A Storm on the Horizon

Trouble is brewing. Trouble I have been warning about since I started writing this blog. Trouble that was a big factor in me starting to write this blog:

Energy leader sees clouds

“An oil crisis is coming in the next 10 years,” John Hess said at the annual Cambridge Energy Research Associates CERAWeek conference in Houston. “It is not only a matter of demand. It is not only a matter of supply. It is both.”

That’s what I have been mostly concerned about. Despite the fact that I think supply can still grow a little from here, I see no easing in demand. And if we do actually peak in the near future – which I think we will – we are not close to being prepared for that.

The number of vehicles in China and India is projected to grow exponentially by 2050. So demand for fuels derived from oil shows no slack despite relatively flat U.S. demand amid the nation’s economic slowdown, he said.

Not gonna happen. The energy won’t be there for them to grow exponentially. And as they try to grow, they will drive the price of oil up exponentially.

The world is consuming about 86 million barrels a day, and analysts expect demand to grow by about 1.5 million barrels a day each year, the International Energy Agency said.

“Recessions may interrupt this growth, but only temporarily,” Hess said.

Where’s the growth going to come from? Not only do we have to find and develop new fields to match that projection, but we also have to find and develop new fields to counter depletion. I have forecast before that I think we get to 90 million barrels a day. But we may not. And I definitely don’t think we will go much beyond that.

Hess also noted that increased investment is crucial because the Organization of the Petroleum Exporting Countries doesn’t have the cushion it once had to protect against supply disruptions. OPEC pumps 40 percent of the world’s oil.

In 1985, he said, OPEC had 10 million barrels of spare capacity. Today the cartel has an estimated spare capacity of 2.5 million barrels.

And that’s the underpinning on the Peak Lite concept, described in some detail here.

The Dallas Morning News also reported on this story:

Oil Execs: Crisis Coming, but Not Because of Scarcity

Mr. Hess’ colleagues sounded more reassuring about their ability to meet demand, but they also said people will have to pay more money and exert more effort to get the energy they need in the future.

“The supply challenge is really not one of scarcity as some believe,” said Exxon Mobil Corp. senior vice president Mark Albers.

It’s not scarcity. That’s a strawman. There is lots of oil left. But getting it out of the ground fast enough to meet growing demand is the problem, and a big reason that oil prices have run up so much in the past 5 years.

Exxon predicts global demand for crude oil will rise around 40 percent by 2030.

I predict that global supply in 2030 is lower than it is today.

Mr. Hess said individuals and governments must address rising demand by conserving energy. The leaders of some of the world’s largest energy companies were responding to the theory that people have used most of the oil that’s easy to recover, and shortages will soon follow.

“We cannot afford to abandon fossil fuels and still deliver the volume of energy needed to sustain the world’s economic and social level, to alleviate global poverty,” he said. “Alternatives are simply not ready to shoulder the load. Nor will they be in a position to do so any time soon.”

Yet we are being promised that alternatives will be ready to shoulder that load. We just have to mandate them – or so the theory goes.

The men didn’t predict future oil prices. Mr. Hess spoke of “healthy” oil prices – that is, price levels to support enough production to meet demand.

Many of the presenters at the conference said oil prices could drop as low as $60 a barrel, but they aren’t likely to go as low as the levels of the late 1990s, when crude traded around $10.

$60? Maybe. But that’s quite a change from what many of those guys were suggesting just a couple of years ago: A return to $30 oil.

Am I concerned about this situation? Yes, I am. I think we have economic hardship already upon us as a result of high oil prices, and I can’t see an end to it. I have been asking myself a lot lately if the end of growth in oil production means an end to economic growth. It is really hard for me to see how we can have robust growth if oil production is dropping each year and prices are escalating. And economic hardship is only part of the problem. That’s what the Western world will see. Some of the world will start to do without while we outbid them for oil.

65 thoughts on “A Storm on the Horizon”

  1. You know what’s really weird? Do you know those “pick-ups” they build basically by grafting a bed onto the back of a commercial truck body? I’ve seen 3 of them on the road here in OC during the last week.

    People don’t get it. I suspect that it is arch Republican types who disbelieve anything any scientist or engineer tells them … but that might be my own biases (or not).

  2. I have been asking myself a lot lately if the end of growth in oil production means an end to economic growth. It is really hard for me to see how we can have robust growth if oil production is dropping each year and prices are escalating.

    I don’t think declining oil production or even declining primary energy production necessarily means lower economic growth. I don’t think growth can be linked directly to exploitation of any particular natural resource. I can give you numerous examples that mostly boil down to expansion of knowledge and arts, both of which are far from any limits. As a very simple example, consider that 200 years ago not much was known about blood types. You could transfuse blood and sometimes it worked, sometimes it did not. Now we know about types and we can do it safely. This knowledge has led to a material improvement in our lives, and hence is a form of economic progress. Examples from the arts (movies, games, etc.) are also easy to find. I could go on and on but you get the point.

  3. Hey wait, I’m an arch Republican type and an engineer – so according to Odo, I shouldn’t believe myself.

    Yesterday’s WSJ had a special section highlighting CERA week. John Heywood, an ME professor at MIT, wrote an article on auto mileage. In 20 years vehicle horsepower has increased 89% and weight 29%. Fuel efficiency has increased more than 20%, but mileage is down 2%. We are driving heavier, more powerful cars. I don’t buy the doom and gloom shared by some of my fellow conservatives. Mileage can improve without sacrificing safety.

    I also don’t believe that India and China will follow the Western development path. Autos in these countries are likely to be small, fuel efficient, and not driven many miles per year. China in particular will keep its mass transit and rail systems. The surge in Chinese demand for petroleum comes from power generation at subsidized prices through state owned sales. Refineries in China are notoriously inefficient and small. As China modernizes and increases coal and hydro power, it can divert crude to transportation.

