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The Most Important Thing You Don't Know About Peak Oil (Mindfood)

Thursday, March 17, 2005 15:14

By now, most people who have been paying attention probably realize that Peak Oil is upon us, even if "peak production" hasn't technically been reached yet (due to the fact that increasing demand is already on the verge of outpacing supply). From here, gas prices keep going up. Of this, I no longer have any doubt.

What I have doubted are the predictions that it will be accompanied by a cataclysmic crash in which the world suddenly turns upside down and civilization as we know it goes bananas. Why not a gradual (though still painful) transition to other energy sources and/or more sustainable ways of living as people adapt over the span of decades? This post does do a good job of stating the logic as to why a more drastic version could happen. Basically, it's not the oil itself that would cause a sudden collapse, but the panic reactions of countries and masses of people when realization sets in.

Should the oil markets themselves begin to 'connect these dots', then all our lives are going to be impacted violently and immediately. The commodity traders for various interested firms live solely by anticipating conditions and events, not by debating them and verifying them. The old mantra is, you "buy the rumor, sell the news". This is the reason you'll never see "Peak Oil" covered by a respected media outlet. Because as soon as it is recognized that for all practical purposes the situation is already upon us, then a fast and viscious "resource grab" will be initiated. The price of oil in the markets will begin to rise dramatically. This will initiate a circular hedging / hording mentality in large end-users, governments, and multi-nationals. This will then have a myriad of devastating effects, but all average Joe Consumer is going to notice is that the price at the pump will experience a brief and dramatic blip upward, gas lines will form for a short time at the corner-stations, and then suddenly the corner gas-stations will go dry altogether. [...]

If this scenario sounds over-dramatic, keep in mind that what I'm talking about is a dawning recognition of something that many analysts have already come to realize: that the "oil grab" is in fact already on, that it's not a temporary 'bottleneck' or passing 'shock', and that the losers in this game will not survive. A global game of 'blind man's bluff' is underway, with all the players pleading ignorance of the issue for as long as possible so they can get their pieces in place... all the while anxiously watching for the first itchy-trigger finger that's going to set the whole thing off. [...]

The world powers are positioning themselves for war. The war is over who can take the most oil.

And a few words of wisdom for those of us who may think we'd like an apocalypse...

Also, those who secretly long for the coming collapse will be in for a shock. The initial oil shortage, when it does come, will certainly be a serious inconvenience, but the events which proceed after that are going to humble us all to the core.
Oil
by Zan Lynx (2005-03-18 11:45)

People need to realize that America doesn't actually need foreign oil. We've got plenty in Alaska. Nature up there is nice and all, but oil drilling won't destroy all that much of it. The benefits outweigh the costs. Anyone who really wants to preserve nature instead of human needs should take themselves out of technological society and live like the Amish, or be totally hypocritcal.

We've also got oil shale which can be mined like coal. That's probably more environmentally destructive than oil drilling in Alaska, but we've got it.

And finally, we should change power generation to nuclear plants.

For transportation with minimal oil use we can use either nuclear powered engines on trains or use electrical power from nuclear generation at a power station. As oil prices rise, we'd need to move goods by train instead of truck and then use electrical powered trucks to deliver from the train to end-users.

But for America what we should do immediately is open drilling in Alaska and leave the Middle East to Europe and China. Then we should build a hundred or so nuclear power plants.

I doubt the scenario described by that article will happen. The US would go into oil rationing and we've got the Strategic Reserve to buffer any drastic dips in supply. Once oil rationing starts you can bet environmentalist objections will cease to matter.

Oil Production and Economic Growth
by bouncing (2005-03-18 21:21)

Well, there are pros and cons to drilling in the ANWR, but the assertion that it could replace the Middle East as a source is absurd. Estimates as to how much oil there is there are diverse, because exploration itself can be environmentally damaging. By the largest estimates, ANWR's reserves could replace Saudi oil (only Saudi oil) for less than a year. Less liberal estimates place that closer to a few weeks. Either way, the United States cannot reach long-term independence given its current demand. We use about 25% of the world's oil, and we do not have 25% of the world's reserves. You do the math.

I actually work for an oil man. Well, indirectly. Our funder is a multi-millionaire who made his fortune in oil exploration. He's got a book called (I think) "The End of Cheap Oil" which predicts an oil production peak in the near future, and he says peak oil is an absolute certainty in the next few years. Interestingly enough, he voted for Kerry although he's always been a Republican. Why? Bush selectively enforces environmental rules, forcing companies to break the law to stay competitive. If everyone has to follow the rules, it's a level playing field for smaller companies. In other words, as a real conservative who believes in actual competition, he just couldn't vote for Bush.

If you want to know what peak oil production will be like, just look at the late 70s/early 80s during the "oil crises". There were no massive crashes, but plenty of layoffs and inflation. I think we need to look at ways of making the economy work without constant growth -- because by definition, continuous growth is unsustainable with finite resources. But speculation about short-term peak oil impact is silly because we've seen it before.

