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Oil is a finite resource and it is predicted that the production of oil will decline in the near future. This phenomenon is likely to challenge the current global economic system such that a world-wide economic depression is likely, with the Scottish economy being tied to that fate.

There are historical examples of positive and negative impacts on population health from economic shocks dependent on the prevalent mindset of the day. It is possible that adoption of pre-emptive plans based on the principles of equity and sustainability could reap a health dividend in the arenas of obesity, inequality and well-being if actions to avoid the worst excesses of the oil scarcity phenomenon are taken quickly.

Oil scarcity and peak oil

One of the most fundamental determinants of health is the economy. Health improvements are associated with increased personal income as well as with the public spending that can be facilitated by economic growth. However, the converse is also true in that economic downturns have been associated with deterioration in population health and increases in mortality.

The Scottish economy has consistently grown for many years but faces new challenges in the years ahead, including that of increasing oil scarcity and associated oil price rises. This increasing scarcity results from a predicted future global phenomenon known as ‘peak oil’, where the rate of oil production goes into decline following the extraction of approximately half of the discovered reserves (Figure 1) (1). As with all finite resources, oil is expected to become increasingly expensive as more is extracted. The second half of any oil field is always more expensive to extract and the flow of oil usually decreases. The rate of discovery of new oil resources has declined since the late 1960s and it is now implausible that this rate will increase to a level that would significantly increase oil reserves such that scarcity could be avoided. To make matters worse, the world’s demand for oil continues to increase. This increase in scarcity would not be such a problem if substitute energy sources were readily available, but there are no current examples, nor any promising developments, that suggest that this is the case.

Figure 1: Global oil discovery and production curves and future predictions

Global oil discovery and production curves and future predictions

Adapted from Campbell, 2005

It has been suggested that biofuels may be a possible substitute energy source, but the required land mass to achieve this is prohibitive. This can be illustrated by considering how fossil fuels such as oil were laid down in the earth’s crust and comparing that with how biofuels are produced. Fossil fuels are actually thousands of years of solar energy of an area captured as plants and organisms and concentrated by the process of fossilisation. In contrast, biofuels represent the captured solar energy of a land area over a single year. Although this is a renewable resource, in that the plants (such as sugar cane) can be grown on the same land year after year, the relative concentration of energy between biofuels and fossil fuels is so low that there is not sufficient land area to produce both biofuels and food for the global population (2). This is in addition to the problem with additional CO2 emissions associated with clearing forest for the planting of biofuels (3). A similar set of problems exists for each of the other possible substitute fuels such that there does not appear to be adequate scope for replacement (4).

The links between the economy and health

The recent growth in the Scottish economy is built upon several components with the export of financial services, tourism and retail expansion playing a prominent part. It is, therefore, an economy built upon global trade and can be expected to gain from international economic growth and suffer with international economic slowdowns (5). It is also the case that the globalisation of the international economy has been facilitated by the availability of cheap transport for trade. The coming gap between the demand for oil and its supply challenges this system and the economic processes underpinning it.

The precedent for the peak oil phenomenon is the Yom Kippur war and the associated OPEC oil production restrictions during the 1970s. At that time, conflict between Israel, Syria and Egypt led to sympathetic States in the Arab-dominated OPEC cartel restricting oil production to raise oil prices. A 10% drop in global production led to a greater than threefold increase in the price of oil (6). This had two main knock-on effects relevant to Scotland (and much of Western Europe). First, the rise in oil prices meant that the costs of production and transport became very expensive, leading to a balance of payments crisis, devaluation and deindustrialisation. Second, the higher price of oil meant that previously uneconomic oil reserves became economic and this promoted the development of the North Sea as an oilfield. In addition, the global recycling of petrodollars led to unwise investments in developing countries which, as a consequence, accumulated a large burden of debt. In short, much of our current debt crisis in poor countries has its origins in an oil crisis.

The rise in oil prices resulting from peak oil will however be different. No new oil reserves of substantial size will be found due to a rise in price. It is only the already discovered oil reserves of poor quality (such as the Alberta oil sands) that will be brought into production (importantly, these reserves will have a higher impact on greenhouse gases than higher quality reserves). Furthermore, the rise in price will be inexorable because production will decline year on year. It is not unreasonable therefore, to expect a reversal in many aspects of the globalised economic system such that aggregate global consumption of goods and services decreases markedly on the back of a global economic depression.

