Energy is the lifeblood of modern societies.
Amory B. Lovins
In the past two centuries, the risk we contemplated related to energy was the volatility of the price.
This was easily, if not always inexpensively, met by buying futures or hedges against the
price changing within a set period of time. This approach has two serious flaws: it means
you do not benefit from favourable price changes; and, it only works in the short term.
Moving forward, we have more serious issues to contemplate regarding energy risks,
especially for remote communities.
We have passed the point of Peak Oil for conventional oil, worldwide. This means that someday, oil
will be too expensive to use for its common applications today. In effect, it will stop flowing.
For remote communities, it will stop coming earlier than in the connected, industrialized world.
That is because it will actually cost more in remote locations, and richer parts of the world
will pay more than remote communties will be able to afford. That's the
dwindling supply issue.
Suppply disruptions are a somewhat different issue. Due to
mechanical failures, company failures, geopolitical tensions or infrastructure issues, some days
supplies just don't show up when expected or desired.
Of course, at some point oil will likely just become unaffordable. That could be related to
dwindling supplies as mentioned above, but it could also be a function of
governments no longer able to willing to subsidize energy prices,
or the imposition of a carbon tax to help mitigate climate change,
or at least try to slow it down. Finally, it is possible that the world's citizens may finally
wake up and simply force a massive reduction in the use of carbon-based fossil fuels, but more
likely climate change will force the issue directly and physically.
We also have to consider the consequences of the energy system decisions we make. In the
industiralized world, we have largely come to understand the risks associated with using
coal as a key energy source, and we are rapidly moving away from it. While oil and natural
gas avoid some of the issues related to coal, they share many (damaging ecosystems which
support life on a broad scale, destroying food sources or rendering them unsafe, making
surface and ground water unfit to drink, and accelerting climate change. Until recent years
we had to balance this against the benefits we derived from oil and natural gas use. Today,
with the cost of renewable energy for heat and electricity and energy storage falling below
the cost of new oil production and refining, and as we now have the technology to support a
rapid transition to powering transportation with electric drive and biofuels, we no longer
have to accept the risks which come with extreme oil extraction (offshore drilling, heavy oils,
TEDx video which considers the impacts of mining bitumen in the Canadian boreal forest.