A State of Emergency

Click all charts to enlarge, without call out.

This BERR assessment (960 kb pdf, 58 slides) of oil and gas production on the UK continental shelf arrived in my mail box last week. It is one of the best summaries I've seen and should be read by all with an interest in the future of UK and European energy security. The chart above is based upon the BERR forecast for UK oil and gas production. It is time for Alistair Darling and Mervyn King to explain to the British people why they see current problems with energy prices and associated inflation as a transient blip when the UK seems to be in a terminal dive towards insolvency.


The bar-charts are prepared from the BERR forecast shown below (slide 57 of the presentation). United Kingdom continental shelf (UKCS) production of oil and natural gas are forecast to continue their decline from their respective production peaks in 1999 and 2000. The decline rate is not given, but it appears to be around 8% which seems about right.

Chart modified from slide 57 of the BERR presentation. Click on chart to enlarge.

Historic oil prices shown on this chart are the annual average for Brent Blend taken from the BP statistical review of World Energy 2008. This year to date (YTD) is about $110 and the forecast uses an annual rate of increase of oil and gas prices of 25% per annum. It is of course near impossible to forecast future oil and gas prices, but with international demand for oil and gas continuing to rise against near static supply, the trend of increasing prices seen in recent years seems set to continue.

BERR forecasts consumption of oil and gas to remain relatively flat. This seems a reasonable first order assumption to make. However, in the real world, escalating fuel and domestic energy costs will lead to widespread conservation. The well-off will insulate their homes and buy more fuel efficient cars. The poor will switch off their heating and take the bus. It is near impossible to forecast the scale of energy demand destruction that will take place in the UK.

Oil and gas are assumed to have equivalent price. Millions of tonnes of oil equivalent are converted to millions of barrels by multiplying by 7.33.

From riches to rags

The bar chart up top indicates the cost of importing oil and gas to the UK ballooning to about $200 billion (£100 billion) per annum by 2013 - just 5 years away. This completely dwarfs the riches of North Sea oil and gas production the UK enjoyed up to 2004, which were exported at rock bottom energy prices. The chart is indicative since it is unlikely that this will ever come to pass. It is unlikely that the UK will be able to source or pay for this ever rising energy bill on the international markets.

Left to market forces, the problem will be solved by spreading energy poverty throughout the UK population. The wealthy who can afford the small amount of expensive energy on offer will be fine whilst the poor will just have to go without - personal transport, heat, light and power.

The charts below show the gross cumulative and per capita cumulative surplus / deficit from 1998 which is when the BERR chart begins, which coincides roughly with when the New Labour government (Blair - Brown) came to power. We are currently at the fulcrum of surplus turning to deficit. By 2013, the UK may well run up a cumulative deficit in oil and gas imports in excess of $500 billion - if we can find countries that will sell us oil and gas on credit. This equates to an energy debt over $8000 for every man, woman and child in 5 short years. This is in addition to the already dreadful debts we have run up as a country importing consumer goods on credit (see below).

Mervyn King, Governor of the "independent" Bank of England;-)

Gordon Brown, the most confused man in the world? On his way to Saudi Arabia to beg for more oil to combat global warming whilst promising a green energy revolution at home founded on nuclear power.
Population data from The United Nations.

A state of emergency

We should hopefully by now have reached a point where all stake holders in UK, European and Global energy are able to grasp the simple fact that we are now in the early stages of a full blown global energy crisis. The focus is currently on oil but this will soon turn to concerns over natural gas and coal supplies.

This crisis has been turned into a state of emergency by the indifference of political leaders in the UK (and throughout the world), fluttering in the wind of poorly informed public opinion while they have prevaricated about expanding renewable energy resources and building new nuclear power stations. All warnings of this pending energy crisis have been ignored in favor of pursuing popular policies that created the illusion of prosperity whilst the fundamentals of our nations security and well being have been draining away.

The chart below shows the current state of the UK trade balance. This is the position at the end of the good times North Sea oil and gas have provided. The situation now is about to get a whole lot worse as our energy surplus turns into a crippling deficit with no plan on the horizon of returning the books to balance.

Data from National Statistics Online, table 5050646091.csv, column ikbj.

I have not attempted a forecast since some major changes to UK trading status are to be expected. Higher food, fuel, domestic energy and bank interest bills will squeeze the disposable income of many individuals and families. Thus, instead of buying consumer goods and going to Spain on vacation, families will instead spend this money on food and energy. Thus we can expect the deficit in goods and tourism to reduce while the deficit in energy balloons.

The future

The exchange last week between Mervyn King (Governor of the Bank of England) and Alistair Darling (Chancellor of the Exchequer) suggests that they plan to do nothing about this presuming that the upwards tick in energy and food prices (that began in 2002) will drop out of the annual inflation statistics a year from now. True rabbits caught in the headlights. They have created a perilous situation for the UK economy that they seem not to understand let alone know how to fix.

Here are a few pointers to what I think we can expect in the next 18 months:

  • Forever rising energy import bills will pressure Sterling which will continue to fall, pushing up the cost of energy, food and consumer goods even more.
  • Public sector workers, no longer able to borrow to supplement income will begin to strike once they discover that 3% wage increases do not come close to covering the rise in the cost of living (the great inflation lie will be found out).
  • Unemployment will begin a steady rise as financial services, banks, building sector, airlines, airports, leisure and retail come under severe pressure. They will be joined by public service workers as the government struggles to fund public services with falling tax receipts, spiraling debt and a falling pound. (already happening in Aberdeen with deep cuts in education spending across the city and teacher numbers being slashed).
  • I won't go into the spiraling and compounding nature of this on the property market since this is an article about energy.
  • The elderly and poor will really struggle this winter to pay their energy and food bills. If the weather is cold, the grid might fail and the vulnerable will begin to die from cold and starvation.

Following that things will begin to get worse as the UK discovers that it is struggling to secure sufficient natural gas at any price, on the liberalised market they helped create. Society becomes more polarised into those who can still afford to drive an SUV, live in comfort and warmth and fill their bellies with prime Aberdeen Angus steak set against a new under class who struggle to feed and heat their families. Welcome to Britain in 2010.

The End

Further reading on UK energy on The Oil Drum

Chris Vernon March 2006
UK Energy Gap

Euan Mearns September 2006
Oil export - import model for the UK

Euan Mearns October 2006
Lies, Damned Lies and Government Oil Production Forecasts?

Euan Mearns November 2006
The architecture of UK offshore oil production in relation to future production models

Chris Vernon February 2007
UK Energy Descent Continues

Jerome a Paris June 2007
The Anglo Disease - an introduction

Euan Mearns July 2007
UK Energy Security

Jerome a Paris October 2007
Energy: the fundamental unseriousness of Gordon Brown

Euan Mearns December 2007
The European Gas Market

Euan Mearns December 2007
Daddy, will the lights be on at Christmas?

Chris Vernon January 2008
Nuclear Britain

Euan Mearns February 2008
Energy Prices, Inflation and Denial

Euan Mearns May 2008
European Gas Security: The Future of Natural Gas

Jerome a Paris June 2008
Countdown to $200 oil meets Anglo Disease

Guest post Bob Everett June 2008
A Little History of the Affordability of Domestic Energy in Great Britain

Guest post Rune Likvern June 2008
Why UK Natural Gas Prices Will Move North of 100p/Therm This Winter

I think it is fair to say that we have been beating this drum pretty hard and loud. While the press and television have begun to help of late they could do an awful lot more. I'd like to see Alistair Darling answer questions about the UK energy trade balance on prime time current affairs. And I believe it is time we had some televised debates about this energy issue that is vital to all of us.

The meeting in Saudi Arabia hasn't achieved any substantial results from what I can see. Oil prices are still going up. There must be something else that's driving prices up and I think I know what it is. Contrary to what US Energy Secretary Samuel Bodman says I don't think supply and demand are really causing the problem. There are to many other factors at play here. Too many middle men skimming profits. Too much manipulation of supplies and inventories. Although oil appears to be a good hedge against inflation, a lower dollar and a low oil supply, in reality nothing could be farther from the truth. Our oil supply is becoming less of an issue because inflation is causing a surplus of gas. The main thing driving inflation is high oil prices and as inflation goes higher investors buy more oil driving inflation higher again. Some experts predict this will trigger the worldwide recession. This will result in lower gas consumption and it will free up more gas supplies.. I am no expert but even I can see the writing on the wall. Investors are going to loose their shirts on oil. We may be looking at another ENRON. Hedge funds will topple leaving old age pensioners with nothing. The government won't be able to bail them out this time because the cost would be far to great. The CFTC and FSA will be too slow to react to the cracks forming in commodities trading so the govenment will finally step in. By that time it will probably be too late. www.nbtv.ca

There was a recent chart (maybe on TOD but I don't have the reference to hand) which showed that oil consumption in the oil producers themselves plus China, India etc now slightly exceeded OECD consumption. Extensive fuel subsidies are in place in these countries although India and China are trying to reduce them.

On this basis we can conclude that the oil producers are pretty well immune to recession and that their internal oil consumption will carry on rising. China etc could experience recession although OECD nations will still buy some clothing, electronic goods etc. A recession in China might mean their adding just 8m vehicles pa to the roads vs 10m pa as at present...but oil consumption would still rise.

It would therefore take a disproportionate recession in OECD nations to substantially reduce global oil demand. In any event as far as OECD nations are concerned $150 oil with full employment or $80 oil with 10% unemployed (due to oil price super-spike leading to recession) still means that at least 10% are priced out of the oil market.

According to BP Statistical Review 2008, OECD coutries in 2007 consumed about 48 Mb/d out of a total global consumption of 85 Mb/d.

During the recession in the early 80's OECD countries reduced their oil consumption with about 15 % through 3-4 years.

It would not suprise me to see the USA cut oil consumption by 15-25% over the next 5 years (3-5 million bpd). And it wouldn't suprise me to see China, India and OPEC take up all that slack.

That may seem unrealistic - but I'm expecting a LOT of economic pain, and if people hurt bad enough they will change.

The question is how much demand destruction will be due to rising prices, and how much due to a depressed economy.

If the pound (or the dollar) fall, these two factors may blend together. Very high prices in the local currency, but not so much of a rise in Euros or Yuan.

So the demand destruction gets localised to the Anglo countries.

Of course as Euan implies this can become a feedback loop. Weak currency leads to high local prices, hits economy harder, causes currency to fall further.

This is how we "deal with" peak exports, hey WT?

As soon as we are on the downside of the Peak Oil curve( 2008 to 2010), global demand will always exceed production, and so there will be no demand destruction. Currently demand is higher than supply, so we are there already.

This also means that no matter what the USA does to conserve oil, the rate of depletion will continue at the same rate -- unless we can get ourselves and the other 3/4ths of the global demand to conserve. This is not very likely.

So can use the oil that we can buy for risk management, or we can use it to build highways for job creation, or solar and wind, but without oil neither of those has a future. But, this is the direction the USA will take.

Without meaning to be rude, you do not seem to distinguish between a statement and an argument.
You state: 'global demand will always exceed production, and so there will be no demand destruction'
If so, why?
What would be the effect of, for instance, a run on the US currency so that it became effectively worthless - would this not reduce demand?
You also do not distinguish terms tightly enough even in your blanket statements: demand technically always matched supply, it does not exceed it or fall short of it.
The question is: at what price do they balance?
If the price were lower than today following major recession then the statement you make would not be true.

U.S. demand can virtually collapse, and depletion will remain much the same. The U.S. is 1/4th the demand. As supply decreases, demand is progressively higher by comparison.

As soon as we are on the downside of the Peak Oil curve( 2008 to 2010), global demand will always exceed production, and so there will be no demand destruction.

I'm not sure you understand what "demand destruction" means.

It does not mean "demand falls faster than supply". It means "price dampens demand". Indeed, demand destruction can occur even when demand is increasing - if 2% demand growth is expected and only 1% growth occurs due to high prices, that "missing" 1% is due to demand destruction.

Given that, demand destruction has already been happening for several years, particularly among the rich (and oil-prolifigate) nations; OECD demand is the same as it was in 2003 (by EIA numbers).

This also means that no matter what the USA does to conserve oil, the rate of depletion will continue at the same rate -- unless we can get ourselves and the other 3/4ths of the global demand to conserve.


Reduced US demand means reduced US money going overseas to pay for imported oil means lower burden on US citizens means less hardship. Import prices will be high (if other nations also conserve) or higher (if they don't), but in either case the US will unilaterally benefit from conservation through the simple expedient of having to pay less.

solar and wind, but without oil neither of those has a future.

You keep claiming that; I'm not sure if you realize that that doesn't make it true.

You keep claiming that; I'm not sure if you realize that that doesn't make it true.

Conversely, it doesn't make it false either!

Ted999, member for 10 hours 4 min = CDJ (Cornucopian du Jour)

There are many here who were/are cornucopians. Remember that. Demonstrate your case. It is the TOD way, isn't it?

I suspect it's the same guy, and arguing the same points over and over again gets pretty tiresome all the way around.

Here's what I'd like to see from those who are proposing that oil prices are largely about "speculators" and/or "middle men": Tell a rational, somewhat simplified, but reality-based story about how a speculator or middle man can pocket half the price of a gallon of gasoline or heating oil. Because that's the common version of this myth - subscribed to by one of my senators, my congressman, my heating oil supplier - that $2 of a $4 gallon is going into the accounts of speculators.

What I don't want is some variation on "Enron did it with electricity, so of course it can be done with oil the same way." Those two markets are just too different. So no hand-waving at Enron or the like, instead I'm asking for a simple story illustrating how it could even be possible for a speculator to pocket $2 out of the final sale of a $4 gallon. I'm betting that if you go from (1) the price of the barrel collected by the producer, add (2) transport and refining, plus (3) taxes, plus (4) the profit such as it is of the service station or heating oil dealer, you will account for better than 99% of your $4 gallon, with only a few cents at best left for even the successful speculator. That's not to say it's not worth being a speculator - if you can keep buying, say, 30-day future contracts, and make 1% on each of them, over a year you're turning a 12% profit - enough to run a business. But you're also only adding a few cents to each gallon - nothing like $2. And you're keeping liquidity in the markets, which actually smooths out price fluctuations, which over time tends to keep prices lower.

Until you can tell me a plausible story about how you could be a successful oil speculator, on the order of $2 a gallon, all I can conclude is that a whole lot of people who should be smart enough to know better are screaming at the moon, demanding free cheese.

What I’d like to know is where are these supposed speculator profits going? What hedge fund or financial institution is raking in a significant share of the total trade in oil every day? This is many billions of dollars. Somebody please let me know I’d love to invest in this company. I’ve looked, Citi Group’s name comes up as a player but this is a company circling the toilet bowl and begging for foreign investments (bailouts with crappy terms) so I know its not them.

Just like with stocks, the profits go to the traders who bought low and sell high. There is a bandwagon effect where investors who dumped stock and bonds are jumping into commodities. It's like an auction. More buyers who want the same thing will bid against each other and end up at a higher price, but in the end, you have to unload it at an even higher price to make any money.

Not discussed in the current round of congressional victization theories: How net long are the speculators? For about the last year, the specs have maintained the same short-long position; the net long positions held have NOT increased. Albeit specs have about doubled their percentage of WTI open interest vs commercials in recent years (allegedly "proof" they are manipulating the market), this in and of itself proves nothing. I find the CFTC COT reports impossible to comprehend, but one analysis of the data I read a few weeks ago stated: In the 2001-2002 period the speculative open interest was 30% net long; in about the last year this number has dropped to 10%; i.e., as prices rose, the specs got less long, not more. According to this analysis, for the reporting period ending 20 May, the specs were net SHORT about a quarter of a million options and futures - not a number I can confirm from looking at the CFTC data. If so, the boys got hammered in the recent spike to $140. Possibly, the recent price strength is not (as Dingell et al allege) more pension funds etc getting more long, but shorts covering?

Much was made of the "Enron loophole", but according to today's press Congress claims this loophole is now closed - how they did it not disclosed. If true, this leaves us with the evils of swaps contracts that allegedly allow Goldman, MS and others to circumscribe position limits to facilitate trades for their clients. Since - to my mind - these brokers are merely conduits executing large scale orders, how are they "controlling" the market? If XYZ Pension Fund wants to get in the game and establish a "large" WTI position, the forward roll strategy would probably be employed. XYZ enters the market and buys the front contract; in doing this prices may (or for argument's sake, do) increase; however, within a few weeks XYZ sells these contracts - unless he wants physical delivery at Cushing, and EIA data shows there has been no increase in storage, rather the opposite - and thereby exerts downward price pressure, a zero sum game when the net effects of buying and selling are added together. Over a period of time, XYZ merely buys, sells, buys, sells, etc. - each time incurring the frictional costs of commissions to hold his position. This may be a tad naive, but for every long there is a short, the net long position of the specs has been flat for about the last year while prices have taken off, so I fail to find any causal effect.

What I don't want is some variation on "Enron did it with electricity, so of course it can be done with oil the same way." Those two markets are just too different.

even Enron had too physically effect supply to pull off its fixes.

it wasn't just a manipulation of non physical factors. dealers were phoning up station controllers (corrupt no doubt) and getting generating plants to go off line with bogus maintance issues.


what I would like to see is who they are going to blame the oil price on after congress has passed these new laws to keep speculators out of the oil markets?

I guess they will then blame it on the Arabs :/

There still are many cornucopians here. They believe that solar, wind, nuclear, coal liquids, and other alternatives will yield us fantastic quantities of energy and prevent disaster. They don't realize that oil is the great enabler. Alternative energy sources appear to have a good net energy result, but only oil makes that possible. Without oil, we won't have the highways and the power grid. And that's it. These new cornucopians did not do their science homework, and it shows. They persist in their beliefs, despite the fact the Peak Oil is upon us and there is not even a plan of how the alternatives will fill the gap as we rapidly slide down the slope toward terminal oil depletion. These corucopians avoid focusing where we must, on risk management.

It is hard to give up something you hold dear. Even if that is just an idea.
And the high standard of living that most westerners currently hold certainly applies.
Many people like to live in fairy land and hope for the best. They rather not deal with reality.
I accept the idea of Peak Oil. But I am still having trouble adjusting my thinking to the ramifications of it.
Hope is a powerful thing. It is just a double edged sword sometimes.

Agree ramilehti. And these sorts of reads don't help...


Excerpt from The Asia Times (Online), a few days ago:

..."The view that recent US military adventures in the Middle East and the broader Central Asia are driven by energy considerations is further reinforced by the dubious theory of Peak Oil, which maintains that, having peaked, world oil resources are now dwindling and that, therefore, war power and military strength are key to access or control of the shrinking energy resources.

"Not only is Peak Oil theory unscientific, unrealistic, and perhaps even fraudulent; war and military force are no longer the necessary or appropriate means to gain access to sources of energy - resorting to military measures can, indeed, lead to costly, not cheap, oil. In fact, despite the lucrative spoils of war resulting from high oil prices and profits, Big Oil prefers peace and stability, not war and geopolitical turbulence, in global energy markets"...

Full article; http://www.atimes.com/atimes/Global_Economy/JF25Dj05.html


Regards, Matt B
Found myself in peak hour traffic this arvo. Wouldn't miss it in the slightest!

Peak Oil as fraudulent. Thats the first time I heard that one.
I supose they will blame Matt Simmons for the oil prices next and acuse him of scaring the oil prices higher to make himself rich!

To the extent that PO having become (somewhat) mainstream has changed the psychology of the market, one could blame it's proponents. If producers are noticing that their finite fields are depleting, and choose to limit their rate of production (rather than letting geology be the only limitation), then the "theory" is in fact a major driver in bringing about the current supply shortfall. That doesn't mean that the producers are not doing the future a favor, by saving some for the future. But given the enormous discount rate apparent among the political and financial sphere, anything which prevents maximum current production is considered to be an agent of misery. Of course if you believe reserves are really trillions of barrels (and don't factor in the fact that most of these are really difficult to extract), then wanting to pump it out faster is rational.

The best I can say about that column is that it was a guest column by a supposed professor at a minor school in Iowa. So, it was not an article at all, but a column. The man obviously knows next to nothing about oil. Also, I fear he will not teach his students much as he makes loads of assertions without making much effort to demonstrate or prove them. The PO as fraud one was nice. Hell, he couldn't even get the provenance right. He stated it started in the 40's, I think, then came up "again" in the '70's and claimed world decline within a couple decades? Well, um, no...

It came up in the 50's and remained an issue until proven in the 70's by the same man who had brought it up in the first place. But that dimwit tried to imply it had been raised and refuted over and over, even prior during those early years!

Etc., etc.


I have no respect for people who can't get past their agendas.

One of you better writers should do a rebuttal to that twaddle.


Hi Cliff,

re: "...focusing where we must, on risk management"

What kinds of things are you referring to when you talk about "risk management"?

