December 05, 2010
Robert Rapier On The Impending World Energy Mess
Robert Rapier has written a review of the new book The Impending World Energy Mess by Robert L. Hirsch, Roger H. Bezdek, and Robert M. Wendling. Rapier finds their coverage of adaptations to Peak Oil most interesting. This is where my own curiosity has shifted on the Peak Oil topic. That it is happening I have no doubt. But how will people and industries and governments respond? How quickly will they respond?
I felt the book became much more interesting when they started to discuss “How is the oil debacle likely to unfold?” This is where I began to find a lot of value in the book for me personally. Future scenarios were very well thought-out, and pros and cons were given for them. The authors delve pretty deeply into potential mitigation pathways. For instance, I have often thought about how people will cope as gasoline prices head higher. One of the possible options is that gas will be rationed. This book takes scenarios like that a step further. First, it makes a strong argument that it is a no-brainer that gasoline will be rationed, and then goes into several well thought-out options of how that might be accomplished.
If rationing gets implemented I expect that to increase the costs of adjustment to the declining availability of oil. Rationing has no other purpose than to hold down prices. Yet prices are the most powerful means to incentivize people to change their lifestyles.
My worry on Peak Oil: The longer the general public do not know it is happening either in the next 10 years or right now the longer they'll make purchasing, career, and lifestyle decisions that will make the adjustment all the harder. When big changes are going to force lifestyle and career changes it is best to get ahead of these changes. Adjusting before you have to costs less and avoids a lot of stress and worry.
This book has a foreword written by former Defense and Energy Secretary James Schlesinger. He also believes Peak Oil is coming in this decade.
Update: Check out some graphs of world oil production in recent years. Note how the last year oil production increased consistent with historical trends was 2004. It is possible oil production in late 2010 might surpass the average rate of 2005. But that would mean beating a rate from 5 years ago! Hardly business as usual and we have oil prices at about double 2004 in order to provide incentives to extract that much oil. The oil is harder to get to and more expensive to extract.
The rising cost of gas will tell the general public what they need to know. I don't understand why you think that price signals will be insufficient to incentivize people to adapt to oil shortages.
You are a fuckin' moron.
The Puritanical Free marketers will not allow government policies to address this soon enough to adapt to it without seriously damaging our economy. They will act as though it was an unexpected shock.
I love the free market, but it must be balanced by strategic direction.
Regarding public knowledge, one little data point supporting the idea that people are becoming aware of it: on AMC's "The Walking Dead" last night, the surviving group makes its way into a secure Centers for Disease Control facility, only to find out that it's about to run out of energy. A sole surviving CDC doctor, in an impassioned final speech, says, as preface to explaining their doomed situation: “The world runs on fossil fuel. I mean, how stupid is that?”
bmack500, you might class me as one of the "Puritanical Free marketers" due to my support of early (1990) legislation (passed into law) to restrict NASA from launching satellites so as to encourage investors to capitalize private launch services. Very quickly, I was confronted by your kind, a class I call "technosocialist", with the harsh reality that very little money was going into these services even with restrictions on NASA. I had to admit they had a point and it set me thinking about capital market failures in technology investment. I figured it out: Taxing economic activity rather than taxing net assets creates highly concentrated capital that is immune from competition and risk averse -- private sector rent-seeking. On the public sector side there remains the rent-seeking of special interests using their government funding to support lobbying for more government funding to their particular "project" -- so you have to change the way tax revenue is allocated to bypass politics and go directly to a citizen's dividend to create markets.
Of course NO ONE in power wants to hear any of this.
The only hope we have is that the dot-com billionaires, a radically different breed from even Bill Gates, will successfully pursue their adventure capital projects to lower launch costs enough that space solar power becomes available. Other options like LFTR and inertial electrostatic confinement (which the author of the reviewed book, Robert Hirsch, was instrumental in not funding when he had his chance) will not receive the funding required because they aren't sexy enough for adventure capital and if the government gets involved they will simply turn into retirement programs for fraudulent scientists -- as did the Tokamak and Shuttle programs.
Because of that I'm working on a much lower risk solution that may align with the special interests and Keynesians. Let's hope they can drink the water they are led to.
A free market with 'strategic direction' is not a free market. Reasonable people can differ on whether or not this is a good thing, but to pretend that a market with a central authority (subject to capture by any number of special interests) is free or even functional is simply delusional.
(...with respect to Peak Oil....)
If one really thinks there will be a severe shortage of some resource in the near future, it seems good to teach one's children both how to make and how to take what they need. But who are the exemplars? Who have been the most successful makers, and who have been the most successful takers?
f1b0nacc1 - You misunderstand. The market needs incentives to invest in risky technologies. I don't think the government needs to do the work, or control the market; however, we do need risky investment that business simply won't bear. That's where government comes in.
Where would we be without the moon shot? Do you really think the "Free Market" in and of itself, would have gotten us where we are today, in terms of technology? Is there free market solution to infectious diseases research?
