January 02, 2010
China And India Displacing OECD Oil Consumption

Writing in a comment on a post at The Oil Drum Gregor Macdonald very succinctly sums up an energy future where China, India, and other rapidly developing countries gradually displace OECD countries as oil purchasers.

High oil prices are more painful to the OECD/Developed world user than the Developing world user. In the Developing world coal accounts for the largest chunk of BTU consumption, and the marginal utility to the new user of oil is high. In other words, the OECD user is embedded in a system where the historical consumption pattern has been to use much more oil per capita. But in the developing world, just a small amount of oil to the new user of oil is transformational. It will be the developing world therefore that will take oil to much, much higher prices in the next decade. They will use small amounts per capita, but the aggregate demand will be scary high. After all, the developing world's systems are not leveraged to oil. They are new users of oil--and unlike us, aren't married to a system that breaks from high oil prices.

Macdonald sees an even bigger future for coal. To prevent that either technological advances have to lower the cost of competitors down to coal's cost (and good luck with that) or developed and developing countries have to agree to tax carbon emissions. I'm not betting on big carbon taxes. I keep hoping for bigger pushes to lower the cost of nuclear, and other competitors. Otherwise Asian demand and Peak Oil will push the whole world toward coal.

I see the OECD becoming increasingly poorer, and turning to the preferred energy source of the poor: Coal. I see the developing world continuing to progress along its current coal-fired powergen pathway, while adding large amounts of oil but in small per-capita terms. It will be the developing world that will get oil above 200 dollars (in today's terms) on a sustainable basis.

Rembrandt Koppelaar, President of ASPO Netherlands, captures this shift of oil consumption from the developed to the developing countries in his Oil Watch Monthly reports (PDF). See pages 8-12 for OECD (developed countries of Europe, US, Japan, Canada, etc) and then compare their oil consumption usage trends (all down including the US) with the trends for India and China on page 13. US oil consumption has already peaked. China and India can afford to drive up oil prices to levels that cause Americans and Europeans to drive less and to switch to more fuel efficient vehicles. This trend will continue.

My advice: Get yourself out in front of this trend. Don't get run over by it. While you can still afford to make financial decisions that insulate your living standard from the price of oil. Don't buy another SUV until they come as pluggable hybrids. If you have an oil heating furnace take a hard look at ground sink heat pumps. Or move closer to your job (provided you think your job can survive higher oil prices). The really hard part I see in the adjustment is how to find a job that'll survive Peak Oil.

You might think that surely Europe is turning away from coal or at least turning toward carbon capture from coal electric plants. But so far the price of carbon emission rights in Europe is too low to force a large scale switch to nuclear power.

E.ON and Centrica warned that they would not invest the tens of billions of pounds to build expensive new nuclear reactors and clean coal plants at today's carbon price, which is supposed to penalise dirty coal and gas plants.

Spot prices are now around €12 (£10) a tonne, close to a six-month low, and experts say that to make building new nuclear reactors financially viable, a price closer to €40 is needed.

What I'd like to know: What do these numbers tell us about the price difference between coal electric and new nuclear electric power? What's the difference in pennies per kwh? The key fact we need: How many kwh or mwh get generated per tonne of carbon emitted when coal is burned? Anyone know how to calculate this?

So far European steps to build more nukes seem pretty small. As soon as the rest of Europe announces plans to build as many nukes total as France has alone I'll think nuclear power is going to play a big role in Europe cutting CO2 emissions.

FRANCE - Building a 1,600 MWe EPR at Flamanville, which is expected to begin operation in 2012. France announced plans in January 2009 to build another one at its Penly power station.

GERMANY - The new center-right government plans to extend the lives of Germany's 17 nuclear plants but is expected to uphold an existing ban on building new nuclear power stations.

HUNGARY - Government agreed in April to allow preparations for building another unit at the Paks nuclear plant to begin. It could take over 11 years to build. [ID:nLE437132] Paks' existing four reactors supply about a third of Hungary's electricity.

