Oil crisis hits, what happens to the Irish transport network?

monument

If an oil crisis hits -- for what every reason -- what happens to the Irish transport network?

I remember hearing a large part of our reserves are in the UK.

Just how badly off would we be if major restrictions had to be put in place on use?

magicbastarder

reminds me of the story my dad used to tell, of when in the early 70s (i think 1973) when he got the call to get home (from dublin to north donegal) as fast as possible because his father was dying. and there was rationing at the pumps, and there was only a quarter of a tank in the car.

Del.Monte

The country would grind to a standstill as it did during previous crises including the 1981 tanker drivers strike, but hey let's keep building more roads.

ED E

Do the emergency services hold a stockpile?

end of the road

ED E wrote: »

Do the emergency services hold a stockpile?

i would hope so but this is ireland.

n97 mini

Del.Monte wrote: »

The country would grind to a standstill as it did during previous crises including the 1981 tanker drivers strike, but hey let's keep building more roads.

Ah yes. The army were called in and picked up some of the slack.

But back to the OP's question. I'd imagine it would just all be passed onto the consumer. EVs would probably see a boost in sales as wind constitutes a large part of electricity generation, so electricity prices wouldn't be as badly affected.

XPS_Zero

ED E wrote: »

Do the emergency services hold a stockpile?

We have only 31 days of oil reserve, physically actually here.

In theory it's 100 due to agreements abroad and reserves we have on order in the event of an emergency.

http://www.nora.ie/

Victor

Those stocks are based on normal usage. Expect extra controls, e.g. steep price increases, if disruption is expected to last more than a week. See what happened in the UK in the 1970s: https://en.wikipedia.org/wiki/Three-Day_Week and 1940s https://en.wikipedia.org/wiki/Winter_of_1946%E2%80%9347_in_the_United_Kingdom However, note that if daily supply is cut by 10% and needs to be supplemented, the 100 days supply would last 1,000 days.

n97 mini wrote: »

I'd imagine it would just all be passed onto the consumer.

Largely.

EVs would probably see a boost in sales

But presumably the demand would be increased elsewhere also. Output wouldn't match demand.

as wind constitutes a large part of electricity generation, so electricity prices wouldn't be as badly affected.

Energy is one big market, regardless of type. While your car can only run on diesel, a power station can run or gas or oil. The demand for gas you use for cooking or heating is in competition with the demand for gas for electricity generation and industry.

Domestic energy sources (wind, peat, gas) can supply perhaps 25-40% of electricity demand, some domestic heating demand, but very little of the transport energy demand.

Bray Head

A lot of Ireland's gold reserves are actually held in the Bank of England too.

Del.Monte

Bray Head wrote: »

A lot of Ireland's gold reserves are actually held in the Bank of England too.

I'd say that would take up a lot of space. :rolleyes:

http://www.independent.ie/irish-news/uk-bank-sits-on-a-pot-of-235m-in-irish-gold-28957757.html

Elemonator

monument wrote: »

If an oil crisis hits -- for what every reason -- what happens to the Irish transport network?

I remember hearing a large part of our reserves are in the UK.

Just how badly off would we be if major restrictions had to be put in place on use?

ED E wrote: »

Do the emergency services hold a stockpile?

There is a strategic oil stockpile in what was Whiddy Island oil facility. I don't think its for public transport, more so to keep the essential government, emergency and military functions running.

beauf

n97 mini wrote: »

Ah yes. The army were called in and picked up some of the slack....

I seem to remember queuing for petrol, and also using the army trucks as buses? Maybe thats my imagination.

Atlantic Dawn

We should buy a few hybrid buses from Wright Bus in NIRL for a start.

beauf

Again could be my faulty memory I seem to remember one of those programs on Cork Harbour that they get two delivers a week from tankers and its a big deal if they can't get into habour due to bad weather for more than a couple of days.

Del.Monte

beauf wrote: »

I seem to remember queuing for petrol, and also using the army trucks as buses? Maybe thats my imagination.

The army stood in with trucks for buses during a prolonged bus strike not during the tanker driver's strike.

When the tanker driver's were on strike people queued at filling stations whenever word went out that they had supplies. Engines were switched off and people pushed their cars in the queues - true fact.

beauf

I also seem to remember the army trucks in use during heavy snow, delivering bread an milk to shops. Also doing transport. Probably early 80's.

Atlantic Dawn

beauf wrote: »

I also seem to remember the army trucks in use during heavy snow, delivering bread an milk to shops. Also doing transport. Probably early 80's.