  4. Well King, it’s called cognitive dissonance, and isn’t that uncommon amongst “arch” anything. We moderates are not immune, but are at least prepared for “balance.”

    On energy (or CO2) and growth, I was saying in another forum:

    […] I don’t think anyone actually knows the limits to carbon intensity in our near-future economy.

    We still suffer from institutional blockage. We have not as a nation opened a can of “creativity” on this.

    There are some things we can project, but projection relies a lot on “all other things being equal.”

    Sure, all else being equal reducing fossil fuel consumption would reduce GDP. But need everthing else remain equal? Might we not get creative?

    I’d say things like a general mobilization and adaptation by society can’t be predicted, because it leaves so little the same.

    (A tid-bit on “exponential growth” … you can be on the exponential without being on the steep part 😉

  5. It does seem to me that we’re going to need both supply- and demand-based responses.

    Some posters here have espoused the idea that the answer is simply new supplies of energy, and lots of ’em. I don’t disagree that we need more supply coming on line, and quickly – population growth and FF depletion both mandate that.

    But I also don’t see how we can avoid some of the more dire and doomer-ish scenarios – much less lift the huddled masses – unless some of us more profligate users also make conservation (which I prefer to think of as “reducing waste”) a priority.

    If only because of the scale of current world energy demand, it seems like folly to think that any remotely-practical-within-
    the-next-two-decades energy source will let any appreciable additional fraction of 6.5+ billion people consume the same amount of energy as the average North American. It appears much more likely to me that North American consumption will be dropping, possibly drastically. And so better to start now, methinks, voluntarily, rather than under duress later.

  6. Robert — one of the issues here is the contradiction between the anti-fossil fuel rhetoric of the usual western suspects, and the need for oil exporters to invest huge amounts of capital into maintaining & expanding oil production capacity.

    Would it be smart for oil exporters to spend a large proportion of their current income to build capacity which will be stand unused, if you take western elites at face value?

    Western anti-fossil rhetoric (in the absence of any feasible large-scale energy supply alternative) could easily make production decline into a self-fulfilling prophecy.

    Interesting thing is that, if we could just show Al Gore & extremist greenies the door and engage brain instead, the energy supply situation can still be handled — and a brighter future of plentiful energy provided to the entire human race.

  7. I have never seen RR so off the mark, and he is usually so right on.
    Economic growth? Hello, the global economy has been growing, right through a 500 percent run-up in the price of crude oil.
    But crude oil demand is flatlining now. We are obtaining economic growth without increasing crude oil demand already, very early into the era of higher oil prices.
    Future improvement are coming. Look for oil demand to shrink, even as the world economy grows.
    RR also seems oblivious to the potentially world-altering effects of the PHEV. The PHEV will radically reduce crude oil demand.
    Once PHEVs are common, the question is not oil supply, but electricity supply. That nut has already been cracked. We can build nukes, coal plants, wind, solar, geothermal, burn biomass etc, etc, etc.
    Meanwhile, electricity demand from the built environment will be dropping, not rising. I happen to be involved with many green architects right now. But green has become mainstream. Orange County CA mainstream architects will not design buildings unless they use half the power they did 10years ago.
    Our electrical grid can easily handle the demand from PHEVs.
    The upshot is a cleaner and quieter world (especially in cities), and less imported oil — I dare say even more prosperity.
    Frankly, I look forward to the day when city cars are largely humming around under battery power.
    RR, what are you thinking? You know about PHEVs, you know the grid can handle it, you know that with just some subsidies we can install all sorts of wind, solar, geothermal, and nuke power plants.
    And to top it off, we enjoiy a less polluted environment, whihc is healthier, and probably will improve urban land values.
    What me worry?

  8. “Interesting thing is that, if we could just show Al Gore & extremist greenies the door and engage brain instead, the energy supply situation can still be handled — and a brighter future of plentiful energy provided to the entire human race.”

    Do the math. You like to tell me that you are in this for the poor African. Tell me how many barrels of oil you’ll get to them, how much you’ll take for yourself, and where you’ll get it all.

    I’ll get you started, with a world population of 6,602,224,175 (July 2007 est.) ….

  9. RR also seems oblivious to the potentially world-altering effects of the PHEV.

    I am not, nor have I ever been a doomer. The reason is that I think when push comes to shove, we will adapt. But I see a difficult transition as push does come to shove. Oil prices at these levels are really hurting the economy. When people have to spend more on oil, they spend less elsewhere. That ripples throughout the economy.

    There is also a huge sucking sound coming from India and China; they want more oil. The supply is going to remain tight, which means little relief on prices. And high oil prices are doing what they have always been predicted to do: stall the economy.

    I see a few tough years, especially when we peak. Those PHEVs aren’t ready for us all to go out and buy, and prices are going to have to go higher before people start screaming for them.

    RR

  10. “Despite the fact that I think supply can still grow a little from here, I see no easing in demand.”

    It’s simple: Too many people chasing too few resources.

    Somehow we have to get the population of the earth back to about two billion.

  11. Interesting thing is that, if we could just show Al Gore & extremist greenies the door and engage brain instead, the energy supply situation can still be handled — and a brighter future of plentiful energy provided to the entire human race.

    Kinuachdrach, what are you smoking? You know as well as I that a good portion (though granted, not all) of the supply tightness is a result of geological and (international – i.e. not domestic green) political factors that are beyond our control. The oil companies can, and will, continue to invest in exploration, production and refining but they are fighting a losing battle against depletion.

    If you got your wish and everyone who gave a damn about the environment vanished tomorrow, the result would probably be greater investment in exploration and production — that is true. The short term effect might be an alleviation of high oil prices, for the next 2-3 decades.