Click thru and read the full list if you are interested. Several European countries might build a nuke or two. But the numbers don't begin to approach what's needed to stop most coal burning.

The United States might be able to go with natural gas from shales (Marcellus, Bakken, Fayetteville, etc) instead of more coal. But I do not think most countries are going to find natural gas a lower cost choice.

Update: Gregor Macdonald argues that this transition away from oil is more problematic than previous energy transitions because the transition is toward lower power density energy sources. True enough for most of the alternatives on offer. Obviously, nuclear power is higher energy density but requires so much capital investment that it has high costs. Plus, electricity is inconvenient and costly for cars and impractical for airplanes.

Those who would propose a successful energy transition over the next 20 years have failed, on a number of fronts, to produce a holistic model that pays respect to both the history of previous energy transtions, and to all (not just some) of the hurdles that lay before us. For example, one group of transitionists will lay out the technical feasibility of running the world exclusively on clean power. But they ignore the construction phase, or the energy required to fund it. Other transitionists will appear to address the construction phase, but instead will elide over crucial engineering details by invoking historical examples of national will–like the space program, or the retooling of Detroit during WW II. Most neglected however is the history of previous energy transitions. And here we find the largest hurdle of all. For, in humanity’s last two transitions, from wood to coal and then coal to oil, the trajectory each time was to a higher power density energy source. Energy transition is disruptive enough, but much less so when you are gaining energy density. And how do you suppose transition will be this time, going in the opposite direction, to lower density sources?

There's no strong political will to do the transition. It'll happen after Peak Oil as the amount of oil exported per year declines by 5% per year.

Share |      Randall Parker, 2010 January 02 12:46 PM  Energy Fossil Fuels


Comments
CyclemotorEngineer said at January 2, 2010 1:45 PM:

Hi Randall,

Thank you for this post. In answer to your question about CO2 emitted per MWhr, I've put some numbers together below.

Typical emission per BTU release for coal burned for electricity generation in this country is 0.095 grams. Divide that by 0.33 to account for thermodynamic efficiency of powerplant and transmission line losses. (factor of three is an easy number to remember and probably accurate to within a few %) Divide by 0.00029 kWhr(thermal) per BTU. Voila: 993 grams per kWhr of electricity delivered to your abode. About a metric ton per MW-hr(e), which is another easily remembered number. If it was generated by burning coal.
Conversion factors and average emission from Transportation Energy Data Book, #27
Also see: http://www.eia.doe.gov/cneaf/coal/quarterly/co2_article/co2.html

Here is what it looks like in front of the powerplant:
"A large coal train called a "unit train" may be two kilometers (over a mile) long, containing 100 cars with 100 tons of coal in each one, for a total load of 10,000 tons. A large plant under full load requires at least one coal delivery this size every day. Plants may get as many as three to five trains a day, especially in "peak season", during the winter months when power consumption is high."
http://en.wikipedia.org/wiki/Fossil_fuel_power_plant
And we all inhale...

Randall Parker said at January 2, 2010 3:09 PM:

Hi Jeff,

Thanks very much for your response. So then €40 per ton is €40 per MW-hr(e). That's 1000 kwh in which to divide the €40 or 4 Euro cents per kwh as the cost advantage of coal over nuclear power. At current exchange rates that's nearly 6 cents in US dollars. Wow, a lot bigger than I expected.

I suspect that the dollar cost of a nuclear power plant isn't equivalent to the Euro cost at today's exchange rates. Even if the additional dollar cost was 4 USD cents for nuclear over coal then that's a substantial cost advantage for coal.

Coal is probably cheaper in the US than in Europe due to lower transport costs from US coal mines. So that pushes coal electric costs down in the US versus Europe.

