Sunday, June 05, 2005

Follow-up on Peak Oil

The post entitled Peak oil will be a non-event generated a lot of email. One comment was, "can you show me a list of all the alternate energy ideas you are talking about?" That list is now available here:If you know of other articles that belong in this list, please send them in.

One of the most interesting articles in the list so far is this one:From the article: Also:The part that is so interesting about it is that all of the technology to pull it off exists today. It is not as though this is hypothetical -- we've had nuclear reactors running in the U.S. for decades.

If you simply cannot stomach the idea of nuclear power, then you can take a technology like the Bill Gross' Sunflower. It is able to generate 200 watts of solar electricity for $400. If you assume that electricity costs 10 cents per kilowatt-hour, then a Sunflower pays for itself in about seven years. However, the cost of electricity is rising fast (here in Raleigh, the request before the utilities commission is to raise residential electricity rates 10% this year). So if you assume that the cost of electricity is 20 cents per kilowatt-hour, a Sunflower pays itself back in three years. After that, the Sunflower's electricity is free.

If you were to plant millions of Sunflowers (or something similar) in places like the Mohave desert or Texas, you've gone a long way toward eliminating both oil dependence and greenhouse gases. And, again, this technology exists today. This article proposes that a solar energy farm of the size shown in the map below could meet all of the energy needs of the United States:

Given that these technologies exist today and are ready to go, "peak oil" will be a non-event. Yes, we will have to make some minor adjustments. For example, we are all likely to be buying new cars powered by electricity or hydrogen or biodiesel (or whatever) over the next decade or so. But most people will end up buying a new car over the next decade anyway -- it is not like this is a major change of behavior.

The adjustments to peak oil will all be like that -- gradual and obvious and straightforward. If we do it with a little forethought, we and the environment will all be much better off without oil. We will look back on the fossil fuel economy like a bad dream.

[See Cheap electric cars from China for one example of how the gradual and straightforward adjustments to peak oil will take place.]

Thanks. Great new site.
I'll mention that sunflower has the unreliability of all solar power and that nuclear has been promised for a long time, but in essence I agree. We don't need any new science or technology to fix our energy problems. We don't even need new government policy. All we need is to get rid of our existing government policy and let alternatives compete with free oil and we will have a much cheaper alternative within 2 decades, possibly within 1 decade, no peak oil problem, no middle east dependence, and probably a 5%-10% larger GDP (which will be entirely eaten up by increases in medical costs during that time period, but that's a different issue).
Whew!!! We humans can continue to expand our dominion without concern of the horizon. There is no end in sight! (I was afraid for a bit that there might be some limitations to our growth. I am so glad that the rules that apply to the rest of nature don't apply to us!)
Overcoming peak oil means much more than overcoming transportation and home heating issues. It also means finding adequate, alternate sources of every other usable energy, plastics, lubricants, drugs, building materials, pesticides, fertilizers, etc. The list goes on and on.

Tooling up for these technologies requires long term research and investments that shareholders may not support as they are not immediately profitable. Our government's energy policies and spending tend toward maintaining the status quo - increasing oil supply by aggression - opening of wilderness for drilling, conquest of foreign resources - not reduction of demand by radically increased efficiencies, decreased waste, and recycling.

Let's suppose we handle peak oil with the gracefulness you suggest. Then what? Next comes peak water? or peak agriculture? There is only so much that can be done with a closed biosystem. Infinite growth is an impossibility.

Maybe peak oil, in its ugliest, worst scenario, would be a more humane tool of population correction than the other peaks that would be certain to follow?
We will need the resources available in space in order to expand indefinitely. Even solar would work better there. (24 Hours a day).

The transition from the oil economy is going to have rough spots. There will be losers.
I love this. Again, much respect MB, but how many gallons (barrels?) of oil does it take to produce a sunflower? I'm not trying to be difficult, this is an important question. Remember, we're living on a round planet in space where nothing is energy-free. So, how much oil does it take to produce it? How much to extract the materials from the ground, assemble them, and ship it to you? Take that fixed number and multiply it by a million. I'd be curious as to what that figure is.
I am an optimist on technological innovation ... but my optimism depends on us being real about where we are, and what our best options are.

Based on my time in science (chem degree) and engineering (20 years doing medical/environmental software), I'd say any technology needs two things to be real:

Give me a price, and an ship-date.

