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Lies, damned lies and BP statistics
Posted by Euan Mearns on June 18, 2007 - 11:16am in The Oil Drum: Europe
Topic: Policy/Politics
Tags: bp, chris skrebowski, colin campbell, lies, middle east, oil reserves, opec, saudi arabia [list all tags]
I almost choked on my whisky when I heard on the UK national television news (13/06/07), a story about peak oil and questions asked about oil reserves figures quoted in the newly published BP Statistical Review of World Energy.
The news item was referring to a story in Thursday’s Independent (14/06/07) (a national UK newspaper) by Daniel Howden titled “Scientists challenge major review of global reserves and warn that supplies will start to run out in four years’ time.” Howden refers to the work of Chris Skrebowski (Oil Depletion Analysis Centre or ODAC) and Colin Campbell (Association for Peak Oil or ASPO). Kudos to Chris and to Colin for getting this news onto the front page.
There’s more…..
Note that the Indepent's server has been very slow on occasions. A pdf of Howden's article may be downloaded from the TOD server here
So what is this all about? If you are unfamiliar with the Middle East OPEC reserves reporting scandal and the culpability of BP and OECD institutions in perpetuating myths about global oil reserves then this is explained below using Saudi Arabia as an example.
In its purestst form, oil reserves accounting follows a simple convention:
Reserves at start of period
Less production
Plus new discoveries
Plus or minus revisions
Equals reserves at end of period
Oil reserves therefore, are a dynamic variable, relentlessly pulled down by production when the rate of new discoveries declines, as it inevitably does in every oil region.
Revisions are a wild card that allows companies or countries to correct for past mistakes or to take account of new technologies that may boost recovery or changes in oil price that may make recovery more or less economic.
Saudi Arabia is the second largest oil producer in the world (after Russia) and is the largest exporter with 2006 exports of roughly 8.9 million barrels of oil per day. This represents 20% of global oil exports and it is therefore vitally important for the World to know for how much longer Saudi Arabia can continue to produce oil at 10 million barrels per day - that equates to roughly 4 billon barrels of oil per year.
The chart shows two lines that provide very different pictures of Saudi oil reserves. Both lines are anchored on 1980 – the year that the Saudi government took 100% control of Aramco – the state run Saudi oil company.
The blue line shows the official Saudi reserves as reported by BP whilst the red line shows how Saudi reserves would have declined since 1980 as a result of the 77 billion barrels of oil that have been produced since then. The red line is then back calculated to 1936, the year Saudi production began and accounts for the 120 billion barrels produced since that time. The red line does not account for new discoveries and revisions and there is therefore scope for the 91 billion barrels indicated reserves in 2006 to be increased or reduced. It is noteworthy that Saudi Arabia has not made any super giant discoveries since 1980 and that new discoveries since 1980 are unlikely to have a huge impact upon the current reserves figure.
There are two main issues with the blue official line. The first is that reserves were substantially revised upwards from 170 to 260 billion barrels between 1987 and 1989. That’s a 53% revision that does not correspond with new discoveries being made. The Saudis must therefore argue that this one off escalation in reserves was due to previous under-reporting or upwards revision based on new technologies such as horizontal drilling and 3D seismic that allows more accurate targeting of oil wells.
The second and more serious issue is that since 1988, there has been no annual adjustment to reserves for production. That flat blue line should at least decline parallel to the red line.
Combined, these two issues suggest that official Saudi reserves are grossly over-estimated. We can say with certainty that the flat line annual return is false accounting, which leaves us in a position of not knowing what the actual Saudi reserves are. I’d suggest that the true figure likely lies closer to 91 billion barrels than the official figure of 264 billion barrels as newly reported by BP.
Those who are unfamiliar with this accounting scandal may be surprised to know that the UAE, Kuwait, Iraq, Iran, Syria and Qatar all follow this same practice.
The reasons for Middle East OPEC countries following this reserves convention are complex but regular readers of The Oil Drum will be aware that ME OPEC may be inclined to report figures for Ultimate Recoverable Reserves (URR) as opposed to remaining reserves. In other words, it seems they report how much oil they will recover throughout the whole history of their oil industry as opposed to how much oil they believe is left to be recovered.
The main reason for writing this short piece is to add my voice to Skrebowski, Campbell, Leggett and others and criticise the BP Statistical Review of World Energy for once again reporting without question the validity of ME OPEC official reserves figures. BP is not alone in perpetuating the ME OPEC reserves myth and the International Energy Agency (IEA) and Energy Information Agency (EIA) are equally culpable.
This is how BP defines Proved Oil Reserves in their statistical review:
Proved reserves of oil - Generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.
This definition is just wholly incompatible with the reserves reporting standard of Saudi Arabia and other ME OPEC countries. Whilst I am aware that there can be business and grander political motives for BP simply reporting the data as presented by ME OPEC countries, there comes a point where the interests of business and national etiquette are outweighed by the more substantial interest of the OECD securing future supplies of energy.
Peter Davies, Chief Economist with BP was reported by Daniel Howden as saying:
We don't believe there is an absolute resource constraint. When peak oil comes, it is just as likely to come from consumption peaking, perhaps because of climate change policies as from production Peaking.
If this is an accurate quote it betrays an extraordinary level of denial within BP. I would agree, however, that $200 per barrel might produce a consumption peak. This of course may suit BP but it is not in the interest of OECD economies to permit this to happen.
For so long as BP, the IEA and EIA go on reporting ME OPEC reserves without question then the leaders of the major OECD economies will continue to ignore the energy peril that they are confronted with. Long-term readers of The Oil Drum will be aware that I lean towards the more optimistic end of the energy depletion spectrum. I firmly believe that the energy gap left by depletion in fossil solar fuels (oil, natural gas and coal) may be substantially filled by a mix of renewable solar energy, nuclear power and smart engineering. If the appropriate actions are taken then harm to OECD society and civilistaion, that may be caused by fossil fuel depeltion, may be minimised. OECD governments, however, must take serious action to promote investment in our energy future – and this will only happen when organisations like BP present a refined version of the truth about our depleting supplies of oil and natural gas.
