UK firms urged to wake up to peak oil risk

UK business leaders were today urged to undertake an assessment of the risks posed by the so-called peak oil phenomenon and join in efforts to lobby the government to take the threat more seriously, following the publication yesterday warning global oil supplies could peak within five years.

The report from the newly-formed Peak Oil Group – a coalition of eight UK firms including Scottish and Southern Energy, Solarcentury, and transport giants, FirstGroup, Stagecoach and Virgin – warned the threat posed to the world economy by global oil supplies peaking is now more urgent than that presented by climate change and terrorism.

Based on two newly commissioned studies of future oil production from Chris Skrebowski, consulting editor of Petroleum Review, and oil giant Shell, the report concludes that oil supplies look likely to peak between 2011 and 2015 and then decline steadily or even collapse leading to soaring oil prices.

Speaking to BusinessGreen.com, Jeremy Leggett, chairman of Solarcentury and a long term Peak Oil campaigner, said that while the risks presented by climate change remained huge, the threat posed by peak oil was more immediate.

"We need to move away from oil at a rate of five to 10 per cent a year, and if producers stop exporting, which is possible, we may have to move faster still," he warned. "Businesses are already acting because of climate change, but this is an issue where we all need to act together so we are looking to government for leadership."

The UK government maintains that global proven reserves can meet rising demand until at least 2030, but the Peak Oil Group insists there is growing evidence that reserves have been routinely overstated and that demand could outstrip supply far sooner than expected.

Leggett accepted there was widespread disagreement across the energy industry on when peak oil will occur, but argued that that uncertainty made it all the more vital for businesses to be aware of the potential risks.

"Our report is about applying the precautionary principle and the conclusion is that the liklihood is peak oil is far closer than expected," he said. " Businesses should be looking at the issue as part of straight forward responsible risk assessment – if questions are not being asked by non-executive chairmen about this they should be."
He added that the Peak Oil Group was looking to attract new members to step up pressure on the government to respond to the issue.

The report came as the International Energy Agency (IEA) sought to distance itself from leaked documents suggesting that it believes oil production is falling faster than expected.

Earlier this week The Financial Times reported on a draft of the Agency's World Energy Outlook, which claimed global production will fall at an annual rate of 9.1 per cent without an increase in investment.

The paper quoted the draft report as saying there was a need for a " significant increase in future investments just to maintain the current level of production".

However, the IEA quickly moved to distance itself from the document insisting it appeared to be based on an early version of the draft and that "the numbers in the article can be misleading and should not be quoted or considered to be official IEA results".

However, the report will add to fears that supplies are becoming increasingly constrained as dwindling reserves and difficulty in finding funding for fresh exploration projects take effect.