Yes might have been 83/84, I remember it, proper good snow for playing in, I had my fun, that's all the matters

GM228

XPS_Zero wrote: »

We have only 31 days of oil reserve, physically actually here.

In theory it's 100 due to agreements abroad and reserves we have on order in the event of an emergency.

http://www.nora.ie/

Under law we must hold at least 90 days of net imports or 61 days of consumption in emergency reserves.

This is an EU requirement.

monument

GM228 wrote: »

Under law we must hold at least 90 days of net imports or 61 days of consumption in emergency reserves.

This is an EU requirement.

Yes, and as the other poster pointed to -- we (somehow) get around this by in theory having some of our stockpile in the UK.

L1011

We don't have sufficient refinery capacity for our full usage in the first place - though some of the reserve is now refined product.

Bray Head

The ESRI did a paper in 2011 on the impact of a natural gas supply disruption on economic output. It would be quite staggering for Ireland.

Losing gas-fired electricity would cost 0.1 to 1.0 billion euro per day, depending on the time of week, the time of year, and rationing of electricity. Industry should be rationed before households to minimize economic losses, but current emergency protocols favour industry. If gas-fired electricity is unavailable for three months, the economic loss could be up to 80 billion euro, about half of Gross Domestic Product. Losing gas for heating too would add up to approximately 8 billion euro in economic losses. We also discuss some options to increase Ireland’s security of supply, and find that the cost is a small fraction of the avoided maximum damage.

Policymakers are rarely able to deal with low-probability, high-impact events. I would have thought that the banking crisis would have provided lessons, but I suspect not.

GM228

monument wrote: »

Yes, and as the other poster pointed to -- we (somehow) get around this by in theory having some of our stockpile in the UK.

We get around it as EU law does not require we physically hold that much oil, just that we have title to that much oil. We currently hold 90 days reserves and about 75% of those reserves in Ireland. They are held at Dublin, Cork (Whitegate Refinery), Whiddy Island, Foynes, Tarbert, Galway, Derry, and Kilroot.

The other 25% is held in the UK, Denmark, Holland and Spain under bi-lateral agreement.

L1011 wrote: »

We don't have sufficient refinery capacity for our full usage in the first place - though some of the reserve is now refined product.

Only refined products are held in reserve - petrol, diesel (motor Diesel or derv), gas oil, kerosene and jet fuel.

bk

Well it depends on what you mean by "oil crisis".

If you mean world wide that we suddenly run out of oil, that isn't going to happen in the short to medium term. Oil production is way up, while oil demand is decreasing year on year and looks likely to continue due to the increasing popularity if EV's. Thus why oil is currently at close to the cheapest it has ever been (in the international market, taking into account inflation, obviously not at the pump here).

In terms of a short term oil crisis, such as a strike etc. like we have had in the past, then I'd expect the impact would be less severe then it was in the past.

First off there would be no impact on electricity production. In the past some 25% of our electricity production came from oil, today it is somewhere around 0 to 1% (just the odd backup Diesel generator, no mainstream production). So electricity wouldn't be effected and by extension DART and Luas wouldn't be effected.

I would also expect that our emergency services and the various bus companies would be given first priority access to the emergency supplies.

So for the most part Dublin Bus etc. would continue to run and in fact would by flying into and out of town due to the lack of other traffic

I'd also expect that the government would try and bring in buses and coaches from abroad and try and get as many of the backup and older buses running to increase bus capacity and try and keep the country moving.

Of course it would be great for the owners of EV's who would now be flying in and out of town with so little traffic and a big smug smile on their face

Then you have the fact that at least some people can work from home today.

Of course it would still be very painful for some people, but in general it would have less impact then it would have in the past. Sort of similar to how the BE strike while of course painful for some individuals, on the whole had a lot less impact then some people expected.

In the long term it could have a positive impact, it would certainly change peoples views on EV's and they would likely be much more likely to buy one in the future.

Snickers Man

bk wrote: »

Well it depends on what you mean by "oil crisis".

If you mean world wide that we suddenly run out of oil, that isn't going to happen in the short to medium term. Oil production is way up, while oil demand is decreasing year on year and looks likely to continue due to the increasing popularity if EV's. Thus why oil is currently at close to the cheapest it has ever been (in the international market, taking into account inflation, obviously not at the pump here).

I can see a scenario within the next two to five years when oil prices, especially in Europe, will start to rise rapidly and significantly. But maybe I'm being a paranoid old conspiracy theorist.

