Transcript Peak Oil, Oil Shortages and Global Governance Bruce Robinson, Convenor 22nd May 2012 Peak Oil but when? 200 1 41 81 121

Peak Oil, Oil Shortages and Global Governance
Bruce Robinson, Convenor
22nd May 2012
Peak Oil
40
but
when?
30
20
10
0
1930
1
21
1970
41
61
2010
81
101
2050
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www.ASPO-Australia.org.au
An Australia-wide network of professionals working to reduce oil vulnerability
Working groups
Oil & Gas industry
Urban and transport planning
Finance Sector
Health Sector
Social Services Sector
Regional and city
Defence and Security
Conservation and Environment
Remote & indigenous communities
Active transport (bicycle & walking)
Agriculture, Fisheries and Food
Biofuels
Construction Industry
Public transport sector
Economics
Tourism
Children and Peak Oil
Young Professionals working group
2
● What is Peak Oil ?
the time when global oil production
stops rising and starts its final decline
Outline
● When is the most probable forecast date ?
? 2014 +/- 5 years
Why is the risk being largely ignored?
● Serious global oil shortages are quite likely in the
near term. The evidence is mounting.
Peak Oil
40
but
when?
30
20
10
0
1930
1
21
1970
41
61
2010
81
101
2050
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● “Peak Exports” will arrive sooner, as exporting countries
use more of their own oil internally, leaving less for export
Forward planning and governance should include
serious consideration of "Peak Oil" scenarios
Oil vulnerability assessment could be a valuable
precaution
3
The Theory of Black Swan Events is a metaphor
The event is a surprise (to the observer) and has a major
impact. After the fact, the event is rationalized by hindsight.
4
Revised edition, 2008
Why do leaders consistently ignore looming signs of crises
even when they know the consequences could be
devastating?
Most events that catch us by surprise are both predictable
and preventable, but we consistently miss (or ignore) the
warning signs
Is Peak Oil a "Predictable Surprise" which is being ignored??
5
Sydney Morning Herald, 10th July 2008
7
26th January 2012
8
26th January 2012
"The modelling is forecasting what can be termed ‘the 2017 drop-off’. The
outlook under a base case scenario is for a long decline in oil production
to begin in 2017
BITRE 117 David Gargett
11
BITRE 117 David Gargett
12
Oil prices to double
by 2022, IMF paper
warns with sweeping
implications for the global
economy, according to a
report commissioned by
the International Monetary
Fund.
(West Australian 15th May 2012)
Global oil production limits are in sight.
Macquarie report, 2009
13
Dr. Sadad I. Al Husseini, ex Saudi Aramco
Oil and Money Conference, London, October 2007
...predicts a 10 year plateau
a structural ceiling determined by geology
Price
$/barrel
Production
M b/day
100
90
80
70
The economic mantra is that as prices rise, production will increase.
Clearly not true from these data.
14
US military warns oil output
may dip causing massive
shortages by 2015
April 11th 2010
'Peak Oil' and the German
Government
Military Study Warns of a Potentially Drastic
Oil Crisis 1st September 2010
By 2012, surplus oil production capacity
could entirely disappear,
and as early as 2015, the shortfall in output
could reach nearly 10 MBD
February 2010
16
"A MIDDLE EAST VIEW OF THE GLOBAL OIL SITUATION"
A.M. Samsam Bakhtiari
National Iranian Oil Company
May 2002
“Noah built his ark before it started raining”
It is very hard to build an ark under water !!!
We must start preparing for Peak Oil in advance,
as Noah did for the flood
There are many simple things that people and governments can do to reduce their oil
vulnerability.
www.isv.uu.se/iwood2002
17
www.csiro.au/resources/FuelForThoughtReport.html
18
US oil peak 1970
mb/d
10
US Oil Production
1910-2010
(million barrels/day)
8
6
??
