Coal

Supporting Everything that Smells Bad

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Published on Cassandra's Legacy on December 15, 2016

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Michael Klare has published an extensive comment on "Tomgram" about what appear to be the current policy choices by Donald Trump on energy and he correctly notes how contradictory they are. Basically,

 

The main thrust of his approach couldn’t be clearer: abolish all regulations and presidential directives that stand in the way of unrestrained fossil fuel extraction, including commitments made by President Obama in December 2015 under the Paris Climate Agreement.

In other words, Trump seems to be locked in a market-only vision of the problem, thinking that physical realities have no role in the extraction of fossil resources. On this, he is surely not alone, but the problem is that deregulation is not so important as Trump seems to think. It was not because the market was over-regulated that oil prices spiked up to $150 dollars/barrel in 2008 and kept hovering at around $100/barrel from 2011 up to late 2014. And it was not because oil production was suddenly deregulated that prices collapsed to below $40 in 2015. The oil market, as all markets, suffers from instabilities that may be, sometimes, cured by regulations. Eliminating all the regulations may well cause further price swings and wild oscillations, rather than increase production.

If oil companies are in trouble, right now, is because the oil prices are too low, not because oil extraction is over-regulated and Trump's policies – if they were to work – may damage the fossil fuel industry even more. That, in itself, would not be a bad thing – especially in terms of the effects on climate. The problem is that Trump's ideas to revitalize the fossil fuel industry may not be limited to deregulation, but could involve actively discouraging renewable energy, a policy that, for instance, the Italian government has been successfully applying during the past few years.

So, why does Trump want to do such a thing? Here, we can only imagine what passes in the mind of a 70-year old man who is not known to be especially expert in anything. Klare puts forward a possible explanation as:

 

To some degree, no doubt, it comes, at least in part, from the president-elect’s deep and abiding nostalgia for the fast-growing (and largely regulation-free) America of the 1950s. When Trump was growing up, the United States was on an extraordinary expansionist drive and its output of basic goods, including oil, coal, and steel, was swelling by the day. The country’s major industries were heavily unionized; the suburbs were booming; apartment buildings were going up all over the borough of Queens in New York City where Trump got his start; cars were rolling off the assembly lines in what was then anything but the “Rust Belt”; and refineries and coal plants were pouring out the massive amounts of energy needed to make it all happen.

And don’t forget one other factor: Trump’s vindictiveness — in this case, not just toward his Democratic opponent in the recent election campaign but toward those who voted against him. The Donald is well aware that most Americans who care about climate change and are in favor of a rapid transformation to a green energy America did not vote for him,

Given his well-known penchant for attacking anyone who frustrates his ambitions or speaks negatively of him, and his urge to punish greens by, among other things, obliterating every measure adopted by President Obama to speed the utilization of renewable energy, expect him to rip the EPA apart and do his best to shred any obstacles to fossil fuel exploitation. If that means hastening the incineration of the planet, so be it. He either doesn’t care (since at 70 he won’t live to see it happen), truly doesn’t believe in the science, or doesn’t think it will hurt his company’s business interests over the next few decades.

This interpretation by Michael Klare may or may not be correct but it underlies a basic problem: elections give power to people on the basis of their promises, but nobody really knows how they will behave once they have power in their hands. The world's history is full of leaders who had mental problems of all kinds or even just had a vision of the world that was completely out of touch with reality. The result was normally unmitigated disasters as leaders, in most cases, refuse to learn from their mistakes. And not just that, they tend to double down, worsening things.

About Donald Trump,as I discussed in a previous post, nobody can know what's going on inside his mind. All what I can say is that America may badly need God's blessing in the near future.

China: Is peak coal part of its problem?

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Published on the Our Finite World on June 20, 2016A coal train once supplied the city of Holland, Michigan with fuel for its electric generating plant. They converted the plant to natural gas. Their costs are down, their emissions are down, and coal is down for the count. (Photo by wsilver/Flickr)A coal train once supplied the city of Holland, Michigan with fuel for its electric generating plant. They converted the plant to natural gas. Their costs are down, their emissions are down, and coal is down for the count. (Photo by wsilver/Flickr)

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The world’s coal resources are clearly huge. How could China, or the world in total, reach peak coal in a timeframe that makes a difference?

If we look at China’s coal production and consumption in BP’s 2016 Statistical Review of World Energy (SRWE), this is what we see:

Figure 1. China's production and consumption of coal based on BP 2016 SRWE.

 

 

 

Figure 1. China’s production and consumption of coal based on BP 2016 SRWE.

Figure 2 shows that the quantities of other fuels are increasing in a pattern similar to past patterns. None of them is large enough to make a real difference in offsetting the loss of coal consumption. Renewables (really “other renewables”) include wind, solar, geothermal, and wood burned to produce electricity. This category is still tiny in comparison to coal.

Figure 2. China's energy consumption by fuel, based on BP 2016 SRWE.

 

 

 

Figure 2. China’s energy consumption by fuel, based on BP 2016 SRWE.

Why would a country selectively decide to slow down the growth of the fuel that has made its current “boom” possible? Coal is generally cheaper than other fuels. The fact that China has a lot of low-cost coal, and can use it together with its cheap labor, has allowed China to manufacture goods very inexpensively, and thus be very competitive in world markets.

