How “too little oil” can crash the system: A hidden risk in the energy transition

Researchers warn that if oil throughput falls below a minimum “viable scale,” parts of the fossil system can fail suddenly.

Building up a new energy system is hard enough.. But breaking down the old may be even harder.. Most energy models assume that as demand falls, the fossil-fuel system will be scaled down in an orderly way along with it.. This is not how it goes.. The fossil-fuel system only runs above a minimum level of oil throughput to function.. If activity drops below a certain level — whether because people shift to clean alternatives

or because of war — pressure in pipes falls and operations become inefficient, unsafe, or outright inoperable and can then quite suddenly collapse.. Researchers Emily Grubert and Joshua Lappen, in a recent (but pre-Iran war) paper, described this in terms of a “minimum viable scale.” Something the Iran crisis is hurling the world towards.. It is brilliant academic work, but actually points to something that is commonly understood by engineers.. An industry estimate puts the

refinery-wide threshold at roughly 65 to 70 percent of capacity.. Below that, parts of the refining process start to fail.. Pipelines, terminals, and refineries begin to lose functionality even if fuel is still technically available.. This is not some theoretical limit.. The US briefly came close when activity dropped to around 68 percent.. The current oil shock is bringing this eventuality into sudden focus again.. JP Morgan Chase, a bank, expects the “operational floor level”

of oil inventories to be reached by September, after which the system starts to fail.. What happens after?. Grubert and Lappen anticipate uncontrolled price and supply shocks, outages and increased risk of disasters, especially at under-resourced oil rigs that cut costs to sell at below market rates.. The deeper point is that governments are unprepared to manage the decline that has already set in in parts of the fossil-fuel industry due to the transformation of

our energy systems.The assumption is that infrastructure will wind down gradually as demand drops.. That is not how these systems behave.. Without deliberate planning, once they are pushed below these hard limits, they collapse.. Because these systems are tightly connected, a failure in one ripples through the rest of the chain.

energy transition risk, minimum viable scale, oil throughput, refinery capacity threshold, operational floor, pipeline pressure