That well known political pamphlet that on the surface bears some resemblance to a real newspaper, and arguably the only newspaper published in this country, the Libdemograph (Formerly known as the Independent when it reported news and was independent, and indeed I used to buy it) reports that we are a short way of the doom and gloom of peak oil which will lead to much wailing and gnashing of teeth.
Well, here is my take. Peak oil theory is rubbish, for one plain and simple reason. As demand surges, or supply seems restricted, the price rises and so more oil is available as it is more economic to extract.
There will be no recession like the 1970's after the Yom Kippur war that led the OPEC price rise of stunning proportions in such a short time.
Prices will rise, as they do other production methods will become viable and the price will stabilise. What will not happen is a jump from $9 a barrel to $40 a barrel in the space of a few days leading to recession.
What is more interesting is that at some point soon, it will be cheaper to grow oil than the drill for it. At that point the question will be where can I get land to grow oil for next to nothing. Then will follow the question how do I get fresh water to this hot and arid destination, when someone will work out that the solution is in the problem.
erik said
ReplyDeleteBenedict, this was an answer I gave a few days ago to your question, perhaps you may consider...........
Erik, So what would you rather we do? Let the French run the EU?
Pull out, become a free trader. Bi-lateral agreements with everyone. Operate own laws/case law/immigration/foreign policies.
Pull-out of EU "army", alter structure/articles of NATO.
Temporary farming chaos but manageable.
Get rid of many thousands of box tickers/quango squatters/uncivil servants. De-politicize everything, - Stats office, treasury, etc leave education to professionals, cream will rise to the top. Strive once again for excellence.
Flat rate tax, with high threshold, bring back married couples allowances, structure taxes to reinforce the family unit. Capital gains tax to 20%, IHT threshold to 1m pounds, indexed to RPI. Corporation tax to 15%, and after 1 year, 12%. Qualifications for all MPs/lawmakers to include 15 years at management level in Industry.
Industry to have vote proportional to manpower employed, in local and national elections.
Most important, be honest.
And do it all in the first 100 days
How much more would you like, benedict?
8:57 PM, June 12, 2007
But, being a finite resource, you'd agree oil has to peak at some point? The only question is 'when?'.
ReplyDeleteAgreed, rising prices will make it economic to extract more hard to reach oil; but demand is largely inelastic in the short-term. The price spike resulting from increased costs of extraction will have major economic consequences, in which hugely inflated oil prices must eventually lead to a reduction in demand and hence a peak in supply.
If you refute a peak, the only alternative is continually increasing flows at ever higher prices until one day the flow stops dead when all the oil has gone.
Which scenario seems more likely?
Bio ethanol is all well and good, but you'd need an area 11 times the size of the UK to cultivate enough crops to fuel even our existing transport fleet. It's a fringe, small scale solution at best.
Erik, I get an email every time someone comments, so you should comment where it is on topic. Do so and I will answer.
ReplyDeleteRussell, There are some theories that say fossil oil is not a finite resource, but I need not go there.
Oil is an infinite resource. It has been used as a fuel for millennia. For most of that time it has grown on trees, and for a very short period it has been extracted from wells.
All oil is solar power, it is merely a question of when the solar power was gathered.
You are very wrong in your numbers, I understand that to deal with all our liquid fuel needs from bio crops we would need to devout about 10% of our current agricultural land. Given that we don't need to grow any food, as we can buy it in from New Zealand, Argentina, Brazil or God forbid we allow the Africans to earn a living, Africa, we don't actually have a problem, we have a solution or indeed series of solutions waiting to happen.
Benedict,
ReplyDeleteI fear your faith in the ability to produce more and more marginal oil production as prices rise is misplaced. Many of the major oil fields in the world are now in decline. The issue is - how steep is that decline? And how fast are replacement reserves being developed to offset that? The attached article covers the third largest field in the world - Cantarell in Mexico.
http://home.entouch.net/dmd/cantarell.htm
Production is falling off a cliff - and not for want of investment. The oil just isn't available to get out of the ground to save the field - a field that has been a saviour of the Mexican economy.