Hi Aniya,

Short term preparations for power failures, family planning for this, what you need for months with nothing from the outside, food, and with no heat super warm clothing, FEMA has stuff on this, storing all the potable water you can as soon as there is a black out, like filling everything you have including the bath tub, then no baths ): and saving clean plastic milk containers, 5 gallon buckets, water necessary for months.

Mid term for guarding financial resources and making locally what comes in on the interstate and over wires and pipes. Avoiding wasteful investments like gold and solar panels. Relocating if you need to and can do it.

Long term for carrying to the other side useful technology for after "the last black out." How do you irrigate without power? You can make cement and penicillin if you know how. One book example: "Where there is No Doctor," there will be docs, but they need to know how to work without all their hospital stuff. How to make IUDs.

Then there is community planning: water, heating, shelter, farming, transport, mutual info/tech sharing, mutual neighborhood defense as the police will not be ready unless you begin to educate them. Educating family and people about: peak oil impacts, google those words, and you get my report, the best source explaining the Peak Oil catastrophe ahead, but TOD won't post it (:

I'll have details on my blog, "Surviving Peak Oil and Peak Oil Preparations" when it goes up soon, I hope. The preparation//planning/survival stuff on the Internet needs some improvement.

I took your advice on many short paragraphs :)

Hugs, Cliff

They don't realize that oil is the great enabler.

That would be because nobody has presented a strong case for oil being fundamentally irreplaceable.

Care to try?

Alternative energy sources appear to have a good net energy result, but only oil makes that possible.

Why, specifically, is it not possible to produce alternative energy sources without oil?

Note that CTL and GTL can be used to create oil, so there will be some oil available for many decades to come. Accordingly, any chokepoint for creating alternative energy has to require not merely some oil but lots of oil. Any lesser requirements won't prevent their construction.

So why, specifically, does the construction of alternative energy sources require lots of oil? Just making claims doesn't constitute an argument.

Without oil, we won't have the highways and the power grid.

Why not?

Highways can be made with concrete, which doesn't need oil (recent developments have made concrete highways more resilient to freeze/thaw cycles, at least those seen in Germany).

I assume you aren't suggesting that oil is important for direct generation of electricity (in the OECD, at least), and that your concern is infrastructure upkeep. For the same reason as above, though, that's only a concern if it requires lots of oil, not merely some oil, so that's what you need to show.

It's a mistake to assume that people disagree with you because they're ignorant, or even because they're wrong.

Oil is replaceable, but not easily and not quickly.

The fundamental problem is that with a growing world economy largely based on oil and a steadily decreasing supply of oil there will be pain in making transitions. Enough pain that in some areas the transitions to alternates will fail.

Some alternates, like fusion power, may prove to be impractical or even impossible. Others, like solar-electric, may not scale as well as we would like.

Then there are the ones like direct wind (sail, wind-driven pumps and mills) that require looking at the world in a different way.

The only thing that can be said for certain is that the world in 20 years will look a lot different than it does today.

(I geek on energy, so my examples are all based on energy, but the same principles apply to fertiliser and plastics)

Enough pain that in some areas the transitions to alternates will fail.

Your evidence for this assertion is...?

I agree that such an outcome is possible, but it's a leap of faith to declare it inevitable.

Others, like solar-electric, may not scale as well as we would like.

Indeed, they may not. Or they may.

All I'm saying is that if someone wants to assume that "may" will work out to be either "will" or "will not", it's an assertion that needs to be backed up.

The balance of evidence is that there are no technical barriers to scaling up alternative sources such as solar or wind. The US DOE recently released an extensive analysis of what would be required to replace 20% of US electrical generation with wind power by 2030, so that gives us a fairly solid base from which to examine constraints such as steel use or manufacturing capacity (neither are even close to being an issue).

Fundamentally speaking, replacing the world's energy supply is a fairly small problem. At $2M/MW (current price of wind, probable near-future price of solar) @ 25% capacity factor, replacing the world's 20,000TWh/yr of electrical generation with renewables would take about 20,000TWh/yr / (8800hr/yr * 25% capacity * 1MW/$2M) = 20,000MMWh/yr / 2200MWh/yr * $2M = 20M / 2.2 * $2M = ~$20MM = $20T = ~15 months of global manufacturing output.

The bigger problem is replacing the things that use energy - particularly cars, but also space heating - to run on electricity. That problem's roughly 10x the size (estimated about the same way), meaning it'll be the work of decades.

I only declare it as an inevitability because history shows that when people have needed to make major changes in the past some groups make the transitions and others don't.

The challenges upon us are already causing major upheavals in some areas, and it is unrealistic to assume that this will not continue to be the case for the forseeable future. I am fortunate enough to live in an area blessed with a temperate clime, good resources and relatively low population density. I have great hopes for this part of the world. Other places without these benefits: outlook uncertain.

Converting space heating? You might be right, but I don't see it locally. In Northern New England most residential heating is currently oil. At current electric rates here passive electric space heating will become cheaper per therm if heating oil goes above roughly $5 a gallon (currently it's about $4.40). What would it take to do that conversion in a typical residence? If there's 200 amp service into the home, and adequate wall circuits, you can go out and get a half-dozen 1500 watt (12.5 amp) space heaters for as little as $20 each. On a typical winter day, in an insulated house, that (in my experience) can be enough to keep things warm.

The electricity won't be cheap. But the conversion to electric space heating for a typical New England residence is. Then again, the aggregate electrical demand that will create (which could well be this winter if oil does crest $5 a gallon) will be beyond what the transmission lines can support. And the demand will ultimately raise electric rates. Still, most Northern New England households already have several space heaters. So if your equations are right for a generating capacity substitution build out, and if a transmission grid improvement is possible, converting every oil-burning residence in America to electric heat should be doable within two years (allowing for those residences that still need the upgrade to 200 amp service and modern internal wiring).

In my experience with electric space heating (Wisconsin, USA, outside temp -30) you don't heat the whole house to a comfortable temperature, you heat the kitchen primarily by cooking and the living room with electric.

The bedrooms use electric heat, but only at night and only to a temperature that is comfortable for sleeping with a heavy quilt, somewhere in the low 60's (or maybe 50's, we didn't keep thermometers everywhere).

As I mentioned in the first post I made, some of what needs to be done involves thinking about solutions differently. Not trying to do everything to the same standard we do today, but falling back to earlier ways of thinking about time and space when getting things done.

Heat bedrooms? Why? Just grab your clothes and run in the morning.
(former New England resident)

At current electric rates here passive electric space heating will become cheaper per therm if heating oil goes above roughly $5 a gallon (currently it's about $4.40). What would it take to do that conversion in a typical residence?

It will typically be better to use heat pumps rather than resistive heating, as you get 2-4 times the heating value per kWh, even in Canadian climates.

As compared to oil heat, and using Halifax as a proxy for New England, the systems would pay back their installation costs in 2-8 years (longer for more efficient systems). (With Canadian electricity costs, but with 2003 oil prices.)

Better insulation is probably the first order of business for many buildings, though; it's amazing what sealing drafts can do.

the aggregate electrical demand that will create

The Office of Energy Efficiency booklet uses a 10kW system for a 2000sqft house as an example. That appears to be 10kW output, so about 3kW input. At 240V, that's about 12 amps, which isn't a big deal.

You're right that it would be expensive and hard on the grids if everyone used resistive heating, but that should be used as a temporary measure at best. Heat pumps are much better for any period over a few years.

In Northern New England most residential heating is currently oil.

The long-term answer, I posit, is to convert structures to passive solar whenever and wherever feasible. Alas, this, too, takes money and resources. Perhaps doing it by attrition... but by then we might have those renewables...

Ah, the real issue is time. If peak is any time in the next ten years, the pain will likely be great. If it it's now, the pain will be likely be disastrous for many.


"Fundamentally speaking, replacing the world's energy supply is a fairly small problem. At $2M/MW (current price of wind, probable near-future price of solar) @ 25% capacity factor, replacing the world's 20,000TWh/yr of electrical generation with renewables would take about 20,000TWh/yr / (8800hr/yr * 25% capacity * 1MW/$2M) = 20,000MMWh/yr / 2200MWh/yr * $2M = 20M / 2.2 * $2M = ~$20MM = $20T = ~15 months of global manufacturing output. "
Your personal opinion Pitt, do you believe the above will be achieved?

Why don't you give us an example of how you see the the world economy to progress between now and 2030, so we can be heartened.

And you say others assume, why don't you look at yourself first.

Hi Pitt,

[[[[CTL and GTL can be used to create oil]]] >>>>> at most few million barrels a day, not much, according the National Coal Council, General Accountability Office and the U.S. Army Corps of Engineers.

[[[nobody has presented a strong case for oil being fundamentally irreplaceable]]] >>>>> The National Academy of Sciences, U.S. General Accounabitly Office, Congressional Research Service, DOE, and U.S. Army Corps of Engineers have done so. Everyone on this site should be familiar with these studies. If not, the links to all of these are found by Google or Yahoo searching: peak oil impacts there you will find my report on Peak Oil Impacts, Alternatives and Renewables.

[[[is it not possible to produce alternative energy sources without oil]]] >>>>> all energies require energy to produce them, even oil. alternatives are manufactured, transported and maintained with oil.

[[[concrete, which doesn't need oil]]] >>>>> concrete requires much natural gas, coal, or oil (heat) to manufacture and oil to transport.

[[[[your concern is infrastructure upkeep. For the same reason as above, though, that's only a concern if it requires lots of oil, not merely some oil, so that's what you need to show]]] >>>>> trucks use oil/diesel to transport, thus no trucks = no infrastructure.

Where are the plans for electrifying everything: the infrastructure to electrify hundreds of thousands of miles of the highways and many thousands of recharge stations, and the same for rail and the mines and mechanized agriculture, and please don't just show us a photo of some small electric truck, tractor, train (let's see the plans and cost for the infrastructure), and how much oil, natural gas, and coal is it going to take to get there, and how will that be done with oil at $500 and $1,000 a barrel, and most people who would do this are unemployed and the US is bankrupt.

I want to see you reference to the specific plans for all of this.

There are no such plans, and the people who talk about these dreams are cornucopians. There are many here at TOD, including some of the editors who constantly feed us technofixes. They can accept peak oil, but not the impacts. For them the energy to transport, farm, and heat homes will come from somewhere to save us. You can dream on, but risk management might be more realistic.

CTL and GTL can be used to create oil

at most few million barrels a day, not much

A few million barrels a day is quite a bit. How much oil is used by essential services, in particular grid maintenance?

Even 2Mb/d would give the US about 3x the per capita oil consumption that India has, and India has a fairly well-functioning electrical grid (and is building locally-designed nuclear power plants, and developing its space program, and has a burgeoning tech industry, and is a big steel producer, and... That level of oil can go a long way).

Accordingly, it's almost certain that "a few million barrels a day" is more than enough to keep the lights on, provided it's used in a reasonable manner. The only questions are whether it will be used in a reasonable manner, and what exactly "a reasonable manner" is.

Everyone on this site should be familiar with these studies. If not, the links to all of these are found by Google or Yahoo searching: peak oil impacts there you will find my report on Peak Oil Impacts, Alternatives and Renewables.

Don't assume everyone will be familiar with your writing, and don't fool yourself into thinking that "go google for my stuff" is anything approaching an argument.

If you've written this up, it should be trivial for you to concisely address the problem here. If you can't, I have no intention of sifting through the internet for something you can't even be bothered to link.

alternatives are manufactured, transported and maintained with oil.

Hasty Generalization fallacy.

Alternatives use oil as an input now because oil is readily available now. That does not mean that oil is necessary for their construction, transportation, or maintenance. In particular, electricity could replace every one of those three (with the possible exception of gear lubricants, although those can be sourced from biomass gasification).

So you need to make your argument: what specific part of the process cannot be completed without oil?

Moreover, as you've noted, there will be some number of millions of barrels of oil per day available even after "oil" per se is gone; accordingly, saying "they use oil" is not a valid argument for their being impossible to construct, transport, or maintain.

concrete requires much natural gas, coal, or oil (heat) to manufacture

You can't be serious. Are you not aware that it's possible to obtain heat without fossil fuels?

Or is this another example of your myopic fixation on how things are currently done?

trucks use oil/diesel to transport, thus no trucks = no infrastructure.

Have you not heard of trains? Electrified rail? Are you really so blind that you believe "transportation = trucks" is a valid argument?

Some fraction of transport miles will be most efficiently done with trucks; fortunately, we've already agreed that there will be some number of millions of barrels of oil per day available, so the modest fraction of industrial traffic that is best done with oil will have it available.

Where are the plans for electrifying everything

Electrifying highways is a nonsensical straw man. Cars will be progressively electrified as oil becomes progressively more expensive; that process is already under way (witness the Prius, Th!nk, Volt prototypes, etc.), and alternatives such as mass transit and electric bikes are already being used in place of cars (China will buy more electric bikes this year that the US will buy cars).

Space heating will be lessened with insulation and converted to electric (heat pumps) progressively as the economic incentive increases, spurred along by government mandates in places (e.g., Sweden).

These aren't "plans"; these are things that are already happening to move away from oil, despite there being no "central master plan" dictating them. Insisting on seeing "plans" is largely silly (although some do exist; my understanding is that Alan has some fairly detailed plans for electrifying rail).

I want to see you reference to the specific plans for all of this.

Nonsensical request. I don't have access to plans for building a single wind turbine, but that doesn't mean it isn't happening.

Moreover, you're trying to dodge the question.

You've made claims; I'm asking you to back them up. Insisting I should prove you wrong is a standard tactic of people who can't back up what they say. If you can't - or won't - back up your claims, don't be surprised when nobody believes them.

Dear Pitt, Please believe me when I tell you you are making an unflattering exhibition of yourself here. You are one of those people whose high IQ and creativity enables them to squirm with infinite success around the forewarnings of reality, right up until the day when they crash into the actual unsquirmable reality itself.

No one here has a duty or need to spend all day answering your infinite capacity for "yes but"s. You have a problem (1) with failing to appreciate the scaleability problems, (2) with failing to research the basics before coming to this site and demanding to be handed free basic tuition, and (3) an emotional denial problem.

Yes we need challenging discussion on this site. But please understand that not all challenging or discussion is useful. Yours isn't. Please don't waste your time and that of the valuable experts we have here. Spend more time asking "might I be wrong" and researching the facts.

(P.S. - I don't propose to get into a discussion of any of this so don't expect any reply if you are foolish enough to post any sort of rebuttal to this "last warning".)

What exactly is the purpose of your post? I cant tell if its a refutation, a rebuttal, a condemnation or just rambling displeasure. It certainly doesn't adress Pitt's objections to the imminent collapse thesis.

failing to appreciate the scaleability problems

Scalability problems have been claimed, but not demonstrated. Forgive me if I don't take claims from anonymous internet posters at face value.

failing to research the basics before coming to this site

You're new here, so I suppose I can't have expected you to notice that I tend to provide a whole lot more factual and quantifiable evidence to back up my arguments than most people do. Browse through my posting history and you can see that for yourself.

I can expect you to know the difference between "research the basics" and "swallow the party line", though.

an emotional denial problem

False again. I have no problem accepting the idea that society might collapse; my problem is with people using shoddy arguments to insist that it will collapse.

I'll go wherever the evidence takes me; all I ask is that others make arguments based on evidence rather than faith in their intuitions.

Spend more time asking "might I be wrong"

Ironic, considering that's pretty much what I'm asking others to do.

Might I be wrong? Of course. I've been wrong before, on this site, been corrected, and thanked the person who corrected me (and provided enough evidence that I could see they were correct, of course). I like being corrected, since that means I learned something.

By the same token, though, I expect others to be willing to take corrections and to challenge their beliefs. That's why I'm asking what evidence argues oil cannot be replaced; it's been asserted quite frequently, but when the assertion is challenged - and not always by myself - all that's been behind it has been weak, hand-waving arguments and a lack of evidence.

Maybe the assertion is right, though, which is why I'm pressing for evidence.

don't expect any reply if you are foolish enough to post any sort of rebuttal to this "last warning".

"Last warning"? What, do you think you have any influence over the internet, or anyone on it?

You're funny, kid.

Sad are those who don't know because they weren't told. So much sadder those who still don't know even after they have been told. You ignored my warning and just wasted a whole load more of this valuable space, to say nothing of your credibility. End of "discussion".

PS - ok, one last point -- the supposed need to demonstrate the problem of scaleability. If you really need this to be demonstrated, I'm sorry but I can't help you, any more than I could help someone to understand "why" 2 + 2 must = 4. Those who don't want to understand something never will. Emotional problem as aforementioned.

Ok Pitt, perhaps I should be a little more patient with your frustrated quest. The thing is that proving that something can be done can be proven by showing how to do it. But proving that something can't be done cannot be conversely proven by failing to show how to do it. In fact it's the wellknown impossible proving of a negative that you are demanding of others. With such problems most people can arrive at a reasonable conclusion by going through loads of options in turn and finding them all wanting. But to lay out a full demostration of such would be too big a task to fit within one of these discussion pages. Most people here have already satisfied themselves of the no adequate substitute thesis. Your trying to force people to justify it on this page just wastes everyone's time. Not because it isn't an important question, or because a proper answer has been given, but because a proper answer cannot be given here. So please accept the apologies of myself and others that we are not going to answer your doubt. And we just have to move on.

You ignored my warning and just wasted a whole load more of this valuable space, to say nothing of your credibility. End of "discussion".

Breath-taking arrogance from the Kid, not to mention futility. Aren't you aware that "end of discussion" foot-stamping has never, ever ended a discussion on an Internet forum? And least of all from the person who says it. Ha!

Settle down fellas!

As a Joe Shmoe, I realise I'm way behind on the learning curve (decades, I would say!). I visit here to grab the basics and have a few "What The?" questions answered - so I don't look so stupid when I talk about PO with my immediate circle or anyone in passing. This sort of stuff just takes up everyone's time, which is THE most precious thing I would have thought.

Regards, Matt B
PS. Just saw the latest seasonal forecast map for Adelaide/Victoria (Oz)... Dry, dry, dry! Isn't talk of ramping up energy from current power grids a bad thing, with Mankind's so-called influence on Climate Change beginning to show its head (seemingly)?

That would be because nobody has presented a strong case for oil being fundamentally irreplaceable.

This is not an honest statement. 1. Why must a case be strong? It need only be right in the end. Tell me, when there's no more oil, how am I gonna get my plastic chairs for my lawn parties? Can you make a strong case for every use of oil being replaceable by some other material?

2. More important than, but strongly connected to, #1 is, your question dishonestly asks one to make a strong case for the "fundamental" irreplaceability of oil. That is not really the conversation, now is it? No. The conversation is about the economical replacement of oil.

"...so there will be some oil available for many decades to come."

"Some" decades? Well, damn, how freakin' many? My kids, grandkids, great grandkids... etc., on down the generations, wanna know. It is as short-sighted to think a few decades is meaningful in terms of mankind as it is to plan your oil use as if it can never run out. Further, the sources you mention can last "some decades" if we want to turn the world into a wasteland. (I don't recall, but perhaps you are also an AGW denialist? If so, you've not much useful to say on either topic, frankly.)

Incumbent upon you, if you are going to rebut, is to also show your proofs. How much oil do we need for the future? How much environmental loss can we suffer and not fry ourselves? What can replace oil in terms of ALL its uses, and do so economically, and in the possibly very short time frames available? Or is "someday" good enough? That is, it's OK if a few billion die while we figure out how to fully replace oil, and economically so?

Enquiring minds want to know...

ccpo - On internet discussion sites one not infrequently encounters people who are absolutely rigidly convinced of their superiority over other contributors. In reality, as you say, they don't have much useful to say - even though they take up an impressive volume of space with their words. They have a striking tendency to give themselves grandeuresque historical pseudonyms. This particular genius's speciality is demands for impossible proofs of negatives. Learn to ignore!

1. Why must a case be strong? It need only be right in the end.

The death of all reason.
Presumably at trial evidence would be superfluous, as it would be possible to adjudge guilt by the look in the accused's eye.
And how do you know that it is correct in the absence of strong argument?
Divine dispensation?

EDIT: That sounded more huffy than I intended, but really......

Perhaps you missed, "...in the end...", or perhaps you think the process of figuring out and dealing with PO and CC are finished, or that no action should be taken till we have 100% certainty on what to do?

Seems we've tried that with CC already, have we not? And failed miserably?

Fact is, we are often forced to take action before having certitude about a situation. This is essentially what leaders do, no? They synthesize, make their best guess and trust their instincts. How is this different? It is not.

All that is to say, consider the context, friend, for it is everything. My post did not need this explanation. But then, I teach language for a living and may be making some assumptions about what others ought to get from context. And, we are not *in a court*, but are posting to a message board.

Still, keep in mind, within the context of what to do about CC and PO, we do not have the luxury of "proving" all before acting, nor will we know whether we have made the right choices until it is past the time for action to have been taken.

The real issue here is the poster I responded to. He continually attacks. Yes, attacks. His joy apparently comes from trying to poke holes in others' posts while offering nothing to them in the way of direction or suggestion. It is all confrontation, all the time.

