What are your thoughts on the "peak oil" debate?

[Groovy Iguana]

But, for clarification: I do not encourage people to "do nothing".

Never said you did! I was just discussing the topic, not making a comment about what you, personally, do / don't advocate. I hope you know that - I was certainly not saying that you don't take environmental issues seriously! It's obvious even to me (who just joined a little while ago) that you do! And you have some really interesting ideas! I always enjoy reading your posts.

Re the mangroves: some weeks ago, I posted a link to an article about that in a discussion in this thread of the FAC.

Interesting. I joined too late to read that before. Thanks for pointing it out.

-Groovy

[Michele Zone]

Never said you did! I was just discussing the topic, not making a comment about what you, personally, do / don't advocate. I hope you know that - I was certainly not saying that you don't take environmental issues seriously! It's obvious even to me (who just joined a little while ago) that you do! And you have some really interesting ideas! I always enjoy reading your posts.

Oops.

And responding to you is a Good Excuse to make another point. If I recall correctly, you are an economist. So you should be plenty familiar with S curves for product ...um..proliferation? So when I say I expect other technologies to take off when gas prices get high enough, that is hardly some Pie In The Sky expectation: it is normal market ..stuff (tm -- that is a Technical Term ). And you can back me on that. Right?


Later.

[Groovy Iguana]

Oops.

And responding to you is a Good Excuse to make another point. If I recall correctly, you are an economist. So you should be plenty familiar with S curves for product ...um..proliferation? So when I say I expect other technologies to take off when gas prices get high enough, that is hardly some Pie In The Sky expectation: it is normal market ..stuff (tm -- that is a Technical Term ). And you can back me on that. Right?


Later.

Hey MZ! Good. We're friends now.

So when I say I expect other technologies to take off when gas prices get high enough, that is hardly some Pie In The Sky expectation: it is normal market ..stuff (tm -- that is a Technical Term ). And you can back me on that. Right?

Sheez. Well, you asked for it!!

You are correct - that if the competitive market is working without interference, rising prices can be a good indicator of scarcity under certain circumstances. Those rising prices could, in turn, lead to a "switch" from one resource to another.

That's a very economist-like statement, full of qualifications. First of all, "the competitive market." That means that the market must be highly competitive, not a monopoly or otherwise highly concentrated market structure. Monopolies and other anti-competitive market structures interfere with the price system acting as an allocative mechanism. So, if your commodity of choice (say, oil) is primarily controlled by a cartel (say, OPEC), the price of that commodity will not be a very good indicator of scarcity. So, the structure of the market has to be considered.

Second, "without interference." That means with no taxes, subsidies, or otherwise market distorting "stuff." Taxes and subsidies interfere with the price mechanism as well. So if your commodity (say, oil) is heavily subsidized (as it is in the US as well as others), then the price is not a good indicator of scarcity. So, political economy considerations have to be taken into account.

Third, "under certain circumstances." Here I mean the structure of the resource itself. Oil is a resource that can be privatized relatively easily. In other words, it's relatively clear who "owns" oil (otherwise OPEC couldn't function). But in "open access," depletable resources (poorly managed fisheries, for example), the scarcity "signal" of the rising price comes too late. The resource is over-exploited because of the fact that access to the resource is not restricted somehow.

Finally, the theory of the allocation of scarce resources over time predicts that if there's a "backstop technology" (for oil, that would be natural gas, coal, or renewables like solar, wind, etc.), some of the resource might actually be left in the ground, because the cost of extracting those last units of the resource (the "marginal cost of extraction" ) rises over time to meet the cost of the backstop technology. Given that, we may not ever run out of oil - it will just become non-economic for us to use. In that case, we may switch to natural gas (not much better in terms of scarcity dynamics), coal (not much of a problem there, at least scarcity-wise), or (God forbid) renewables. However, our infrastructure is so dependent on fossil-fuels that it will be tough to switch to anything else. It would have to take a tremendous rise in price to make changing our infrastructure economically viable.