I appreciate that BP may feel compelled to report reserves figures for ME OPEC countries and in the absence of reliable data what should be done? At the very least ME OPEC reserves should not be referred to as Proved Reserves as defined by BP and attention should be drawn to the fact that ME OPEC reserves figures are not declined for annual production. That at least would be a small step in the right direction that would bring greater transparency to OECD planners and pressure to bear on ME OPEC reporting standards.
Footnote: the title of this piece is derived from the saying “Lies damned lies and statistics”. In no respect is it implied that BP are being untruthful. But questions need to be asked if they may be reporting statistics in a self serving way. I might add that in many ways, the BP statistical review is a tremendous source of global energy data. It is just a great pity that it continues to be scarred by the reporting issues dicussed here.
Nice piece Euan.
How did you come to the 120 Gb for cumulative production in Saudi? It is usually referenced at 100 – 105 Gb.
How verisimilar do you think are Campbell’s 160 Gb and Bakhtiari’s 130 Gb for Saudi?
Folks, besides these imperative comments made by Euan consider the following: Iran reports 130 Gb of remaining reserves every year. At the same they struggle to get daily production above 3.5 Mb/d, and more than that, gasoline consumption is being rationed.
How can anyone believe in those 130 Gb?
Luis - 120Gb production to date is based on API Facts and Figures Centennial edition 1959 for 1936 to 1964 and then BP data from 1965 to present. BP is C+C+NGL. How the Centennial edition dated 1959 reports data till 1964 - I don't know.
Are you saying that Campbell estimates 160Gb and Bakhtiari 130Gb remaining reserves in Saudi? If so then Campbell has 61% of the Saudi official estimate and Bakhtiari 49% - and so in those terms they are both substantially lower than the Saudi official estimate.
If we assume the 1980 figure was prepared in good faith, then an upwards allowance does have to be made for new discoveries and new technology - which would nudge the 91 billion remaining upwards towards Bakhtiari.
If memory serves me, Simmons said in Twilight that the Saudis revised their reserves up twice. They were estimated at 110 billion barrels in 1978 and were revised up to 170 in 1980. That, presumably, would take care of the revisions made for legitimate reasons.
Luís de Sousa:
1st I do not claim Iran has 130Gb in remaining reserves.
However, the foreign analysts' opinion seems to be that the current problem with Iran's oil production rate is due to:
- lack of technically skilled workers
- delays in new projects (partially to reasons above/below)
- lack of funding in new projects (oil minister Kazem Vaziri-Hamaneh has himself directly stated this)
These could explain a current lack of production capacity, even without imposing final geological constraints. Of course, for their current wells they must be constrained, otherwise they'd be producing more.
As for the rationing, I think this is a direct consequence of their double-folly:
1) subsidizing domestic consumption way too heavily (gasoline roughly 10 euro cents/liter), which has really accelerated the growth of consumption
PLUS
2) not being able to produce more oil (either through lack of investments/skill or due to geological constraints).
They are in the situation where they are now: they need to export to get money, they need to keep local economy going (cheap oil), which has been financially strangled for so log and they also need to invest in new projects.
I think it is going to be very difficult to do it without several foreign big investment projects and as far as I understand it. USA may be still weighing whether that is the best option for them.
To me the situation for USA looks like this:
Fact: Iran still exports a big amount of oil (roughly 2.5-2.9 Mbpd, I can't find exact data)
Assumption 1: Iran has a lot of unexploited oil reserves (whether it is 130GB or not)
Assumption 2: Iran's own production development is in a rut. If they do not get new projects in the pipeline soon, their production levels could crash (Vaziri-Hamaneh has been quoted as saying 13% p.a.)
Assumption 3: IF Iran's production crashes, that combined with the situation in North Sea, Canada and Mexico, will cause huge strains on the system (pricing, availability, access to right type of refining capacity as wrong type of crude would be brought to market in order to compensate).
So, USA has to ensure that Iran will keep producing.
Options:
1) Attack, take over and start investing.
2) Remove sanctions, threat of war and make Iran an inviting target for investments. Risk terms of PSA and export-end-points => end result not acceptable to USA
I'm not sure the PNAC posse/Israel Lobby allows for option number 2. It's not a "long term" solution for them. Too many risks.
However, attacking might in fact play out assumption 3: removal of Iran from oil market. I won't even try to consider what it could do to Russia/China relations. I'm not 100% sure USA is overly concerned about those either.
Supply-demand margins are very tight now. I don't think they can risk Iran going off-line currently.
So, to be able to attack, USA must enable the world to build build a cushion first. A 1-3 Mbpd temporary cushion? Is that doable?
I don't honestly know, but based on all that I've read here and elsewhere, I seriously doubt it's easy to do.
I think USA, due to their strategic thinking and oil dependency, is between an rock and a hard place in regards to Iran.
They'd love to be able to double Iran's oil production (and so would Chinese, Europeans, etc.)
So, they can't risk production falling to zero due to non-investments or due to military conflict related chaos.
I'm afraid that in the end, they will attack, because that is what they appear to be gearing up to do. Of course, I hope I'm wrong and they'll do this through negotiations.
Sorry for off-topic, but imho, the strategic moves of USA also indicate to me that there are serious untapped reserves of oil in Iran.
That is the worst analysis I've ever read about anything.
It may well be so.
It'd be nice to hear why you think so.
I have a question about the various classifications (proven, probable and possible) of reserves. I understand that the international oil companies are very conservative about what they call proven reserves because of SEC regulations which often leads to reserve growth.
I'm curious, how accurate is the probable reserves at predicting what the actual reserve are after reserve growth? Or, to put it another way, how much of the probable reserves typically end up being reclassified as proven reserves as time passes?
Alan - I am unable to answer your question specifically but the general points you raise about SEC regulations, 1P, 2P and 3P reserves all in relation to ME OPEC reporting standards, is a vital issue to understand.
There is no doubt that overly conservative SEC reporting standards contributes to the phenomenon of reserves growth and that initial 2P/3P estimates will lie closer to ultimate recoverable reserves (URR) than will 1P estimates.