I've seen oh, so, many things touted as breakthroughs. Some work, certainly, and some other things that come out of left field. But, I won't consider something solved the first time I see a press release.

The problem for so many energy technologies (hydrogen in particular) is that they seem to be caught in a 10-20 cycle of more press releases, and more "prototypes."

I think we should craft our energy plans a little more from technologies that are real, and a little less from things stuck in R&D.

Check the history on some of these things ... if 20 years work brings you to an efficiency of X, don't bet the farm on achieving 2*X or even X^2 in 5 or 10 more years.
PS. I believe a plot of solar cell efficiency ($/MW) shows a pretty good incremental improvement over the last 30 years, but despite about 10,000 press releases to the contrary, few inflection points!
PPS. I think you might also be stepping away a bit from "non-event" when you say "Yes, we will have to make some minor adjustments." and "The adjustments to peak oil will all be like that -- gradual and obvious and straightforward."

Spoken like somebody with a steady job in punditry ;-)

Think about it on a human scale, and think about the success of worker mobility and retraining when other industries died.

I get as much a kick out of Schumpeterian "Creative Destruction" as anyone ... but it is never fun being on the receiving end.
I'd say odograph has hit the nail on the head. A press release about a great new technological breakthrough is much different than the finished, working product. These "new" energy sources will not be developed until there is a market for them - ie, when they are cheaper than oil. By that time, it will most likely be too late to avoid a "crisis". That being said, I certainly don't believe the peak oil "chicken littles" that claim the sky is falling and that civilization will end once we're past peak. That's just as ridiculous as saying it will be a "non-event". My guess is that the transition will be a difficult one. The world won't end, but there will likely be a global recession or depression, some wars fought (like our current war in Iraq) and general hardship. But the world won't end and we'll come through this crisis better off in the end, no longer dependent on fossil fuels. That's worth a little hardship as far as I'm concerned.
Thank you Ed, you are very kind.

And with that encouragement, I'll mention one other thing ...

I read a long time ago that engineers overestimate the ability of new technologies to come on-line, and underestimate their abilities to extend current technologies. I’ve seen that proven in the computer world time and again. As an example, it was widely assumed in the 1980s that magnetic disks would die out and be supplanted by optical disks everywhere. Opticals came in, but it was “out of left field” that we could extend plain old magnetic disks into the gigabytes.

We may see that story again in energy: engineers will overestimate the ability of new technologies to come on-line, and underestimate their abilities to extend current technologies.

"These "new" energy sources will not be developed until there is a market for them - ie, when they are cheaper than oil."

Here in Holland, the government had a major financial setback because alternative energy was - get this - *too popular*. This caused the prices to soar.

From my point of view, I'd say the market is ready. But I'm just a Dutch guy, ofcourse.

"We may see that story again in energy: engineers will overestimate the ability of new technologies to come on-line, and underestimate their abilities to extend current technologies."

I personally don't think so. People use extrapolation a la Kurzweil nowadays, in order to a relatively accurate peek into the future.
It's a horse race, and everybody can place their bets ;-)

I think that things like the boxfish-bodied Mercedes will matter more in my lifetime than perennial holy grails like hydrogen fuel cells, but maybe that's just me.
Your peak oil assessment reminds me of my boss and her naivety regarding complex problems. She took a 2 day beginner's Oracle class a while back. Now, when she wants a complex report created from our huge database she tells me "it's just a simple select statement." All that's missing is a wave of her magic wand.
I hope that it is common knowledge why economics is not a Nobel prize science. A Bank of Sweden prize etc. no doubt. Not a Nobel prize though.

Having a privat company, such as the FED print a fiat-currency requires little effort, but I still doubt that a 'what ever value' dollar bill would solve the energy situation.

How fractional reserve banking works might be interesting to look in to.
Quoting a news source - "US electricity production in 2002 was approximately 2.6 trillion kilowatt-hours, little changed from the 2001 level."

Umm, I think that's about 2.6 billion megawatt hours. Umm, lets see 200W x 1 million of them there sunflower gadgets... that would be about 200 MegaWatt hours or about 200/2,600,000,000 of what the we need. Ok, lets change that and say we need to plant a few more than a million of them. Plus a bit to make up for line losses and cloudy days and night time... You better get your order in now because it may take a few decades to make that many and the price may go up with demand too.
If Peak Oil were not a serious problem we would not be in Iraq right now. The US government did that expressly because the situation is so egregious. They had to move on the oil and find a way to do it such that the masses, and in particular Wall St., would not find out the real reason. A pretty tall order but one that they've known about for many years and had time to plan.

