No cause for concern, they say "Because there is continued volatility in prices, BERR proposes to review these assumptions on a regular basis, annually in autumn (starting from next year), and if necessary bi-annually in spring and autumn."

So, IF NECESSARY they will look at the prices twice yearly starting from next year 2009 presumably. Just how difficult would it be for these civil servants to review the prices weekly?

Tell BERR what you think.

I have told them to include a scenario that assumes peak world 'net exports' of oil in 2005 - since that is what has actually happened!

http://netoilexports.blogspot.com/

Euan,
You recently wrote about the UK "State of Emergency", where North Sea depletion is resulting in larger and larger trade deficits which will continue to balloon going forward.

I think I have the answer!

According to BP Statistical review, the UK used 620 million barrels of oil in 2007. Lets assume this stays constant (e.g. economic growth is subsidized by increases in efficiency or energy substitution.) That means over the next 8 years, the UK will consume around 5 billion barrels of oil.

Using the BERR expections for "high case" of oil prices (meaning the risk is to the low side of these numbers), wouldn't it make sense for the energy experts at BERR and UK Finance Ministry get together and arbitrage their expertise vis a vis the futures markets?

To wit, the ENTIRE futures strip from now out to 2016 is above $140. (many of the contracts are above $146). By selling forward what are obviously significantly overpriced contracts compared to the 'high case', the UK Finance Ministry can pocket $275 billion in next 8 years ($142.5-$87.5 high price average times 5 billion barrels).

Much of the above budget deficit then disappears. If they also sell forward natural gas and coal vs their 'high case' as well, then the deficit would turn to a surplus!

Problem solved.

We have government sponsored campaigns, here's a couple to give you a flavour:

Chewing gum litter public awareness.

A public awareness campaign, designed to improve the understanding of the "12A" cinema rating.

It reminds me of that song

We're busy doing nothing
working the whole day through
trying hard...:-(

Duckrichard,

Biofuels will NEVER replace oil regardless of price! Using numbers from Brazil, then a sugar cane field can produce about 0.5 litre of ethanol/m2/year.
To put this into perspective, then different countries will need to plant:
Japan: 220% of total land area
Denmark: 78% of total land area
USA: 34% of total land area

This is just field areas, not including supporting roads and processing plants. In other words we will run out of space before we can produce any serious amount of bio fuels.

$150 could be both demand destruction and substitution of unspecified alternatives. If those alternatives include unconventional oil, then their number may not be all that far off. If world consumption is cut 15% over the next five years, seeing tar sands as roaring in rather than trickling in might be a little easier since the market would be smaller.

Chris

I am constantly amazed that people put a lot of faith in the government in reguards to planning for the future.

Governments are consistently BEHIND THE CURVE as one sees in the report above. "Policy" is a response and not a strategy. The governMental question is not: how do we plan our country's future in light of falling FF production, but: how do we react to falling production and rising prices? Since there haven't been major shortages at the pump, there is no reason for the govt to react, now, is there?

Cheers, USDom

That would upset far too many wealthy people. I can hear Orlov "It may not be profitable to slow collapse".

Great graphic. It highlights two things:
1)that 'steep discount rates' also work backwards. In addition to discounting the distant future in favor of the present, we also discount the distant past in favor of the present. Its like one of those illuminated maps of the world with a moving light on it showing regions with daylight - we quickly lose our attention to those areas in the dark - just behind us and just before us.

2)As Taleb documents in Black Swan, we collectively don't know how to model 5+ standard deviation events, because by definition, the things that cause such events aren't (and can't be) factored into our models.

The BERR forecasts are not much different than the other global institutional forecasting models, and little different than historical wall street consensus. It's OK to be very wrong, as long as everyone else is very wrong too. Its a career ender if you are very wrong by yourself....

Considering that even the vertical axis scale of that graph is out of date, I thought I would look for more recent 2008-ish numbers.

http://www.eia.doe.gov/emeu/steo/pub/jun08.pdf

And their short term energy outlook is up to the same old tricks.

TOD sidebar tells me that the price is now pushing $146 per barrel, so this alone pretty well shatters the validity of the EIA prediction. But I'm not sure if you could convince a 3rd grader of these graphs. It just doesn't 'fit'. While there could certainly be other factors that make it right... occam's razor

given every one seems to have been caught out its hard to imagine what they thought was going to happen. the haulage association gets nothing but complaints from its customers on prices so they optimised themselves around this fantasy land.

what is gauling is the lack of influence bodies like TOD and ASPO have. the ideas and analysis have been floating around with increasing precision for decades.