My belief is that ME OPEC countries have in a way estimated 3P reserves back in the 80s - related to production quota negotiations. There is really nothing wrong with that. The problem arises when these are quoted as 1P, giving rise to the expectation that they really have a lot more oil - when they don't. As detailed above, the other problem is the fact that these initial (3P?) estimates have never been declined for production.
Last year I did an article on the reporting methodology of IHS Energy (IHS Data Suggest Kuwaiti and Global Proved Oil Reserves Significantly Lower Than BP Estimates) where they stress that they report 2P and not 1P reserves. IHS reserves estimates, therefore, are significantly lower than BP - especially for Kuwait. I'm pretty disappointed that BP have continued reporting ME OPEC reserves as 1P, on equal footing with the much more conservative definition of 1P used throughout the OECD and I intend to pursue this matter directly with BP in the coming months. IMO the first and most vital step in international preparation for energy decline is to gain acceptance throughout the policy makers within the OECD that a serious problem exists.
1P = proved
2P= probable
3p= possible
In some ways it would make sense that OPEC countries would do just sufficient exploration and research each year to ensure that they could make up for the oil that is pumped. So, if they chose, they could spend more each year on exploration and technological upgrades to upgrade their proved reserves, but they know that doing so would only cause their oil to run out faster at a lower price.
On top of this, they may very well have a significant buffer of "proven-to-themselves" reserves, but choose to report slightly less than this, which allows them to maintain a steady "proven-to-the-outside-world" level.
Is there actually any "official" explanation from OPEC countries as to how they have managed to keep their "proven" reserves remaining steady for so long?
Not that I'm aware of. But I see that as less than 50% of the problem. The core issue is the way that OECD institutions reproduce the OPEC statistics without question. Those inflated reserves numbers are then quoted by political leaders from around the world and provide an excuse for inaction.
We are 100% certain that this flat line reserves reporting is wrong - and it is pretty unacceptable to have a Global energy strategy that is based on numbers which are known with 100% certainty to be false (and that is not pre-judging if they are too low or too high).
It might make sense but it would be an incredible trick to just discover enough oil, or to just tweak technology enough, to replace production.
Not if they maintained a buffer that they weren't telling us about.
In principle 1P reserves in the USA are 90% probability, although sometimes 95% probability is used. 2P reserves are 50% probability or "most likely". 3P are 10% probability. Pre 1989 the FSU seemed to report 3P as if it were 2P. The SEC requires reporting of 1P, so USA reserves must grow over time toward 2P. Laherrere has analyzed the actual growth of a number of fields in the USA and concluded that the "proven " reserves reported are closer to 60-65% probability, ie somewhere between 1P and 2P. The rest of the world is thought to report 2P reserves. In their 2000 report the USGS applied USA reserve growth history to world reserves, coming up with a 1995-2025 growth estimate that is simply nonsense.
A few years back, in reporting Caspian 3P reserves, the USGS arithmetically added 3P reserves of several individual fields to get a region total 3P. Any first year statistics student would know that the arithmetic sum of several 10% probability values moves toward a vanishingly small probability. Caspian resreves are now taken to be near 1/10th of the initial USGS 3P report.
Campbell seems to have accepted SA URR as 260 Gb. As it was in the interest of oil companies to underreport reserves when they ahd way more than they needed, so they could please shareholders by adding some even in years with no discovery, it could be that SA simply revealed the underreported reserves when they had that big reporting jump. (It could be untrue too).
About 11/2 years ago I did a similar analysis to what Euan describes and came up with cumulative production for SA of 106 Gb. That would make 120 about right for now. Murray
What do you mean by "substantially filled"? Do you see that these alternatives can largely make up for oil declines, in the forms of energy currently used by oil (and other fossil fuels) and that energy availability can then continue to be increased indefinitely? If not, then there is no real room for optimism, until the world figures out a way to live without growth in the use of resources.
Sofistek, on this chart, you see that in 2005 oil accounted for 39% of all energy consumed. Following peak, which I see in 2012, the first thing that will happen is substitution from other sources - in the first instance coal and natural gas. This I believe will give way to massive expansion of other sources, in particular nuclear ± certain renewables with high eroei like wind and direct solar. In the same period, higher energy costs will lead to demand destruction which comes in two disguises - simply using less energy (driving less) and energy efficiencies (driving smaller cars and new technologies - efficient electric cars). So no catastrophe there.
Short term, the main threat I see from this scenario is rising energy costs feeding into inflation, interest rates, the unravelling of the debt mountain and growing trade imbalances between energy exporters and importers. These risks are compounded by wrong decisions being made now - such as temperate latitude bio-fuels adding to inflationary pressure on agricultural produce.
Future trouble is then compounded by geo-political risks limiting access to natural gas, existing oil and coal supplies and when natural gas and coal develop scarity value. I believe that peak oil may act as a catalyst for action by OECD economies, but to what extent declining oil, gas and coal energy can be met from nuclear, renewables and conservation - I don't know. It seems there are ample supplies of energy in these sources - what is required is the political will and investment to tap into these resources.
Demand destruction = jobs destruction. So I'm sure that some people would regard that development as a catastrophe. No doubt it's possible to construe a scenario in which only the oil companies, and their employees get hit, but whether conservation and efficiency measures can be that finely targeted is questionable.
I'm not sure what your definition of "ample" is but are you saying that other sources of energy can smoothly substitute for most of the declining oil, for the same uses, and that this substitution can eventually continue providing increasing amounts of energy for the world's societies to resume business as usual?
It's on this final point that I simply don't understand the optimists here. This is a finite planet and resources, renewable or not, just cannot continue to be consumed at increasing rates. At some point that growth will come to an end. And I see no reason, other that wishful thinking, on the part of assumed alternatives, to think such a point is so far in the future that it becomes some distant generation's problem.
I don't agree that this has to be so. But energy price inflation, leading to higher interest rates will certainly lead to jobs destruction.
