Articles tagged with "energy policy"
This is a guest post by Matthew Kuperus Heun (Calvin College) and Martin de Wit (Stellenbosch University & de Wit Sustainable Options) based on their recent paper in Energy Policy.
The Oil Drum Editors' Preface
The following analysis provides an interesting view on the relationship between EROI (Energy Return on Energy Invested) and market prices, but the strong inverse correlation that the authors emphasize may be an artifact of the underlying Cleveland (2005) EROI statistics that they use. Cleveland’s indirect energy intensity approach, based on calculating EROI from $/BTU and adjusting for energy quality using price indices, will plausibly result in lower EROI during periods of oil price spikes because of higher prices of inputs that do not correspond with higher energy inputs, and will, therefore, overstate changes in EROI that are unrelated to “energy quality.”
Because this post is excerpted, we suggest that readers refer to the full paper in Energy Policy for details of the analysis not mentioned below.
The economical and sustainable provision of energy to run modern economies and meet human development goals is one of the Grand Challenges facing the world today. There is increasing evidence that the physical scarcity of fossil fuels is a serious possibility to reckon with. An important question to ask is whether price signals of physical scarcity will be sufficient to cause transitions to alternative fuel sources.
One proposed physical indicator of energy supply scarcity is energy return on (energy) invested (EROI). Little work has been done so far to model, test, and understand the relationship between oil prices and EROI over time. This post (based on our recent paper) investigates whether declining EROI is associated with increasing oil price and speculates on the implications of these results on oil policy. The questions addressed are:
- ‘‘How is EROI related to energy prices?’’
- ‘‘What implications do EROI trends over time have for economic and energy policy?’’
- ‘‘What is required to ensure a smooth transition away from oil toward substitutes?’’
We propose a physically based model of the interaction between physical scarcity and market prices, with a focus on the behaviour of EROI and oil prices over time.
The post below shares Nate Hagen's timeless address to President Obama about the importance of energy in our society, written in January 2009. It goes into how energy ties into our economic system, the importance of energy quality, and discusses policy options to deal with decreasing availability of high quality energy supply.
The post/letter below is very important to me, as it brings together much of what I have worked on the past few years. We are at a major crossroads in the history of our nation and our world - the juncture where financial capital no longer can function as an effective marker for real capital. The crisis we face is the product of our own success - therefore it is highly unlikely to be fixed with the same policies and thinking that steered us to the present precipice. There are dozens if not hundreds of salient aspects of our supply and demand situation, each with its own cheerleaders, opponents and unaware. Unless one casts a wide boundary net, myopic focus on any particular issue runs the risk of creating more long term harm than good. In this letter, I attempt to highlight our situation's most critical components, not claiming other issues are unimportant, but that the following principles likely trump/supercede the others:
1) It is energy, not money, that powers our economies. Money is only a marker for real capital and the divergence is large and growing at an accelerating pace.
2) All energy is not equal- each energy investment entails different input costs, and has different output quality, often not recognized by the market system, nor by many environmentalists. We are at peak oil globally and are likely approaching the net energy cliff for the USA
3) We can likely deal with energy decline, but our current economic system of claims and wealth distribution cannot. It is likely that collective policy responses to resource depletion (more debt) will create another form of bottleneck in the form of currency dislocations or social reactions to jubiliee.
4) The highest odds for arriving at a better energy future lie in exploration of, understanding of, and ultimate jettisoning of our cultural addiction/habituation to conspicuous consumption. Ends and then means.
The US Department of Energy (DOE) recently issued a report called Report on the first Quadrennial Technology Review (QTR), which has as its purpose helping the DOE choose among conflicting priorities.
The new report sets priories based on a distorted view of the future. One issue is that it is trying to set priorities based on an overly optimistic view of energy supply presented in the EIA's International Energy Outlook 2011 (IEO 2011). Another issue is that it overlooks the way the US and world economy can be expected to change as a result of lower oil and natural gas supply. A third issue is that its view of climate change mitigations is based on a view of fossil fuel supply that is far greater than is likely to be the case.
The DOE needs to re-think its priorities for an entirely different kind of world--a world of energy scarcity. In a world of energy scarcity, citizens are poorer and less able to pay for basic services, much less higher-priced services. Maintaining basic transportation and electrical services for as much of the population as possible needs to be a top priority. Some government agency, presumably the DOE, will need to make certain that rationing systems are set up so that essential industries get the fuel they need and essential workers are able to obtain transportation to work.
This change in approach in priority-setting requires a very different mind-set than is currently being promulgated through the press. Let me start by explaining where we are today.
Posted by Euan Mearns on October 17, 2011 - 10:02am
Tags: $100 oil, bank of england, debt, energy efficiency, energy policy, euan mearns, financial times, insolvency, interest rates, iranian revolution, m. king hubbert, oecd, peak oil [list all tags]
David Cameron describes the economic downturn as "no normal recession" UK Prime Minister David Cameron to party conference, 5th October 2011.
