Peak Oil… Demand for it, that is.

It is demand for oil that may peak as governments adapt to the problems of global warming, security of supply and an amplitude of market volatility that could bring economic ruin to nations and then the world. Oil-demand may be reduced preemptively to the production peak (peak oil) through more efficient vehicle technologies and finding alternative energy sources. Ultimately electricity is seen as the best “supply vector” for delivering energy to users. Probably it is a game of “tag” between reducing demand and falling supply; whichever comes first will win-out.

Peak Oil is the global term used to describe an eventuality when world oil production reaches a maximum, and then relentlessly falls. Such “peak” models are based on an inexorable rise in demand for oil, against an infrastructural lack by which to meet that demand (i.e. you can’t pump out more). Supply-demand gaps are to be expected en route but once the peak is reached, the shortfall in supply is catastrophic. As a rider to this, it should be noted that there is no such thing really as “global peak oil” since different fields, under the control of various regimes will peak at different times, thus shifting the emphasis of economic and political control across the globe. Those without oil will become weak and those with plenty of it will become strong – or targets for other nations who want to grab their oil.

Now, the assumption of relentless demand has been called into question in a new report entitled “The Beginning and End of Oil” by Peter Hughes, who is a director of Arthur D. Little’s global energy and utilities practice. The main issues surrounding oil, climate change, security of supply, and an amplitude of market volatility that could bring economic ruin to nations and then the world, are lucidly clear. Rather than simply waiting in a spirit of foregone conclusion for these calamities to unfold, it is likely that governments will be forced to act preemptively to anticipate and provide alternatives, which will curb demand for oil.

It is a global energy-mix that is to be contrived, rather than a single solution, which there is not. The recent hike to $150 and then a crash to $30 for a barrel of oil hand in hand with the credit crunch, makes it clear to most governments that deliberately reducing our demand on oil is a policy imperative. Of all the energy-resources, oil is especially vulnerable since more than half of the world’s 30 billion barrel annual count goes to fuel transportation. The absence of alternatives to oil-based fuels has cemented the outstanding stature of oil as literally empowering the engines of progress.

Scitizen