No I don't think it will be smooth - but how rough it is will be dependent upon the right action taken by national governemnts as soon as possible - and for so long as BP and others persist in reporting drivel, government action will less likely be taken.
In terms of "ample energy" - I don't know the definitive answer but suspect that between wind, solar and nuclear there is sufficient energy to plug the gap left by declining fossil fuels. If that is so, then the limits to a busness as usual model are shifted to other resources such as food (which is of course energy), water, metals and envirionmental sustainability.
Initialy – nice post Euan
Secondly, I have to agree with sofistek as for the consequences of dwindling oil.
The ease in getting hold of oil (eroei) and its dense energy content – are not matched by anything till date – and probable never will.
When comparing oil with today’s wind turbines, PV and other semi-mainstream power alternatives (like the wave-snake of Scotland) – and the concepts of using food for fuel – THIS spell clearly new ways of thinking -and behaviors from all of us.
There will be a “back to the future” scenario – and a lot of today’s newborn babies are farmers … but most parents don’t realize this today.
Correction:
More likely, they're going to die of unnatural causes before they reach farming age.
Sorry, this is not what I prefer. Just what I fear.
" Demand destruction => jobs destruction => farmers generation"
We have spent the last 70 years replacing the people on farms with petroleum-based machines and chemicals. Animals are now the only eyes and ears watching the land, and they are confined to concrete.
Whether we want to or not, we will have to put the people back on the land if we want healthy food, appropriate to our evolutionary adaptation. If we do it soon, and quickly, many babies may grow up to be farmers. If we wait too long, most of us will not grow up to be anything. Sometimes, doom and gloom comes slowly, through nutritional deficiencies, social decay, and economic exploitation.
The future of Growth economics doesn't lie in the actual resources, but in the Perception of perpetual growth.
"If you want Change, keep it in your pocket. You vote for a faux president every four years, but you vote for real corporations thousands of times each month. Your money is your only real vote."
Other have written on how this transition will be made and I agree that the transition is the critical phase. If one looks at the current situation through reports such as the US Civil Engineering 'report card' giving the US civil infrastructure a D grade, it is virtually impossible to conceive of finding enough energy to make the energy infrastructure transition without cannibalizing other already energy strapped parts of the economy. In many ways we are already strapped for 'enough' energy in many areas; a situation arguably brought about by our 'free' market.
I can appreciate the emphasis on 'government action' but the US is held in thrall by a pseudo-free-market religion that will likely cause meaningful legislative action to be put off until way too late. This 'cannibalizing' must take place and the pain is likely to be severe. Intelligent government action (there's an oxymoron for you) would possibly spread out the pain and direct things along reasonably productive lines.
While the back-of-envelope figures might look good for a combination of nuclear/wind/solar/coal, I don't see this transition happening without major pain, if at all because this type of major social pain can easily translate into major social breakdown and short circuit the transition leading to the catabolic collapse that others have talked about.
Euan, I've yet to read a good argument as to why this is not so. Consider that all use of energy is associated with some activity and that all (or most) energy is provided by someone else, for economic gain. Any conservation or increase in efficiency will lead to less economic activity and less energy sales. Both of these will lead to loss of jobs. Of course, some recovery may then be possible, but at a lower level. The answer lies in different living arrangements, not conservation.
That's probably true for electricity generation but I don't think it's true for the uses that oil is put to, because it is not just about the raw energy figures, it's also about the use of that energy. Even in electricity generation, we'd have to keep our fingers crossed that it can be done before we find ourselves in a world of dwindling energy supplies. And the effect on oil based activity will no doubt have a knock on effect on renewables build out.
It's also interesting that you have little confidence that effective and timely government action will be taken yet still remain optimistic that someone, somehow, will manage the transition without too much pain.
Tony
Euan is focused on the technical problem, as most engineer types would be expected to do. He has not attempted to assess the sociological, psychological, and political issues and the fallout from these.
I find many technical types run the gamut between unbridled optimists or at least somewhat optimistic. A far smaller set of technical types are pessimistic. This is because, on the purely technical level, the problems all look solvable if we rearrange things just so. But these people have not examined the psychological, sociological (and by extension, the political) aspects of each of these problems.
Now let me remind you that New Orleans got hit in 2005. In a nation as powerful and wealthy as the US, New Orleans remains at about 50% of its pre-Katrina population with large areas still not rebuilt, with ongoing issues still with its levees and other systems, and other problems. Alan can testify to all of this. Much of what has passed for progress in New Orleans has been N.O. residents bootstrapping themselves rather than external assistance.
Very clearly, the US has the technology right now to have rebuilt New Orleans in the 22 months since Katrina. Yet we have not done so. Obviously whatever is stopping us is not technical in nature. Yet here we are with New Orleans still not rebuilt while the rest of the country is in excellent shape overall in comparison. Why? The problems are psychological, sociological, and political in nature, not technical. If it was just technology, New Orleans would have been rebuilt already. When you understand why New Orleans is not yet rebuilt, then you will begin to understand the limits of technology in saving us.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Nicely put, Greyzone.
"You can never solve a problem on the level on which it was created."
Albert Einstein
GZ - Big Grin - cos my wife is a psychologist - and jointly we are applying for funding to find out why environmentalists are against both wind power and nuclear energy and why the popultaion at large in Scotland seems to be opposed to having electricity in the future.
Great! And it's exactly those sorts of weird questions that mean the problem is well beyond just technical. I mean clearly from a technical perspective, if I can give you electricity with wind and nuclear, why wouldn't you take it when the alternative appears to be no electricity at all? And yet your wife is investigating exactly that oddity.
I have lots of faith in our scientists and engineers. I believe they can devise solutions, though I agree with M. King Hubbert. We need to replace the court astrology of our era (economics) with real science. Let me quote him for you:
The monetary culture is the greatest barrier to stability. Even many engineers believe that if we tweak the system just so that we can continue the happy motoring, endless growth nonsense forever. Innumeracy in engineers! Yet there it is.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Wow, that is a great piece of writing.
Its amazing how well Hubbert understood this problem all those years ago. Its a shame that today, even some members of this board can't grasp it.
