Answering the Comfortable Questions about Energy
Posted by Heading Out on June 27, 2008 - 10:00am
Topic: Supply/Production
Tags: commodities, depletion rate, flow rate, oil, peak oil, saudi arabia, speculators [list all tags]
| There is an old vaudeville skit that has an actor (Annie) come on stage behind the M.C. and begin visibly searching the floor of the stage. “What are you doing, Annie?” asks the M.C. “Looking for my ring,” she says. So they both start to look over the floor. After a while the M.C. looks at Annie and asks “Where did you lose it?” “Backstage,” says Annie. “Then why are we looking for it out here?” asks the M.C. “Because it is too dark to see backstage,” says Annie. |
I was reminded of this skit as I watched a ”panel of experts” on the PBS News Hour with a couple of energy analysts talking about petroleum economics, and the cause of the current price rise. Their reasons (one blaming it in part on the Federal Reserve decision to cut interest rates) related to their areas of expertise and knowledge in the Commodities Markets. It is a common failing. Experts will try and explain events or seek to control events, based on their what they know and are comfortable with discussing (where it is light), rather than necessarily going to the root cause of the problem (where the ring was dropped). It is a fault both of those who select the experts to give an opinion, and the focus of those experts, and where this approach is used extensively it tends to hide the nature of the true problem from the public, in the obfuscations of those who are comfortable only when turning the question to allow answers that relate to subjects they know about.
In the current debate about why the price of oil is going up and what can be done about it, the current cause is often cited as being due to “speculators who play the market out of selfish interests.” And in the PBS discussion there was the suggestion that traders had increased the value of oil perhaps $30 - $50 dollars over the true price. Yet while the analysts concentrate on this “market factor” they ignore the underlying increase in price that has lifted the price the majority of the way to its current level. Because they (and many other analysts) are more comfortable talking about stock market factors, this is where they focus their discussion and the blame for the current rise in prices. And, because they don’t really understand the reality of the current situation, there are comments such as that in the Economist which advises
In theory, the world still has a little more spare capacity, in Saudi Arabia. The latest increase will raise the kingdom’s output to 9.7m b/d, its highest level in decades. But it claims to be able to pump as much 11m b/d, and further expansions to that capacity are supposed to be ready imminently. If King Abdullah really wants to deflate the oil markets, he could try announcing an increase in output of a few million barrels a day.It is hard to know why Saudi Arabia does not do so.
Actually it is not hard at all. As has been discussed here, repeatedly, the excess oil that Saudi Arabia has for sale is heavy and sour and is not desired or usable by the market at the price that it being offered for.
But that is, in a way, a digression from my over-riding concern, which is illustrated by the example I gave at the beginning. Those who are asked about the causes and solutions to the current and increasing gap between demand at a reasonable price and liquid fuel supply tend to give answers based on their past experience and areas of knowledge. Thus, for example, you talk to those with a background in oil production, and they have always in the past been able to find and produce more to meet market demand, and so their answer is along the lines of “increase drilling and exploration.”
In the main folk tend to fall back on these answers since it is more comfortable to anticipate that this situation is a repeat of what has happened in the past, and it is more comfortable assuming that this is just another situation that will work out alright, since supply problems have been resolved in the past (so maybe the Economist quote is relevant). Unfortunately this time the problem is different. Because as we reach peak oil, and start to look at the down-side of that mountain of production, it is the length of the plateau at the top, and the rate of collapse beyond it, that should be recognized. This time around, the problem is sufficiently different that the solutions that have worked in the past are no longer valid.
Time to find new answers, as they say, is a’wasting – as the scale of the problem continues to be ignored by all but a few. But to address the consequences of the upcoming lack of oil is to recognize that the current state of business as usual cannot continue. It is to ask and debate the questions with uncomfortable answers, and where, of most commentators were honest, we don’t really know a lot of the answers. I am not sure that we even know all the questions that we should be seeking to answer.
