All 2 entries tagged Oil
April 18, 2006
My previous article sparked a lot of angry protest about my arguments for petrocollapse which was probably mostly sparked by the way I ended the blog by creating a challenge that sounded like I knew everything and no one could prove me wrong. I have been accused of not understanding anything, being very onesided and using false information to justify my arguments. I would like to correct these to explain myself and my article more clearly. I will hopefully do this in an unbiased way (forgive me if I fail to do this). It is incredibly complicated to relay all these issues in a blog, so as you are reading I would ask that you keep in mind what was said before and not to focus on a single part without considering the rest. I do not claim this to be complete or perfectly accurate, none the less it is interesting to consider and I would appreciate a valuable debate which does not simply dismiss this.
When oil production peaks there will be a shortfall of supply and this will cause the price of oil to rise inorder to reduce demand and encourage more supply. Initially this demand destruction will occur by reducing unnecessary car trips and other conservation methods. This will reduce the strain for a while I suspect and give us chance to implement alternatives. A significant increase in production is unlikely in the long term and it would take several years for this new production to come online. When it does it will slightly reduce the decline. I would consider this to be the bumpy plateau which may last for several years, perhaps with gradually increasing prices. Oil will continue to decline and this plateau will eventually end at which point the price of oil is likely to get very high and there would be further oil shortages. As these prices get very high so do other products due to their dependence on oil, unless we have by this point managed to remove this dependence with alternatives.
Questions then arise, how high will prices go when production peaks and how long will this bumpy plateau last? Many of the worlds largest oil fields that have already gone into decline have a decline rate of over 10%, this is due to the drilling technology that was used, they run out very quickly (not the bell curve one might expect). Other issues need to be taken into account here, particularly political ones. When peak is realised there may be a significant amount of panic, violence (wars) and political manipulation (middle east etc) which would send prices even higher than they otherwise would be. If prices go up too fast and too high as a result then what will happen? It will become viable to seek alternatives to oil, however it will still take time for these alternatives to be put in place. Currently these alternatives (mostly) are still in very early stages and to suddenly have to take them to global levels that replace oil is going to be very difficult. It should also be noted that the cost of making these alternatives increases with oil (since they require energy and oil products to make them, at least until the alternatives are in place). As a result of these alternatives costing more than they do now and the fact that a massive infrastructure (for hydrogen) or construction (for power plants and such) would take time and cost yet more (this initial cost may be too high and cause the viability threshold to also be higher than it would seem at the moment), it would mean oil prices would rise much higher than perhaps expected. Coal is likely to become viable before these more expensive alternatives, and this would be a backward step since we moved from coal for a reason (cost, efficiency, …) and would add to climate problems (coal to oil technologies exist but they are costly and what I refer to here is the use of coal in the cheap old ways). These issues are difficult to predict because it is a hugely complex dynamic system with massive numbers of variables, as a result I have not gone into much detail but I have considered these in more detail and it seems oil will become very expensive before the pace and viability of changes becomes enough (debatable, I am not certain).
How long will the plateau last? Not very long I suspect (again cannot tell), due to political reasons. This is difficult to predict because I cannot determine demand destruction, political issues, new oil field developments and so forth. I would think that 10 years is an optimistic (I expect less than this) time for this plateau. Oil prices would probably be very high but supply would still meet demand as demand will still be reducing and supply increasing (due to increased investment). Alternatives may also be gradually comming online (at least the easy ones, which may reduce the strain on oil).
What would it mean to have very high prices ($200 per barrel ?, I have seen figures like this being discussed and much higher) and a 10 year plateau (again probably less, some suggest no plateau at all)? This is overly simplistic but the price of a barrel of oil does correspond to how much it costs to fill up a car, if anything it is more. As a result it would probably (uncertain) cost around $200 to fill up a car (if oil = $200). Many companies that depend on energy would struggle in this period (before alternatives have been implemented or become viable) and may go bankrupt (this has already happened to some and others are coming close with recent rising energy prices). As I am sure any economist would say at this point, there would as a result be demand destruction and prices would drop to the correct levels. This figure already allows for demand destruction (in this scenario), demand for oil can only be reduced so much without these alternatives yet in place. This kind of stress on companies and individuals may be too much. How can the average individual afford these massive price increases (in nearly every product) especially when they already have debt and may even be unemployed as a result of companies going bankrupt. It may be that even when these alternatives do become viable and have been implemented that the average person cannot afford them either? This may of course be wrong and that these alternatives can be done cheap enough to be afforded by the majority of people. I say majority, not all, because a large number of relatively poor people will not (this is already true now with fuel poverty) and that it is quite possible for this minority (or maybe majority with prices this high) to disrupt civil order to a huge extent with massive riots (like those in Paris, but this would be worse since they would be unable to live in warm homes and feed their families).