In my view, China really had no choice regarding the cutback in coal production–market forces were pushing for less production of goods, and this was playing out as lower commodity prices of many types, including coal, oil, and natural gas, plus many types of metals.

China is mostly self-sufficient in coal production, but it is a major importer of natural gas and oil. Lower oil and natural gas prices made imported fuels of these types more affordable, and thus encouraged more importing of these products. At the same time, lower coal prices made many of China’s mines unprofitable, leading to a need to cut back on production. Thus we see the rather bizarre result: consumption of the cheapest energy product (coal) is falling first. We will discuss this issue more later.

China’s Overall Historical Production of Energy Products

With the pattern of energy consumption shown in Figure 2, growth in China’s total fuel consumption has slowed, as shown in Figure 3.

Figure 3. China energy consumption by fuel, based on BP 2016 SRWE.

 

 

 

Figure 3. China energy consumption by fuel, based on BP 2016 SRWE.

The indicated increases in total fuel consumption in Figure 3 are as follows: 8.1% in 2011; 4.0% in 2012; 3.9% in 2013; 2.3% in 2014; 1.5% in 2015.

Unless there is a huge shift to a service economy, we would expect China’s GDP to decrease rather rapidly as well, perhaps staying 1% or 2% higher than the growth in fuel consumption. Such a relationship would suggest that China’s reported GDP for 2014 and 2015 may be overstated.

The Problem of Low Coal Prices

Most of us don’t pay attention to coal prices around the world, but according to BP data, coal prices have been following a similar pattern to those of oil and natural gas.

Figure 4. Coal prices since 1999 based on BP 2016 SRWE data.

 

 

 

Figure 4. Coal prices since 1999 based on BP 2016 SRWE data.

Oil prices tend to cluster more closely than those of coal and natural gas because there is more of a world market for oil than for the other fuels. Coal and natural gas have relatively high delivery costs, making it more expensive to trade these products internationally.

Figure 5. World oil prices since 1999 for various oil types, based on BP 2016 SRWE. (Prices not adjusted for inflation.)

 

 

 

Figure 5. World oil prices since 1999 for various oil types, based on BP 2016 SRWE. (Prices not adjusted for inflation.)

Figure 6. Historical prices for several types of natural gas, from BP 2016 SRWE.

 

 

 

Figure 6. Historical prices for several types of natural gas, from BP 2016 SRWE.

The one place where natural gas prices failed to follow the same pattern as oil and coal prices was in the United States. After 2008, shale producers extracted more natural gas for the US market than it could easily absorb. This overproduction, together with a lack of export capacity, led to falling US prices. By 2014 and 2015, prices were falling everywhere for oil, coal and natural gas.

Why Prices of Fossil Fuels Move Together

The reason why prices of fossil fuels tend to move together is because commodity prices reflect “demand” at a given time. This demand is determined by a combination of wage levels and debt levels. When wage levels are high and debt levels are increasing, consumers can afford more goods, such as new homes and new cars. Building these new homes and cars takes many different kinds of materials, so commodity prices of many kinds tend to rise together, to encourage production of these diverse materials.

Why Fossil Fuel Prices Don’t Necessarily Rise Indefinitely

Rising fossil fuel prices depend on rising demand. Wages are not really rising fast enough to increase fossil fuel prices to the levels shown in Figures 4, 5, and 6, so the world has had to depend on rising debt levels to fill the gap. Unfortunately, there are diminishing returns to adding debt. We can witness the poor impact that Japan’s rising debt level has had on raising its GDP.

Adding more debt is like using an elastic rubber band to increase the world output of goods and services. Adding debt works for a while, as the relatively elastic economy responds to growing debt. At some point, however, the amount of debt required becomes too high relative to the benefit obtained. The system tends to “snap back,” and prices fall for many commodities at the same time. This seems to be what happened recently in late 2008, and what has happened again recently. The challenge is to restore world economic growth, since it is really robust world economic growth that allows commodity prices to rise to high levels.

Some Historical Perspective on Rising Energy Prices and Rising Debt 

In “normal” times, a small increase in demand will increase production of fossil fuels by several percentage points–generally enough to handle the rising demand. Prices can then fall back again and there is no long-term rise in prices. This situation occurred for quite a long time prior to about 1970.

After about 1970, we found that it became more difficult to raise production levels of energy products, without permanently raising prices. US oil production began to decline in 1970. This started an energy crisis that has been simmering beneath the surface for 45 years. Various workarounds for our energy shortage problem were tried, such as adding nuclear, drilling for oil in new areas such as the North Sea, and building more energy efficient cars. Another approach used was reducing interest rates, to make high-priced homes, cars and factories more affordable.

By the late 1990s, even these workarounds were no longer providing the benefit needed. Another idea was tried: encourage more international trade. This would allow the world access to untapped energy sources, including coal, in the less developed parts of the world, such as China and India.

This too, worked for a while, but resource depletion tended to continue to raise the cost of energy extraction. Also, the competition with low-cost labor in India, China, and other countries tended to hold down the wages of the less-educated workers in the developed countries. Higher prices at the same time that wages for some of the workers were depressed is, of course, a bad mismatch.

One way of “fixing” the problem was with cheaper debt, and more debt, so that consumers could buy homes and cars with lower incomes.  This fix of more debt stopped working in 2008, as repayment on “subprime” debt faltered, and all fossil fuel prices collapsed.

