As it now admits, BP “did not have the tools” to contain a deepwater oil leak. Its failure with that risk must now raise questions about its approach to other risks. Top of the list must be the threat that global oil production will fall sooner than generally forecast, ambushing oil-dependent economies with a rapidly opening gap between supply and demand. The approach of the point at which global oil supplies reach an apex, “peak oil” as it is often known, worries growing numbers of people. But, until now, BP has poured scorn on the worriers, encouraging the oil industry's effort to reassure society about peak oil. The disaster in the Gulf of Mexico casts doubt on the viability of the deepwater production on which industry forecasts depend.
Every year BP publishes a report that is effectively a risk assessment on peak oil arriving prematurely. Its Annual Statistical Review of World Energy, due out today, routinely states that there are about 40 years of proved oil reserves, that advances in technology will enable much more to be found and produced, that rising oil prices can finance the necessary exploration and infrastructure, and that global oil supply can go on rising for decades. Every year, peak-oil worriers say they doubt the Opec oil producers' reserve statistics that are echoed in BP's review, that technology can only slow depletion not reverse it, that rising oil prices do not help when it takes so many years to extract new oil from increasingly exotic locations and that global supply is heading for an imminent fall.
BP's disaster has mired a regional economy, hammered the company's share price and dragged down the FTSE 100. Yet failure with the peak-oil risk assessment would render such wreckage insignificant. Leaders of the companies in the UK's Industry Taskforce on Peak Oil and Energy Security (ITPOES) – Arup, SSE, Solarcentury, Stagecoach and Virgin – argue that premature peak oil would be quite as bad as the credit crunch. In the foreword to our report published in February we urged the UK government to “act now . . . don't let the oil crunch catch us out in the way the credit crunch did”.