I appreciate all of the research you have been doing in this area!
One question that bothers me is the vastly different price per Btu that different fossil fuels command. This is a graph, based on data from the 2008 Annual Energy Outlook (Early Release) of a history of prices, in 2006 dollars.
To maintain these differentials, it seems like we need to have very high EROI for coal and natural gas, relative to oil. Otherwise, the energy used for these sources must come from like sources (coal from coal, natural gas from natural gas).
I think that the fact that we are past "trough fossil fuel energy price" in 2006 dollars is important also. This would seem to say that the growing efficiencies of producing the fossil fuels have been cancelled out by other factors, like lower EROI. Electricity follows a similar pattern, with a smaller dip, since it is more a function of coal and nuclear.
These things are probably outside of what you plan to discuss, but if you have any insights, I would be interested in hearing them.
The combination of that price per BTU chart and the EROI bubble map above shows how desirable coal is as a major problem solver in peak oil. The coal circle stands apart from the other circles as a solution. It's really tragic that coal suffers the greenhouse problem so much more than the other solutions and points out the urgency of clean coal technology development.
If you look at how to guage the effect of declining EROI over the history of global oil production, you can get a sort of "EROI adjusted" Hubbert's peak. It does make a difference from the first half of production to the second half. And then we are adding all the oil substitutes, so many of which are of worthless or minimal net energy levels. If you lump them into the declining EROI for conventional oil, you get a diagram I posted here about a week ago. Many of the things we are putting into that zone between conventional oil and total liquids are contributing to the net energy curve, but far too many of them aren't pushing the curve out much at all.
Considering the net energy cliff implications we are coming up against in a few short years, it's imperative that we get this oil/EROI thing figured out soon.
As a first question, Gail, is the price of coal/btu shown here, the price of thermal coal delivered to the electrical generating plant, or the price of coal delivered to my yard from where I can haul it and dump it down a chute, from where to refill my furnace I can shovel it every few hours once I've gotten the fire going?
I wonder if the price per btu of natural gas includes the effort of programming my thermostat and arranging for pre-approved payments at my bank?
I'm afraid it is whatever EIA says it is. I haven't investigated the details. Given the low cost for coal, I would think that the costs are before delivery costs are added. Delivery costs would be high for coal, because it needs to be transported by rail / barge / truck. This may explain some of the difference between it and the other fossil fuels.
I looked at Jon Friese's graph down thread. The NG prices from the EIA are definitely the wellhead prices. If, as Jon says, delivery costs approximately double the NG cost, that may explain a big piece of the difference. It would be much better to use data including delivery costs. Delivery costs would also add something to oil, but not as much.
Not to mention that, with respect to transportation, the coal is not useful until it is converted into electricity or liquid and then actually inserted in the gas tank or used to recharge the batteries. The true cost of coal is a function of the ultimate use and the price per btu as an end product is much higher than the raw cost of coal, say, delivered to a coal fired electric plant.
...the coal is not useful until it is converted into electricity or liquid...
I would've thot that Black Mesa coal I see people selling by the sack or pickup load along the roadsides around here would be pretty useful in the stove. Guess I'll just stick with wood, then...
if it takes 5 btus of coal or natgas or nuclear to make one BTU of transportation fuel on a wholesale basis, the wholesale price of each should be the basis of comparison. the cost of a barrel of crude from tar sands is the same as th cost of a barrel of oil from the north sea. the eroi of the latter might be very high vs. the former, while the absolute returns of the former are much higher due to cost inputs.
the price per BTU at the point where one energy is converted to another the only relevant price. so we should consider the price to suncor of natgas and coal delivered to their tar sands projects in ft. mcmurry -- low EROI but very strong ROI.
seems to me EROI analysis is ignoring the utility function expressed int he wholesale BTU price.
These price differences underline the issue of "energy quality" which must be addressed to get EROI straight. Per-BTU is not the most useful measure. E.g., electricity is certainly of higher quality than coal. But sometimes quality seems unclear, or not possible to delineate on one axis. E.g., how would you compare electricity and oil? Given the use of oil for transportation, and the _current_ unsuitability of electricity for the same purpose, is oil of "higher quality"?
One important detail in the above price chart: the pause in the price rise of NG in the last couple of years. Especially given the peaking of NG in North America. (And I assume that chart depicts prices in the USA.) I believe that that dip in NG price is a result of the shutting down of fertilizer and plastics factories in response to the preceding rise of NG prices - these industries have moved to places with still-abundant NG, such as Trinidad or Qatar. The resulting "glut" of NG supply in the USA (relative to demand) is temporary: as demand from other uses grows and catches up with declining supply, expect the price curves of NG and oil to again correlate. One indication that NG prices are artificially low right now is the fact that in parts of the US it is now cheaper to heat with electricity (using plain resistive radiators) than to use oil or propane for heat. If this situation lasts, it would shift more of the heating load onto electricity, causing more demand for NG, and eventually increasing the price of NG - above a per-BTU parity level, since power stations are much less efficient than good non-electric home heating devices.
Regarding NG price, I think a couple of warm winters may have helped the cost trend also.
Another reason that I expect the price of NG will need to increase is to encourage the production of tight gas/shale gas. These tend to be higher cost, probably due to lower EROI. If we really need the NG for heat and electric, it seems like the cost relativity to oil is likely to increase.
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k Nation (Jim Kunstler)
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I appreciate all of the research you have been doing in this area!
