Lloyd's of London issued a report two weeks ago warning that businesses must take our peak oil problems seriously. The report predicts oil prices above $200 per barrel by 2013, and it warns businesses to take action now or face "expensive and potentially catastrophic consequences."
News that the world's largest insurance market sees significant risks in the problem of peak oil was reported in the UK media, but I did not see (and have not been able to find) a single mention of it in the mainstream US media.
If the US media doesn't cover the story, does that mean the story isn't real? Even if the story comes from a reputable organization such as Lloyd's of London? What is going on here?
The problem is that "peak oil" is a very expensive story to develop and report. Our media prefer to report on "events" that they can simply "cover" and comment upon. For example, the media spent very little time or effort on the risks of offshore drilling or corrupt and ineffective government regulators before the BP Deepwater Horizon catastrophe happened. And you can bet that they will pay only passing attention to the complicated environmental consequences of that spill now that oil slicks on the surface are evaporating (no more photos of oil soaked pelicans) and the underwater video stream no longer shows oil gushing from a broken pipe.
Peak oil is not so dramatic as an oil spill, and its consequences are only felt over a period of years or decades. It is not the end of oil. It is simply the end of increasing oil reserves and the start of declining oil reserves.
As Lloyd's of London warns, however, peak oil will will be very disruptive over the coming decade or so. As reserves start decreasing instead of increasing, supplies will tighten and prices will rise. That will happen even in a weak economy. And as demand grows dramatically in developing markets, prices will rise dramatically.
It does not take an economics degree to understand that demand will grow dramatically in the coming decade. Billions of families in China, India, and other growing economies want more cars and SUVs just like the American dream. That's why, even in a Great Recession, GM is already selling more vehicles in China than it sells in the US. As the economy improves, China alone will put 2 or 3 times as many vehicles on the road as are on the road in the US today. Plus billions of people in China, India, and other developing countries would love to have lawnmowers, pickup trucks, ATVs, buses, recreational vehicles, air travel, and ocean cruises. Plus pharmaceuticals, plastics, cosmetics, and thousands of other products that contain petroleum by-products. Plus more factories and industrial plants to make all these oil-derived and oil-consuming products.
All of this dramatically increasing oil demand will occur as the accessible oil reserves start declining.
Now if only we could figure out a way to put that on streaming video.