I detest small people. Such a person is small.

This is a bit huffy, and deservedly so.


I find Pitt the Elder both stimulating and productive, with his emphasis on the need for precision.
And yes, he has in the past criticised some of my posts - where needed, I corrected and thanked him for his input.

If a case is correct, then the opportunity to examine it should be welcome, and as Taleb argues in the 'Black Swan' what we should always be trying to do is not to confirm our position, but to look for anything which falsifies it.

It seems unlikely that anyone who doesn't already agree with a position will be persuaded by repeating the assertion that it should not be questioned.

I certainly welcome criticism of any of my positions, hence my welcoming Pitt's posts.

Tell me, when there's no more oil, how am I gonna get my plastic chairs for my lawn parties? Can you make a strong case for every use of oil being replaceable by some other material?

Yes. You can talk to Sasol about how they make it from coal. Its just using syngas (CO + H) over various catalysts to make whatever hydrocarbons you need. You can get hydrogen from water and CO from limestone if you dont want to use coal.

The conversation is about the economical replacement of oil.

CTL is profitable now. It takes a little while to build the infrastructure.

"Some" decades? Well, damn, how freakin' many?

Well long enough that we'll be able to build replacement infrastructure is all that is important.

I think oil is replaceable. World War II was fought with under 10 million barrels per day of world production.

It's a mistake to assume that people disagree with you because they're ignorant, or even because they're wrong.

This is an intereting statement and holds great truth. It also disguises the problem; experts rarely agree on a unified solution.

eg, The pro nuclear experts (Royal Society for example and, I think, The Royal Institution of Chartered Surveyors has a similar view)tell us wind cannot replace conventional generation. The wind lobby (David Milborrow, BWEA for example) tell us wind can. From reading D Milborrow's article on "assimilating wind" he puts a very strong case for wind that debunks the "winter anticyclone" senario many talk about.

Both the Royal Society et al, BWEA and D Milborrow are respected bodies, with opposing views. They can't both be right and none of them are ignorant, I would like to think in any case. My belief is no one knows the solution to fossil fuel depletion. When we started using oil and other fossil fuels, we evolved at a rate that we could extract them at. We now have the possibility of a discontinuity in energy supply and the proposed solutions are currently speculative. By speculative, I mean we don't actually know how they will hold without a fossil fuel platform to fall back on. To hold, they must be sufficiently energy positive, affordable to all users and make adequate profit to encourage investment. They may do well, they may not.

Highways can be made with concrete

Making concrete is very energy intensive. I think 10% of the world's energy consumption is consumed making it. I have to admit I have not checked my facts here, which is rather complacent of me when tackling Pitt, but I'm sure he will correct me if I'm wrong.

They believe that solar, wind, nuclear, coal liquids, and other alternatives will yield us fantastic quantities of energy and prevent disaster. They don't realize that oil is the great enabler.

no we don't, that is a straw man. there is a lot of renewables out there but I wouldn't call it "fantastic." there is lots of conservation out there that can happen.

oil is not the great enabler. oil can be replaced. we can use electricity is move cars. it's as simple as that. it's already happening.

we can use electricity is move cars. it's as simple as that. it's already happening.

No, It isn't happening, and that's because it isn't "as simple as that".

Changing millions of cars (and countless other machines) from oil can't be done just by clicking fingers or by making ultra-brilliant decisions in boardrooms. It would be a massive task which would require huge amounts of energy and time. Which we haven't got. So it will never happen. When the transport system collapses all those grand projects of new infrastructure will collapse with it too.

My advice above to Pitt the Elder applies to you too.

No, It isn't happening, and that's because it isn't "as simple as that".

Yeah it is. The first step is taking the honda instead of the jag to the office. Choosing the train instead of the plane. The next is carpooling. After that is public transit. All these can be done very quickly with just some price pressure and thats allready happening.

Some larger scale infrastructure adjustments are also happening because of the new price regime of oil. CTL for instance is gaining momentum and market share, and higher milage cars are being more rapidly produced. These take years, but we have years because we waste so much.

Yeah it is.

But only on an absolutely piddling scale relative to the problem. On a practically meaningful scale it as near as matters is not happening and never will for reasons already stated. Please spend more time reading/thinking and less assuming you know better than those who have typed before you!

You are a very slow learner, I have to say. But learn to debate and discuss, not make unsupported assertions (ie, opinions and beliefs paraded as fact), and learn to hurl less abuse at those who question, disagree with you, or do wish to debate. End of discussion!

Disclaimer: Occitan - member < 2 hours.

Ted999 said "The main thing driving inflation is high oil prices and as inflation goes higher investors buy more oil driving inflation higher again."

Do you work for the Fed? I ask because this is their excuse too. Until you look into the easiest to understand definition of inflation (my personal example is this: increased inflation = a decrease in goods & services relative to money & credit supply OR an increase in money & credit relative to goods & services).

So we may have too many $dollars chasing a stable amount of oil supply, or we could have a stable money supply and a diminishing amount of oil. Worse case scenario is too much money and credit chasing a decreasing supply of something important. Speculators are not in this equation in meaningful way, unless if they are members of the Federal Reserve. It would also help for someone to understand how futures contracts are written for "speculators". And let's not confuse investors with speculators while were at it. My take is that for every buyer of a contract there has to be a seller. In other words for every speculator" that thinks prices are going down there has to be a counterparty that thinks prices are going up. How does this drive prices in a meaningful manner long-term in any direction?

As for the theory of investors buying more oil, what are you talking about? Do you know of any endowment or large enough institutional investor buying and storing oil somewhere? If so where is it? Even the Strategic Petroleum Reserve is a drop in cubic-mile bucket. The only ones I know that are large enough (sovereign wealth funds) already have oil. But surely you don't mean the rest of us through USO, DBO, or UCR? The only way I'm aware of actually impacting the price of oil worldwide is to affect supply (of oil and/or money & credit) OR demand (for oil with money & credit) . Easiest is to affect the supply of money through the electronic printing press. More difficult to affect the supply of oil by intercepting the delivery through purchase and by storing it somewhere. Both can only drive the price up. Are you aware of any ETFs that let you do the latter? Perhaps the folks in the Nigerian delta are the only ones right now intercepting delivery in a meaningful way, but one could definitely argue that they were not as motivated when oil was $30 bbl.

Perhaps the Fed and the member banks' excess credit creation had something to do with this bubble. Did those that complain about oil prices and blame speculators lament when their dot com stocks were increasing by 5% a month in 1999? Did those same "investors" complain about "speculators" when their home price were increasing by 5% a month more recently? No, or course not. Did any of those increases make sense? No one asked. Yet the supply of homes and dot-com stocks seemed to be increasing almost as quickly as the supply of money and credit. Interestingly now we seem to have too much paper money chasing after a seemingly diminishing supply of something critical to modern life.

What we are experiencing is the result of hubris ongoing since long before most of us were born. So, just maybe, folks had better gain an understanding of what inflation really is. It's not always something that gives you an early retirement, or turns your home into an ATM. Sometimes it takes away what you worked for. A few hours on Wikipedia will help, but luck perhaps will be of most help this time around for the clueless (present company excluded).


Occitan - I think this is a very good summary of where we are. In particular like your definitions of inflation, and no doubt where we are right now is too many $ chasing a static supply of oil.

On the speculator front, futures contracts were normally driven by "commercials" wanting to hedge against changes in the oil price. For example, airlines hedging three out at $50 / bbl have actually been kept afloat by these wise hedging moves. The speculators on the other side of these bets have lost their shirts. Notably, many airlines kept afloat in this way are now hitting the fuel price wall as they are moving into the real world of $130+ / bbl oil.

Another major group of industry hedgers are small oil cos with borrowing, forced to hedge by banks, and many of them have lost out in recent years, forced to sell future production at low price. Now that's just what we want isn't it. Oil companies losing out on hedging and airlines winning. So if there is a problem with speculation, this is it.

The political and media focus right now on speculation is part of the blame game. OECD political leaders have done nothing to prepare for this energy crisis and now its here they want to blame everyone but themselves. The media have also done a sh*t job of covering this crisis as it has brewed for 6 years now and they too seem too willing to opt for the easy explanation rather than focus in on the real issues.

Welcome to TOD


Giddaye Euan,

"The media... opt for the easy explanation..."

I hear financial commentators and DJ's try to explain the "reasons" for rising oil prices on morning radio - quite often it seems. A few one-liners that sound straight forward, sure, but unless we Joes and Janes know the basics, the answers (whether true, part-of or whatever) sound like gobble-de-guke (sp?).

"Planet Earth is running out of 'affordable' oil", SOUNDS easier to me - that's why I'm here.

Regards, Matt B
PS. Latest humming and harring by a city council (Melbourne, Oz): Should they spend $10 billion on a new road-connector tunnel just north of the city; or upgrading and adding to a railway system that's been in place for more than seventy years. Hmmm...


Oil is expensive, because of reserve production capacity has diminished and continues to diminish:

and because oil exports available to oil consuming countries are shrinking:

and because demand mainly from Asia is outstripping global oil supply:

and because tight refining capacity is causing distillates to rise in price even further:

That much is certain and undisputed.

However, some seem to think there is also a speculative bubble on top of the fundamental supply-demand crunch causing the initial price rise. George Soros is one of these people, so if you believe this yourself, you are certainly within esteemed company.

So, who are the people making this bubble?

Are they the commodity speculators, who buy up oil?

Well, they would need to store it somewhere (inventories) to cause a global shortage, which in turn would raise the price, allowing them to speculate with crude oil futures contracts.

But inventory levels show this is not the case:

So, if the inventory data is correct and there is no significant difference in the Asian inventory data, commodity hoarding is unlikely to have a great influence on the price currently. Speculation in general may have some effect, but it is unlikely that it accounts for $80/barrel out of the current price, like some are claiming.

Now, if not oil hoarding speculators, then who could it be?

Maybe those 'evil' (sic) Arab OPEC countries are behind it? They are an oil cartel after all, right?

That theory is again hypothetically possible, were it not for the fact, that they all publicly say that they are uncomfortable with the price, they do not want demand destruction, which is already happening:

Further, considering the infighting amongst OPEC countries, it seems unlikely on the surface at least that they would act in unison to raise the prices by not producing what they can, especially when it would be to their detriment by causing diminishing demand in the future.

Historically oil prices have always crashed, if they rise much too fast. This has never worked to the advantage of the oil producers, but has in fact put them in debt. They have publicly stated they will do anything to avoid this scenario repeating.

So, what other possibilities are there?

Those big oil corporations! ExxonMobil, Shell, BP and the rest. Maybe we should tax them, because they are behind this?

Not so fast. This is the amount of oil flow in the world they control:

While it is theoretically possible that in a very tight demand situation (like now), they would be able to raise the price somewhat by not producing that which they've got, it doesn't really make economic sense in the long run (cf. above). However, they are not a cartel and as such do not act in unison.

So, in the end, the only thing left is to accept that the fundamentals and acceptance of most probable things to come are the reasons driving the price:

If not, we can of course conjure up strategic conspiracy theories, which are always nice, but very, very hard to prove:

"Maybe the price rise doesn't reflect cost structure fundamentals"

"Saudis themselves prefer a lower price"

"Saudis are cutting production to put a squeeze on the new US president

While ideas like presented in the last three slides are perhaps possible, there really isn't fundamental data to back them up. As such, I would leave them for what they are - possible, but highly unlikely. As to refuting the argument itself, it can only be done by waiting till the new president comes to power. If KSA suddenly starts pumping oil from some hidden reserve capacity and crashes the price of oil after the first visit by Obama to KSA, then this theory might be true. Or not. As a theory is impossible to prove, it can only be refuted if the prices do NOT crash.

Personally I believe the real answer is staring us in the mirror:

It may take a while to accept, but in the end it will sink in.

We drive up the price of oil, by using more and more of it (us humans, globally). And it doesn't help blaming the Indians or the Chinese, because they are using the oil, in order to build us all the goods (and much of the food) we consume.

Blame game in this situation is neither truthful nor helpful. Only accepting the facts of oil depletion and acting on it going to help.

Hello SamuM,

Great post--thxs! Your Quote: "Only accepting the facts of oil depletion and acting on is going to help."

As explained in this posting....


...I am hoping the 'acting on it' to help ourselves is a massive ramping of global organic topsoil restoration, habitat enrichment & protection, O-NPK recycling, and I-NPK hoarding [while we still can], to help bridge the transition gap.

The problem appears to be that Overshoot effects are currently overwhelming the efforts to ramp global NPK topsoil injection rates and I-NPK hoarding efforts. I hope continued Peak Outreach* can turn the tide. But, if not, I remain a fast-crash realist.

* which includes birth control

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Siwmae (Hiya) Bob,

I've been savouring your subscript -- "Are humans smarter than yeast" -- for some time now. Makes me smile grimly every time I see it.

I still teeter round the answer that, probably, in the aggregate we shall prove to be no brighter than any other species that ramps up its population and then crashes.

Whether it's fast crash, slow crash, or -- as John Michael Greer argues, multi-step-crash, I would now give you odds-on that human population will stop its ramp-up soon, that many of us are going to die untimely and nastily, and that it's probably too late to do much about it on the wide-scale.

All each of us can do now, after doing what we can to secure things for our nearest and dearest, is to be good to each other, as far as we're able, and do what we're able to help the victims who happen to come within our reach. I absolutely don't believe that the die-off will be conveniently confined to the distant hyper-wretched of the Earth, as we of the Pampered Twenty Percent are all quietly hallucinating at the backs of our minds.

At least yeast probably can't peer into the future and know what's coming to get them.

Cofion gorau (Best remembrances), RhG


you are way ahead of the curve from me on this one. Phosphorous systemic depletion and potential peak production are just something I'm starting to grasp. I'm not there yet on the whole systemic NPK issue, although I've just started reading your backlog of posts and outbound links :)

I was looking at a presentation by Folke Günther just yesterday and it's slowly starting to sink in.

Thanks for keeping posting about this. Now that I begin to correlate this with all the fertilizer/agri news, it's starting to make sense.

What is your take on the Malawi experience?

As you know, it was all achieved with heavy I-NPK fertilizer subsidies, but it is now being touted as the success story that needs to be copied all over the world, esp. in the light of the recent agri-commodity boom.

Personally, I'm not so sure that following this idea is a very good one in the long run, but I fully admit not having figured out much of the issue yet.

Hello SamuM,

I-NPK handouts are better than food handouts-- it's important for people to know how to grow food. But I-NPK subsidies will eventually prove postPeak unsustainable. Therefore...

...O-NPK recycling is better than I-NPK. Cheaper & healthier too, in the long run, for the people and ecosystem. I-NPK, and the other trace elements [sulphur, manganese, etc] should be imported and used sparingly only when native sources prove insufficient to keep native crops above a Liebig Minimum. Again, the goal is to make balanced, mulchy soil full of micro-organisms and worms best suited to the climate and matching acclimated crops.

All of the above is important, but if the population grows: Malthus eventually invites the Grim Reaper to do his duty. IMO, I would somehow like to see aid and fert-subsidies linked to full-on Peak Outreach, which if successful to create deep understanding, would make the population deeply accept the need for birth-control, thus shrinking the pop. back to a 'full-quality of life' vs the stupid 'full-quantity of misery'.

Samum - a great summary hitting all the main points. In particular I like the quantification of demand being 5 mmbpd higher at $20 / bbl. I suspect the figure may actually be $50 / bbl but that is largely irrelevant.

The point is, all those who want lower price must point to where that additional 5 mmbpd might come from. And the answer is it just isn't there - anywhere. The Saudis are offering up 200,000 bpd - a drop in the ocean.

The other point you make about blame game is also spot on. The thing that really, really surprises me here is that we have on the one hand an energy crisis and on the other hand a theory (peak oil et al) to explain it - but the powers at be seem incapable or unwilling to accept the obvious.

“It's difficult to get a man to understand something if his salary depends on him not understanding it.” —Upton Sinclair


I think that depends on the reason for wanting a lower price. If you want a lower price to be able to use more oil, then yes, people have not explained where 5 million barrels per day will come from. But, if you want a lower price in order to forestall exploration for pointless, expensive, low EROEI oil, then the source of the 5 million barrels per day is pretty obvious: US conservation. A 25% reduction is US consumption brings the price down to the bottom. It is worth remembering that the oil embargo fell to the oil boycott so it is pretty clear that the political will to avoid using oil can be stronger than other forces.



A 25% reduction is US consumption brings the price down to the bottom.

Let's see, that is about 5 million barrels a day. If the rest of the world then resumes its pre 2004 yearly rise in demand, that gets eatten up in 2-3 years. What mechanism produces that miraculous result? How do we maintain what would be for many very painful if the price goes down to bottom. Would not American just raise their consumption again?

I think the best case for conservation in this situation is that it slows the price rise somewhat. The only true solution is building a new energy infrastructure.

If you read the link, you'll see that the proposed mechanism is rationing and further annual cuts keep the price low until we end our use of oil.


The blame game is not in play here. One axiom of the blame game is that the only people who don't want to play it are the ones who deserve the blame.

In this case we have everyone playing, especially the ones who are to blame, i.e. the politicians and the media. And, to some extent, the public who only listened to what they wanted to hear for a couple of decades.

Anyway, in my experience that axiom is a universal truth whenever the blame game is being played, ergo what is going on now is not The Blame Game. It might be the scapegoat game, or that chapter of crisis management called, "The Search for the Guilty". But the blame game it ain't.

It's always refreshing to see people use concepts accurately. Thanks for the correction. Difference noted.


Great post!

Blame game in this situation is neither truthful nor helpful.

But it provides some relief for accumulated frustration.

My goodness I seem to have caused a stir. Love all those pretty graphs and pie charts. Here is another pic to ponder.

Euan, excellent article, as always. A stark message...and to think it's based on Government's own (BERR) forecasts. This point leads to the question - 'does Gordon Brown know and understand these issues and if so is he clinging to the hope that Prof Odell's 30 Gbbls from UK NS are about to come to the rescue?

With the demise of the majority of UK manufacturing base in (and since) the Thatcher era, the inability of UK to grow enough food for 60m population, an estimated £19bn pa tourism deficit pretty well the only success story is financial services i.e. the City of London including large investments in overseas corporations. There's another big problem here - that's about to go downhill rapidly as the global credit crunch and ongoing debt deflation bite deeper (although I guess there's some commission to be earned for all those sterling sell orders).

I don't know where we go from here - it's as if our politicians are living on another planet. They seem to think that a combination of asking KSA to 'open the taps' and economic growth will permit BAU...at least that's what they are saying publicly. A list of excuses will already be in place - speculators, OPEC, world food prices etc but at some point soon Joe Public will expect politicians to take ownership of UK's economic mess and come up with a credible action plan; more likely that will mean making way for someone who can.

I don't know how deep the downturn in the wider OECD will be, although the omens don't look good. For the UK I can only now envisage a full blown economic depression as I just don't see how the type of energy, transport and other infrastructure changes can deliver sufficient mitigation in time to avoid the type of economic and sterling crisis which will exceed that of the 1970's when UK was forced to borrow from the IMF. To make matters worse debt levels in UK are, from what I've read, among the highest in OECD and a property 'bubble' has taken prices to around 6x earnings.

I also think it's only a matter of time before this whole matter gets into the markets at which point sterling and equities would unravel quickly. In short a big mess...and the UK election in around 2 years' time will offer a poisoned chalice to subsequent Gov't.

Joe Public will expect politicians to take ownership of UK's economic mess and come up with a credible action plan; more likely that will mean making way for someone who can.

Actually, they will likely have to make way for someone who can't - Cameron, who displays even less awareness than the current Government, and is currently involved in trying to block the passage of laws to enable the swift building of wind and nuclear energy by simplifying the planning process.
His idea of energy policy is to slap a ludicrously inefficient and expensive eco-bling wind turbine on the roof of his London pad.
Still, doubtless he will allow pensioners to freeze in peace without the introduction of bothersome rationing.

"Eco-bling"! Beautiful put-down word. Thanks Dave!!

David Cameron, possible next Prime Minister of the UK

It is hard to believe at this time that the Tories seem to know less about the realties of UK Energy than the government. Which brings us back to that bye election.

Alan Duncan MP is the Conservative Shadow Secretary of State for Business, Enterprise and Regulatory reform. He worked for Shell and as a trader of crude oil and refined products. When I have heard him speak about oil, which admittedly isn't very often, he seems to know what he is talking about.

Good point, I just emailed him with the link - maybe he'll call by?

I've been e-mailing Johann Hari, of the Independent, with links - silence so far.

I emailed a link for Euan's post to David Smith of the Sunday Times.

A couple of years back, Smith put together a piece questioning if Sterling would survive a downturn in oil production in the UKCS.

It seems he has no trouble with a regional peak (UKCS + Norway) but couldnt quite get a feel for Global Peak.

So, this excellent piece by Euan may fit with his own earlier piece in the Sunday Times and kick start another look.