The real issues of concern relate to such questions as “how long do we have until the situation really starts to deteriorate?” Some would say that it already is, and then there is the issue of “how rapidly will it deteriorate?” There is evidence from a number of fields that where horizontal wells predominate, that the decline in production, when it comes, will exceed 10% in such fields. Yet we accept 4 – 4.5% because that has been the historic number, and it gives us a more comfortable answer to questions like these, even though more and more fields are using horizontal wells and MRC technology. And so we continue, with the MSM really skirting the issues that should be more frequently discussed, because, unlike the movies that have been made on the oil supply situation, it is, in reality unlikely to result in a happy ending, at least in the intermediate term. It is easier and more comfortable to be out in the light, talking about the daily variations in oil prices, than it is groping in the dark trying to see what we are going to have to do to find an adequate supply of liquid fuels to meet the worlds needs – unfortunately it is in that unknown that the answers lie. It is still a relatively lonely place – there are not that many people looking there for answers yet, in fact there are disturbingly few.
Yergin's going to be on Charlie Rose tonight.
He looked flushered in the promo.
http://www.charlierose.com/home
How can Yergin, who has consistently got it wrong all the time every time, be a media darling? Maybe because he tells people what they want to hear instead of what they need to hear. We are on a plateau headed for decline.
I forget where I heard this, so can't attribute it to a source, but:
"To a man with a hammer, everything looks like a nail."
I've heard it as "If all you have is a hammer, every problem looks like a nail".
A quick google search attributes various forms of the quote to Abraham Maslow (Presumably of Maslow's Heirarchy fame.)
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JimFive
The PBS News Hour is a circus of obfuscating the obvious, funded by big oil and big corporations, with nary a bad word about America. Got to up the number of viewers, up the underwriters contributions, and keep the masses ignorant. It is the classic example of "you get the news you want to hear."
You are joking right? PBS News Hour is nothing but left-wing, anti-American polemics that we all have to pay for unfortunately.
Whatever it is, it's boring.
Which means it's useless.
The fact that one of you sees PBS NewsHour as right-wing corporate propaganda, while the other sees it as left-wing commie propaganda, tells me it must be pretty bias-neutral.
How about this: PBS NewsHour is often shallow. Both the corporate right wing and the commie left wing prefer shallowness. A true reckoning of our world, the real news as compared to the predigested glosses, would radically undermine the whole spectrum of truisms, right to left and top to bottom. The whole game of "here's a fragment of fact, and here are two commentators from right and left to play the game of fitting it into their traditional molds" would be over.
Did anyone see Krugman laughing at the fools who believe oil prices are due to "speculators" earlier this week on Keith Olberman? It was delightful precisely because a show or two before Olberman had ranted at length about Enron redux, and mocked all who could doubt that it's all up to speculation. Naturally, Olberman was too chickenshit to invite Krugman to straighten him out, and just let the challenge drop. But as Krugman points out in his column today, there are as many elected Republicans and Democrats on the idiots' bandwagon on this one.
Somehow our brilliant capitalist system has never bothered to educated either politicians nor newscasters about the fundamentals of its essential institutions - such as the exchanges which pretty much define what our economic system is. You'd think businesses would hold summer camps to provide remedial education - except the businesses welcome the shallowness too.
On the other hand, I'm pretty sure that no one wants to admit they don't know it all.
We're all too vain to admit there is something we don't understand --so vain that we won't admit it even secretly to ourselves.
Do you know how a simple pencil is made?
Milton Friedman (famous economist) used to brag that one of the advantageous "features" of our capitalist system is that no one person knows how to make a complete pencil and yet it gets made.
Well, I think Friedman's description was more complicated than that, and probably not really a good example. Many people know how to make pencils, although they might not know every detail of everything.
Still, to know, one really only need read Henry Petroski's delightful book:
The Pencil: A History of Design and Circumstance
Petroski is a fine writer of many engineering books, in this case, detailing the history and manufacture of a simple-seeming item we take for granted.
Indeed, that is an advantage, and why the capitalist system is "successful". Distributed or network decision making allows more complexity than could be directed by a smaller group of individuals. I am just reading a book on the history of the Industrial Revolution, and the breakdown of the rigid hierarchy of guilds after the middles ages is what laid the foundation for the Industrial Revolution.
Network systems tend to have emergent properties which are hard to predict, unlike hierarchical systems where those in charge can dictate the shape of events. While some of these unexpected properties are beneficial, some will not be, and will then be hard to "fix" because there is no single point where the decisions are made.
Politicians are really now just observers of the system, but give the illusion that someone is "in control". It's a bit like the illusion that your consciousness controls the actions of your mind.
You're joking right?