I wish more people shared our desire for cleaner air.

th said at January 2, 2010 4:27 PM:

quote of the week... "High oil prices are more painful to the OECD/Developed world user than the Developing world"
Western nations that lose their nationality and go planet, do in fact lose everything in the process, china is 30% lower in its manufacturing of all things green, whys that? They are kicking your asses and you know it. Looks like germany is going to have to look elsewhere for its salvation, the 40,000 green jobs can't be sustained by subsidy alone. The bright side is carbon sequestering of coal power generation in the US, if it occurs and the teleprompter said he wanted to destroy the coal industry, will add as much as least 7 cents per kwh to your bill, basically doubling it overnight.

th said at January 2, 2010 4:34 PM:

that should be china is 30% lower in manufacturing costs

Clarium said at January 2, 2010 4:35 PM:

Randall,

Regarding nuclear, what is the requiste national IQ for a country to be able to utilize it? Surely, China passes this test, but I doubt India would.

random said at January 2, 2010 5:31 PM:

@Clarium - According to Wikipedia, India has 6 active nuclear power plants (17 total reactors) and 4 more under construction. China only has one fully active nuclear power plant and 10 under construction.

William O. B'Livion said at January 2, 2010 5:54 PM:

"Get yourself out in front of this trend. Don't get run over by it."

Not going to happen, our politicians are too stupid and too greedy. They've bought fully into CO2 production being the primary forcer in the Catastrophic Anthropogenic Global Warming scare-story and are using that to milk all the lovely green juice out of various industries and lobbyists.

This will keep the focused on maintaining the status quo as long as possible--after all THEY won't suffer when things go tits up, they know people and are protected first by the system.

Of course their grandchildren will be eating the same mercury tainted fish as the peons, and the uranium and other radioactive material in the coal ash will be doing it's thing to everyone irrespective of social class.

And as long as you vote for them to "solve the problem" you'll keep getting what you've always got from them. Look at California and Massachusetts, does either of THOSE states have the financial reserves to deal with ANY additional problems?

Randall Parker said at January 2, 2010 6:37 PM:

William O. B'Livion,

I'm not talking to you about what your government should do. I'm talking to you about what you should do. Yes, you really can prepare for hard times. Though most people to just complain.

You can buy less stuff and use the saved money to cut your energy footprint. This can involve simple moves like install CFL bulbs or caulk air leaks around windows. Or it can involve switching to a hybrid car or replacing an oil burning furnace with a ground sink heat pump. You can blow insulation into your home's walls or move closer to your job and stores.

I personally do way more walking and also buy larger amounts on car trips to stores so I can go less often. I've also upgraded my wardrobe to reduce my need for heat. Plus, the only incandescents left in my place are in fixtures that can't fit a CFL. I've ordered some light socket extenders to help with that.

I've cut my energy footprint so far that my main concern is now my job. $10 per gallon gasoline would not cost me much. I just need to find something to do for a living that'll survive a 5% yearly decline in world net oil exports.

Bruce said at January 2, 2010 8:03 PM:

Randall, I'm going to get me a hybrid coal/wood/NG furnance. But some cheap coal and let it burn.

http://www.yukon-eagle.com/FURNACES/EAGLEIHUSKY/tabid/55/Default.aspx

And I'll keep the thermostat at 72.

PacRim Jim said at January 2, 2010 9:21 PM:

Switch to Celsius in the summer, so air conditioners set to Fahrenheit will never turn on.
Switch to Kelvin in winter, and heaters will never turn on.

Mercer said at January 2, 2010 9:25 PM:

"move closer to your job"

Many areas with employment centers have strict zoning that make housing expensive too expensive for workers earning the median income. A much larger percentage of jobs could be done by telecommuting with current technology. It is cheaper for people to work at home instead leasing office space. If oil prices skyrocket this seems more likely to happen rather then everyone moving to the city.

Randall Parker said at January 2, 2010 10:05 PM:

Bruce,

I wouldn't want the coal exhaust seeping in. Plus, there's the cleaning of the ash. Does ash accumulate faster from coal, wood, or corn?