Either way, it is becoming quite clear that the UK is in for a horrible time in the next decade.

We will be lucky if rationing and Martial Law are the least of our problems by 2020.

Frankly, I think the current crop in Government know what is coming and are just dazed by the horror of it. But since they know they will be opposition and Cameron , Duncan et al will be carrying the can it will be an SEP.

I doubt any current leader of any major party could handle what is coming using any aspect of what they consider normality - Free Market, Liberal Democracy and elections .

Mudlogger, I wonder if you would give contact details to Euan?
Whilst we still have electricity for the internet those of us dwelling in Brittania tend to e-mail each other, to try to pretend that we are waving not drowning, and hatch the odd cunning plan to derail the Juggernaut.
You might miss out on our patented perpetual motion machine if you are not contactable!

Got your email Thanks.

Who can really alert the British people to the terrifying scenario set out by Euan?

Euan covers the balance of payments today and yesterday the gas gap and alongside all this today is the crunch in base load generation that will require money and time to sort out.

In short: we no longer have the time and soon, we will not have the money.

As well as a political failure over the last twenty years (it started long before labour) it is a market failure. Just as the US got used to cheap, plentiful fuel and grew an SUV fleet, the UK got used to cheap electricity and market efficiency eradicated resilience and spare generating capacity.

We now have the worst of both worlds. High prices, money draining out of the exchequer and peoples pockets, fuel and food inflation, lack of spare capacity and the urgent need to build new capacity.

And this is just the start!

Other constaining factors soon to occur will be Increased social security payments to the increasing numbers of unemployed, reduced tax take at all levels from Corporate , income, council and VAT taxes.

By 2012 there will be no wriggle room left. And we are still debating about Nukes / No Nukes , the Severn barrage , carbon capture coal fired generation.

If this current Government had the bottle for it, it would realise that there is now way they would get elected in 2010 and just go for it: Take all the unpopular decisions now, start the nuke builds , start the Severn Barrage, ignore popular opinion and especially the Greens, start the work so the die is cast, loose in 2010 and be regarded as heros in 2050 for foresight shown in 2008...

I dont know if we have a Statesmanlike politician available.

Most appear to be pygmies and unlikely to risk pay,perks and pension.

I think the only action will occur after a major grid failure in winter with additional thousands dead.(poor souls)

If we are lucky, that failure will occur this winter not the one after, or after that. The longer we 'muddle through' the worse it will ultimately be.

As the Economic crisis deepens we will see a 'flip-flopping' from one government to another in a similar fashion to Weimar Germany in the 1920s...

Hopefully one day a government will get it and sow the seeds of a solution however unpopular...


These articles focussing on UK energy are most welcome. There is no doubt we are rushing headlong to our doom.

The political class has ransacked the country to fund their ideals, when TSHTF how much more will they feel empowered to ensure their own survival.

The £19bn tourism deficit can be corrected pretty quickly

Like vacation but you stay where you are.

Left to market forces, the problem will be solved by spreading energy poverty throughout the UK population. The wealthy who can afford the small amount of expensive energy on offer will be fine whilst the poor will just have to go without - personal transport, heat, light and power.

UK politicians of all major UK politial parties believe in the market and 'rationing' is alien to them. Even so I'd expect to see some big u-turns and some sort of rationing imposed to maintain an orderly market in energy supplies and transport. As an example I usually quote a City bond dealer (provided they still have a job) vs an essential health visitor or similar in rural Aberdeenshire. The former can drive to work in a Porsche even at $10/litre, the latter could not afford to run any vehicle. The former has lots of public transit alternatives, the latter none.

As we discussed yesterday after Rune's TOD article Why UK Natural Gas Prices Will Move North of 100p/Therm This Winter it would be very difficult to physically ration domestic gas consumption other than by the price mechanism which tends to hit most consumers quarterly in arrears i.e. after they've already used the gas. The most effective method of physically rationing gas is to substantially reduce the gas supply to power stations thus precipitating rota electricity cuts which, in turn, cut off all but the pilot lights on domestic gas boilers (furnaces for those in US).

There's an urgent need to introduce 'inverted' or 'lifeline' tariffs for both gas and electricity. The way these work in some countries is for an amount of energy, typically around 50 - 60% of average domestic consumption, to be supplied at a low rate per unit. Subsequent tiers of units are charged at increasingly punitive rates. In this way enough energy per household is supplied at affordable rates for cooking and a basic level of heating (maybe just 1 or 2 rooms). Those households who 'spend all day in a hot shower' or who 'open the windows to cool the house' rather than turn the heating down (and I'm being serious, colleagues at my work really did do this) will be hit with a punitive level of charges.

Right now exactly the opposite form of energy prices apply - those who use the most units are 'rewarded' by lower overall unit charges. Those with poor credit history, inability to budget their finances or without bank accounts are supplied with pre-payment meters...and these (often low users) are hit with surcharges up to £400 pa ($780) vs direct debit customers. The profit motive for the Utilities rules here - they reward prolifligate consumption and penalise conservation!


I agree that rationing will be used. We could move to say monthly meter readings to allow the effect of banded energy prices to show up quickly in the bills.

The level of unemployment should allow for a multitude of local meter readers who read meters just in their locality (and upload results via the web) in exchange for some discounted energy.

Longer term the ID card could morph into an energy entitlement card and a TEQs type system may emerge. However there is not enough time for this to be up and running before we run off the cliff.

I am sure that the whole idea of a full-spectrum ID card is:

Food Rationing
Carbon (ie fuel) rationing

And , ultimately control and Internal borders between EuroRegions.

You see , the ID card will belong to the State and not the person.

Take away the card, or re-issue as 2nd Class or 3rd Class and the individual ceases to exist or slowly starves.

Time to re-watch Dr. Zhivago again...

Chris - a valuable contribution, and something I hadn't thought about before.

There's an urgent need to introduce 'inverted' or 'lifeline' tariffs for both gas and electricity. The way these work in some countries is for an amount of energy, typically around 50 - 60% of average domestic consumption, to be supplied at a low rate per unit. Subsequent tiers of units are charged at increasingly punitive rates. In this way enough energy per household is supplied at affordable rates for cooking and a basic level of heating

This is exactly the sort of measure that the government can enforce via regulation. It flies in the face of conventional economics, but makes very good sense if one wants to preserve a modicum of social harmony versus the fittest takes all. Those who believe they are the fittest, spending an hour in the shower before driving the kid to school in a Range Rover, may discover they are not so fit as they would like to be when an angry hoard smashes up the vehicle and steals the diesel - starting to happen I believe.

Another thing that is pissing me off big time right now is food pricing policy. It is near impossible to escape the "buy 2 get 1 free offer" or variations thereof. There is enormous pressure to buy more than you want - and much of this ends up in the bin.

And Raspberries on sale at half price - only £2 for 10 scabby berries in the bottom of a deluxe plastic tray - when you can buy a kilo for £2 at farm outlets in Perthshire. I suspect there are regulations in place already to stop this dishonest pricing policy, but as is all to often the case in the UK, said regulations are not enforced.

Practical issues:

1) What do you do about the number of people in a household? Do you say the cheap energy cost level is the same for the single person in a flat as it is for the family of five in the McMansion?

2) Some use gas for heating and electricity for other things. Some just use electricity. Some even use oil or wood. To make sense you would need to have the lifeline tarif across energy types, but how do you arrange that when they can be separate companies?

3) Is the 'lifeline' amount the same in scotland as cornwall? I can hear the screams now.

4) So you use more you pay more? Who gets the money? How do the power companies balance what is an effective subsidy for the first units for the value on more expensive ones, particularly when that might be across energy types.

5) What about time based costs (economy 7)? How do you deal with making nightime units cheap (as coal stations keep running) but daytime units expensive?

To me it would seem to be easier to just increase the VAT on energy, and provide a tax rebate to people of a 'lifeline' energy amount.

garyp these are good questions, but probably with simple answers - if we can't as a society address such basic questions then we are indeed doomed and deserve our fate.

The universal ID card is on it's slow way, and none too soon by the looks of it. It will enable much rationing and probably stop a lot of fraud eg: driving a car without tax or insurance - no petrol allowed, let alone a cheap base price petrol ration if the vehicle isn't taxed or insured for use by the iD card holder.

You trust politicians to stop fraud?

It is a solution for controlling the population, not empowering them to deal with the problem ... and the problem of our future energy deficit has been sustained by the same class presenting ID cards as a anti-terror measure.

If you and me and Mudlogger understand the ID card as a ration card, so do the proposers. But their reticence in presenting it as such doesn't bode well for our eventual fate.

Hi xeroid,

"probably stop a lot of fraud " my take would be that having a single ID card which gives you access to everything opens up a whole new world of fraud, i.e. easier to crack one digital device than several mixed items.

I recently heard that London's Oyster card had been cloned. This is a fairly recent contactless "ID" chip used for transport tickets but was/is also being trialled as a cash wallet.

Euan, 'lifeline' tariffs were discussed in section 5.26 thru 5.28 of House of Lords
Science and Technology Committee - 2nd Report of Session 2005-06 - Energy Efficiency.
In addition Depletion Scotland raised this specific point in their response (which I co-authored) to The Royal Society of Edinburgh
Inquiry for Scotland’s Energy Supply (2005).

On this basis we can only conclude that Gov't and others have long been aware of this option but nothing has changed i.e. excessive energy use results in lower unit costs. This situation badly needs to change as inverted tariffs are a mitigation option which would be quick and cheap to implement. By contrast long term infrastructure changes and addressing UK's energy efficiency in existing housing stock will be very expensive and take decades.

Totally agree with your point re '2 for price of 1' food offers which seem to dominate every UK supermarket. They totally discriminate against single person households (often the elderly) who obviously don't require food in such quantities. The fact that the offers usually pertain to perishable items surely contributes to estimated 33% of food 'thrown away' in UK as per a very recent report. To add insult to injury the supermarkets surround such food in wasteful and unnecessary packaging (ok rant over)!

From each according to his ability, to each according to his needs? Historically tends to fail to produce desirable results.

Another thing that is pissing me off big time right now is food pricing policy. It is near impossible to escape the "buy 2 get 1 free offer" or variations thereof. There is enormous pressure to buy more than you want - and much of this ends up in the bin.

I live in a household of 4 and I do most of the shopping. Whenever I see such an offer, for items that we regularly consume and that do not rot, I will buy them. It makes a lot of sense for us and it does not increase our consumption. However, I do feel sorry for single pensioners who cannot benefit from such deals - my wife tells me that they often cooperate with one another and share the goods.

I am sure all these offers will eventually disappear once food producers are in a position to tell the supermarkets to "get lost" - these offers are usually financed as a "marketing" effort by the manufacturers.


Good points. I have to read the yesterday's backlog as well.

About gas flow management:

Are there any regional/end-use gas flow limiters that can be used to remote control the flow of gas? That is, a network that can volume ration while maintaining pressure at all parts of the network?

Or is is just one big delivery network, where only major branches can have their flow volume controlled?

Assuming a rationing scenario (through volume, not through price), that could theoretically mean that the first users use up all the flow, while there is relatively little or none left for those at the edge of the delivery network.

If this is a semi-accurate description of the gas delivery situation in the UK, then I fully agree that demand control through price is the only way.

However, if/when this happens at a steep enough price during a colder period, electricity plants can sometimes succumb under the extra load, when people start heating their homes/offices with cheap £30 heaters, ovens and whatnot. Unless the price of electricity goes through the roof as well. In that case it's sweaters, slippers and plenty of hot tea.

May sound ridiculous, but I know of a couple of places where something like this has happened. The trouble is getting all those electricity plants up again, when the load still exists on the network. It becomes an exercise not unlike a yo-yo: UP, DOWN...UP, DOWN... UP, DOWN...

That is also the reason why I'm more worried about delivery disruptions than just prices rising: one can somewhat plan for a price rise, but one cannot plan for a disruption. Gas must flow, or the load will go elsewhere (onto the grid).

SamuM, I'm not that up to speed on UK gas distribution but maybe Chris V or others can help here. I guess it's partly because I've lived without access to mains gas for decades.

UK has had plenty of experience of rationing electricity, especially during the 2 coal miners' strikes in the Heath and Thatcher eras. The process involved a rolling program of 2 or 4 hour rota cuts several times per day, mainly confined to the hours when people were normally awake at load factors are at peak then. Depending upon the actual daily demand for electricity the rota cuts occurred once, twice, three times per day etc - a lot depended upon the prevailing temperature and whether it was a workday or weekend. A '3 day working week' was also implemented for large sections of industry.

The above process was used to conserve stocks of coal at power stations (the large majority of electricity was coal-generated in those days). It would not be hard to devise a similar program today in order to conserve gas stocks. The important point is to implement the cuts before actual shortages occur. Of course electricity cuts would be far more disruptive today as, for example, computers were far less widely used in the 1970's and 1980's (and almost no domestic computers existed), shops would still have had manual cash registers, doctors and dentists a manual appointment booking system and handwritten case notes etc. Just having thought about it enough to write this paragraph electricity cuts are going to be traumatic for the UK...but that's the way towards which UK Gov't is currently sleepwalking.

As I've posted earlier electricity cuts do have the immediate effect of reducing domestic gas loadings without risking actual domestic gas disconnections.

first off all great post and smart move

By 2013, the UK may well run up a cumulative deficit in oil and gas imports in excess of $500 billion - if we can find countries that will sell us oil and gas on credit. This equates to an energy debt over $8000 for every man, woman and child in 5 short years.

This is tough with house prices plunging. To convey such a message even with a Kevlar vest would give little protection.

With respect to energy supplies UK will in 2013 still be in a better position than countries it naturally compares to like France and Germany.
A good follow upper here would be to make a post on one of these countries to identify historical and possible future similarities and dissimilarities (I am on to it, giving me a week) on energy supplies.

I would be stunned if Germany and France's position were worse than Britain's.
They may have to import more of their oil and gas, but Germany at any rate is far more efficient in the use of energy for heating as they insulate their houses better.
They also produce a lot of their coal, however dirty, and have an export surplus as they still build something.

France has a huge amount of nuclear power and is rapidly building wind turbines and installing air heat pumps at the rate of 50,000 a year and plans to install 5million solar water heaters within a few years.
They are also building light rail systems in most cities of more than 100,000
The prospects for exporting nuclear expertise are also excellent.

They might have problems running their cars but I doubt that either will end up freezing.

The French appear to have made some wise investments in nuclear power and electric infrastructure. When oil is too scarce, however, they won't be able to maintain the power grid. After the "final blackout," not much will move or work, just like everywhere else in the world.

Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again.

France is also South of the UK and therefore a hell of a lot warmer [yes, I know they have cold continental winter winds - vs - the UK gulf stream, but LATITUDE = heating bills].

This kind of statement does not seem too useful to me, as it just an unconditional ex-cathedra statement instead of argument.

If you wish to argue that France will not be able to maintain its grid when oil is 'too scarce', you need to define at what point scarce becomes too scarce, and specify why that will make it impossible to maintain the grid.

You also need to indicate time frames - there is a world of difference between a situation where things rub along with a low level of oil for years, giving time to produce electric vehicles etc, and perhaps the production of liquid fuels from nuclear energy, which is certainly theoretically at least possible, and a situation where there is no oil next Thursday.

It will happen well before 2070, look at the TOD/ASPO depletion stuff. The grid depends on the highway for trucks for maintenance, hundreds of thousand of pylons 250,000 miles of high tension lines, parts and hundreds of thousands of transformers that will need replacement, mfg of cables. It is all made with oil and transported by it. It just takes a few to go out, and they do. Alternatives will accelerate oil depletion and yield useless electricity. Read my stuff at google/yahoo search: peak oil impacts. There is not even a plan for the "electric economy" or making liquid fuels in quantity which are still in the R&D phase with no plan for any quantities, and peak oil is here now, and all of the people working on this stuff will soon be out of work.

Thanks for your response.
However, if you wish to make an argument here, you need to post it here.
I have not accepted your basic thesis as yet, and so am not inclined to 'read up' at an external site.
Nuclear energy can produce liquid fuels, albeit at some cost, and the time you give is so far out that many advances may be made.
In the closer time span we can predict, France seems rather well placed, and there seems no reason for the grid to go down.
The use of air source heat pumps would further reduce load, and they are rapidly being introduced.
Substantial strides are also being made their to electrify transport.

y'all also realize that grid maintenance is a pretty good application for EVs right? Line maintenance vehicles are generally short distance travel (<30 miles) vehicles that at the endpoint of the run are at electrical infrastructure locations suitable for multi-hundred amp drops capable of quick-charging LI-ion battery packs and the tools and expertise to use them.

You forgot that when the grid is out, your EVs don't work for very long. Some power outages will last for weeks or months.

You forgot about the hundreds of thousands of miles of highways that need to be maintained and plowed in order to maintain the power grid, and the competing critical uses of oil, like home and institutional heating (schools, nursing homes, hospitals, prisons). Peak Oil means not enough oil at some point. It is also the oil that is used to mine and process iron ore, bauxite, and copper, and making cable, etc.

Hi Dave, I would also add that vehicles responsible for infrastructure and emergency public services will get first call on whatever types of fuel are available going forward; the family vehicle powered by oil will become a relic. If individuals want to go somewhere individually, they will need to use some other mode of transport: Bicycle, horse, mule, donkey, roller blades, segway. Perhaps there will be some version of Flexcar but all electric. But all depends on affordability, and thus a healthy economy.

I don't hold out much hope for UK politicos to listen, as was proved by the massive anti-war protests which Bliar ignored, and for which he has yet to be held to account for that crime. It seems the natural allies would be those in the power structure with as much to lose as the average UK citizen. I wish you all the best in trying to find such allies.

look at the TOD/ASPO depletion stuff.

Yes, look at it. It says there will be less oil, not none. Less oil means more expensive and/or rationed, and either method will preferentially divert available supply to critical tasks like maintaining the electrical grid.

The US and Canada, to take an example of one grid, will likely still be producing millions of barrels of oil per day, even in 50 years, due to stripper wells and deposits such as the oil sands. How is it credible that none of that oil will be available for maintaining that grid?

India uses about 2.7Mb/d for 1.1B people, or about 3% what the US and Canada use per capita, yet it still maintains a large and relatively-robust electrical grid. By what logic do you claim that the US and Canada will be unable to do so even with greater resource availability?

Hi Pitt, You forgot about the hundreds of thousands of miles of highways that need to be maintained and plowed in order to maintain the power grid, and the competing critical uses of oil, like home and institutional heating (schools, nursing homes, hospitals, prisons). Peak Oil means not enough oil at some point. It is also the oil that is used to mine and process iron ore, bauxite, and copper, and making cable, etc.


I will use some hard numbers, i.e. specific energy consumption/capita/year expressed in MTOE/capita/year based upon BP Statistical Review 2008 and CIA World Fact Book 2008;

UK........3,54 MTOE/capita/year
Germany...3,78 MTOE/capita/year
France....3,98 MTOE/capita/year

France is listed as having negligible coal production imports +95 % of its coal.
Germany has a higher coal production than UK, but imports some 30 % of its consumption.

In other words the hard specific data proves France and Germany to be higher energy consumers than UK, so where does that lead us?

(I will continue my work on Germany and France later today)

I think this may have something to do with the degree of de-industrialisation achieved. Germany, uses some of its energy to make stuff for export to pay for the imported energy.

The UK uses its energy to party and fly the world - and that's cos we are rich. Owning property makes you rich, you don't have to do anything, just buy it, let it sit there and it makes money to spend on energy.

Chris V had some interesting stats on UK manufacturing. Its not as bad as you may think, but we still lag Germany and France I believe.

For the sake of peer group completeness you should also run up some data on Zimbabwe. The UK has similar problems with colonial powers having screwed us many times through history - first the Anglo Saxons, then the Vikings and then to crown it all the Normans (French Vikings). No wonder we are in such a mess.

Zimbabwe....0,15 MTOE/capita/year

Based upon data from CIA World Fact Book 2008

and their spesicfic GDP was 6 000 000 $/capita/year in 2007 (estimates), that is ......Zimbabwen dollars.

So is that...... where we all are headed?

Just a thought for nrgyman2000's labours.
Perhaps the relative per capita carbon emission per country is a useful indicator of fossil fuel use?
I note the following for France and some others. (Germany I did not get just now, but is higher than UK.) Road transport figures high in France's fossil fuel component.
"A high electricity user per capita, Sweden at ~6t CO2 equivalent per capita is something like Switzerland (and France at ~6.8t ) compared with ~10t (or 11t?)for UK. Swedish electricity is overwhelmingly hydro (49%) and nuclear (44%). Swedish nuclear apparently provides ~35% (2001) of all primary energy, which is not as high as in France (~40%)".

France and Germany are also accustomed to having to import the large majority of their oil and gas needs whereas 3 decades of N Sea production has allowed UK to become very complacent on this issue. Serious lack of gas storage capacity is one conequence of such complacency. Imo UK is especially vulnerable due to the sheer speed of the transition from oil and gas exporter to large scale importer (and that transition co-inciding with what amounts to about the biggest price spike in history). The UK also has a large, and deep-seated, trade deficit even completely excluding energy imports.