One question that bothers me is the vastly different price per Btu that different fossil fuels command. This is a graph, based on data from the 2008 Annual Energy Outlook (Early Release) of a history of prices, in 2006 dollars.
To maintain these differentials, it seems like we need to have very high EROI for coal and natural gas, relative to oil. Otherwise, the energy used for these sources must come from like sources (coal from coal, natural gas from natural gas).
I think that the fact that we are past "trough fossil fuel energy price" in 2006 dollars is important also. This would seem to say that the growing efficiencies of producing the fossil fuels have been cancelled out by other factors, like lower EROI. Electricity follows a similar pattern, with a smaller dip, since it is more a function of coal and nuclear.
These things are probably outside of what you plan to discuss, but if you have any insights, I would be interested in hearing them.
Perhaps the price discrepency can be summed up by the words 'immediate utility' and 'demand'.
If we started to turn coal into Petroleum I would expect the yellow line to rise up just as we have seen the price of corn rise...
Nick.
The combination of that price per BTU chart and the EROI bubble map above shows how desirable coal is as a major problem solver in peak oil. The coal circle stands apart from the other circles as a solution. It's really tragic that coal suffers the greenhouse problem so much more than the other solutions and points out the urgency of clean coal technology development.
If you look at how to guage the effect of declining EROI over the history of global oil production, you can get a sort of "EROI adjusted" Hubbert's peak. It does make a difference from the first half of production to the second half. And then we are adding all the oil substitutes, so many of which are of worthless or minimal net energy levels. If you lump them into the declining EROI for conventional oil, you get a diagram I posted here about a week ago. Many of the things we are putting into that zone between conventional oil and total liquids are contributing to the net energy curve, but far too many of them aren't pushing the curve out much at all.
Considering the net energy cliff implications we are coming up against in a few short years, it's imperative that we get this oil/EROI thing figured out soon.
As a first question, Gail, is the price of coal/btu shown here, the price of thermal coal delivered to the electrical generating plant, or the price of coal delivered to my yard from where I can haul it and dump it down a chute, from where to refill my furnace I can shovel it every few hours once I've gotten the fire going?
I wonder if the price per btu of natural gas includes the effort of programming my thermostat and arranging for pre-approved payments at my bank?
I'm afraid it is whatever EIA says it is. I haven't investigated the details. Given the low cost for coal, I would think that the costs are before delivery costs are added. Delivery costs would be high for coal, because it needs to be transported by rail / barge / truck. This may explain some of the difference between it and the other fossil fuels.
I looked at Jon Friese's graph down thread. The NG prices from the EIA are definitely the wellhead prices. If, as Jon says, delivery costs approximately double the NG cost, that may explain a big piece of the difference. It would be much better to use data including delivery costs. Delivery costs would also add something to oil, but not as much.
Not to mention that, with respect to transportation, the coal is not useful until it is converted into electricity or liquid and then actually inserted in the gas tank or used to recharge the batteries. The true cost of coal is a function of the ultimate use and the price per btu as an end product is much higher than the raw cost of coal, say, delivered to a coal fired electric plant.
I would've thot that Black Mesa coal I see people selling by the sack or pickup load along the roadsides around here would be pretty useful in the stove. Guess I'll just stick with wood, then...
if it takes 5 btus of coal or natgas or nuclear to make one BTU of transportation fuel on a wholesale basis, the wholesale price of each should be the basis of comparison. the cost of a barrel of crude from tar sands is the same as th cost of a barrel of oil from the north sea. the eroi of the latter might be very high vs. the former, while the absolute returns of the former are much higher due to cost inputs.
the price per BTU at the point where one energy is converted to another the only relevant price. so we should consider the price to suncor of natgas and coal delivered to their tar sands projects in ft. mcmurry -- low EROI but very strong ROI.
seems to me EROI analysis is ignoring the utility function expressed int he wholesale BTU price.
These price differences underline the issue of "energy quality" which must be addressed to get EROI straight. Per-BTU is not the most useful measure. E.g., electricity is certainly of higher quality than coal. But sometimes quality seems unclear, or not possible to delineate on one axis. E.g., how would you compare electricity and oil? Given the use of oil for transportation, and the _current_ unsuitability of electricity for the same purpose, is oil of "higher quality"?
One important detail in the above price chart: the pause in the price rise of NG in the last couple of years. Especially given the peaking of NG in North America. (And I assume that chart depicts prices in the USA.) I believe that that dip in NG price is a result of the shutting down of fertilizer and plastics factories in response to the preceding rise of NG prices - these industries have moved to places with still-abundant NG, such as Trinidad or Qatar. The resulting "glut" of NG supply in the USA (relative to demand) is temporary: as demand from other uses grows and catches up with declining supply, expect the price curves of NG and oil to again correlate. One indication that NG prices are artificially low right now is the fact that in parts of the US it is now cheaper to heat with electricity (using plain resistive radiators) than to use oil or propane for heat. If this situation lasts, it would shift more of the heating load onto electricity, causing more demand for NG, and eventually increasing the price of NG - above a per-BTU parity level, since power stations are much less efficient than good non-electric home heating devices.
Regarding NG price, I think a couple of warm winters may have helped the cost trend also.
Another reason that I expect the price of NG will need to increase is to encourage the production of tight gas/shale gas. These tend to be higher cost, probably due to lower EROI. If we really need the NG for heat and electric, it seems like the cost relativity to oil is likely to increase.