Following on from Friday's posting on the uncertainty about how close we are to a peak in global oil production, I want to focus on a question I think is actually more important: However close we are to a peak--whether it is already here, or 5, 10, or even 20 years away--are we doing enough to prepare for the possibility of one? The short answer is no, but that doesn't mean we aren't doing anything. In fact, many of our strategies for addressing climate change and energy security also provide some insurance against the consequences of Peak Oil or its forerunner, a sustained period in which liquid fuel supply doesn't grow as fast as potential demand, and the oil-market discontinuity that would trigger.
On a basic level, oil is important for two main reasons. It is the source of most of our transportation fuels and many useful petrochemicals and lubricants, and it also accounts for 35% of the world's primary energy production. Preparing for a gap between oil supply and demand requires addressing both of these aspects of oil's value to the economy, and in that regard it dovetails neatly with the concerns about global warming and energy security that are prompting big changes in our energy policies.
For example, while improved energy efficiency is a primary strategy for countering climate change and reducing oil imports, it looks equally important in preparing for a future oil shortfall and price spike. Peak Oil worries could lend urgency to the debate over CAFE and appliance energy standards. At the same time, efforts to expand biofuels production and bridge electricity into transportation via plug-in hybrids and electric vehicles, though driven by emissions and energy security calculations, are also excellent prescriptions for mitigating Peak Oil's impact and even delaying its onset.
There are a few areas in which this one-size-fits-all logic fails. The conversion of solid and gaseous hydrocarbons into liquid fuels--CTL and GTL--looks quite useful from a Peak Oil perspective. Viewed through a climate change lens, however, it looks like an expensive diversion or downright counterproductive. And while natural gas has oddly fallen from favor with those most concerned about climate change, despite its relatively low CO2 emissions, improving our access to gas (imported and domestic) looks like another key leg of the energy security/Peak Oil axis. If Peak Oil is a significant risk, we would certainly not want to face it in the midst of an emerging natural gas crisis.
For me, all of this boils down to effective large-scale risk management. For the next decade Peak Oil remains a big uncertainty, not a given, but prudent planning must take it into account. Where it reinforces other concerns, it may prompt accelerated timetables. Where it conflicts, as on some aspects of climate change, we need a candid debate about which problem looms larger, and which consequences would be most damaging or costly. At a minimum, we should improve our monitoring capabilities, including the means of auditing global production and reserves data for all liquid fuels, not just the conventional oil on which most Peak Oil predictions are focused.