A couple of days ago my latest purchase from Amazon, Resilient Cities by Peter Newman,Timothy Beatley and Heather Boyer, arrived. I’m only part way through it so far, but it certainly makes for an interesting read. Basically, the book looks at how cities should be altered to ensure they can best respond to Peak Oil and Climate Change over the next few decades – how they can become resilient to the significant changes that face us in the future. I have not quite got into the details of the solutions, but the problems are quite starkly outlined on page 32:
Climate change imperatives suggest reductions in greenhouse gases of at least 50 percent by 2050, from around 9GT of CO2 to around 4.5 GT of CO2 are needed worldwide.
Oil production is predicted to decline to approximately 15 billion barrels a year by 2050; a 50 percent reduction. Remarkably the two agenda of climate change and peak oil overlap precisely: 50 percent less by 2050.
One is demand driven, the other is supply driven. Either way, we have to find a way to reduce the need for these fuels. For oil, it will mean designing cities in which we drive 25 to 50 percent less. Trucking will carry 25 to 50 percent less freight and aviation will have even fewer planes. For our buildings it will mean 25 to 50 percent less fuel will be necessary for heating and cooling. Is this possible? What technologies will be needed to help make this happen? How will we rethink our cities to meet these goals?
In my opinion it is transportation that is the biggest challenge here. Most electricity in New Zealand is generated from renewables, and we certainly have the options – solar, wind, geothermal and tidal – to generate 100% of our electricity from renewables in the future. So that kind of covers the ‘buildings’ issue. Sure, we have Plug-in Hybrid Electric Vehicles (PHEVs) as a potential saviour in the future, but as this book states: “it will take 20 years to move a transport system into even a small proprtion of such vehicles and power systems.” What are we going to do in the meanwhile?
Leaving aside climate change for a bit, given the significance of the anticipated drop in oil production it’s interesting to have a little dig into what the government thinks of peak oil and how we might best respond to the challenges it presents. I guess the first step is to see what the government anticipates fuel prices to be over the next few years, as spiking fuel prices will be the most obvious and telling effect of peak oil and declining oil production. Helpfully, Treasury has included predictions of oil prices for the next few years in its Budget Economic and Fiscal Update. Page 10 of that document outlines shift in oil prices over the last few months – generally a recovery from the plunge that they took when the global economy turned to shit late last year:
Rudimentary signs of stability have also been evident in global markets. Share markets have recovered from their low point in early March and in some cases have recouped their 2009 losses, but remain well down on previous peaks. Commodity prices have also risen, with the Commodity Research Bureau futures index up 20% from its low in early March. West Texas Intermediate oil prices have increased from their low of US$34/barrel in February to just under US$60/barrel in early May and world prices for New Zealand’s major commodity exports rose in spot markets in March and April 2009. Financial markets have also shown some signs of stabilisation with a narrowing of spreads between interbank and effective policy rates, particularly in the US; safe-haven demand for US dollar-denominated assets has declined, and – combined with higher commodity prices – this has led to the appreciation of the New Zealand dollar from below US 50 cents in early March to above US 60 cents in early May.
Oil prices – The average price of West Texas Intermediate (WTI) oil on a quarterly basis peaked at US$124/barrel in the June quarter of 2008 but had declined to US$43/barrel by the March 2009 quarter as demand fell with the slowing of the world economy. Based on the average futures prices for WTI oil in March 2009, it is assumed that the price of oil will gradually increase over time, reaching US$60/barrel by the end of 2010 and around US$68/barrel by the end of the forecast period. Over most of the forecast period the oil price assumption contained in the Budget Forecasts is approximately 20% below that assumed in the December Forecasts.
So according to Treasury, prices should increase slowly to reach around $US68 a barrel by 2013. But hold on, they’re currently $US4 a barrel more than that! In the middle of a recession! With demand significantly lower than it’s been for a number of years! As Homer Simpson would say: “D’oh”.
Keep in mind, this is New Zealand’s official prediction of oil prices over the next four years. This is the information that our response to peak oil will be officially based upon. This is the information that our transportation policies and their resilience to peak oil will be based upon (that explains a lot actually). This is pathetic.