I think not.
I think that without the Apollo program we would not have reached the moon in 1969. As someone who counts watching tha first landing as one of the most profound moments of my life, I say to that 'big deal'. We got a bag of rocks, some incredible propaganda, and great footage, but very very little else. Had Eisenhower not interfered with the various military space programs in the 1950s, and created NASA (which in turn interfered with various private corporations burgeoning experiments) we might well have gotten far more, though at a more measured pace. We might have ended up with a moon landing in 1980, but a sustainable infrastructure to support it. As it happens, we haven't been back to the moon in 37 years (today is the anniversary of the Apollo 17 launch, the last mission to the moon). If you intended to use that as an example to support your argument for government intervention....epic fail....
Technology and science develop at a pace that the government is largely unable to change. It can interfere and distort that process, and yes...there are sometimes good results from this...but only at the cost of creating unforseen consequences. When the government chooses to intervene, as an example) it creates perverse incentives in the system, even when the original goals are met. To use NASA as an example, we saw the erosion of virtually all efforts to obtain access to space by anyone not associated with NASA, and the decimation of the aerospace industry following the Apollo drawdowns in 1969-70. Rather than a sustainable infrastructure, we got a one-time stunt, of little value to anyone beyond the immediate impact of the landing itself. We do know that prior to government intervention (and before you say it, yes...I acknowlege that the fact that the government was buying missiles, etc. for defense represents some interference in the marketplace, but the difference here is that the government was buying those missiles because it wanted them, not because it was trying to create a missile industry) numerous private concerns were pursuing many different ways to access space, and that as NASA ended up with the 'only ticket', they simply gave up. NASA chose favored contractors, and alternative approaches were quietly killed or simply ignored. Some of this is quite natural, when there is only one program, alternatives have to be weeded out, but that can be disastrous when a technology (or in this case technologies) are still evolving. This problem was bad enough with Mercury and Apollo, it was catastrophic with the Space Shuttle, an abortion we are still living with, to the detriment of virtually every other approach to space access. The current NASA obsession with heavy-lift boosters is likely to create the same sort of problem in the future. Even this ignores problems of regulatory (or simply institutional) capture by special interest groups (the EPA is a great example of this problem, by the way), not to mention political interference by the various politicians. DOD's weapon purchases are often badly distorted by this last problem, and it is nonsense to suggest that any kind of government 'incentives' for the marketplace wouldn't suffer the same fate. Have you any answer to the debacle of Ethanol, for instance?
I realize that I am blathering on, but ultimately the effectiveness of the government in attempts to incentivize the marketplace to nudge it in the 'right' direction depends on its ability to know ath the right direction is, and then to competently produce the necessary incentives without creating unintended consequences. There is very little reason to believe that the government can do either of these things, and excellent historical evidence to suggest that they not only cannot, but should not do so...
You would be amazed how little stock anyone who works in petroleum exploration and production puts in ravings of the Peak Oil loons. 10 years from now, the WTFOMFGPEAKOIL! types will still be screaming at their televisions (made from, delivered by, and probably powered by petroleum products) about how Peak Oil rationing and the end of civilization is just around the corner...maybe just another ten years away...
Government incentives in the form of subsidies are mostly bad. The gov ends up picking winners and losers, usually based more on political clout rather than real ability. And the minute the subsidies run out, the subsidised forms go belly up. Because of this, we end up with permanent boondoggles, like the ethanol program. Gov research is not much better, since the gov pays a huge cost, with huge burocratic waste, lots of pork earmarking, with the benefit mainly going to the companies that use the discoveries, and the labs that get the research grants. And gov research is often subject to political manipulation, like the climate research boondoggle, or medical research going mainly to ailments with strong political lobbies.
One government program that might help though would be to give out prizes for specific technological achievements, similar to the X prize. In this case for specific technologies that can produce energy for a lower price with less resources and less environmental impact. Examples might be a more efficient solar panel, wind turbine, electric batteries, a lower cost way to get men and equipment to space, a cleaner/safer nuclear plant, or for the longer term, some technology breakthroughs neccesary for a working hydrogen fusion plant. You could also use this for health research, by offering prizes for new treatments or drugs that are proved effective for previously intractable medical problems, or for new antibiotics. This way, the money goes to a company that actually achieves something, rather than to favored political clients, or to some gov research burocracy. And the company that wins the prize, plus many of its compeditors that also tried for the prize, is in a better position to exploit the technoligical breakthrough, without subsidy. Another advantage of the prize system, is many multiple companies are often willing to spend more to try and win the prize, than the prize money is actually worth, just for the prestige of winning it, so the gov prize money is leveraged to provide more research than its actual cost. This could do a lot to encourage private research, but without burdening us with permanent subsidies or huge gov research burocracies.
To Some Jerk Said.
