1

Peak OilFuture oil shortages and mitigation/adaptation options

for Australian cities  

Bruce Robinson, Convenor

? ? ? ?

Look out !! Something serious

is looming on the radar

2

Peak OilFuture oil shortages and mitigation/adaptation options

for Australian cities  

Bruce Robinson, Convenor

? ? ? ?

Look out !! Something serious

is looming on the radar

3

www.ASPO-Australia.org.auAn Australia-wide network of professionals working to reduce oil vulnerability

Working groupsUrban and transport planningTown planning professionals (being formed)Finance SectorHealth Sector Social Services SectorRemote indigenous communitiesActive transport (bicycle & walking)Agriculture, Fisheries and FoodBiofuelsOil & Gas industryRegional and city working groupsConstruction IndustryPublic transport sectorDefence and Security Children and Peak OilYoung Professionals working group

Part of the international ASPO alliance

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Outline

This is about oil, not energy in general.

Transport (largely)Global oil supply, not just Australia's

● What is Peak Oil ?

the time when global oil production stops rising and starts its final declineWe will never "run out of oil"

● When is the most probable forecast date ? ? 2012 +/- 5 years

● Peak Exports is likely to occur sooner

● Oil vulnerability assessment and risk management plans are crucialfor city planning, and for governments at all levels

● Why does it seem like all decision-makers are in a state of denial ? ?

1930 1970 2010 2050

Peak Oilbutwhen?

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Macquarie report September 16th 2009 "The Big Oil Picture: We're not running out, but that doesn't mean we'll have enough"

September 17th 2009

2005 2009 2013

Toronto

Financial Times

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Key oil figures were distorted by US pressure, says whistleblowerExclusive: Watchdog's estimates of reserves inflated says top officialguardian.co.uk, Monday 9 November 2009

The world is much closer to running short of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

2008

7

Two analogies for Peak Oil risks

1. Hurricane Katrina (New Orleans, 2005)

2. US Financial Crisis (World, 2008-09)

Can we learn to prepare for probable events rather than just hoping business will be as usual ?

What are the reasons for the ubiquitous and very risky "no-worries" attitudes of decision-makers

KOSPI

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Scientific American March 1998

First Major Article about Peak Oil

www.aspo-australia.org.au/References/Campbell%20Laherrere%20Scientific-American-March-98.pdf

1995

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www.csiro.au/resources/FuelForThoughtReport.html

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www.chathamhouse.org.uk/publications/papers/view/-/id/652/

Time for an energy bail-outPeak oil is just five years away, and we must start to plan now to avert a truly ruinous crisis

www.peakoiltaskforce.net

October 29 2008

August 2008

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The IEA "estimates that the average production-weighted observed decline rate worldwide is currently 6.7% pa for fields that have passed their production peak”.

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery

because most of the major oil fields in the world have passed their peak production,

a leading energy economist has warned Fatih Birol, chief economist of the International Energy Agency (IEA), the developed world's energy watchdog

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"Even if oil demand were to remain flat to 2030, 45 m barrels/day of gross capacity -roughly four times the capacity of Saudi Arabia - would be needed just to offset the decline from existing fields"

2008

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Prof Kjell AleklettGlobal Energy Systems

Uppsala University, Sweden

Australian lecture tourJune 2009

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2008

International Energy Agency (OECD)

WEO 2008 and Uppsala Oil

Outlook 2008

2008

Uppsala Global Energy Systems

group

Using the same IEA datafields to be developed and yet to be found, and the same natural gas production

Different conclusions.

IEA production forecasts are "outside reality", not possible.

(because IEA have assumed impossible production rates from the reserves)

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"A MIDDLE EAST VIEW OF THE GLOBAL OIL SITUATION"A.M. Samsam Bakhtiari National Iranian Oil CompanyMay 2002

Global oil crunch at the horizon --- most probably within the present decade.

"...It would take a number of miracles to thwart such a rational scenario..

A series of simultaneous miracles is not possible --for there are limits even to God Almighty's mercifulness".

“Noah built his ark before it started raining”

It is very hard to build an ark under water !!!

We must start preparing our cities for Peak Oil in advance

www.isv.uu.se/iwood2002

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Dr. Sadad I. Al Husseini, ex Saudi AramcoOil and Money Conference, London, October 30, 2007

...predicts a 10 year plateau

a structural ceiling determined by geology

100

90

70

80

Production M b/dayPrice

$/barrel

Economists say "As prices rise, production will increase". Clearly false from these data.