Figure 7. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

 

 

 

Figure 7. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

To “re-inflate” the world economy, world leaders began to try to add even more debt. They did this by fixing interest rates even lower, starting in late 2008, using a program called Quantitative Easing (QE). This program was successful in raising commodity prices again, although its effect seemed to diminish with time. China’s huge growth in debt during this period helped as well.

Energy prices turned downward again in mid-2014, when the United States discontinued its QE program, and China (under new leadership), decided not to continue increasing debt as quickly as before. The result was a second sharp drop in commodity prices, without a corresponding drop in the cost of producing these fossil fuels. This shift was devastating from the point of view of energy supply producers.

Impact of Lower Prices on China’s Coal Producers

China has a lot of coal resources, but not all of these resources can be produced cheaply. Generally, the least expensive resources tend to be produced first. When prices are high, it may look like deeper, thinner seams can be extracted, in addition to the easier and cheaper to extract seams, but this is never certain. At some point, prices may fall and thus issue a “stop mining” instruction.

When coal prices drop, producers are likely to encounter debt problems, as loans related to coal operations become due. The reason why this happens is because loans taken out when coal prices were high are likely to reflect an optimistic view of how much can be extracted. Once prices drop, operators discover that they have committed themselves to paying back more in loans than their coal mines can actually produce. This seems to be happening now.

What Are the Implications for Future World Coal Production?

If we look at a chart showing world consumption of energy products by fuel, we see that world coal production has turned down in a similar manner to the downturn in Chinese coal production.

Figure 8. World energy consumption by fuel, separately by major groupings.

 

 

 

Figure 8. World energy consumption by fuel, separately by major groupings.

There are many large areas of the world that seem to be beyond their peak in coal production, including the United States, the Eurozone, the Former Soviet Union, and Canada. Note that the United States’ coal production “peaked” in 1998. This added to pressures for globalization.

Figure 9. Areas where coal production has peaked, based on BP 2016 SRWE.

 

 

 

Figure 9. Areas where coal production has peaked, based on BP 2016 SRWE. FSU means “Former Soviet Union.”

If we consider the rest of the world excluding the areas shown separately in Figure 9 as the “Non-Peaking Portion of the World,” we find that China’s current coal production far exceeds that of the Non-Peaking portion of world production.

Figure 9. Coal production in China compared to world production minus production shown in Figure 8.

 

 

 

Figure 10. Coal production in China compared to world production minus production shown in Figure 8.

Figure 10 indicates that even the non-peaking portion of the world is showing a downturn in production in 2015, no doubt relating to current low prices.

Another issue is that India’s coal production now falls far short of its consumption. Thus, India is becoming a major coal importer. In 2015, India’s consumption of coal slightly exceeded that of the United States, making it the second largest consumer of coal after China, and the largest coal importer. If China should decide to increase its coal consumption by adding imports, it would need to compete with India for supplies.

Figure 14. India's production and consumption of coal, based on BP 2016 SRWE.

 

 

 

Figure 11. India’s production and consumption of coal, based on BP 2016 SRWE.

India’s hope for continued economic growth is also tied to coal, even though it doesn’t produce enough itself. India’s use of natural gas is declining, because its own locally-produced natural gas supplies are declining, and imports are expensive.

Figure 11. India's energy consumption by fuel based on BP 2016 SRWE.

 

 

 

Figure 12. India’s energy consumption by fuel based on BP 2016 SRWE.

Imported coal is more expensive than locally produced coal, because of the transportation costs involved. Thus, adding an increasing portion of imported coal will eventually make India’s products less price competitive. India started from a lower wage level than China, so perhaps it can temporarily withstand a somewhat higher average coal price. At some point, however, it will reach limits on how much of its mix can be imported, before workers cannot afford its products made with this high-priced coal.

As noted above, India and China will be competing for the same exports, if they both expect to grow using imported coal. We can modify Figure 9 to show what the size pool producing imports might now look like, if the countries needing imports is “China + India,” and the part with perhaps extra coal to export is the Non-Peaking Areas from Figure 9, less India.

Figure 12. Coal production for China plus India, compared to production from non-peaking group used in Figure 9, minus India. Based on BP 2016 SRWE.

 

 

 

Figure 12. Coal production for China plus India, compared to production from non-peaking group used in Figure 9, minus India. Based on BP 2016 SRWE.

This comparison shows an even a worse mismatch between the peaking areas, and the current production of areas that might raise their supply.

Is Future Coal Production a Function of Resources Available, or of Prices?

Future coal production is clearly a function of both the amount of resources available and future prices. If there are no resources available, it is pretty clear that no resources can be extracted.

What most researchers have not understood is that future prices are important as well. We can’t expect that prices will rise indefinitely, because low-paid workers, especially, find themselves in a squeeze. They find homes and cars increasingly unaffordable, unless the government can somehow manipulate interest rates down to never heard of levels. Because of this lack of understanding of the role of prices, most of today’s models don’t consider the possibility that price levels may cut back production, at what seems to be an early date relative to the amount of resources in the ground.

Part of the confusion comes from the view economists have regarding prices, innovation, and substitution. Economists seem to be firmly convinced that prices will always rise to fix the problem of future shortages, but their models do not seem to take into account the major role that energy plays in the economy, and the lack of available substitutes. Certainly, the history of energy prices does not support this claim.

