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from 04 sept 2005
blue vol IV, #21 |
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Part One 
by Steve Booth of Green Anarchist
Oil is a finite resource. The stated reserves (2004) are 1,188 thousand million barrels [1] and annual consumption is put at 71,890K barrels per day. This gives us around 41 years. Attention is being given to taking oil out of the Caspian Sea area, with BP recently opening its new Baku-Tbilisi-Ceyhan pipeline, [25th May 2005] and other speculative reports about US deals in the former Soviet Asian Republics. One of the factors which worries analysts is China, who increased its consumption by 16.8% from 2003 - 2004. It overtook Japan in consumption in 2003, and has averaged a 9% increase per year. It has established links with Sudan, and recently CNPC took over the Kazakhstan state oil company for $4.2B. Chinese oil expansion may also lie behind the recent shock of the US being asked to leave their K2 airbase in Uzbekistan [30th July 2005] China bid for a US oil company, UNOCOL, and was rebuffed, [26th July 2005] and has also been moving into Canadian oil. Reserves overstated There is clear political and economic pressure to overstate the amount of oil still underground. On 5th February 2004, Shell executives were sacked over overstating their reserves by 40%. Ten years ago, Dr Colin J Campbell stated that 45% of the OPEC stated reserves were doubtful. More recently, it has been claimed that the Saudi Arabian oil reserves have been overstated by 25%. [2] Perhaps most tellingly, Professor Kjell Aleklett, Anders Sivertsson, and Dr Campbell, at the University of Uppsala, produced a report which claimed that the world oil reserves might be overstated by 80%. [3] Other oil experts are increasingly pessimistic about the outlook, [4]. It's later than you think If these studies are anything like correct, then there is less time than people think. The 40 years estimates may well be wrong. If we are 40% overstated, then we have 18 more years of oil. If 80% then we have a mere five. Back in 1956, Dr M King Hubbert suggested that oil production follows a curve, rising over time, peaking at some point, and then going into decline. The amount of oil which can physically be extracted from the ground is a finite quantity (the area under the curve). As the amount of oil extracted goes into decline, the price rises. When will the peak be passed? Dr Colin J Campbell suggested 1999, but then revised his estimate, stating the first decade of the 21st Century. There is an assumption that the graph will be a smooth and symmetrical curve, but the reality is that it is subjected to shocks like the 1974 oil crisis. As the peak is approached, the degree of political denial grows. There is an attempt to prove that production can be increased, year on year. Extraction and demand must be kept up. This is seen in US demands to Saudi Arabia, for example, to pump more oil, and keep the price down. However, one penalty of pumping harder than the optimum value for the age of the oil field is that some oil in the lowest part of the oil bearing rock is trapped, and cannot be extracted. The implication of reaching Hubbert's Peak is that from then onwards, the price of oil will rise. We have seen recent increases in oil prices. In the 1990s, oil averaged $14-15 per barrel. Back in February 2003 it was $33. By 12th August 2005, it reached $67.10, more than double in two years. There has been a 13.4% rise in raw material prices in the last year [5]. The consequences of this denial are that the downward side of the graph is steep. There is an inertia effect where customers are reluctant to change and there is also a vested interest effect, where companies are unwilling to invest in new technologies and approaches. The profits of keeping to oil militate against the change over. in this present phase, production rises, and strains against what is possible. Money is invested in new oil technologies, to pump more out, but this attempt flounders on the reef of diminishing returns. The strategic thing to do would be to invest that money in alternatives to oil, but for the most part, the long term strategic vision isn't there. Oil demand expands, but ultimately cannot be met. As supplies run out, the price rises. The wells run dry. The markets can read the graphs, though for a time, the spin doctors will have their way. The war against Iraq is one aspect of this (it's all about controlling the oil). Behind the scenes, but increasingly in the open, the superpowers, America and China scrabble for what is left. The effects of this will be felt in the High Street. We have seen a fore shock of this in the September 2000 fuel crisis. We can ride this out, to the extent to which we anticipate the likely effects of the coming oil crunch, and take steps to minimise it. The three main ways it will affect us are:
Capitalising on the Crisis The people in the Peak Oil Symposium were absolutely right to urge people to prepare themselves for the coming oil crash. There will certainly be a recession. It will be worse that the crash at the end of the 1980s, or the negative equity slump in the early 1990s housing market. Yet it is important not to overstate the position. The coming oil crunch does not spell the end of capitalism, nor the end of industrial technological civilization. The fact of oil running out will cause many problems in the short term, in the long term the system will respond to the challenge, and will probably thrive because of it. People in the symposium based some of their ideas on the September 2000 oil crisis. Thus they foresee things like bread running out in the supermarkets. This is alarmist. The 2000 crisis was a short term effect. As we all know that oil is ending, there is time to prepare substitutes. Even at a local level, we can take simple steps to meet most of our basic needs, for example by building up stocks of warm clothing, growing our own vegetables, reducing our transport needs, using bicycles or walking. The symposium was right to urge people to live simpler lives and to leave the cities for the countryside; but green minded people have been doing this for years. In smaller, local based communities, there is a greater degree of self-reliance, but also a higher level of mutual support. More generally, there are five obvious and simple strategic steps, which will greatly reduce the pain when it comes:
Take the example of potatoes. On a typical fruit and veg stall, you may get potatoes from Cyprus, from Egypt, from the Channel Islands and other places. Clearly, it is the existence of oil which enables these to be transported. But there are also plenty of potatoes grown in Pilling, perhaps twelve miles from where I live. Cutting out the imported spuds would strengthen the demand for local produce. I would suggest that this is not a bad thing. Were I to be a capitalist, I would be sitting down, thinking about the coming oil crunch, and ways of making money out of it. Inflated oil prices caused by the shortage are profitable - Shell profits last year came to £9.3B (a record) [reported 3rd February 2005] and BP at £8.7B, up 26% [8th February] and Shell again for the first half of 2005, at £5.84B. [29th July] I would invest in alternative fuels, fuel cells, substitutes for plastic, and other such things. I would push for political incentives and support for wind farms and solar cell technologies, and make sure I was in on the ground floor with them. Capitalism is quite capable of cashing in on the situation; just as in war, the profits of the arms manufacturers are secure. The switch to sustainable fuel technologies will be good for the ecology of the planet. The coming oil crunch is a consequence of globalisation, and so, to the extent that there will be a recession, weakening in High Street sales, unemployment, empty supermarket shelves, a sudden dearth of plastic trinkets or a 4 x 4 shortage, an increase of mothers walking their children to school, so too will there be a propaganda opportunity to criticise globalisation. It is possible to imagine future wars, for example America attacking Iran, and no doubt Blair would be Right Behind Bush (assuming that either of them are still here for it) but this sounds so much just like business as usual to me. The lessons of the Iraq war need to be learned by the protest movement. Should the US and China come into conflict, it is vital that Britain is not caught up in this. The time for the UK to walk away from America is long past. [6] The crisis should be used as a lever to bring about social change. But are the radical people prepared for it? By switching to dependence on the local, the political and economic structure of society alters. With the five steps outlined above, many aspects of the response to this accord with the radical agenda. Some have broader economic and social implications, which imply political and structural action. In a time of abject crisis, astonishing things are sometimes possible, when they would not happen during 'normal' times. Here, a bit of forethought and pre-positioning is required. Suppose, for example, you believed bread was going to run out. You could collect together the equipment and means for communal bread making - find safe local supplies for flour. When the corporate bread supply gave out, you would be there to supply your community with bread. Thus fed, people would be more inclined to listen to your ideas. We need to be there, in with our demands at the start, for local control over facilities, and community action to meet our basic needs. UK energy and transport requirements: In this section, I want to comment on our approach to the existing and future energy and transport needs. Much of our energy requirement is met through electricity. Our transport needs depend on road vehicles which in turn need petrol and diesel. UK oil consumption remains fairly constant. In 1989 it was 1,745 thousand barrels per day. In 1995, 1,705. European consumption follows a similar trend. Though more road miles are driven, the engines are more efficient, but clearly there are limits to how far this can be pushed. In 2004, it was reported there were 294,357 million vehicle miles of road journeys made. How much of this demand can be eliminated? How much replaced with renewables? Electricity It is obvious that central to the preservation of the present way of things is the electricity supply. In the early years of the Twentieth Century, the UK electricity supply industry was chaotic. Some generators were set up by local councils, and others by private companies. Supply frequencies varied from 25-100 Hz, some