    But the end result would be the same — demand would outstrip supply — and it would be worse in your ideal world. As it is, political factors both foreign and domestic are preventing us from exploiting this resource as quickly as would otherwise be possible. This is good: it means that we feel the pain sooner, but less acutely, and will likely have a lengthy production plateau in which to adapt to other energy sources. If you had your way, we would exploit these resources just as fast as physically possible, until we ran up against geologic constraints on production. In that case, the world production curve would look like the lower-48 production curve, with a rapid drop-off after peak.

    Trying to keep the wheels on the economy while oil production is no longer growing is challenging but may be possible. Trying to keep the economy running — or simply trying to avoid chaos — in the face of 4% annual depletion, with no advance preparation, is almost certainly impossible.

    When exponential demand is applied to a finite resource, supply-side solutions can never do more than delay the pain. They never change the story — they just give us more time to get more thoroughly dependent on a resource that is going to become scarce soon anyway.

    Be grateful for the greens. They’re saving your children’s asses.

  12. “I see a few tough years, especially when we peak. Those PHEVs aren’t ready for us all to go out and buy, and prices are going to have to go higher before people start screaming for them.”

    But if people aren’t screaming, things are not tough …

    People who are using mega-trucks to commute can still knock 2/3 off their gasoline bill, at will, by switching cars. And that isn’t even a “creative” solution.

    I think efficiency, conservation, realignment, are the best real-world choices right now, but we won’t see them until things start to be perceived as at least a little “tough.”

  13. [Apologies if this gets posted twice, didn’t seem to go through the first time]

    I’m not too worried about the world of 2030. By then technology should have advanced sufficiently for energy to be plentiful. We may even have greatly increased oil production, for example if biotech breeds bugs that can liquify oil left in place in existing reservoirs. At this point it would be foolish IMO to bet against such technological advances given the rapid progress in the field.

    More problematic is the world of 2012, 2015 and 2020, where technology may not yet have created solutions to an energy squeeze. At the same time no one can deny that expectations and awareness of energy problems and challenges have grown enormously in the last few years, with investment ramping up from a wide variety of sectors. Whether we have enough of a head start is not yet clear, but it seems very plausible to me that five or ten years from now we will have many more tools and options at our disposal to meet any energy or oil crisis.

    As far as GDP, “energy intensity” is defined as GDP per unit of energy use in an economy. According to the EIA, “Between 1980 and 2001, the G-7’s energy intensity declined 28% overall — an average of 1.6% per year — from 13,039 Btu per $1995-PPP to 9,254 Btu per $1995-PPP. The most rapid decline took place prior to the oil price collapse of 1985 – 1986. Between 1980 and 1985, G-7 energy intensity fell an average of 2.7% per year…”

    So when prices rise, energy intensity has historically adapted relatively quickly. This should allow GDP growth to continue in the West even if energy consumption flattens. I suspect however that the situation will be worse in the third world, particularly in China, which may see its rapid growth rates become throttled by energy limitations.

  14. but we won’t see them until things start to be perceived as at least a little “tough.” (in America, by implication)

    True. By which time, the economies of the entire developing world will be in convulsions.

  15. RR-

    Check out BP stats on India demand for crude. Not that bad.
    China? Yeah, bad, but look for changes soon.

  16. Odo – I really don’t belive in the exponential growth thing. Look at the US. In the late 1970’s we used about 20 million barrels of oil per day and $1,819 billion in GDP (1998 $). In 2007 we use about the same amount of crude but the population is 300 million and GDP is $14,000 billion.

    We’ve gone from 18,000 BTUs per $ of GDP to 8,750 over the same time frame. Low prices throughout the 1990s led to increases in consumption of gasoline and pushed the trend in crude consumption back to where it was 20 years ago.

    China can grow its economy and prosperity without exponentially growing energy consumption.

  17. Guys (and girls?),
    I have to say I’m with King on this one, and I don’t consider myself an “arch” anything. Rapier, for such an educated and informed commentator, you share one blind spot with the disciples of Peak Oil (and I am not calling you one of them): Economics.

    Now, for the hard core scientific/engineering type (I’ll call you one of those, Rapier, no offense), economics can be a bitch, because it is such a soft science – you can’t use it to calculate any hard numbers. But it does tell you that when prices go up, production goes up and demand goes down. If, as you suggest, Rapier (and you may be right), we are getting to the point where demand can no longer increase, then price will continue to go up until demand gets back to the level where it is inline with supply. It’s that simple.

    And high oil prices are doing what they have always been predicted to do: stall the economy.
    In two words: Bull manure. Feel free to disprove it with real numbers or data.

    The economy is getting whacked by the subprime mess, that the elected fools’ idiotic response (“Quick! Add more money!”).

    Oil prices at these levels are really hurting the economy. When people have to spend more on oil, they spend less elsewhere.
    That much is true. Now for some real numbers: Still, current gasoline prices have already prompted 13% of those surveyed to cut back on driving.
    13%? For all the noise, it’s only 13%! And of that 13%, probably half made a completely insignificant reduction.

    Or how about this – Nov 2006: Starting from evidence from a survey conducted in three retail grocery stores varying in median household income of their neighborhood, we find that roughly 28% of respondents state that they adjust their grocery purchases to save money when gasoline prices are high. Or this from the same source: Among those who adjust their purchases to save money when gasoline prices are high, the main stated way in which they adjust purchases to save money is by purchasing items that are on sale. Note to Rapier (and Odograph) buying on sale is not suffering, it’s just being cheap. I do it all the time.

    This is dated (September 2005), but we can easily adjust it: Even the poor spend ~10% of their income on gasoline. For the middle class it’s less than 5%!. Note, at the time gasoline was $2.25/ gal. Today it’s $2.978 a gallon (call it three). So even if we assume that real income did not increase at all, the poor is still spending only 14% of their income on gasoline. For the middle class, it’s a painful 5.9% – and you are bitching about that?

