15 Oct 2007
First Oil Vulnerability Audits in Totnes Report Back.
In talks I give and in other places, such as this website, I often enthuse about **Oil Vulnerability Auditing**, the tool developed by Simon Snowden at Liverpool University, but haven’t yet written much about it. I thought you might find it interesting to read the following short report by **Fiona Ward** of Transition Town Totnes who co-ordinated the OVA work in Totnes. Two pilots have so far been done, and in the report, Fiona reflects on the process and on what emerged from them.
The team has now completed the first stage of the pilot OVAs for two Totnes businesses: Rumour Wine Bar & Bistro in the High Street; and Coloursworks Print & Design Ltd on the Industrial Estate. This work has seen Simon, Fiona & team work closely with the companies to (1) understand the business (2) identify its activities and business processes (3) establish the resources used in each activity including staff, consumables, raw materials, utilities, overheads etc and (4) calculate the costs of each resource.
The resources, and their associated costs, are then tagged as being ‘oil vulnerable’ if they fall into one of the following categories: direct use of energy (for power or heat); liquid fuel (for transport); are made directly from petrochemicals (such as chemicals); are man-made (nylon, plastics etc.); or if they are a finished good or component that includes products from previous categories (e.g. rubber gloves, or plastic window frames). Then within an activity, the % of those costs that are tagged as vulnerable indicate the Oil Vulnerability Ratio of an activity or a business process.
With each business, we focused on a certain part of the operations in order to make the scope manageable. For Rumour we looked at their A la Carte food operation (i.e. not pizza or drinks) and for Colourworks we looked at all the business activities required to deliver the needs of their largest customer. Within Rumour the key findings were that (unsurprisingly) the ingredients and Preparation/Cooking process was their largest risk area given the quantity of oil that goes to food production (fertilizers, production and farm processes) and distribution – with 45% of A la Carte costs vulnerable to oil price changes. It was also found that 70% of ingredients came from overseas although all were bought locally. For Colourworks the main area of vulnerability by far was with paper, and the Print process – with 35% of costs for this one customer being oil price vulnerable.
For both, the next largest area of vulnerability was their staff, particularly skilled employees such as Print Minders. This increased the cost vulnerability by around 30% for Colourworks and 10% for Rumour As transport costs rise this directly impacts each employee’s living costs (not just petrol/travel but also energy costs, price of food etc.) and puts increasing pressure on salaries. The issues of local, affordable housing and food, and having appropriate skills within an affordable commute will increasingly play a role in business resilience.
We then explored the impact of cost increases in these key resources on profit margins, and also how far prices to customers may need to increase to compensate for these rising costs. Interestingly, energy (gas and electricity) was not a highly significant risk for either as it was a small part of the overall costs for both at <3%. However energy efficiency is still essential in order to minimize exposure to price rises, especially as this is where oil price increases are felt the quickest. Our presentation of the initial findings to the business owners was very well received. Our next stage is to explore further the links between these key resources and the oil price to establish the level of connection and interaction. The link between oil price and price of other energy sources, including renewables, will be researched to establish level of market integration, i.e. as the oil price goes up, will the prices of non-oil energies track with similar increases (some just because they can)? If so, then switching to green energy may not give the expected protection against cost increases (but of course is essential for carbon emission reductions and the compelling fact that it is the only feasible long-term solution). We aim to complete this research stage by the end of the year. We are continuing our work to involve the business community further in TTT projects in order to understand better the interactions between jobs, employees, suppliers, customers, housing, skills, food and transport. Only by working as an integrated community can we build the resilience we need to withstand the economic, social and environmental impacts of post-peak oil and climate change, and to achieve a way of life potentially better and more rewarding than that of today. More detailed case studies will be available shortly. For more information on OVA or other business related TTT projects, please contact FionaWardttt@googlemail.com
16 Oct 12:41am
What surprises me in all the debate and writings that I’ve heard and read in relation to the issue of Oil depletion/peak and renewables is the total lack of acknowledgement that this ‘unintelligent’ use of resources is in fact an effect and not the cause of our problems in relation to mismanagement of resources and the problems that flow from that. The dominant economic sytem on the planet i.e Capitalism – the aggregation of surplus value and private ownership of the means of production – is what is really driving human relations and the conflicts that are a corollary of that relationship between humans. I believe the sustainable ‘technological’ solutions are in front of our faces and we can, wherever possible as humans, either collectively or in our own way, make a contribution to achieving an alternative to these problems, that are thrown up by a system of political and economic ruthlessness that sees only surplus value/profit as the means and ends. However, this won’t make the cause go away unless we address these issues; until we have an alternative system of economics, flowing from a totally different system of government, the abuse of life/resources and the ruthless annihilation of human beings – witness the Palestinian struggle – is continuing. These matters are an intrinsic and very urgent part of the problems that need resolving. It’s about time the global as well as the local in relation to this struggle was acknowledged within this debate, rather than ignored. It’s a dialectical relationship and should be considerd as such when discussing potential solutions.
United Diversity Guide, October 16th, 2007 | united diversity
16 Oct 5:06pm
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