‘Paradoxically, the very worst outcome [for oil prices] might not be a sudden shock, but a milder recession. If this were to create some temporary spare oil production capacity by depressing demand, … the urgency of the need to prepare for the impending peak could easily be forced off the policy agenda…
As the global peak approaches and the market tightens, any sudden interruption of oil production could [then] spark the last oil shock.’
David Strahan (2007) — The Last Oil Shock (p. 177)
* * * * *
In early 2009, I described the dramatic rise and fall of the oil price associated with the financial crisis of 2008, and looked at the future oil price trends which might follow recovery through into 2010.
Two years on, economic uncertainty remains, and a return to growth is far from guaranteed. Yet across this time, the oil price has risen steadily. From a low of $40 in February 2009, Brent crude stands at well over $120 today.
The last time when the oil price was above $100, back in 2008, the economy was still booming. Three years later, during the long aftermath of the deepest global recession for eighty years, the oil price remains close to historic highs. How can this be possible?
The triple shock of a huge earthquake, a devastating tsunami and an unfolding nuclear accident rocked Japan in March, and my condolences go out to all the many thousands affected.
Luckily, none of this could never happen here in Britain. Or could it?
Despite public disquiet over the safety of the industry since Three Mile Island and Chernobyl, nuclear power has regained political favour in recent years.
Amidst desperately slow progress in investing in renewables to fill a looming energy gap in the UK, successive governments have presented nuclear as a clean, cheap and proven solution which also offers zero carbon emissions.
Faced with public concerns after Fukushima, ministers have maintained that the UK is unlike Japan because there are no appreciable seismic risks. We do have earthquakes, but mostly they are minor.
But low seismic risk falls far short of guaranteeing safety. The more important question is whether there are risks from geological or meteorological events which could threaten the safety of our existing and future nuclear power plants. And I’m afraid the answer is a resounding yes.
And so they’ve capped the well for now, although storms aren’t far away and the oil is still out there across the Gulf. I really hope your Florida beaches manage to avoid it.
Elsewhere around the coast it’s a mess, and although hurricanes might spread the oil, a silver lining from experience of the Braer oil spill off the Shetland Islands in the 1990s is that severe storms may finally help to dissipate the slick.
Deepwater drilling is challenging. High Pressure / High Temperature drilling is difficult.
Combining these operations into drilling HP/HT deepwater wells is new within the past decade, pushing the technological envelope while incorporating the difficulties of both.
Although vilified for his PR gaffes, finally Tony Hayward did get it exactly right in one of his pronouncements last month, when he said that the real problem is we just didn’t have the toolkit to deal with problems in this setting.
In that sense, the Deepwater Horizon, just like the Sea Gem or Piper Alpha, will be a disaster which changes the way we do things for ever more beyond.
As evening falls beneath the deepest black of a December northern sky, a thin veil of dark blue hangs streaked with vivid orange just above the pine trees.
The homeward rush hour in Inverness is a muted, half-hearted affair, and in minutes we’re sailing past the bright lights of the bridge towards the darkness of the Black Isle.
Half an hour ahead, the lights of Cromarty barely touch the depths of nightfall. The white houses of the Royal Burgh are hiding low against the shoreline.
There’s a menace to the silence now, faintly interrupted as it is by the bleak moanful sounds of grinding metal and hammering. Across the water, just half a mile offshore, the leviathans of the deep are waiting.
Here in the Cromarty Firth, oil rigs from around the world are waiting for the calmer seas of spring, wintering inshore through maintenance and upgrade programmes to equip them for ever deeper, more challenging drilling as our quest for oil expands.
My car was ten years old last week. As chance would have it, 100,000 miles came up on the same day. That’s the most miles of any car I’ve owned.
By European standards, it’s a middle of the road kind of vehicle. A 2000 Ford Focus with a 1.8 litre petrol engine, which has delivered 39.8 mpg over the life of the car.
The UK government launched a scrappage scheme last April, and extended it in September. My car qualifies. If I scrap the car, the government and dealer will each give me £1,000 off the full list price of any new vehicle I buy.
At first sight that’s good, but a new family car still costs £15,000. The cynic in me also noted that before the scrappage scheme began, dealers were offering discounts of £2,000 to drag buyers from the street. Those offers aren’t available within the scrappage scheme.
The result is that the taxpayer is writing a cheque for £2,000 to manufacturers for every new car sold, while the real savings to buyers are minimal. I’d be better off buying a one-year old model and saving £5,000 off the list price that way.
In addition to supporting the car industry, the scrappage scheme aims to offer environmental benefits by taking older, thirsty cars off the road and replacing them with modern, more fuel-efficient models. But does it?
My next car will be more fuel-efficient and likely smaller. I’ve seen a new Ford Fiesta Econetic claiming 76 mpg, and the equivalent Focus will do 66 mpg. Even a basic 2009 1.6 Ford Focus diesel gives 60 mpg. So is there a clear environmental case for scrapping my 10-year old car and buying a newer model?
June in Houston. It’s 99F outside as we wait an hour at immigration.
A glossy US arrival video is playing on a giant screen above our booth, but we have to wait an hour and offer all our fingerprints before we’re free to pass.
Welcome to America.
Obama’s America — but has it really changed?
The freeway towards the city looks just the same. A little less traffic perhaps.
Wide blue skies are yawning high above the endless sprawl beside the road. The downtown towers inch nearer across the final swoop of our 5,000 mile journey to reach The Loop.
In the hotel at last, I flop my bag and body down and switch on the TV. There’s a programme talking all about energy costs, and today’s phone-in prize is (quite remarkably) a free green audit of your home.
And it strikes me that I’ve never heard this stuff in Texas before.
All fresh and showered by sunset, we walk on Main Street to find a place to eat. It’s hotter than July this evening, but after ten hours in an aluminium tube we’re in no mood for air-conditioned civility. Some al fresco nachos, a cold beer and a simple plate of enchiladas are all we seek.
We find them at Cabo on Travis. A perfect terrace to catch the steamy breeze of sundown.
And then unexpectedly, outside the restaurant, we find surprise again. A parked Mini, with just the perfect bumper sticker. Actual Size.
Things have been slow around here, for a little while now, and in more ways than one.
I’ve had less time for running, and less still for writing. I’ve been unfit, distracted and slow.
And yet — there’s been real progress, too, hidden not far beneath the surface.
Our 95,000 visitors this year may have found only 22 new posts to read, but it’s been a momentous year of change, both in London and abroad.
The great crash formed the backdrop to the year, but it was in America that destiny was decided.
A changing political landscape marked the 2008 US election and the new opportunities that brings, for America and the whole world beyond.
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