My issue is not so much with the scarcity, but with the pollution and global warming that comes with burning fossil fuels. Also, as Klare points out, the location of the remaining stores of oil - in the obviously volatile Middle East, and in the not so stable Russia. Many, if not most, wars have been fought either directly or indirectly over natural resources, and that trend will accelerate, I think, in the near future. Water, as our friends in the West know, is going to be a big one.

Sorry for the lengthy, pontificating post. Hope I didn't sound too preachy. If I did, it wasn't intentional. Occupational hazard.

-Groovy

[boiker]

Sheez. Well, you asked for it!!
[snippy]
-Groovy

Good economic explanation. I think that one of your last statements concerning the switchover is going to be the biggest heartache. We've invested so much more of our economy and livelyhood into oil than other fuels that I can't even imagine how we are going to pull out of it smoothly.

When I think of our past fuels coal, nat gas, and currently oil, I realize that each one coexists with the other or found in similar surroundings to each other. It made the discovery of each successive fuel almost accidental rather than intentional.

With any new energy we are currently looking for, it's being approached in a committed intentional way. I'm afraid that this mode of discovery may take quite longer than anticipated. We've been great at finding applications for materials to make other materials. We've been great at utilizing naturally occuring fuels through combustion, but when it comes through forceful application of energy creation (like nuclear) we've only produced volitile or exposive results. We can't apply nuclear energy to power our cars....it's still too dangerous. Maybe we'll get lucky and accidentally discover a new, more efficent energy...I just doubt it'll be as easy to stumble across as it was from peat, to coal, to nat gas and oil.

[giff57]

I think at some point when the current fuels are scarce/expensive enough, folks will say screw it and quit fighting the construction of new nukes for electrical generation. I'd like to see a future of all renewables, but I think the technology is not evolving fast enough. With enough electrical power I can see the automobile culture continuing almost indefinitely. Hybrids running ethanol or bio diesel will be the norm. Maybe even solar if some technological breakthrough occurs soon enough. There have been successful experiments with burning switch grass in coal fired plants. There are some good renewable alternatives being worked on, but our government will not get serious about any of them until the oil is all most gone

[JLA]

Check out item 504 at: http://216.187.75.220/newsletter51.pdf


It's a report prepared by SAIC for DOE.

Here's the full text:


504. The US Department of Energy addresses Peak Oil The US Department of Energy has submitted the following article for inclusion in this NewsletterThe Mitigation of the Peaking of World Oil ProductionSummary of an Analysis, February 8, 2005A recently completed study for the U.S. Department of Energy analyzed viable technologies to mitigate oil shortages
associated with the upcoming peaking of world oil production.1 Commercial or near-commercial options include improved vehicle fuel efficiency, enhanced conventional oil recovery, and the production of substitute fuels. While research and development on other options could be important, their commercial success is by no means assured,
and none offer near-term solutions.Improved fuel efficiency in the world’s transportation sector will be a critical element in the long-term reduction of liquid fuel consumption, however, the scale of effort required will inherently take time and be very expensive. For example, the U.S. has a fleet of over 200 million automobiles, vans, pick-ups, and SUVs. Replacement of just half with higher efficiency models will require at least 15 years at a cost of over two trillion dollars for the U.S. alone. Similar conclusions generally apply worldwide.Commercial and near-commercial options for mitigating the decline of conventional oil production include: 1) Enhanced Oil Recovery (EOR), which can help moderate oil production declines from older conventional oil fields; 2) Heavy oil/oil sands, a large resource of lower grade oils, now produced primarily in Canada and Venezuela; 3) Coal liquefaction, an established technique for producing clean substitute fuels from the world’s abundant coal reserves; and 4) Clean substitute fuels produced from remote natural gas. For the foreseeable future, electricity-producing technologies, e.g., nuclear and solar energy, cannot substitute for liquid fuels in most transportation applications. Someday, electric cars may be practical, but decades will be required before they achieve significant market penetration and impact world oil consumption. And no one has yet defined viable options for powering heavy trucks or airplanes with electricity.To explore how these technologies might contribute, three alternative mitigation scenarios were analyzed: One where action is initiated when peaking occurs, a second where action is assumed to start 10 years before peaking, and a third where action is assumed to start 20 years before peaking. Estimates of the possible contributions of each mitigation option were developed, based on crash program implementation.
Crash programs represent the fastest possible implementation - the best case. In practical terms, real-world action is certain to be slower. Analysis of the simultaneous implementation of all of the options showed that an impact of roughly 25 million barrels per day might be possible 15 years after initiation. Because conventional oil production decline will start at the time of peaking, crash program mitigation inherently cannot avert massive shortages unless it is initiated well in advance of peaking. Specifically,* Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.1 Hirsch, R.L., Bezdek, R.H, Wendling, R.M. Peaking of World Oil Production: Impacts, Mitigation and Risk Management. DOE NETL. February 2005.1
* Initiating a crash program 10 years before world oil peaking would help considerably but would still result in a worldwide liquid fuels shortfall, starting roughly a decade after the time that oil would have otherwise peaked.* Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period.Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic
hardship worldwide.Other important observations revealed by the analysis included the following:1. The date of world oil peaking is not known with certainty, complicating the decision-making process. A fundamental problem in predicting oil peaking is uncertain and politically biased oil reserves claims from many oil producing countries. 2. As recently as 2001, authoritative forecasts of abundant future supplies of North American natural gas proved to be excessively optimistic as evidenced by the recent tripling of natural gas prices. Oil and natural gas geology is similar in many ways, suggesting that optimistic oil production forecasts deserve to be viewed with considerable skepticism.3. In the developed nations, the economic problems associated with world oil peaking and the resultant oil shortages
will be extremely serious. In the developing nations, economic problems will be much worse. 4. While greater end-use efficiency is essential in the long term, increased efficiency alone will be neither sufficient
nor timely enough to solve the oil shortage problem in the short term. To preserve reasonable levels of economic prosperity and growth, production of large amounts of substitute liquid fuels will be required. While a number of substitute fuel production technologies are currently available for deployment, the massive construction effort required will be extremely expensive and very time-consuming, even on a crash program basis.5. Government intervention will be essential, because the economic and social impacts of oil peaking will otherwise
be chaotic, and crash program mitigation will need to be properly supported. How and when governments begin to seriously address these challenges is yet to be determined. Oil peaking discussions should focus primarily on prudent risk management, and secondarily on forecasting the timing of oil peaking, which will always be inexact. Mitigation initiated earlier than required might turn out to be premature, if peaking is slow in coming. If peaking is imminent, failure to act aggressively will be extremely damaging
worldwide.World oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action.

[brix]

Jared Diamond makes some useful insights about past societies in his new book Collapse. I think one of the most important deals with peoples' willingness to "give up" poorly-adapted cultural institutions. For that reason, I think it will be immensely helpful to "spread the word" on peak oil. Being mentally-prepared, so-to-speak, matters.

However, I share an optimism for those of us in North America. Many of us enjoy a particularly forgiving landscape that will survive some environmental damage without giving out on us. But I wouldn't recommend moving to Phoenix.

Let's get to work.


brix

[Northboy]

IMHO

As far as peak oil goes, we're OK thanks, we just have to not renew NAFTA in June, 2005...That's definately on the table these days.....

Bio mass energy is well past the experimental stage at least in Europe and Canada. Central heat and thermal electric plants run continuously on a combination of wood pellets and other organic waste. CO2 emissions meet Kyoto requirements and are 90% lower than fossil fuels-- current cost of pellets delivered are $5.00 - $9.00 / gigjl Can-- a clear 1/5th the price of comparable fossil fuel.