I like electric ground sink heat pumps because they are both clean and cost effective in the long term. Mind you, I live in such a mild environment that I just use an electric space heater for a couple of months. But if I lived somewhere that got seriously cold then I'd prefer a heat pump.

For back-up should the electric fail you need a conventional fireplace or wood stove since any burning device that requires a fan isn't going to work.

What I wonder: If you have a steel wood-burning fireplace that does a good job of expelling the exhaust then how does the oxygen supply get replenished? Does the exhaust lower internal air pressure in the house and pull in more air thru the walls? Or do they have a separate air intake pipe?

Bob Badour said at January 3, 2010 6:19 AM:
Does the exhaust lower internal air pressure in the house and pull in more air thru the walls? Or do they have a separate air intake pipe?

Depends on the age and design of the house. If you have an R2000 home, you will need to provide an external air supply with a heat exchanger.

DaveMc said at January 3, 2010 8:46 AM:

One thing you have omitted from consideration is natural gas. Now that the technological problems of extracting natural gas from shale formations have been worked out North America is awash with cheap natural gas supplies. Unlike coal this can fairly easily be used to power trucks and trains.

Bruce said at January 3, 2010 11:13 AM:

Randall, for many years I lived on a small island with a 150 homes or so on it. One winter we had a humungous snowfall and power lines were knocked down in 4 locations and it took about 2 and a half days to come back all the while it was below freezing.

I slept in front of the wood stove in the living room, feeding it every few hours or so and we kept the place warm and made food on the wood stove. The lack of electricity was annoying but having heat was wonderful.

The amount of ash was quite irrelevant. We cleaned the the bottom of the wood stove about once a week. It took 10 or 15 minutes.

bane said at January 3, 2010 4:27 PM:

@clarium: I don't know what precisely you mean by "national IQ", but an important aspect to understand about India is that they have a fierce desire to have a degree of cutting-edge capability in technological fields even though this is not (currently) based upon a broader general technogical capacity. They've got an active space program even whilst having relatively high levels of illiteracy and poverty in the country. Whether this strategy is good for the country as a whole or not I couldn't say,but it's a mistake to think the difference between "peak education" and "average education" is the same as in the west: it's actually a much bigger difference.

Engineer-Poet said at January 5, 2010 5:58 AM:

The USA is temporarily awash in cheap gas (especially because so many LNG trains have come on-line in the Middle East, and the value of the NGLs from those gas fields makes it economic to sell the LNG for roughly the price of shipping so the USA has become the destination of last resort).  The price needed to make shale gas economic is reported to be around $8/mmBTU.  Overdue restrictions on e.g. chemicals used in hydrofracturing may drive this up some more; externalizing costs by destroying people's groundwater is penny-wise, pound-foolish.

(Aside:  I have to wonder how much of this shale gas is actually generated as a result of the water added.  Supposedly, lots of shales have plenty of organic matter but are too salty for microbes to survive.  Adding water dilutes or removes the salt, and microbes can go to work turning the matter into methane and more microbes.  This would argue for a very long tail on the production curve.)

LL said at January 5, 2010 1:43 PM:

While I can see the trend for India and China to continue to increase its use of Coal/Oil for the short to medium term(4-10 years), I think it is temporary and they will need to start embracing cleaner technologies or be doomed to fail. America and Europe used to burn all the Coal and Oil as it saw fit until the air quality because so poor, the people demanded cleaner air. The pollution problem is already a big issue in both India and China and will only get worse. There will come a point where the Health/Civil unrest/Environmental cost become so severe that Both countries will have to clean up their act. This will not be cheap, good healthcare, environmental cleanup, oversight etc....Once these are required in these countries to the level that is in west today we will find the trend of outsourcing and offshoring reverse. Many jobs will return to the western countries. The key is to survive and thrive until then, and use political pressure to speed up the process. If the western countries are energy self sufficient and green, they will be well poised to thrive 10-15 years out.

Nick G said at January 5, 2010 4:47 PM:

Does ash accumulate faster from coal, wood, or corn?

