by Michael Smith (Veshengro)
First the UK's economy must break free of its dependence on oil in order to make a sustainable recovery from the current credit crunch.
This is the warning issued by University of Liverpool expert Simon Snowden, who said the world is heading for a "supply plateau".
Mr Snowden, who recently addressed the All-Party Parliamentary Group on Peak Oil and Gas, said that the accelerating cost of oil marks the approach of a peak in oil production, and that demand will soon outstrip supply to the extent where world economies will begin to fail.
The price of oil has, in the past 12 months, risen from just above $50 a barrel to a record of nearly $139 a barrel recently.
A recent report, however, from Goldman Sachs mentions that the possibility of $150 to $200 a barrel is increasingly likely in the next six to 24 months.
Mr Snowden said that, unnless we completely cut our dependence on oil, we could see years of almost non-existent growth for the UK economy. Any recovery will be short-lived and at ever lower levels.
He further stated that the cost of goods will rise even more sharply and the economy could stagnate into a recession for several years.
In order to overcome this dependence on oil we must invest – heavily – in alternative forms of energy and transport. Changing our economy in such a fundamental way, however, will take years, and therefore, in this sense, a recession is inevitable.
While this may be so it must be a definite requirement that the elderly and the poor, as well as the farming industry, be safeguarded and protected from fuel poverty.
In the United States we begin to see farmers to bring back draft animals for use in the fields as they can no longer afford to run their fuel-guzzling tractors and other machinery.
The great paradox is that the UK exports oil and gas and then imports it again rather than to keep the oil that we produce. This does not make sense. Someone said once, when I questioned him on this, that it would be too difficult to store the oil and especially the gas until needed. Why?
Is the truth not more like that the Treasury gets a nice sum from the export of British oil and gas and that that really is why we do not keep our own, home-grown, so to speak, oil and gas. It is much more beneficial for the Treasury and therefore the government's coffers to sell the oil and gas and then to have the petrochemical companies import oil and gas from elsewhere.
It has nothing to do with being difficult to store, I am sure. In the same way that we destroyed our coal mines in this country – thanks Mrs. Thatcher – and import cheap coal that is low grade and very high in sulfur content. British coal was and is high quality coal that burned well and with today's technology could be the world leader in clean coal power stations and such like. However, most of the collieries will be finished for ever as they cannot even be reopened because they were permitted to be flooded and the gas was allowed to build up in there.
© M Smith (Veshengro), June 2008
Recession is 'inevitable' as long as UK economy is dependent on oil
