New Scientist

High oil prices are an opportunity for change

25 June 2008

LAST week's meeting in Jeddah of oil producers and consumers, government ministers and oil companies produced little of value. The extra oil Saudi Arabia agreed to pump has been more or less wiped out by production lost through rebel attacks on installations in Nigeria. For the unlucky motorist, that means the price of fuel will stay high.

Get used to it. Today's oil price may have been stoked up by speculators and could even fall for a while, but the long-term trend is clear. Depending on who you talk to we have either passed the point called "peak oil" - after which the rate it can be extracted begins an inexorable fall - or we are close to it (see "Kicking the oil habit" and "Final Warming"). Past that point, the price can only go up, unless demand falls dramatically.

So we are presented with a choice: use the incentive created by high oil prices to push our transport systems towards low-carbon technologies, or remain at the mercy of speculators, saboteurs and the economic uncertainty that comes with high energy prices.

There are other reasons to switch from oil. Our addiction to the stuff is fuelling global warming. Tailpipe CO2 accounts for some 17 per cent of the world's energy-related emissions and is set to nearly double by 2050, but we're doing little to reduce it. We know from opinion polls that people want cleaner cars. We also know that many countries, especially the US, are concerned about their over-reliance on imported oil.

Yet nothing much is changing because hybrid, hydrogen and electric cars are more expensive than petrol and diesel models, and/or they are not as fast or they don't travel as far between top-ups. The selection on offer is poor, and for some of these technologies the essential infrastructure is non-existent. So how do we remove these obstacles?

Some would argue that the market will do the job for us - and in a small way that is already happening. Over the past decade, while General Motors was selling Hummers and cancelling its EV1 electric car, Toyota has sold more than a million Prius hybrids. Now GM has announced plans to begin making a plug-in hybrid, the Chevrolet Volt.

New companies are appearing, selling small, light cars that look surprisingly exciting. California-based Tesla Motors produces an electric roadster that boasts acceleration of 0 to 60 miles per hour in 3.9 seconds, and can go 250 kilometres between charges with a running cost of less than 1 US cent per kilometre.

We need more, better and cheaper alternatives like this - and quickly. That means pushing the markets. Cutting government subsidies that favour oil companies - estimated to be worth $250 billion a year in the US - would be one way to do this. Another is to introduce a cap-and-trade system on carbon emissions to help price carbon-based fuels out of the market. Europe has such a system - though it does not yet apply to the transport sector, and the political realities mean it is unlikely to be extended any time soon.

California has come up with another solution: in 1990 it told manufacturers they would be allowed to sell cars in the state only if a percentage of them were zero-emission vehicles. The rules have been watered down since, but the principle is sound. Carrots can work as well as sticks. Prizes to encourage technological innovation are back in fashion. The Automotive X-Prize is offering $10 million to the best car capable of travelling 100 miles on a gallon of fuel (42.5 kilometres per litre).

One powerful player unlikely to be overjoyed at a switch away from oil is the oil industry itself. Some 70 per cent of its output goes on transport, and if that figure falls substantially its profits are likely to go the same way. Shell and BP, among others, are investing in solar energy and other green technologies but, like the car companies, they may need an extra push to help them to diversify. Democratic presidential candidate Barack Obama has suggested a windfall tax on oil companies, but perhaps a more constructive approach would be to compel the companies to invest this money in clean technologies.

Such measures may seem extraordinary, but we live in an extraordinary time. For a century, the industrial world has been built on oil. Now, an oil-based future looks precarious. Preparing for a world without oil is a colossal task, for which we will need a commitment to change and to take bold action.