If I am correct in saying that prices cannot rise indefinitely, then all three of the fossil fuels are likely to peak, more or less simultaneously, when prices can no longer stay high enough to enable extraction. The downslope after the peak will be based on financial outcomes, such as the bankruptcies of coal operators, not on the exhaustion of reserves or resources in the ground. This dynamic can be expected to produce a much sharper downturn than modeled by the Hubbert Curve.

If analysts consider the possibility that prices will never again rise very high for very long, they realize such a low-price scenario would be a catastrophe. That is why we hear very little about this possibility.

Conclusion

It appears likely that China’s coal production has “peaked” and has begun to decline. This is especially likely if energy prices stay low, or never rise very high for very long.

If I am correct about energy prices not rising high enough in the future, all fossil fuels may reach peak production more or less simultaneously in the not too distant future. Widespread debt defaults seem likely if this happens.

If we are, in fact, reaching peak coal, even before peak oil, this is disconcerting for those who believe that the Hubbert Model is the only way of viewing the world. Maybe we are expecting too much from the model; maybe we need a model that considers prices, and how prices depend on wages and rising debt. Falling energy prices are especially bad for the system; they seem to lead to debt defaults.

RE & Steve Collapse Update 2

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Published on The Doomstead Diner on April 27, 2016

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In our latest installment of the Collapse Update Report, Steve and me cover Energy Industry Bankruptcies, Mass Shootings & Suicides and trying to resolve monetary and fiscal problems utilizing Gold as Money.

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Coal, Wars, and Beautiful Women

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Published on Cassandra's Legacy on February 22, 2016

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Why in Italy we speak Italian and not French

 

 

Virginia Oldoini, Countess of Castiglione, 1837-1899. Portrait by Michele Gordigiani. The following text is part of the talk that I gave in Paris on Feb 12, at the Momentum Institute (h/t Yves Cochet, Agnes Sinaï, and Mathilde Szuba)

In the study of history, it is fashionable to use quantitative data as much as possible. We speak of financial and economic factors, of the competition for natural resources, of population unbalances, of the effects of climate, and more. And, yet, sometimes history goes on according to the whim of one or another ruler making colossal mistakes; from Napoleon to Saddam Hussein. In that case, human factors become predominant and only in some cases we can have a glimpse of what may have passed in the mind of the people at the top. One such case may have been that of countess Virginia Oldoini, femme fatale of the 19th century, mistress of the French Emperor Napoleon III, and, perhaps, the origin of the Italian unification of 1860. Beautiful woman, indeed, and hard to describe using system dynamics models!

Let's go back to the early 19th century. At that time, the industrial revolution was in full swing; fueled by the coal mines of Northern Europe, mainly in England, France, and Germany. This revolution had created an economic unbalance, making the Northern countries much richer and more powerful than the Southern ones. It was not just a question of having or not having coal. It was a question of transporting it. Coal is heavy and bulky and, at that time, the only practical way to carry it over long distances was by the sea. Sailing ships could take coal everywhere in the world but, when it was a question of taking it inland, waterways were needed. No waterways, no coal. No coal, no industrial revolution. That was the reason of the unbalance: the Southern European countries, just as the North-African ones, could have no waterways because of the lack of water. Hence, they could not industrialize and they remained economically and militarily weak.

Here is the situation as it was in 1848.
 

At this date, the only Mediterranean regions that had waterways and could industrialize were France and Northern Italy, and Piedmont in particular. Of the two, France was by far the most powerful and, already in 1848, you can see how France had occupied Algeria, snatching it away from the weak Ottoman Empire. The rest of the North-African region was ripe for the taking and even the Kingdom of Naples, in Southern Italy, was militarily and industrially weak; an easy prey for any industrialized country. So, what could have stopped the French from turning the whole Mediterranean sea into a French lake? That had been, apparently, Napoleon's idea when he had invaded Egypt, in 1798. It had not worked out at that time, but it had been a good strategic intuition that later French governments could have carried out.

Now, put yourself in the shoes of the British. In the great strategic game of the 19th century, they had sighted Egypt, that they would occupy in 1882, but there was little or nothing that they could do to stop France from occupying the whole Northern African shore, all the way to Egypt and perhaps farther than that. Nothing direct, that is, but what if they could create a strategic counterweight to balance the French power? And what could that counterweight be? Italy, of course, if it could be unified and transformed into a single country, out of the plethora of statelets it was at that time.

So, in mid 19th century, the strategic pieces of the Mediterranean game were all in their places, as if on a giant chessboard. The British objective was shared by Piedmont: unify Italy as soon as possible and stop France from further expansion. On the other side of the chessboard; France's objective was also clear: avoid at all costs the unification of Italy and take as much as possible of North Africa, as soon as possible.

Clear; perfectly clear. And easy for France. They had almost nothing to do; just keep Piedmont in check; which they could do easily. It is true that Piedmont was a small industrial powerhouse for its times, but it was no match for the much larger and much more powerful neighboring France. But the French president and emperor of that time, Louis Napoleon, or "Napoleon III" did exactly the opposite, even engaging the French army in support of the expansion of Piedmont in Northern Italy in a series of bloody battles against the Austrians, in 1859. Not that France helped Piedmont for nothing, of course. In exchange, the French obtained a slice of land on the Western side of the Alps, formerly part of Piedmont. It was a territorial gain but, in strategical terms, it was nothing in comparison to what France was losing.

