Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years.

 

The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ­coming crisis could be even more serious than the credit crunch.

 

"The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.

 

"Our message to government and businesses is clear: act," he says in a foreword to a new report on the crisis. "Don't let the oil crunch catch us out in the way that the credit crunch did."

 

Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach.

 

Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called "peak oil" to avoid panic on the stock markets.

 

Ministers have until now refused to take predictions of oil droughts seriously, preferring to side with oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist there is nothing to worry about.

 

But there are signs this is about to change, according to Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak oil taskforce within the business community. "[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest."

 

The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. "The problem of peak oil remains."

 

Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis: "The next major supply constraint, along with spiking oil prices, will not occur until recession-hit demand grows to the point that it removes the current excess oil stocks and the large spare capacity held by Opec. However, once these are removed, possibly as early as 2012-13 and no later than 2014-15, oil prices are likely to spike, imperilling economic growth and causing economic dislocation."

 

Skrebowski believes that Britain is particularly vulnerable because it has gone from being a net exporter of oil, gas and coal to being an importer, and is becoming increasingly exposed to competition for supplies.

 

"This is likely to put pressure on the UK balance of payments and in a world of floating exchange rates is also likely to put downward pressure on the valuation of sterling. In other words, the positive benefits to the valuation of the pound as a petrocurrency are now eroding," he said.

 

The question of peak oil came to centre stage last November when a whistleblower told the Guardian the figures provided by the IEA – and used by the UK and US governments for much of their planning scenarios – were inaccurate.

 

"The IEA in 2005 was predicting that oil supplies could rise as high as 120m barrels a day by 2030, although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."

 

But Saudi Arabia launched a counter-strike at Davos, insisting the issue was overblown. "The concern about peak oil is behind us," said Khalid al-Falih, chief executive of Saudi Aramco.

 

Tony Hayward, the BP chief executive, downplayed fears about dwindling supplies in an interview with the Guardian last week.

 

http://www.guardian.co.uk/business/2010/feb/07/branson-warns-peak-oil-close

I don't think it's possible to predict when oil supplies will be exhausted or even if we're close yet. Allow traders to decide - they will shift prices smoothly to account for shortages or surpluses.

Peak oil will happen, I doubt in 5 years but in most of ours lifetimes, but instead of doing much about it we just continue using it and not finding viable alternatives, really great plan we have there.

Well there are scientists and researchers who are working around the clock to create alternatives to oil.

 

When you're talking about energy, the key thing is "energy density". The reason oil is so popular is that you get a ton of energy inside very little space - gasoline is explosive.

 

The same can't be said for something like solar, or wind, where you need a lot of equipment and land, working around the clock to collect a bit of energy. The density is lower, and therefore the profit margins are lower.

 

So what will happen at "peak oil" is this: gradually reserves will build as we run dry. The price of oil will slowly start to tick up, then more quickly, and finally it will shoot up. The poor and middle classes will be forced to use more public transportation. The price of real-estate in and around cities will skyrocket as it becomes untenable to live in distant rural areas.

 

Investors will naturally begin to shift their capital to the alternatives - businesses that specialize in solar and nuclear energy, battery manufacturers, electric car companies, etc. The stocks will take off, and anyone who's trying to start a company in these fields will be able to find investors without any government assistance. The transition will likely occur over a period of time, not all at once.

 

This isn't a doomsday scenario, it's just economics. When the car was invented, horse breeders and buggy manufacturers didn't freak out and society didn't collapse. There was a transition, built around price-signals.

I propose we just steal all of the Middle East's oil.

Nick I think Branson's right in some respects - we need to prepare. But the fact that we use what we have so inefficiently to begin with is the real problem. Either governments, or economics will solve it - it depends on whether we like the roller-coaster ride from markets without oversight, or (if it can be obtained) honest intelligent oversight that smooths out the transitions necessary to a green global economy.

 

Jay - Energy density is a problem to be solved in the transportation sector, true - but then there's always biodiesel, bio-oil, 2nd generation alcohol fuels, hydrogen in zeolites, lithium iron phosphate batteries, and other storage mediums.

Efforts are underway to double engine efficiency (from the 15-25%, to 30-50%), and halve the energy demands of autos (dynamic braking, superior aerodynamics, smart interiors, lighter, stronger car unibodies). 4X the current efficiency levels is already quite possible, but the effort to retool auto plants and general designs requires a strong impetus, as the costs to do so make auto makers reluctant to change.

Even Branson's aircraft could be redesigned for efficiency and solar - they could all be fitted with solar photovoltaic films on the upper surfaces and electric motor boosters, and hydorgen storage in earth-friendly mediums may be of sufficient energy density to provide a safe fuel alternative to petrol products. Generating hydrogen with solar via hydrolysis makes sense, given all the rooftops and unused space at airports. I could even see paving the tarmacs with solar power collecting systems - if designed properly, the area which could be generating electricity would be enormous, and the newer hydrogen storage mediums are safe, so therein lies one possibility..

(now there's an idea - why not pave the tarmac with translucent solids that have a rough exterior surface, like a well-designed bio-polymer. Beneath the surface could be solar cells encased in plastic films, and the area generating electricity would be quite large..)

My main worry isn't about transport so much, it's how heavily we rely on oil for farming, pesticides etc, when oil does run dry, which will be a slow and expensive process, I'm well aware it won't happen overnight, can the world really support 6bn people?, or more likely 8bn by the time it happens.

Since the industrial revolution we've seen huge population increase but I fear the world can't naturally support it.

I propose we just steal all of the Middle East's oil.

 

 

 

America is already working on that.

America is already working on that.

 

The irony is that the process of "securing" the middle east is actually costing us far more money than if we had simply purchased the oil from the terrorists and dictators.

It mightn't be ironic in the long-term when Western approved democracies turn in favourable trading to the US.

The irony is that the process of "securing" the middle east is actually costing us far more money than if we had simply purchased the oil from the terrorists and dictators.

 

For the people paying tax, but for the connected few they're making a killing off cheaper oil in Iraq and military contracts and weapons sales.

Statisticians have proved that we have about 30-40 years of oil supply left. Don't believe Branson too much, that guy can't even stand a straight face when he's talking. What a great appearance to be business tycoon.

The real problem is that while the oil begins to slowly taper off, demand is on the rise. Not really a problem, since improved efficiency will be able to stave off any real problems we might face from a real shortage for a long time - enough time to bring the changes we need. But can the global environment handle it?

Anyhow, beside the oil crunch, I also enjoy peanut-butter crunch and chocolate crunch. Which do you prefer?

Statisticians have proved that we have about 30-40 years of oil supply left. Don't believe Branson too much, that guy can't even stand a straight when he's talking. What a great appearance to be business tycoon.

 

It's not just about total supply but production capability. If we need 95,472,000 barrels/day but can only produce 90,472,000 then there is a problem and prices will greatly increase.

America is already working on that.

 

that was kinda my point lulz

that was kinda my point lulz

 

 

 

Oh, and when did you become American?

I wasn't aware I had to be American to comment.

there are scientists and researchers who are working around the clock to create alternatives to oil.

Well, there are lots of people out there trying to find the 'next big thing' people are willing to pay $$$$, yes.