4
2
0
1910
1930
1950
1970
1990
2010
19
Big fields are found first, and as they decline, they are replaced by smaller and smaller fields
soon the additional small fields can not match the decline of the large fields,
so the overall production begins its final decline
20
World Discovery Peaked in 1964
Billion barrels of oil per year
After Longwell, 2002
60
50
Discovery revisions backdated
3-year moving average
Campbell 2012
40
30
20
10
0
1930
1950
1970
1990
2010
2030
21
IEA November 2008
The world is heading for a catastrophic energy
crunch that could cripple a global economic
recovery because most of the major oil fields in the
world have passed their peak production, a leading
energy economist has warned. (IEA’s Fatih Birol)
The IEA estimates that the average production-weighted
observed decline rate worldwide is currently 6.7% pa for
fields that have passed their production peak”.
22
2008
Even if oil demand were to remain flat to 2030, 45 m barrels/day of gross capacity -roughly four times
the capacity of Saudi Arabia - would be needed just to offset the decline from existing fields
World Oil Production Forecast
Billion
Barrels / year
ASPO-2011 (Dr Colin Campbell)
30
Gas plant NGL
Polar
Deepwater >500m
20
Heavy & frac.
Regular Convent.
10
2012
0
1930
1950
1970
1990
2010
2030
A simple observation -- or why peak will be earlier
than most people expect
Chris Skrebowski
Petroleum Review
London
‘Global production falls when loss of output from countries in
decline exceeds gains in output from those that are expanding.’
Expansion
Decline
25
Australia uses 58,000,000,000 litres of oil each year
a cube of almost 390 metres size (2009)
70% of Australia’s oil usage is in transport
If Australia’s 20 M tpa wheat crop → ethanol = ~10%
Perth’s Central Park
building is 249 m high,
to top of tower
Million barrels/ day 2010
BP Statistical Review, 2011
Australia uses
0.94
China
9.1
US
19.1
World
87.4
US 1 cubic km oil / year
Australia
l
China
1 km
l
United States
27
China – Motor Vehicle Production
(units)
Global Motor Vehicle Production
(Share of total)
Consumption
1000 Barrel/day
7000
China
4000
250
Production estimates from
Chinese scholars (Pang, 2005)
200
150
100
1000
50
Production
0
5 7
1965 1970 1975 1980 1985 1990 1995 2000 20051 32010
9
11
13
152020
17
-2000
-5000
Imports
Data: BP. Analyse: Zittel LBST, ß, Pang Xiongqi
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1000 Barrel/day
6000
4000
2000
UK
Consumption
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
-2000
-4000
Quelle: BP Analyse: LBST, ß
Export/Import
Production decline rate ~ 10%
UK already a net importer
1000 Barrel/day
6000
Indonesia
3500
1000
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Consumption
Export >
Import
-1500
-4000
Quelle: BP; Analyse: LBST, ß
31
1000 Barrel/day
12000
Saudi Arabia
Production
8000
4000
Consumption
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
BP Statistical Review, ß
32
"Anyone who believes exponential
growth can go on forever in a finite
world is either a madman or an
economist."
IEA
US-EIA
Kenneth E. Boulding,
economist
1910-1993
"The only function of economic
forecasting is to make astrology
look respectable"
John Kenneth Galbraith
33
Oil Prices and Australian Government economists' forecasts
(WTI monthly average)
ABARES' economists and others
have been systematically wrong
in their oil price forecasts
140
120
2011
100
2010
80
2008
2009
60
2006
2007
40
2005
2004
2003
20
2002
♦
♣
0
Jun-00
Mar-03
Dec-05
Sep-08
Jun-11
Mar-14
Nov-16
Economists' forecasts published Nov 2005
Prof Tony Owen, then at UNSW
Nobel Economics winner, Vernon Smith (at UNSW)
♦
♣
$35/barrel in a couple of years
$15/barrel in the near future
34
www.ASPO-Australia.org.au
General priorities for facing Peak Oil
1: Awareness and engagement
2:
Frugality
3:
Efficiency
4:
Equity
Low priority
Alternative fuels
and technologies
Failure to act now will prove incredibly costly
An oil vulnerability assessment and risk
management plan is an essential first step for
government and business
Governance at all levels should include
consideration of oil depletion and future oil
shortage
Hint: Check your superannuation
is not being invested into urban tollroads, tunnels and airports.
