It now appears that there is now no such thing as peak oil (the point when the maximum rate of oil extraction is reached, after which the rate of production is expected to enter terminal decline) in the medium term future (The Guardian 2/7/2012). We shouldn’t really worry about the long term, as Keynes, the renowned economist, once remarked ‘in the long term we are all dead’.
The high price of oil means that investment is being made in fields that were previously too costly to exploit such as shale oil. The Bakken shales in the US contain as much oil as Saudi Arabia and there are 20 similar fields in the US. So what does this mean? Most importantly for industry is that there is going to be no shortage of oil, but the cost may not fall and is likely to increase as the easily exploited resources are depleted and we reply more on shale oil. This, despite the price warning, is excellent news as oil is not only a fuel but a raw material for plastic and other important products. But what does this mean for energy efficiency and global warming?
There is still a financial case for improving energy efficiency as the cost of oil will increase and this should still be a priority for intensive energy users. However, the real threat to stabilising, let alone reducing greenhouse gas emissions is the fact that there are still one billion people in the world still without electricity. It is morally questionable whether we in the developed world can dictate to the developing world how they generate their electricity.
The solution, in my view, is for the developed world to accelerate the development of wind and tidal power and develop storage schemes such as pumped storage to even out demand and eliminate the need for thermal power stations to supply base load. In parallel, we should electrify as many processes much as possible. This means electrifying railways, replacing thermal space heating with electric space heating (preferably using ground source heat pumps for large buildings), and converting industrial processes heating to electricity. With the conversion of thermal processes (e.g. diesel locomotives) to electric we are increasing the demand for electricity and thus the opportunity for renewable to generate the electricity. The time may come where users are charged just for the electricity supply capacity (kW) and not the usage (kWh). This is because the capital cost of installing renewable capacity is high, but the running costs are comparatively low. The promoters of the world’s first commercial nuclear power station (Calder Hall in the UK), suggested that electricity would be so cheap that it would not be worth metering. Whilst this never happened with nuclear, it is a possible scenario in the future for renewable energy.