- Why Just (sic) Stop Oil will win Archived Message
Posted by Keith-264
on June 6, 2023, 10:45 pm
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https://consciousnessofsheep.co.uk/2023/06/01/why-just-stop-oil-will-win/ Just Stop Oil are the latest in a long line of single-issue campaign groups to take an Underpants Gnomes approach to politics. Phase one, apparently, is to have a load of upper-class white kids make a nuisance of themselves by throwing orange paint at things. Phase three is the UK ending its use of oil entirely. As in the South Park episode, phase two has yet to be revealed. The billionaire-funded group is an offshoot of Extinction Rebellion, and as the name suggests, they have just one aim; to see the UK stop using oil entirely. Although, tellingly, the one thing the group seem determine to avoid disrupting is the flow of oil from Britain’s handful of remaining oil refineries… something which would serve to emphasise just how dependent a complex industrial economy like the UK is upon a steady flow of oil and oil products. For the most part, opposition to Just Stop Oil has focussed on the disruptive nature of their protests, which involve either blocking roads or disrupting the sporting events enjoyed by people who are largely powerless to do anything about energy policy. Although perhaps the hope is that if they piss-off enough ordinary people, they will go out and vote for politicians who want to ban oil. But even in the unlikely event that people respond in this way, the bigger problem is not that the political class doesn’t listen, but that the political class has already consumed rather too much of the Just Stop Oil Kool-Aid. Indeed, the man being touted as Britain’s next Prime Minister has pledged to make a rapid transition to the utopian net zero, including a pledge to end any further oil and gas extraction in the North Sea. It is this which has spurred some detractors to point to the impossibility of ending our use of oil unless the aim is to plunge us into an apocalyptic deep green dark age. As Henry Hill at CapX puts it: “There are some deep Greens who truly believe in that deeply misanthropic objective. There is also the slightly more fashionable ‘degrowth’ movement, which could row in behind the idea so long as they didn’t think too hard about the consequences. “But outside those circles, it’s rightly seen as nonsense. One doesn’t have to be a climate change denier, or even oppose huge investment in renewable energy generation and other new technologies, to accept that we live in a machine civilisation that more or less runs on fossil fuels and will do so for some time to come… “Trying to brute-force modern society off fossil fuels before adequate alternatives are brought on-stream is a recipe for economic disaster; nobody who complains about the cost of living crisis or the impact of government spending cuts has any business dallying with such an idea.” Hill makes the point that the current combination of political commitments and gaping holes in the infrastructure required for the net zero project leaves the UK facing a series of dangerous cliff edges: “This generation of politicians have set 2035 as the deadline for sweeping changes, from getting the National Grid to Net Zero to banning gas boilers and stopping sales of new petrol and diesel-powered cars; yet as James McSweeney has detailed, actual planning for the cliff-edges that would create is patchy or non-existent. “A simple thought experiment suffices: think about this country’s track record on major infrastructure projects, and then try to estimate the odds that we will have a comprehensive network of road charging points in place in just over ten years – let alone the additional grid capacity as the burden of road traffic shifts en masse onto the electricity network. (Happily, the date is just far enough away that everyone involved in setting it will be safely removed from office by the time it arrives; they can then shake their heads sadly that those who came after them let them down so badly.)” This is likely the outline of a new counter-narrative to the neoliberal version of net zero – plausible because it neither denies the reality of climate change nor the desirability of deploying more non-renewable renewable energy-harvesting technologies (NRREHTs) but merely argues that without a credible phase two to the current Underpants Gnomes net zero project, it would be foolish to race ahead to phase three. And once one rejects the desirability of a rapid descent to a way of life similar to that enjoyed by the Anglo-Saxons – one which would be unable to support more than a million people – then the choice before us is whether to continue using local deposits of oil (and coal and gas) or whether we should risk making ourselves dependent on some of the world’s least savoury regimes… Hill plays the Putin card: “Were that [North Sea] pipeline to dry up (pun intended), all that would happen is that the United Kingdom’s energy needs would need