Ethanol production and the production of other bio- based alcohol derivatives capable of meeting the fuel needs of transport are expanding. When Mr. Deisel designed his motor, it was capable of running on a multitude of fuels....No problemo

As pointed out above by G. IGUANA the assumptions of economic theory require qualification of the form and structure of market-- Big oil is Big oil period...Nuff said by me on this subject..

It is interesting to see how different the world view is becoming in different parts of North America..Too bad in a way.

Graham.

[JLA]

IMHO

As far as peak oil goes, we're OK thanks, we just have to not renew NAFTA in June, 2005...That's definately on the table these days.....

Bio mass energy is well past the experimental stage at least in Europe and Canada. Central heat and thermal electric plants run continuously on a combination of wood pellets and other organic waste. CO2 emissions meet Kyoto requirements and are 90% lower than fossil fuels-- current cost of pellets delivered are $5.00 - $9.00 / gigjl Can-- a clear 1/5th the price of comparable fossil fuel.

Ethanol production and the production of other bio- based alcohol derivatives capable of meeting the fuel needs of transport are expanding. When Mr. Deisel designed his motor, it was capable of running on a multitude of fuels....No problemo

As pointed out above by G. IGUANA the assumptions of economic theory require qualification of the form and structure of market-- Big oil is Big oil period...Nuff said by me on this subject..

It is interesting to see how different the world view is becoming in different parts of North America..Too bad in a way.

Graham.

I just finished reading the full report that I referenced in my above post. The report was prepared for DOE by SAIC and addresses the need to prepare for peak oil. (I emailed the author to request a copy.)

The economic losses due to a peak if we have not spent at least 10 years (preferably 20+) in a crash program to prepare will likely be measured in the trillions in the U.S. alone according to the study. It's a very sobering read, especially when you consider where it is coming from.

The problem is our need for liquid fuel--gas, diesel, jet fuel--for transportation. You need the energy density of these liquids for transit. Jets and trucks don't do very well on wood pellets, coal, or even electricity. Ethanol is a joke--it is only economical in the U.S. due to enormous subsidies. It's a net energy loser.

We've got a lot of work to do as planners to get ready for this. Whether it happens next year or thirty years from now, we need to to start incorporating the prospect of oil scarcity and much higher prices into the dialogue on transportation and land use issues.

[giff57]

Ethanol is a joke--it is only economical in the U.S. due to enormous subsidies. It's a net energy loser.

No it isn't

http://www.agecon.ksu.edu/renewablee...anol%20_2_.pdf

[JLA]

No it isn't

http://www.agecon.ksu.edu/renewablee...anol%20_2_.pdf

Thanks, I'll take a look. This may be disputed territory, but here is what they said on the topic in the DOE report:

"Currently, biomass-to-ethanol is produced on a large scale to provide a gasoline additive. The market for ethanol derived from biomass is influenced by federal requirements and facilitated by generous federal and state tax subsidies. Research holds promise of more economical ethanol production from cellulosic (“woody”) biomass, but related processes are far from economic. Reducing the cost of growing, harvesting, and converting biomass crops will be necessary. In other parts of the world, biomass-to-liquid fuels might be more attractive, depending on a myriad of factors, including local labor costs. Related projections for large-scale production would be strictly speculative. In summary, there are no developed biomass-to-fuels technologies that are now near cost competitive."

[Michele Zone]

"Currently, biomass-to-ethanol is produced on a large scale to provide a gasoline additive. The market for ethanol derived from biomass is influenced by federal requirements and facilitated by generous federal and state tax subsidies. Research holds promise of more economical ethanol production from cellulosic (“woody”) biomass, but related processes are far from economic. Reducing the cost of growing, harvesting, and converting biomass crops will be necessary. In other parts of the world, biomass-to-liquid fuels might be more attractive, depending on a myriad of factors, including local labor costs. Related projections for large-scale production would be strictly speculative. In summary, there are no developed biomass-to-fuels technologies that are now near cost competitive."