    I’ll close with this: Ms. Lopez looks for weekly specials at the supermarket. Salmon, her favorite fish is $7 a pound these days. So she buys the tilapia for $2.99 instead. Not to make light of the situation, but substituting tilapia for salmon is what economists would call acting like a rational consumer. It’s not what what a rational observer might call suffering.

    Sorry Rapier, the facts do not support your position. But, hey, feel free to prove me wrong as opposed to… I’m kidding. You’re nothing if not a straight shooter, Rapier.

  18. King, I think I agree with all of the spirit and most of the detail of your 7:32 PM post.

    But technically I think China has been on an “exponential.” Not that this matters much. Remember the gapminder videos. Societies can accelerate in one direction and then change directions in another.

    Speaking of “those” peak oilers, the worst sort tend to think of “exponentials” as some sort of railroad tracks to the future. It is prediction as determinism.

  19. BTW, it’s amusing that a species as simple an prolific as the Tilapia is taking off. It is healthier (less mercury) and often more environmentally friendly (though some comes from recently cleared rainforests).

    But geez louise folks, it’s a cichlid! Dirt simple to grow and hard to kill with a stick. Anybody else have a fish tank when they were a kid?

  20. Before I deleted his post, Dave Mathews whined: Robert engages in selective censorship.

    Yeah, it’s my blog, and you have been asked to leave multiple times because of your lies. (Your ISP asked me to clearly show that I had asked you to leave. Here it is, Roadrunner).

    Why would you think you would be allowed to continue to slander me? Didn’t I tell you that I wasn’t going to let you post here anymore? Yet here you are, whining for sympathy. You’ll get none from anyone here.

    The only reason I let you post anything at all was so you could incriminate yourself. And you have. You have put your lies and false accusations on record, and per Florida Statute 784.048 you have committed multiple crimes. I won’t allow you to continue your criminal activity here, so you will just have to take your rants somewhere else. I think the authorities have all the evidence they need at this point, so your posting privileges have ceased. Anything you post will be deleted at the first opportunity. Of course if you happen to threaten me, I will leave that up as evidence.

  21. Re-reading, do some of YOU think “exponentials” are railroad tracks to the future? If so that might lead you to think I have a different position than the one I thought I was taking way back above.

  22. It’s simple: Too many people chasing too few resources. Somehow we have to get the population of the earth back to about two billion.
    This is dangerous propaganda! Excuse me, Mr. Stalin, but how did you come up with the random number of 2e9? What are you going to do, fire up Auschwitz and Treblinka?

    Malthus has been wrong for what? 150 years (and counting). Yet somehow his followers can’t give it up. There is always a catastrophy just around the corner.

    What about the damage done by Mathus himself? In a major result of this influence, the official response to India’s periodic famines (which had occurred every decade or two for centuries) became one of not entirely benign neglect: the authorities regarded the famines as necessary to keep the “excess” population in check. In some cases administrators even banned private efforts to transport food into famine-stricken areas. However, this “Malthusian” policy did not take account of the enormous economic damage done by such famines through loss of human capital, collapse of credit structures and financial institutions, and the destruction of physical capital (especially in the form of livestock), social infrastructure and commercial relationships. As a (presumably unintended) consequence, production often did not recover to pre-famine levels in the affected areas for a decade or more after each disaster, well after the replacement of the lost population.

    Malthusian theory also influenced British policies in Ireland during the 1840s: the government neglected relief-measures during the Irish Potato Famine (1845-1849), seeing mass starvation as a natural and inevitable consequence of the island’s supposed over-population.

    You Malthusians are dangerous. If the planet has too many people feel free to leave…

  23. If, as you suggest, Rapier (and you may be right), we are getting to the point where demand can no longer increase, then price will continue to go up until demand gets back to the level where it is inline with supply.

    A solution to that equation is also found where Demand=Supply=0, and Price tends to infinity.

    It’s that simple.

  24. A solution to that equation is also found where Demand=Supply=0, and Price tends to infinity.
    (Sigh!) STILL don’t get it do you? People are resourceful. At that price, somebody is going to find more oil and sell it for a nice profit.

  25. I just don’t see a disaster coming. High prices will drive efficiency and conservation. Americans will buy more fuel efficient cars.

    In the US most of the petroleum is consumed in the transportation sector. Not so in Asia. A lot of petroleum goes into industrial boilers and power plants. Power plants in China are cheap and inefficient, just like the refineries.

    You don’t see poor people driving around in Toyota Prius (what is the plural of Prius?) They drive cheap used cars because it makes more sense for them to invest in things OTHER than efficiency until they reach a certain wealth. Same with China and India. They build factories first and scrimp on the power plants. They will eventually switch to better technology.

    Look at the development cycles of England in the early 19th century (coal economy), the US in the early 20th century. Cheap and dirty first, efficiency later.

    Take Singapore and Hong Kong. Their energy consumption per GDP is probably better than the US. China will look more like them in 20 years than they will the US. China and India won’t go to suburban development like we see in the US because they don’t have a cheap indigenous supply of crude like we had in the US in the 1940s-1960s.

  26. Malthus has been wrong for what? 150 years (and counting). Yet somehow his followers can’t give it up.

    It’s worth pointing out that Malthus has indeed been consistently wrong, against a backdrop of ever-increasing supplies of energy (i.e. during the transitions from human/animal power -> wood -> fossil fuels).

    The thing that I find worrisome, that seems “different this time”, is the possibility of an imminent decline in readily-available energy. In other words, we have used the one-time abundance of cheap energy that carbon-based FF gave us to boom the population well past a level that’s sustainable without said FF — aka well into biological overshoot.

