Peak Oil and Britain
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Monday, September 12, 2005
Peak Oil and Britain
So Britain's Chancellor, Gordon Brown, has firmly put his finger on the current oil supply problem. It's all the fault of OPEC. If they would open up the valves a bit more on those "inexhaustible" resources, we could all breath more easy again. This flies in the face of what Saudi oil officials were saying some weeks back when they firmly put the finger of blame on lack of oil refining capacity in the USA and beyond.
Britain is facing some short to long term problems when it comes to oil and natural gas. North Sea production has been falling at precipitous amounts of up to 15% since it peaked in 1999. This was against the analysis of experts who saw a more gradual decline as Britain moved into the underclass of net energy importer. What they and a host of other over-optimistic analysts did was to assume that new production would significantly cancel out depletion. It has not and the government has been desperately auctioning of new exploration zones in the hope that something, somehow will come online in the next few years to mitigate this looming disaster in production.
But oil has been good to the coffers of the British Treasury. With a huge reserve on their backdoor, they have watched billions in royalties, oil corporation taxes and the odd windfall profit tax flow into succeeding chancellors' budget plans. Indeed, not content with this bonus, they have slapped enormous taxes and duties on the British motorist since the 1980s with the introduction of the "fuel escalator" which now stands at 67% of a £4 ($7) gallon of petrol.
One would think that an energy independent country would offer cheap fuel to its citizens, but for Britain the opposite has been the case. This is wholly due to the huge expense of Big Government. An ever increasing Welfare State continues to eat up billions in revenues annually while next to nothing has been spent in that time on bringing in renewable energy alternatives to face up to the evil day of North Sea depletion.
Why is this? Instead of showing far-sighted leadership, successive governments have only been interested in staying in power and that means doling out ever increasing benefits to buy the most votes. For this, there shall be a day of reckoning.
Meanwhile, the next few months in Britain could be an interesting little "trailer" for the big movie "Peak Oil" coming to a country near you soon. A combination of Hurricane Katrina, depleting North Sea supplies, fuel protests and the inadequacy of the current LNG and continental supply could set Britain up for a "Winter of Discontent" as fuel prices continue to rocket upwards.
What previews will we see in those coming months to give us an idea of the "Big One"? More pensioners dying from hypothermia? More demonstrations and strikes by fuel-dependent industries? A signifcant economic slowdown into recession encouraged by raises in tax rates? Tony Blair fired before he retired as Prime Minister?
I once went on a rollercoaster ride called the "Kraken" in Orlando, Florida. We were cranked up to the top of the ride ready to let gravity do the rest when we plunged downwards. It was a pleasantly frightening experience, mainly because you knew you were firmly belted into a controlled chaos.
Britain is also at the top of a rollercoaster, but it will not be controlled and it will be chaos when she drops unbelted and sorely unprepared into that depletion plunge with no hope of an upswing. You see, Britain has the misfortune of losing energy independence just as Peak Oil is about to hit. That is really bad timing, but not as bad as the abuse that will fall upon the head of that government who is in charge when it happens. If Gordon Brown does succeed Blair as Prime Minister, those words "It's OPEC's fault." may come back to haunt for the rest of his political life.
Monday, September 12, 2005
Peak Oil and Britain
So Britain's Chancellor, Gordon Brown, has firmly put his finger on the current oil supply problem. It's all the fault of OPEC. If they would open up the valves a bit more on those "inexhaustible" resources, we could all breath more easy again. This flies in the face of what Saudi oil officials were saying some weeks back when they firmly put the finger of blame on lack of oil refining capacity in the USA and beyond.
Britain is facing some short to long term problems when it comes to oil and natural gas. North Sea production has been falling at precipitous amounts of up to 15% since it peaked in 1999. This was against the analysis of experts who saw a more gradual decline as Britain moved into the underclass of net energy importer. What they and a host of other over-optimistic analysts did was to assume that new production would significantly cancel out depletion. It has not and the government has been desperately auctioning of new exploration zones in the hope that something, somehow will come online in the next few years to mitigate this looming disaster in production.
But oil has been good to the coffers of the British Treasury. With a huge reserve on their backdoor, they have watched billions in royalties, oil corporation taxes and the odd windfall profit tax flow into succeeding chancellors' budget plans. Indeed, not content with this bonus, they have slapped enormous taxes and duties on the British motorist since the 1980s with the introduction of the "fuel escalator" which now stands at 67% of a £4 ($7) gallon of petrol.
One would think that an energy independent country would offer cheap fuel to its citizens, but for Britain the opposite has been the case. This is wholly due to the huge expense of Big Government. An ever increasing Welfare State continues to eat up billions in revenues annually while next to nothing has been spent in that time on bringing in renewable energy alternatives to face up to the evil day of North Sea depletion.
Why is this? Instead of showing far-sighted leadership, successive governments have only been interested in staying in power and that means doling out ever increasing benefits to buy the most votes. For this, there shall be a day of reckoning.
Meanwhile, the next few months in Britain could be an interesting little "trailer" for the big movie "Peak Oil" coming to a country near you soon. A combination of Hurricane Katrina, depleting North Sea supplies, fuel protests and the inadequacy of the current LNG and continental supply could set Britain up for a "Winter of Discontent" as fuel prices continue to rocket upwards.
What previews will we see in those coming months to give us an idea of the "Big One"? More pensioners dying from hypothermia? More demonstrations and strikes by fuel-dependent industries? A signifcant economic slowdown into recession encouraged by raises in tax rates? Tony Blair fired before he retired as Prime Minister?
I once went on a rollercoaster ride called the "Kraken" in Orlando, Florida. We were cranked up to the top of the ride ready to let gravity do the rest when we plunged downwards. It was a pleasantly frightening experience, mainly because you knew you were firmly belted into a controlled chaos.
Britain is also at the top of a rollercoaster, but it will not be controlled and it will be chaos when she drops unbelted and sorely unprepared into that depletion plunge with no hope of an upswing. You see, Britain has the misfortune of losing energy independence just as Peak Oil is about to hit. That is really bad timing, but not as bad as the abuse that will fall upon the head of that government who is in charge when it happens. If Gordon Brown does succeed Blair as Prime Minister, those words "It's OPEC's fault." may come back to haunt for the rest of his political life.
posted by Marcel at 7:31 AM
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