Well, things seem dark for Britain.
But haven't you forgotten something?

The Falkland Islands offshore is a 'second North Sea'
--60 billion barrels of oil---which you may have to split with the Argies.


How many years could this buy Britain?

LOL, I had to shine a little light amongst the gloom.

I'm considering drilling in my window box.
I think there might be a couple of billion barrels of oil in there.
This projections seems as reasonable as some for the North sea and everywhere else where it can't be conclusively shown that there is nothing there.

If you read the assumptions for Chris Skrebowski's megaprojects review you will note that lead time for offshore projects is 6 to 8 years. In a remote and difficult offshore environments such as the Falklands it would likely be nearer 10 years. By contrast Euan's article refers to potential supply shortages for UK by 2010 and a full blown economic and energy crisis by 2013.

It's still not known if substantial deposits around the Falklands exist; if they do they can't contribute early enough to make a difference.

And I can establish as probable that it will happen sooner.:-(

Ha! If only

1. We need to drill it to delineate it (may be 60gbbl, may be 0.6gbbl)
2. Its a long way away.
3. We would have to defend it.

Time will tell.

Our model, recent case histories and current data suggest that net oil export decline rates tend to accelerate with time, and this would presumably be true for other energy exports. In any case, this presumably requires a rapid increase in oil prices, in order to balance demand against declining net oil exports, and we have seen an increase of 6% per month in oil prices since May, 2007.

I've suggested a good way to view consumption in importing countries is to group all consumers in energy importing countries into five groups, and then rank them by income. So, at the bottom we have a poor Third World consumer, at the top we have Bill Gates. As we go up the income ladder, the purchasing power for each quintile increases dramatically, and more importantly, the ability to shift spending from discretionary to non-discretionary food & energy spending increases dramatically. In my opinion, this requires an accelerating rate of increase in oil prices in order to balance supply & demand. Basically, the bidding gets tougher as forced energy conservation moves up the food chain.

Taken together, these two factors will probably cause a continued rapid increase in oil prices, and perhaps even an accelerating rate of increase in prices.

Doesn't Exportland turn the Campbell's Oil Depletion Protocol into so much mush?

That Kyoto-like protocol has the world importers reduce their take by the world depletion rate while producers in decline will reduce production by their rate of decline. A quick look at it indicates it would ideally stretch world oil supplies to so that in 50 years only 50% of the oil would be gone versus maybe 80%. It would require worldwide cooperation(an ideal situation) versus the mercy of the markets dominated by NOCs. Of course this would be in the long term interest of producers facing decline.

It seems that the ODP folks aren't looking at Exportland and are doomed to irrelevance.


No argument from me. For starters, the exporters are drowning in cash flow, even as their export volumes decline as oil prices (at least initially) increase faster than the export volumes decline.

The prime example is Saudi Arabia. Who knows what will happen, but their consumption, in 10 year increments would look like this, at their current rate of increase in consumption (note that their 2005 total liquids production was 11.1 mbpd):

2005: 2 mbpd
2015: 4
2025: 8
2035: 16

It seems that the ODP folks aren't looking at Exportland and are doomed to irrelevance.

Actually, the impact of net exports should help promote the institution of OPD or something like it. I suggested that it would be a mechanism Saudi could adopt to maintain its income while averting the possibilty of further war. IMO, the current energy crisis has the world much closer to a nuclear exchange than at any time since 1962. The UK's desperation is well illustrated by Blair's last-gasp Imperial/criminal lunge into Iraq that's become a colossal mistake. And the USA's desperation is shown by the PNAC's plan for world domination being adopted by both neocons and neoliberals from both parties, which has also amounted to a colossal mistake/crime. There are already calls for the invasion of Saudi Arabia, along with the continuing cries to escalate the economic war against Iran into a hot war, which is part of the PNAC plan. The PNAC plan is a last-gasp act of a desperate, dying Empire, carried forward by people who clearly don't value any human life but their own. The subjects of the Empire opine they don't want further war, but when you look at the condidates for the next elected Emperor, neither is really about advancing peace, with one clearly advocating more war. In other words, the Imperial Mafia don't even care about their own subjects. These are the major reasons why I desire King Abdullah to admit to Peak Oil and to advance the ODP as a solution the planet can live with, and thus deter future aggression by one dead Empire and its dying Imperial ally.

I've long had a gut feel that Ukraine and Belarus are at risk. Little / no indigenous energy, previous dependence on subsidised oil and gas from Russia, cold climate, big, industrial base.

They need to throw up some nukes as fast as they can.

This could be an interesting guest post?

Belarus will return to mother Russia - Russian Nationalism will see to that. Probably the best option for the Country in the long run.

Hi WT,

"probably cause a continued rapid increase in oil prices"

Whilst we are at a record high in prices expressed against inflation when expressed against world GDP we need to reach about $195 to be at the same level as the last oil shock. Now that did cause a significant recession but the oil flow reduction was fairly short lived.

You may see a resurgence of the coal industry that once made England an economic powerhouse back in the day. My mother is English and she told me there was a time when air quality was so bad from coal burning that you had to use your headlights in the daytime.

How poorly insulated is the housing stock of the UK? I know much of the housing stock is old and that presents problems re-insulating. I'd think given the reasonably mild UK winters (I'm Canadian), it's possible they could live without a heating source in much of the country.

Someone mentioned how France has invested so much into its infrastructure to prepare for peak oil. Given the raw deal France has taken on the world stage they may well survive longer into Peak Oil them many of the countries detractors.

Mining and transporting coal will be mighty expensive when oil hits $500 and then $1,000 a barrel, and then more. The French may last a bit long with oil depletion, but see my comments above on French longevity and the need for oil.

Yeah, it's a long way to Australia, or even America. Hauling a ton of coal that distance will cost tens of dollars a ton. Now if only someone were to discover coal in Britain...
I'd still go with nukes. Cheaper.

Very pertinent to this is my location here in (the) Birmingham. The Lady Wood (of Ladywood) was already gone 500 years ago - used to fuel the furnaces of Birmingham industry.

Then the Dudley Road became rather important for carrying coal from the Black Country mines. When Brindley's primitive Old Main Line canal was opened the price of coal in Birmingham fell to half overnight. Fifty years later Telford's huge New Main Line project eased the major traffic jams and so on. Smethwick's bizarrely one-sided High Street is a reflection of the former economic importance of that canal.

But now the mines of the Black Country are all defunct and silent. So it would be a greater reverse than just going back to the age of coal and canals.

Hi Anti_Elvis,
you are correct that a well insulated air-tight Canadian house doesn't need much more heat than a 200 watt light-bulb at even -5C. The problem
appears to be that most UK houses are not very air-tight and have less insulation and usually single glazed windows. Closing off doors to rooms and only heating the kitchen and living room, and sleeping in sleeping bags in unheated bedrooms was what I and my neighbors did in Oak Ridge Tennessee, during natural gas shortages. Our sewer and water pipes started to freeze when it got to -5C( 1977?), and this would be a big problem in UK when you stop having hot baths.

The Uk doesn't have much freezing weather nowadays, apparently due to climate change. Gulf Stream willing.

All it requires is a one-in-ten-year winter.

Ok, so it goes to one-in-twelve, but they can and do still happen.

I think the big problem in the UK for most people will be fighting off the relentless attrition caused dampness, cold, condensation and mould from November to March. Though cold snaps will kill more suddenly and make headlines, the general attritional malaise brought on cold and damp and lower food quality will debilitate the population. Especially the poor. And at some point, some of us here will become newly poor...


How poorly insulated is the housing stock of the UK? I know much of the housing stock is old and that presents problems re-insulating. I'd think given the reasonably mild UK winters (I'm Canadian), it's possible they could live without a heating source in much of the country.

65% of the UK housing stock was built before 1960. Insulation only started to feature on houses since about early 1970's prompted by first oil shock.

Houses built after about 1920 had hollow cavities between brick walls, and many have applied cavity wall insulation.

Before 1920, walls were generally 9" solid, two skins of bricks, tied together with bricks laid crossways called headers.

These early houses normally had an open coal fireplace in every major room, including bedrooms. Typically during winter, only one room was kept permanently heated, and coal consumption was around 112lbs (1 sack) per week between November and March. This equates to around 1.5 million BTU burned per week (425kWh), but the notoriously inefficient open fires were only about 20% efficient.

From my current gas consumption readings, it is possible to heat one of these typical 100yr old houses on between 400 and 650 kWh per week, with much of the efficiency gain being achieved from pumped central heating and 85%+ efficient condensing gas boiler allows multiple rooms to be heated on a similar quantity of heat.

With rising fuel costs, many more of the poor and elderly will have to return to heating just one room.

It takes around ten years to open a mine, and officially at least reserves are very low - they were downrated, partly because it was not economic and partly because the best seams were mined already.
What remains, however much it is, would be expensive and hard to get.

Here is a summary of the UK housing stock form the POV of insulation:

We use far more energy for heating to a given standard than comparable European countries, because insulation is worse.

Euan,scary VERY scary.
Was it intentional or not that you finished the article with THE END?
The way I read the figures it will be the end of Britain. Is there any silver lining that can save GB?


Great post. The future looks bleak for formerly Great Britain.

Can we collectively kickstart industry and find something that we can export to improve the balance of trades payments?

Can we get BAE and Airbus Industries to start making wind turbines in their aircraft wing factories?

Can UK motor manufacturers turn their manufacturing skills to electric vehicles and CHP systems?

If we need a sea change of technology, to provide renewable energy equipment, should we perhaps start thinking how we can re-allocate or resources to benefit from this emerging market?

The government can create jobs from home-insulation provision. Much of the construction industry could be re-allocated from house building to upgrading the existing housing stock, plus the provision of solar hot water heating systems, pV and CHP systems.

If what Euan says is correct, we are facing the biggest set of challenges since 1939 - and as a nation we certainly sleep-walked into that one.

Whichever government that wins the 2010 poison chalice should put the country on a "war footing" and mobilise the nation to meet the forthcoming challenge of fuel, energy and fiscal poverty.

However, I fear that we will be distracted by the 2012 Olympics to achieve anything useful for the first few years and it will be 2013 before we finally wake up a smell the coffee.


In my post yesterday I showed that about 39 % of UK primary energy consumption presently is natural gas. UK natural gas production is in steep decline and import requirements to balance consumption in sharp growth.

In the short term natural gas is the soft spot in UK energy supplies, in other words something has to be done with the UK energy mixture in the medium and long term and secure nat gas supplies untill these changes are implemented.

Without energy for the industry, it will be hard to produce anything for exports which could pay for the accumulated UK deficit or even energy imports.

Do you smell the coffee now?

2020Vision>Can we ... find something that we can export to improve the balance of trades payments?

It seems Britain has an export order book for armaments even greater than the USA now. Not sure that makes Britain Great.

I suspect the silver lining or perhaps more accurately last hope from a hydrocarbons standpoint would probably be coal gasification.


That'll be the silver lining to the cloud of Global Warming then?

I take it you didn't follow the link and/or missed this part of the text contained therein:-

The gas can be processed to remove the CO2 before it is passed on to end users, thereby providing a source of clean energy with minimal green house gas emissions.

If that were done successfully on a commercial scale the question would then be what to do with all that CO2? Seems to me enhanced recovery of near depleted oil fields in the North Sea by CO2 injection, along the lines of what has been done at Weyburn, Saskatchewan, would be next up on the agenda at least from a feasibility study sort of standpoint:-


More like quicksilver lining as in mercury. I happen to live in South Florida and if you go fishing in the Everglades you may find posted signs that warn you not to eat too many of the fish you might catch. They are contaminated with mercury, mostly from coal powered electrical generation.


Fossil Fuels as a Source of Mercury Pollution
Oiva I. Joensuu 1

1 School of Marine and Atmospheric Sciences, University of Miami, Miami, Florida 33149

The upper limit of the quantity of mercury released by weathering processes is approximately 230 metric tons per year. The quantity of mercury released by burning of coal is estimated to be of the order of 3000 tons per year, a quantity comparable to that emitted as waste from industrial processes.

That is indeed the holy grail (advanced IGCC+CCS). And has been now for the past 10 years or so. The coal industry would love it. Environmentalists would probably accept it, if done right.

The problem is that the technology doesn't exist on commercial scale. There are a couple of test plants worldwide, none of the advanced variety, and only a few with CCS processes under testing.

And even if it existed, it in most cases means a new plant. Consider financing, permits, planning, construction and deployment... 5-8 years on a crash program, I'd guess, but I'm not an expert.

So yes, by 2013 UK could have goal IGCC+CCS plants feeding them 'clean' gas, IF the technology was available and IF UK started on a crash program this year at the very latest.

I wish I could find reasons to be more optimistic on this, but I can't find a reason how - at least not in regards to gasification having a major impact initially.

Sure, the old way of dirty gasification is possible. Some of it can be done with retrofitting to old plants. Much faster, much less capital intensive, known technology. VERY, very dirty both in atmospheric pollutants and GHGs, esp. if optimized for gas/power output.

Somehow I don't find that thought very alluring, but if proper planning is not done in advance, that is probably what we will get.

My understanding is that it takes nearly as long to build a coal plant, even the old, or perhaps more accurately current type, as it does a nuclear plant.
Then you have to get the coal from somewhere, and we have closed most of our mines.
Getting coal, presumably from America, would demand major infrastructure, both here and in the States - we would not be the only eager customer for American coal, and hang the environment.
Further out I am most hopeful about small mass-produced factory built nuclear units - the Japanese could build this, if regulatory approval was easier.
If used as CHP units they could rapidly provide enough power.
We have allowed our nuclear expertise to dissipate, and could not do that now, so are reliant on others.

Dave, I got a response from the trade body of British Coal companies about a year ago - they were quite sanguine about the coming energy crunch, because they know many sites where they can start opencast operations as soon as the tide of public opinion turns against environmental protection. Lots of little ANWRs.

Have you got any figures?
Either on what and where these resources are, or on the time it would take to develop them?
I appreciate that they might be difficult to access.
I'm starting to see the beginnings of a game-plan, not very ecological mind, of coal and nuclear plants having their closure dates extended, more opencast and so on - it all gives some time to adapt.

Jerome recently posted about off-shore wind, but just indicated a levelised cost.
It isn't possible to arrive at any numeric assessment just using that, as there is no way in the world I can get anywhere near his estimates with the projected build costs I have seen.
You can't do much without a proper breakdown of costs.

Agreed, this game plan must surely be at the back of peoples minds. I can also see the Large Combustion Plant Directive that forces the older coal plants to close before the end of 2015 being modified on a "emergency" basis to extend the life of some of the older coal stations. It will still not be enough though, and I reckon we will have a tough time after about 2011, due to a lack of affordable gas.

From a AGW perspective it might not be as bad as it first appears, as the drop in gas fired generation will help balance out the extra coal burn. Indeed, there could be a "deal" done in the way the directive is lifted whereby the amount of coal burn allowed would relate to the amount of shut in gas generation.

Hello Euan,

We have discussed this before here on TOD, so I won't beat the drum senseless: Will the British Isles, and the rest of Europe, partially immigrate and/or restore Rhodesian topsoil and habitats, and the remainder of the Dark Continent, before it is too late? Or is China still on the fast track to African dominance and postPeak ecologic & agricultural control?

Could all concerned parties agree on a UN-mandate for optimal African decline, paradigm shift, and a sustainable rebirth?

How key is Morocco at over one-third of global phosphates, and Saskatchewan at an even greater potash percentage? How control-crucial is sulfur to fertilizer beneficiation [plus nearly all other industrial processes], and its resultant effect upon postPeak civilization everywhere?

Will the geo-strategic position of Morocco be as important again postPeak as it was back in the earlier days of the Barbary Pirates?IMO, sealane dominance for directive control of P & K flows to sustainable topsoils will be crucial postPeak so that food surpluses allow some degree of job specialization. Who will have the best non-FF-powered P-irate navy, and the stock of tall timber to build these Cargo-Clipperships? Control the necessary P & K flows, as outlined in the UN FAO Forecast, synchronously combined with the depleting FFs--control the world! Again, Hopefully for optimal global decline.

The Conquistadores foolishly put much of their efforts into importing pointless gold & vanity gems, while the British Empire concentrated on the topsoil NPK-fuel of guano, Atacama nitrates, real pot-ashes from America, and bone-cleansing the battlefields and catacombs for dead-heading home [recall earlier posts]. The resulting modest food surpluses then sufficiently leveraged their society to allow enough job-specialized scientists, inventors, and industrialists to exploit the full potential of their native coal reserves beyond rudimentary cooking and heating tasks. Then, as they say, "the rest is history...."

Optimal decline in Africa can save so many important habitats and species it boggles the mind. The longer the world waits, the much higher the global costs....IMO, the March to Olduvai can take a narrow path, lightly trodded; it is not necessary that we bulldoze & burn everything in front of us.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Umm, ever heard the word "corsair"? It is way more efficient to let others mine and refine the gold, then take some ships and rob them.

As for the clippers, a steel ship is way cheaper, lighter and safer than a wooden one. There are many plans for automatic rigid sails, and as soon as heavy fuel gets expensive enough, they will use it.. or not, if coal is still cheap.. Think about the cost of having an expensive asset going slowly through the ocean trading lanes...

Hello Aitorbk,

Thxs for responding, and welcome to TOD. I agree with your points, in fact, I already have posted earlier much detailed information on piracy, and possible hi-tech non-FF-powered ships.


I've followed the discussions here for several years as registered user but usually haven't had anything to add to the multifaceted and interesting discussions...

This morning the local papers here in Finland told that Russia is going to raise the natural gas prices about 33 % here and about 50 % in Europe...

Natural gas is used here in some power generation and in some industries so it is not really serious for us but if those price increases hit the western europe then there can be some difficulties...



thanks for this important news. I also noticed it and many in the industry probably knew it was coming.

In many places the Gazprom sold price is based on a tariff that is based on oil price.

Oil price rises, so does gas - regardless of gas fundamentals.

Now, as gas is not sold on 'open' market nor is it a perfectly fungible commodity due to pipeline constraints, even monopolies cannot charge whatever they wish. If the clients can't pay, the seller can't sell. Both lose.

Russia is of course aware of this, which is one of the reasons they are expanding their pipeline infra to have more options. It doesn't hurt if one can pit buyers against each other.

As for the case of Finland, as you well know we are 100% dependent on Russian gas. Personally I'm not so worried about price rises, because we can stomach it and it will hopefully also cut consumption (never a bad thing). This may not apply to every other nation (e.g. Ukraine, Belarus).

Unfortunately, it looks like Russian gas production is heading towards a potential (temporal) crash and if that happens, there will not be enough gas to go around to all potential buyers - price be damned:


Growing demand

This is even more distressing considering that the LNG ramp up doesn't look like it can meet global demand and because Russia is also hoarding Central Asian gas supplies. There really aren't many places that Europeans can turn to for their gas in the future.

Overall I'm still more worried about primary and secondary effects of a prolonged gas delivery disruption than just plain price rises. Disruptions can lead to some pretty nasty situations.

And of course, if the data about Russia gas production is roughly correct, then this applies to many other European countries as well:

There is a significant uncertainty with all this: properly audited data is not freely available and as always, Gazprom's head are saying "Don't worry, there will be plenty of gas". So again, all the above risks could be imaginary - it is very hard to know for sure at this point.

Thanks SES - do you happen to have any links - doesn't matter if they are in Finnish, someone will translate the essentials.

Russian Natural Gas gets a hefty price increase

Quick translation of key points:

Russia's gas exports to Eruope will get a 50% price rise this year compared to the year before. The average export price to Europe rose to $410/USD per thousand cubic meters (10E3 m^3) at the beginning of June.

The price of gas is tracking the record breaking price of crude oil. The price of natural gas has risen faster than oil during the past ten years. According to BP statistics the price of natural gas grew to five-fold from the base price of 1998 to 2007. During the same period the price of oil grew four-fold.

The average price of gas to Central and Western Europe will rise to 401 USD/10E3 m^3 from the average of 273USD last year, according to the VP of Gazprom, Alexander Medvedev.

The profits from exports to Western Europe will rise 65% this year according to Medvedev. He anticipates profits will be 64 billion (10E9) US dollars this year. Last year's profits were 39 billion dollars (USD).

Gazprom exports to Western Europe shrunk to 150 billion cubic meters last year due to the warm winter. Market share for Gazprom rose to 40%. Consumption will grow this yea according to Medvedev.

Exports to FSU and Baltic countries totaled 54,6 billion m^3 and resulted in profits of 5,3 billion USD.

European imports of natural gas have risen 17% in the past ten years, when the total primary energy demand for EU has risen only 3% during the same period.

[then stuff about energy consumption in oil equivalent tons and oil consumption falling in EU a bit last year]

Funnily enough, I can't seem to find anything on the English speaking news on this.