I believe it depends on the coal quality. Anthracite's not too bad, but bituminous (which is all that's left these days) is an enormous pain, ash-wise. Wood is much easier, I believe.

I like electric ground sink heat pumps

You might want to research air-sink heat pumps. For most of the US, I believe they are far more cost-effective.

If you have a steel wood-burning fireplace ...Does the exhaust lower internal air pressure in the house and pull in more air thru the walls? Or do they have a separate air intake pipe?

Bob is right, but for most people it's like NG furnaces: it depends mostly on the design of the stove - you can get both types.

Anonymous said at January 6, 2010 1:31 AM:

Per wikipedia China currently has 11 reactors with a total capacity of 8587MW, india has 17 but its total capacity is only at 3779MW.

Anonymous said at January 6, 2010 1:35 AM:

People like to lump together India with China, but in reality comparing India with China is like comparing pakistan with India, they are not in the same league therefore incomparable. For example, China's car market is 5 times bigger than India's by volume, and 8 times bigger by value.

LL said at January 6, 2010 6:07 AM:

People lump India and China together because over the next 5 - 30 years most of the growth and commodities demand will come from them. It is true that China is currently a lot bigger than India in terms of economy, but the fact still remains that they are still the 2 fastest growing "large economies" Also a major reason for comparison is the population size and the future growth potential. (this is Future Pundit after all) Long term forcasts have China and India the number 1 and 2 economies in the world, followed by the US. It has been estimated that in the medium to longer term the Indian population size will be larger than that of China. (no one child policy)

When looking long term both countries are very significant when it comes to energy policy, global warming, Economy and global security. Remember that China's growth is a bit artificial and a result of the currency manupilation. I find it odd that China that has a per capita GDP much higher than India still has lower labor costs than India!

Nick G said at January 6, 2010 1:45 PM:

High oil prices are more painful to the OECD/Developed world user than the Developing world user.

This doesn't sound quite right. The average OECD/Developed world user is more affluent than the average Developing world user. High prices will be more painful for the poor. What he really means is that there are more consumers arriving in the developing world, so they'll have more marginal impact on demand.

In the Developing world coal accounts for the largest chunk of BTU consumption, and the marginal utility to the new user of oil is high.

This confuses electricity with liquid fuel: coal isn't used for transportation in either the OECD or in developing countries.

It will be the developing world therefore that will take oil to much, much higher prices in the next decade.

He's not clear on the feasibility of substitutes for oil: Over $80/bbl EV/PHEV/ErEVs are cheaper than oil. Visualize a a column of liquid (oil, if you want) rising in a tube. At certain price points there are holes in the side of the tube, where demand is lost. As the column rises, those holes get bigger, and they widen with time. Pressure from below can push the fountain above the level of the holes, but not for long.

The fact is, those substitutes exist in both the OECD and developing countries, and are more important in developing countries (electric bikes outsell ICE vehicles in China, and China has higher CAFE MPG regulations).

Bob Badour said at January 6, 2010 2:14 PM:

Nick,

The whole point is the guy with the electric bike can pay a lot more per barrel to lube his motor and grease his chain than the American can pay per barrel to pull his boat or his camper (or both) behind his SUV.

Are Americans more likely to cut back on fuel for SUVs or are the Chinese more likely to cut back on buying electric bikes? It's clear to me the demand for petroleum to deliver and to lubricate electric bikes can continue to increase rapidly even while demand for petroleum fuel in the US drops off drastically due to high prices.

Nick G said at January 6, 2010 3:03 PM:

the guy with the electric bike can pay a lot more per barrel to lube his motor and grease his chain

Sure. But,

1) that's a use for oil that is very, very small. Even a billion Chinese lubing their motors aren't going to increase demand for oil very much.

2) if the volume did, for some odd reason, become large it would be cheaper to get lubricants from non-oil sources than from $200 oil.

I predict that inflation-adjusted oil prices will never stay above $200 for a full year.