I suggest Berr contract out scenario design to TOD europe.

I'm serious.

Boris
London

Gordon Brown & Co. are intelligent and aware of the real petroleum supply situation. Surely, they know better than we do

How do you know they are aware? There are intelligent people on this site who share the same information but come to starkly divergent doomster or cornucopian conclusions. Neither intelligence nor information nor their combination can logically necessitate awareness in the sense of understanding and coming to terms with the implications.

In my experience the authoritarian mentality would not know what the truth was if it was within a second of smashing into their nose. Their mentality does not ask "is this true or false?", as the scientific mentality does. Rather it is totally preoccupied with "is this friend or foe?", or "is this convenient or inconvenient to my personal advancement?". This is the sort of person that makes up the dominant elite of a decadent society and thereby damns it to all but certain inevitable doom.

12 times significant! ;-)

The UK's transport planning is presumably based on BERR's mid range forecast for oil prices, which supports projected road transport growth of 28% by 2025. Fat chance.

But building roads and bridges to nowhere is standard operating procedure for countries trying to stimulate their way out of recession.

What will the UK do this time - aircraft carriers? Perhaps insulating the housing stock would be a wise move.

Yet more North Sea nonsense, this time from Malcolm Bruce, Liberal Democrat. Quote from today's P+J:

Mr Bruce pointed out the UK is 90% self sufficient in oil and 70% in gas and "there is probably as much oil to be got out of the North Sea as we have yet produced."

We might expect this kind of statement from current Gov't but Lib-Dems recently showed a little more understanding by stating in Radio 4 interview a few weeks back that "Gov't long term oil price assumtion of around $70/bbl in 2020 for transport planning was ridiculous." Looks like New Labour are not the only UK political party taking Peter Odell's numbers at face value.

Yes, that was the table, so thanks for pointing out my mistake Olle. Never again will I give the UK government the benefit of my own doubts!

Olle, can you also mail it to me: rekkaa at gmail dot com

Thanks!

Can you also email it to me at:

copeland@pt.lu ?

Thanks in advance,

Carolus.

SamuM! Our media are usually as "brilliant" as our eastern brothers', but there seems to be a shift now: Read this one:
http://www.e24.se/branscher/ravaror/artikel_564653.e24
MSM has awoken.... to late as allways, but maybe we should be glad that the do not do a "Bagdad Bob" at least... :)

I reckon syncrude (CTL) will end up being a bit like ethanol/food for fuel. They'll be producing one or two million barrels per day by 2020, which will make little difference to fuel supplies, but because the BTUs will be worth a lot more as liquid fuel they'll bid up the price of coal deposits - in order to consume maybe 100 million tonnes of coal per year for feedstock - and thus make the coal used for electricity generation a lot more expensive.

Little effect on diesel costs, but higher electricity bills.

Hey hey SamuM,

It's as if they are trying to consciously perpetuate a world view that suits their dogma

That is exactly right, it cannot be put more precisely. The MSM is not consciously spewing out garbage that suits their dogma, but it is as if they are. There are several structural reasons that have driven news media to report in such an obviously flawed way.

The first is advertising and the profit motive. The MSM is a for profit business and it makes it's money from advertising, not subscriptions. That means that the product they sell is the audience, we are that audience, not the content. MSM produces an audience, us, and then sells it to advertisers who are looking to sell their own products, again to us.

This drives the MSM to create content that produces ratings which takes the focus off investigative journalism. Well researched pieces into complicated matters are boring, boring is bad for ratings. Juicy celebrity scandals and cheap sentimental tripe are the antithesis of news; it is mindless entertainment, this is good for ratings.

The advertising link also drives the MSM to produce a higher quality audience which is inversely correlated with high quality news. A high quality audience is receptive to advertising. The audience needs to be put in the mood to buy product. Critical thought is bad for advertising as is unpleasant news, it puts the audience in the wrong state of mind to buy things.

The second things is deregulation with particular emphasis on mergers. Fewer players has created more homogeneous news. The massive consolidation of news outlets in the USA has lead to a thinning of the costly support staff, investigative journalists, and an increase in free press releases from government, industry, and politicians being broadcast as if it were news. This helps the bottom line quite a bit, but it is undesirable for us consumers, urr... I mean citizens.