Why is this surprising? Natural gas prices in Europee are indexed to oil prices - usually to a blended index which is an average of the past several months, so nat gas prices follow oil prices with a lag - and with less volatility.

Given what the oil prices have been doing over the past 18 months, it's hardly unexpected that natural gas prices are going the same way - and it's nowhere near over!

Jerome, natural gas prices are not surprising to me. I know of the tariff indexes. However, the fact that the news conference by the VP of Gazprom wasn't widely reported in the English language media, when most people do NOT know how natural gas prices are indexed, well that is surprising. To me at least :)

Wind turbines? you must be joking.... that won't be enough. It will be enough for 60-70% of the current electric consumption.. but you need also oil for transport, chemicals... even for the roads themselves!!
Also, the wind is not very reliable: you would need 200% nominal power to be sure that you will have power..

So the solution would be a mix of wind, solar, sea power, biofuels AND huge power use reduction, either by effciency or rationing.

I recommend you this site:

It is pessimistic, but well informed. The PV modules considered are 10% efficcient, while new solar parks are using 25% efficient cells, and newer ones (concentration) will be 30% or more.. in a year. But, still, a very good read.. and UK related..

There is no way on God's green earth of powering Britain without using nuclear power.
Here are the figures:
Sustainable Energy - Without the Hot Air (withouthotair.com)

Download the book, and then if you can come up with some way of powering it without, I would be interested in your figures.


Darn. You stole my thunder again and got in before me with the recommendation to download Professor MacKay's book at:


I don't think one can recommend it often enough --- we should really plaster every TOD posting with a reference to the website -- saturation bombing, so to speak. MacKay really puts paid to all illusions as to alternative energy as a deus ex machina.

I think that having read his book no reasonable and open-minded person can draw any other conclusion than: either we opt for nuclear energy or we're done for.

I agree, it's a good book and should be pasted all over.

Still, I'm more of the opinion that for risk management, contingency planning and resiliency, we are probably better off building most if not all energy options.

Not just nuclear, but wind, solar, heat exchange pumps for heating, etc.

Now, we will need the base power and I don't either believe it can come from renewables alone.

And looking at coal, lack of CCS, problem with AGW - what other choices do we have except nuclear?

Luckily I'm in a country where we are building a new 3rd gen nuke plant and are planning three additional units.

However, if that comes at the cost of every other energy solution (efficiency, renewables, biomass, etc) then I think we've chosen the wrong path and put all our eggs in one basket. Not the worst choice by any means, but maybe not good enough.

As for the world nuclear renaissance where everybody would build dozens of new plants for the next few decades, we should also take into account systemic effects:

Source: Peak Oil and Limits to Growth, Meadows (ASPO, 2006)

Again, I'm all for nuclear, but I'm not convinced yet it's enough alone or that all the required capacity is easily doable. What I'm pretty sure of, is that if you want nuclear, you better start building it yesterday.

There is no way that nuclear can be rolled out in time, and it is ludicrous to build numerous stations then throw the heat away with badly insulated houses.
It is what in my view is the fantasy about powering northern, crowded countries solely with renewables that has hindered a realistic solution.
The priority has to be conservation though - there is nothing else which can help at this stage.

However, unless someone wishes to go off grid entirely and pay the lot themselves then no help should be given to solar PV installations.
The reason is simple - they still cost a fortune and do not help at all for peak power in the winter, when the problems arise.
A vastly expensive 5kw system is going to generate an average of around, say 300wats/hour during the critical months of Dec-Mar - and the shortfall is going to have to come from the overloaded grid.

Solar thermal water heaters are a different matter, and we should be installing them like mad, bodging up a solution if needs be with bottles and plastic tubing.

In fact, of the short term what we need is to bodge frantically, to do some sort of job on millions of houses in the existing stock instead of doing a perfect job on new builds.

An obligation on landlords to attain high standards of insulation would do a lot to level the social inequalities in the country.

Longer term, it is clear that in this climate nuclear is not only the sole realistic option as baseload, with other sources making marginal contributions, but that costs are much better than gas or probably coal.

I'd like to make it clear that in other climates such as much of America solar will in my view play a major role, as will their cheap on-shore wind.

Options in Britain though are much more limited.

The first thing needed is the realisation that there is a crisis.


You are spot on about giving priority to insulation. But (as every reader of MacKay's book should know), staying warm isn't everything. We also like to move about in comfy little boxes on wheels and once the oil gets too expensive we won't have any option but to switch to electrically powered vehicles or not move about at all. Like you, I don't see how the energy needed can be produced other than with the aid of nuclear power.

However, you write:

There is no way that nuclear can be rolled out in time...

Under current rules and regulations, you are correct. But we are entering the age of force majeure, virtually equivalent to a state of emergency (Euan's title), and when force majeure takes over, the existing rules and regulations (such as ridiculously demanding safety requirements costing 10 billion euro per life saved) will be thrown into the trash can.

When la merde frappe le ventilateur, as the French say, fancypants stuff about the risks of exposure to 1 nano-Bequerel of ionising radiation per person per annum will be jettisoned. NIMBY-ism will reclassified as treachery, public consultations will become a thing of the past, and those nuclear power stations will start cropping up like mushrooms.

Not a very pleasant picture, perhaps. But better than reverting to the hunter-gatherer mode of life.

Given human nature, the decision to "damn the regulations" and appoint an energy Czar to run a nuclear crash program will happen only when it becomes a sure-fire vote winner.

Which will happen AFTER there are widespread blackouts and stories in the paper about pensioners freezing to death.

At this point it will still be 3-5 years minimum to get some plants running. You'll have to find the steel from somewhere, and the engineers.

Perhaps you could ask the French?

Whoever you ask,......they will expect to be paid......real money.

Isn't there that problem that nukes depend on hugely difficult huge castings for the reactors? For which there is only one or two foundrys and a global backlog. Which makes me wonder if the 3-4 years forced timeline is hopelessly unrealistic.

They don't. There are other designs for reactors which use more than one casting for the reactor vessel.

Its going to be one of those cosy Jimmy Carter fireside chat moments isn't it:

2013: XYZ sits in front of WOOD fire, Horlicks in hand, thick jumper on...
"I know that some of you have been suffering a lot with the cold snap just lately so I wanted to tell you about our plans to build another 20 nuke plants to keep us all warm and power my PHEV..."

-Then we can go to bed with an electric blanket each.


They'll have to send the chat by carrier pigeon in the UK....

Speaking of good ol' Jimmy, this always brings smile to my face:


Warning! Profanity and whatnot. If you're from UK, you'll most certainly appreciate the piece. The Onion is my refuge in times of despair :)

Solar thermal water heaters are a different matter, and we should be installing them like mad, bodging up a solution if needs be with bottles and plastic tubing.

In fact, of the short term what we need is to bodge frantically, to do some sort of job on millions of houses in the existing stock instead of doing a perfect job on new builds.


I'm disappointed you've never given me credit for the transformation in your view of things as stated above.

Who says being a pain in the ass isn't beneficial?



Credit duly applied!
If the evidence changes, so does my opinion - if we ain't here to learn, but just pontificate, then there is no point being here.
To clarify for the benefit of those who weren't part of the debate, I was somewhat down on the idea of solar thermal in the context of Britain, as most of it's benefit comes in the summer, when you need least electricity.
However, it is now clear that we have made such a monumental cock-up of energy policy that any energy which is financible is required.
ccpo, I hope that you have had a chance to reconsider, and now agree that solar PV, in contrast to thermal, does nothing at all to help the grid? :-)
I see great things ahead for PV, in America and elsewhere, but not in the British winter.
Here is in my view a definitive assessment of energy possibilities for the UK:
Sustainable Energy - Without the Hot Air (withouthotair.com)

The problem is that we have a lot of people here in very little land, and we are way far north, so we have worse prospects for solar than even areas like Japan.
Anyways, I don't intend to get into debate on this, but present this survey for your consideration - lots of useful data there, even if you don't agree with the conclusions.

Credit duly applied!

Why, thanks!

ccpo, I hope that you have had a chance to reconsider, and now agree that solar PV, in contrast to thermal, does nothing at all to help the grid? :-)

I would if I had said that. (At least I don't think I have.) What I believe I have said is that individual cases must make their own decisions and that micro energy systems could reduce the size of the backbone, be faster to deploy, and much cheaper if done at the neighborhood/community level because things can be built from the crap laying about in homes, junkyards, etc., and if the community is banding together to do this there might well be no, or greatly reduced, labor costs.

BTW, you seem to be under the impression I made specific reference to your home land. I've always spoken in general terms, or about the US/Korea. Sorry if I was unclear.


Microgeneration, and just about every other technology, is much easier in the US than in the UK.
With the population, climate and northerly latitude we have, we are, short of nuclear, and to use the technical term, stuffed.
Here is an analysis - lots of good data there, even if you happen to disagree with the conclusions:
Sustainable Energy - Without the Hot Air (withouthotair.com)

In fact, of the short term what we need is to bodge frantically, to do some sort of job on millions of houses in the existing stock instead of doing a perfect job on new builds.

An obligation on landlords to attain high standards of insulation would do a lot to level the social inequalities in the country.

Spot on! New builds are declining, so we doubly need to do something about existing housing stock.

In our local news today:

An insulation supplier has blamed a downturn in the house-building industry for its decision to axe 64 jobs.



"An obligation on landlords to attain high standards of insulation" Thanks Dave, as someone who lets flats (apartments) at below market rents to teachers etc I am really pleased you are giving me even more obligations:-) FWIW because of PO and the likely economic situation I am moving out of being a landlord so maybe in a few months time I will have a different opinion.

So if I buy a flat in a block that has properties above and below, two outside walls (that I can't change anyway) and radiators fixed to the outside walls are you saying I should be forced to take out the heating and fit interior insulation then refit the heating? IMHO it is not reasonable to force landlords to do any more than any other property owner but see below on electrical devices.

Other than that I pretty much agree with your ideas, here's a few more:

An immediate ban on sales of new gas-guzzlers > 200g/km CO2 to drive the point home it is not an option you can buy out.
Impose a 55mph/90kmh speed limit, again to show PO/GW not an option.
Apply a tax on electrical devices over their working life that is equal to the cost of offsetting the electricity/CO2 down to the level of A+ or A performing devices. This will encourage people to buy A class devices since now people often tend to just look at the initial price and others who have no interest in the running costs just the up-front costs e.g. landlords, builders.

Make all consumer goods have a 20 year life span and built to be easily repaired not thrown away.

I am a lifelong Tory, and I have rented property, but the gulf in income is getting out of hand in this country. Likewise the rental sector has much the worst standards of insulation, and little incentive to improve it.
The argument was that increasing tax rates did not increase tax take.
However, by this stage when just like in the States we have two countries, one which has increased its income throughout he last few years, and the majority who have had falling living standards disguises by fiddled inflation figures, to me it seems time to call a halt.
At the moment people who buy their gas and electric by a key pay around £400 a year more than those who pay be direct debit, and the instances go on and on.
In the South West rents are up by over 30% - who has had a 30% wage increase?
Injustice there will be, but I do not want to live in a Britain where many are being thrown out of their houses and into expensive rented accomodation, whilst others enjoy their second houses and the bankers are rescued from their folly, but common people are ruined.
Having had a rant, what we will actually get next is David Cameron, so what I think is irrelevant!

BTW, Tony, we have a group of TOD UK users, who mail each other and are trying to come up with a 'Cunning Plan' to prevent ourselves ending up in a cold version of a Mad Max movie, I haven't got your e-mail so if you would like to be included please e-mail me on brittanicone2007 at yahoo dot co dot uk and I will put you on the list - anyone else in the UK who is interested please mail me too.

hope you have seen that graph, can mix of wind, solar, tidal, biofuels etc that currently mounts up to little more than 1% of world energy consumption take up the place left by oil and gas(and in future coal maybe aswell)?
biomass energy probably cant grow much, given that amount of forests is even more limited than amount of oil and that all that heavy machinery for cutting trees guzzles diesel.
its probably no good to place your hopes on hydro power eighter, as most naturally suitable places are already exploited and building dams is a crafty work taking years of effort and payoff time in decades, also think of all the land that will be under water. i see no way to expanded the sector enough to meet the deficit left by fossil fuels
nuclear power might seem like a good option but as you would need to build 10-20X more of these than there are out there currently its not even an option one might consider in 20-30 year plan.

at the moment we see fishermen, farmers and hauliers protest against fuel prices all around the world - i think its alright as long as they protest, it gets grim when they just close the business, shake their heads and try to find employment on another field. no transport, farming, fishing means no food, resulting in a survival of the top 10% on the population fitness scale. i wonder where will we dig the hole for the rest.

for the silver lining - after about 80-90% world population cut we can rebuild the drill rigs and there is plenty of fuel for decades to come.
people wonder why politics do nothing about the situation, in reality situation is already so grim that any sensible men will flee the sinking ship and save their political arses rather than fight the windmill

People can still be farmers, fishers and hauliers, but they will need to change the machines they use to do their work. But there are a lot of unneeded jobs that will disappear, and the people now doing those jobs will need some other work. That work could be constructing the alternative electrical generating system and its transport grid that all countries will require. Immagination will be essential in making work for those without any. For example, getting rid of automatic track layers and go back to manually laying rails or returning to the axe, non-power saw and horse in lumbering.

Is it significant that the BERR report's final page is a photograph of the sun setting over a North Sea oil/gas rig?


Actually it's the sun rising, to symbolise the rise of the new less commercialised, less impersonal civilisation which will arise from the ashes of the present lot.

Oh gods, now I know where your trollish responses are coming from. The anarchoprimitivist meme. The Brave New World is here to stay I'm afraid.

In the midst of your half-baked stereotypes about myself you present as supposedly a self-evident assertion that:

The Brave New World is here to stay

The great historian Arnold Toynbee in his magnum opus A Study of History titled one of his chapters "The illusion of immortality". When did you read it? and which part of "is" didn't you understand?

Great post Euan!

Can you try and explain to me some issues:

  • What is the price tariff for UK gas? It is partly oil price derived? Partly government controlled (base-tariff) or fully set by the market?
  • Why has UK gas prices dropped somewhat recently (p.21, BERR pdf)?
  • Where and why is UK Gas consumption dropping (p. 13, BERR pdf)? Industrial use only? Due to price rise?
  • When UK gas production really drops and price really starts to rise, I assume domestic use will turn more towards electricity use (esp. in heating). Is electricity capacity planning showing a surplus that can accommodate this?
  • What happens to the currently growing UK gas imports when Norway hits peak gas production (c. 2015 according to Norwegian Petroleum Directorate)?

I've been trying to follow the UK situation myself, because I see it as a perfect test case that many of the other European countries will follow in due time.

Your posts and those of Chris & Jerome have been elemental in understanding the base numbers, but I just cannot fathom the political response.

On the face of the looming GHG emission explosion risk alone I'd somehow guess that the politicians would be pushing for nuclear, efficiency measures, LNG, practically anything and with great urgency. After all, UK has been the poster child of cutting emissions.

Because if it really comes down to it, I see that back to the coal you guys will go. Regardless of domestic reserves, you still have the infra, it's fairly inexpensive worldwide and it can at least be bought and used in sufficient capacity, unlike LNG. It's just that CCS is not here yet, so UK would take huge steps backward in emissions.

There must be some reasons for the apparent political complacency in regards to the NatGas situation. The data seems way too obvious for even the most hardheaded politician to ignore.

What's your current take on all this?

I just cannot fathom the political response.

Samu, you just have to understand the psychology of the dominant elite of a decadent society (civilisation in breakdown stage). For clarification of terminology see abridged edition of A Study of History by Arnold Toynbee.

These "leaders" are not idiots as commonly sloppily asserted. Nor are they lunatics in the sense of psychotic. But they are severely morally/mentally defective in specific ways made clear in my 1987 article http://www.zazz.fsnet.co.uk/decadenc.htm , of which there is a somewhat enhanced presentation a third through my 2004 book http://www.lulu.com/content/140930 . The repeated lesson of history is that dominant elite "leaders" are utterly useless and are a main part of the problem rather than enablers of any solutions.

Very sobering article Euan, particularly after Rune's excellent article yesterday. Thanks.

The more I read about this subject, the greater the sense of forboding I get as a UK resident.

The projected rises in fuel costs were all over the mainstream UK media yesterday. We already have many people here who are struggling with fuel costs. According to BBC News:

The government estimates that 2.5 million households are in fuel poverty - defined as when more than 10% of household income is spent on fuel bills - but watchdog Energywatch says the figure is more than four million.

The threat of strikes and rising unemployment are also big news. Some are suggesting we may see a Summer of Discontent this year.

Thousands of schools could be forced to close next month after more than 600,000 council workers voted yesterday to strike over pay. The walkout, expected to last 48 hours, will also hit rubbish collections, libraries, social work and other frontline services.

The decision by members of Unison, the biggest public sector union, to reject a 2.45 per cent pay offer could trigger a wave of industrial action this autumn over below-inflation pay deals. Unison has already indicated that it will press for part of the three-year NHS pay deal to be renegotiated if inflation rises further and Civil Service unions are threatening a national strike ballot later this year.

And this is all before we see the huge anticipated rises in fuel prices...

With the announcement indicated by ses/SamuM above of a 50% rise the rises talked about recently are an almost certainty. The gas retailers have been shielding the consumers somewhat, even making a loss. With a 50% rise on top they will have to pass it on.

UK Gas is going up 40%+ by Christmas, enjoy your turkey...


Thanks Euan, as ever, for you clarity and bullet-biting honesty. I tell you: I'm bloody glad my little permaculture food'n'stuff-growing operation is building up nicely. The way food prices are going, I may just be in time to feed myself and dependents when I can no longer afford to buy very much. (I have absolutely no illusions about my pension keeping up with hyperinflation, and I've become a bit too slow to churn out as many useful, sellable articles of furniture and such as I used too)

Tell us more! Is it UK based?

Have you tried "Aquaponics" yet? (This is a permaculture/hoilstic approach).


Thanks Euan, as ever, for you clarity and bullet-biting honesty. I tell you: I'm bloody glad my little permaculture food'n'stuff-growing operation is building up nicely. The way food prices are going, I may just be in time to feed myself and dependents when I can no longer afford to buy very much. (I have absolutely no illusions about my pension keeping up with hyperinflation, and I've become a bit too slow to churn out as many useful, sellable articles of furniture and such as I used too)

Thanks Euan, as ever, for you clarity and bullet-biting honesty. I tell you: I'm bloody glad my little permaculture food'n'stuff-growing operation is building up nicely. The way food prices are going, I may just be in time to feed myself and dependents when I can no longer afford to buy very much. (I have absolutely no illusions about my pension keeping up with hyperinflation, and I've become a bit too slow to churn out as many useful, sellable articles of furniture and such as I used too)

Excellent article. Also SamuM's comment (http://www.theoildrum.com/node/4188#comment-367957) is brilliant, perhaps it could deserve a post of its own for 'debunking' the speculation theorists. Paul Krugman on his blog has been trying to do that job too, but SamuM's post is better. I too have to lulz at the fact all the people who never tell us about bubbles are suddenly complaining there is a bubble. But all the people that do tell us about bubbles, are saying oil isn't one of them. Even if you know nothing about energy of economics, just follow the fighters win/loss record.

Re: the pound. The Sterling pound depreciating in value isn't all bad though. It means our products are cheaper to third countries thus reducing the balance of payment deficit. The same issue is being talked about in the US, the papers seem to be reporting it is a bad thing but it means the books can be balanced. But in the UK we are in a unique situation where I don't know what we export anymore. The bullshit economy (lawyers, finance) doesn't contribute to economic growth as directly as manufacturing.

Thanks for posting this.

My answer for the gas supply crunch is to insulate the UK housing stock PDQ (I just happen to be trying to finish some teaching material on this).

Let me fill in some numbers:

Roughly a third of UK gas consumption is used for domestic space heating. That's 1.2 EJ/yr. I make that about 11 billion therms/yr. At at 'high' future price of 100p/therm that would cost £11 billion/yr.

An 'extreme retrofit' of an apartment block in Ludwigshafen in Germany showed that is was possible to reduce space heating demand by a factor of seven by using 200 mm external insulation, triple glazing and mechanical ventilation with heat recovery. See:


For lesser mortals the UK Energy Saving Trust lists a lot of things that could be done for a typical house: cavity wall insulation, external wall insulation, double glazing, draughtproofing; with payback times between 1 and 12 years at current gas prices. See:


If gas prices go up then all these things will become more economic.

What is the 'payback time' on finding more gas?

But - there seems no mechanism for getting ordinary home owners (and owners of homes for rent - they have the worst insulation standards) to take action, especially since we are endlessly peddled the illusion that 'the invisible hand of the market' will provide cheap gas for years to come.

'Home energy ratings' are slowly creeping through the system, and mutterings of future mandatory upgrading when properties are sold or rented. All this needs to be speeded up.

