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DrumBeat: June 18, 2006
Posted by threadbot on June 18, 2006 - 9:09am
Topic: Miscellaneous
There is more to today's oil crunch than temporary jolts to supply and demand. What is also roiling the energy world is an enduring shift in the balance of power between the fuel-guzzling West and oil-rich developing countries.
Since World War II, the industrialized world has relied on stable and affordable supplies of crude to fuel economic growth. The United States, Europe and Japan together needed more oil than they could produce. The developing world had plenty of oil, but little use for it and few alternative markets. So industrialized countries tapped the cheap resources of poor ones.Update [2006-6-18 10:38:34 by Leanan]: Also from the WSJ: The fuel supply chain’s weak linkNow this mutual dependency is unraveling and a new order is taking shape, turning the tables on America, its allies and other big energy consumers. Major exporting nations have concluded that they have more leverage than ever before over consuming countries.
As the hurricane season starts, a little-understood episode from last summer — the shutdown of a massive gasoline conduit run by Colonial Pipeline Co. — underscores how vulnerable the U.S. energy network remains.
And the oil business is booming in Mississippi: As Oil Rises in Markets, Rigs Rise in Mississippi.
Update [2006-6-18 11:10:3 by Leanan]: International Roundup:
Cubans cheer promise of blackout-free summer
Cuba’s sweltering, mosquito-plagued summers have not been kind to its 11m inhabitants since the Soviet Union’s demise. For 15 years, daily power outages left homes in the dark and without fans to battle the heat and insects, while vacationing youths made do for hours without television or music and water pumps went idle.Said "energy revolution" involves energy efficient appliances from China and other conservation measures. It also involves lots of cheap oil courtesy of Hugo Chavez.But in the most significant sign yet that the post-Soviet crisis may finally be coming to an end, the lights have remained on this summer because of what President Fidel Castro calls his “energy revolution”.
In Sri Lanka, people are being encouraged to Make love, save energy. They want people to turn off the TV and go to bed early. TV stations are being threatened with fines for airing programming after 10pm. (No World Cup? Now that's a sacrifice.)
Soaring oil prices hurt Thai industry.
BANGKOK - Thailand's Ministry of Industry is preparing measures to assist operators of small- and medium-sized enterprises to survive, as oil prices are expected to continue rising during the third and fourth quarters of this year, a senior ministry official said Sunday.Food, glass, and ceramics are particularly affected.
India is feeling the strain of high fuel prices, but the Financial Express doesn't think the problem is peak oil: Oil: What Lies Beneath.
And on the climate change front:
The Telegraph worries that We are cutting energy use - but it is dirtier. (The article also talks a bit about peak oil, and the effect of high oil prices on businesses.)
And the Guardian warns that That Sinking Feeling is not reserved for Venice.
The disastrous flooding that overwhelmed New Orleans after Hurricane Katrina highlighted the vulnerability of low-lying coastal cities around the world. A predicted global sea-level rise of up to 88 centimetres over the next century, due to climate change, would put many major cities at risk.
The Governor has objected to the October offshore leases, following in the steps of Gov. Bush of Florida, California, Massachusetts, etc. The reason is that Louisiana has sustained large scal environementla damage to our wetlands and the US Gov't will neither give Louisiana a % of the royalities nor fund remediation (as they have in the Eberglades & Chesapeake Bay).
We will get to vote in November on a state constitutional amendment that would allocate any federal royalities to rebuilding the wetlands and better levees.
And it was announced that a lignite (low quality coal) gasification plant will be built to supply gases to the petrochemical industry. 900 jobs at the plant, 300 mining jobs in North Louisiana.
No links I could find yet.
The wetlands of LA have suffered from the actions of the Federal Government. I am definitely not a proponent of big government, but mitigation of a mess Uncle Sam created has considerable merit in my estimation. Isn't the Governor just trying to make this point?
It will, over time, dry up on-shore support servcies here BUT the state is solidly behind her. $10 billion for Chesepeake Bay, $12 billion for Everglades (from memory) and pennies for the more valuable Louisiana wetlands.
We are NOT playing on this one. There has been a sea-change in Louisiana politics (corruption is tolerated FAR less as well). Patriotism and sacrificing for the common good has not been reciprocated from DC so things are going to tighten up down here.
The lower series contains only crude+lease condensate. I also subtracted oil produced from tar sands.
