Tasmanian Government’s Peak Oil Study

by David Hamilton

[This article refers to the Tasmanian government’s Oil Price Vulnerability Study, currently being conducted]


Why supply is an issue too.

The Background Info section of this web site explains that oil fields inevitably decline, and since peak discovery was in 1964, global oil supply will shortly enter an inevitable decline – the “second half of the Age of Oil”. Thus, reduced availability will be an absolute constraint: oil will simply become increasingly unavailable, regardless of price.

Put simply, the fact of peak oil means the end of business as usual.

What decline rate is expected?
The rate at which oil fields decline varies from field to field; in addition the companies operating the fields can usually reduce the rate of decline or delay the worst of the decline by spending money trying harder and harder to extract the diminishing amounts of oil left in the field. Predicting the global rate of decline of oil supply once we are clearly past the peak is therefore difficult. Most predictions seem to be in the range 2% to 4% per year, but higher predictions can be found. If the decline is a steady 2% per year, then oil supply will halve every 35 years; if it is a steady 5% per year (at the higher end of the predictions), then oil supply will halve every 14 years.

The time frame for the Tasmanian Oil Price Vulnerability Study is 20 years, so even at the low end of the range of predicted declines, the availability of oil will decrease significantly over the period, as we appear to be already past the absolute peak of oil production. There is a further issue the Oil Price Vulnerability Study is ignoring: whether the oil that is available will be distributed around the world in proportion to how it is currently used. For example, oil exporting countries could decide that they want to slow down the rate at which they export oil to allow a larger buffer for their own use over the years.

What are the implications for oil supply?
Putting these factors together, the outlook for oil supply over the next 20 years is at best a gradual decline of around 2% per year; at worst a larger decline will underlay a tumultuous period which includes rapid changes in availability and conflict over access to oil.

What difference does including supply issues make?
All of us make decisions based on assumptions about the future. When we move house, change jobs, buy cars, we are assuming (perhaps unconsciously) what the future will be like, and often part of that assumption relates to future availability of petroleum fuels: petrol, diesel and jet fuel. A person knowing that price rises were inevitable might decide that given present and expected income and living expenses they could manage the price rises with a slightly smaller or more efficient car, or a bit less travel – life would go on much as at present. If however a person knows that fuel will be subject to occasional severe shortages and will consistently become less available, then they are more likely to decide that the future will be significantly different from the past, and change the decisions they would otherwise make.

Nick Towle et al’s table, below, summarises the differences that considering supply as well as price makes:

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2 Responses to Tasmanian Government’s Peak Oil Study

  1. Chris Harries says:

    Excellent, David,

    It has taken organisations such as the International Energy Agency a decade to have the courage to insert ‘Peak Oil’ into its reporting and analysis. The vulnerability study is able to do this without hindering its main agenda – to examine who in Tasmania is most vulnerable to oil price rises.

  2. Greg says:

    Agree wholeheartedly. It’s extremely disturbing to note many Govt and big oil web sites talking about finding alternative energy sources to sustain growth. They just don’t get it! Capitalism Growth and Greed are not dead they are death. It’s suicide. One way or another we are all going to find out. Australians can have a smooth transition to the new world or armageddon. At the moment the Govt is choosing armageddon. One of the scariest thing to note is that in the last 100 years we have forgotten all our knowledge (non electrcial based) of the previous 4000 years. Who out there knows how to spin cotton or wool manually (I mean from the raw product). How to spin that into clothes? How to build an iron forge and smelter by hand? What about the myriad of fantastic mechanical devives that worked just fine until capitalism and growth intervened and decided we needed endless dumb electrcial products to do what a nechanical device did just fine. (and lasted forever) Abolsute lunacy and stupidity. We deserve to all be wiped out. It all; boils down to greed. profit is good everything else is bad.

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