A whole range of measures are described and costed in extreme detail in a 2005 report from the UK Building Research Establishment Reducing Carbon Emissions from the UK Housing Stock


I'd draw your attention to the figure on page 67 which shows the speed at which things are being done and might be done in the future. It has a couple of 'Step change' scenarios, but even these don't really seem fast enough.

The investment costs quoted - £54 billion by 2050 for 'Step change 2' in some ways seem large (over £2000 per house) but compared to the cash shelled out for Northern Rock or invested in oil futures, this seems piffling.

What's needed is to reversion this report and entitle it 'Reducing gas consumption in the UK housing stock as soon as possible'.

End of rant.


Every word you say is true.
I will think we have a grip on reality though when reports are titled: 'How we can stop as many as possible from freezing, and avoid the catastrophic failure of the grid in the next few years' rather than 'how to reduce carbon emissions by 2050'.

We have perhaps 5 years to do it.

You make a lot of sense. Been trying to pin this down myself.

Everybody has been building a lot of new houses (UK, Spain, Ireland, US, etc), because of the extra money aggregates and speculation floating in the markets.

Will the next construction boom be forced retrofitting of better insulation and heat exchange technologies to most of the old buildings.

If so, where will the capital come from in a world suffering from a global liquidity crunch and a looming recession?

Who will do that all, when the average worker/architect/construction engineer understands very little of modern efficiency methods.

How can the industry, which is geared towards quickly producing material-cost-optimized houses with standardized modules, accommodate the need for retro-fitting and upgrading older houses?

"Isn't it just easier to turn up the heat"?

Ah well, hope springs eternal :)

Hi SamuM,

"Everybody has been building a lot of new houses" not in the UK, our house building unlike say Spain and US has not hugely increased and is one of the factors that "helped" to cause a house price bubble.

Official statistics from the Government showed that in 2006/07 there were 173,369 housing starts - properties in the early stage of construction - compared to 184,906 in the previous year. Since then the number of new houses being built has plummeted by nearly 60% with the credit crunch.

As I write this we have had over 3000 unique visitors today and 72 comments. And yet the “Digg” button has only been hit 15 times. It really does help expand our readership to publicise articles in this way. If you value this work and want to thank our writers, please consider taking a minute to sign up to Digg and hit the buttons.

Dear Chris, I think you and Goosey are totally barking up the wrong gum-tree here.

There needs to be an intelligent, informed conversation about energy peaking. That's what tod has excelled in and could continue to do. But if too many of the general public and riffraff such as myself and you-kn*w-who get on board then the discussion is degraded (as already tending) to everyone's loss.

I'm sure I'm not the only reader already struggling to keep up with the unnecessary volume of comments.

The business of promoting the wisdom that emerges here is better done not by attracting more visitors to the site itself, but by putting the outcomes of the discussions on sites specifically designed for informing of the way the consensus is tending - for instance wiki, or some other peak sites.

And avoid promoting the site itself except in relatively elevated arenas where experts predominate. The alternative would be to restrict comments to some exclusive selected elite, which would clearly be an unhelpful development.

But wait, won't everyone turn to electric vehicles and plug-in hybrids powered by electricity from ....

To bring proper perspective, nuclear is slightly less than 20% of electrical generation capacity in the UK; however, gas is 40%, and will begin to drop precipitously. Where will the UK get its electricity from over the next decades?

I'm beginning to think that the UK future as portrayed in "Children of Men" might be a bit too rosy...

Where nuclear is concerned I suspect the red in the upper plot and the word "extension" is probably the shape of things to come. There is also the renewables target of 15% by 2020 to be factored in and there are no doubt major efficiency savings that could be made in a crunch so there are obvious partial solutions that could prevent a completely apocalyptic outcome. Glad I emigrated, however.

Exiled Scot, I was thinking exactly the same thing regarding the 'extensions'. But how long can the life of these aging nuclear facilities be extended? I presume it's not indefinitely. I know the current safety record for nuclear reactors is reasonably good, but will this change in the future as as much use as possible is eked out of these old plants? And if new power plants (nuclear and other) are rushed through during an energy crisis, how much will environmental and safety standards suffer?

Here are links setting out the issues with nuclear plant life extension - the old Magnox reactors are rather different to newer ones:
Can old reactors take the strain?

British Energy begins extending engineered life-spans

My guess is that they will be extended regardless of safety, just as the Government over-rode the engineers to force the Windscale plant to continue operating after they had been told that safety margins were exceeded, and then blamed it on the operators.

An accident will doubtless be put down to the evils of nuclear energy, rather than terminally incompetent governance not allowing timely replacement.

Fortunately the consequences of leaks are grossly exaggerated by Greenpeace.

As an aside, the most recent estimates for the offshore wind build were looking at perhaps £99bn plus connection and backup.
That was before the latest round of steel and energy price increases.
Wind turbines are very materials intensive, much more so than nuclear power, so at a wild guess we might be looking at £150bn or so - multiples of nuclear costs, even at the old estimate.

But nuclear is only 1/5 of the puzzle at this time. With gas also dropping off a cliff, how much will be diverted from home heating to make electricity? Can we assume ANY will be diverted?

If the electricity grid is down, you can't run a gas boiler as it won't work.
The number one priority will always be to run the grid, even if only a few hours a day.

So will the upcoming decades be known in UK history as "The Freezing Time"?

Rioters and possible ethnic and religious conflict should start enough fires and burn enough tires to furnish a degree of warmth...

The Idea of spending my twilight years surrounded by BSc (Hons)in Applied MadMaxology does not appeal.


I am going to walk the dog.

Thanks Euan,

For telling it like it is...

Seems to me that people sometimes assume that nothing less than the status quo is an option and anything else means chaos but there are enormous savings that could potentially be made in any western society in the context of a sustained energy crisis. For example, do we really absolutely need to light up our cities with streetlights that are visible from space every night 365 days a year while more than 90% of the population are either asleep or working a factory shift to the extent we currently do? I doubt very much that Britain could or would run up a $200 billion trade deficit just to keep the non-essential luxuries that have been made possible by cheap energy, going in an environment where energy is much more expensive. I grew up in a Scotland where only about 50% of households had access to a car. During my parent's childhood that number was probably more like 20%. People still got around using buses and trains and society still functioned. People can and will go back to that again even if they would prefer not to have to. Once people start seeing the use of petrol/gasoline for personal transportation as a luxury rather than as some sort of birthright, it's not so difficult to envision how energy consumption can be cut back.

Euan's article gives the reasons in the UK to not be optimistic.
It is not just the energy crisis, but the very poor state of financial and mental readiness we are in to cope with it.
At this stage of the cycle we have a huge budget deficit and a large balance of payments deficit, and we are moving into being an energy importer on a large scale.
We are not even facing up to coming energy shortages.
As you say, personal transport at any rate should not be a showstopper, at least in the towms, but lets look at some of the other issues:
You compare to times in the past, well, I was born in 1950, so remember much harsher times.
At the time we heated ourselves by an open coal fire.
We no longer produce coal on anything like that scale, and many homes haven;t even got a chimney.
We cooked with town gas - coal again, and we now have no works or distribution net for that.
We travelled by train, and industry had access to it.
Most factories are no longer anywhere near a rail line, and many have been ripped up.
We did not need electricity to keep our computers going, nor to pump fuel to the same extent.
The population was smaller.
There is indeed enormous waste, and some cutbacks will be relatively painless, but our society has spent the last 50 years moving away from ready adaption.

In Germany, for instance, the strong financial position means that they can upgrade already high standards of insulation and improve public transport, and their automobile industry will have a good crack at building electric cars.
The only significant political capital that needs expending is to reverse their stand on nuclear.

France, although its fiscal position is not so strong as Germany's, has enormous assets in its nuclear industry and vigorous public transport policies, and substantial agriculture.

Challenges to the UK are fiscal and political as well as technical, and we have not even begun to ready ourselves for them.

I think some people on here revel in outlining the most apocalyptic scenarios possible and deliberately leave out obvious steps that can be taken to alleviate the situation. I disagree with you on the notion that Britain is not even beginning to ready itself politically. 5 years ago the idea that there would be a third wave of nuclear plants is something that mainstream politicians would not have touched with a bargepole. Now having 10 new nuclear stations by 2020 is government policy:-


Earlier this month a target of 7000 offshore wind turbines by 2020 was also announced:-


and there are huge numbers of onshore wind farms and other renewable energy projects awaiting planning consent in a Scottish context:-


Where coal is concerned. In an emergency opencast could be expanded in areas where NIMBYism is currently preventing it. There are still very large scale deep mining opportunities like Cannonbie and Longannet if the political will is found under a new set of geopolitical circumstances to provide the sort of government support that used to be there in the NCB era:-


and as I outlined above in situ gasification of coal seams that can't be mined using conventional techniques is the next potential hydrocarbons bonanza for the UK:-


and that would produce CO2 that could potentially be used for enhanced recovery of depleted oil fields in the North Sea along the lines of what was planned by BP at St Fergus recently:-


Exiled Scot - Perhaps those are fair points for 2020 onwards as far as they go. But are we still going to have a functioning industrial society by 2020? It's the intervening years that look like the problem.

A few years of austerity are not so difficult to endure if there is light at the end of the tunnel. I can remember doing my homework by candle light wearing a duffel coat, scarf and a sweater in a very cold council flat in the early 70s. An earlier generation made it through the blitz and the Battle of the Atlantic. Britain has been through very serious emergencies before. The population persevered with a bulldog spirit and industry survived.

The question is whether we are talking about a few years of austerity or a systemic breakdown of society.
In your earlier post you mention alternatives - well, I am not a doomer, and it seems to me that societies such as France and Germany, and even the US with its vast resource base have good opportunities to pull through in fair shape, but the political and technological choices made here in a country where agricultural land is insufficient to feed the population are very dangerous indeed.

This is due to the entirely unrealistic view taken on energy options, of which the wind 'option' you refer to is a prime example.
Here is a more realistic appraisal:
Brewing storm over Labour's dream of wind power future - Telegraph

In short, it is not possible to build the arrays planned, they could not be afforded if it were - last estimates centred on £99bn plus connections, back-up and storage - and would not do much if it could be built - the 33GW planned would only turn out around 10GW per hour on average - that is about 6 or 7 nuclear reactors at perhaps £4bn each.

Until plans re-establish some connection with reality no progress can be made, and by the time that occurs the ability of this country to take action will be far, far lower than it is at present, and it is already much lower than it was, say, ten years ago.

BTW, the figure of £99bn for wind does not take account of the latest 100% increase in steel costs, or the latest energy costs.

To put the numbers mentioned in perspective £100bn in subsidies for wind would probably be just over 1% of total UK government expenditure between now and 2020 as things stand right now. If the government were to get into the business of building 10 nuclear plants rather than leaving it to the private sector it would take about 0.5% of government expenditure between now and 2020. To claim that sort of thing is unaffordable is a bit of a stretch to say the least. Somebody maybe should also let the journalist in on the fact that cars with Li ion batteries will be in mass production in the United States as early as late 2010.


Check out the lead article on this thread.
The money we allegedly have is in an asset bubble.
France, Germany, Holland etc will indeed be able to finance very expensive alternatives.
We won't- how are we to finance it with the balance of payments and budget deficits already projected?
The ships etc needed also simply do not exist, as 'The Telegraph' notes in my link, so not only are they impossible to finance, they can't be physically built - and that is agreed by people like the Wind Energy Association.

How long do you think it takes to retrofit a ship, Dave? Worth noting that they seem to think it is possible over in Delaware:-


I take it you missed this recent story on here?



You can build some turbines, that is not in question.
However even advocates are saying you can't build the quantity specified in the time.
In any case, this is only a fraction of the energy needed.
For an idea of how renewables scale ion this country, download this:
Sustainable Energy - Without the Hot Air (withouthotair.com)

At the costs specified, some 3 or 4 times the cost of nuclear, why would you want to anyway?
As for Jerome's article, he did not supply other than a levelised cost, and without a full breakdown it is really not possible to work on the figures to assess viability.
The figures I am using are from actual orders placed.
The subsidy for off-shore wind is huge at the moment, and even then some are pulling out as it is not viable.
Don't get me wrong, I am all in favour of anything which can supply power at any reasonable cost - on-shore wind, for instance.
There is just no way I can make those figures work.

Have you had a chance to re-read Euan's article on the economic circumstances of the UK?
If you have, you can see how tight the constraints are now, and the impossibility of going for anything but a least-cost option - I suspect open cast coal mining, and hang the environment.

I am well aware of the UK's financial position. I don't believe that measures involving 1% of government expenditure over 12 years are out of reach on that basis if as some claim on here civilization as we have known it is what is potentially on the line. My prediction for the future is that the existing nuclear and coal plants will simply have their lives extended for a few years until new nuclear plants and windfarms can take their place, people won't drive and fly so much given the high price of oil, problems with gas will cause home owners to take serious conservation measures and will prompt them to keep the heat down more often in the winter time. Overall the British will find a way to muddle through as they have always done. Feel free to have the last word if you want.

Feel free to come back if you want! :-)
BTW, no need to get huffy - no one will take any notice of what we think anyway!

Yes but I obviously knew all that already. And yet those analogies did not impress me. That's because our society now is vastly different from those times, and the challenge vastly different too.
Yes, light at the end of the tunnel. But that tunnel looks pretty certain to pass through the collapse of society as we know it, a drastic dying-off of at least 70% of the population (but more likely 99%) and re-emergence to new localised civilisations much more modest but infinitely less impersonal, bureaucratised, pretentious and superficial.

There have always been doomsday cultists like you and there probably always will be. Meanwhile the powers that be in all the major economic powers have long term strategic plans to mine lunar regolith for 3He and to develop nuclear fusion by the middle of the century. A combination of oil and gas, coal, nuclear fission and renewables can tide us over in the mean time.

Meanwhile the powers that be in all the major economic powers have long term strategic plans to mine lunar regolith for 3He and to develop nuclear fusion by the middle of the century.

Interesting concept: http://www.grc.nasa.gov/WWW/RT/2005/RT/RTB-palaszewski1.html

However, wouldn't it be necessary to have a highly functional scientific industrial complex operating at full force to be able to implement and exploit this potential in the first place?

So the question becomes, is a combination of oil and gas, coal, nuclear fission and renewables sufficient to tide us over or have the majority of us already missed getting into the lifeboats as the Titanic points it's bow skyward minutes before it plunges to the bottom of the sea.

Sure there will be survivors to tell the tale of its sinking but unfortunately it seems more and more likely that not every one will get a place on the lifeboats. So I can understand the that the ones who are already starting to feel the effects of the frigid waters lapping at their necks may be a little less than optimistic about their chances of survival, major economic powers long term strategic plans to mine lunar regolith for 3He, notwithstanding.

Sure there will be survivors to tell the tale of its sinking but unfortunately it seems more and more likely that not every one will get a place on the lifeboats. So I can understand the that the ones who are already starting to feel the effects of the frigid waters lapping at their necks may be a little less than optimistic about their chances of survival, major economic powers long term strategic plans to mine lunar regolith for 3He, notwithstanding.

The real problem is you can get 3He far cheaper doing neutron bombardment of lithium-6 and waiting 12 years for the tritium to decay.

That and well, fission actually demonstrably works for industrial civilization. The only fusion we've utilized for power has been the sun and some rather big bombs.

Exactly the data I was looking for, great - much thanks!

I've just posted the following comment to Andris Piebalgs' blog (awaiting moderation):

TEOTWAWKI School Report

Pupil: Andris Piebalgs
Subject: Energy
Marks: 7 / 10

Andris has been doing good work at times, but it is not consistent. However, he is making progress in this area. He is having some difficulty with the topic of oil depletion, but if he continues to work hard he will see improvement soon. He would benefit from reading online contributions at such websites as 'The Oil Drum', though we are aware that he has a busy schedule. Unfortunately, he misuses much of his work time daydreaming about such bullshit as the potential of biofuels and the utility of 'discussions' with oil producing countries. He suffers from overoptimistic personality disorder but a good dose of reality may eventually have a corrective impact.

Recommending reading for persons with overoptimistic personality disorder:

Euan Mearns: 'A state of emergency'


Carolus - if I find time I'll do another article on Piebalgs, maybe next week. His new entry is better than the last. It seems he just learned about PO - but then seems to think his old sh*t energy policy is just what we need.

Was it you who posted data on word searches at the EU? Climate change, Disneyland and Peak OIl? If so would you care to post again here or email me.




Yes, it was I who posted it. I'll send it to you again later on today (we've just had the longest electricity outage ever at the Commission building here in Luxembourg and I'm busy rushing about telling my colleagues that the end is nigh, read TOD now before the lights go out forever, etc ..).

Jerome also published an extract from my contribution at:



For some years I have diagnosed a serious condition, part pathological, part delusional, which I have called the "Anglo Saxon Syndrome", otherwise known by its acronym, ASS. It is a state of systemic paralysis and moral dereliction caused by an ultimately fatal capitulation to the free market, neo-liberal and monetarist "school" of economics (though to call it a school is to mislead, it's more a kindergarten), such that investment in important and strategic infrastructure is neglected, productive capacity is "outsourced" overseas, reliance on a "service economy" becomes the norm, massive debts accrue from lack of monetary controls, wealth becomes ever more concentrated into the hands of a powerful clique and sovereign powers become emasculated. These countries, all speaking the same, insane language are the USA, of course, the UK, Canada, Australia and New Zealand.

Other countries have also become infected with the same transmissible agent but have, to varying degrees, not been so completely infected, perhaps one real advantage of not speaking English as a first language.

Now the proverbial dark, sticky stuff, and I don't mean oil, is hitting the fan, these sufferers of the ASS are going to be fighting for their lives, their social, economic and political resilience and adaptive responses have been so damaged. I am not going so far as to say other countries won't be severely affected, but France and Germany and other smaller countries which have been run more sustainably and sensibly such as the Scandinavians, Finland, Holland, Austria etc. may be able to weather these economic assaults better.

And in the Anglo-Saxon countries, Canada and Australia might cope better, because of their small populations in their large, resource-rich countries. In New Zealand, in the vanguard for monetarism since the early eighties, we'll be hit very hard indeed, but in the final analysis, we have a small enough population living in a clement, productive land to survive in some form or other. But as for the UK and the USA, I really do dread what could happen.

However, to bring some reality to this posting, the sheer cluelessness of leadership in all countries gives no cause for comfort anywhere. France for instance may have a functioning infrastructure, but it doesn't have a functioning Presidency. It will be purposeful moral leadership that will define success or failure, perhaps there is some green equivalent of Winston Churchill biding his or her time on the periphery of economic and political life and activity in the UK, who will galvanise its citizens into cohesive action. Though if there is, he or she is leaving things mighty late. Because what is happening with oil and resource depletion and global warming is a challenge of monumental proportions, and to compare this challenge to that facing the Allies in the Second World War, as I have done many times, is not to overstate the case at all.

Jock Moron.

Thanks, I laughed my ASS off :)

In New Zealand, in the vanguard for monetarism since the early eighties, we'll be hit very hard indeed, but in the final analysis, we have a small enough population living in a clement, productive land to survive in some form or other. But as for the UK and the USA, I really do dread what could happen.

Its even worse than that, Jock. There will be millions of Pomms tries to emigrate down under once the heating goes off in the UK.

You Kiwis are going to have to tighten up your entry requirements.

They already are tight, and I think only 4,000 a year, from all parts of the world, are allowed in each year. It will take a long time for millions of poms to get here, at that rate!

as long as you're ok sofistek.
So is New Zealand the place to be for someone recently retired(early)on an average income and hoping to enjoy a reasonable quality of life for the next 30 years or so?
If the kiwi's are only allowing in 4000 a year what are the entry criteria?

It depends what you mean by "quality of life". If you're expecting to while away your dotage sipping wine on the deck (patio), with an occasional sojourn to far away lands and trips out at salubrious restaurants, then I don't think any place is the place to be. Likewise if you expect other people to do all the work, during your retirement, while you simply buy what you need or want.

New Zealand has a low population density and, perhaps, isn't as far along the technological road as some other developed countries. Both of those things would see us better positioned than a lot of other countries. We also have a fairly benign climate (at present), with warm summers (but hardly ever roasting) and mild winters (though some high areas in the south, and even the north, island would expect snow). We have a high number of sun hours (as I recall, Auckland has double that of London, UK), but lots of rain too. As a result of a mild climate we have a long growing season, perhaps several seasons, and some areas rarely see frost. New Zealand currently exports much, or most, of the food it grows and raises, so I don't see any danger of not being able to feed ourselves.

So, I think New Zealand has a fair chance of making it through the transition, to some other kind of society (though I can't say if it will be sustainable).

I'm not sure of the entry criteria currently but it will certainly involve educational qualifications (and if you have a partner that has tertiary qualifications also, then that is a plus), work experience, the type of work you do (better not say you're retired), your age (beyond 50, I'm not sure you get any points, but age itself is no barrier, as it would be in Australia).

Go here for more information.