[email protected]
0427 398 708
08-9384-7409
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36
ENERGYwww.energyfiles.com
FILES
Rich
Poor
Energyfiles Ltd
Oil consumption is not shared equitably
37
The Economist
17th June 2010
38
Government Policy and Action Options
1: “Talk about it, Talk about it”
2. Engage people, “Participatory democracy”
3. Dismantle the "perverse policies" that subsidise heavy car use and
excessive freight transport.
4. Encourage frugal use of fuel, and disadvantage profligate users.
Fuel taxes should be incrementally raised to reduce usage.
5: SmartCard personal fuel allocation system. A flexible mechanism for short-term oil
shocks, as well for encouraging people to reduce their fuel usage..
6. Concentrate on the psychological and social dimensions of automobile dependence,
not just “technological fixes”
7. Implement nationwide "individualised marketing" travel demand management.
8. Railways, cyclepaths and public transport are better investments than more roads.
9. Give priority for remaining oil and gas supplies to food production, essential services
and indigenous communities, using the Smart-Card system.
10. Review the oil vulnerability of every industry and community sector and how each
may reduce their risks.
11 Promote through the United Nations an Intergovernmental Panel on Oil Depletion,
and a Kyoto-like protocol to allocate equitably the declining oil among nations. An
international tradable sliding scale allocation mechanism is one hypothetical option.
39
Bicycles are powered by
biomass, renewable
energy
either Weetbix
or abdominal fat
No shortage of either
www.ASPO-Australia.org.Au
40
The graphed number of discoveries is misleading and deceptive.
It would be far more honest and relevant to graph the cumulative volume discovered.
This would not be so encouraging.
41
a few more slides follow,
in case they are needed for questions
42
80
Per capita oil consumption
(Barrels/day/1000 people)
EU plus some others 2008
60
USA
Australia
Japan
40
UK
Bangladesh
20
China
0
B C R P B SK H C P U IT LT To FR D SE A D ES Ja E FI A IE N N U B
an hi O L G
or L SA +
E
us
U Z T K
T K
pa L
ta
w
gl na
tr
LU
lE
n
ay
a
ad
l
U
ia
es
(+
N
h
or
w
BP Statistical Review, 2009
ay
)
43
Two analogies for Peak Oil risks
1. Hurricane Katrina
(New Orleans, 2005)
2. Global Financial Crisis
(World, 2008-2010- ?)
Can we learn to prepare in advance
for probable events rather than
just hoping business will be as usual ?
KOSPI
Past "Predictable Surprises" which were ignored
44
Oilfields and oil provinces "peak".
Oil Production UK, field by field
(EnergyWatch Group, 2007)
Their production rises, reaches a maximum and then declines
Mexico's Cantarell giant
(Simmons)
Alaska's giant Prudhoe Bay
(Simmons)
Oil production,OECD Europe
(EnergyWatch Group, 2007)
45
46
47
48
Australian petrol & diesel rationing using 2010 technology
Smart-card based, scalable, tradeable, flexible, quick to change, equitable, transparent.
Fuel allocations should be per person, not per vehicle, and depend on
Location
(inner or outer suburb, public transport access, regional or remote)
Health status (elderly or infirm, expectant mothers with toddlers), less for the fit
who can ride a bicycle 20kms if needed
Job importance (defence, essential services, hospitals, food)
People are encouraged to conserve by being
able to trade unused allowances electronically
and automatically.
Martin Feldstein,
Chief Economic Advisor to
President Reagan,
now at Harvard, (WSJ 2006)
"tradeable gasoline rights
are more efficient than
fuel economy standards
or gasoline taxes"
49
Water Analogy for Fuel Pricing
A rational pricing system
Perth domestic water
Renewable scarce resource
A personal fuel SmartCard
system could tax petrol and
diesel on a sliding scale like
water.
People could trade unused
allocations to those who
want more fuel.