to be met through more overseas imports – a double-whammy to the balance of trade, as a fair share of current domestic production is exported for plastics and manufacturing. “That means more money going to the many unsavoury regimes around the world which prop themselves up with oil and gas. That almost certainly includes Russia, too – we might not buy from them directly, but there’s arbitrage opportunities for less scrupulous countries to sell on Moscow’s exports with a more palatable flag (and a mark-up).” A similar rationale was used in support of the recent decision to open a new coal mine in Cumbria to supply coal to what remains of Britain’s steel industry. Insofar as we are going to continue to need coal for steel making, then using local supplies rather than shipping coal from around the world, is surely the lesser evil. Indeed, it may have become more of a necessity now that the political class has sanctioned the coal that the UK used to import from Kazakhstan. The same point is often made in support of shale gas fracking in the Bowland shale deposit in Northern England. Again, if the choice is between imported gas from Russia or domestic gas from Lancashire and Yorkshire, surely the latter is both environmentally and politically better. Moreover, in the wake of energy shortages and their impact on the cost-of-living, there is growing support for an economic imperative to restart domestic fossil fuel production – at least until NRREHTs can demonstrably provide the promised energy too cheap to meter. It is here though, that Just Stop Oil are going to win the argument. Because what many of the opponents of net zero within the political class fail to understand is that energy security is about more than the simple presence of a deposit or the uncosted supposed benefits of a technology. Keir Starmer – assuming he doesn’t repeat Neil Kinnock’s skilful snatching of defeat from the jaws of victory – may be kicking at an open door when it comes to new production in the North Sea. All of the big deposits have been in decline since the end of the last century. And Britain has been a net importer of oil and gas since 2005. For more than a decade, the North Sea oil and gas industry has required state subsidies to keep running. And with government net zero targets and ESG investment rules making further production prohibitively expensive, even supposedly “proven” reserves are increasingly unviable. The same applies to fracking. While there may be some shale gas left to be drilled beneath the UK, the tortured and broken strata beneath us likely means that most of the gas that was there escaped to the surface some 250 million years ago. In any case, what stopped the industry from taking off 15 years ago was the cost. That is, even if there was a viable reserve of shale gas, the price it would need to fetch would be more than anyone would be prepared to pay. The underlying issue with oil is about finding a balance between the oil price investors need to make further production worthwhile and the price businesses and consumers need in order to grow the economy. In periods where a stable “goldilocks” price range can be maintained – usually as a result of a cartel controlling production – the economy has grown. But periods of price volatility – as we face today – are associated with recession and depression: This is because – despite claims that we have entered a third, digital, stage of the industrial revolution – we remain in an oil age in which almost everything we depend upon for life support, along with the much wider array of consumer goods and services, is either made from or with oil, transported using oil, and/or maintained using oil. And this means that if sufficient low-cost oil cannot be produced, then consumption – by both businesses and households – must decline. And as consumption declines, so demand for oil falls, forcing the price down: Previous periods of volatility were eventually overcome as new abundant and relatively low-cost oil deposits were developed. Most recently, for example, the depression of the 1980s was ended by the development of oil fields off the North Alaskan slope, the North Sea and the Gulf of Mexico – ushering in the period of relative price stability which came to an end in 2005… the ensuing price increases paving the way for the 2008 crash and the depression which followed. The once-and-done oil glut created by the US shale bubble was somewhat different in that it was never profitable in the long-term. Although it was sold as a technological revolution, the technology for horizontal drilling and hydraulic fracturing had been known for decades – it was just too expensive while conventional oil was still abundant. The peak of global conventional oil production in 2005, together with the economy-wide low returns on financial investment caused by quantitative easing and near zero percent interest rates after 2008, created the conditions for investment in fracking – which, with oil prices seemingly stuck