I could go on forever discussing these kind of issues. In my previous blog on this, several arguments were made against what I have just said, they are valid arguments. Change habbits: drive less, work from home, don't go on holiday, work locally. This would be the demand destruction I speak of. Alternatives: nuclear, solar, wind, hydro, biofuel, coal to oil, tidal. Along with hydrogen systems for transportation. These are valid alternatives I do not dispute this. The problem is how flexible is our economy really when it comes to making so many expensive and difficult changes in a short time? It seems most people think these kind of things would happen very rapidly if they needed two, but how fast and would it be fast enough? How long can the economy survive with high oil prices and these changes not in place? (Please note that the following estimated times may be wrong but you get the idea). Would it not take 5–10 years to build power plants, 10 years to rip out all existing oil based transport infrastructure and install hydrogen and replace all cars with hydrogen cars. Would it not take 10 years or so to convert enough land into biofuel land and build associated production and distribution plants. Would it not take 5 years to build enough hydro and wind systems. How is everyone going to afford to install solar panels, it may be cheaper than staying with oil but they may still not be able to afford it, and how long would it take to increase their production levels, several years? This is assuming we move as fast as possible with no interruption (ie. as it is today in our relatively calm economic state). What happens in the mean time while these things are being done? We may be starting some now but compared to what would be required to replace oil this would be nothing. Again I am sure someone would say that it does not have to replace oil completely but enough to reduce demand and lower prices. True, it will take several years for this to begin and by that time oil production will have dropped even further, so these initial alternatives will only offset that decline and hence prolong the plateau as I suggest (10 years?).
I leave it to you to expand on some of the above issues (a lot have been left out). When all this required change is considered with the massive civil unrest at the high prices and the possible collapse of many business and resulting unemployment, it seems difficult to see how the economy will survive. Perhaps I over exagerate some of the challenges and underestimate the power of the economy, but there has never been anything this challenging before and the least we can expect is a depression greater than that of the 30's. The government is likely to get involved and tax oil companies to subsidise alternative energy. The oil companies are likely to provide alternatives, but we still suffer from the pace of change problem and will governments actually survive such a crisis?
It seems this is still one-sided, I again leave it to you to see the other side (since that is how you see it anyway) and to challenge this, but please do not accuse me of knowing nothing. We are in for a turbulent time and I seem to have less confidence in our ability to get through this than most (I am a pessimistic person). Forgive my mistakes and point them out politely please. Thanks.
April 15, 2006
We all know that Oil is finite yet we continue to consume it at alarming rates without considering what will happen when it runs out. No problem you might say, we have 50 years of oil left in the ground, thats plenty of time. The situation is more complex than that, it's not about how much oil is in the ground, it's about how much we can get out and how fast we can do it. Currently we are consuming over 82 million barrels per day (about a thousand barrels a second) and this is increasing rapidly every year especially with China's massive growth. At some point we will not be able to pump enough oil out of the ground to meet this demand. Leading (independant of oil company) experts are predicting that this will occur within the next 10 years and it may have already happened (there is evidence to suggest it happened in December 2005). We have used up all the easy oil (picked the low hanging fruit as it were) and now we must dig deeper for smaller reserves just to keep up the pace. In recent years the gap between supply and demand has been closing and as a result we have seen massive increases in oil prices (not because of Katrina, that just scared people because of the already tight oil supply). This is a crisis so big that it could (and probably will) destroy our civilisation, and yet we (our governments) do nothing, why? I will attempt to answer this here.
What does the peaking of oil mean? Once it peaks we will have less oil each year so there will be shortages that get worse every year and will never get better. Economists would argue that this would cause price increases and that these increases would allow oil companies to spend more on extracting oil, hence solving the problem. This, however, is very naive, they do not seem to understand the nature of energy resources. Initially these price increases would allow a small increase in production which would delay the peak for a very short time, but there is still only so much oil and the cost of finding and extracting this extra oil will become huge. What these economists fail to realise is that price increases in oil will have a massive effect on every part of the economy, this alone would prevent further exploration and production of oil. In addition to this they assume that technological advancements will save the day, this is wrong, I will discuss this later. Our economy fundamentally depends on CHEAP oil and gas, almost every product depends on it so any increase in oil price will increase all other products as well. The economy can absorb so much but eventually the price will become so large that the economy itself will collapse. Here are some example products that depend on oil in some way.