PBS News Hour avoids anything that is critical of U.S. public policy, until the public moves in that direction, and then it is very light critique. I've watch that pap for some 30 years, and it is not independent and gets little funding from the Corporation for Public Broadcasting, which gets little funding from the federal government.
http://en.wikipedia.org/wiki/Corporation_for_Public_Broadcasting
All general audience news sources give patriotic Americans what they want to hear. It's the same in every nation. Who wants to hear that their nation stinks? PBS News Hour is an exaggerated case. Look at what they've had on Peak Oil, good grief:
http://www.pbs.org/newshour/bb/business/jan-june08/crude_03-04.html
Did you really get an education about Peak Oil from the above program?
The same for NPR, their Peak Oil coverage stinks, despite the fact that I have written them and they published my criticism, and then finally after a long gap Diane Rhem interviewed Matt Simmons. Google NPR and Peak Oil and you get some half-baked piece from 2004.
Finally, I don't think it is all a big conspiracy, rather most of the journalists are ignorant and smug there inside the beltway.
Actually, PBS is nothing more than dialectics of the machiavellian order, the right and the left have the very same ideology in the final analysis.Its all about money in the end.As my kids would say - we are being 'gamed' by the media.
I bumped your score back to 31 negative comments.Your statement wasn't that inacurate, the PBS news hour is more anti-Republican to be more specific.
The PBS Newshour is public television, with some grant money from corporations. They are highly independent, and would bristle at any 'steering' of journalistic content. They are rated as the most neutral US news program, and is one news source that normally provides all sides of a subject under discussion in relatively lengthy sessions (for evening news, that is).
This one episode appeared to be one particular slice of 'experts', as I have seen other Newshour segments that delved into supply and demand, and the subject of peaking, albeit with all sides chiming in.
No news sources are independent, in particular the PBS Newshour, for a lack of information about what drives U.S. foreign policy and oil policy. On the Newshour they are all "terrorists," never are they called resource nationalists, or revolutionaries. The U.S. military is shown to be spreading freedom, instead of stealing oil from whom ever it can.
Actually there are issues where there is really only one side to the story and when there are alternate views presented for the sake of balance, a whacko idea is elevated in standing.
We got the whole debate about Iraq that way and the notion of balance distorts the facts more than it provides for context.
The News Hour is corporate driven America first swill.
Yep, I can see Jim there debating whether Peak Oil is fact or theory.
He could have on some nut on representing the abiotic theory of oil and Dan Yergin arguing that oil is biotic, but that there is still plenty down there, so not to worry. And that is all you need to know about Peak Oil. Poor Jim, Peak Oil will really get to him. After all, America can accomplish anything if we just bring our technology, ingenuity, determinism, and cooperative spirit to the task. Poor Jim, he won't know what to do.
"....with some grant money from corporations..."
Independent thinking in corporations...what an oxymoron.
Its all about money...a-moral money.
Excellent!
I've been reading : "The Transition Handbook" by Rob Hopkins.
It attempts to look forward to a future without oil and discusses what is being done currently in places like Totnes (UK).
It approaches this holistically by combining Global Warming and Peak Oil issues to arrive at an answer that may satisfy both...
In a nutshell we have to change the way we do almost everything ASAP.
Nick.
About 50 people turned up to a transition city birmingham meeting this thursday. I'm not clear how sound a big city can be in the coming years anyway, but I'm going along with this for now because the alternative of de-urbanisation seems too difficult. I don't know of any rural areas in the UK that would welcome people moving out from cities, however talented and virtuous they may be.
I'm currently helping with arranging a followup meeting. r[at]rpcc [dot] info
Hi Robin
I am involved in Transition Coventry and we have meetings on a regular basis. Would you welcome a delegation of people from Coventry to one of your meetings sometime? We will be pretty busy for a week or so preparing our stand at the Godiva festival. Maybe after that. One of my friends is starting Transition Tamworth as well.
.
Carbon - Coventry, UK
http://www.transitioncoventry.org.uk
This is an excellent article.
For awareness of peak oil to grow, we need both heat and light, so to speak. Good news -- we don't have to worry too much about the "heat," that will come with events themselves. Ali Samsam Bakhtiari's schema of the periods of peak oil decline of T1, T2, T3, and T4 (going from a plateau or slight decline to a steep decline) is helpful here. I thought that when we hit $100 a barrel, we'll really see some press on peak oil. It's hit $140, and still no insight. This is the "heat" without the "light."