And the plan is still in motion of course. The need for a police state is absolute in a time of collapse and chaos, and that's fully what they expect. It's not what I want at all... but then I'm only worth a single vote and even those don't count for much nowadays.
The thing is, all these alternative technologies need to be in place, ready to pick up the slack, by the time peak oil hits. As soon as demand starts to outstrip supply, we're gonna be in trouble. The price of oil will skyrocket, the world economy is gonna have serious problems etc. etc. blah blah blah.

The general concensus seeme to be that peak oil is gonna come sooner rather than later. But there still isn't any massive implementation of these technologies because it's prohibitively expensive. As the price of fossil fuels increase, so does the price of implementing this technology. So we're caught in a catch-22.

We'll be living is intersting times.
I went to sunflower article - the final paragraph was a worry -
"Does Gross worry about the competition? Not at all. "The opportunity for solar is so large," he says, "that we don't even think of other solar companies. All of us combined could not make enough of this stuff to satisfy the planet's demand."
So basically your argument rests on a Wired article, and a link to a technology that you cannot even buy.

I agree that we will mitigate some of the loss of oil with other technologies, but you seem to me to be way over-optimistic. One obvious flaw is that...well...both nuclear and solar can provide electricity, but neither can power an airplane. What jet do you know of that runs on batteries?

And about your nuclear argument. Worldwide, nuclear power represents about 15% of our power generation, currently. You also don't mention the fact that nuclear power relies on fuel: namely, uranium (which we currently mine from the Earth using oil, I might add).

Well, at the current usage rates, the world's Uranium will run out in 140 years. To replace oil power with nuclear power, you're talking about Uranium's share climbing to something more like 40-50% of our power generation. So, you can cut the time until Uranium runs out to 70 years, even assuming we don't have other uses for it, thus pushing demand even higher.

Ditto solar - the outlook for silicon availability is even worse.

And we acquire all of those things with oil...I might add again. It seems like you want to pick out a couple of optimistic articles and call it a day, but really...dig deeper. Even if this goes as you say it will, it will impact your life more than anything else you're talking about on this blog.
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Let's suppose we handle peak oil with the gracefulness you suggest. Then what? Next comes peak water? or peak agriculture? There is only so much that can be done with a closed biosystem. Infinite growth is an impossibility.

No, what happens next is peak population. Growth rates have been sliding since the 1970s and in a few decades population growth is going to go negative.

Anyway, here's my opinion on Peak Oil:

Depending on the decline rate of current fields, oil is almost certainly going to peak within the next ten years. Whichever way you look it it, it’s going to cause a massive amount of economic hardship until the economy realigns itself to a less oil-based system. We’re talking Great Depression kind of proportions, but it’s not going to be be permanent because there are millions of potential jobs in retrofitting our current system to one that doesn’t rely on oil for transport fuel. Why the governments are not doing anything about this is beyond me.
Industries that will suffer:

- Airlines (will probably completely disappear for a while)
- Car companies
- Farming (although not because of fertilizer, which is based on natural gas)
- Trucking
- Entertainment (because people will have less disposable income)

So people are losing their jobs AND food and everything else is becoming more expensive. The result: hyper-inflation. The recommendation: keep a close eye on oil production and be ready to get the hell out of the property and stock markets. Buy the most economic car you can find, because there will be a rush on them (in fact, better not to have a car at all). Don’t work in an industry that is completely reliant on oil, like air travel. And don’t buy a house unless you can walk to the shops and take public transport to work, because in ten or twenty years property in car-dependent communities will be worthless.

Ultimately, however, the economy will recover, because of these activities:_
- Retrofitting suburbs so people can live closer to their work
- Building public transport
- Building coal liquefaction or TDP plants or growing biofuels
- Building renewable energy infrastructure
- Replacing the entire car fleet with hydrogen or electric cars (maybe)

These things are going to create countless jobs. They could be creating jobs now, if the government got off their fat asses.

I wouldn't call Peak Oil a "non-event". The hype and hysteria surrounding it is only debasing its credibility as a real problem and ostructing the solutions.
For all the complaints about everything needing oil, here's a solution. HEMP replaces petroleum all the way and can be the best fuel source and NO, it's not your typical biofuel that "could" cause "global warming".
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