Nick G said at January 6, 2010 3:08 PM:

one group of transitionists will lay out the technical feasibility of running the world exclusively on clean power. But they ignore the construction phase, or the energy required to fund it.

Building enough wind would be very easy. Wind and nuclear have high E-ROI. EV's could replace ICE's at no greater cost.

He's being unrealistic.

Are we going to have an unnecessary painful transition? Sure, but there's no reason to expect a collapse. High CO2 emissions? Sure, but that's different.

Nick G said at January 6, 2010 3:18 PM:

Let's see: 1 billion Chinese at 10 cc's of motor oil per year (which is about right for a tiny EV): that's 10M liters, 2.5M gallons, 60k barrels, or 200 barrels of oil per day. That's .002% of current Chinese oil consumption.

th said at January 6, 2010 3:23 PM:

Shale gas is very productive, barnett has proved that, this is an assessment that doesn't even include Marcellus.
http://www.afdc.energy.gov/afdc/pdfs/ng_supply_assessment_2.pdf
as far as it destroying the water table, that will become much more problematic the more gas production moves into areas of democrat party strongholds where the prevalence of whiners and the neurotic are always a consideration, no such problem exists in Texas..Barnett, Louisiana..Haynesville, etc, if coal bed methane is workable, shale gas should be a breeze as far as rolling over spotty yappy liberal nitwits.

Bob Badour said at January 6, 2010 3:43 PM:
That's .002% of current Chinese oil consumption.

You ignore the diesel for the trains that move parts and finished products around the country. You ignore the myriad other convenience items that the Chinese will increase consumption of that also use oil. You are basically just ignoring the whole point.

Nick G said at January 6, 2010 5:11 PM:

You ignore

First, that's a judgmental comment - I thought, based on what you've said in the past about "shoulding", that you felt that sort of thing was unproductive.

2nd, I addressed the demand item you raised - have patience, and just raise the points you feel haven't been addressed.

3rd, diesel trains can and will be electrified. Case in point: Russia just finished electrifying the trans-Siberian railroad.

What other "myriad other convenience items" do you have in mind?

Nick G said at January 6, 2010 5:39 PM:

Bob,

When I discussed electric bikes, I was squarely addressing the point by dealing with the single largest demand item: personal transportation. Everyone focuses on the growing Chinese personal transportation market, without including larger volume alternatives such as e-bikes, or noticing the difference between the kinds of vehicles sold there and those sold in the largest market (US), with which it is often compared.

Bob Badour said at January 6, 2010 7:07 PM:
First, that's a judgmental comment - I thought, based on what you've said in the past about "shoulding", that you felt that sort of thing was unproductive.

It's not a judgment. It's an observation. Continue to ignore the whole point all you want. I will simply observe when you do so.

[without] noticing the difference between the kinds of vehicles sold there and those sold in the largest market (US)

"But in the developing world, just a small amount of oil to the new user of oil is transformational. It will be the developing world therefore that will take oil to much, much higher prices in the next decade."

Your statement does not withstand the evidence.

that's a use for oil that is very, very small.

"They will use small amounts per capita, but the aggregate demand will be scary high."

Your statement seems pointless in the face of the original article. Obviously, if they are using small amounts per capita, they are also using only small amounts per individual use.

diesel trains can and will be electrified.

Eventually. Eventually, declining worldwide production will force even China and India to reduce consumption. The whole point is their consumption will continue to grow for a time, though, even after worldwide production starts to decline. The growth in their consumption will come at the expense of our consumption.

Nick G said at January 6, 2010 7:26 PM:

Bob,

Your statement does not withstand the evidence.

What evidence? The original article made an argument. That's not evidence. You're repeating the argument doesn't make it evidence.

Obviously, if they are using small amounts per capita, they are also using only small amounts per individual use.

Ah, but how small? let's get quantitative, here. 10cc's per person per year doesn't add up to anything.

The growth in their consumption will come at the expense of our consumption.

