Later On

A blog written for those whose interests more or less match mine.

Shell CEO puts Peak Oil at 2015

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Time flies:

In a rare moment of candor, Jeroen van der Veer, the chief executive of Royal Dutch Shell, acknowledged what many have long considered a forgone conclusion: the end of the oil era is almost upon us, and sooner than you might think. The Oil Drum retrieved an e-mail sent to all Shell employees in which the CEO admitted the obvious (emphasis ours):

“Regardless of which route we choose, the world’s current predicament limits our maneuvering room. We are experiencing a step-change in the growth rate of energy demand due to population growth and economic development, and Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.”

He went on to criticize the sluggish response by policymakers to the coming energy crisis:

“Taking the path of least resistance, policymakers pay little attention to curbing energy consumption – until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility. …

As calls for harmonization increase, policies converge across the globe. Cap-and-trade mechanisms that put a cost on industrial CO 2 emissions gain international acceptance. Rising CO2 prices accelerate innovation, spawning breakthroughs. A growing number of cars are powered by electricity and hydrogen, while industrial facilities are fitted with technology to capture CO2 and store it underground.

Against the backdrop of these two equally plausible scenarios, we will only know in a few years whether December’s Bali declaration on climate change was just rhetoric or the beginning of a global effort to counter it. Much will depend on how attitudes evolve in Beijing, Brussels, New Delhi and Washington.”

It is rare to hear such candid talk from an energy executive given that the future success of his business is predicated on the longterm availability of oil. His call for more investment in renewable sources of energy sounds prescient though many will likely dispute his assertion that only nuclear power will provide a stable, reliable solution to our energy needs. More controversial will surely be his statement that we will need to spend more money on accessing difficult-to-reach fossil fuels, such as the vast Canadian tar sand deposits and oil reserves from the Arctic.

The contrast he draws between what he views as the two likely energy scenarios that will likely come to pass – the “Blueprints” scenario vs. the “Scramble” scenario – also deserves mention:

“At Shell, we think the world will take one of two possible routes. The first, a scenario we call Scramble, resembles a race through a mountainous desert. Like an off-road rally, it promises excitement and fierce competition. However, the unintended consequence of “more haste” will often be “less speed” and many will crash along the way.

The alternative scenario, called Blueprints, has some false starts and develops like a cautious ride on a road that is still under construction. Whether we arrive safely at our destination depends on the discipline of the drivers and the ingenuity of all those involved in the construction effort. Technical innovation provides for excitement.”

Whether or not you agree with the substance of his views, it is well worth your time to read his e-mail in full. Alternatively, you can also listen to a brief discussion of his e-mail on American Public Media’s Marketplace program here. Even if peak oil arrives later, his comments and recommendations are well worth keeping in mind as we see the energy landscape change over the coming years.

Written by Leisureguy

27 January 2008 at 9:17 am

Posted in Business, Daily life, Government

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