Lastly self censorship thins the heard of responsible journalists. Dedicated journalists who are committed to a free and open press are expensive to keep on the payroll and they don't drive ratings, thus they never get promoted while pundits and hacks rise through the ranks in direct proportion to the showiness of their show. People who want to make a career of it adapt to the environment, people who want to make a difference find something else to do.

There are some other factors, but I think that covers it pretty well. As a corollary, politicians are driven away from boring and responsible positions and toward smart sound bites and flashy slogans. It's the system that we have built that creates these results, if we want different results then we need to build a different system.

Sorry for the lengthy post but a sound bite was insufficient for this involved and complicated issue.

-Tim

Peak oil and global warming are not the problem, they are the result. The problem is a collective action problem and an inability to make good long term plans

So, I assume that was your positive-looking scenario-
What's your middle and negative one?
Cheers from Munich..

I completely agree.

But you left out one troublesome little thing and that could be a wave of resentment leading to a serious rise in the BNP. I do not doubt that they know they need economic hardship to make serious headway.

This is a very possible scenario as people will ultimately feel betrayed by the Major parties (Lab,Con, LibD) - Especially in England. Scotland at least for now has a more civilised form of Nationalism.

If that kicks off in England, it will very very bad.

On another point, the only way that BERRs prices can come even close is if demand destruction and conservation is so great that it gets beneath the depletion curve.

Euan;

I think of this as the "Argentina Scenario".

What happens when your debts are over 100% of GDP, you no longer export anything of value, you are dependant on imports of food and energy to survive, and a crisis then leads people to abandon your country as an investment destination?

What is the pound worth when nobody wants to invest in Britain anymore?

thx Euan, scary visions you relay here.

This BERR report how does that correspond to the good-intentions and seemingly awareness of the All Party Parliamentary Group on Peak Oil and Gas, with their own web-page and all : http://www.appgopo.org.uk/

It seems like the authorities in UK is suffering from a severe attack of cognitive dissonance , any reflections ? Are BERR aware of something called "APPGOPO" and what it's purpose is ?

Burgandy, by 2010 I'd say full blown recession and chaos. Trade balance so bad that the pound is in free fall - the only glimmer of hope here is that we join the € - likely at parity of worse. Unemployment significantly higher, wide spread strikes as workers can no longer afford food and electricity and gas and fuel. Memories of holidays in Spain will fade as a large tranche of the population working in public services and the poorly paid part of our service economy struggle to survive.

That's only two years away.

The inertia of the UK economic & social system is immense, so surely this huge change in just two years is unlikely?

Five or ten - maybe.

Euan, you are a serious poster / observer in the energy field ... if two years pass without Mad Max arriving then the opposition will claim that your opinions are worthless.

"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." -
-- Bill Gates

Hmmm.... Some of the nuclear plants are already mysteriously making unscheduled shutdowns. Hinckley, which provides upto 16% of the Grid's power, went down for some reason the other day. Keeping all the power plants running may not be quite as easy as it seems (especially when there's profits to be taken into consideration).

IIRC, if it wasn't for the availability of imported electricity from France, Britain would already be suffering periodic power shortages. More pressure on the Trade Balance.

It seems that the various problems (finance, energy and climate change) are bifurcating into a myriad of interconnecting problems. All attempts to solve the individual problems and their offspring seem to cause further bifurcation. It's like civilisation has caught a virus which is multiplying chaotically through out its system.

Time for an Oil Drum report on the likelihood of electricity blackouts in the UK in the coming winter.

Euan, I share your frustration. But like you I'm not interested in moaning about the stupidity of the government - I want to change it's course. And these UEP figures, hopelessly optimistic as they are, give us a tool to influence them.

Have they revised their existing policies to take the latest projections into account? Judging from the news on airport expansion today, have they b*llocks. But we can now encourage the government to reassess their policies in the face of their own evidence.

We might bemoan the fact, but many people in power are still unwilling to seriously consider the possibility of peak oil. However, it's harder for them to ignore their own figures.

I would encourage a two-pronged approach. By all means we should argue with BERR to make future price forecasts more realistic. But at the same time we can take the current UEP to, for example, the DfT, our MP or the media and ask "what do these projections do to the demand forecast in the 2003 aviation white paper?". [Answer: Fuhgeddaboudit] And that's an example we can repeat for dozens of policies.

We're not going to persuade the government of peak oil overnight; you know better than I do that this is a war of attrition. In this context the UEP is a weapon, and it's becoming more powerful every year. Don't just try to fix it - use it.

