The Oil Drum

This is a talk given by Dan Bednarz to a group of nurses. The talk was given at the House of Delegates Meeting of the Pennsylvania Association of Staff Nurses & Allied Professionals (Pasnap) in Harrisburg, Pennsylvania on April 29, 2008.

Dan is a healthcare consultant who tries to get people in healthcare (including public health) to start thinking about peak oil and climate change issues and how to address them. In Dan's words, he is "a healthcare consultant building a consortium among public health and health care stakeholders and actors to address peak oil, climate change and related environmental issues". Dan posts on TOD under the name Danb.

Hello, it's nice to be with you today. My intent is to give you a realistic take on the future of your profession by explaining why healthcare and nursing will be transformed by rising energy costs. Is there danger ahead? You bet. It's going to be difficult, probably life-changing for all Americans. Here’s why: the scale of our energy predicament is enormous, unprecedented and grossly misunderstood by institutional leaders and most of the media.

I know some of you may be wondering, Energy scarcity? That's someone else's problem; put this guy in touch with geologists and politicians.

So let's step back for the big picture.

The logo of the ASPOItaly-2 conference. It shows, superimposed to the classic ASPO peak, the mythical "post peak car", the battery powered, retrofitted Fiat 500

Conference report, many links and some pictures below the fold.

Animal rights group PETA recently announced a $1 million reward for the first person to make in-vitro meat (leading Bruce Sterling to dub them "People for the Ethical Treatment of Alien Lumps of Flesh").

While PETA's aim here seems to be to be to publicise their opposition to the consumption of animals (as shown in the quote below), there is another angle to this story which is perhaps more interesting for those interested in energy issues - which comes back to "the oil we eat."

"Why is PETA supporting this new technology? More than 40 billion chickens, fish, pigs, and cows are killed every year for food in the United States in horrific ways. Chickens are drugged to grow so large they often become crippled, mother pigs are confined to metal cages so small they can't move, and fish are hacked apart while still conscious — all to feed America's meat addiction. In vitro meat would spare animals from this suffering. In addition, in vitro meat would dramatically reduce the devastating effects the meat industry has on the environment.

"Of course, humans don't need to eat meat at all—vegetarians are less likely to get heart disease, diabetes, or various types of cancer or become obese than meat-eaters are—and a terrific array of vegetarian mock meats already exist. But as many people continue to refuse to kick their meat addictions, PETA is willing to help them gain access to flesh that doesn't cause suffering and death...."

This is a guest post by Phoenix, an engineer working in the energy sector, and a friend of mine for well over 3 decades.

In January 2006 Phoenix emailed me a spreadsheet that predicted an oil price of $100/barrel by 2008, followed by an ongoing geometric rise in oil prices. I remember immediately phoning him to point out that the scenario was impossible because it is unsustainable - $100/barrel would cause economic havoc comparable to the oil shock of the 1970s and if a geometric price progression followed, then no economic recovery would be possible and... well, I recall using the phrase “rioting in the streets inside of 18 months”.

As we know, oil hit $100 in January 2008 and kept climbing, surpassing even Phoenix’s predictions. So when Phoenix offered to explain the model that generated those numbers, I leapt at the opportunity. Here is the story of how Phoenix became Peak Oil aware and generated his Price Calculator.

Click to Enlarge

When I read James Howard Kunstler's (JHK) book The Long Emergency, it had a profound impact on me. I had been aware for many years that "running out of oil" was a serious matter. After all, I took on the challenge of peak oil in my graduate thesis in 1995. But my focus was more on finding a source that could replace oil as it ran out. Reading The Long Emergency was the first time it really hit me that I was missing a lot of key pieces of the picture.

Where's the Demand Destruction?

Oil is close to $120/barrel, "peak oil" is everywhere you look, so where’s the demand destruction? The latest EIA figures actually show a 0.57% increase in US gasoline demand year on year over the last week. The week prior also showed an increase in gasoline demand, but the 4-week average still shows a 0.5% decrease because of lower demand in 2008 for the weeks ending 4/4/08 and 3/21/08. Regardless of which statistic one chooses, this is hardly a convincing case for demand destruction. Admittedly, historical demand growth has been near 1.5%, and the per capita gasoline use is slightly lower since the US grew roughly 0.883% last year. At best, this is not significant "demand destruction." Take a look for yourselves: here are the EIA’s full historical tables for gasoline demand, both week ending and 4-week average. With statistics available to show both minor increases or decreases, recent reports in the press and blogosphere consistently publish reports of declining demand. Other articles, also consistent in claiming that we're driving less, rely on entirely different sources: Businessweek recently claimed that "traffic" as measured by the Federal Highway Administration is down 1.4% last year, and MasterCard claims that purchases at the pump are down 6.8% since last year. If EIA statistics are even vaguely accurate, then MasterCard's figure seems untenable--what is happening to all the additional gasoline being purchased? Gasoline stocks are up from a year ago, but nowhere near enough to make up for these discrepancies. And, of course, it is possible that EIA data is off--there are even internal discrepancies in the EIA's reporting, with this week's Weekly Petroleum Status Report highlights (.pdf) claiming that the 4 week average for gasoline demand rose by 0.9% over last year, directly contradicting the EIA's data tables (referenced above) that show a 0.5% decline in the exact same statistic. Amidst this confusion, the consistency of reporting about a decline in gasoline demand seems like cherrypicking.

With this uncertainty surrounding the concept of “demand destruction,” it’s time to take a deeper look at the mechanics behind how demand destruction occurs. Specifically, this essay will limit its focus to two components of demand destruction in gasoline: the time-lag between high prices and reduced demand, and the need to price alternatives to each gallon of gasoline we consume. Does a lack of demand destruction when oil is well over $110/barrel mean that prices must go even higher to destroy demand? How much higher? Or is it enough that prices hold at this level for long enough to cause people to gradually make long-term purchases with this price in mind, and thereby destroy demand? How long? Finally, how much of current US demand destruction (to whatever degree it exists—even if only as a decrease in growth of demand) is due to current economic conditions, and how much can be attributed directly to the price of oil?

Megaproject contribution from 2005 to 2013, the decline rate is 4%/year with a linear transition period of 6 years starting in 2005. Historical crude oil + condensate production from the EIA.

It was interesting to see today's editorial in the Sydney Morning Herald (the link will succumb to linkrot shortly I'm afraid - I'm not sure what permalink scheme they have for editorials) mentioning "the threat of peak oil clouding the future of motoring" as one of the reasons for giving up on trying to widen sections of traffic clogged Victoria Road and instead commence building the proposed Sydney metro line.

Last week, the EIA held a special conference, celebrating the 30th anniversary of their founding. They have held smaller one-day conferences in the past, but this was an expanded conference for the occasion.

I decided to attend because we use a lot of EIA data, and I thought I might learn more about the behind the scenes process. I also thought I might learn something from the presentations, and meet a few new people.

The conference was held in the Washington Conference Center in Washington DC. We were told that there were 1,600 registrants. The conference was free, so it was "sold out" shortly after registration opened.

The website for the conference can be found here. It now includes links to presentations from quite a few presenters. Below the fold are a few of my take-aways, including some graphs from the session on peak oil and a session on electrical issues.