One year later, Piedmont, with the support of the British, sent an army led by Giuseppe Garibaldi to invade the Southern Kingdom of Naples. The Neapolitans put up a spirited resistance, but, alone, they couldn't cope and Napoleon III did nothing to help them. With the collapse of the Southern Kingdom, the complete unification of Italy became unavoidable, despite a last-ditch attempt by Napoleon III in 1867, when he sent troops to Italy to stop Garibaldi from taking Rome.

So, Italy was. And it still is. The curious thing is that it had not to be. Had Napoleon III stopped Garibaldi in 1860 in the same way as he did in 1867, probably we would still have a kingdom of Naples and the country that today we call "Italy", would be mainly a French protectorate. And, most likely, French would be the dominant language in most of the country.

Instead, France had lost a historical occasion to become the dominant Mediterranean power. Later on, the Franch still managed to carve out some more pieces of North Africa, occupying Tunisia in 1881 and Morocco in 1904, but all further advances in the Mediterranean region were stopped when, in 1911, Italy claimed what Italians saw as their rightful slice of the declining Ottoman Empire: the region that we call Libya today.

So, how was it that Napoleon III made such a colossal strategic mistake? In a way, we can say that it is rather normal: Rulers of states are often awfully incompetent at their job (just think of our George W. Bush). But, for Napoleon III, there may have been a reason that goes beyond simple incompetence.

The French have invented the phrase "Cherchez la femme" ("look for the woman") as an explanation for many otherwise inexplicable events. And, in the story of the unification of Italy, there is a woman involved: Virginia Oldoini, Countess of Castiglione. She was the cousin of Count Cavour, prime minister of Piedmont at that time, and she was sent to Paris by him, it seems, with the specific idea of influencing Napoleon III. She was a faithful Italian patriot and she understood very well what was to be her role as mistress of the French president and emperor. She was to convince him to do something that the French should never have allowed: help Piedmont to invade and conquer the rest of the Italian peninsula. According to what we can often read in history books, she fulfilled her role and, from the portraits and the photographs we have of her, maybe we can also understand how.

Of course, we can legitimately think that this story is just a legend. But could it be that Virginia Oldoini really convinced Luis Napoleon to do what he did? In this case, the Countess should be considered as one of the most influential women in modern history. But we will never be able to know: by now, she is on the other side of the mirror, perhaps watching us from there and laughing at us.

 

For a fictional tale of what could have happened had Napoleon III been smarter (or Virginia Oldoini less beautiful) see "The Tipping points of History" on the "Chimeras" blog.
 

 

 

 

 

 

 

 

 

 

 

 

Can Peak Oil Save Us From Climate Change?

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Published on Resource Crisis on October 8, 2015

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"Peak Oil will save us from Climate Change:" a meme that never went viral

The idea that peak oil will save us from climate change has been occasionally popping up in the debate, but it never really gained traction for a number of good reasons. One is that, in many cases, the proponents were also climate science deniers and that made them scarcely credible. Indeed, if climate change does not exist (or if it is not caused by human activities), then how is it that you are telling us that peak oil will save us from it? Add to this that many hard line climate science deniers are also peak oil deniers (since, as well known, both concepts are part of the great conspiracy), then, it is no surprise that the meme of "peak oil will save us" never went viral.

That doesn't mean that we shouldn't ask the question of whether we have sufficient amounts of fossil fuel to generate a truly disastrous climate change. The debate on this point goes back to the early 2000s. At the beginning, the data were uncertain and it was correctly noted that some of the IPCC scenarios overestimated what we are likely to burn in the future. But, by now, I think the fog has cleared.  It is becoming increasingly clear that fossil fuel depletion is not enough, by far, to save us from climate change.

Nevertheless, some people still cling to the old "peak oil will save us" meme. In a recent post on "Energy Matters", Roger Andrews argues that:

All of the oil and gas reserves plus about 20% of the coal reserves could be consumed without exceeding the IPCC’s trillion-tonne carbon emissions limit.

Now, that sounds reassuring and surely many people would understand it in the sense that we shouldn't worry at all about burning oil and gas. Unfortunately, that's just not true and Andrews' statement is both overoptimistic and misleading. One problem is that the "2 degrees limit" is a last ditch attempt to limit the damage created by climate change, but there is no certainty that staying beyond it will be enough to prevent disaster. Then, there is a problem with Andrew's use of the term "reserves," to be understood as "proven reserves". Proven reserves include only those resources that are known to exist and to be extractable at present; and that's surely much less than all what could be extracted in the future. The parameter that takes into account also probably existing resources is called "Ultimate Recoverable Resources" or URRs

So, let's consider a world fossil URR estimate that many people would consider as "pessimistic," the one by Jean Laherrere that I already discussed in a previous post. It turns out that we have enough oil and gas that, together, they can produce enough CO2 to reach the 2 degrees limit; even though, maybe, not more. There follows that, if we really wanted to burn all the oil and gas known to be extractable, to stay withing the limit we would need to stop all carbon burning; starting from tomorrow! Not an easy thing to do, considering that coal produces more than 40% of the energy that powers the world's electrical grid and, in some countries, much more than that. It is true that coal is the dirtiest of the three fossil fuels and must be phased out faster than oil and gas, but the consumption of all three must go down together, otherwise it will be impossible to remain under the limit.