I agree. I think the peak oil types are in the same league as the global warming advocates. Their scenarios are long on alarmism, short on fact, their solutions mostly big gov regulation, and their actual track record pretty poor. Remember the Club of Rome, back in the late 70's. According to them we should have already run out of almost everything in the late 90's, and civilization should have already collapsed. And remember that most of todays global warming alarmists were predicting a man caused ice age in the late 60's.
James Schlesinger sez it? Jimmy Carter's Energy Secretary? The guy who told us at the time we would run out of oil within a decade? And, you think this boosts the case?
(Head tilting) Really?
Dear Some Jerk and others,
Peak Oil has already happened. World production has been in decline starting in 2007 or so. Facts matter. None of the recent finds make a dent in overall reserves.
That isn't the important point though. It's all about price. We will have enormous amounts of fossil fuel on Earth, but the high energy content, low cost stuff (oil) HAS peaked.
The oil companies deliberately confuse the issue to make people think that Peak Oil means NO oil. We will
have plenty of oil for a long time. It will just get really expensive and the market/government decisions made
going forward on substitutes and alternatives will be supremely important.
You state "world production has been in decline starting in 2007 or so", without citing any references. You do realize that the world economy has had a major slowdown during that time period, and that use of oil has declined in parallel? And you also realize I hope that production and supply are two very different things...that production can slow to meet a reduced demand without signaling any change in the long or even short-term supply.
I don't have nearly enough knowledge to spout one way or another about the realities of a peak oil scenario, but sadly too many others don't share that hesitation.
Some of the posts here are really hilarious. I remember James Schlesinger well. I also remember the gasoline shortage during the summer of 1980 that was more or less engineered by DOE. There was a 5% shortfall in supply, so DOE reduced gasoline allotments by 5% for every gas station in the US -- over the July 4 holiday weekend. I began to understand when I drove to coastal North Carolina on vacation. Gas shortages were severe in Washington, DC. In Holly Ridge, NC, both gas stations had signs out, "We are open 24 hours, seven days". No one had gone to the beach that year because of the gas shortage, and the guys in Holly Ridge were turning away deliveries and still couldn't get rid of the gas fast enough!
I don't believe in peak oil, but I REALLY don't believe that "technosocialist" morons are going to do a better job than the free market.
Has anyone here read last week's NY Times article about how the US is going to soon become an EXPORTER of natural gas? And how we now have enough oil to last a hundred years?
"Peak oil", my ass.
Dave & others, not long ago the US was running out of natural gas and Europe was choking on Russian blackmail to get their supply. Shale gas has come along and changed the story dramatically in the US, and just wait until fields are found all over Europe. As to reserves, they are only what governments want them to be. The major oil producers manipulate their figures. The US puts huge areas off-limits to exploration (the entire east and west coastlines, eastern Gulf of Mexico, and Colorado/Utah Green River Basin) where there are almost certainly huge potential reserves, but they don't make it into the official count. The Green River Basin is known to have large resources of perhaps over 1T barrels (perhaps 5 Saudi Arabias), but technology is too immature to develop it into reserves and political pressures are preventing exploration. That could change, as we see from the recent shale gas experience. There are lots of other ways technology could improve to recover a lot of oil counted today as unrecoverable and thus not part of official reserves. That would bring costs down and offset the rising costs story told above.
True, green energies should also improve to bring costs down. But consider that green energies are primarily about converting solar energy hitting the earth in real time into forms usable by our modern infrastructure. Fossil fuel technologies convert solar energy that hit the earth over millions of years into forms we can use. There is a lot more of the stuff created over millions of years than from current solar energy, and it's in more concentrated form. True, there is also a lot of the present, but you'd need to cover a lot more of the earth's surface with green energy capture infrastructure (aka, solar collectors and wind turbines) than you do for fossil fuels (oil and gas rigs, mining activities). That has an environmental impact on eco-systems too. Plus, a lot of the electricity based green energies need a lot of rare earth metals, such as solar panels, windmill generators, batteries, and electric car motors. These must be mined in a way that does not please environmentalists, and currently China is the only place that is being done, creating an industrial supply headache. So there is a strong trade-off environmentally between all current forms of energy.
Ironically, the most concentrated energy form is nuclear, by far. Because of that it's eco-footprint, that is impact on the earth and its eco-systems, is the smallest of all our current and prospective energy sources. How ironic that environmentalists have spent the last 4 decades demonizing it. Some are belatedly coming around to embrace it, but half-heartedly.
Looking at the statistics for "Crude oil proved reserves" and "total petroleum consumption" at the Energy Information Admin (http://www.eia.doe.gov/emeu/international/contents.html) the number of years of oil remaining at then current levels of consumption was
1980 28 years
1990 41 years
2000 36 years
2009 44 years
Lower consumption in 2009 raises the "years left" number, but c'mon. As prices rise, people will find ways to reduce consumption, unprofitable fields will become profitable, exploration will increase, substitutes will become more attractive...