This is an important possibility to consider for future health improvement. An economic downturn of this scale was seen in the early 1990s in the former USSR, following the collapse of the communist system and rapid adoption of the free market (7). Life expectancy across the former Soviet states dropped by around five years at the same time as continued increases were seen in Western Europe (Figure 2).

Figure 2: Life expectancy at age 15 for selected European states

Life expectancy at age 15 for selected European states

Adapted from European HFA database

It is important to note that the economic shock in the former USSR was highly negative on the health of its population. This contrasts with the generally positive population health effect of rationing and the reduced personal income seen during the Second World War in the UK (excluding the direct effect of wartime deaths and injuries). During the war economic production was switched almost entirely from goods for domestic consumption to the efforts of war at a time when large sections of the workforce were abroad fighting or engaged at home in wartime efforts. Admittedly, there is a confusion of effects: food rationing was controlled to provide a healthy diet, GDP grew during the war by around 30%, each individual in society became valued and given a role and there was a greatly enhanced sense of community and collectivity (8). However, this part of our history provides the basis for optimism as we face the imminent threat of peak oil. If the UK could reduce personal income and consumption and yet generate a sense of community and improve general health during war it is possible to use many of the same principles to reduce obesity, inequalities and improve well-being and a sense of community in the face of oil scarcity. This is synergistic with the need for a significant reduction in greenhouse gas emissions to avoid the worst excesses of climate change and could represent a new wave of health improvement for the 21st century (9).

Actions to reap the health dividend or lose the plot

This is the crux: the sustainability of future oil supplies provides both a threat and opportunity to health improvement through the health effects of the global economy. If an unplanned and market-orientated approach to increasing scarcity is taken, history suggests that the economy will collapse and that the population will suffer increasing inequalities, declining overall health and increasing competition for resources as seen over a short period in the former USSR (10). However, developing a planned approach to oil scarcity could yield a series of positive health effects despite declining consumption rates as seen during the Second World War. This would require that we deal with the economic susceptibilities in the national industrial structure, transport network, food supply chain and urban landscape prior to the rapid rise in prices. In turn, this would be mediated by: an eradication of the obesogenic environment that is based on vehicular transport and a profit-driven food industry; a redistribution of wealth through the rationing of remaining oil supplies (known as carbon rationing*); an increase in well-being resulting from the decline of the consumerist society and a rise of mutual interdependency between humans coming from the need for co-operative solutions to the new circumstances. It is also worth mentioning that these are the same actions that are required to avoid the worst excesses of climate change.

Society therefore has stark choices to make in the near future. An approach to increasing oil scarcity based only on the existing socioeconomic system underpinned by the ordergenerating rule of the market economy is likely to generate a series of negative health effects concentrated in society’s most vulnerable groups. In contrast, a concerted effort to prepare for increasing scarcity using principles of equity and sustainability has the potential to generate a positive health dividend. This choice needs to be considered carefully, but action before the rapid decline in oil production will be necessary to avoid the numerous problems of attempting to restructure in adverse circumstances (11).

* Carbon rationing is where an alternative currency is created based on fossil fuel consumption that is distributed evenly and increases in value as the total supplied decreases over time, thereby overwhelming the value of the existing currency.

Key points

  • Increasing scarcity of oil is an inevitable phenomenon for a finite resource, with oil production likely to decline in the near future since the discovery of new reserves of oil has been decreasing since 1970.
  • The globalised economy, and the Scottish economy in particular, is dependent on the availability of cheap oil and it is difficult to perceive circumstances in which continuation of the status quo could occur once oil production starts to decline.
  • Historical examples of economic shocks have shown there is potential for positive and negative health effects to be seen.
  • If a pre-emptive plan was carried out in Scotland based on equity and sustainability, a health dividend involving obesity, well-being and inequalities could be reaped from the peak oil phenomenon. If not, the potential negative health consequences may be unsustainable.