So to shut me up at source/allay my fears, does anyone know how far into the future speculators estimate the price of oil? I understand there is a "futures" market where one can buy an option to purchase oil at a given price at some point in the future. Heavy users of oil, such as airlines, typically hedge their bets by taking out these options as an insurance against sudden unexpected price rises.

If the spot price rises above the price of their option, they call in their option when it matures and save a lot of money: if the spot price is less, they decline their option and buy on the open market.

Of course those selling options need to be able to predict to some degree of accuracy the likely price of oil in the future so that they don't get burned by having to sell oil at huge discounts to the market price.

So my questions:

How far into the future can organisations buy barrels of oil?
What is the projected price of oil in say 2, 3 or 4 years time, if indeed such prices are available?

A link to the most appropriate website would be more than sufficient as an answer

ED E

Oil for cars, trucks, planes, emergency services? Doesnt matter. Natural gas for heating/power, matters a bit.

Bunker fuel for ships, critical. If that becomes scarce (part of the same supply) we're all in real trouble.

Victor

Snickers Man wrote: »

So to shut me up at source/allay my fears, does anyone know how far into the future speculators estimate the price of oil?

I get the impression you can agree a contract direct with a supplier that will last years.

Speculators / hedging seems to be in the 6 months to 2 years band.

Note that to some degree there is an annual cycle with heavier oils preferred in (northern) winter and lighter oils preferred in summer. If there is a mild winter, this throws things out of whack.

bk

Snickers Man wrote: »

I can see a scenario within the next two to five years when oil prices, especially in Europe, will start to rise rapidly and significantly. But maybe I'm being a paranoid old conspiracy theorist.

While of course anything is possible, we could all be hit by a meteorite in the morning, but there is little evidence to support such a big increase.

Mostly it is down to various geo-political and technological reasons.

After the oil crisis of the 70's the US took certain steps to stabilise oil prices. Firstly they got militarily heavily involved in the middle east. I realise it mightn't seem it with Syria, ISIS, etc. but things are actually very stable in the middle east at the moment. Syria/ISIS has little or no effect on the ME's ability to pump oil and it gives the US a good excuse to keep a massive military presence in the region, which gives them a lot of power over the Saudi's etc.

As a result the ME's is pumping more oil then it ever has.

Relationships between the US and Iran have improved (but still icy) and now Iran is also pumping large quantities of oil.

Russia's economy is under great stress, due to economic embargoes and as a result they are also pumping as much oil as possible to keep the economy going.

Basically there is lots of competition and a lot of countries wanting to pump, thus there isn't much chance of anyone reducing output to try and bump up prices like they did in the 70's, if anyone does, the other countries will just pump more oil to take advantage of it.

The other factor is more advanced technology has opened up previously inaccessible oil deposits using fracking, oil shale fields and deep water. While these are more expensive to access, they do put a cap on the maximum price of a barrel of oil. If the Saudi's etc. were to stop pumping, then these come into play, yes oil would be more expensive, but it would still be available.

The other part to the story is that global demand for oil has been slowing and is expected to drop. Oil has almost been completely dropped from the production of electricity due to cheap coal and much cheaper gas and of course more wind and solar coming online.

Demand from vehicles is dropping due to more fuel efficient engines. EV's are expected to accelerate that, specially with the likes of China massively pushing EV's (all new bikes and buses there now most be EV etc.).

This is partly why the Saudi's/Russia/Iran are pumping like mad. They know that oil demand is dropping and will continue to drop and they need to now extract all the value they can from oil. No point holding onto it if it becomes worthless.

Of course we will still need some oil for plastics, aviation, etc. But 30 years from now, it is likely there will be few petrol/diesel cars left on the roads and demand is going to be way lower and they know it.

Of course prices will continue to go up and down, but the max is very much capped by the price of oil shale, etc. It is extremely unlikely we will be seeing any sort of 70's oil crisis again. The oil producers know it would just hasten the move to EV's etc. and the geo-political environment just doesn't exist for it any more.

patrickbrophy18

Something like the Coradia iLint springs to mind as it is fueled purely by hydrogen. Check the following YouTube video:

https://www.youtube.com/watch?v=O3bUE9uHkqM

So, it could be a possible (albeit eventual) replacement for the Intercity and Commuter fleet. The only difference would be the track gauge.

Snickers Man

bk wrote: »

While of course anything is possible, we could all be hit by a meteorite in the morning, but there is little evidence to support such a big increase.

Mostly it is down to various geo-political and technological reasons.

