The UK General Election - what we can expect in the next 5 years

There's a UK general election coming up in the next couple of months.

What can we expect in the next 5 years?

While politicians talk of cuts to come and agree they will be even move severe than those under Margaret Thatcher in the 1980s, a group of industrialists and the Government's own former chief scientific adviser reveal a more fundamental problem that will severely compound our current financial crisis.

What UK industry is telling us

In February this year, a group of UK industrialists launched a report at the Royal Society in London. The industrialists were Arup, Foster + Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group and Virgin. They call themselves the Industry Task Force on Peak Oil and Energy Security and the report is called The Oil Crunch - a wake-up call for the UK economy.

The report finds that

oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years.

To be perfectly clear, this is not a bunch of science fiction writers, communists, environmentalists or hippies warning of economic, political and social strife within the course of the next parliamentary term. The warning comes from UK industry.

What the Government's former chief scientific adviser is telling us

David A. King was chief scientific adviser to the current government. Earlier this year he published a paper. Not unusual for an academic. However, this paper is most revealing. It explains that the commonly used figure for global oil reserves is highly inflated, where the confusion in the data comes from and the actual global oil reserve figure.

So what?

Well, this more realistic assessment of world oil reserves leads to the following startling conclusion:-

This paper supports the contention held by many independent institutions that conventional oil production may soon go into decline ... and it is likely that the ‘era of plentiful, low cost petroleum is coming to an end’

 

 and that

Supply and demand is likely to diverge between 2010 and 2015, unless demand falls in parallel with supply constrained induced recession.

In other words, exactly the same conclusion as the UK Industry Task Force on Peak Oil and Energy Security.

What should we conclude from this?

These two papers are amongst the first signs that the UK establishment are in the process of recognising a peak in world oil production and that the peak is imminent, if it has not happened already. The industry report has already led to the UK Energy minister, Lord Hunt, meeting with UK industrialists to discuss an early peak in world oil production. However, according to a study for the US Department of Energy, mitigation of the worst ravages of peak oil takes considerable time and leaving mitigation to when world oil production peaks would leave a liquid fuel defecit for 20 years.

We have already seen the early effects of peak oil reflected in the price of oil. The graph of historical oil price at the top of this blog shows the recent run up in prices to $147 a barrel. The price then collapsed, but has since increased again to $84 a barrel in what looks like a second oil price spike. The start of the original price run up coincided with the start of a plateau in world crude oil production. Crude oil production has been on a bumpy plateau ever since. Despite record oil prices, when oil producers had every incentive to increase production, world oil production failed to grow. Where the oil price will go on a day to day basis is difficult to predict, but it is generally accepted that peak oil will bring highly volatile oil prices with potentially much higher oil price spikes.

The situation in the UK is further compounded by the decline in our own indigenous fossil fuel production and the need to import more and more of our energy at a time when costs are rising dramatically. This is illustrated in the graph below, borrowed from an article by the excellent Paul Mobbs. The graph shows the balance between indigeneous and imported primary energy over the last eighty years. Our recent generally high standard of living is illustrated in the boom provided by North Sea oil and gas. As North Sea production rapidly declines, the question arises - what are we going to use to pay for the energy imports we will need to replace these indigenous sources? Financial services anyone??

While some of the consequences of peak oil are fairly obvious, the link between energy, environment and economy must be appreciated. While the papers discussed here are amongst the finest descriptions of the peak oil phenomenon, Chris Martenson's Crash Course is perhaps the best internet resource for describing the broader predicament we face.

The conclusion is that peak oil is upon us and we are ill prepared. The political class who are about to seek our votes in a UK general election are either unaware of the problem, not prepared to admit the problem, or only just waking up to it.

The Transition Movement aims to address the issues of Peak Oil and Climate Change.