In the end, we have here one more of the many illusions that surround the climate issue; one that could be dangerous it were to spread. However, in addition to the other problems described here, Andrew's post falls in the same trap of many previous attempts: it uses the data produced by climate science to try to demonstrate its main thesis, but only after having defined climate science as "Vodoo Science." No way: this is not a meme that will go viral.

Nasty

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Published on 22 Billion Energy Slaves on September 17, 2015

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I was having a cup of tea with a friend in his polytunnel the other day and he was telling me about how hard it was to live a simple life minding his own business. He's about ten years younger than me, is married and has a kid on the way, and they live on a three acre plot of land which they bought with their own money and manage using permaculture. They work every day of the week, have practically no money and their ecological footprint is probably so small it might even not register, and yet they are suffering from endless harassment to get them evicted and complaints from nearby wealthy residents who feel that people shouldn't be allowed to live as they please. My friend had a simple explanation for all this, he said that as a nation and a culture, we are basically nasty and intolerant.

This got me thinking. Britain, after all, was the first industrialised nation. We had the enclosures acts from the 17th century onwards which kicked people off the land and turned it over to the pseudo industrial practice of sheep farming (the rearing of 'woolly maggots' as George Monbiot describes them). Wealth has been concentrated at the top for so long and the society has been stratified by class that imagining normal people living and working in the countryside is practically impossible for most.

Our culture is a dominator one. Due to a geological accident regarding coal, combined with a military nature and a lust for foreign goods, we ended up being the world's largest empire. When colonisers arrived in Australia and encountered Aboriginal people, instead of making friends with them they buried their children up to their necks in the sand and played a game where you had to kick off their heads with a single powerful kick. In India we caused mass famines and when people complained we machine-gunned them down. We did the same in plenty of other countries too. We divided up vast expanses of Africa, Asia and the Middle East and drew lines on maps which caused huge upheavals and sectarian violence. Nelson razed Copenhagen with naval bombardment, just for fun, and we devised the world's first concentration camps during the Boer War, and enthusiastically firebombed cities during the Second World War. And then, even when we stopped being an empire, we spawned Margaret Thatcher whose enthusiasm for the ideas of neoliberalism was enthusiastically passed onto Ronald Reagan and forced upon the world.

People don't like to talk about any of these aspects of Britishness. They prefer to talk about the engineering marvels we brought to India and how we taught the world to speak English. We brought football, cricket and tennis to the natives, and helped them become civilised. They might concede that there was the odd 'dark chapter' but that overall the empire building was all good and proper.

I was in London a couple of weeks ago and took the opportunity to visit the City (i.e. the financial district) to do a bit of background research for my online book Seat of Mars. Leaving Liverpool Street station one passes by a bronze statue of some refugee children. I looked at the inscription and it was a dedication to the selfless efforts of local people who took in 10,000 Jewish children from Germany prior to the Second World War. Valiant stuff, but this is the statue that many of the 35,000 City workers walk past every morning as they head for their high rises to unleash further financial mayhem on the world. How many millions of people has the City of London killed in the last few decades? It's a valid question, but don't hold your breath for an answer. Yet these City workers, for the most part, see themselves as good people. They run marathons to raise funds for cancer research, they donate money on Children in Need night, and they buy kittens for their kids. I have some friends who are City bankers and they are not evil people (though we don't have much to talk about these days). Hell, I was once almost a banker myself, luckily fluffing my interview at Citi.
 

 

 

So maybe it's just the system that is evil.

But then I see evil everywhere. I see the attack dogs set onto Jeremy Corby for daring to suggest scrapping nuclear weapons. I see evil in the pages of the Daily Mail and the Telegraph as they attempt to character assassinate anyone who wants to stop global warming, or as they incite violence against refugees. I see evil in the countryside where farmers and rich people collude to kill the wildlife in the most painful and inhumane ways possible. Fracking is evil. Bombing by drones is evil. Hosting arms fairs is evil.

 

 

Of course, if you say these things to people they will call you a traitor and a 'Brit hater'. They will point out that it's not their fault, all those wars of conquest, and that they have no need to feel guilty – even though our way of life is funded by one-sided trade deals, easy access to energy and a ponzi system of finance that allows us to continue to rack up astronomical levels of debt and consume huge bites of the world's resource pie. I'm not a Brit-hater – there are far too many positive aspects of life in these isles – but that doesn't mean I have to be an apologist for the less-than-wholesome aspects.

Perhaps my friend had a point.

Or perhaps not. Perhaps it is a case that those in the top positions are psychopaths, willing to do anything and everything to consolidate their power and enslave the masses using mind control techniques. I know plenty of people who are not evil. As a matter of fact, I don't think I know anyone who is evil. Most people, it seems to me, are good at heart. They want to help. They want to love one another. They want to stop the destruction of the world. These are the people it is best to hang around with – they're better for for soul and your sanity.

So why do we collectively put up with all this evilness? Is it because badness has a natural advantage over goodness? Do evil plans always work out in the 'real' world and good ones are just 'idealistic dreaming'? Does the devil have all the best tunes?