Well of course. And in the oil business, more than just about any other commodity business, "geo-political" issues have a huge say in the overall mechanics of supply and demand.

One of the most significant shifts in factors affecting "geo-political" pressures on oil prices has been the transition of America from a country dependent on oil imports to one now self sufficient in that commodity. Largely because of those technological reasons to which you referred. It also has large reserves of other fossil fuels, especially coal. It is now in a position to become, as many of its more excitable commentators call it "Energy dominant".

How do "energy dominant" countries exercise their dominance? By controlling the volume of their oil supplies and thereby causing the spot market to rise and/or fall according to their (the energy dominant country's) needs. As OPEC has done repeatedly since the Yom Kippur War of 1973.

The future price of crude oil has jumped in the past two weeks. On May 10, the date of my first post here, the June price of crude oil, according to a trading website was $45.88/bbl; on May 22 it had jumped to $50.33/bbl.

July had jumped from $46.27 to $50.67
August from 46.62 to 50.92
Further out in the year the jumps were less dramatic but all were up.

November was 47.48 on 10th; 52.45 on 22nd
December was 47.73; up to 51.56

May 2018 was 48.29; up to 51.49
May 2019 was 48.54; up to 50.88
May 2020 was 49.32; up to 51.09

Now I am no market trader and there may be some immediate reasons for such jumps on the futures market, but I will be keeping an eye on these Skibbereen Eagle-like, for the future.

Anyone with any better knowledge to allay my fears, well I'm here to learn as are most of us. But it seems to me that a new unholy alliance of oil producers is taking shape across the world. They include the US, Brexity Britain and probably Norway, Europe's largest indigenous oil supplier if you don't count Russia.

They don't include ANY members of the EU post March 2019 when the Union shrinks from 28 to 27 members and loses its major oil supplier. The American right has been saying for years that it has less and less in common with Europe with its welfare states and distaste for military spending. The price of oil is likely to become a major "geo political" weapon used against us.

Let's get those windfarms up and running FAST!!!

bk

Shrug, back in 2008 they were $156. Todays prices of $51 is pretty low.

Sure they may have gone up a little over the last two weeks, but nothing too shocking. They are a commodity after all and like any commodity they will go up and down, no one is arguing that.

The point is, even though it went up to $156 in 2008, that still wasn't an "oil crisis" as asked about in the original post. Sure oil was expensive in 2008, it meant people had to watch their spending, maybe cuts backs in other parts of their budget, stop unnecessary trips, maybe even think of buying more fuel efficient cars, but you could still easily buy oil, it was widely available, even though it had been the most expensive it had ever been!

So difficult, but not an "oil crisis" as mentioned in the thread title.

The Oil crisis of the 70's weren't really due to the cost of oil, they were due to the Middle Eastern members of OPEC not liking the US and the "West" backing Israel in the Yom Kippur War and the OPEC members putting an actual embargo on the supply of Oil to the West. You couldn't buy oil even if you had lots of money, it just wasn't available.

The geo-politcal circumstances for a similar oil embargo just aren't there today. As a result the US got way more involved in the Middle East and today the ME looks like the following:

- US has massive military bases and presence in Saudi Arabia, Kuwait, Jordan, Iraq, etc.
- US has just last week done a 100 billion arms deal with Saudi Arabia
- US has soldiers on the ground fighting wars in Iraq, Libya and Syria
- US has ongoing excellent relations with Israel

The US has vastly more influence over the ME now then it did in the 70's. The Saudis can barely sneeze now without US permission.

Then you have Saudi Arabia and Iran, in the 70's they were the two largest members of OPEC and very close. Today they are at each others throats, fighting pretty much a religious war of influence in Iraq and Syria via proxy forces. They won't be working together again, they would love to hurt each other by driving oil prices lower and the West now has somewhat better relationships with Iran and is happy to buy from them.

Back in the 70's there was no way you could buy oil from Russia, due to the Soviet Union and the cold war. Today, while relationships still aren't great with Russia, they are now part of the open market and happy to sell massive quantities of oil.

And then you have the technological changes, fracking, deep sea drilling, shale oil and also the reduction of oil usage in electrical generation and more fuel efficient car engines.

As for the idea of US/UK/Norway creating some sort of new Energy dominating organisation, that would actually be pretty great for us here in Ireland as we are right in the middle of them and have very friendly relationships with them all. Though I don't think any such thing exists.

It is absolutely true that the US has become energy independent and that it can use that power to manipulate markets. But again that is very different from an oil crisis.

