Peak oil and the developing world

Having mentioned this morning that it is very rare to hear anything about peak oil and developing countries, I was pleased to come across this article by Sir David King. “Our analysis predicts that prices will soon be considerably more than $100 a barrel, peaking at around $130 by 2015” he says, citing work by the Smith School. ” This in itself is likely to stall the global economic recovery following the financial debt crisis.”

In principle, that’s good news for oil-rich countries such as Norway and the Gulf states, where higher prices mean higher GDP. But most countries in the world are oil importers and as prices rise their economies will suffer. Developing countries will be especially vulnerable, as their economies depend heavily on manufacturing and distribution, which are, in turn, dependent on transport fuels. Take Rwanda, an ambitious country whose economy is currently growing by 8% to 9% per year. We estimate that rises in oil prices over the next two decades will cumulatively cost Rwanda some 30% of its GDP.

…As scientific adviser to the Rwandan president, Paul Kagame, I have recommended that the country should do everything in its power to decouple its economy from oil. But Rwanda is by no means atypical. In the face of rising oil prices, most net importers of oil around the world will face further recession if they have not found other ways to move themselves and their goods around.

Perhaps its time for a transition towns movement for the developing world.