$2.00
Perth domestic water prices
per kilolitre 2008
$1.50
$1.00
$0.50
$0.00
0
150
350
550
Consumption range kilolitre/year
950
50
51
There are innumerable “Perverse” subsidies
to
roads,
4WDs
profligate vehicle users
heavy inefficient vehicles
FBT tax on cars
as part of salary
FBT tax on motor vehicles
30%
20%
10%
Supermarkets subsidise
CO2 $18/tonne
with their fuel dockets
0%
0
15,000
25,000
km range
40,000
Supermarket petrol discounts
People who walk to the
supermarket are subsidising
those who drive in the big SUVs
52
Gb/year
50
40
Efficiency
Transport
mode shifts
Demand
Growth
World oil
shortfall scenarios
Pricing / taxes
30
City design/lifestyle
Other petroleum fuels
gas, tar-sands
Other fuels
Past Production of Oil
20
Forecast
Production
10
0
1930
Deprivation, war
2009
1950
1970
1990
2010
2030
2050
• no single “Magic Bullet” solution,
• probably no replacement ever for cheap plentiful oil
• Urgent preparation and adjustment are vital
53
Rembrandt Koppelaar Oilwatch Monthly, January 2010
54
Gb/year
50
40
30
20
10
50
Demand
Trend
World oil
shortfall scenarios
40
Shortfall
Past Production of Oil
30
20
Forecast
Production
10
0
1930
2007
2030
2010
2030
0
1950
1970
1990
2050
By 2030, the gap is equivalent to 6,000 nuclear reactors
55
“OK, it’s agreed – we announce that to do nothing is not an
option and then we wait and see how things pan out”
from ‘Private Eye’
56
Government of Western Australia
STATE LIQUID FUEL SHORTAGE
EMERGENCY PLAN
OPERATIONAL PLAN
PREPARED BY
ENERGY SAFETY DIRECTORATE
DEPARTMENT OF CONSUMER
AND EMPLOYMENT PROTECTION
20 Southport Street, W Leederville WA 6007
Tel: (08) 9422 5200
Fax: (08) 9422 5244
January 2003
Current WA Government planning for a sudden fuel shortage
Ineffective and inequitable. Odds & Even number plates etc
Nothing significant about public transport
57
discussion paper, Liquid Fuel Emergency Act review, 2004
58
The UK Fuel Tax Escalator Margaret Thatcher
pence
Nominal tax per litre (pence)
50
Real tax
40
30
20
10
0
1988
1990
1992
1994
1996
1998
Australian fuel taxes should be raised to European
levels on a fuel tax escalator
59
Australia
US
China
60
Urban passenger mode shares Australia
100%
Car
90%
Mode share (per cent)
80%
Car
High automobile-dependence
70%
60%
50%
40%
Public transport share
is very low
30%
Rail
20%
Other
Bus
10%
0%
1945
1950
Potterton BTRE 2003
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
61
Million barrels
per day
(equivalent)
140000
140
120000
120
kb/doe
100000
100
80000
80
60000
60
WORLD OIL & GAS PRODUCTION
ASPO 2008 base case
NonCon Gas
Gas
NGL
Polar Oil
Deepwater Oil
Heavy Oil
Reg.Oil
40000
40
20000
20
00
1930
2009
1950
1970
1990
2010
2030
62
Iran 10c/litre
Venezuela 2c/l
Jeff Rubin
September 2007
Canadian Imperial Banking
Corporation
www.aspo-ireland.org/contentfiles/ASPO6/2-3_ASPO6_JRubin.pdf
63
World Liquids Exports estimate to March 2009
“Peak Exports” occurs before “Peak Oil”
million b/d
forecast
Rubin 2007
from Oilwatch Monthly: ASPO-Netherlands
Rembrandt Koppelaar
64
65
66
67
68
69
Mortgage and Oil Vulnerability
in Perth
Mapping oil vulnerability at high resolution
provides useful information for planners.
Like US cities, the outer suburbs of
Australian cities are more at risk from rising
fuel prices and mortgage interest rates.
Oil vulnerabilities of cities and regions
would be very useful to see where the
biggest oil vulnerability risks are (and to
help devise relevant mitigation and
adapation stragies)
www.griffith.edu.au/__data/assets/pdf_file/0003/88851/urp_rp17_dodsonsipe-2008.pdf
70
February 2004
By 2015, we will
need to find,
develop and
produce new oil
and gas equal to
eight out of
every 10 barrels
being produced
today.
71
Why are oil supplies peaking?
• Too many fields are old and declining
•
54 of 65 oil producing countries are in decline!
