Whitehall Place, London, location of the UK Deparment of Energy and Climate Change. (image: photos.igougo.com)

As reported by the Guardian, the UK government is responding to the report released last month entitled “The Oil Crunch: A wake-up call for the UK economy” by holding a meeting between energy minister Lord Hunt and the British business leaders responsible for the headline-grabbing report.

“We do this all the time; it is just a normal stakeholder meeting,” a spokeswoman for the Department of Energy and Climate Change said Sunday night, denying that the “private and behind-doors” meeting with peak oil advocates represented any deviation from status-quo approach to energy. However, the decision to take into account an independent assessment on the future of cheap oil supplies would be a radical departure from the UK government’s policy of silence on the issue.

The report released by the business group known as the UK Industry Taskforce on Peak Oil and Energy Security made waves in February by stating an oil crunch was imminent within the next five years and that society was completely unprepared for the consequences. The report was not a scientific study, but rather a collection of “opinion” pieces written by global oil supply expert Chris Skrebowski and London School of Economics lecturer Dr. Robert Falkner. Unlike other, similar warnings from the UK Energy Research Centre in October, and the International Energy Administration, the Industry Taskforce’s report has prompted a faster response, possibly because it comes from the business community, a sector that typically has the most to lose when it comes to environmental awareness, and because the individuals involved are very powerful. The taskforce’s business leaders include billionaire Richard Branson, founder of global brand Virgin Group; Jeremy Leggett, CEO of Solarcentury; and Ian Marchant, CEO of Scotland’s largest company, Scottish and Southern Energy Group.

The Dept. of Energy and Climate minister Lord Hunt and other unidentified energy civil servants started meeting with the taskforce Monday. That the meeting is located at the Energy Institute, the UK’s more expansive version of the (oil industry-supported) American Petroleum Institute, demonstrates an interest in grappling with peak oil issues by understanding the needs of industry. Contrast that to the US, which is involved with energy-efficiency initiatives, but has yet to hear from any private sector leaders even though any adaptive project in transport, agriculture, power generation, or heating would inevitably encroach upon existing commercial structures.

The lagging US response to peak oil issues was explored on the March 6 episode of Financial Sense NewsHour, where peak oil guru Matthew Simmons shared his reaction upon first reading the executive summary of the UK taskforce report, as soon as he found out about it:

I said to myself; You know this is exactly what Sam Bodman, when he was secretary of energy, actually asked the department of [sic]—the National Petroleum Council to do, and we basically punted the ball saying we don’t have a clue. And who would have ever guessed that it would be the Chairman of Scottish and Central [sic] Power, and Richard Branson, who would head this task force, that would effectively say to the United States [sic]—to the UK government, saying that we are in an unbelievably deep hole and if we don’t get out of it, the country will collapse. It’s no minced words, and it’s all the same figures that I’ve been using for the past ten years.

He continued, remarking on his impulse to email a copy of the report to Sen. Susan Collins (ME), Representative Chellie Pingree (ME), Governor John Baldacci of Maine, and Sen. Mary Landrieu (LA) within hours of reading its summary.

What is wrong with the United States? The United States government—that was such a striking report, they should basically either dig down and refute it, or they should say ‘whoa we screwed up.’ And we should not be listening to Dan Yergin, you know telling us everything is in great shape. And now we have basically entered into the greatest illusion I’ve ever heard of, that luckily if you never worry about this shale gas is going to last well into the 21st century.

The last oil crunch that affected the US and UK happened in 1973, when OPEC cut off oil supplies to Western nations to discourage their military support of Israel during the Yom Kippur War. The resulting price spike immediately required the use of strict measures such as fuel rations in the US and Sunday driving bans in the UK. The UK Taskforce report warned that a pending oil price spike would be greater in magnitude and harsher in consequences than the 1973 crisis, due to changes in the UK’s oil dependency (the UK was a net exporter during the 73 embargo, and now is a net importer), greater inelasticity (conservation measures in the past few decades took care of all the easier adjustments) and further diminished supplies worldwide.

The UK government’s meeting will likely bolster the validity of peak oil theory in the eyes of other governments, but then again, Britain has been slow to even acknowledge the issue. Years ago, France and Germany already completed government-sponsored studies on the date of the global peak , with France saying 2013 in a 2004 study, and Germany saying 2006 in a 2007 study. It’s also important to remember that despite the UK’s apparent change of position on peak oil, even emphatic acknowledgment within a culture can coexist with minimal change to a country’s political agenda.

However, the reason independent studies are so promising is because their proximity to government commands attention for the results in a way that outside recommendation does not. It is a positive sign that the UK is taking matters into its own hands. It would be logical that the US would be influenced by a new Anglo seriousness regarding the cheap oil problem, but whether the issue gains any political traction is up to the work of individual politicians.

Inside the high-tech world of Saudi Aramco. (image: saudiaramco.com)

Saudi Aramco has two new entries on the TOP500 biannual list of the world’s 500 fastest supercomputers, which was released this week, the Wall Street Journal’s Environmental Capital Blog reported Thursday. The supercomputers, which are Dell clusters and run Intel processors, came in at nos. 119 and 134.