above $100 per barrel appeared to offer a far greater return on investment than could be found in safer government bonds or in stocks and shares. Fracking though, is its own worst enemy because of the fast rate of depletion. Almost all of the oil a well will produce comes in the first couple of years. So that, as money flowed in and fracking wells spread like mushrooms, so much new US oil entered the world market that – despite OPEC+ cutting production – it crashed the price back to an unsustainable $40 per barrel by 2015. During the pandemic lockdowns, much of what remained of the fracking industry was shut down and locked in. And with interest rates rising faster than at any time in modern history, there is little enthusiasm for funding drilling on anything like the scale needed to bring prices down toward $40 per barrel again; particularly in an environment in which governments and banks are actively promoting regulations which make further oil production ever harder. As Juliet Samuel at the Telegraph wrote in response to last year’s energy crisis in the UK: “The meeting goes like this: ‘We need you!’ say the politicians. The producers scratch their heads as they mull $20 billion, 20-year investments, and wonder whether, when the war is over and the green bandwagon rolls back into town, the politicians will still sound so sweet on them. ‘Your green targets still say we need to shut down by 2030,’ they point out. To which Europe says: ‘Well, of course. Fossil fuels are evil!’” Suppose though that the growing economic fallout from oil too expensive for the wider economy to bear, was to finally jolt the political and financial elites into a self-interested volte-face. Perhaps, contrary to the Labour Party’s recent policy announcement, ongoing economic depression and growing political unrest will oblige Kier Starmer – or quite possibly Rishi Sunak – to take the advice of critics like Henry Hill and wait until we have developed a renewable energy system which really can make oil obsolete. But there lies the killer blow. Because globally – and remember that the majority of Britain’s fossil fuel consumption takes place in Asia, where most of our goods are made – we have been consuming more than four barrels of oil for each new barrel the industry discovers. As Nick Owenn, Oliver Inderwildi and David King explain: “Until now, the widening gulf between discoveries and production can be almost entirely attributed to reduced discovery rates… In the near future, however, this rift could be driven further apart by forecasted declines in production from the relatively few fields that support supply… “According to the WEO 2008, the world’s 20 most productive fields were discovered in 1959 (IEA, 2008), which suggests that the chance of finding fields of similar size is remote.” The stark reality is that there are no more large and cheap oil deposits left to fill the gap between production and consumption. And what remains – like the chimerical Cambo field in the Northeast Atlantic – is too small and too difficult to be developed at a low enough price to relieve the pressure on an increasingly energy-starved economy. The government might, of course, cut some of the regulations and provide subsidies to get some new oil flowing. And we might attempt to mend fences with Mr Putin – although having stolen his bank reserves and blown up his pipeline, this is unlikely to happen anytime soon. Which brings us to the harsh reality that whether we like it or not, this time around there will not be any new oil to end the price volatility which is killing both investment and consumption. And whichever way you cut it, that means that Just Stop Oil will have their wishes granted far sooner than they appear to think… so well done them. But before the posh kids who front up Just Stop Oil, along with the billionaires who fund them, take their victory lap, they may want – as you may want, dear reader – to take a moment to look around the place you call your home and consider all of the material things around you, from the consumer goods to the food in your cupboard and from the clothes you are wearing to the cement, concrete and steel which prevents the walls and roof falling in on you. And then consider that none of those things can currently be made, transported, or maintained without fossil fuels. And perhaps more importantly, the critical infrastructure which you barely notice but which underpins your life support – electricity grids, road and rail networks, communications networks, water and sewage systems, etc. – also depend upon fossil fuels to operate and maintain. In the absence of a viable alternative system, Just Stop Oil’s inevitable “victory” will be pyrrhic, because the society it ushers in will not be the shiny green techno-utopia so beloved of the technocracy in which you will own nothing and be happy, but – without careful management – is likely to more resemble something akin to the economy of the 1820s… and with a collapse in population to match. |