Views on commodities and energy
Branson’s Virgin Group gets into peak oil
Dire predictions tend to grab the attention – especially when an international celebrity lends a voice.
A report released in Britain this week with the unpromising title — the UK’s Industry Taskforce on Peak Oil & Energy Security – might have found only a specialised readership, but for the inclusion of Richard Branson’s Virgin Group in the six-member task force.
(The others were Arup, Foster & Partners, Scottish and Southern Energy, Solarcentury and Stagecoach Group.)
As it was the warning that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years was splashed across the press.
Advocates of the peak oil supply theory have long argued world oil supply is nearing a peak from which it will decline, leading to skyrocketing prices. Some of them have reckoned the peak could be as early as this year.
They have had publicity in the past, but not quite on the Branson scale.
So far, the other side of the peak debate has yet to find celebrity backing, although it is quietly earning more adherents, who are asking whether demand rather than supply will be the first to run out as climate change policies change energy consumption habits.
The Paris-based International Energy Agency, which advises 28 governments including the UK — said on Thursday oil demand, rather than supply, looks to have peaked in the developed world. If true, that would ease any strain on supplies that may develop in future and is a more reassuring message – provided of course you don’t own or work at an oil refinery in Europe or you’re not a major oil exporting country.
So who is right? Time will tell, but future expectations for the oil price do not yet suggest extreme concern about supply.
Investors expect the price of crude to trade at $95 a barrel in December 2018. That is around $20 more than the present level, but still some way short of the record high reached in 2008 near $150