I have no problem grasping it, and even agree with much of it, but I don't necessarily agree that the conclusions he draws follow. I wonder if you asked him when he wrote that what the state of the world would be like in 2007 whether he would be able to believe that economies had continued to grow with no immediate sign of stalling in that period.
There's no question that growth fuelled by increased FF burning and mineral extraction is reaching an end, but there are already examples in the last decade of economies continuing to grow and develop even while using less fossil fuels and less resources, and we will all have to learn how to get their eventually. I have trouble seeing why the use of money should make that more or less difficult.
Huh? Of course he would believe that. Oil continued to grow for the entire time just as he predicted. Why would economies stall in that period? The problem would come after the material world stop growing exponentially and the monetary world was still relying on that growth. We may be at that cusp now.
Perhaps then you really don't grasp it.
There are literally hundreds of theories about how money works, and what's fundamentally wrong with and why it can't last forever. And I would agree that many of ways we currently determine the value of money are problematic (especially how to determine how much money there should logically be in existence at any one time - inflation is one of the 'symptoms' of this), but there's nothing inherently illogical about the concept of an abstract means of determining the value of certain goods and services, provided that you can prevent abuse of the system (which is the only real purpose I can see for tying to some physical commodity like gold: but then you have an issue that the total amount of gold in existence constrains the total amount of wealth, which is hardly a desirable situation).
Even worse then that, try "the material world stops growing and the monetary world now simulates growth"
Image over substance, the pig wears so much lipstick that it couldn't be removed with a die grinder while the sheeple march merrily over the cliff.
Can you give references? Are they economies that have simply gone through an efficiency improvement period? If so, it might be possible to continue growing during that period (if it is carefully managed, more likely, there would be a downturn for a while) but long term economic growth and increased living standards (not to be mistaken for quality of life) must be accompanied by increased resource use. Even recycling can't stop that fact (unless everything, absolutely everything, gets recycled and no new finite resources need to be extracted, i.e. static economies).
Tony
It is an "energy efficiency improvement period" that I'm talking about...i.e, improving our ability to translate energy usage into productive growth. I agree that once we get to a certain point of doing this at essentially maximal efficiency, further economic grwoth would not be possible without a growth in energy consumption, but I see that point as being 50 years away at least, and by then we should (hopefully) be in a position to start producing sufficiently greater clean and/or renewable energy.
Well, that's very optimistic and I hope you're right but I doubt we can get efficient enough fast enough, and certainly not without a lot of pain. But you mentioned examples of economic growth using less energy; what are those examples?
To be honest I can't remember where I read that, and the examples were not entire countries - I vaguely recall a group of cities in Sweden being mentioned. There's also a number of industries (e.g. aluminium production) that have boosted output while cutting energy.
Did some sniffing about, and it appears, according to http://www.eere.energy.gov/states/state_specific_statistics.cfm/state=WA, that Washington state would qualify as an example: it's GSP increased at a significant rate from 1991 onward, but it appears total energy usage is down (the stats only go to 2001, but the trend is clear enough). Over a longer term period, Illinois has increased its gross state product at an annual average rate of 5.8% per annum from 1980 to 2003, and yet in the same the average energy usage has stayed virtually constant.
In fact no state that I checked has increased its energy usage anything like its GSP, and most have flat-lined on energy usage over the last few years. This is all without any strong motivation or program to increase efficiency (that I know of anyway).
Yeah, I've heard that there is a city in Sweden that appears to have done this also. Certainly energy intensity has decreased but that may mean that there is less leeway for more savings, in future. However, I don't know how you measure energy use of individual cities, within a bigger national economy. Does it include all the energy inputs for "imports", and energy costs of "exports" once they've left the city. I can see that it's possible to estimate energy use of homes and businesses in the city and the energy in fuel bought in the city, but I can see a lot of "hidden" energy use, depending on the city and the residents' lifestyles. And for city GDP, how is that measured? And are there knock on effects outside the city (e.g. to companies who produce the fuel or other affected services)?
No need to answer, unless you know, it just seems that it will be a tricky exercise but, sure, more could be done with less, no question. It's just that there is a limit there.
Well of course, measuring the energy usage even for a whole country is problematic. No economy is fully self-sufficient except the global one.
As for there being a limit, no question about it. And without cheap, readily available fossil fuels, it will be far more challenging to keep up anything like the pace of growth that has occurred over the least couple of hundred years. At worst, all these means is that the fossil fuel age will have been a one-off "super-growth" period. At best, it will last just long enough to push to the point where we have sufficient non-fossil-fuel energy to keep the pace of technological development up (in fact, we know it's technically possible already, using nuclear power).
Well, I don't think we "know" that. There are divided opinions on it. For fission, it's using another limited resource (apart from the safety and security concerns) - I realise some believe that the resource can last thousands of years, but others disagree. Fusion always seems to be 40 years away.
Uranium supplies only need to last long enough until we have some other supply of sufficient energy. I accept that currently there are no commerically viable reactors that would allow us to provide for our current energy demands for very long, based on known uranium availability, but I don't believe there are any known serious technical hurdles (the main issues seem to be sodium leaks, and the fact that uranium is too cheap for FBRs to be competitive).
Well, you said "we know it's technically possible already, using nuclear power", referring to "non-fossil-fuel energy to keep the pace of technological development up". So I guess you're now saying that nuclear won't, in fact, do that, at least not long term. You're then into the "belief" stage, where someone will think of something to replace non-renewable fuel sources and we'll all grow happily ever after.
I think it's about time we stopped making assumptions about how technologically innovative we all are and, instead, started to figure out how a sustainable society will look and figure out how to get there. However, I'm sure that, as a whole, we'd rather expend resources on trying to keep the wealth increasing and the cars running, until we have no capacity to adapt to declining resources.
FBR reactors have been built and run commercially (albeit briefly), and our best scientific understanding is that the current uranium supplies would be enough to power them for hundreds of years, were they to supply all the world's energy. Hundreds of years is good enough for me: there's absolutely no reason why that much energy can't be enough to build new energy generators using even existing renewable technologies.
