Svenska Dagbladet Brännpunkt har nu publicerat mitt inlägg med rubriken “Vi måste anpassa oss till Peak Oil“.
We must adapt to Peak Oil
Already a decade ago there were early signs that oil production was reaching its maximum. The future will see dramatically less oil and we must adapt to this significantly faster that we have done so far. We need real leadership in industry and politics. So writes Kjell Aleklett, Professor of Physics.
Ten years ago, between 1 March and 20 May, I was given the opportunity to write four opinion pieces for Brännpunkt [the “Focal Point” column of the Swedish broadsheet newspaper, Svenska Dagbladet]. They were titled, Half Of The Crude Oil Is Gone, Oil Shortage Threatens Our Civilisation, Soon We Will Be In Putin’s Embrace and Gas Shortage will Force Us To Use Nuclear Energy. It was the future that was discussed and we can now ask what has happened in the ten years since then.
We can state that the International Energy Agency (IEA) last autumn admitted that the world had passed the point of maximal crude oil production in 2006. We can also state that the high oil price in 2008 was one of the causes of the deepest economic downturn the world has seen since the 1920s, that the North Stream pipeline under the Baltic Sea is now being built to deliver gas to the EU from Russia and that record numbers of nuclear reactors are now being planned worldwide. In the articles I noted that we could expect armed conflict in Iraq, Iran and Libya and it is to be regretted that I was correct in two of these cases. I also suggested that Göran Persson, then PM of Sweden, should address the Peak Oil issue which he did by forming an Oil Commission.
Back then in 2001 the price of crude oil was approximately $20 per barrel. The World Bank, Deutsche Bank, the EU, the IEA and several other organisations predicted that, in 2020, the price of oil would be around $25 per barrel. These prognoses resulted in the leading economists of that time declaring that I was describing a false reality. They thought that, if I was correct, then the future price of oil would be much higher than $25 per barrel and, of course, the prestigious institutions above could not be wrong. At this moment in the spring of 2011 the price of oil has parked itself above $100 per barrel.
My hope was that Swedish society would begin to adapt to a future that will be different to the reality that we have today. The necessary adaptations cannot occur overnight. Rather, expert opinion considers that at least 20 years are required for the required changes. As I see it, the adaptations cannot happen unless we have clear leadership in industry and politics.
In our political system where we choose a new leadership for our nation every four years it can be difficult to go to the polls on an issue that reaches 20 years into the future. That means that our future lies principally in the hands of our industrial leaders – those whose responsibility it is to see that today’s industries are adapting so as to remain profitable in 20 years and can continue to provide the employment opportunities that are the driving force in Swedish society. We can have no childcare, schools, health system or aged care if our industry cannot deliver new products in the future.
Some industry leaders have taken up the Peak Oil issue and one whom I will name is Leif Johansson, the former CEO of Volvo Trucks and the recently elected chairperson of the board of Ericsson. He made Volvo AB the first company in the world to officially raise Peak Oil as one of the guiding issues for the company’s development.
In September 2006 company heads from all over the world gathered in Gothenburg and I was given the opportunity to hold a presentation on Peak Oil for them. In the latest issue of the magazine Chamber of Commerce there is an article on Peak Oil and Leif Johansson was given an opportunity to express an opinion, “We are very aware of Kjell’s research. Since our products currently primarily use diesel, Peak Oil is a core issue for us. I have no doubt that access to oil will decrease in future”.
The role that Leif Johansson now has as the chairperson for Ericsson is important for the future of Swedish industry. My research group at Uppsala University has, in collaboration with personnel from Ericsson, studied how Peak Oil will affect Ericsson under its current structure. The effects are surprisingly large and I anticipate that Leif Johansson will introduce Peak Oil as one of the guiding issues for the future development of Ericsson. The rest of Swedish industry should follow Johansson’s lead. I am convinced that such a change will be decisive for our nation’s future.
For the last five years I have tried to get our Minister for Industry and Energy Maud Olofsson (C), former Minister for Infrastructure Åsa Torstensson (C) and Minister for the Environment Andreas Carlgren (C) interested in Peak Oil but I must confess that I have failed.
At the recent Sustainability Day held by the environmental directors of the industry on 14 April I met Andreas Carlgren and made a new attempt to arouse his interest. It is commonly asserted that Sweden is the world’s leader in reducing oil consumption since we have taken this down by 48% since 1970. It is true that we no longer use oil to generate electricity but, instead, use nuclear energy. We no longer heat our homes with oil to the same extent as we did. Instead, bioenergy has become a large component of this heating. However, we continue to power personal and freight vehicles with oil and, since 1970, our oil use in transport has grown by 83%.
Andreas Carlgren should celebrate when he hears about Peak Oil since this means that our oil use can never become as great as the UN’s International Panel on Climate Change, the IPCC, has stated. All the possible means that are discussed for reducing oil consumption will, ultimately, become reality one way or another. I usually say that Peak Oil is an environment minister’s best friend because the adaptations that enviroment ministers suggest are usually disliked by finance ministers but now Nature will have her way regardless of what finance minister’s think.
By coincidence, last week I met the Minister for Finance’s oil analysts and was disappointed to discover that they use the IEA’s World Energy Outlook report as the basis for their assessments. In WEO 2004 the IEA projected that world oil production in 2030 would be 121 million barrels per day (Mb/d). I made an analysis that showed that that prediction was pure fantasy. In 2006 the IEA revised their number for 2030 down to 116 Mb/d. This was still inconsistent with reality and in 2008 they revised the 2030 production number down again to 106 Mb/d. My research group then decided to publish an article that was subjected to peer-review and that showed that the IEA was still exaggerating future oil production by 25%. Last autumn the IEA revised its 2030 production prediction down to 96 Mb/d.
In six years the IEA has reduced its future projection for oil production by the equivalent of two and a half times the current production of Saudi Arabia. But not even that is enough. In 2030 oil production will be around 75 Mb/d and it is this change that necessitates the visionary leadership that Leif Johansson has shown.
On 3 May I have been invited to give a presentation at a symposium on Peak Oil in the EU Parliament and I hope, of course, that it will contribute to a revision of the EU’s energy policy. In ten years it will be too late to act.
Professor of Physics, Global Energy Systems, Uppsala University
President of ASPO International (Association for the Study of Peak Oil & Gas)