    I’m not saying it’s absolutely true – I have no better means for predicting the future than anyone. But it seems plausible enough for me to find it worrying. The population problem is a driver and multiplier of every other (biological) problem we collectively face, it seems to me. I could be wrong… I kinda really hope I am, in fact.

  27. King, most folks aren’t in those small cars yet either:

    “For the entire U.S. auto industry, light trucks still constitute more than 50% of sales, and the vehicles are on track to regain in 2007 the market share that was lost in 2005 and 2006.”

    That’s a December 2007 story.

    Please also remember that with an average new-car price of $28K most people are spending more than they would for the “affluent” Prius.

  28. Interesting. Robert’s attempt to introduce a serious topic ends up with the same old same old about buying smaller automobiles! As if that is going to change anything significant.

    Bottom line is that we are going to have to move away from fossil fuels — sooner or later, and probably both since the associated infrastructure is a decades-long project.

    Today, we have proven technology (such as nuclear and Coal To Oil), and we have subsidized fads (such as biofuels, windmills and solar panels). Logical choice is obvious — we start to build up nuclear power rapidly, and we find more effective ways to stimulate technological breakthroughs that will be cheaper & better than nuclear.

    Instead, we get self-absorbed western greenies patting themselves on the back for changing their light bulbs.

    Sigh! Things will have to get worse before we can get realistic about both the problem & the solution.

  29. I know you think everyone should drive a Prius.

    Poor people buy used cars or inexpensive new cars not fuel efficient Hybrids. Just as poor countries invest in cheap (capital) and inefficient energy sources. It is a questions of priorities. I can buy a Toyota Corolla for $10K that gets 40+ mpg or the Prius for $22K that gets 50+. If I’m poor I’ve got better things to do with the extra $12K.

    On a cost per MWh basis, fuel oil fired power is pretty cheap and quick to build. Dirty, but cheap.

    If it makes you feel any better I am seeing a lot of Prius in the Energy Corridor company lots!

  30. I can buy a Toyota Corolla for $10K that gets 40+ mpg or the Prius for $22K that gets 50+. If I’m poor I’ve got better things to do with the extra $12K.
    The beauty of the the economic argument is that when gas goes to $4/gal the payback on that extra investment is only two years (assuming the difference between the two vehicles is indeed 10 mpg and that you travel 15,000 miles per year). Your payback will vary based on miles travelled, and the actual gas price…

  31. The thing that I find worrisome, that seems “different this time”, is the possibility of an imminent decline in readily-available energy.
    Mike, are you not familiar with all the coal supplies around the world? There is NO imminent decline in readily-available energy. There is arguably a slow decline in crude oil.

    In other words, we have used the one-time abundance of cheap energy that carbon-based FF gave us to boom the population well past a level that’s sustainable without said FF — aka well into biological overshoot.
    The level that is sustainable is a function of technology. Earth cannot support 6 billion hunter-gatherers. But thanks to agriculture, energy production and waste disposal, earth can support 6 billion of us.

    You can argue that we need to do a better job of cleaning up behind us, or the way we produce energy. Well, the good news is we will, especially as oil gets more expensive.

    And there is no evidence of an overshoot. Just a lot of hot air.

  32. Hi Robert,

    I’ve been a Oil Drum lurker for a couple of years now and recently a lurker on your site.

    I’ve read a lot of emotional attacks directed at you, which, as far as I can tell stem from an unwillingness or inability to understand/address the arguments you’re making. Anyways, I just wanted to add some balance and just say kudos and I enjoy reading your posts.

  33. I know you think everyone should drive a Prius.

    Why would you say that, King, when I just pointed out the median?

    I think people spending $28K+, especially when they are already buying midsize sedans, should seriously consider a Prius.

    If you think buyers of $28K+ cars should back all the way off to a used Corolla (you sure can’t get a new one for $10K around here) you are actually going further than I am.

    You are asking those $28K+ buyers to give up a lot of tangibles an intangibles.

    (As a point of fact I NEVER ask anyone spending less than the $23K base Prius to step up.)

  34. Not so in Asia. A lot of petroleum goes into industrial boilers and power plants. Power plants in China are cheap and inefficient, just like the refineries.
    Apparently a lot of diesel goes to generators because the electric grid is so unreliable. Once they improve the reliability of the grid (coal) some of that crude would be freed up.

    [W]hat is the plural of Prius?
    Prioria, of course…

  35. Re. Overshoot.

    There was an amusing factoid on Gristmill. It was presented as bad news, that X calories of grains are currently fed to produce Y calories of meat. I said “so the good news is the earth can support 20 billion vegans?”

    You can check my math, but that’s pretty amazing for a back of the envelope result.

  36. “[…] buying smaller automobiles! As if that is going to change anything significant.”

    With current, inexpensive, models we can double fleet mpg, halving fuel use. I think that’s “significant.”

    If we were only talking about shaving off 5-10% I might agree, but we’re not.

  37. Every morning, as I am parking, I face a guantlet of pickup trucks. In a lot of about 800 vehicles, I’d say at least 30% of them are pickup trucks. One in set of rows it’s about 75%; big monster trucks too. It’s kind of humorous. I doubt that many of the drivers really need them. I can’t say too much though, since I drive a Jeep Cherokee. There is an awful lot of room for demand destruction.

  38. With current, inexpensive, models we can double fleet mpg, halving fuel use. I think that’s “significant.”

    Why am I not surprised at what you think is “significant”?

    If we simply put 4 people into every vehicle (OK, not those limp-wristed Priuses, not if there is a hill on the way), we could cut gasoline useage by a factor of about 4. In parts of the former Soviet Union, that is exactly what they do — most drivers pick up hitch-hikers who pay the equivalent of a couple of dollars to help with the gas. Of course, that is possible only in a politically-incorrect society which has little tolerance for ambulance-chasing lawyers and even less tolerance for criminal behavior.