I have a theory. Could it be that it is because Britain is an island that was once fabled for its gold and tin mines? That it has been invaded again and again since the end of the last ice age, and that the settler populations always selected for the most war-like? For me, you could forgive the Anglo Saxons and the Romans, but it was the Normans that did it. With their Scandinavian blood, their aristocratic French ways and their lust for conquering – the country changed dramatically after 1066. One of the first things they did was catalogue all the people, land and assets in the Domesday Book. Invasion, murder and cataloguing – the start of the dominator culture. It's been almost 1,000 years and still the top landowners in this country can trace their lineages back to the Normans. Or maybe there is some kind of supernatural explanation …

So, no, I don't think we are evil. Just some of us. The ones with the power. And the ability to project that power has been multiplied a thousand-fold since we discovered that you could burn coal and use it to power engines. So will we see a future where access to limited high-concentration energy also leads to a corresponding drop in the ability of bad men (yes, it's mostly men) to do bad things? One can only hope so.

Who knows, maybe in 500 years time it will be possible to live on a small piece of land and raise a family without having the collective wrath of a millennium of dominator culture threatening to fall down and crush you just for wanting not to be a part of that system.

Collapse Cafe 8/23/2015: TSHTF Part 1 Energy

Discuss this Vidcast at the Diner TV Lounge inside the Diner

Audio Only Podcast:

gc2Well, we certainly timed this Vidcast well! 🙂

It's a marathon between the 3 parts we got recorded, we skipped over Part 3 to record at a later date on Climate & Geopolitics.  Part 1 here focuses on Energy, Part 2 on Economics and Part 4 is Futurology, doing the Cassandra and Nostradamus thing.

I will Feature Part 2 on Thursday and Part 3 next Sunday, however all 3 parts are currently up on the Collapse Cafe You Tube Channel.

Thanks to all the participants, Nicole Foss, Gail Tverberg, Steve Ludlum, Tom Lewis, Norman Pagett, Ugo Bardi & my co-host Monsta.

RE

End of More: Interview with Norman Pagett

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on July 22, 2015

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End_of_More

Get the End of More on Amazon.com

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Recently, we had the opportunity to talk with Norman Pagett, one of the Authors of the End of More, and excellent Primer for people new to the world of Industrial Civilization Collapse and Population Overshoot.  Norman resides in Shropshire, England, right at the heart of where the Industrial Revolution began in the early 1700s with the invention of the Steam Engine, and its early application in pumping the water out of Coal Mines.

In this first part of our discussions with Norman, we go over the early history of the Industrial Revolution and its expansion in the early years.

Much more to come in future episodes.  We have a few hours of collapse chat still to wade through and edit here.  Meanwhile, enjoy our Collapse analysis of the day here on the Doomstead Diner.

RE

Snippet:

http://axisoflogic.com/artman/uploads/2/children_in_coal_mines_-_dickens495.JPG

RE: …I don't know how much do you followed any of the old Dickens stories about the dirty state of London back in the early nineteenth century as a result of coal burning?

Norman: Yes I do. In fact two things which expanded London and other cities as well because all of them was the go to transport that's rail transport and the output of sewage, because if you've got a city with a million people in it you've got an awful lot of sewage and you've got to get rid of it, and the only way you can get rid of it was building a sewage system which could only be built with bricks, and the heat needed in vast quantities could only came from coal. So coal firms were about sixty or seventy miles from London where the bricks were fired and they had to be transported into the city by train, and then from that they use the six million bricks to build the London sewage system, which was then pumped out from the London Centre right to the estuary on the North Sea, and then the big engines out there which pumped the sewage into the sea and was just discharged and got rid of . Now again you're talking not just about pumping the water out of the coal mines you're talking about pumping water into the city fresh water in some way and then taking sewage and pumping it out of the city. So those two processes then enable cities to start growing to much larger sizes than they had ever before and so that was a prrocess there that allowed the sytem to take off…

 

For the rest, LISTEN TO THE INTERVIEW!!!

Senility of the Elites

http://www.doomsteaddiner.net/forum/index.php/topic,4914.msg76739/topicseen.html#msg76739Off the keyboard of Ugo Bardi

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Published on Resource Crisis & Chimeras on May 29, 2015

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fall-of-rome

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The senility of elites: coal mining must continue, no matter what the human costs

 
The coal mine of Bihar, India. Photo by Nitin Kirloskar
 

This post was inspired by a recent article about coal mining in India by David Rose in the Guardian about coal mining. In India, people are dying in the streets because of excessive heat caused by global warming, but Rose reports that "across a broad range of Delhi politicians and policymakers there is near unanimity. There is, they say, simply no possibility that at this stage in its development India will agree to any form of emissions cap, let alone a cut." In other words, coal mining must continue in the name of economic growth, no matter what the human costs. 

I think it is hard to see a more evident example of the senility of the world's elites. It is, unfortunately, not something that pertains only to India. Elites all over the world seem to be nearly totally blind to the desperate situation in which we all are. 

On this matter, I have a post written on my "Chimeras" blog that describes how the blindness of the elites is not just typical of our times, but was the same at the time of the Roman Empire. It is a discussion of how one of the members of the Roman elite, Rutilius Namatianus, completely misunderstood the situation of the last years of the Empire. It is our plea of human being that we don't understand collapse, not even when we live it.

Of his return: a Roman patrician tells of how he lived the collapse of the empire.

 

 

The 5th century saw the last gasps of the Western Roman Empire. Of those troubled times, we have only a few documents and images. Above, you can see one of the few surviving portraits of someone who lived in those times; Emperor Honorius, ruler of what was left of the Western Roman Empire from 395 to 423. His expression seems to be one of surprise, as if startled at seeing the disasters taking place during his reign.