I don't think anyone's making assumptions about mankind's ability to be technologically innovative - we have about a million years of proof, for a start.
Sure, eventually we may well paint ourselves into a corner we can't escape from, and our technology (or nature) will get the better of us. We're not going to be around forever, anyway. But I see mankind as being able to achieve far more than it has so far, and I don't believe anyone is ever going to convince us all to stop doing what we do best.
Ideally at some point in the future we can settle other planets there will be places for those that decide they've had enough of technological development and want what you call a "sustainable society". That's purely an issue of choice, and I respect it fully.
So now you're saying that because a few FBRs have been run for a short time (I understand that some have been built by never commissioned) then they will eventually power our planet for hundreds of years. That's one of the assumptions I'm talking about. Yes, we've had a good run but there is no guarantee for FBRs or for any huge technological leaps. It is those kinds of assumptions that could well keep us from making the hard decisions about our futures.
Colonizing other planets? If we had unlimited supplies of energy and a whole host of other resources, we might have been able to think of getting started on that by the end of the century. As we don't have unlimited resources, I don't see it happening at all but there are those who think we should expend even more of our dwindling resources on such a plan (or on mining other planets) in the belief (yes, belief) that it will be possible, and possible in a timely and sufficient manner.
Is sustainability really so terrible that you can't even begin to contemplate it?
I'm not saying that FBRs will eventually power our planet - in fact I highly doubt it. Just that, to the best of our knowledge, we have that technical capability right now. I *hope* that we can do better than current technology, because there are still too many risks with nuclear power.
Colonizing other planets isn't going to happen any time soon, I accept that. 200 years optimistically.
As far as sustainability being "terrible" I don't think you understand my position. My belief is simply that humans are capable of far more technological (and other) progress than has so far been achieved, and that any sort of "sustainable" society that effectively prevented further technological development would be a limiting and unfulfilling destiny for mankind.
Mankind doesn't have a destiny, it has decisions to make about how it wants to continue living on this planet. I think all preconceived notions about what is progress and what mankind is supposed to be here for need to be jettisoned for us to have a chance of avoiding catastrophe. Similarly, we need to stop thinking in terms of trying to "solve" the energy problem in a way that allows life to go on as "normal". Ultimately, this will not be possible, and I wish we could all concentrate on moving toward sustainability, instead of wishing to maintain unsustainability a bit longer.
Technological "advances" are great but unless they are helping us live more harmoniously with the rest of this planet, they are only as useful as Beethoven's 9th (i.e. interesting or emotionally satisfying). Only a couple of years ago, I never thought I'd hear myself say that.
Of course mankind has a destiny - it will go extinct. But before then, there's no reason we shouldn't hope for great acheivements.
I actually suspect we're talking over different time-scales. I fully agree that over the next few decades we'll have no choice but to scale-back a bit, just to survive to the end of the century. But after that, who knows?
As far as "useful" goes though, what's inherently useful about being alive? If there were great music, no great art, no great scientific achievements, then why would I even care about humanity's survival? Just to propogate genes? But you are effectively denying the thing that makes human genes different from, say, chimpanzee genes. Chimpanzees live "sustainably" now - they may well outlast us. But they will never achieve what we have (and of course, it's not at all important to them).
Indeed. And it is only important to you because you choose it to be so. If there were no great "achievements" of the kind you mention, you may not care about humanity's survival but I, for one, would consider it an enormous achievement (probably the ultimate achievement) if we could reach effective sustainability. I can't think of anything greater. That would be a true mark of human greatness and intelligence. And wouldn't that stability provide a platform for other artistic achievements, and who knows what else?
Well, fine, you're welcome to your view. But it clearly does NOT require intelligence to exist sustainably - the only species that have demonstrated "true" sustainability - over billions of years, are very simple organisms, most of them single-celled.
And great artistic achievements are only possible if you have a) the freedom to pursue them, which requires that relatively little of our time is spent pursuing subsistence activies (i.e. a robust economy) and b) the technology to create them with (a violin is a incredibly sophisticated piece of technology!).
Maybe you think it's beyond humankind's capabilities and maybe you're right. We've used our so called intelligence to do a lot of things and discover a lot of information. It's got to the point where we now seem to think it is our right to continue consuming at an increasing pace. That's why it will take a huge dollop of intelligence to reach sustainability from here. Single celled organisms don't have to start from here but we do. There is no doubt that sustainability would be a huge achievement. I can see that you don't think so and don't consider it a remotely worthy aim. If enough people think like you then I don't think we'll manage it and will go the way of the dumbest species that ever went extinct, and we'll do it knowing that we're doing it, which makes us even dumber.
Obviously sustainability isn't beyond humankind's capabilities...we spent the first million years of our existence essentially sustainably (i.e. if the rate of growth during that period had stayed the same, we would have easily gone another million years or so without even getting close to over-consuming the planet.)
I don't think moving the current obviously unsustainable economy to one that has a decent long-term future requires excessive amounts of intelligence, particularly - it's more an issue with convincing people that giving up some of what they have now will prevent a nasty result in the longer term. Even once you have the intelligence to realise the logic of the situation, it's very difficult to overcome our deep-seated essentially irrational behavior which for the most part strives for individual short-term gain over global long-term gain (a behaviour that is exactly what you would expect given the way natural selection works, of course).
Of course it's the sort of behaviour one would expect from organisms. That's exactly why it will take enormous efforts, and intelligence, to overcome that behaviour, before nature starts to take its inevitable course. We managed it in the past, only because we didn't have the bountiful energy that we do now. Once that starts to decrease, we'll have to go back to an essentially sustainable behaviour but the challenge is getting there without a severe dislocation. That will take intelligence.
They dont WANT to rebuild it. They dont want the 'white trash' or the black americans. They lost out. The developers want the tourist bits and bits where money can be made. They will keep the sexy bits and a few bits to house cleaning staff and those required for waiting on tables.
Oh, and some mid range condos to house Blackwater Mercenaries - just in case it happens again...
Lassaiz Bon Temps Roulez.