• Oil supply will peak in 2010/2011 at around 92-94 million
barrels/day
• Oil supply in international
trade may peak earlier
• Collectively we are still
in denial
72
Australia
Actual
Forecast
1.0
Million barrels/day
}
0.8
Consumption
$17.8 billion
2007/08
0.6
0.4
P50
0.2
Production
0.0
1965
1975
1985
1995
2005
2015
2025
73
released 2nd March 2010
74
75
76
Dr Roger Bezdek, MISI, Washington
77
PFC 2004
78
PFC 2004
79
80
80
Per capita oil consumption
(Barrels/day/1000 people)
EU plus some others 2008
60
USA
Australia
Japan
Austria
40
Bangladesh
20
China
0
B C R P B SK H C P U IT LT To FR D SE A D ES Ja E FI A IE N N U B
an hi O L G
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81
ENERGYwww.energyfiles.com
FILES
Rich
Poor
Energyfiles Ltd
Oil consumption is not shared equitably
US:
5% of world's population
uses ~ 25% of world oil
82
Some local governments are discussing Peak Oil,
while State and Federal Governments are largely avoiding the issue
Sunshine Coast
Regional Council
September 2009
Maribyrnong City Council’s
Peak Oil Contingency Plan
a first for Australia
83
50 litres of gasoline is equal to
the work of 1000 persons
during one day
A day’s work for a man is 0.5 kWh
= 50 ml of petrol
84
85
Hurricane Katrina New Orleans
US Federal, State and local Governments were
shown to be shortsighted, ill-prepared, uncaring
and disorganised.
Most governments and communities are much
less prepared for Peak Oil
86
26-Feb-2011
87
88
Australia must not let the
opportunities slip away
Many of the policy options to reduce
fuel usage will also lead to wealthier,
healthier and happier communities.
Australia is very well placed globally
 Big attitude changes in past;
to race, gender, smoking, water..
 World-leading demand management skills
TravelSmart and water conservation
 Considerable uncommitted gas reserves
Failure to act now will prove incredibly costly
Abstract at www.STCwa.org.au/aspo
See our “Oil: Living with Less” policy
Sustainable Transport Coalition www.STCwa.org.au
89
"The Big Oil Picture: We're not running out,
but that doesn't mean we'll have enough"
Macquarie
Financial Times
London
September 18, 2009
report September 16th 2009
Global oil production limits are in sight, demand should again
become constrained, oil sands et al. will be needed
M barrels/day
92
Macquarie Research September 2009
Base demand
90
88
Supply limit
86
84
82
2005
2009
2013
90
About 80% of Australia’s transport fuels are already imported
91
The EIA’s view of world liquid fuel supply
•
•
•
Future supply looks inadequate
Demand remains strong and possibly
underestimated
Crunch point is no later than 2012/2013
Chris Skrebowski, ASPO9 April 2011
92
Oil Prices and Australian Government economists' forecasts
(WTI monthly average)
ABARES' economists and others
have been systematically wrong
in their oil price forecasts
140
120
2011
100
2010
80
2008
2009
60
2006
40
2005
20
2003
2007
"If the price of eggs is
high enough, even the
roosters will start to lay."
♦
ABARE to Senate inquiry into
Australia's future oil supplies
2004
♣
2002
0
Jun-00
Mar-03
Dec-05
Sep-08
Jun-11
Mar-14
Nov-16
Economists' forecasts published Nov 2005
Prof Tony Owen, then at UNSW
Nobel Economics winner, Vernon Smith (at UNSW)
♦
♣
$35/barrel in a couple of years
$15/barrel in the near future
93
People once
thought the
Earth was flat
and greeted
scientific proof with
suspicion and
resentment
from Colin Campbell, Clausthal, 2002
94
How much energy is bound
in oil?
100 ml of oil contains 1 kWh
What can you do with 1
kWh?
You can move a small car to
the top of the Eiffel Tower!
Filling your car with 50 litres
is equal to the energy you
need to move 500 cars to the
top of the Tower.
95
50 litres of gasoline is equal to
the work of 1000 persons
during one day
A day’s work for a man is 0.5 kWh
= 50 ml of petrol
96