Er, that doesn't say to me that it is "a net energy loser". It says to me that it is financially uncompetitive with the highly subsidized fuel of gasoline.

[giff57]

"Currently, biomass-to-ethanol is produced on a large scale to provide a gasoline additive. The market for ethanol derived from biomass is influenced by federal requirements and facilitated by generous federal and state tax subsidies. Research holds promise of more economical ethanol production from cellulosic (“woody”) biomass, but related processes are far from economic. Reducing the cost of growing, harvesting, and converting biomass crops will be necessary. "

Corn has a lot more sugar in it than "woody biomass". When corn is bred for ethanol production the output/bushel is even greater. Most of the plants going in now are using grains and not biomass.

[The One]

Corn has a lot more sugar in it than "woody biomass". When corn is bred for ethanol production the output/bushel is even greater. Most of the plants going in now are using grains and not biomass.

Yes, corn is the biomass of our future. Just think of the bidding wars between energy producers and third world countries that want to feed their people (China). Corn producers will be the new Sheiks of the 21st Century

I still think that mass produced solar energy systems fitted to every new home in areas currently using fuel oil could be done. Using the kind of technology that our Government is sitting on right now...

One other issue: I don't think (regardless of some government report) that any of us should just assume that our government or the corporations will choose to acknowledge when "peak oil" has occured. In fact, I think it will be the other way...we will only know when the price spikes for years at a time....then it will be too late, creating a trillion dollar crisis (see above).....

[Michele Zone]

Yes, corn is the biomass of our future. Just think of the bidding wars between energy producers and third world countries that want to feed their people (China). Perhaps you have not seen "Diet for a Small Planet", which is a political book, not just a cookbook. According to the author's research (at that time), every nation could feed all their people and not have starvation IF they grew crops for the traditional local diets instead of raising meat and the like (which the locals cannot afford) to sell to wealtheir countries like the U.S. -- often due to pressure to come up with hard currency to pay international loans which were made supposedly to help out poor countries. And there won't be "bidding wars": like now, the wealthy countries will win that one while millions starve. Sigh.

[JLA]

No it isn't

http://www.agecon.ksu.edu/renewablee...anol%20_2_.pdf

I've heard several times that ethanol is a net energy loser, but had never really looked into the issue. Having spent a few minutes on the web, it appears that this is still an open debate. There are studies showing that it is net energy positive (like the article you cite), but here is one recent study showing a different finding:

http://www.acfa.ws/Support%5CPimentel_Nat'l%20Resour%20Res_Jun%202003.pdf

I should have known better than to question ethanol with someone from Iowa on the board.

[giff57]

http://www.acfa.ws/Support%5CPimentel_Nat'l%20Resour%20Res_Jun%202003.pdf

I should have known better than to question ethanol with someone from Iowa on the board.

LOL, I have never seen such a MTBE cheerleading site before. Maybe I should counter with one from the ethanol producers, or the corn growers...

I will agree that there are differing opinions on this. The technology has promise, especially as fossil fuel prices increase, and new technology brings the prices down. Here in my area, we also produce a lot of wind power. When somebody gets the idea to use all renewable energy to produce the ethanol, how will the oil/chemical folks going to argue then?

[boiker]

LOL, I have never seen such a MTBE cheerleading site before. Maybe I should counter with one from the ethanol producers, or the corn growers...

I will agree that there are differing opinions on this. The technology has promise, especially as fossil fuel prices increase, and new technology brings the prices down. Here in my area, we also produce a lot of wind power. When somebody gets the idea to use all renewable energy to produce the ethanol, how will the oil/chemical folks going to argue then?

The scary thing about MTBE's is that the are being found in drinking water in many different states. The compounds don't break down into harmless components probably because they are still derived chemicals from petroleum and others.

Does ethanol have any reported environmental issues after it is combusted?

[giff57]

Does ethanol have any reported environmental issues after it is combusted?

Supposed to just be CO2 and H2O, but I don't know that for sure....
seems reasonable with my limited chemistry... CH3CH2OH + O2 == ouch my brain hurts.