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Germany, October 22 2007

Fig. 7 Oil production world summary

2008www.energywatchgroup.org/fileadmin/global/pdf/EWG_Oilreport_10-2007.pdf

IEA WEO 2008

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A simple observation -- or why peak will be earlier than most people expect

‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

Decline

Expansion

Chris Skrebowski Editor, Petroleum Review,

London

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THE GROWING GAPRegular Conventional Oil

Billion barrels of oil per yearLongwell, 2002

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Perth’s Central Park building is 249 m high, to top of tower

Australia uses 51,000,000,000 litres of oil each yeara cube of about 370 metres size

80% of Australia’s oil usage is in transportIf Australia’s 20 M tpa wheat crop → ethanol = ~10%

100 ml of oil contains 1 kWh of energy. Enough to move a small car to the top of the Eiffel tower

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ABARE Australian CommoditiesMarch 200922 million in 2006

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Australia China United States

1 kml l

Million barrels/ day 2008 BP Statistical Review, 2009

Australia uses 0.94 China 8.0US 19.4World 84.4 US 1 cubic km oil / year

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Mortgage and Oil Vulnerabilityin Perth

www.griffith.edu.au/__data/assets/pdf_file/0003/88851/urp_rp17_dodsonsipe-2008.pdf

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September 2009Maribyrnong City Council’s

Peak Oil Contingency Plan a first for Australia

Sunshine CoastRegional Council

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0.0

0.2

0.4

0.6

0.8

1.0

1965 1975 1985 1995 2005 2015 2025

Million barrels/day

Actual ForecastAustralia

}$15.7 billion2008/09

P50

Consumption

Production

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Failure to act now will prove incredibly costlyWe must recognise the urgency, and leave the "business as usual" cult.

Oil vulnerability assessment and risk management are crucial important tools for planners, governments and investors.

Building more distant suburbs, urban freeways and tunnels will soon be seen as crazy

These slides at http://tinyurl.com/Cities-Peak-Oil

www.ASPO-Australia.org.au

Hint: Check your superannuation is not being invested into urban toll-roads, tunnels and airports.

General priorities for facing Peak Oil1: Awareness and engagement 2: People solutions Frugality Efficiency

Last: Alternative fuels and technologies

1ADX♦245STATE OF AWARENESS

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a few more slides follow,in case they are needed for questions

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1: “Talk about it, Talk about it”2. Engage people, “Participatory democracy”3. Dismantle the "perverse policies" that subsidise heavy car use and excessive freight transport.

Australian Government Policy and Action Options

4. Encourage frugal use of fuel, and disadvantage profligate users. Fuel taxes should be incrementally raised to European levels to reduce usage.5: SmartCard tradable personal fuel allocation system. A flexible mechanism for short-term oil shocks, as well for encouraging people to reduce their fuel usage..6. Concentrate on the psychological and social dimensions of automobile dependence, not just “technological fixes”7. Implement nationwide "individualised marketing" travel demand management.8. Railways, cyclepaths and public transport are far better investments than more roads.9. Give priority for remaining oil & gas supplies to food production, essential services and indigenous communities, using the Smart-Card system.

10. Review the oil vulnerability of every industry and community sector and how each may reduce their risks.

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Australian petrol & diesel rationing using 2008 technologySmart-card based, scalable, tradeable, flexible, quick to change, equitable, transparent.

Fuel allocations should be per person, not per vehicle, and depend on Location (inner or outer suburb, public transport access, regional or remote) Health status (elderly or infirm, expectant mothers with toddlers), less for the fit

who can ride a bicycle 20kms if needed Job importance (defence, essential services, hospitals, food)

People are encouraged to conserve by being able to trade unused allowances electronicallyand automatically.

Martin Feldstein, Chief Economic Advisor to President Reagan, now at Harvard, (WSJ 2006)

"tradeable gasoline rightsare more efficient than fuel economy standardsor gasoline taxes"

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Coal

Gas

Oil

OtherTotal Energy UsageAustralia, 2000ABARE

Kenneth E. Boulding, economist1910-1993

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."