When I think back to my own life, and how I reversed a belief that I had previously held (that I may not have even given any thought to), there was usually something that I already knew or believed in -- that was right -- that helped make the connection to the new way of thinking. Since my friends tend to be liberal environmentalist Democrats, I've been using statements like, "environmentalists have been saying for decades that we cannot continue our consumption of finite fossil fuel resources indefinitely." In short, I've tried to frame peak oil as the vindication, at last, of the ideals that "we" have warned about since the first Earth Day in 1970. This may not be the winning approach, but this is the sort of thing we need.
As the price of oil hit 130$ a barrel there was some mention of PO on CNBC for about a week. But at the same time PO was being brought up some other expert was comming on and dismissing the Peak Oil 'theory' with a false arguement.
As long as this arguement is being fudged were not going to get any light on this subject.
CNBC's tilt was seen by everyone when oil and gold was "crashing"
Wednesday.
The CRB Index was put up in orange, right after oil, to show how it was falling.
Didn't see it yesterday.
Bet it closes at it's high today.
Also, up/down volume is ignored.
Going by the experience of the climate change discussion, what we can expect is that it'll take 5-10 years from the first definite signs of it happening for it to reach general acceptance, then those with money to lose from its general acceptance will mount a "scepticism" campaign which muddies the waters another 5-10 years, until basically everyone accepts and then things start to be done, which again takes 5-10 years.
Assuming that shortages or some such occur by 2010, this puts widespread acceptance of peak oil at 2015-20, time wasted from 2020-25, and action starting 2030-35.
The one possible advantage which the peak oil issue has, which the global warming issue did not have and still lacks, is significant "heat." There has never been a significant economic impact of global warming, our only weapon has been "light." During the 1990's, there was no adverse impact, or actually a negative adverse impact (if I may use a double negative) from global warming: as the climate warmed, the economy boomed.
If we had been confronted in the 1990's with crop failures due to global warming which had caused economic damage equivalent to the recent doubling of oil prices, the discussion of global warming would be considerably further along today. It may still not be soon enough, but the discussion of peak oil -- when it does come -- will probably progress quite a bit faster than did the discussion of global warming.
Keith
So where in this sequence are we now with respect to climate change? I find TOD rife with skepticism on climate change. The public response curves are totally out of sync with events. The sequence I observe all to often is: denial, denial, denial, oh damn - it's too late to do anything.
The media are as bad, with a complete disconnect between oil consumption and the resulting climate change being the norm.
An editorial in today's Daily Mail whinged about high oil prices, but, as usual, no mention of the effects of consuming oil.
The BBC is blighted by this inability to see more than one dimension of the problem, too, alas.
I've had a feeling for a while that we won't really need to worry about climate change because energy depletion is going to get us first. This is the way with so-called bottlenecks, or the weakest link in the chain. It doesn't matter that link #2 is starting to show some surface rust if link #1 is already pretty near rusted through. Similarly, it doesn't matter that in 50 years crops will fail due to global warming if in 5 years we will lose our ability to perform mechanized agriculture at all, or transport the produce of same.
Utopia in Decay
http://home.comcast.net/~kevin.cherkauer/site
Kevin Cherkauer
Your feeling is wrong. Unfortunately, we have more than enough fossil fuels, in combination with the other half of things contributing to global warming, to blow through 1,000ppm CO2 by 2100.
What will happen when the oil runs short? Well, if the market's allowed to decide, people will use more natural gas and coal. The Australian government for many years has offered subsidies to convert petrol-driven cars to LNG; expect this sort of thing to happen across the West as oil becomes more expensive.
So we can't look at just the oil, we have to consider coal and natural gas, too.
Already since 2000 we've put about 315Gt CO2e into the atmosphere, and we're putting another 49Gt CO2e annually. Ultimately how much stuff can we burn and put out there? Well, let's take the optimistic but not insane reserves estimates you find here and there. Then let's combine them with the CO2e emissions of each; for the sake of argument we'll assume perfect combustion (5-10% of all methane just leaks out of mines and pipelines).
Oil, 1,317Gbbl @ 450kg CO2e/bbl = 593Gt CO2e
Coal, 998Gt @ 2,350kg CO2e/t = 2,854Gt CO2e
Natural gas, 6,074 trillion cu ft @ 52.2kg CO2e/1,000 cu ft 316Gt CO2e
So the total of burning all fossil fuels is 3,763Gt CO2e
If we just burn the oil, the 315Gt existing emissions this century plus the 593Gt from oil gives us 908Gt CO2e.