Oh, I agree that developing country consumption will grow, and OECD consumption will decline. The question is, what will prices do, and what effect will these changes in price and consumption have on the OECD? I'm arguing that developing country consumption will be reigned in by high prices, and at a price level that is lower than is implied by this article. I'd also argue that falling OECD consumption will be good for the OECD, not bad, and that rising oil imports to developing countries sets them up for a harmful addiction. I'd further argue that a few countries understand that pretty well - these include Israel, much of Europe (especially Denmark) and most importantly, China. As far as I can tell, they don't include most oil exporters (like Russia), and many other developing countries, like India. Much of their national future will be shaped by that.

The oil and car industries have managed to convince many people, peak oil enthusiasts in particular, that oil is essential to a modern economy. The sooner we learn that's not the case, the better off we'll be.

The US is a bit of a split personality here. Bush talked about addiction, but only waged oil wars. Obama talks about energy security, but spends as much money on roads as energy infrastructure (though, to be fair, his energy policy is lightyears ahead of his predecessors). Fortunately, the US has made progress: GM is about to unveil a truly revolutionary extended range EV, the Volt: this kind of design has the potential to wean the US off of 45% of it's oil consumption.

Bob Badour said at January 6, 2010 8:17 PM:
What evidence?

The evidence for what others do or do not notice. I didn't waste any time reading the remainder of your post.

Nick G said at January 6, 2010 8:25 PM:

Too bad. I have the sense that you might bring something useful to the discussion, if you were to really think about the questions at hand, and try to bring in new ideas and information.

The issue originally raised here is supply and demand curves, and supply and demand elasticity, not whether new demand is arriving from developing countries (clearly it is).

Will poor customers really ignore price increases? I think not.

Randall Parker said at January 6, 2010 8:46 PM:

Several points regarding pain, suffering, China, India, the United States and oil:

1) Oil demand is growing in south Asia and China in spite of high prices. Yet oil demand is falling in the US and other OECD countries.

2) China uses much more coal than the US but less than half the amount of oil.

3) China's economy depends less on oil than the US economy.

4) China's population feels high oil prices less than America's population. People who ride electric bicycles do not feel the price of oil.

Randall Parker said at January 6, 2010 9:01 PM:

Nick, I'd like to see your math on this assertion:

Over $80/bbl EV/PHEV/ErEVs are cheaper than oil.

Suppose you drive 12,000 miles per year with a gasoline equivalent of a Chevy Volt. Your gasoline cost is going to be what at $80 per barrel? Maybe $3 in California but less in most of the US. This car is going get maybe 30 mpg (assuming 6 speed duall clutch automatic transmission and an I3 with direct injection and dual turbo - Ford will sell this in a year or two). So, what, 400 gallons? $3 per gallon? $1200 per year?

That seem a reasonable comparison? So what is your incremental cost for a PHEV? How many kwh and at what rate to compete against the ICE car?

Engineer-Poet said at January 7, 2010 10:21 AM:
People who ride electric bicycles do not feel the price of oil.
It depends.  To the extent that their food comes on diesel trucks and their wages depend on overseas shipping costs and even the existence of overseas markets, they still do.  Move the food to electric rail and push the shipping by sail, and oil drops out except as it affects consumers.
Nick G said at January 7, 2010 10:39 AM:

Randall,

1) Oil demand is growing in south Asia and China in spite of high prices. Yet oil demand is falling in the US and other OECD countries.

It helps, I think, to use use the economist's approach of separating the concepts of demand and consumption. So, demand is growing in south Asia and China due to their economic development: it would grow even faster if prices were lower. Demand is stable in N America and falling in Europe, but consumption is falling faster than demand because prices have risen.

2) China uses much more coal than the US but less than half the amount of oil.

Yes, China uses about 25% more coal than the US: http://www.nationmaster.com/graph/ene_coa_con-energy-coal-consumption , and uses about 8M bbl/day of oil, or about 42% as much. It's worth noting that China's coal reserve to production ratio appears much lower than either the US or Australia. I believe China has begun to be a significant coal importer, and oil imports are rising to close to 50% of total consumption.