...and to compare this challenge to that facing the Allies in the Second World War, as I have done many times, is not to overstate the case at all.

Back then the enemy/threat had a name and a face.

'Gordon' does me......

The coming dead cat bounce and its implications for policy:

As Rune has argued, demand is likely to drop significantly in the event of a major recession.

Such a recession is surely inevitable, so we will have an 'Indian summer' for oil and gas prices.

The problem is that if oil and gas prices start to fall, whilst simultaneously we have a major recession/depression, the political debate is likely then to redefine itself into a 'recession' issue - ie all the focus will be on unemployment, balance of payments, budget deficits and all the usual economic issues in a recession, with scant attention being paid to energy issues.

Meanwhile west texas's ELM will quietly continue to chug away in the background, decreasing the availability of oil for export and resources will be further depleted, whilst price signals will not be so encouraging to expand exploration and development of more oil, and renewables, conservation and nuclear will all take a hit.

The upshot of all this is that by the time oil supplies are tight again, we will be even deeper in the hole.

Anyone got a cunning plan to prevent peak oil dropping off the radar?

Invest the energy freed up by the recession in building nuclear and renewables.

Hence no reduction in price.

Hence no dropping off the radar.

In reality what is needed is a new political party, there is no way the existing ones will be able to cope.


• world agriculture prices increased by 60% and UK retail food prices by 8%.
• world oil prices rose by more than 80% to average $123 a barrel and UK retail fle prices increased by 20%.
• wholesale gas prices increased by 160% and UK household electricity and gas bills by around 10%.

And we are expected to believe that the cpi is running at 3.3%. My belief is that inflation is much, much higher than this - and I think that is a belief shared by many.

Thus, we likely have negative economic growth, and have likely had this a while, the "growing economy" in fact being un-metered inflation. There are some macro economic factors to mask this. Housing bubble and equity withdrawal. And importantly, E Europe joining the EU with millions of migrant workers under pinning a failing economy.

In short, I believe we have been in recession for a number of years. Most likely most of the OECD too, and energy prices have not flinched.

In the words of Ronnie Reagan: 'You ain't seen nothing yet!'
I can see unemployment accelerating to 20%.
To get to Rune's 15% demand reduction, it will need a 30's style recession, across the western world with China and India also being hard hit.

I wonder if we could draft a letter, to send to our local MP's, pointing out that the balance of payments is about to spiral out of control, and energy prices force many into poverty, and ask what their party intends to do about it, and perhaps indicate that their response will be held on a database?

Post deleted. Government policy announced today.

Perhaps that should read: 'Government fantasy framework announced today'
In the world today there is currently one ship capable of placing the wind turbines at sea.
Brewing storm over Labour's dream of wind power future - Telegraph

Anyone like to calculate what the latest 100% rise in steel prices will do to the last estimates of around £99bn not including storage, connection or backup for a 33GW off-shore build, around 10GW average hourly production?
I'd guess we would be looking at around £15/watt of real generation capacity.

That's £15,000kw, perhaps £2,000kw if amortised over ten years
It ain't gonna happen, and no-one could afford it if it did.

Anyone got a cunning plan to prevent peak oil dropping off the radar?

Peak oil won't drop off the radar if prices rise in pounds (or dollars) due to a sliding currency.

You might see $300 oil thanks to the dollar going through the floor.

This could then create demand destruction centered around the US & UK, while prices in OPEC + China remained stable. OPEC+ China would probably take up the slack over the next 5 years as fast as the US & UK cut back, so prices would stay high in real terms, while rising relentlessly in pounds or dollars as the US & UK continued to slump and the doom and gloom got deeper.

This was maintain plenty of "awareness" about energy issues.

And we are expected to believe that the cpi is running at 3.3%. My belief is that inflation is much, much higher than this - and I think that is a belief shared by many.

The Daily Telegraph has been running a campaign for over 18 months to have UK Gov't acknowledge the real cost of living increases being experienced by average households. By contrast official stats such as RPI and CPI assume that just because the price of large screen plasma TV's is falling...and you now get a 50% larger screen for the same price then cost of living for single pensioners living alone has risen proportionally less...and their pensions are thus increased by lower amounts accordingly. I don't know what planet Gov't is living on as it's not rocket science to figure out that 'big ticket' and unavoidable items such as food, energy (and in UK the Council Tax) have been rising at far greater rates than RPI / CPI....and it's on those items where the majority of poorer households' incomes go.

Latest article from DT shows real rate of inflation at 9.5%: The Real Cost of Living Index.

You folks have nothing like Shadow Stats over there, eh? Unfortunate.



Hello to All,

I´m a 35 year old mechanical engineer + stock/futures Trader living in Germany. I worked many years in the german car industry, last in the development division for hybrid cars.

I´m fully Peak Oil aware, reading TOD since three years and traveled a lot. Regarding to this article (and the comparison between England/France/Germany) I would defneatly choose Germany as the place to live because:

- G don´t has oil, so there´s nothing that will go into decline (no extra coming negative effects on money flow)

- G has a 2008 trade surplus of >200 billion Dollar per year.

- Besides Japan, Germany already has a good amount of industry that exists only because of high Oil prices and will (with a further unfolding Peak Oil scenario) continue to grow (Solar/Wind/Insulation/Heating/Transport with high mpg) which will have a positive impact on trade surplus.

- Weather is not a pro, but housing insulation/heating standard is by far highest of these three.

- There was no housing bubble and no easy credit behaviour, so there is no decline in prices.

A plus in all three countries are the high Gasoline taxes (10 Dollars per Gallone at the pump), so already higher level of adaptation and less impact of future crude prices.

Biggest problem in Germany & France are the high sozial system costs and a leftist goverment that try´s to buy votes with new social programs.

In summary I see a lot of changes and a though time coming but in my opinion Germany will suffer less pain than England.

Regards and have a nice day!

You left out Deutche Bahn. Germany has excellent public transport infrastructure in place.

I know because I watch a lot of BahnTV on the internet.

The encouraging thing about Germany and Japan is that they show that there is life after Peak Oil, albeit not the same as now in the U.S.A..

Germany has excellent public transport infrastructure in place.

Seconded. I was pleased with the rail system in the Ruhr area when I was there a little while ago.

The encouraging thing about Germany and Japan is that they show that there is life after Peak Oil

Germany's oil consumption has fallen 15% in the last 10 years - 9% in the last 5 years - despite a pretty reasonable rate of economic growth.

Germany's oil consumption has fallen 15% in the last 10 years - 9% in the last 5 years - despite a pretty reasonable rate of economic growth.

These numbers are no doubt correct, but like all numbers it depends how you interpret them. I don't know how much of this is down to importing goods that have used the oil in other countries and how much is down to energy efficiency. In the UK we have likely exported some of our oil consumption to China. Unravelling data to interpret its true meaning is rather difficult, that is why we frequently here two experts arguing opposite ends, over the same figures, as to what they are telling us (crime figures, education exam results, energy use etc etc).

This point has been raised many times on the oil drum. I think the term is something like "embedded carbon" in imported goods.

Aren't Porsche, Daimler, and BMW expected to lose significant sales due to low mpg?


A very well framed expose...the best I've seen yet. And to make matters worse for those on this side of the Big Pond, the upcoming presidential election cycle will exagerate the ASS factor. Our political system has evolved into a devisive spectacle of finger pointing and blame game. All done, IMHO, to divide the masses and provide an infinite power sharing between the two parties.

Regardless of the absolute need for developing a united mindset to deal with PO I cannot see our political system passing on the opportunity to take advantage of the fear and anger ahead.

Re: most confused man in the world?

On my side of the Atlantic, the nominees are now


in light of the fact that W will be stepping down in January.

Both men should be judged on how adept they are in negotiating a bankruptcy whilst standing on their heads as they skillfully explain to the Chinese why the $1,000,000,000,000 they hold in U.S. Treasury Bills are now almost worthless in so far as these T-bills will only buy 17 barrels of oil.

This is not meant to put down Gordon Brown, whose confusion level is second to none.

-- Dave

Thanks for this posting. In the US the media are, to some extent, blaming the shortage of oil and increased costs on either speculation or the decreasing worth of the dollar. It is interesting that in the UK similar trends are quite clear with respect to cost increases.

Small update to my post of yesterday,

UK nat gas futures for delivery December 2008 (1 month contract) went above 100 p/therm on ICE 06. June 2008.

Looks like my post was history before it was posted.

I have to write an update;

Why UK natural gas prices (dayahead and settled) will go north of 150 p/therm before the upcoming Christmas. :(



We saw well head price for NG go from $7/unit in January (the normal "high season") to over $12/unit this spring.

Similar trend in the UK?

Yes, actually

Back in February nat gas in UK traded at 50 p/therm and is now oscilating around 70 p/therm. For UK I believe this is due to general tightness in the European market.

For US I believe (based on data from EIA which shows growth in domestic supplies as of March 2008) that this is due to nat gas being relatively cheap based on energy content compared to oil, so this I belive has motivated some users to switch from oil based to nat gas fuelling (like power plants with dual fuel capabilities, where this may be accomplished just by turning some valves).

Judigng by historical data I belive nat gas in the US need to grow to the area of US$ 14 - 18/MMBTU this summer (peak loads for air conditioning, also due to the slow recharging of the storage facilites.

Relatively speaking nat gas (based on energy and compared to oil) will still be cheap, but the US consumers will be hammered with significantly higher nat gas bills.

I am just waiting for it to reach the headlines of the US MSM to start writing/talking about it.

In the UK I presently belive it is supply related, while in the US it is energy related.



You're right on about the fuel switching situation. In an odd way that is a big portion of the price jump. The prime reason was a big jump in coal prices. When coal jumped the NG sellers knew the plants that could switch would switch. Other factors added in but this is recognized by many as the key element.

And here's a bit of uncomfortable news I just picked up from an oil patch web site....haven't seen it anywhere else...yet. Might make you folks in the UK/EU have a restless sleep tonight:

OPEC kingpin Saudi Arabia has arrested 701 Islamists in recent months who it claims were preparing attacks on oil industry installations, the interior ministry said on Wednesday.

Security forces "carried out several operations against followers of the deviant ideology and arrested a total of 701 people of various nationalities," said a ministry spokesman quoted by the official Spa news agency.

Of those arrested, "520 are still being held for their implication in the organisational and ideological plans of the deviant ideology."

Deviant ideology is the term used by Saudi officials to describe Al-Qaeda.

Forgive as i am sure these simple points have been covered already, and i do not have time right now to read all the posts .

1) For those who believe that alternative energy sources will allow us to continue life as usual ; how will solar panels et al be replaced when oil and other peaking fossil fuels are essential for their manufacture ?

2) How will we deal with the role of oil and gas in food production, as pesticides and fertilisers become increasingly scarce ( and increasingly ineffective as top soils deplete ).

Invisible Drum Kit

Imagine Rowan Atkinson with white hair.

All we need now is some invisible oil, it is probably found in the land of elves and fairies, with unicorns grazing in the pastures, tended to by members of the Texas Communist Party - all of which seem to be invisible.

Or maybe that's the invisibles in the "balance" of trade?

Mike Ruppert gave a lecture several years back wherein he quoted a corporate suit type who said, paraphrasing here, "There may not be any profit in mitigating Peak Oil." And what have the world's leaders done about Peak Oil? Nothing. Now you know why. That fraction of a percent of the population that owns or controls most of everything has realized that there is no profit in conservation or renewables. If you think about it carefully, you'll realize they're right. Where's the profit in selling less of some commodity? What's the advantage of selling an energy source or carrier that is a net loss or nearly so? What is the cost and time frame for retooling an entire economy for energy sources that are puny compared to fossil fuels? No combination of alternatives can ever run the global economy as it runs now. Where's the profit in making every industrial process a losing proposition? Why throw good money after bad? The capitalists are probably betting on converting their current capital to the next capital form and continuing on, business as usual. They're probably right.

IMO this is because high energy prices are very regressive, like high food prices. Those at the top have yet to be directly affected, if they ever are.

An interesting article, thank you! Politicians always SEEM to be clueless ... the last to take effective action ... there are no more Winston Churchills - or Teddy Roosevelts in our political lives. Us citizens will need to muddle through on our own. Where did I put that 'Whole Earth Catalog'?

I am not particularly alarmed by the prospect of 'no this' and 'out of that!!!'. Consider that most of the people of the world do not have heat or air conditioning, or running water, or a telephone, or internet, have not ridden in a car or used a flush toilet. Somehow, without all the 'modern conveniences' these people continue to go forth and whatnot.

Most of the modern conveniences have appeared in our lives after 1950. Certainly a sixty- year run of one sort of machine- mongering is not such a long period in human history that its disappearance -and replacement by other kinds of machine mongering- is an insurmountable crisis.

The political problem can be summed up in two words; 'Jimmy Carter'. President Carter gave Americans odd-even days, sweaters, turned- down thermostats and a "malaise". NO FUN!! We Americans always want ... and are entitled to MORE!!! Carter was embarrassed out of office -that loser! Politicians who offer voters something other than sugar coated with candy are generally given the boot. It is not surprising that the PM and his Central Banker are emitting with the happy talk. Circumstancew will drive the governments. Changes will take place outside of the capitals; this is how it always has been done and how it will be done in the future.

As for replacing declining petroleum supplies ... in America the easy answer is conservation. My brother was shocked when I informed him this morning that most if not all of the people clogging the roads at any given time with speeding SUV's and pickup trucks were just aimlessly driving nowhere in particular. This is what people do for activity when there is nothing on the tube. "They are have drive to work!" seid Brother ... "Then, they are all late!" I replied. It was eleven o'clock in the morning.

Eliminating the wasted and unnecessary driving would reduce the demand in this country esubstantially. I suspect most driving in other countries could be eliminated as well. The increase in price will cut down on the unnecessary trips without any government action. Most Americans are 'tapped out' and cannot afford to drive for fun, anyway. The next two dollars per gallon (or so) will get many of these people off the highway.

Prices are high obviously because of the constrained supply issues described well here and elsewhere ... another bigger reason is the US imports most of its oil and the fuel is priced in US dollars. Our Federal Reserve Chairman has dramatically increased dollar liquidity to save the finance sector of the economy from itself ... but in doing so has allowed more dollars to chase ever- scarcer oil. This is inflation from 'Economics 101'. The Fed is between a rock and hard place; if it cuts liquidity to dampen inflation, banks will fail including large banks overseas. Consider Northern Rock which collapsed under the weight of non- paying mortgage loans inlcuding loans peddled to it by Wall Street. If the Fed doesn't rein in liquidity, oil prices and other American imports will continue to climb in price.

If prices rise sufficiently, useage of fuel will decline dramatically. Consequently, the drop- off aspect of the peak oil curve will be extended. This is presumed that economic values are being used to measure the availability of oil: at some price some supply of oil will always be available.

As for alternative solutions .. they will come. I suspect in the developed world, the solutions will be mainly technical: medical this and that and computer programs, for instance. England has a robust military contracting sector; England will always have a source of hard cash! The oil producing world requires items that they cannot make. Japan is similar to England, it has no oil or gas, but its diverse and inventive economy and industrious workforce allows it to produce items that are desired in other countries ... including the oil producers'. Japan's dynamic economy allows it to purchase sufficient oil regardless of its price. Americans will also be able to do this although it will only gain laverage in the markets with serious conservation. England and other Euro- zone countries have to do the same as Japan and diversify their economies ... As oil becomes more valuable, security will be a counter- value that can insure supply.

As for a world with less oil .. sounds like the 1890's! From what I can tell, Europeans and American bourgeois lived pretty well at that time. No gasoline, no oil, no 'energy infrastructure' to speak of, not much technology at all. They had handle- bar moustaches, barbershop quartets, beer halls, big- wheel bikes, girls in hoop skirts and bustles ... no traffic noise, no cars running over people ... good food locally grown in markets down the street, no junk 'Made In China' ... farms within walking distance of towns ... sailing ships, mysterious places that were hard to get to ... good music, Impressionist art, interesting theater ... it sounds like fun to me! As for the non- bourgeoisie ... they are going to have to improve themselves and be smart about it ... or not!

In the greater part of the world ... peak oil will come and go without most people knowing or caring about it.

Dear TODers, there are many excellent comments on this thread. I just ran out of time to respond to them all. A few points:

A letter to all UK MP's and Scottish MSP's and MEP''s (?)

A great idea. Something that hits all the main points:

North Sea oil and gas decline
Constrained source of import supply
Impact on balance of trade
The state of the UK grid

Send out from "Group of concerned citizens" - we can post the open letter and all replies here.

Can someone volunteer to compile email lists / groups.


BobE - it would be great to have a short post detailing the lamenatble state of UK housing stock, what it will cost to upgrade and what the energy savings might be.

Speed limits and fuel rationing

This one maybe also for BobE - or academic associates. id really like an article on VMT in the UK and Europe, looking at fuel savings with lower speed limits and by imposing limits on engine size and power. Does such data exist in accessible form.

And a message to all other Europeans

This is a European site, if you want to use this as a forum for presenting analysis and galvanizing support then contact either myself, Chris - or any of the other contributors.

List of MP's:
List of MEP's:
Is this what you wanted?
it seems too simple.

John McDonnell seems to be da man:

This isn't about pay, and its not solely about the credit crunch, it's about short-term decision making over the last 11 years as New Labour has done nothing to move the UK from a fossil fuel based economy to an economy based on renewable technologies".

Of course, form my POV I would have very much liked to see '..and nuclear' in there.

Here is the rest of my google search using 'peak oil' and 'MP':

And a message to all other Europeans
This is a European site, if you want to use this as a forum for presenting analysis and galvanizing support then contact either myself, Chris - or any of the other contributors.


I don’t know if it is only me, but hard facts show that in general the European self-sufficiency degree for energy is lower than the US and still it looks to me as Americans are more aware of this (even if the American’s who are energy aware constitutes a small part of the total population) than Europeans.

How can this be?

In addition the European market (to use the favored phrase by economists) is bigger (in plain language this means Europe has more people than the US). Most European countries import most of their energy for consumption.

Energy illiteracy seems more widespread in Europe than in the US, while it should be the other way around!

Europe needs an energy czar or have they just decided for………………..Putin?

(I am aware that Putin no longer is president in Russia.)

Mr Putin may disagree wth you on that point!

Would you care to elaborate?

It was a joke. I meant he may no longer have the title of President, but I think he still pulls the strings

Some more info on MP's who may be receptive:
Norman Baker MP for Lewes asked why Government estimates included projections of future prices were lower than had already been reached:
Anthony Steen< MP for Totnes is supportive of the Transition towns intitiative:

Handily, he is a Tory and the other Lib/Dem, so we still need a Labour guy...

The UK Renewables Report and White Paper is now out and is available here:
There is also a consultation exercise here:

Given that energy imports on scale depicted by the BERR charts and Euan's article are likely to prove totally unaffordable for UK I wonder if consumption would adjust to match N Sea output. Indonesia is a case in point, once output fell to level where imports were necessary oil availability simply fell away as large volume imports were unaffordable. UK is a more developed economy but what do we really do or manufacture which would sell abroad in an energy-short world to provide hard currency to offset energy imports?

If UK were really to rely solely on NS output here's an approximation of what levels of cutbacks might apply:
2010 - 500k bbls/day
2015 - 1m bbls/day
2020 - 1.5m bbls/day (which btw would leave just 300k avail)

It's also interesting to note how much imports to 'fill the gap' might cost. Here are annual costs to UK trade deficit for each dollar of the prevailing oil price (based on 'round number' imports listed above):

2010 - £94m
2015 - £187m
2020 - £281m

For example if oil cost $250/bbl in 2015 UK oil import bill would be £46.75bn based on 1m bbls/day imports.

It's gas that is the great worry for the UK - much more than the oil, I feel.

Quite agree, I just used oil as an example. If anything the 'gas gap' in terms of BOE is worse...and hits earlier than oil. Not least gas is much more difficult and expensive to transport across continents vs oil. With c15m UK households 'locked into' gas boilers (furnaces) and 40% of UK electricity generation currently from gas it's going to prove the bigger challenge. I doubt even 1% of UK folks realise what's headed their way wrt gas - all they keep shouting about (aided by Daily Mail etc) is cost of petrol (gasoline) and motor taxation.

The Mail did do an article, indicating that most of the generating capacity was due to be laid off, and run the fuel figures in their cost of living index - way above and better than the Government one.
I think the rises in heating costs this winter should catch people's attention!

Energy costs for the 1.5m UK households without mains gas are catching our attention already - I'm one of them! Heating oil has risen 5 or 6 fold this decade and I assume LPG (which a lot of houses in my area seem to have) shows similar rises. Just 1.5m households in this position and located in rural areas hence very little publicity.

British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.


Families in the UK now owe a record 173pc of their incomes in debts

Right. But despite that 173pc debt, buildings are still being built and cars still being sped well above the limits (dozens past here this morning). So why can't the same continue with 1733pc debt, or 177333pc debt for that matter? Where does the crunch have to come?