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Peak oil and energy policy--a critique

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  • Dieter Helm
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    Abstract

    Energy policy has frequently been based upon assumptions about future oil prices. At the end of the 1970s it was assumed oil prices would continue to rise. Now a similar assumption pervades policy design. This article critiques the peak oil hypotheses which lie behind these forecasts and policy beliefs, and considers that, from a climate change perspective, the challenge is too much not too little fossil fuel reserves. The coming of shale gas, its fungibility with oil via the electrification of transport, along with technological advances in increasing the depletion rates of existing wells and new reserves, together undermine that assumption that rising oil prices will rapidly make renewable and other low-carbon technologies cost competitive without subsidies. The paper suggests indexing carbon prices to the oil price, infrastructure investment, strategic storage, and a focus on market failures provides a superior approach to energy policy rather than relying on forecasts of oil prices and picking winners. Copyright 2011, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1093/oxrep/grr003
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    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

    Volume (Year): 27 (2011)
    Issue (Month): 1 (Spring)
    Pages: 68-91

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    Handle: RePEc:oup:oxford:v:27:y:2011:i:1:p:68-91

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    Web page: http://oxrep.oupjournals.org/

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    Cited by:
    1. Wicker, Pamela & Becken, Susanne, 2013. "Conscientious vs. ambivalent consumers: Do concerns about energy availability and climate change influence consumer behaviour?," Ecological Economics, Elsevier, vol. 88(C), pages 41-48.
    2. Frank W. Geels, 2013. "The impact of the financial-economic crisis on sustainability transitions: Financial investment, governance and public discourse," WWWforEurope Working Papers series 39, WWWforEurope.
    3. McGlade, Christophe & Ekins, Paul, 2014. "Un-burnable oil: An examination of oil resource utilisation in a decarbonised energy system," Energy Policy, Elsevier, vol. 64(C), pages 102-112.
    4. Cameron Hepburn & Alex Bowen, 2012. "Prosperity with growth: Economic growth, climate change and environmental limits," Grantham Research Institute on Climate Change and the Environment Working Papers 93, Grantham Research Institute on Climate Change and the Environment.

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