The Peak Oil Crisis: Virginia Writes a Plan

Last summer the Commonwealth of Virginia began work on a state Energy Plan in response to legislation adopted in the 2006 General Assembly session. Now it would be nice to think this plan was developed in response to the looming threat of peak oil, but sadly this is not the case.

The enabling legislation that will lead to the plan began life as a result of the Study of the Future of Manufacturing in Virginia. The bill’s sponsor was concerned about the high cost and constraints on natural gas supplies that are so important to the remaining manufacturing industry in the Commonwealth.

Once introduced, however, the energy bill of 2006 took on a life of its own so that it went well beyond the narrow issue of natural gas supplies. At final passage, the bill set out 12 policy statements concerning energy for Virginia. These include supporting research and development of renewable energy sources and clean coal technologies; promoting biodiesel and ethanol from Virginia agricultural crops; promoting cost-effective conservation, electric generation from non-greenhouse gas sources, and motor vehicles that use alternative fuels; as well as ensuring the availability of affordable natural gas, and the siting of LNG terminals.

The bill requires Virginia’s state government to make projections of energy consumption by type of fuel and to conduct in-depth analysis of such items as the adequacy of power generation, electric and natural gas transmission and distribution and related siting requirements; efficient use of energy resources, how Virginia issues relate to regional initiatives to assure adequacy of fuel production, generation, transmission and distribution assets, among others.

The results of all this work are to be incorporated into a 10-year plan to guide state decisions about energy. The plan will propose actions, with these objectives:

Ensure reliable energy supplies at reasonable cost to support Virginia’s economy;

Manage rates of consumption of existing resources in relation to economic growth;

Establish sufficient infrastructure to maintain reliability in event of a disruption to Virginia’s energy matrix.

Use energy resources more efficiently;

Facilitate conservation;

Optimize intrastate and interstate supply and delivery;

Increase use of less-polluting sources of energy;

Research the efficacy, cost and benefits of reducing, avoiding or sequestering greenhouse gases from energy generation;

Remove impediments to use of abundant low-cost indigenous energy resources and ensure the viability of energy producers;

Develop energy resources to not impose a disproportionate adverse impact on economically disadvantaged or minority communities;

Foster economically developable alternative sources at market prices to diversify Virginia’s energy portfolio; and

Increase use of biofuels.

These are indeed worthy objectives. Although they were developed without specific reference to imminent oil depletion they sound a lot like what a state should do to begin mitigating the consequences of peak oil.

An advisory group has been appointed to assist in the development of the new energy plan. Members represent consumers, local government, general business, environmental interests, electric utilities, natural gas utilities, petroleum industry, energy extraction industries, renewable energy interests and other groups with a special interest in energy, such as public transit. Numerous state agencies are also represented at the meetings.

At a recent meeting of the advisory group one could get a sense of the nature of the pre-peak oil energy debate in the state. As nearly everyone at the table was a professional lobbyist, expert in making the case for whatever organization was being represented, none was shy about speaking out forcefully.

As could be expected, the house soon divided along traditional lines. Representatives of the various "friends" of the earth, water, air, woods, scenery and what-have-you see a long-term energy plan as an opportunity to steer the state toward a cleaner environment. The traditional energy suppliers – coal, oil, electricity, and natural gas – are more ambivalent. Their representatives’ marching orders clearly include instructions that the forthcoming state plan costs them as little as possible in added expenses, gets rid of state regulation, and does not force them into renewable energy programs until they are ready.

The state role in the coming peak oil crisis will be interesting. Most states can do little in the short-term to increase the supply of energy for a state but clearly have the powers to allocate and to restrict its use. Acquiescing in drilling off Virginia shores may be a very emotional issue, but is unlikely to provide any real benefits in the short term, if at all. Judging from the outline, the draft plan is not due until next summer, and this plan is intended to guide long-term changes to Virginia’s energy resources. It says nothing about what the state is going to do when 2 or 3 million barrels a day, suddenly or even over the course of a few years, disappears from America’s 13 million barrels a day imports. Even a cursory familiarity with discussions about peak oil make it virtually certain that cuts of this magnitude are coming before the plan’s end in 2017.

Governors are said to have vast emergency powers. They can commandeer fuel from soccer moms’ SUVs and allocate it to essential vehicles like police cars and food trucks; mandate closings, speed restrictions, carpools, and hundreds of other ways to save fuel. This may be fine for the next hurricane or snowstorm, but mitigating permanent worldwide oil depletion is not the same. Once oil depletion sets in, there will be no turning back. Uncontrolled prices will fluctuate wildly. State revenues will have nowhere to go but down. It will be a new world.

Although the plan under development is clearly a good first step in the right direction, Virginia might just be planning for a world that will never exist.