Peak Oil was a false summit
If you’ve done any hill walking, you’ll know the problem. You walk up towards the peak in front of you, expecting to find a panoramic 360O view of the terrain, only to find a new and higher hill ahead. It was a false summit. And I’m afraid that “peak oil”, touted by the Green Lobby as the ultimate justification for moving to intermittent generating technologies, is a false summit, too.
Back in 1968 we had Paul Ehrlich, in his best-seller “The Population Bomb”, telling us with great confidence and authority that food, and other resources including fossil fuels, would run out in the last century. He was wrong, but the idea refused to go away, and it became fashionable to talk about “Peak Oil”. After all, the world is finite, so resources like oil must be finite, so if we keep using them, they’ll run out. QED.
The logic is unassailable, but the time-scales need a new look. And we should broaden the issue to fossil fuels generally, not just oil, since (A) in principle, any fossil fuel can be used as an energy source; and (B) the Greens hate all fossil fuels, because they all create CO2 emissions.
Like the false summit of the hill walkers, Peak Oil (or Peak Fossil Fuel) just keeps receding. We have the shale gas revolution in the USA which is transforming US manufacturing, and has resulted in US gas prices dropping to a fraction of those in Europe. We have the report from the British Geological Survey (in Keyworth, Notts, in my East Midlands Region) indicating that shale gas resources in the UK are much larger than previously thought. There is likely to sufficient accessible gas for decades, perhaps centuries, of current consumption. The Bowland Shale formation in the North West of England is said to be three times thicker than the vast Marcellus field in the USA, suggesting not only large volumes of gas, but relatively efficient extraction possibilities. There are new discoveries everywhere.
Just now large fields in the Eastern Mediterranean, for example, are being explored. The shale gas just keeps coming.
The shale gas revolution in the US has had an interesting side effect: there is a large amount of low-cost American coal being freed-up as US generators switch to shale. Much of this coal is coming to Europe, where coal use is increasing, despite the green posturing of the European Commission. Both Germany and Japan, in the aftermath of the Fukushima incident, have foolishly decided to close their nuclear fleets. In my view, both countries will be forced to re-consider. But in the meantime, Japan is adding new coal capacity, and Germany is building or refurbishing as many as twenty-five coal-fired power stations.
But it gets better. US shale gas is an old (or at least a mature) story by now. The hot news on the block is that shale oil is also being extracted, and — cue astonishment — US oil production is likely to exceed that of Saudi Arabia by 2020. Just a few years ago we expected the US to depend increasingly on imported oil, driving up global prices. Now the tables are turned, and the outlook for oil prices is much more positive. There is, however, a geo-political down-side. If the USA no longer needs oil from the Middle East, it may be less inclined to keep a naval battle-group in the Gulf. Europeans who still depend on Saudi Oil may have to look to their defence capabilities.
Then beyond shale gas, we have methane hydrates, which on some estimates are equivalent, in energy terms, to all the known reserves of all other fossil fuels in the world combined. “Peak Fossil Fuel” has disappeared over the horizon.
This new reality knocks the bottom out of the EU’s (and the British government’s) case for intermittent technologies (or “playground technologies”, as I like to call them). In reality, there is no economic case for wind and solar, but attempts to justify them only appear to work if you make eye-watering assumptions about future increases in fossil fuel prices. It’s looking increasingly unlikely that such increases will happen any time soon.
I’ve used it many times, but I don’t apologise for repeating the metaphor: the Stone Age didn’t end because we ran out of stones. It ended when we developed better technologies. And the same will be true of fossil fuels.