The oil opened up in Iraq should offset the declining reserves in other markets, if the contractors can defend their infrastructure from sabotage. It's pretty serendipitous that the Iraq war is just years before peak oil production.

Oil and Stuff
by Zan Lynx (2005-03-19 02:03)

Here's a handy site:

http://www.gravmag.com/oil.html

And a bit about ANWR:

http://www.doi.gov/news/030312.htm

So it looks like ANWR could replace half our Middle East imports. (I'm most worried about the Middle East because they are closest to China.) Prices would rise and we'd feel the pinch but it'd still be a lot of oil. If we lost all foreign imports including Canada and Mexico, it would really hurt.

I think that we've got enough oil to keep going and avoid any catastrophes. With no foreign oil at all we could still provide essential services.

We'd need to switch to other energy sources. I really think nuclear is the way to go. Plenty of uranium to burn for a while. Then we could use the power in batteries or to create hydrogen turbine or fuel cell power.

I don't really see a need to cut consumption just yet, instead we need to look ahead and build new non-oil using energy sources. I think it will start happening quickly as oil prices rise.

Omission
by Bitscape (2005-03-19 03:55)

The doi.gov url you cite cleverly omits any comparison of ANWR to how much oil the U.S. consumes per year, or how much is imported, and instead talks about how huge it is compared to oil that is pumped from other states. There's a reason for that. U.S. oil production peaked back in 1970.

By combining both of your sources, I did a little math. If the total recoverable oil in Alaska is 10.4 billion barrels, and the U.S. consumed 20 million barrels per day in 2004, then at that rate, Alaska would be able to supply the U.S. with oil for 520 days, or 1.4 years. Not exactly a long term solution, especially when you consider that it's going to take many years to pump it all out.

As for nuclear energy, here's what one site has to say about it though (you may or may not trust the credibility of the source, but I would consider it at least as believable as CNN, which admittedly isn't saying a whole lot):

Nuclear energy requires uranium - of which the US has enough to power existing reactors for 25-40 years. As with oil, the extraction of uranium follows a bell-curve. If a large scale nuclear program was undertaken the supply of US domestically derived uranium would likely peak in under 15 years.

Even if such a program is undertaken, there is no guarantee the energy generated from nuclear sources would be any cheaper than energy generated from fossil fuels. Attempts by China and India to scale up their use of nuclear energy, for instance, have already caused uranium prices to skyrocket.

Uranium supply issues aside, a large scale switch over to nuclear power is not really an option for an economy that requires as much energy as ours does. It would take 10,000 of the largest nuclear power plants to produce the energy we get from fossil fuels. At $3-5 billion per plant, it's not long before we're talking about "real money" - especially since the $3-5 billion doesn't even include the cost of decommissioning old reactors, converting the nuclear generated energy into a fuel source appropriate for cars, boats, trucks, airplanes, and the not-so-minor problem of handling nuclear waste.

More fundamentally, the problem we have, especially in America, is that we are accustomed to the idea of constant expansion, even to the point that we take it for granted. The economy always grows, we can always consume more, technological advancements (most of which are derived to a large extent from oil energey) will always provide us with ever-fancier gadgets, etc etc. Just because this has been the trend for the past few hundred years does not mean it can extend into infinity. Physics dictates otherwise.

Oil and other fuels represent many eons worth of energy gradually stored up by the earth, which we have managed to spend in the span of a couple hundred years -- a tiny flash in the grander scheme of time. This has made for some very fascinating developments, but a way of life that depends on a temporary surge of a finite resource cannot last; the only question is when a return to equilibrium will occur, and how we will adapt when it does.

This isn't necessarily a bad thing. Someone once remarked that we should really be glad that the oil is running out, because if it didn't, we'd keep burning it until the whole sky turned black, and all the plants and trees died. If there were no plant life, guess who would die next? Fortunately, the earth hasn't given us quite that much rope with which to hang ourselves, at least in that manner.

Anyway, these are interesting times.

A return to coal?
by Linknoid (2005-03-19 07:53)

I see problems with moving completely over to nuclear power. The main issue is the long term storage of the waste material, but the main reason uranium for power plants has been as cheap as it has been is because a lot of the cost has been paid for by the demand for plutonium (a byproduct of breeder reactors) for nuclear weapons. Since we're no long making nukes by the 10s of thousands, the price of running a nuclear reactor is going be going up, in addition to the demand increase quoted by Bitscape.

I've heard estimates that the US has enough coal to last us for something like 300 years if we switch to that. I have little doubt that if worst comes to worst, we'll greedily switch over to the natural resource we do have, pollution be damned. Hopefully the increases in technology have gotten us to a point where they can keep the coal burning relatively clean (ok, so it doesn't burn clean, but they can filter out most of the stuff bad for the environment). Either way, the price of clean power won't be as cheap as it is now.

