<DrumBeat: June 14, 2006The Oil DrumNew BP statistical review>

159 comments on Plateau background

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westexas on June 14, 2006 - 10:07am Permalink | Subthread | Parent | Comments top
The WSJ had a couple of interesting articles yesterday, which I just glanced at.   If memory serves, one article stated that Chinese car sales are up by more than 50% year over year.  

The other article was about data processing centers, which the article stated can use as much electricity as a city of 30,000 to 40,000 people.  There was an article in the NYT about the new Google computer facility going up in the Pacific Northwest.   They located it there to be close to large amounts of cheap (hydro) electricity.  

In today's WSJ, there is an article contrasting the fate of the energy exporters to the energy importers, "In Oil's New Era, Power Shifts to Countries With Reserves."   There was an interesting quote by the Saudi Oil Minister, "Any industry that requires intensive energy will be welcome in Saudi Arabia.

At I have noted before, it seems to me that we are going to see a population shift, here in the US, and worldwide, to areas that have surplus energy to export.   As I have also pointed out, as depletion and rising domestic consumption both work against net export capacity, net exports are going to disappear at a rapid rate, while demand in energy importing areas like China continues to go up at a rapid rate.

Final quote from the article, by Henry Groppe, "We have entered the era of scarcity and price rationing (for oil)."

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wstephens on June 14, 2006 - 10:33am Permalink | Subthread | Parent | Comments top
And another interesting quote from that article:
"It doesn't appear that the planet is running out of crude, as proponents of the "peak oil" theory have argued."
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westexas on June 14, 2006 - 11:14am Permalink | Subthread | Parent | Comments top
"It doesn't appear that the planet is running out of crude, as proponents of the "peak oil" theory have argued."

This is of course a mischaracterization of the Peak Oil argument--that one day we have oil, and the next day we don't.  In any case, the WSJ writer went on to state that "But some oil experts foresee the big Western companies running out of easy-to-tap oil, and most of them are already turning to harder to recover reserves."  

The overall theme of the article regarding Western oil companies is that they are turning toward GTL projects and to tar sands and very heavy oil and away from traditional exploration--not because they want to but because they don't have a choice.

There were three broad themes in the article:  (1)  life is good for energy exporters, not so good for energy importers; (2)  Western oil companies are turning more toward mining type operations for oil, rather than traditional drilling and (3)  they finished with a pretty good summary by Henry Groppe, that we have entered a new era "scarcity and price rationing."  

The only mild gripe I have with the article is the mischaracterization of the Peak Oil argument, but the rest of the article all but made the Peak Oil argument, but in different words.  The only real question is how fast unconventional oil production can be brought on line.  IMO, it won't be fast enough to offset the declines in conventional production.

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wstephens on June 15, 2006 - 5:37am Permalink | Subthread | Parent | Comments top
Not only was it a "mischaracterization" -- the sentence was a non-sequitur -- given the comments made in the rest of the article.
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mcain6925 on June 15, 2006 - 12:45am Permalink | Subthread | Parent | Comments top
The other article was about data processing centers, which the article stated can use as much electricity as a city of 30,000 to 40,000 people.  There was an article in the NYT about the new Google computer facility going up in the Pacific Northwest.   They located it there to be close to large amounts of cheap (hydro) electricity.

People don't pay enough attention (IMO) to the increasing role of electricity in the US economy.  As implied in the following graphic comparing economic growth in the US to electricity growth and total energy growth, electricity is playing an increasing role in our total energy budget.

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TI on June 15, 2006 - 2:22am Permalink | Subthread | Parent | Comments top
Right, electricity is the clue. Cutler J. Cleveland has some reasearch on this (http://www.eroei.com/the_chain/economics_p.html) where he shows the importance of the energy mix - especially electricity - fot the economic growth. And here we have the coal again. Coal is mostly used for generating electricity, and electricity is what modern industry needs. No wonder China is such an industrial giant.

According to BP, the US electricity generation in 2005 was 4229 TWh, and the Chinese 2475 TWh. But the Chinese generation grew 12.3% and the US only 1.7%. The growth of the Chinese electricity generation accounted for 42% of the increase of the World electrcity generation in 2005. It is important to note that in China most of the energy and electricity is used in manufacturing (up to 70%), unlike in the US where residential and commercial use dominate (the share of the industrial sector of the electricity consumption is about 30%). This means that the Chinese industry can use considerably more electricity (and energy) than the US manufacturing sector. Here we have a striking example of the importance of energy in economic development.

We should especially note the rate of growth here. China is definitely where the growth is in energy production. The average electricity generation growth between 2002 and 2005 has been nearly 15%. This means doubling the production in 5 years! If the 2005 growth could continue, the Chinese would produce more electricity than the US in 2010 and its industry use it 3 times more than the US industry - and nearly as much as the US and EU industrial sectors together. I think it is easy to understand the significance of this.

An another matter is, if these extrapolations are realistic. It is obvious that China will meet the physical limits to growth very soon. What will happen when the growth engine of the World energy and economy stops?

The Chinese energy (coal) production is, of course, crucial to the Climate Change. China is overwhelmingly the most important factor here. So the future of Chinese energy production is decisive to the climate forecasts. The forecasts of the increase of CO2 in the atmosphere are dependent on the fossile energy (mostly coal) supply forecasts. But most of those forecasts used here are based on EIA or IEA super-optimistic "official" long-time energy scenarios. Closer look suggests that the overall fossile energy production is nearing to a peak very fast, or at least to a situation where the growth slows considerably. I think these are basic facts for a global Climate Strategy.

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