What is 'peak oil'? When might it happen and what effect might it have on transport usage and transport planning?

Paper for the Transport Planning Society's Bursary Award

Christopher Mason - September 2008

Introduction

Introduction

“...the peaking of world oil production presents the US and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and without timely mitigation, the economic, social and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance”

(Hirsch et al 2005)

Presentation Outline

- Peak oil theory (What and When)

- Transport and oil

- Alternatives to oil

- Peak oil and climate change interaction

- Conclusions and way forward?

Peak oil theory - What

Peak oil theory - When

- 'When?' is the crucial question

- Difficulties in predicting peak due to OPEC, political and institutional self interest and other factors

- Within the time-scale of policy and appraisal

Timing Source2006-2007 Bakhitari AMS Iranian Oil Executive2007-2009 Simmons MR Investment bankerAfter 2007 Skrewbowski C Petroleum journal editorBefore 2009 Deffeyes KS Oil company geologist (ret)Before 2010 Goodstien D Cal TechAround 2010 ASPOAround 2010 Campbell CJ Oil company geologist (ret)2010- 2020 Laherrere J Oil company geologist (ret)2016 EIA nominal case DOE analysis informationAfter 2020 CERA Energy consultants2025 or later Shell major oil companyNo visible peak Lynch MC Energy economist

Peak oil theory – the role of OPEC and Saudi Arabia

Saudi Oil Production

Non-OPEC, non-FSU Oil Production

Peak oil theory – Future demand and price

World oil supply and demand

“a 4% global shortfall in supply results in a 177% increase in

the price of oil”

- US National Commission of Energy Policy

Transport and oil

Approx 95% of transport activity is fuelled by oil products

Alternatives to oil

There are significant barriers to the introduction of most alternatives

- Biofuels

- Hydrogen

- Electrification

- Natural Gas

- Improved supply and demand side efficiency

- Non conventional oil

Peak oil and climate change interaction

“Climate change is not simply an environmental problem, but a threat to international peace, security and development” - DTI 2006

Not all peak oil solutions are climate change solutions, e.g.

- Use of unconventional oils- Relaxed drilling regulations- Massively scaled biofuels

The UK Perspective

UK North Sea oil and gas peaked in 1999 and had fallen by 36% by 2006 – BERR 2007

Government's position?

Conclusions

- A peak in global oil supply is inevitable

- Within the time-frame of TaSTS, Eddington, and 30-60 year appraisals

- Volatile oil prices will make modelling 'business as usual' scenarios increasingly difficult

- Peak oil solutions must also be climate change solutions

- Transport planners have a vital role to play

Any questions?