- Food (tractors and fertilizers become expensive, transport)
- Transport of any kind
- Most plastics (oil based)
- Many chemicals (oil based)
- Electricity (from gas and coal…)
- Other comodities such as metals (need to be mined)
- Coal (needs to be mined and transported)
- Solar panels (plastic, metal, electricity and transport)
As everything becomes more expensive people will begin to have much less disposable income and will only spend money on heating, food and water. Developing new technology will become an expensive and mostly fruitless exercise, our so called 'progress' will actually go backwards. Technological advancement is not infinite, there are limits but it seems economists are blind to scientific limits. It may appear as though we live in a world with rapidly increasing technological development but in fact this is an illusion, the rate a advancement is most areas has slowed to a halt, it is only computers and a few other areas that are experiancing any kind of advancement. Innovation is decreasing, physical, practical and intellectual limits are being reached, each advancement requires more money, time and resources than ever before. In a collapsing economy this kind of expensive advancement will become impossible. Unless alternatives are found and implemented before peak there will not be enough time or money, since this development and implementation will itself require oil.
I hope I havn't lost you. What alternatives are there? Short answer is none, long answer is a whole lot a small scale possibilities that require 10 to 20 years more research and would be to expensive or suffer from their own sustainability problems. Solar panels require energy and resources to make, they are only 20% efficient at best, so there is no way they can replace our energy needs. Hydrogen is a myth, you need energy to make hydrogen so where does this energy come from. Ethanol or other biofuels are not scalable, you can only cover so much of the planet with sugar cane. Oil from coal requires so much energy that you probably end up using more energy to make it than you get back from it, certainly not enough to replace normal oil. Wind and hydro can only do so much, nothing approaching enough. Nuclear is expensive and uranium is also a finite resource, the number or power plants required to replace oil and gas would cause uranium to run out in a few years. If you combined all these together you still would only get about half the necessary energy and to implement all of the above would be impossible (cost, time…). The best thing we can do is reduce demand now before we have to.
What does all this mean? If everyone on this planet consumed like the average american we would require 5.1 earths. There is a finite limit to the number of people this planet can support, that is about 2 billion, and that is with a basic non consuming life style. Our current population is approaching 7 billion and a lot of those are consuming more than they should. From this it is fairly obvious to see that at some point our population will collapse, as all population booms in all species eventually do. There are many possible causes for this collapse, but peak oil and environmental destruction (climate change etc…) combined with our existing political and economic system seems most likely. It's funny, we all think the apocalypse would be some external event like a meteorite or an alien invasion, but it seems it's going to be our very civilisation itself that collapses from within, where we least expect it. I have spent the last two years looking at this problem and attempting to find a way for our civilisation to continue, but there is none, we will collapse just as all previous civilisations have collapsed. Civilisations collapse for several reasons: drought or climate change, resource depletion, war or invasion, political or economic collapse, disease. All of these apply to our current civilisation, it is degrading and falling apart.
Why have we not been told this by the government or media? There is a paradox, if the government tells everyone the economy will collapse (or hints at it) then the economy will collapse out of fear of collapse (consumer and investor confidence). If they do nothing it will collapse. The only thing they can do is secretly try and solve the problem, but they have been blinded by their own denial and have yet to respond properly. There is the classic conflict of interest, truth and power verses money. In addition to this, what do you think the public would do if they knew the truth? Civil war, violence and chaos. To say that our governments are doing nothing is not true, the war in Iraq can only be explained if it was an oil war, a strategic move by America to secure its oil supply for a few more years after peak.
In summary, peak oil is happening about now and we have left it too late to do anything about it, our own apathy and ignorance will cause the collapse of civilisation. This may sound extreme but that does not make it less true, there are many well respected people who believe this, it is not just an Apocalypse cult. If you think you know a way that collapse can be averted then I would like to here it, I assure you it cannot. If your solution involves technological advances then you should really consider how that would be possible (physics, economics etc… in a post peak environment). Don't worry though, although we may die during the collapse our children and grandchildren will be the seed of the next human civilisation that will inevitable follow this one, albeit without oil. PS. if you want to survive I suggest you learn to live independant of the infrastructure of civilisation, only then will you be free from it, this is what I will be attempting to do before it's too late (10 years at most before it really begins).