Thursday, October 9, 2008

Oil on Troubled Waters

What is happening to oil? Over the past 12 months oil prices have marched all the way up the hill from $80 a barrel to $150 in July right back again to under $90 today. Some see it as the straw that broke the global economy's back: the last great blow out before the markets blew up. Maybe. Certainly the whiplash turn in the world economy's fortunes over the past 3-4 months has been extraordinary. Not just Ireland but most of the OECD are now in or about to enter recession. We're in good company I guess.

Certainly falling oil prices are good for Ireland as we have the highest dependency on oil of any EU country for our energy. A shrinking economy also means that we use less oil - that'll keep those fretting about our carbon footprint happy. But we do seem to be experiencing many of the characteristics associated with the concept of Peak Oil. When the economy is going strong then oil prices rise, sometimes sharply. When the economy stalls and goes into reverse then oil prices tumble right back ... ready to start the cycle all over again when growth returns.

When faced with such uncertainty one of the most useful planning tools is that of scenarios. Which is why I recommend taking a look at the Future Scenarios site which examines the interplay between peak oil and climate change. I think we might be lucky and end up going through the GreenTech scenario (bottom left of chart). A depressed economic outlook will lead to a moderated pace of decline in global oil output over the next decade, while some of the (remaining) capital anxious to avoid dodgy investments like land and property (!) might find its way into energy innovation.

I recently met some of the folk from Better Place when they were in Dublin recently and certainly their initiative and those of several others point to a very exciting time for transport innovation here and elsewhere. Every cloud has a silver lining and all that.

1 comment:

  1. Indeed, fingers crossed this crisis can also be an opportunity to push the world in a new and more sustainable direction. Personally I quite like www.transitionculture.org, going to check out the Future Scenarios site now...

    ReplyDelete

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