I changed Stupidity to Idiocracy, before you were able to reply :-)

I agree with some of your takes here, but the BERR report uptop is "not of this world". It is steaming-fresh as of may 2008 and we are approaching $150 for oil and they dream of $ 105 in 2030 .

There is something VERY WRONG with this report and I'm out of words .... TOD's readers know it, but Joe-average does not...

If Euan's reply just upthread here http://europe.theoildrum.com/node/4248#comment-374106 bear any validity .... then what to call the actions of the UK government, et al ?

Recently, I saw the following article by Martin Wolf, the FT's chief economics commentator:

Why Britain has run out of luck

...
Everybody should calm down. What is looming ahead will be tougher than the continuous expansion the UK has been used to over the past 16 years. But this is not the end of the world.

Sir John Gieve, the Bank of England's deputy governor for financial stability, put the points well in a recent speech.* First, he noted how unexpectedly good performance has been. Second, he pointed out that the UK, like the rest of the world, is being affected by two global cycles: the commodity cycle and the financial cycle. It has to weather these storms.
...
If the outcome is indeed even close to this, the current policy framework will have proved its worth. It is not in good times that a regime shows its value, but in bad ones. The examination is now. Panic is the sure way to fail. The British must resist this most destructive of emotions.

I had an email debate with him two years ago and warned him about what was about to happen to energy. I wrote to him again and pointed out that "luck" had very little to do with this and that it was all really pretty obvious.

Here was his reply:

I remember your argument well. You are an energy fundamentalist.

I don't think it is very important in this case. If running a deficit on energy were a catastrophe, Japan and Germany would have imploded long since.

Martin Wolf

I replied that I was an "energy fundamentalist" if that means a person who believes in the laws of thermodynamics.

My point is that this illustrates that until these learned gentlemen spend many months hungry and cold, they will not "get it". The young will simply shove them aside (at best) and leave them to their own devices.

Perhaps someone can change my username to EnergyFundamentalist?

Clever-Stupid is quite a common malaise.

"you can be very smart and yet believe quite a lot of dumb things".Exactly.George Mobus,on his blog "Question Everything" has dubbed modern man Homo Caladus(clever) rather than Homo Sapiens(wise).Apt distinction.Daniel Goleman's "Emotional Intelligence" is still worth a read.

Not only is oil infinite, but the world including all natural resources are infinite.

Let me quote from George Reisman's masterpiece 'Capitalism' (page 63). This book has been called 'most rigorous and relentless case for laissez-faire capitalism' and 'a magnum opus on the nature of capitalism'. So it should have something deep and profound to say on the subject, I think we all agree on that:

"The potential for economic progress is in no way limited by any fundamental lack of natural resources...

Nor is there any fundamental scarcity of energy in the world. More energy is discharged in a single thunderstorm than mankind produces in an entire year...

Because the supply of resource provided by nature is one and the same with the supply of matter and energy, the supply of economically useable natural resources is capable of virtually limitless increase. It increases as man expands his knowledge of and physical power over the world and universe." [emphasis in original]

So there, you see : human ingenuity and technology can provide limitless energy and matter. No problem! The more people there are, the more inventors there are! The more need there is, the higher incentive there is to invent new energy sources. Free markets will solve ALL problems. All. Forever.

Besides, who knows what the laws of physics will be in the 100 years. Maybe that EROEI stuff won't matter at all?

< / end sarcanol >

Rooooooone, if you take their high forecast of $85 / barrel in 2010. It won't surprise me if this is factored into treasury models for growth and inflation.

I would not bet against you!

I am in the process of drafting a post for kveldssong based upon BP SR 2008, which i consider to give a new heading;

"May oil, nat gas and coal consumption within EU have peaked?"

Looking on reserve figures and development in net exports, short answer is YES!

I'll translate it and adapt it for posting on TOD E. The outlook for long periods of future oil at US$85/bbl are bleak, but what do I know I am not a public servant with the all the inside information and state of the art data.

Trust me Carolus...I wotchit everyday. My boss engineer is a woman. But, sadly, only one out of many dozens of male engineers. She does fight for (and gets) her share of the spotlight. We don't have a lot of females in the oil patch but from my veiw point they tend to be a little sharper than the males. But I suspects that's only because it's required to survive/excell) in this arena.

After 30 years as a consultant in the oil patch I've learned to respect everyone's opinion...especially those signing my invoices.

Hey logger...Some of us geo's actually have three 21 inchers to work with...xplaines why we work with the door closed sometimes.

You working on the holiday like me?