3) China's economy depends less on oil than the US economy.

Yes, I'd say there's some truth to that. Both the the US and China use coal for generation. China has more coal generation, and less NG and nuclear. China has a strong trade balance, so rising oil prices might hurt their economy less, but I'm not sure how much less. Chinese transportation is somewhat less dependent on oil, but both countries would find a cutoff of oil imports disruptive. China's % of consumption from internal production is only a little higher than the US. China uses their export surplus to keep their currency low - would a deteriorating trade balance hurt their ability to buy dollars? I'm not clear on that.

The fact that China is less dependent on oil, and is working aggressively to stay that way by building wind, solar, nuclear, high efficiency vehicles and EV's, is only good for the US.

4) China's population feels high oil prices less than America's population. People who ride electric bicycles do not feel the price of oil.

This is complicated. Chinese demand is rising, but those Chinese who use oil probably have demand that is just as sensitive to oil pricing than in the US. IOW, if prices rise, Chinese consumption will be affected. For instance, Chinese consumption fell in 2008, at the height of the oil price peak, and later rose as prices fell. Also, keep in mind that China recently deregulated oil and gasoline pricing, so Chinese consumers are no longer protected from international pricing. This is part of why I think China is much smarter on energy issues than most countries, like India and Russia (and the US).

Nick G said at January 7, 2010 10:42 AM:

E-P makes a good point: there is a feedback between the US economy and China's. If the US is hurt by oil costs and prices, that will slow down the Chinese economy and it's oil consumption.

Pundit Now said at January 7, 2010 10:49 AM:

Going to back to coal will be a disaster. Check out the worst environmental disaster in US HISTORY:
http://www.alternet.org/water/11693/can_america_clean_up_from_its_worst_environmental_disaster

http://www.inteldaily.com/news/144/ARTICLE/9251/2009-01-12.html

http://www.earthjustice.org/news/press/2009/one-year-later-america-s-worst-environmental-disaster-continues-with-no-regulatory-relief-in-sight.html

The government suffocates nuclear energy for political reasons, nuke plants in the 70s were as cheap as coal plants. The government interference increased the cost several times.

I'm repeating a bit myself here, but it's necessary:
We need to build nuclear plants. Fast and thorium reactors generate 30 TIMES more energy per unit of fuel, while producing 30 TIMES less waste per gigawat and the waste lasts 100 TIMES less than the current nuclear waste (current nuclear waste is NOT waste, it's pure fuel). Nuclear energy saves lives. This is the only sustainable and dense enough energy source - immediately available fuel supplies will last us at least 10000 years, a bit more expensive fuel production (available today) will last us until the sun explodes.

Here are the hard facts about GW :
(1) Each year we put 25 to 30 GTones of CO2 in the atmosphere,
(2) Each year the amount of CO2 in the atmosphere grows by 15 to 23 GTones

Obviously, the natural carbon sinks cannot absorb the man made CO2.
So there will be change, what change, we can only guess. Either way, advanced nuclear
technology is the ONLY SAFE answer. It can solve either problem - cooling or heating. We can remove our excessive push on nature and see what happens next. No need to guess.

Nick G said at January 7, 2010 2:51 PM:

Randall,

I'd like to see your math on this assertion: Over $80/bbl EV/PHEV/ErEVs are cheaper than oil.

See this discussion. It might need a bit of updating, as costs have fallen, but it gives the broad calculations.

Angeline Ambatali said at May 13, 2011 12:06 PM:

The US is a bit of a split personality here. Bush talked about addiction, but only waged oil wars. Obama talks about energy security, but spends as much money on roads as energy infrastructure (though, to be fair, his energy policy is lightyears ahead of his predecessors). Fortunately, the US has made progress: GM is about to unveil a truly revolutionary extended range EV, the Volt: this kind of design has the potential to wean the US off of 45% of it's oil consumption.
sail charter

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