Peak Oil: What does it really mean?

BP recently published a statistical review of world energy.

Saudi Arabia and Iran account for 1/3 of the global oil reserves. Venezuela is the largest oil producing country out of the Middle East region.


The report stopped short of suggesting that we are at peak oil. However, a senior energy economist from Shell whom I met two years ago in Cambridge revealed that peak oil is already behind us. We are at the decline of global oil reserves.

However BP did link up their findings with an analysis with how much time we're left before we run out of oil. According to them, if the world continues to produce oil at the rate we are at and with current estimates of oil reserves, we will only have 42 years left to find a replacement to oil.

In my opinion, the problem we are facing is not peak oil. We are not running out of oil but cheap oil. Therefore the concept of peak oil is economic rather than arithmetic. It is true we have already run out of $5 a barrel oil but we have plenty left at $200 or even $300.

Recently I was reading an article about the sustainability of our natural resources. I felt the world has over-emphasised on energy security without much said about our natural resources like metals and precious stones. Energy may be a major concern, but it is not THE major concern since we already have established alternative energy systems in place, only lacking political willpower to implement them extensively.

There are other pressing issues other than energy. If we are not careful with our priorities we may end up with a situation where we have the best electric car system or found more oil to last for another century but not the materials to build the cars.

Ebay: A model for Product Service System?

Last year I wrote an essay about the way forward for Japan's sustainable development. Aware of the fact that Japan is a major export manufacturing country, I advocated for a product service system (PSS).

PSS is a system that offers the value of use instead of the product itself. For example, a ‘mobility service’ versus a car. This means mobility is the value of use coming out of a product, a car in this case. PSS can decrease the environmental load in two ways. First, companies offering the service have all the incentives to make the system efficient, as they get paid by the result. Likewise, consumers would alter their behaviour as soon as they gain insight into all the costs involved with the use. For each kilometre in a car from a car sharing company, one would pay the actual costs. With one’s own car, this is much more difficult, as the purchasing costs, taxes and fuel costs all add to the total costs

Today I found that PSS could be represented by many more existing systems which we never thought of possible. After an interesting chat with two of my Cambridge friends, I realised Ebay, (as much as I hated them) can be a model for PSS.

We were talking about bicycles and veered off the topic about getting a bike off Ebay, selling it off during the winter months and getting a newer one the next summer. Then I realised it was a little similar to the PSS model.

Under the PSS, mobility is procured through the temporary possession of a vehicle which in my case would be a bicycle. So the Ebay model would have fitted well with the PSS, wouldn't it?

Yes and no.

Yes because Ebay provides the flexibility for PSS to happen. In a PSS, the flow of material is cyclical with a tight control of waste at source and products’ end life. PSS keeps the generation of waste to the minimum with an element of waste management – recycling and reusing of goods to accommodate the functional condition and lifespan of the product. In the article, I drew this materials flow diagram to illustrate the current practice of industries:

Materials flow diagram

For products that have reached its end life, manufacturers should manage and control the waste of their products because they are better placed to deal with them and be in control of where and how the wastes end up afterwards, which in the environmental point of view, is an extremely attractive proposition.

Assuming the Porter Hypothesis is right, imposing this onto manufacturers can stimulate innovative designs and strategies that will not only reduce waste but also raw material consumption. I described this concept with this diagram with a positive feedback into the systems dynamic:

Materials flow diagram with PSS

However, Ebay is not a manufacturer. It is a web-based platform for products to be traded.

This balances the argument with a NO as it does not deal with wastes. However in reality, anything that can be bought from Ebay can be sold back into the site as a spare or repair. We can further expand this to the likes of Gumtree and Rakuten.

Still, it lacks the answer in addressing the issue of waste at the end life of products.

If Ebay have to change their model, which I think they should, PSS should be the next logical move. Forget about being a try-hard Amazon or a lousy auction site. With existing infrastructure, they can easily be the most diverse PSS proponent in the market now. They are not only a direct competitor to PSS leaders like Streetcar or Zipcar but also product distributors of all kinds and brands in the market!