    But whether we cut gasoline usage by 2 (by rebuilding the entire vehicle parc at vast expense & great energy input) or cut it by 4 (by getting rid of much of the overhead of the modern western liberal state), it is not signficant in the big scheme of things.

    There are 4 billion human beings using quite little energy, and less than 1 billion Europeans & North Americans using a lot. Eliminate the entire demand of the EU (the world’s largest fossil fuel importer), and growth in China & India & elsewhere would replace that lost demand within a few decades.

    Globally, energy is a supply-side issue. We need a supply-side solution.

  39. Kinuachdrach,
    How is putting 4 people in a car a supply side solution? Sounds demand side to me. Perhaps we need both?

    You should try a Prius some time. Pretty nice car. Enough zip for me.

    And stop channeling Ann Coulter. You can’t blame everything on lefties/greens/Democrats/hippies. Occasionally other people make mistakes too.

  40. I said “so the good news is the earth can support 20 billion vegans?”

    I imagine that will eventually happen. The trick is going to be for them to be human vegans.. 🙂

  41. Mike, are you not familiar with all the coal supplies around the world? There is NO imminent decline in readily-available energy. There is arguably a slow decline in crude oil.

    There are imminent declines in liquid fuels and natural gas, both of which are fundamental to the vast majority of agricultural production today. Will coal-to-liquids and their ilk allow agribusiness as usual? (I’m not just being adversarial – I’m genuinely curious. I suspect the answer is “not without drastic changes”, but I could be wrong.)

    The level that is sustainable is a function of technology. Earth cannot support 6 billion hunter-gatherers. But thanks to agriculture, energy production and waste disposal, earth can support 6 billion of us.

    The vast majority of Western agriculture today is energy consumption underpinned by fossil fuels. Remove that underpinning and the planet’s carrying capacity goes way down, to a limit Jared Diamond calls the “photosynthetic ceiling”.
    See “The Oil We Eat”:
    http://www.harpers.org/archive/2004/02/0079915

    And there is no evidence of an overshoot. Just a lot of hot air.

    Well, there are shortages of water, depletion/erosion of topsoil, and accelerating extinction rates. You’re right; none of these have yet resulted in widespread dieoffs of h. sapiens. And maybe they won’t. But this is one hell of a big uncontrolled experiment we’re collectively running here.

  42. The thing that I find worrisome, that seems “different this time”, is the possibility of an imminent decline in readily-available energy.

    There’s enough coal that one can’t really say a decline in readily available energy is “imminent”. And there’s the Rodney Dangerfield of energy sources, nuclear power, which is plentiful enough to run our civilisation for millenia, so you can’t really say it’s “inevitable” either.

    The extreme environmental movement pushes the malthusian idea that a mass dieoff of humans is inevitable, and is fond of giving 2 billion as the maximum carrying capacity of the planet, limited to energy sources and lifestyles that are approved by the movement, and naturally excluding from consideration sources that are disapproved. I find their position very troubling – they usually stop short of advocating the deaths of 4.5 billion people, but their policies would seem to lead to that outcome. Is that preferable to the purported evils of (say) nuclear power?

  43. The vast majority of Western agriculture today is energy consumption underpinned by fossil fuels. Remove that underpinning and the planet’s carrying capacity goes way down

    True. However, the energy doesn’t have to come from fossil fuels. It’s true that today we use a lot of nat gas to produce hydrogen to drive ammonia production for nitrogen fertilisers. Other countries use coal – we could, too. We could also produce hydrogen relatively efficiently with a nuclear thermal process, or less efficiently using electrolysis from any electricity source. As for powering farm equipment etc., those limited uses could be met easily by remaining petroleum production, coal-to-liquids, or even biodiesel. Transporting food? Extremely cheap by rail and ship, and even there both could be switched to electricity or nuclear power. Running out of water? Nothing a few nuclear-powered desal plants can’t solve. Running out of topsoil? Shame on us for our poor stewardship of the land – let’s start using better practices, crop rotations, etc. Worst-case: topsoil can be dredged from riverbeds etc. In short, there’s no reason other than our own stupidity to see food production fall off a cliff for lack of energy inputs.

  44. According to IEA figures, global oil consumption per unit of GDP has halved since the early 1970’s. This suggests to me that adjustments on the demand side can indeed be significant.

  45. There’s enough coal that one can’t really say a decline in readily available energy is “imminent”.

    You’re right; I was thinking mainly of the forms of energy that agriculture today uses primarily – liquid fuels and natural gas. I wasn’t thinking of us being able to produce just as many calories of food using, e.g., coal or nukes. (It still seems, if not farfetched, at least a good ways off, though.)

    In short, there’s no reason other than our own stupidity to see food production fall off a cliff for lack of energy inputs.

    So all we need is for humanity to become less stupid?

    Is that supposed to make me feel better? 🙂

  46. So, Robert, what you’re saying (many comments ago) is Dave Mathews’s banned?

    Yes. For those who are unaware of the situation, and for Dave’s benefit, here is what has been going on.

    Dave started stalking me – oh, it’s probably been a year ago now. He showed up at The Oil Drum ranting. He said some very disturbing things, several people responded with “Uh, Dave, are you crazy?” and he finally got himself banned. So he took his rants over to Jim Kunstler’s blog, where I don’t even post. He continued to direct them at me. I don’t know if Jim has banned him there yet or not.

    I actually let him post here for a while, being a staunch believer in free speech and allowing my critics to have their say. However, I let him know that certain things were off limits. Dave flaunted that and continued to post things about my employer, make false accusations, and make personal attacks. He has posted untold number of vile things about me, occasionally even bringing up my family. I told him that he would therefore not be allowed to post here again.