If you think that a doubling of the price of oil means a doubling of revenues to the oil companies - it ain't that simple. Many of the non-OPEC countries operate production sharing contracts. These are set up such that a first large chunk of production goes towards paying off the initial costs of exploration and development of that field (called cost oil). Once the oil companies are paid back from the oil produced, the balance of the oil (called profit oil) is split on a very different basis - ususally with by far the greater share going to the nation whose oil it is. So if the price of oil doubles, then it means that the oil companies get their investment back much sooner - but the profit oil regime kicks in much sooner too, so their revenues through the fifteen or twenty years life of that field do not reflect the doubled price.
Plus what you also see when the price of oil rises is that the costs associated with getting that oil out the ground rocket. So for example, a deepwater drillship might have been hired out four years ago for say $150,000 a day. Today those same drillships will cost you $500,000 a day. And all the associated contract terms will have gotten skewed in favour of the service companies.
Many of the world's producing oil basins are well understood and extensively explored. Finding a new five hundred million barrel oilfield these days is a mighty rare event. It will take years to develop it and maybe billions of dollars. And yet at current rates of consumption, the world will use up that field in about a week! Put another way, in a hundred years, we have already used hydrocarbons it took the earth a hundred MILLION years to create.
So, you say let's grow biofuels and get out of the problem that way. Apart from big issues about the impact on biodiversity of nature which results from these monoculture prairies - where do you think the fertiliser to get the yields comes from? Yep - it is largely produced from hydrocarbons! So the natural gas gets used up producing fertilizers so that we can use slightly less crude oil.
Peak oil is most certainly not rubbish, Benedict. People can argue about whether it will occur in four or forty years - or indeed whether it has already happened - but unless the ultra-deep waters of the oceans have some pleasant surprises in store, cheap oil is about to become a distant memory.
Which is a particular problem for the US economy, built as it was in the twentieth century on cheap fuel to move goods and people. There is a school of thought that says that the US decision to invade Iraq - one of the last places on earth with huge and cheap-to-produce oil reserves - was decided upon once the incoming George W. Bush government was given intelligence briefings on the true extent of the decline of future Saudi oil production. You might doubt it, but there are signs America in particular is acting to ensure it is not caught flat-footed if the Indie should prove to be right...
Benedict, I'd always seen more pessimistic numbers for the amount of land need for biofuel. Perhaps I should try to run the numbers myself.
ReplyDeleteIn terms of the next 50-odd years, you may well be right, the Canadians have a heck of a lot of oil in the tar sands. I also hear that the oil major are now starting to prospect for oil underneath the deep ocean floor - whereas previously they'd restricted themselves to the shallow seas on the continental shelf.
I shudder to think what it would do to the climate if we ended up using it all.
"Oil is an infinite resource. It has been used as a fuel for millennia. For most of that time it has grown on trees, and for a very short period it has been extracted from wells."
ReplyDeleteBut the amount used pre-20th century is absolutely minute and irrelevant relative to the vast amount we've used since.
You're burying your head in the (tar) sand if you suggest we could maintain our current industrial infrastructure (requiring 85 million barrels of crude per day and rising) by converting to biofuels.
Crude is the stored solar power from millions of years of plant growth and we've exhausted half of that in a century's binge. It's hard to see how you could continue on the same consumption path when the ratio between production rate : consumption rate becomes 1:1 (from 1:10,000,000) as with bio-fuels.
Furthermore the energy in : energy out ratio in producing biofuels is significantly worse than simply pumping crude out of the ground. When you take into account the further energy cost of shipping it from Africa or New Zealand, it's a far from attractive proposition.
The most worrying stat I've seen is that modern agriculture requires 10 joules of fossil fuels to produce 1 joule of chemical energy in food form. That's not a sustainable proposition and suggests earth's carrying capacity post-fossil fuels will be substantially less.
It's a rough ride ahead.
