
• Maximise production from maturing provinces, especially UKCS (UK continental shelf)

And the conclusions on peak oil are

• It is not possible to predict with any accuracy exactly when or why oil production will peak
• While reserves are plentiful, existing fields are maturing and the rate of investment in new production is being slowed down (by bottlenecks, the credit crunch and geo-politics). Alternative technologies to oil in transport will take a long time to develop and deploy at large scale
• The implications of tight oil markets and a decline in total production would be higher and more volatile prices
• The UK economy would be initially relatively robust to higher prices; overall, the UK is relatively more immune than most other countries
• However, if peak oil happened before 2015, this would have significant negative economic consequences for some of the main importers of UK goods and services resulting in a negative impact on the UK economy in the longer term

For further discussion - see this article in the Guardian.

What this report fails to appreciate is the squeeze on global crude oil exports. In the oil market since 2005, importers are bidding for a shrinking pool of oil available on world markets. Global crude oil exports peaked in 2005.

And this is having an effect on the price paid for oil on the world markets. The peaking of crude oil exports coincided with the price of oil on the world markets breaking out from the price range that oil had traded in for the previous 20 years.

Once global oil production peaks and enters decline the rate of decline in global crude oil exports will increase. Exports will be squeezed by the typical increasing consumption in countries with remaining reserves and also by falling production. Oil prices will be much more volatile.  There could be no oil traded on the world market in the 2020 - 2040 timeframe.