Peak oil believers could argue that an interest in supercomputers on the part of Saudi Arabia’s national oil company suggests that Aramco needs significant help to identify new reservoirs in oil fields once believed to be bottomless. And the Saudis are not alone in using a supercomputer in their quest for ever-elusive black gold. The world’s fifth-largest supercomputer—the Tianhe-1 in Tiajin, China—is slated to be used partly for “petroleum exploration.”

The oil industry’s growing interest in supercomputers would seem to corroborate the opinion of geologist and author Jeremy Leggett and the colleagues that he surveyed at this year’s Petroleum Geology Conference in London. HeatingOil.com posted on Nov. 10 that in a poll Leggett conducted during a plenary session, 70 percent of 500 geologists said that peak oil is still a concern.

IEA Deputy Executive Director Richard Jones. (image: csis.org)

Could we have already reached peak oil? According to a Monday report by the Guardian, the answer is yes. A whistleblower at the International Energy Agency spoke to the UK paper on the condition of anonymity, saying that the IEA has been “deliberately underplaying a looming shortage for fear of triggering buying panic.” He also added that the United States has been encouraging the distortions, asking the agency to downplay the lack of oil while overhyping the promise of new reserves.

Many governments rely on the IEA’s World Energy Outlook (the most recent version of which was released on Tuesday) to help predict energy trends and shape policy. The serious allegation of the IEA misrepresenting the facts raises obvious concern over the accuracy of the report, particularly the forecast that oil production will rise from 85 million barrels per day to 105 million barrels per day by 2030. According to the anonymous source within the IEA, “…today’s number is much higher than can be justified and the IEA knows this. Many inside the organization believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further.”

According to a Wednesday piece on CNN.com, the IEA completely rejects the allegations from the whistle blower. Richard Jones, deputy executive director of the IEA, told CNN that they are generally viewed as optimistic by peak oil theorists and pessimistic by the oil industry. “We’re the ones that are out there warning that the oil and gas is running out in the most authoritative manner. But we don’t see it happening as quickly as some of the peak oil theorists,” he said.

As HeatingOil.com reported on Tuesday, peak oil is still a concern for 70 percent of geologists surveyed at this year’s Petroleum Geology Conference in London. Jeremy Leggett, a geologist, social entrepreneur and author spoke out on the deep concern, and referenced an oil company geologist who once told him it was almost “an unspoken act of treason” to doubt the industry’s ability to meet demand.

So what if what this whistleblower says is true? What if Jeremy Leggett is right? What if we have already reached peak oil and supplies begin to dwindle in the next five or ten years?

(image: treehugger.com)

Unfortunately, if that is the case, the news is likely not good. The first thing that would happen when confronted with a serious decline in oil supply is that prices would skyrocket. The prices of everything would skyrocket. We rely on fuel for making goods, transporting goods, transporting ourselves…we’d be looking at a massive increase in the prices of gasoline, heating oil, diesel fuel, not to mention food, clothes, and…well, pretty much everything. HeatingOil.com went down this path this summer, exploring multiple visions of a world without oil. As you can see in that post, high prices could be the least of our problems.

The alleged actions by the IEA, if true, are shocking and disheartening. It would seem that the most helpful thing in light of a coming oil shortage, panic or no, would be to have all the correct information so the world could plan accordingly.

Jeremy Leggett. (image: upload.wikimedia.org)

About 70% of 500 geologists surveyed at a plenary session during this year’s Petroleum Geology Conference in London said that peak oil is still a concern, according to an interview with geologist, social entrepreneur and author Jeremy Leggett posted Sunday on TheOilDrum.com. Even Leggett himself, who argued against the belief that peak oil is “no longer a concern” in a debate that preceded the vote, was surprised at their response, saying, “I thought I’d be lucky to get 10% of the vote.”

The survey results suggest that geologists and practicing scientists hold a different view of the peak oil issue than do executives at major oil companies, such as ExxonMobil, BP, and Shell, said Leggett. This difference of opinion makes what he termed the “forthcoming energy crunch” different from the period preceding the current global financial crisis. A “hall full of investment bankers would “no doubt” have supported the motion that “major downside risk in derivatives is no longer a concern,” Leggett said.

He added that valuable comparisons exist between the financial crunch and the energy crunch. Prior to the financial meltdown, only a few “maverick” economists and financial journalists were sounding off about the downside risks of derivatives. However, many people in the oil industry and companies in various petroleum-user industries, as well as the International Energy Agency, are concerned about peak oil production.

Unfortunately, few oil company researchers voice their own science-based opinions. Leggett said that an oil company geologist once told him that it is considered almost “an unspoken act of treason” to express doubt about the oil industry’s ability to meet projected demand.

In addition, oil companies have a financial interest in convincing people that the world has enough oil for years to come. Cultures, or industries, have many “dysfunctional” ways of protecting themselves, Leggett explained. In the case of oil companies, this could mean overstating oil production.

The winner in the peak oil debate will be crowned before the decade is out, and sooner rather than later, said Leggett. He described his preferred scenario as the widespread use of clean energy technologies, with the world enjoying a “renaissance built around the many social value adders inherent in these technologies.” This includes the end of so-called oil shocks and oil wars. As he put it, these and “all the other dismal paraphernalia of the hydrocarbon age” would seem very…twentieth century.