    He continued, and I continued to delete. However, I kept a record of his IP addresses, as it became more apparent that I would have to take legal action – which I have done. Last week, I contacted several law enforcement agencies in Florida and his ISP, and spent a lot of time on the phone yesterday discussing the case. Several interesting conclusions have come out of my discussions. One is that there is now a record of Dave’s behavior.

    First, and most importantly, Dave has broken the law. The state of Florida, where Dave lives, has quite strict laws against cyberstalking. Dave is in violation of Section 2 of Florida Statute 784.048. This is punishable “by a definite term of imprisonment not exceeding 1 year.” We are presently discussing who has jurisdiction to prosecute. They informed me that individuals like this often are already known to local law enforcement for obvious reasons. They apologized for me having to tolerate this, and one said “You wouldn’t believe the kind of people who are walking loose on the streets.” But since Dave doesn’t seem to understand that he has committed a crime, I would advise him to spend some time reading over that statute.

    Two of the officers also concluded from Dave’s writing that he is mentally ill. The fact that he continued the rhetoric even after I pointed out that law enforcement was looking at this thread (I was, of course, not bluffing) reinforces the view that he suffers from mental illness. Therefore, they said he could probably plead insanity. However, in that case he would at least be sent to a mental institute, where he undoubtedly belongs. One officer said that it looked like Dave has trouble distinguishing fantasy from reality. In the fantasy world he has erected, he is Good who is fighting against what he perceives as Evil (me). He derives meaning from his life in this way, which is why he spends so much of his time and energy doing it.

    Furthermore, the officers stated that Dave has certainly slandered me, numerous times, and that I would have solid grounds to go after him in civil court. In civil court, I would get a cease and desist order and force Dave to pay court costs and whatever punitive penalty the court deemed appropriate. They didn’t expect Dave’s defense of his slander – “But you work for an oil company” – would get him very far when the actual false accusations were put before the court. The only question is whether I want to spend the money going after him. Given that Dave would be ordered to pay all legal costs in case of a judgment against him, I am considering this option as well.

    Finally, they said not to respond to him, as this just reinforces his fantasy world. Don’t engage him, don’t debate him, don’t try to explain to him that what his is doing is wrong. While the law runs its course, I am to delete anything else he writes, as I have enough incriminating writings already recorded. I do have other options for banning him, but that would affect others as well. I refuse to let one individual affect the ability of others to debate their views. So, if you will just ignore him, I will delete any of his posts at the first opportunity. Dave will soon learn that he is merely wasting his life away, typing things up only to see them deleted.

    The irony of the situation is that for all of Dave’s self-righteous rants and accusations, only one person involved here has broken the law: Him. And you will all be glad to know that I have said the last thing I will ever say about Dave, outside of the courts.

    RR

  47. Odograph 13th 8:30 PM,

    ”It is healthier [than salmon?] (less mercury) and often more environmentally friendly.”

    Interestingly there’s quite the classical environmental fight occurring over whether to proceed with development of the Pebble Mine at the headwaters of two drainages into Bristol Bay. Bristol Bay (the southeastern arm of the Bearing Sea between the Seward and Alaska Peninsulas) is where fisheries produces a harvest of somewhere between 25 and 30 Million Salmon yearly, principally Reds (if spoken by an Alaskan) or Sockeyes (if by others). The argument is over potential harm to the fishery. Some are not tied to aquariums.

    The wild salmon mercury numbers are quite good, but there’s more of a problem with the farmed knock-offs. Fish mongers can be quite slimy it seems.

    WhiteBeard

  48. “It is healthier [than salmon?] (less mercury) and often more environmentally friendly.”

    I didn’t mention that I love the wild, smoked, salmon myself … I just like OTHER people to eat the tilapia 😉

  49. Benny “Peak Demand” Cole said: Our electrical grid can easily handle the demand from PHEVs.”

    Perhaps Benny, but will there be enough lithium for all the Li-ion batteries those PHEVs would need?

    The Trouble with Lithium

  50. The vast majority of Western agriculture today is energy consumption underpinned by fossil fuels. Remove that underpinning and the planet’s carrying capacity goes way down, to a limit Jared Diamond calls the “photosynthetic ceiling”.
    Jared Diamond has some interesting and disturbing theories. It would take a while to dispel all those. But consider the following ways we can (and will given the right price incentive) free agriculture from some of the fossil fuels we use and lift the ceiling:
    1. Much of the same fossil intensive nutrients go post-consumption to wastewater treatment plants where we (I’m not kidding) burn more fossil fuel to destroy it. Anybody see an opportunity?
    2. Selective breeding has already produced tomato (and other) plants that can grow on seawater. Think about the possibilities.
    3. We could also dose ferric iron to the ocean to stimulate the growth of phytoplankton, which we could turn into biofuels or leave to become part of the food chain. Environmental impact? Sure, but these are supposedly desperate times, right?

  51. Thank God David Mathews has found a new place to hang out. He used to torment us with his longwinded, pompous sermons at SciGuy. He couldn’t get along with anyone, and acted as if his presence was a gift to the rest of us. See for yourself. Dave – a self-proclaimed man of God – can’t get along with anyone: Should David Mathews Be Banned? He is a man of God in the same vein as Fred Phelps.

    So don’t feel bad, Robert. David gets his jollies on this stuff. FYI, he lives in the Tampa/St. Petersburg area, if you hadn’t figured that out.

  52. David lives in Clearwater, Florida. He is a very cranky old man who can’t get along with anyone. He cries for the downtrodden and then trods over those he actually encounters.

  53. Optimist wrote:
    How is putting 4 people in a car a supply side solution? Sounds demand side to me. Perhaps we need both?

    You missed the point. Let me spell it out — Realistic demand side reduction in the developed world will be completely swamped by demand growth in the developing world.

    Yes, we can cut our energy use. In which case we use energy more efficiently and something else (e.g. time) less efficiently. The interesting thing about economics is that human beings can make their own decisions on this — don’t need Big Green telling them what to do.