were D.C. and there were similar variations in voltages. There were 438 power stations and 572 suppliers. Many of these were out of date and inefficient. In 1919 a Royal Commission was established to sort this out. It determined to build a national grid of 132,000 volt transmission lines. Domestic supply was standardised at 230 Volts, 50 Hz. 122 power stations were retained and the remainder closed. In 1926, as a result of the Commission's work, the 'Central Electricity Board' (CEB) was set up. Over the next decade 2,900 miles of primary high voltage overhead cable were built, and 1,000 miles of secondary lines. Pre 1939, Battersea Power Station could deliver 250,000 KW. Following WW2, the demands placed on the system rose, and the capacity of the National Grid expanded. By the mid 1960s, places like High Marnham could deliver 945 MW, and a string of power stations like that were established all along the River Trent. In 1978 there were 137 UK power stations with a capacity to generate 56,326 MW at any one time. Peak demand was 42,803 MW. Over the year, 211,914 GWh were generated. In 1985, at the end of the Miners' Strike, 235,379 GWh were generated. Most importantly, 92% of the generating capacity was coal fired. 72,776 thousand tons of coal was burned, and 12,759 thousand tons of oil. By 2002, about a third of UK generating capacity was coal fired. 352,985 GWh of electricity was being generated, a 60% increase on 1978. 46,779 thousand tons of coal was burned in power stations. Peak demand stood at 53,000 MW. Despite this, under the renewable energy policy set in April 2002, a target of 10% of UK generation is to be from renewables by 2012. Coal fired power stations are the backbone Since the 1993 closure of coal mines, a number of the smaller coal fired power stations like Drakelow, High Marnham and Fifoots Point have closed. There has been some rationalisation where coal powered generating capacity has tended to concentrate on the larger plants like Drax at 4,000 MW, Didcot at 2020 MW, and Longannet 2,304 MW. By 2004, the total UK generator capacity was somewhere between 75,000 MW and 80,000 MW. The peak demand of 53,000 MW would be met from a permutation of the 20 GW which was gas fired, 10 GW nuclear, 1 GW hydroelectric, or the 27 GW from coal fired plants. According to 'Hydrogen Now! hydrogen fuel lobbyists, the coal fired plants are the real backbone of the system. "It is the 27 GW of available coal fired plants that keeps the lights on and avoids power cuts in the winter in the UK." [7] Coal's market share of UK electricity production fell to 32% in 1999, in the face of the so-called 'Dash for Gas' but rose back to 40% in 2001, responding to higher gas prices. With North Sea gas in decline, much of our future gas will be bought from Russia and brought here through pipelines across Europe. 80% of our demand will be met from Russia by 2012. Already gas prices are rising, in line with the oil price hike. The 'Dash for Gas' does not look so clever. Energy security is becoming a worry, with a recent TV documentary discussing the issue. Coal is seen as one of the answers. Burning more coal carries a penalty though, with a 1.5% rise in CO2 emissions in 2004. [8]. In 2001 Europe as a whole emitted 1,677 M tons of CO2. [9]. In the last quarter of a century, Europe has more than halved its sulphur dioxide emissions, dropping from 60M tons in 1980 to 27M in 1998. Transport Waiting for the bus, we have observed that somewhere between 80% - 90% of urban journeys are made by SODs (Single Occupant Drivers). Therefore, most of the present vehicle use could be eliminated by switching away from the selfishness of SODs towards communal transport - for example minibuses and public transport. Mostly, this is a change of social culture rather than any change of technology. People could walk, people could use bicycles. There might be a resurgence in horse drawn transport. It won't kill them - in fact there might be massive health benefits. To cut down on vehicle road use would reduce carbon emissions and particulates, making the air more breathable. The question is, at what price will people make the switch? When oil reaches $100 a barrel? When the price at the pumps reaches £1 a litre? - We are about to find out. A sensible government would do everything it could to improve public transport. More buses and trains are needed, and ways must be found to make these more frequent and reliable, and above all else, to bring the prices of tickets down. Railways This suggests that an effort to improve the railway network is required. In 2001, Dr Paul Salveson wrote a report 'Beeching in Reverse' which suggests that towns formerly linked to the network should have their links restored. Investments in new trains, improvements in safety and signaling are needed. In Scotland there is a project to restore part of the Waverley Line between the borders, and Edinburgh. [10] In Lancashire there is a campaign to bring back the line between Skipton and Colne, a major transpennine link. [11] In Bedfordshire, the line between Bedford and Sandy is to be rebuilt. Much of this is a matter of finding the political will and funding. There is money for crossrail schemes in London and for the Channel Tunnel Rail Link. Why not in other parts of Britain also? New railway stations need to be opened up, and it