Current projections are that global oil demand will increase by 2% per year with at least a 3% decline in production from existing reserves. The rate at which these supplies dwindle will no longer be offset by oil and gas becoming available from newly discovered reserves. We are inevitably moving away from supply outstripping demand to the cold reality of a world where those with the remaining supplies call all the shots. This so called peak oil is just as much a threat as climate change.
Unfortunately we have an additional problem. The economic downturn has lead to a short term drop in the price of oil and reversed the price shocks of 2008. This has two consequences; a false security that we are back to ‘business as usual' with oil supply, but also a slump in the viability for energy companies investing in alternative sources of supply and storage.
In Britain we have just 15 days of storage capacity to tide us over in case of disaster. We have been a net importer of natural gas since 2005. We should not forget the effect on Ukraine when Russia unilaterally cut their gas supply. Currently Russia, Iran and Qatar control 60% of all known gas reserves.
The reality is that we need to completely change the way that we generate and use energy. In an ideal world that would mean only renewables and biogas, but the fact is that we will not be able to meet demand using these as sole sources. Of course we need a so called smart grid and feed in tariffs to encourage local energy generation from as many sources as possible. We need marine energy parks with offshore wind farms and the harnessing of tidal power. But we need to be clear that no Government should allow the lights to go out across Britain. This means that nuclear power has to be part of the mix as well as coal powered stations with carbon capture. Of course nuclear energy is not as low in carbon as it may first appear if uranium mining, construction and decommissioning are taken into account. Safety can never be guaranteed, and I know that for many it cannot be an acceptable part of the mix. Unless we are prepared to accept prolonged blackouts or increases in carbon from fossil fuels, I do not see an alternative. It is a shame that the Government has dithered on this to such an extent that we already face a power gap within ten years.
We also need to take responsibility for reducing our use of fuel. Perhaps we should start by taking steps to increase local food production and reducing the insane ‘food miles' and packaging of supermarket foods. At present, increasing home insulation remains the most cost effective method of conserving energy and needs to be encouraged with grants for home improvements.
We all need to plan for scarcer and more expensive energy, but we also need to be realistic and take uncomfortable decisions to maintain our energy security.