This second chart includes only the 13-month averages for the two data series and a trendline for each. In order to more easily see how they are diverging, the lower, non-conventional oil line has been "raised" to overlap the total liquids. In 1995 the two figures differered by about 7.5 mmbpd. I simply added 7.5 million to every point on the non-conventional line to raise it.
Perhaps 1 million from tar sands (1995-2005), a few hundred thousand for "improved asphalt" from Venezula and ethanol. The rest just better lease condensate recovery IMHO.
How much more lease condensate can be captured ? And how long before oil recovery slows to such a low point in a field as recovery drops off and production shifts to NG and condensate that was reinjected years ago. The condensate may actually jump the "All Liquids" recovery for a while.
I suspect that, as Peak NG approaches, many oil fields will shift to reinjected NG, further dropping oil recovery.
It's a nomenclature snafu and quick writing. I was simply after the fact that 5 more years from 2005 (aka 2010) that by following the trend line, the number will have doubled (from 4 to 8mbpd). Also that Oil CEO had artificially closed the gap in 1995 by 7.5mbpd. So adding the trendline number and the artificial gap closing number, it comes CEFGW to the ASPO number, whether that means anything or not.
It will be interesting to see if Tim Russert mentions the "P" word, or raising the gasoline tax, offset by cuts to the Payroll Tax.
I think that Tim is interviewing three oil CEO's. I predict that they will stay with the party line, "Don't tax us, we need the cash flow to bring on new sources of oil so that we can lower the price of gasoline."
IMO, we need to tax energy consumption, offset by eliminating the Payroll Tax.
IMO, the ConocoPhillips CEO was the most rational--talking about the need to reduce demand in the US. He only talked about fuel efficiency, but I wonder if he privately might support a higher gas tax.
I have listened to and spoken with him in a small private group. He was also advocating fuel efficiency, and he was quite concerned that high oil prices would hurt the economy. I actually asked him about Peak Oil, and our need to prepare, but he didn't think it is imminent.
RR
BTW, there was a quick reference to an oil discovery "in the gulf" [presumably GoMex]at 32,000 ft!!! I repeat 32,000 feet. Reported 600 feet of pay. The only source I have for this was a very sceptical comment by George "Zapata George" Blake in an interview at about 1:50 of the third segment of this week's Fiancial Sense News Hour. Blake reported that he had talked to some of those involved and that "yes" it was oil at 32,000 feet. Blake stopped just short of dismissing the whole thing, but his punchline was after they drilled some offsets he was prepared to reconsider. Until then?
Have you heard anything about this "discovery"?
Well, he was speaking to small group of employees. My impression was that he did not believe peak oil was an imminent problem. I was asking specifically whether it might not be a good corporate strategy to pour my R&D into sustainable alternatives.
Have you heard anything about this "discovery"?
No.
RR
When Son Of Biggy Russ took on the Big Oil 3 this morning, I was focusing on the language the threesome were using to "frame" the issues.
They were talking about "recovering" oil from National Park lands. What an interesting choice of words by the extractionists, "recover". It's sort of as if they had it, owned before, and now they are merely getting back (re-covering) that which was rightfully theirs.
Tim Russert comes on at 10:30 PM here. Is it worth the time & trouble to stay up watch ?
Then again, Congressman Murtha was on also, but I missed that part.
http://www.theoildrum.com/story/2006/6/14/16336/6646
Ther eis no doubt that they are suffereing from high prices in ways that richer societies do not.
However, I was QUITE impressed with the way that they are attacking the problems.
1) US$16 billion allocated for mass transit. This puts the MUCH larger & MUCH richer US to shame !
There are political disputes as to where and what to build (democracy at work) BUT, unlike the US, they agreed to start with three elevated high capacity rail lines in Bangkok for $4.4 billion to get something built ASAP while they argue over the rest. Bidding to start in a month.
- They are going to a largely renewable grid and use very little coal or natural gas to generate electricity (except in dry years). The national grid currently buys a bit over half of it's power from "others'. The largest source is Lao hydroelectric plants. They now have a project to build a 1,070 MW hydroelectric plant with 990 MW going to Thailand. This should supply half of Thai electricity in an average year.
- They are encouraging small scale biogas (animal manure) on farms, biogas small tractors, and either biogas or CNG cars (goal 300,000*). Small steps, but worthwhile. Converting 1,000 Thai farmers to biogas should keep several Hummer drivers in gas.
* I assume that when Thailand burns little natural gas for electricity, they will expand the #s of CNG cars.All in all, I see a society that is perhaps not doing "enough" but is doing about the maximum that they can.