Now, if it was Jeb's Florida, then no problem: It would have been sorted faster than a wrinkley in bizzare golfing trousers could snarl ' god - damn ! where's my golf cart?'.
As Alan might say: Best hopes for bouncing back after a calamity that should have enraged any decent Nation to action.
I have never seen any point in rebuilding a city that is basically underwater - or will be once the next hurricane comes.
It may not be good politics to say this, but it is common sense.
Frankly, neither do I, because Laisser les bon temps rouler says it all - as ever, the shiftless locals want to sit back while somebody else pays the bills.
First, it's a city that no longer needs to exist. Many, many decades ago, every port famously had its huge army of big, stupid, thieving, ill-behaved brutes to unload ships one or a few barrels or bundles at a time. And poets expended untold hours and endless angst expounding on the myriad troubles that miserable lot (and the sailors, too) got themselves into. Then, starting in the 1920s, containerization came to be developed. Now the army is redundant, and will be forever. A relatively few crane operators will suffice, who could easily commute in from a safe place upriver.
Second, it's a city that has too much land below sea level, and, in the spirit of les bon temps, insists that somebody else should foot the bill. So, for example, the despicable officials, acting on behalf of their shiftless, irresponsible voters, wasted no time getting the Palace of Moronic Entertainment, a.k.a. the Superdome, a.k.a. une partie des bons temps, back into action. But they did nothing else. They have yet to disburse more than a low single-digit percentage of the Federal largesse they have received for reconstruction, even though Mississippi (which is often looked down upon) has already disbursed most of its funds.
Meanwhile, the levees (dykes) continue to be administered, or, rather, not-administered, by a mishmash of agencies including the famously corrupt and incompetent local levee boards, and the inept U.S. Army Corps of Engineers. Create a régie, a comprehensive regionally funded regional authority? Sacré bleu, non, because somebody else should take care of the responsibilities while the irresponsible locals sit back on their bottoms and enjoy les bons temps.
So the only actions I would consider appropriate would be to put the whole area under the control of an unelected receivership board (as happened with New York City years ago) and also strip the venal, incompetent local officialdom of their ill-gotten wealth and throw them in the hoosegow. And use the Federal funds to remove and resettle everyone living below mean high tide, by force if necessary. And impose a 10% regional sales tax, or whatever it takes, to pay for the damned levees in the future, in the event that anyone should be insane enough to want to remain there.
No, I see no point in funding More Of The Same, which is unfortunately what is (very slowly) happening.
I think this might have a bit to do with why New Orleans won't be rebuilt - three landmark hurricanes in four years indicating global changes in storm frequency with the brunt of the change likely to fall on the U.S. Gulf Coast region.
http://www.dailykos.com/story/2007/6/18/05557/9447
The Meat Stick Media won't say it but anyone with a lick of sense perceives it clearly - that region is going to experience the same dynamics the plains states saw during the dust bowl seventy years ago. Population will decline as people seek a stable place to live, businesses will follow or close, and tax bases will shrink. Betting on the Gulf Coast is a loser's move no matter how you slice it.
I think this might have a bit to do with why New Orleans won't be rebuilt - three landmark hurricanes in four years indicating global changes in storm frequency with the brunt of the change likely to fall on the U.S. Gulf Coast region.
http://www.dailykos.com/story/2007/6/18/05557/9447
The Meat Stick Media won't say it but anyone with a lick of sense perceives it clearly - that region is going to experience the same dynamics the plains states saw during the dust bowl seventy years ago. Population will decline as people seek a stable place to live, businesses will follow or close, and tax bases will shrink. Betting on the Gulf Coast is a loser's move no matter how you slice it.
While I agree that many 'engineer types' ignore the social and political aspects of coming energy problems, I disagree that there are definite technical solutions. We are dealing with hugely complex systems that are extremely inter-dependent and I don't think it is remotely possible to assess all the energy inputs needed if one begins tinkering with various models. Simply upping the energy need in one small area can have rippling effects throughout the system. Look at what is happening already with corn ethanol, even though, for the most part, it is still a twinkle in some bureaucrat's eye.
Try conceiving of ramping up wind power and solar power. The energy inputs necessary for this would have to come from somewhere else, and the complexity of ramping up nuclear power would be immense.
Every so often someone mentions the higher rate of fuel costs for shipping from overseas. Inevitably some 'engineer type' jumps in with their calculator and demonstrates how small a percentage of the individual product's cost is represented by this fuel expense. Problem solved, right? What they ignore is the overall increase in expense of every aspect of the shipping from infrastructure manufacture and maintenance down to increased wages for ship crews because of increased fossil-fuel costs. Beyond that, the overall economic effects are ignored. It may very well be that many shipping companies would go bankrupt because of other economic effects causing a vastly disproportionate increase in charges from the survivors.
I don't think there exists an envelope back big enough on which to calculate all the inputs needed to assess the problem in a realistic way. I'm not saying we shouldn't try to get a picture of the energy future, but, IMO there seems to be a positive correlation between simplistic models and optimistic forecasts.
The bottom line is, in my opinion, even if social and political moves are relatively intelligent and well thought out, we still have huge, possibly insurmountable technical problems.
...too much pain.
Well, maybe plugging the gap will be impossible. But if it is possible then
what amount of pain is too much?
Tony - this long emergency will unfold slowly and whilst politicians might not act as soon as we would like them to they will eventually act - and a few years late is better than not at all. I see the huge energy waste we have at present as buffer between fossil fuels and a new energy future.
What political action do you think needs to be taken urgently?
Euan,
I'd like to think that you're right, regarding our energy waste as being a buffer but I think so much of our economies have been built on that waste, that much pain will result from using that buffer.
As far as political actions are concerned, our main problem is that we don't understand the true meaning of sustainability. Politicians only see as far as the next election (assuming that they can stand for re-election) and so can never consider longer term actions. All politicians who pretend to support sustainable societies also cling to the belief that economic growth can continue in a sustainable society. Most non-politicians do also. I put up an e-petition on the UK's e-petition site, but only 10 people have signed it, so far.