[JLA]

LOL, I have never seen such a MTBE cheerleading site before. Maybe I should counter with one from the ethanol producers, or the corn growers...

I will agree that there are differing opinions on this. The technology has promise, especially as fossil fuel prices increase, and new technology brings the prices down. Here in my area, we also produce a lot of wind power. When somebody gets the idea to use all renewable energy to produce the ethanol, how will the oil/chemical folks going to argue then?

David Pimentel at Cornell is apparently the biggest critic of ethanol. I just happened to find his article on their web site--it was actually published in Natural Resources Research.

The trick is to reduce the petroleum inputs (e.g., fertilizer, pesticides). I'm not sure how you do that with renewables...you need petroleum to make petrochemicals.

[giff57]

David Pimentel at Cornell is apparently the biggest critic of ethanol. I just happened to find his article on their web site--it was actually published in Natural Resources Research.

I have read Pimentel's stuff before. He uses a lot of ag data from the 80's to lay out the negatives, some of which has improved. An example is soil erosion, which has declined considerably since the 80's. Some where I read an article disputing his numbers....don't remember where though.

EDIT: Google "David Pimentel" +"junk science" a quick look found papers on both sides, very interesting. I need to read some more of those results later.

[BKM]

Wow.

Now this is some hysterical (not funny hysterical, scary hysterical) stuff. But, does it cotain a kernel of truth. I hope not.

http://dieoff.com/page185.htm

[JLA]

Wow.

Now this is some hysterical (not funny hysterical, scary hysterical) stuff. But, does it cotain a kernel of truth. I hope not.

http://dieoff.com/page185.htm

Dieoff.com has been around for a while. Note that the article was written in 2000--I think the site might go back to '96 or '97, but I'm not sure. If you're feeling a little too cheery and would like to get depressed in a hurry, I can think of nothing better than reading that site. Believe it or not, it has actually gotten a bit less "in-your-face" since Jay Hansen retired from running the site.

I try to stay away from it because it just depresses me. I prefer to focus on positive solutions, like some of the ideas promoted by Worldwatch. Dieoff.com takes everything as fate...I'd like to think that we have a choice to build a better future.

[Northboy]

I just finished reading the full report that I referenced in my above post. The report was prepared for DOE by SAIC and addresses the need to prepare for peak oil. (I emailed the author to request a copy.)

The economic losses due to a peak if we have not spent at least 10 years (preferably 20+) in a crash program to prepare will likely be measured in the trillions in the U.S. alone according to the study. It's a very sobering read, especially when you consider where it is coming from.

The problem is our need for liquid fuel--gas, diesel, jet fuel--for transportation. You need the energy density of these liquids for transit. Jets and trucks don't do very well on wood pellets, coal, or even electricity. Ethanol is a joke--it is only economical in the U.S. due to enormous subsidies. It's a net energy loser.

We've got a lot of work to do as planners to get ready for this. Whether it happens next year or thirty years from now, we need to to start incorporating the prospect of oil scarcity and much higher prices into the dialogue on transportation and land use issues.

We forgot to include natural gas and propane into the discussion. Northern reserves are still being discovered for these fuels. LNG works fine for running cars, but jet fuel....

[JLA]

We forgot to include natural gas and propane into the discussion. Northern reserves are still being discovered for these fuels. LNG works fine for running cars, but jet fuel....

Good point. Although natural gas in the US has peaked and is in decline, we have made up for some of this by importing from Canada. Right now, there is a lot of pressure to build LNG terminals to import additional gas from the Middle East and other locations. But, gas imported via tanker is much more expensive and there is a lot of NIMBYism around the construction of these terminals.

BTW, I believe you can also manufacture gasoline from natural gas (I read about it somewhere...not sure where). This may be a stop-gap measure when supplies begin to decline. I'm not sure how far it will take us, though. By at least one estimate, gas may peak around 2020.