Really the era of "oil crisis" is over IMO. Sure prices will bounce up and down like they do in any commodity market, but it won't have such a big impact as it did in the 70's. In fact I'd say that we are seeing the beginning of the end of "oil" dominating the world economy. 30 years from now, oil will just be another relatively unimportant commodity.

AngryLips

monument wrote: »

If an oil crisis hits -- for what every reason -- what happens to the Irish transport network?

The Healy-Raes will finally get their wish for a Dart to Kerry.

Snickers Man

bk wrote: »

The Oil crisis of the 70's weren't really due to the cost of oil, they were due to the Middle Eastern members of OPEC not liking the US and the "West" backing Israel in the Yom Kippur War and the OPEC members putting an actual embargo on the supply of Oil to the West. You couldn't buy oil even if you had lots of money, it just wasn't available.

The geo-politcal circumstances for a similar oil embargo just aren't there today.

As I remember (and I AM old enough) there were only actual embargos to one or two countries. I remember the Netherlands was one, for some reason For the rest, what the OPEC countries did, under the chairmanship of the unforgettably named Sheikh Yahmani, * was to cut production and thereby cause the price to soar. All for geopolitical reasons as you rightly say.

You reckon there aren't similar circumstances that could cause some price manipulation on the international oil markets by those countries who have their own large supplies? I hope you're right, because we ain't got none, or at least none worth talking about.

Just when the rabidly right-wing elements in the US commentariat are talking about "energy dominance" and the current US administration is in thrall to, and even represented in the cabinet by, leading oil companies (Secretary of State) and climate change skeptics (Environment Secretary) then you gotta fear something approaching the worst.

bk wrote: »

It is absolutely true that the US has become energy independent and that it can use that power to manipulate markets. But again that is very different from an oil crisis.

Really the era of "oil crisis" is over IMO. Sure prices will bounce up and down like they do in any commodity market, but it won't have such a big impact as it did in the 70's. In fact I'd say that we are seeing the beginning of the end of "oil" dominating the world economy. 30 years from now, oil will just be another relatively unimportant commodity.

Long term (30 plus year) I think you're right. In the short term, there is still a huge amount of leverage to be had from countries who have plentiful oil supplies. Especially if they gang up with other countries similarly endowed. I am sure the opportunities afforded the British by Brexit (or maybe even the inevitable consequences of same) will force them to cosy up even more to America and use oil prices as a lever against the EU to get their own way. And of course there's the whole shady Trump/Putin frenemy act.

Call me a paranoid conspiracy theorist but I think the less you need oil in the near future the better. (must renew my dublin bike card )

* Yes kids. There really was such a person. Or there is, I should say. He's still alive

bk

Snickers Man wrote: »

You reckon there aren't similar circumstances that could cause some price manipulation on the international oil markets by those countries who have their own large supplies?

Price manipulation, absolutely of course, there always has been and will be price manipulation.

But 70's style oil crisis, where you can't access oil at any cost, as asked about in the original post, then no, I don't see that.

Basically all the oil producing countries know that they have about 20 to 30 years to extract the maximum value from the resource. They know perfectly well that as EV's really start to take off in about 10 years, demand is going to start to slip and thus prices will plummet.

They will of course try and manipulate the market to try and get the maximum value, but they also know that time to do that is running out and they can't push such manipulation too far as it will just speed up the introduction of EV's. No point in not pumping now, because the same demand for it just wont be there in 20 to 30 years.

You should check out this really interesting video from Bloomberg about the effect of EV's on Oil:

https://www.bloomberg.com/features/2016-ev-oil-crisis/

Capt'n Midnight

patrickbrophy18 wrote: »

Something like the Coradia iLint springs to mind as it is fueled purely by hydrogen.

Hydrogen is only a way to store energy.

You still have to make it from some form of primary energy. It's not a solution in and of itself.



During WWII the Swiss used electric steam engines.
Think kettle elements powered by hydroelectric power


AFAIK Ships and power stations with steam turbines can be changed from fuel oil to running on a coal power suspended in water, you need an emulsifier or something.


Also remember we now have lots of unconventional oil. Shale oil, tar sands and stuff. This also means OPEC isn't as powerful as it was. One big problem for the Saudis is that they have lots of investments in the west. If energy costs are too high then it'll hurt their investments.


We can also make oil from coal and Hydrogen which could be produced from renewable energy. So very roughly , the long term price of oil shouldn't be more than four or five times it's current price because that's the price we could make alternative fuels for.