I think the best action for politicians would be to educate themselves, and then the public, on what sustainability really means. Once educated, the public may be able to take on board a re-engineering of society along sustainable lines.
Tony
Hi Sofistek
I have signed it for you, it won't appear until I check my email tonight and verify the address. I think I can get more signatures from our local group.
Carbon Coventry - UK
Thanks, Carbon.
I recall that another petition complaining about road tolls got about a million signatures. It's odd that the things that truly matter are ignored. Maybe if my petitiion collected a few thousand, it might get some wider publicity.
Euan, the Easter Islanders cut down that last tree and very probably knew it was the last or nearly the last. Their politicians led them to do this. Those Easter Islanders believed things would be one way and not another yet in the space of a few generations they cannibalized themselves out of existence.
Are you sure that the long emergency is going to unwind slowly? Are you sure that the politicians will act and act in a manner that is positive and not negative? If you are sure of both those things then I want to see your crystal ball. And if you are not sure, then you are making a gigantic bet that is going to impact you, your wife, and your children.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
It's not very often you hear a statement like this from anybody. So if I understand you correctly, you're saying that waste is good for the economy.
It's patent nonsense anyway. Statistically all the world's developed economies have decreased their energy usage per GDP over the last few decades.
Read http://www.unep.org/OurPlanet/imgversn/123/weiz.html or anything by Amory Lovins etc.
Yes, but would the GDP per capita have gone up even more if the energy use per capita had gone up instead of down?
I don't believe the energy use per capita has gone down in any developed economies. But it will certainly need to start doing so soon. The nature of economic activity, and even the way we measure it, may very well need to change in an energy-constrained world, but I don't see any logical reason why it can't continue to generate "surplus wealth": i.e., the economic freedom of individuals and organisations to devote their time to activities other than subsistence living (which is ultimately the goal, no?).
One logical reason why economic activity will be constrained from generating "surplus wealth" is from the effects of peak EROEI. As the costs of extraction of the bottom half of the oil drum continue to escalate, we will, by definition, be losing productivity,ie it will be taking more and more energy expended to get a smaller and smaller energy return. I would submit this is not a trivial issue, that this will be an increasing drag on productivity at the macro level, which has been the main driver for what real economic growth we have experienced.
But an "energy return" isn't the goal. The goal is to be able to "do useful stuff": grow food, build shelters, keep ourselves warm/cool, transport ourselves around etc. etc.
We already know how to do all those things using much less energy than we do know, and we'll continue to learn better and better ways of doing so.
We will also learn how to better capture the renewable energy that is available to us. There's no physical reason why we should be able to perfect, e.g., a solar panel that in its lifetime generates 100 times the energy that goes into creating and installing it (they can currently get about 30, I believe, and yes I'm aware of the limitations in calculating this). So I'm not at all convinced we're at peak EROEI by any means.
I'm saying that what one regards as waste may be regarded by someone else as income. Energy intensity is decreasing but energy use overall is increasing. Anyone here can think of many wasteful uses of energy but someone, somewhere, is benefiting from that waste, whether it's the plastic bag manufacture, the power company or the tyre shop. Reducing energy consumption will mean someone gets less money.
Tony
In the scenarios that I've been running (of my 9 lives, I still have two left:-), the slightly falling oil supply will do the oposite than what you're assuming. Of course there will be demand destruction concerning oil. There will also (continue) to be destroyed economies in the 3rd world. But there will be an INCREASE in economic ACTIVITY which will consume even more energy, while creating more energy capacity in all categories, renewable or not.
(More power plants, new vehicles/motors, research and development of alternatives, investment boom because that's where tomorrow's dollar is to be made.)
This will also create an enormous demand for capital, which will mostly be serviced by the good ol' USDollar. (That's why its death knell shouldn't be tolled yet!)
In short, a peticular version of stagflation.
I'm guessing this could last til the middle of the next decade, til disruptive shortages appear. And this is where the (at least partial/regional) discontinuity and failure in many economies and the global economy will occur.
Of course, a sudden disruption on a different sphere (i.e. political / so called above ground factors) whould help bring about a quicker economic collapse, but I have difficulties believing that this will happen at the beginning of the downward slope..
I'd like to point out that the technology to build electrical cars with mileage equivalent of 110 miles per gallon, while using energy that is not currently tapped (night's electrical shift) is Available today. I'll say this again: WE DON'T NEED ANOTHER POWER PLANT TO FEED OUR ELECTRIC CARS, AS ALL THE POWER WE WOULD NEED IS WASTED ALL NIGHTS. Want me to repeat it again? Big Car is not building them yet, but when they see that TSHTF, they will say "oh, ok 'nuff rippin' them off this way, or else we're toast. Let's give them what we backed off for years, the electric car".
To say that electric cars will save the day is a big dumb assumption though. But if people just start building them bigtime and people just start buying them, we might still smooth it out quite nicely.
See, this is not true at all. We're friggin' using bad bad bad combustion engines which use only 15-20% of the so-called "high density energy" that petrol is all about. That so incredibly high EROEI petrol (like 20? 30?) has just falls deep when one considers the waste our cars have of it. Just divide it by 5 or more, and you end up with an EROEI of 5-6. Electrical cars, for example have a much more substantial use of energy, while hybrids try to use them more efficiently.
What is here in confusion is this:
- Doomers claim that More Economics EQUALS More Energy.
Not true. What really happens is:
- More Economics EQUALS More Utilities.
Like who cares how much energy I waste? I'm not that MORE happy if I know that I consume a whole lot more energy than I shoould. I'm a lot more happy if I can DO THE THINGS that I WANT. And I don't want to "eat oil". I want to eat Pineapples and Move Myself to whatever landscape I want to. If people just build things that permit me doing them while energy saving, the better.
2 cents.
greets.
I think you're missing my point (although you sure are trying to make yours!)
Economic activity will increase BECAUSE of building electic cars, for instance, BECAUSE of retooling the auto industry to make the parts, the batteries, etc..
<We will need a helluva lot of minerals (mining/very energy intensive) to build all those millions of storage batteries.