I would add Thailand to the nations making great efforts, along with Brazil & Switzerland.
Fusion our way out NIX
Ethanol/Grow our way out NIX
Spend our way out NIX
Here I can only speak for the US. It seems that most people here would agree that building our way out of a depression by doing road projects etc. will only drain more energy that we no longer have.
Fusion is at best 20 years away and one can only assume that fusion will allow our population to grow and that is something that can't be allowed to happen.
It appears that growing fuel also fits in with diminishing returns. To grow we need farmable land, sunlight, water and sustainable fertilizer. Farmable land is shrinking while more homes are being built. Global warming is adding to deserts not shrinking them. All of the drinkable water in the US is spoken for. Keep in mind the government lowered the standard of what is considered drinkable water.
For those that don't understand how the US dollar and energy are linked together odds are that you never heard about the gold standard. Yes back in the day money was based on precious metals. As supplies of oil fall the costs of everything rise since money is linked directly to oil! We can't spend out way out since that would mean barrowing money from the future.
So we are running low on all sorts of energy. It is more expensive to build things and more expensive to move around things we already have. As well as peak energy we are no longer able to feed the world. We have reached the peak capacity of water too. This does not even exclude contaminated water.
Please can we discuss actual options to extinction here or perhaps we might as well Party Like its 1999
No, that is not how Homo sapiens operate. They will listen to no warning from Cassandra. That is because for every Cassandra there is a Julian Simon or a Bjorn Lomborg telling everyone that everything is okay, nothing to worry about. For every position taken by anyone there is an opposite position taken by someone else. Only evnets change people's minds, never dire warnings.
As Francis Bacon once wrote, "People desire to believe what they desire to be true." So there is one expert telling people one thing while another expert tells them the exact opposite. Which do they believe? Why the one that tells them that which they most desire to believe of course.
That's how the world works. All options require action before disaster strikes. But only the actual disaster will convince people that disaster looms. Sorry to be the bearer of bad news but there are just no options that will save the world. There is no plan B that will actually work, Lester Brown's book notwithstanding.
One can nitpick the efforts of each, but all seem to be making significant, even dramatic, efforts to modify their economies and societies towards sustainability post-Peak Oil.
I think your judgment is clouded too much by the society you live in and you are over generalizing. The list of nations above have little otherwise in common. (Even Sweden & Switzerland; one ultra-liberal & big central gov't & homogenous population; the other very conservative and very minimal central gov't. with 3.5 languages & two religons)
One thing that Son Of Biggy Russ (SOBeR) did explore with the Big Oil 3 was Brazil.
Big 3 argued that Brazil is becoming independent of what they consider "foreign" oil mostly because of huge increases in oil extraction in Brazil itself (deep offshore as well as onshore).
One of the Big 3 (forget whom) mentioned that GM's E85 program is going to produce a fuel that gives fewer MPG and costs more. They are testing the concept to see if the sheeple will buy into it despite the poor MPG performance.
I am writing an article on this right now for World Energy Source. The breakdown of Brazil's energy independence "miracle" is 90% domestic oil/10% ethanol. This is hardly the story you get from ethanol proponents.
RR
This is a worldwide problem, local solutions will not work. Well, they will not help unless countries with the most resources build a wall and arm it with machine guns every hundred yards or so. Even then that would only be a temporary solution. The world is deep into overshoot. Only a massive reduction in population offers any long term hope.
Has anyone read "The Camp of the Saints"?
Thailand is going to an almost 100% renewable grid (fossil for backup in dry years), encouraging farmers towards animal manure > biogas > tractors, small trucks & cars (interhcangeable with the NG that they were using to make electricity), AND making it so people can move around bangkok (their only big city) by hydroelectric Urban Rail ($16 billion is a LOT of money for an upper 3rd World country).
Thailand is a rice exporter and biogas seems a good step. (AFAIK, manure is a better nitorgen source after produxing biogas).
Switzerland today is 100% hydro + Nuke. Sweden is almost 100% hydro + nuke + bio.
Switzerland is spending the US equivalent of $1 trillion to improve their rail system and get frieght off trucks and onto hydroelectric rail. Sweden is talking about an oil-free society in 14 years and taking a number of concrete steps to get there.
Perhaps not enough, but in the future they can do even more.
If one is already doing 72% of what is needed, it is easier to take that last 28% than if one is currently doing 5% of what is needed (US).
