Posted on This is My Truth on 7 April 2010
AA's figures from last week showed average petrol pump prices at 118p a litre, with diesel at 118p.
The Daily Mail reports they look set to overtake the previous record high of 119p due to a combination of a weak pound and rising fuel duty. And that's before the economy grows.
If the economy is going to pick up demand for oil will rise and prices will rise further still (which may well push the economy back into recession).
After having denied there was a long term problem about the availability of cheap oil the Government appear to be coming round to the view that there may be trouble ahead.
The Government's former chief scientist, Sir David King, now says the world's oil reserves have been exaggerated by up to a third. After being one of the chief critics of so called 'peak oil theory' Sir David is now warning of shortages and price spikes within years.
He's not alone Richard Branson and Ian Marchant, chief executive of Scottish & Southern Energy, are members of the Peak Oil Industry Taskforce, which is trying to raise awareness of potential shortages in the coming decade.
A private seminar convened by the Energy Minister Lord Hunt under Chatham House rules at the end of March indicated that the warnings are no longer being dismissed as crackpot. “Government has gone from the BP position – ‘40 years of supply left, the price mechanism works, no need to worry’ – to ‘crikey’” taskforce member Jeremy Leggett told the Guardian
One of the attendees helpfully gave an account of the conclusions of the private meeting. Rob Hopkins noted that the summit concluded:
Peak oil is either here, or close enough.
Prices will have to go higher as demand outstrips supply.
Governments will be forced to intervene to maintain critical levels of oil supply, and limit volatility.
Rationing measures may be unavoidable.
Electrification of transport must be pursued in order to reduce demand.
Communities will need to work quickly to reorganize around walking instead of driving, producing food and energy locally instead of importing, and generally try to reduce their need for oil
Before anyone rushes to point out that there is still plenty of oil to be had it is worth noting that nobody denies this. However the counter argument is that most of the oil available cannot be accessed quickly or cheaply. Indeed oil that is very expensive to produce, such as deep sea oil, is unlikely to be profitable except at a price which puts the economy into recession.
There is a great deal of uncertainty around the exact details of the debate, but the general point is becoming more widely accepted.
We need to start thinking and planning for a world where cheap oil cannot be relied on...but don't expect that to feature in the General Election campaign