1. Research Homework.
The last steam trains (burning coal) stopped being used on Britain’s general railway network.
Nuclear energy first came online.
North Sea gas first cam on line.

2. The traditional sources of energy: spatial variation
Oil

3. 3

4. Oil consumption by world region 1981-20064

5. Distribution of proven oil reserves 1986, 1996 and 20065

6. Answer the following questions using p259-261 of text.
Which area of the world has experienced the largest increase in consumption?
Why do you think this is?
2. What is meant by the term proved oil reserves?
3. What is meant by the term reserves to production ratio?
4. Copy figure 7.8 into books – showing the reserves to production ratio in 2007. 6

7. %

8. Recent price rises
Prices rose from $10 a barrel in 1998 to more than $65 in 2005 – petrol prices. Oct 2005 over £1 per litre for first time. Now increasingly volatile in prices.
Prices of oil effects almost all other products and activities – examples?
Recession – global economy could not ride out the substantial rise in oil prices.
Current high price situation due to rising demand – means prices are more likely to remain high – susceptible to substantial fluctuations in prices.

9. Why has there been an increase in oil prices?
Increase in demand – growth in demand from China, India and USA – emerging economies such as India and China subsidise oil which encourages consumption.
Insufficient investment for exploration and development over last 2 decades – low prices did not provide enough incentive for investment.
Problems in Middle East – Iraq – terrorist attacks and slow pace of reconstruction after the war.
Governments stocking up on oil to guard against disruptions to supply.
Impact of hurricanes.
Limited US refining capacity – US refineries are ageing.
Lack of spare oil production capacity – Saudi Arabia has maintained significant amount of spare capacity to prevent global supply problems – this spare capacity declined to 20-year low.

10. USA and China
USA consumes ¼ global oil but has only 2.5% of proven reserves. Of the 20 million barrels a day consumed in the US, 25% is used for transportation.
Oil efficiency of US vehicles is at a 20 year low – a result of complacency in the period of low energy prices.
US high decency on oil leaves it vulnerable to supply shocks. – what does this mean?
How could you decrease the demand for oil in the US?

11. Oil Imports

12. Why is the prediction of peak oil production so important?
Why is the prediction of when peak oil production will occur vary so widely?

13. Homework
Background reading – read through Waugh p about finite energy sources.