Metropolitan passenger travel AustraliaBTRE

Car

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0

20

40

60

80

100

120

140

160

Sep-0

1

Sep-0

3

Sep-0

5

Sep-0

7

Sep-0

9

Sep-1

1

Actual price

March 2009prediction

March 2008prediction

March 2007prediction

March 2006prediction

March 2005prediction

March 2004prediction

ABARE's oil price forecasts have proven to be systematically low in normal timesWTI US$/bbl

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0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

0

1 0

2 0

3 0

4 0

5 0

World oil shortfall scenarios

Past Production of Oil

ForecastProduction

Demand Growth

Deprivation, war

City design/lifestyle

Pricing / taxes

Transport mode shifts

Efficiency

Other petroleum fuels gas, tar-sands

Other fuels

Gb/year

• no single “Magic Bullet” solution, • probably no replacement ever for cheap plentiful oil• Urgent preparation and adjustment are vital

2009

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“OK, it’s agreed – we announce that to do nothing is not an option and then we wait and see how things pan out”

from ‘Private Eye’

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Energy White Paper, 2003

Coal

Gas

Oil

Other

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Government of Western Australia

STATE LIQUID FUEL SHORTAGE

EMERGENCY PLAN

OPERATIONAL PLAN PREPARED BY

ENERGY SAFETY DIRECTORATEDEPARTMENT OF CONSUMER

AND EMPLOYMENT PROTECTION20 Southport Street, W Leederville WA 6007Tel: (08) 9422 5200 Fax: (08) 9422 5244

January 2003Current WA Government planning for a sudden fuel shortageIneffective and inequitable. Odds & Even number plates etc

Nothing significant about public transport

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discussion paper, Liquid Fuel Emergency Act review, 2004

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A rational pricing system Perth domestic water

Renewable scarce resource

A personal fuel SmartCard system could tax petrol and diesel on a sliding scale like water.

People could trade unused allocations to those who want more fuel.

Water Analogy for Fuel Pricing

$0.00

$0.50

$1.00

$1.50

$2.00

0 150 350 550 950

Perth domestic water prices per kilolitre 2008

Consumption range kilolitre/year

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toroads,4WDsprofligate vehicle usersheavy inefficient vehicles

Supermarkets subsidise CO2 $18/tonne with their fuel dockets

Supermarket petrol discounts

People who walk to the supermarket are subsidising those who drive in the big SUVs

There are innumerable “Perverse” subsidies

0%

10%

20%

30%

0 15,000 25,000 40,000

FBT tax on motor vehicles

km range

FBT tax on cars as part of salary

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Petrol taxes OECD

IEA Dec 2003

Korea

UK

Australia

US

€ 0.80

0.60

0.00

0.20

0.40

Au$cents/litre

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The UK Fuel Tax Escalator Margaret Thatcher

Australian fuel taxes should be raised to European levels on a fuel tax escalator

1988 1990 1992 1994 1996 1998

Nominal tax per litre (pence)

Real tax

10

30

50

40

20

0

pence

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China

US

Australia

43www.ASPO-Australia.org.Au

Bicycles are powered by biofuel, renewable energy,

either Weetbix or abdominal fat

No shortage of either

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Urban passenger mode shares Australia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Mo

de

sh

are

(p

er

cen

t)

Car

Rail

BusOther

Potterton BTRE 2003

High automobile-dependence

Public transport share is very low

Car

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WORLD OIL & GAS PRODUCTIONASPO 2008 base case

0

20000

40000

60000

80000

100000

120000

140000

1930 1950 1970 1990 2010 2030

kb

/do

e

NonCon GasGasNGLPolar OilDeepwater OilHeavy OilReg.Oil

140

120

100

80

60

40

20

0

Million barrelsper day

(equivalent)

2009

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Jeff Rubin

September 2007

Canadian Imperial Banking Corporation

Iran 10c/litreVenezuela 2c/l

www.aspo-ireland.org/contentfiles/ASPO6/2-3_ASPO6_JRubin.pdf

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49

50

51

52

}0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

2007

World oil shortfall scenarios

Past Production of Oil

ForecastProduction

Demand Trend

Gb/year

0

10

20

30

40

50

Shortfall

By 2030, the gap is equivalent to 6,000 nuclear reactors

2030

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February 2004

By 2015, we will need to find, develop and produce new oil and gas equal to eight out of every 10 barrels being produced today.

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Why are oil supplies peaking?

• Too many fields are old and declining• 54 of 65 oil producing countries are in decline!

• Oil supply will peak in 2010/2011 at around 92-94 million barrels/day

• Oil supply in internationaltrade may peak earlier

• Collectively we are still in denial