Running on...

The 'peak oil' debate - are we or are we not about to reach the limit of our global capacity to extract oil from the ground, and what does this mean? - rumbles on without any sign of a resolution.

Peak oil proponents, like US investment banker Matthew Simmons, assert that most of the accessible reserves of oil will be drilled out within ten to fifteen years, and that the global economy - and particularly gasoline-dependent countries like the USA - risk decades of economic and social upheaval as they try to adjust to a less oil-thirsty lifestyle. Many disagree strongly. Some respected commentators, like former Shell chief economist turned senior UK politician Vince Cable, believe that the case has been overstated and that there is plenty of oil still in the ground - but point out that we risk becoming increasingly dependent either on supplies either from unstable neighourhoods such as Iraq, or from 'unconventional' - and expensive - sources like the tar sands in western Canada

And others still say that all of this still misses the point – that regardless of reserves in the ground, norms, expectations and regulations are shifting rapidly towards an assumption of lower oil usage. It’s quite possible that as people start to perceive the upside of this shift, lower usage will follow. As Alcatel-Lucent chairman Ben Verwaayen pointed out at BSR last week – the move to a sustainable economy is going to change our lives more than the Internet. We shouldn’t assume the old expectations will hold.

The lack of any emerging consensus in the peak oil debate is borne out in our public opinion data. When we asked people in 23 countries last year whether the world will 'continually produce more oil' or not, 47% agreed and 42% disagreed. But the public, at least, seems to take a relaxed view of how we might cope with declining oil production - 64% agree that their country can generate enough energy from renewable sources to replace coal, oil - and nuclear - in 20 years.

Whether this is overly optimistic is an issue partially addressed by an interesting new report from the UK Energy Research Council, which looks to have moved the debate forward. Yes, they concede, there may still be large reserves of conventional oil still available. But technical limitations mean they are unlikely to be exploited quickly enough to compensate for the decline in the 'mature' fields - and we may see production peak anyway before 2020. The push for renewables and greater fuel efficiency in climate change policy will help - but there will also be a 'strong incentive' to exploit high carbon non-conventional fuels such as liquefied coal, with potentially disastrous environmental consequences. And they warn that the ongoing volatility of oil prices - which spiked again this week amid economic uncertainty - remains a major disincentive to investment in the sort of alternative energy strategies that the public confidently seem to expect.

Looks like the peak oil debate has a while to run yet.