    But, in the global context, cutting energy use in the developed world will not solve global energy. Greater supply is the only humane approach.

    As Doug points out, there are effective ways to meet human energy demands for millenia without fossil fuels. The challenge is political, not technical.

  54. Realistic demand side reduction in the developed world will be completely swamped by demand growth in the developing world.
    I think you’re missing the economics of it again. Indians buying cars for $2,500 aren’t going to line up at $150/bbl. That would lead to a lot of innovation, I predict. I also predict we will see soon enough. How is it that you see the developing world outbidding the developed world for energy?

    Hey, Benny Peak Demand, looks like $100/bbl by the end of this week or maybe next, doesn’t it?

    don’t need Big Green telling them what to do.
    So don’t sweat it, Big Green’s voice will get drowned by economic concerns, if things really go belly up.

    The challenge is political, not technical.
    There is probably some truth to that. Of course, better technology always helps. And remember, politicians listen to voters (India yes, China no). Voters vote with their pocketbooks. So, here too, I wouldn’t sweat it.

  55. Optimist wrote, rather optimistically:
    I think you’re missing the economics of it again. Indians buying cars for $2,500 aren’t going to line up at $150/bbl.

    Maybe, maybe not. There is no law of the universe that says Californians who produce little except lawsuits will always be able to outbid Indians who produce steel, automobiles, ships, rockets, satellites, etc.

    There always will be rationing — either by the supply/demand mechanism of price, or by inefficient corruption-generating Big Government fiat. The question is — can we make the supply of energy large enough that every human being can afford a decent standard of living, however energy is rationed?

    I am very optimistic about humanity’s ability to meet that challenge technically. We could start building the infrastructure today, using proven technology. In 50 or 100 years, we might have even better, cheaper large-scale competitive energy sources — if we invest enough in education & research in the meantime. But we are not going to get there with the current generation of political dunces in charge. Or at least “we” in Europe & North America are not going to get there.

    Still, I am optimistic that China’s geriatric leaders are making fewer mistakes than all the Men from Hope. At least part of the human race will continue to move forward.

  56. Indians buying cars for $2,500 aren’t going to line up at $150/bbl.

    I disagree. People in third world countries often pay more in fuel over the life of a vehicle than they paid for the vehicle itself.

    As Kinu said, they are becoming more and more capable of outbidding us for oil. We must move to electric ASAP.

  57. As Kinu said, they are becoming more and more capable of outbidding us for oil. We must move to electric ASAP.
    More and more, yes. But not yet by a long shot.

    These are also the guys with the biggest incentive to come up with a cheap source of fuel: a large number of potential vehicle owners (at $2,500 per car), who cannot (yet?) afford expensive gasoline. Keep watching, things are about to get interesting…

  58. There is no law of the universe that says Californians who produce little except lawsuits will always be able to outbid Indians who produce steel, automobiles, ships, rockets, satellites, etc.
    Why don’t you tell us what you really think about California? Here’s a reality check: Would you rather live in California or India? As for California produce, if you have fruit in the house, it was probably grown in California. Free of federal subsidies, as well. Please explain what is more basic an industry than unsubsidized agriculture.

    I am very optimistic about humanity’s ability to meet that challenge technically.
    On that much we agree, then.

    But we are not going to get there with the current generation of political dunces in charge. Or at least “we” in Europe & North America are not going to get there. Still, I am optimistic that China’s geriatric leaders are making fewer mistakes than all the Men from Hope.
    You cannot be serious! Our leaders may be dunces, but at least they are democratically elected. Which means they can be recalled on reasonably short notice, and replaced by Men of Hope. You know, the kind of inspirational leadership that is in such chronic short supply.

    Your comments about China’s geriatric leaders shows that you, too, do not understand economics: no beaurocrat, no matter how well intentioned (and I won’t call the Chinese leadership that), can fix prices at the right level: you need the invisible hand for that.

    China is enjoying a few moments in the sun. It may last several years still. But it is fundamentally unstable. Eventually that is all going to come crashing down.

    India, OTOH, is a different matter all together.

  59. Your comments about China’s geriatric leaders shows that you, too, do not understand economics:

    I agree, optimist. I do not understand economics — much like the rest of the human race, including most economists.

    What I do know is the often-overlooked importance of energy, innovation, and investment to the real economy. Real wealth is not money (an accounting mechanism); it is the ability to produce goods & services that people want.

    In places like the US (especially California), politicians have been resting on the wealth created by their forefathers; they are focused on wasting resources on redistribution & self-aggrandisment. Investment & innovation ges strangled by bureaucratic red tape, and then the “invisible hand” moves wealth-creation to friendlier climes.

    One of today’s paradoxes is that nominally-Communist China provides a freer environment for wealth-creating new development than the Peoples Republic of Californiastan.

    Californians ought to have got the message when Indian companies started recruiting high-tech expatriate Indians from Silicon Valley to go back to Bangalore. Yes, the pay would be lower — but the public education system there is incomparably better, and the quality of life is higher.

  60. One of today’s paradoxes is that nominally-Communist China provides a freer environment for wealth-creating new development than the Peoples Republic of Californiastan.
    LOL! Californiastan! Did you think of that one yourself? BTW, you are either joking, or you don’t understnd what’s going on in China.

    Californians ought to have got the message when Indian companies started recruiting high-tech expatriate Indians from Silicon Valley to go back to Bangalore. Yes, the pay would be lower — but the public education system there is incomparably better, and the quality of life is higher.
    Like I said, India is a different matter all together. We’ll see how many Indians choose to go back.

    Right now California is taking a much more sensible approach to renewable fuels than the federal government (more ethanol, hic!). We’ll see if their is a pay-off on this investment.

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