is also a national scandal that we have not seen the electrification of the Paddington to Bristol line. Ways have to be found to connect up industrial centres to the railway network. In 1977, 40,443,000 loaded train miles with freight were completed. Over the last decade or so, there has been a rise in the use of rail for freight. Five companies; EWS, carrying (70% of railway freight), and Freightliner, GB Railfreight, DRS and Advenza, together shift 100M tons per year, and this figure has grown 50% since privatization. The railway share of the total UK freight market went from 8.5% to 11.5% in the last decade. [12] A major reason why railway privatization has been a failure was that the post privatization infrastructure set up was dictated by EU directive 91/440. Three quarters of all railway freight is concerned with four heavy industry sectors: Coal for power stations, iron and steel, petrol products and aggregates. A significant recent act of stupidity was the closure of railway postal depots and the scrapping of postal trains. The post office underground system in London has been mothballed. Instead of passing through central London at 20 mph, post now moves at 5 mph in vans. During the mid 1990s, 70 rail freight terminals were opened. The use of railways for freight would be more viable were fuel duties and road tax payments due on heavy lorries increased to reflect the true cost of 44 ton truck damage to the roads and the environment. Unfortunately, the political power of the road transport lobby prevents this. Canal transport In 1905, there were 3,822 miles of canal, carrying 42,359,388 tons of cargo, and this mostly pulled by horses. [13] By 1968, at the beginning of the canal resurgence, this had shrunk to 2,242 miles. [14] In 1982, canals took a mere 0.5% of goods, compared to about 10% on the railways, and 89.5% on the roads. With increased efficiency, mechanisation of loading and unloading, and perhaps by installing inclined planes to by-pass long chains of locks, it seems realistic to think that the carrying capacity of the canals could increase to perhaps one fifth of our transport needs. It has been shown that both canals and railways use a quarter of the energy of road transport. A waterway uses 491 Kilojoules/tonne/Km, a road uses 2,023. [15] Canals are slow, of course, but they could be used to transport bulk items, regularly required goods on a steady demand basis, where the time spent in transit is not so important. Coal If oil ended tomorrow, the most obvious response for the UK would be to revert to coal. The peak year for UK coal production was 1913, when 287 million tons of the stuff was extracted. In 1978, 119 million tons was brought to the surface. By 2002, this had been reduced to 29.6 million tons, with a similar quantity of coal being imported. Prior to the Conservative Party killing off the UK coal industry, the National Coal Board used to claim that 450 years reserves were buried down below. The British Geological Survey claimed the true figure was less. Kenneth Fergusson stated it was 100 years worth [BBC Report, 27th July 2004] while COALPRO stated it was 50 years. [16] The US Energy Information put UK coal reserves at 1653 Million tons. Where confusion enters into the figures is over the condition built into the definition of 'reserves' - "Known about and economically recoverable". This is where the politics enters into it. Prior to the decimation of the mining industry by Heseltine in 1993, many mines had productive reserves of over 100 years. Once a mine is closed, the coal it would have mined is no longer deemed 'economically recoverable' and disappears from the statistics, but the coal is still down there. European Union Limits Section 5 (6) of the Coal Industry Act 1994 prevents planning permission being given to open up new mines. There are also European regulations which limit the quantities of British coal being burned in power stations. Imports of coal to Britain increased from 7.3 million tons in 1980 to 36.2 million in 2004. Under the EU Emissions Trading Scheme (EUTS) the limit of 37M tons of coal per year has been set. Coal is imported from South Africa, Australia, Columbia, Russia, USA, Poland, Canada, and China. A mere £55.8M subsidy to British coal is permitted, despite the coal industries in other European countries being heavily subsidised. On present trends imported coal is expected to rise from around 50% of the UK demand to 70% by 2020. The trade union, Amicus, claims the European restrictions, particularly the Combustion Plant Directive, and the Carbon Trading Directive are going to cause a shortfall in the UK generating capacity by 2020, because these force the power stations to be closed before the end of their productive lives. [17] Sea Coal There are also very large offshore deposits particularly under the North Sea, off Lincolnshire and The Wash, the East and West Shetland basin, and near Bora on the Moray Firth. There are others in the English Channel, South Celtic Sea, and the St George's Channel. [18] If the energy crisis did become acute, offshore extraction in these places may be seen. It is also suspected by some that there are large coal deposits near the Falkland Islands. Next week, Part 2 - Cleaning up existing technologies vs. Renewables 
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