This is the fourth post in the series following the oil price, markets and general health of the global economy examining the simple theory that OECD recession may result from annual average oil price exceeding $100 / bbl.
The annual average price (AAP) of Brent went through $100 on around 16th August 2011 and the AAP stood at $105.3 on 12th October. The AAP high point in the 2008 price spike was $104.8 on 9th October that year.
Below the fold are observations and commentary on debt, economic growth, interest rates, commodities prices and government policy. This is not intended to be quantitative analysis but instead is intended to provide a platform for discussion in the comments.
Posted by Robert Rapier on October 14, 2011 - 10:10am
Topic: Alternative energy
Tags: advanced biofuel, cellulosic ethanol, energy policy, next generation biofuel, renewable fuel standard, rfs [list all tags]
While the mandates for corn ethanol have been met, I said quite explicitly from the start that the cellulosic ethanol mandates were wishful thinking, and that there was practically zero chance of meeting the targets. There are a number of reasons for this, but the fundamental reason is that cellulosic ethanol is not new technology, and can’t be expected to advance according to Moore’s Law. The United States actually had two commercial cellulosic ethanol plants in operation by 1920. Both plants were later shut down due to poor economics, and there were numerous attempts over the ensuing decades to commercialize cellulosic ethanol.
Like many of you, I am often unhappy with our political leaders. One thing that annoys me the most is that many will say or do just about anything to get elected. By now, you have surely heard the news that Republican presidential hopeful Michele Bachmann has promised a return to $2/gallon gasoline if she is elected president:
NEW YORK (CNNMoney) -- President Michele Bachmann has a promise: $2 gas.
"Under President Bachmann you will see gasoline come down below $2 a gallon again," Bachmann told a crowd Tuesday in South Carolina. "That will happen."
"The day that the president became president gasoline was $1.79 a gallon," Bachmann said. "Look what it is today."
The UK desperately needs a new energy strategy based on a realistic assessment of its assets, its needs and the options available to it. Unfortunately, its freedom for technical and financial manoevre is deeply restricted by its self-imposed Climate Change Act and its commitment to the EU's 20-20-20 targets. Its technically illiterate, if financially canny politicians and civil service do not appear to understand that the world’s financiers are not likely to place the required £200 billion of long-term investment into their vision of a "low carbon" infrastructure while this concept remains so woolly and badly defined. If the UK government continues on this course, it will lead the country toward certain energy failure.
After hundreds of years of imperial and industrial power, the UK has suddenly become more or less powerless as a world player. With its North Sea resources fast depleting just when the world’s upstream energy producers of oil, coal and gas are struggling to meet rising global demand, saddled with a public debt of £ 1 trillion, and a massive trade deficit, its leading role as an innovative, world-class centre of scientific and manufacturing know-how being ceded to Germany, Japan and now China, it is ill prepared to become a net energy importer. Yet energy import dependence is what the country is rapidly headed for.
It is no secret that consumers are suffering from very high gasoline prices. And as a result of these high prices, ExxonMobil just reported a first-quarter profit of $10.7 billion — 69 percent higher than a year ago. The national level of disgust and anger is approaching record levels as we watch the loss of our hard-earned dollars become Big Oil’s gain. The question is, what are we going to do about it?
Before discussing how to deal with this, we should first discuss what it is that we are actually trying to do. I believe the very simplistic view is that by going after the oil companies, they are going to relent and lower gas prices. Thus, their profits will return to ‘normal’ levels along with our gas prices. We want a return to the good old days of sub-$2/gallon gasoline. But most of the proposals that are being floated won’t do anything to relieve high gas prices, although they may have an impact on oil company profits. If that’s the case, then what is the point? I would say that it is simply feeling like justice was served. We want to get even with Big Oil.
Posted by Rembrandt on March 21, 2011 - 10:00am
Topic: Site news
Tags: agriculture, belgium, energy policy, european parliament, high oil prices, oil dependence, peak oil, reducing oil dependence, walloon parliament [list all tags]
The end of cheap oil poses the great challenge of diminishing dependence on oil in the economy. Topics of importance include coping with effects of high oil prices on the economy and investment, regional transport planning for diminished oil use, and an agriculture without fossil fuel use, To advance policy discussions on these and more topics two meetings will be held as part of the 9th ASPO conference in Belgium, at the European Parliament (03 may 2011) and the Walloon Parliament (26 April 2011) in Belgium. Both meetings can be attended publicly free of charge. The meetings are organized together with the Peakoil & Gas Committee of the Walloon Parliament and the Greens/European Free Alliance Party in the European Parliament
Full details about the program of these meetings and how to register can be found below the fold.
Yesterday, I believe, will go down in history as one of the most significant for mankind. Whilst most citizens of the developed and developing world do not realise this yet, the future of the human global energy system has just changed course with potentially far reaching consequences for human civilisation.
A hydrogen explosion destroys the reactor building of the Fukushima #3 reactor, Japan on 14th March. The wisdom of venting hydrogen into the confines of the reactor building will be one of many questions asked in the weeks and months ahead. Picture courtesy of the BBC