"Crude is the stored solar power from millions of years of plant growth and we've exhausted half of that in a century's binge."
ReplyDeleteWhere do you get the half used part? I have yet to see any facts on the amount of oil available in the world and now I hear that half is already gone o.O
"Where do you get the half used part?"
ReplyDeleteTaking the mean of the latest independent estimates, you get a peak in 2011. The BP report suggests later - but that's just a summary of countries' stated reserves which are widely recognised to be inflated to increase their OPEC quota.
Marquee Mark, the point is that provided there is no sudden spike in oil prices things will evolve from using increasingly expensive to get oil to energy efficiency and alternate means of energy production.
ReplyDeleteVenezuela has vast reserves of difficult to get at oil which becomes economic at around $60 or so dollars a barrel.
As for bio fuels, who said you need or want petrochemical based fertilizer? For a start there would be very little point (marginal benefit in terms of greenhouse gasses), secondly you don't need them. They are generally used to provide nitrogen and you can grow peas to do that (or mustard) but we quite literally piss away millions of gallons of nitrogen based liquid fertilizer every day (in the toilet).
Timothy, well, There is an awful lot of underutilised agricultural land out there, particularly in Europe where we grow crops we then don't seem to want.
Russell, to give you an idea of just how much renewable energy there is available, more energy from the sun hits the earth in a single minute than the total energy consumption of man in a year. That is total. Not just for road, or this or that sector, but TOTAL.
As for transporting bio fuels what do you think we do to transport fossil ones?Oil tankers are driven by oil, there is no reason why bio oil tankers can't be run on bio oil.
We don't have a problem, we have a solution (or rather solutions) waiting to happen.
As for the amount of fossil fuels used to grow bio fuels it does depend on how you grow them, see above about "pissing" fertilizer (specifically urine) down the toilet.
Lord Naz, there is no way anyone is going to agree about how much oil is left unless we pull it all up, measure it and put it back, which I doubt is going to happen.
"to give you an idea of just how much renewable energy there is available, more energy from the sun hits the earth in a single minute than the total energy consumption of man in a year"
ReplyDeleteNo-one's disputing there's a vast amount of energy out there - the difficult bit is capturing it, transporting it and replacing the millions of years of stored energy we've pumped out of the ground in the last hundred years.
Pre-industrial revolution the earth sustained around 1bn people... in the fossil fuel era, this has grown to 6bn+ in the blink of an eye. It seems questionable whether we can sustain this 6x greater carrying capacity without the fossil fuels that made it possible in the first place.
I'm a big fan of renewables, but haven't seen any research to suggest that (even with biofuels) we could continue on a "business as usual" scenario.
Interesting article from Business Week (not the usual scare mongerers) here: http://www.businessweek.com/magazine/content/07_26/b4040074.htm?campaign_id=rss_magzn
ReplyDelete"We will know soon enough whether the capacity to raise production really exists. If not, basic math and the clock tell the story. All alternatives—geothermal, solar, wind, etc.—produce only 3% of the energy supplied by oil."
Peak oil is already past, maximum crude oil production was 2005. The figure of 85 mbpd includes all oils, and not crude alone.
ReplyDeleteBasically, it's too late to panic.
Anybody who can't put 2 and 2 together (lower production supply + increasing demand = rising oil prices) either hasn't done any research, or refuses to accept reality.
Only free-market capitalists are naive enough to think that infinite economic growth is possible on a finite planet using finite resources. They're also naive enough to believe that self-interested human beings primarily motivated by short-term profit gain will "naturally" produce a market outcome that is beneficial to the long-term common good.
Only religiously free-market believers don't see a fatal market flaw when oil per liter is still cheaper than milk or beer, which are much more "renewable" and less vital to world economies than oil.
Human beings are traditionally short-sighted and given to rationalize in order to protect their own interests. They are only willing to change when catastrophe actually strikes - not when it is looming on the horizon. Global warming & peak oil are perfect examples of how human beings don't react until the problem is already upon us.