Of course if we burn all the oil then people will burn all the natural gas and coal, too. So we hit the 3,763Gt.
The IPCC told us in 2004 that
What a messy jumble, typical scientists, they should have done some English! Let's put it clearly:
- about 1,800Gt CO2e puts us at 450ppm by 2100
- about 5,200Gt CO2e puts us at 1,000ppm by 2100
Once we've burned all the oil and natural gas, we actually only have to burn 20% of the coal to pass that 1,800Gt threshold. Burning it all takes us to 4,078Gt. That's not far off the threshold that takes us eventually to 1,000ppm.
However, we have 8.6Gt CO2e of deforestation annually. That'd be 791Gt if taken to 2100. Then there's 7.1Gt CO2e from methane, which is partly from livestock and partly from rice paddies, we can't really expect that to drop, people have to eat - though not so much meat, but still - that's 653Gt CO2e by 2100. And 3.9Gt annually come from nitrous oxides, from animal manure and excess artificial fertiliser. Again, people have to eat, so that's another 359Gt CO2e, though of course with better land management this could be reduced.
But then with higher population... so let's be conservative and assume no annual change; better land management in one area is offset by higher population or climate-change induced changes in land use in another area.
So we get 1,803Gt CO2e just from our land use. Yep, even if we stopped burning all fossil fuels tomorrow, the way we use our land would blow us through 450ppm CO2, more than two degrees of warming. Adding fossil fuels to it just takes us into the 1,000ppm range.
Okay, you say, peak oil is all about that we won't be able to get it all out. Of course, that doesn't apply to "proven" reserves over 92 years, those are all coming out, it's more for these "unproven", ie stupidly expensive reserves.
But let's be optimistic - over the next 92 years, we mine just half of it. We still get 1,881Gt, plus the existing 315Gt makes it 2,196Gt CO2e. That's past the 450ppm threshold. Add in the 1,803Gt from the land use and we get 3,999Gt CO2e.
Accepting what you said, that shows that our descendants will have a big problem with GW. But if we look at the next 20 years, it is clearly PO that will be the dominant concern. If the GW situation is as bad as you paint, there is little possibility of effective mitigation, we would have to have net negative emissions, i.e. remove CO2 from the atmosphere. I don't think anyone is seriously proposing that.
The solutions for PO will involve non-fossil fuels, so this will also help with GW. But when it comes to the crunch, people will choose coal burning without CSS.
However you look at it, GW mitigation will take a back seat to PO.
Well, the emissions are those up to 2100, with their effects up to 2100. CO2 is like booze, a little the system can handle, it's just a lot in one go that's a problem.
Whether PO or CC will have the most effects in the next couple of decades we simply don't know. CC could give us a dozen Katrinas or record blizzards or droughts. PO could give us Kunstler's apocalypse. We don't know.
The electricity generation is probably not going to be chosen by "people", but by government and corporations. I've yet to hear of any country or municipality getting to vote on what their power source would be - though one or two have got to vote on excluding nuclear.
What the people would choose we don't know. We don't get asked.
The impacts of the peak oil situation are much more evident to the public already, and although just recently "global warming" was mentioned much more on the Web than "peak oil" I would anticipate that this is in the process of changing fairly rapidly. If there is little evidence of global warming in your neighborhood it is more difficult to get excited about it, than is the case when you go down to the gas station and discover it is costing you double to fill your tank.
Thanks for an interesting post and shared observations.
Let's hope this trend continues, but it (attention about PO) could be thrown off the tracks if there is a full blown recession.
If the recession comes about, in part, because of the rising cost of energy, and that cost is driven by a reduction in the availability of oil and natural gas, then there could be some interesting dynamics in terms of where to make investments to get the world back on its feet.
This is typical rhetoric. "If the recession ...". This automatically give the out that there may not be a recession. If you are living on fixed income with the stated inflation @ 2 1/2% and the real inflation @ more than 10% there is already real recession.
This morning at coffee one fellow was telling about more oil off the coast of Prudhoe Bay than all of Saudi Arabia. He was there and knew it for fact. I didn’t have the heart to tell him. “Oklahoma has thousands of capped oil wells just waiting for the right time.” All this BS will fade when there is the first true shortage. <