By Chris Welby, Good Energy’s Commercial Director

Peak oil used to be about when the oil runs out, and as new reserves are discovered, it was a problem for the future.  However, today’s argument is not about the oil running out, but where the inflexible demand for oil exceeds supply, and that, some experts predict, could be very, very soon.

There is, we are told plenty of oil to extract, there is no shortage of oil.  However, as the situation in the Gulf of Mexico shows, getting it out, is getting more and more difficult and risky.  Nimbys  may rally against the visual intrusion of wind turbines, but I am sure the good people along the coast of Louisiana and Florida would happily swap their problem for a few visually intrusive wind turbines. Incidentally, the cost of offshore wind and tidal energy is negligible compared to the cost of oil extraction, both financially and environmentally.

The main problem with oil lies in the demand for it, and its inflexibility.  To understand it, look at it at a micro level.  Could any of us remove oil from our lives, without significant investment?  I for example, need a car to get to work (there’s no reliable public transport where I live) and this car uses oil.  To reduce my oil usage, I could invest several thousand pounds on a more efficient car.  (although my car is fairly efficient already), or move closer to work, which would be even more expensive.  The same applies to many of us.  We may not like it, but if the cost of fuel doubled tomorrow, we would moan like crazy, but few of us would have any option but to stump up the extra cost, and cut some other area of spending.  We are hooked on oil, with no real alternative.  Now add in the millions of people in India and China who are becoming car owners, it will not be long before demand outstrips supply.  Sure, the price of oil will rise, but it will not reduce demand significantly unless an alternative is available.

For our own sanity, we must move to alternatives, and soon.  The world of transportation is oil dependant.  It’s ironic that the nation most addicted to oil, the US, cannot see how its own demand for oil is partly to blame for the disaster in the Gulf of Mexico. BPis merely seeking to provide what the citizens of main street USA desire, to drive gas guzzling vehicles. Our friends in the States must share the blame for the fact that BP has to drill in deep water in the first place.  If they didn’t need as much oil, this disaster may never have occurred. President Obama mentioned it in his Oval Office address this week, but it was hardly a call to arms.

BP has been asked to put aside $20bn (£18bn).  Of course the true cost to the environment is incalculable, but if that money, and the money spent searching for more oil in ever riskier environments was spent on developing alternatives to oil, then would that not be money much better spent?  For example, the UK Government has announced it is spending just £11M (less than 1% of the BP clean up fund) on creating 50,000 electric car charging points, and offering Nissan just £20M to help develop the Nissan Leaf.  Imagine what £18bn could do in moving the UK away from fossil fuel transport if this British company was investing it here rather than paying the Americans to clean up the a mess caused  in part by their thirst for Oil

It is also in our economic interest.  As peak oil hits, then the money we pay will go into the coffers of those countries with oil.  That will affect our balance of trade, our ability to compete and to remain topical, our ability to pay off the huge national debt we incurred bailing out the banks.

Peak oil, will hurt us sooner or later if we ignore it.  We need to use the Deepwater Horizon as a trumpet call and spend what money we have not on searching for more oil, but finding alternatives….and fast.