The US, if it wished to, could very easily use NO portable liquid fuel for its electrical grid. We have more coal than anyone else in the world. But as far as feeding the world this would not help one iota.
What does Thailand use to power its motor vehicles, its tractors, its ships or its locomotives? What will Thailand and other overpopulated Asian nations do when the world starts running short of grain? Will they use their grid to produce more?
I am reminded of the man who lost a silver dollar on one block but looked for it on another because the light was better there. We are deep into overshoot and peak oil is about to send us right over the edge. Yet "the grid" is something we can power with nukes, with coal, with hydro, so people will talk about a total renewable grid because such a thing is possible. But totally renewable liquid fuel to power the world's food producing industry is not possible.
Motor Vehicles & Tractors ?
Right now 300,000 CNG cars is the goal while small biogas powered mini-tractors are being promoted (still in it's early days).
Once animal manure is at full potential, wood and agricultural waste can be a biosource.
In addition, Thais can take a "step back" from the motorcycle and go to bicycles & cargo carrying tricycles with or without (hydro) electric assist.
Ships ? Heavy bunker oils, coal, LNG, biofuels (wood pellets), sail assist are all possibilities.
An alternative to ship is rail for many shipments, since Thailand is on the EurAfAsia land mass. Connect with Chinese and Indian rail and from there to "many places".
locomotives ? Hydroelectricity (with some wind turbine supplement in the future).
> What will Thailand do when the world starts running short of grain?
Charge more for their rice exports and, with the help of their renewable grid, grow more rice than before. Trade rice for oil & natural gas.
You have a focus on what was done and there are other ways of doing things. You are fixated on "your solution" (Dieoff if I remember correctly) and refuse to see positive steps others are taking, aince they do not meet your standard of "enough".
Thailand is doing, say, 72% of what needs to be done. Very close to their maximum effort. But as circumstances evolve, they can step up their efforts to, say, 88%. And then 94%. etc.
A sidenote. I am not sure but I think this essay was where Bob Shaw got his byline "Are Humans Smarter then Yeast?".
There are several main errors: the analysis of renewable energy, the use of laws of physics, and analysis of population growth.
First, energy: "
Visionaries support the potential of wind, waves, tides, ocean thermal energy conversion, and geothermal sources. All of these might be able to furnish a portion of the energy in certain localities, but none can supply 75% of the world's energy needs. Solar thermal collection devices are only feasible where it is hot and sunny, and photovoltaics are too inefficient to supplant the cheap energy available from fossil fuels."
Well, this is just not true. Wind is already in the same price range as conventional energy (with an E-ROI of 80:1!) Solar thermal and PV work anywhere in the world. They're only cost-effective in some places at the moment (because of labor required, not E-ROI), but they're dropping in cost (not price, but only because demand is increasing even faster than supply) quickly. Solar has a E-ROI of 10 to 20:1.
Second: the laws of physics. The article tosses in the 2nd law of thermodynamics: this only applies to an isolated system: the earth gets each hour the energy humans use in a year. That's a system that WILL run down....in several billion years.
Third, population: first, the article suggests we'll grow like reindeer, or yeast, without end until resources limit us. Then it admits that's not the case, but interprets it as a bad sign! (similarly, it interprets a slowing in energy use as a bad sign). In fact population growth is slowing because of affluence, not poverty. Women are getting educated, getting careers, and being free of unplanned children. As children have the affluence to be independent of their parents, and parents are not supported by children in their old age, the economic pressure to have children falls away. As it is, most of the countries of the world are below replacement fertility levels (the laggards are the poor countries and some big oil producers which keep their women uneducated), and global population is on track to level off in 2050, and then decline.
Now, no question that greater energy efficiency, and lower energy use per-capita is driven by a recognition of limits and higher oil prices. But, it's a rational change, driven by improved technology, and is not a sign of economic decline (not to say that it's painless). It's an optimistic sign!
No, there's nothing in this article that provides a solid foundation for a solid understanding of the world.
Please don't mistake me: I think peak oil and global warming are big problems, that could be very painful to deal with, if we're not smart. But, to think that doom is inevitable is just not realistic.
Good post, good point.
Requesting elaboration on this. Not seeing it in my numbers.
I believe there is a general consensus among demographers that part of the pressure for children in rural societies is the need for children to take care of their parents in their old age, and that urbanization, pensions and wealth accumulation have mostly broken the link between parenthood and old-age security.
Does that help?