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I tried to find some hard information about the UK's reserves, but after about half an hour of Googling I couldn't find anything definitive.

So far as I can tell a significant proportion of the UK's reserves are - er - still in the ground.

E.g. from here we have:

This is good news because it suggests that the UK isn't totally dependent on imports, so in the worst case some oil will still be available for essential services.

The bad news is that it's not clear how large the strategic reserve is - in the sense of barrels of refined products ready for immediate use.

In any case, a 90 day reserve is only a minimal cushion against an oil drought. The strategic reserves are exactly that - emergency measures against a sudden and temporary cut-off.

What worries me about Western economies is that demand reduction measures - like car sharing, bussing, home working, and so on - will need organisation and management. It's going to take months or years before they can have an effect.

So a 90 day reserve, stretched out to half a year or a year with rationing, is going to be a very temporary palliative, and I don't think it's going to make a significant economic difference over a longer period.

If planned demand reduction is needed to make a difference, there's no evidence it's happening yet - at least, not in the UK. What is happening is intense political pressure to lower taxes. People here are trying to convince themselves that all Gordo has to do is cut taxes and everyone will be able to carry on as before. Once Gordo is out and prices still don't start coming down, that's when things will start to get colourful.

Also, I don't think GDP is a good indicator of economic health or robustness. The UK has a faith-based, not an energy-based economy, and it's perfectly possible for the faith to disappear long before the oil does.

When wealth distribution is poor - which it is - even a small change in income will have significant social and political consequences, even if the nominal GDP looks strong.

I think you'll get a more accurate picture of the immediate effects by working bottom up - looking at median income and the percentage of that which will be eaten away by personal energy expenditure in the form of transport and heating.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon May 26th, 2008 at 09:40:16 PM EST

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