Living in Peace and Wisdom on our Planet

By Warren Karlenzig

A new report by a United Kingdom industry taskforce predicts steep oil price rises and gasoline supply shortages by 2014-2015, which will put the global economy at similar risk to the 2007-2008 rapid rise in oil prices that helped trigger the Great Recession.

"The time period would be 2014-2015 when the oil market would be starting to experience rapidly rising prices and tightening oil supplies...It is notable that the CEO of Total, Christophe de Margerie, is already warning of such an outcome in the 2014/15 period," says the report, "Industry Taskforce on Peak Oil & Energy Security" funded by Virgin Group, Arup Engineering, Foster and Partners, and Scottish and Southern Engineering.

What can cities, businesses and individuals do to prepare for such energy price volatility, buy hybrids? Actually, the report asserts, "there is real danger that the focus on technological advances in cars is making consumers and government complacent."

More urgent steps need to be taken by policymakers in particular to avert this impending crisis:

• Support greater planning and funding for public transit, including taxation to benefit public transit and allocate road space based on most fuel efficient modes (i.e., congestion pricing).
• Support planning for less energy-intensive forms of development (less sprawl, more transit-oriented housing, retail and businesses).
• Transition to more energy-efficient transportation fleets or vehicles.
• Coordinate policy mechanisms and organizational practices to create a behavioral shift from private car use to other more sustainable forms of mobility, including public transit, car sharing, cycling and walking.
• Encourage, enable and practice smart green city tactics: telecommuting, video conferencing and public work centers, such as those being piloted in Amsterdam with Cisco.

At the state and national government level, preparations for another "oil crunch" similar or worse than 2008 and 1980 should include: 

• Ending subsidies for oil in order to reduce economic dependence on oil-based industries.
• Transition agriculture and food production from operations highly dependent on the use of oil-based products such as diesel fuel, fertilizers and crop treatments, while encouraging bio-regional food production from urban foodsheds for nearby population centers. 
• Planning and support for high-speed rail networks (though this would be a longer-term preparation for post-carbon transportation era beyond 2020)

Daniel Lerch of the Post Carbon Institute authored a guidebook for cities and local government on how to prepare for an oil crisis. I have also written a study looking at US oil crisis readiness in the largest 50 US cities, "Major US City Post-Oil Preparedness Ranking" (second publication from top).

Whether, it is called "peaking oil" or an "oil crunch," many experts see total global oil production reaching a plateau of around 91-92 million barrels a day by 2012-2014 unless, as the report says, "some unforeseen giant, and easily accessible, finds are reported very soon."

With fast-growing demand for oil in developing economies such as China (which overtook the US in 2009 for total automobile sales), India and the Middle East, developed nations in North America and Europe need to consider wholescale industrial and societal shifts.

The United State and Canada in particular should start reducing oil dependency now in preparation for oil price volatility and possible supply disruptions that would force such shifts without warning, with dire consequences for the economy, nationally and locally. Many cities (New York, Toronto, Vancouver, Washington, D.C.) are already somewhat prepared to make this shift because of infrastructure for public transit and other oil-free mobility options.

The world is heavily dependent on 120 oil fields that account for 50 percent of world production, and contain two-thirds of remaining reserves of fields in production. New discoveries of oil fields off Brazil's coast, under the Arctic and elsewhere, will not be enough to replenish the "drawdown" that is occurring. Besides, many of these fields take investments that require oil to be priced over $100 or $120 a barrel, so they will not be producing for a number of years after such investments are made: in other words, far beyond 2015.

"The challenge is that if oil prices reach the levels necessary to justify these high-cost investments, economic growth may be imperiled," says the Industry Taskforce on Peak Oil and Energy Security.

Another so-called energy "ace in the hole," oil sands deposits in Canada, are not a viable option. Oil sands produce at least three times the amount of atmospheric carbon over conventional oil when they are processed and used, which would exacerbate global climate change significantly, while also fouling the region's water supply.

What is being raised by this report is that the era of cheap oil is over, and that the consequences will be ugly, unless we start preparing for this profound change.

"Don't let the oil crunch catch us out in the way that the credit crunch did," said Virgin CEO Richard Branson and other corporate executives in the introduction to the report

Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.