But I also think we need to be putting a lot more emphasis on solar and wind power. I go outside most days, and the wind is blowing like mad, but does Nebraska care? No, they want to keep using coal, uranium, and natural gas (I've done research on the power plants in Nebraska, those are the types used here, or there might have been one oil) to make all their power. I'm not sure how many windmills it would take to power a city like Lincoln, but each one they build means that much less dependance on burning stored energy. I wonder how much energy you could extract like this from the natural environment before it starts seriously impacting weather patterns and such. I suspect quite a bit.

Solar is a bit more difficult, mainly because of very environmentally costly method of producing solar panels. But still, as science keeps increasing their efficiency, the more they will be practical for deployment, and the less we'll have to depend on cars. Maybe someday everyone will have their own windmill and/or solar panels, and all we'll need the power companies for is the distribution network (I have a sunny day, you have clouds, I sell power to you, and the maintainers of the power lines take their cut for their services).

Vehicles are a different matter. I'd be happy to see people driving far less, and if the price of gas increases gradually enough (i.e. over like 10 years or so), hopefully everyone can make the transition to alternative methods of transportation as they realize that driving themselves everywhere is no longer a viable alternative.

"Quality of life" will go down, but I don't see that as necessarily a bad thing. Us americans are a consumer society, and I think it would be very good for us to use more wisdom in what we buy. But I guess that's more along the line of the insane amount of dependence on debt that our culture is built around.

Still, much of our infrastructure is built around a dependence on oil. From what I've heard, biodiesel has very good potential, and is already in active use. Ethanol on the other hand, it seems like I heard that it takes more oil energy put into it than you get out in ethanol energy (here at bitscape.org?).

But we may return to the days where long trips require public transit, but for a different reason than in the past. People will have to give up their fast cars, cars that can drive across the US with only brief stops for gas (it used to be that you couldn't drive long distances simple because of lack of reliability). Instead, if we get our power system done right, switching to electric may be the way to go. For local transit, just leave your car charging for several hours, and you're good for another drive downtown and back.

For long trips, a return to trains may be necessary. They can't compete with cars and airlines right now, but if the price of oil goes through the roof, I imagine they'll be quite attractive once again. I say they'll be more attractive because they aren't mass constrained in the same way vehicles and airplanes are. That means you have a lot more options for propulsion methods than you do for a small car with internal combustion engines, or a plane that has to be light enough to actually take off.

I would see all this as a good thing. Maybe inconvenient compared to what we have now, but we're buying our convenience at the price of the future.

I work at the department of roads. The people I work with don't share my view. We plan roads for expected consistant growth over the next 20 years. We spend 10s of millions of dollars on a single highway interchange, a mile of road runs in the millions I think, with no end in sight. The only thing that's going to stop this insanity of growth is when the price of using those roads is just too much to bear. $10, $15 a gallon, maybe? Maybe we'll end up like those pictures I've seen of Shanghai with thousands of bicycles crowding the streets.

I can continue my own personal effort to minimize my burning of oil, but I can only change myself. The decisions of 250 million people in the US far outweighs the efforts of one person. I guess I could become an evangelist for conservation, but even those I could influence (I can't even influence those that I'm around on a daily basis) would have a small impact on the whole.

Costs of Energies
by bouncing (2005-03-19 12:55)

Something to consider with ANRW oil, besides what Bitscape points out, is that is inherently more expensive. I've come to understand from talking to energy people I share an office with that Oklahoma, for example, still has vast supplies of fossil fuels, but they aren't cost-effective to tap.

There are a few factors. One is the cost of extraction, but after extraction the cost of refinement must be considered. In the early days of the Texas oil boom, Texas was an oil center not so much because of its supply but its quality -- Texas oil required very little refinement and was therefor most cost effective than other sources.

Middle east oil is the most cost effective oil out there. Not only is it of very high quality, the virtual slave labor system of the countries where it's produced keep costs down. ANRW oil, in comparison, is not that cost effective. So even if it's tapped, don't expect fuel prices to decline any. Similarly, Canada has huge oil reserves in underground "sands" but extraction cost is quite high and so almost none of these resources have been tapped.

Nuclear power has the advantage that it does not contribute to global warming. Combustion based fuels, no matter how you cut it, produce carbon which has to either be released or captured and stored.

I read an article in MIT Technology Review that discussed the potential for under-ocean turbines that would harness the power of the tide. That's a promising idea that would both be renewable, and unlike wind or solar power, would be consistent. The short-term solution may be nuclear energy, but the long-term solution I think is smaller cities and reduced consumption. I disagree that reduced consumption always means a reduction in quality of life. Driving across Los Angeles, for example, is one of the most consumptive things a person can do, but it doesn't promote quality of life.