At some moment during the first decades of the 5th century C.E., probably in 416, Rutilius Namatianus, a Roman patrician, left Rome – by then a shadow of its former glory –  to take refuge in his possessions in Southern France. He left to us a report of his travel titled "De Reditu suo", meaning "of his return" that we can still read today, almost complete.

Fifteen centuries after the fall of the Western Roman Empire, we have in this document a precious source of information about a world that was ceasing to exist and that left so little to us. It is a report that can only make us wonder at how could it be that Namatianus got everything so badly wrong about what was happening to him and to the Roman Empire. And that tells us a lot about how it is that our elites understand so little about what's happening to us.

To understand the "De Reditu" we need to understand the times when it was written. Most likely, Namatianus came of age in Rome during the last decades of the 4th century, during the reign of Theodosius 1st (347-395 C.E.) the last Emperor to rule both the Western and the Eastern halves of the Empire. When Theodosius died, in 395 C.E., there started the last convulsions of the Western Roman Empire, that would lead to its formal demise in 476 A.D. But, at the times of Namatianus, there still were Roman Emperors, there still was a Roman Senate, there still was the city of Rome, perhaps still the largest town in Western Europe. And there still were Roman armies charged to defend the Empire against invaders. All that was to disappear fast, much faster than anyone could have guessed at that time.

Namatianus must have been already an important patrician in Rome when Stilicho led what Gibbon calls "the last army of the Republic" to stop the Goths coming down toward Rome in a battle that took place in 406 C.E. Then there was the downfall of Stilicho, executed under for treason on orders of Emperor Honorius. Then, there came the invasion of the Goths under Alaric 1st and their taking of Rome in 410 C.E. All in all, Namatianus saw the fall of seven pretenders to the Western throne, several major battles, the sack of Rome and much more.

Those troubled times saw also a number of figures we still remember today. Of those who were contemporary to Namatianus, we have Galla Placidia, the last (and only) Empress of the Western Roman Empire and it is likely that Namatianus knew her personally as a young princess. Namatianus must also have known, at least by fame, Hypatia, the pagan philosopher murdered by Christians in Egypt in 415 CE. He also probably knew of Augustine (354-430), bishop of the Roman city of Hippo Regius, in Africa. There are more historical figures who were contemporaries of Namatianus, although it is unlikely that he ever heard of them. One was a young warrior roaming the Eastern plains of Europe, whose name was Attila. Another (perhaps) was a warlord of the region called Britannia, whom we remember as "Arthur." Finally, Namatianus probably never heard of a young Roman patrician born in Roman Britannia, someone named  "Patricious" (later known as "Patrick"), who would travel to the far away island called "Hybernia" (today known as Ireland) some twenty years after that Namatianus started his journey to Gallia.

But who was Namatianus, himself? Most of what we know about him comes from his own book, De Reditu, but that's enough for us to put together something about him and his career. So, we know that he came from a wealthy and powerful family based in Gallia, modern France. He attained prestigious posts in Rome: first he was "magister officiorum;" something like secretary of state, and then "praefectus urbi," the governor of Rome.

During those troubled times, the Emperors had left Rome for a safer refuge in the city of Ravenna on the Eastern Italian coast. So, for some time, Namatianus must have been the most powerful person in town. He was probably charged with defending Rome from the invading Goths; but he failed to prevent them from taking the city and sacking it in 410. Maybe, he also tried – unsuccessfully – to prevent the kidnapping by the Goths of the daughter of Emperor Theodosius 1st, Galla Placidia, who later became empress. He must also have been involved in some way in the dramatic events that saw the Roman Senate accusing Stilicho's widow, Serena, of treason and having her executed by strangling (these were eventful years, indeed).

We don't know if any or all these events can be seen as related to Namatianus' decision to  leave Rome (perhaps even to run away from Rome). Perhaps there were other reasons, perhaps he simply gave up with the idea of staying in a half destroyed and dangerous city. But, for what we are concerned with, here, we can say that if there was one person who could have a clear view of the situation of the Empire, that person was Namatianus. As prefect of Rome, he must have reports coming to him from all the regions still held by the Empire. He must have known of the movements of the Barbarian armies, of the turmoil in the Roman territories, of the revolts, of the bandits, of the usurpers, and of the Emperors. In addition, he was a man of culture, enough that later on he could write a long poem, his "De Reditu." Surely, he knew Roman history well, as he must have been well acquainted with the works of the Roman historians, Tacitus, Livy, and Sallust, and others.

But could Namatianus understand that the Western Roman Empire was collapsing? Perhaps surprisingly, he could not. That's clear from his report of his travel to Gallia by the sea. Just read this excerpt from "De Reditu":

"I have chosen the sea, since roads by land, if on the level, are flooded by rivers; if on higher ground, are beset with rocks. Since Tuscany and since the Aurelian highway, after suffering the outrages of Goths with fire or sword, can no longer control forest with homestead or river with bridge, it is better to entrust my sails to the wayward."

Can you believe that? If there was a thing that the Romans had always been proud of that was their roads. These roads had a military purpose, of course, but everybody could use them. A Roman Empire without roads is not the Roman Empire, it is something else altogether. Think of Los Angeles without highways. Namatianus tells us also of silted harbors, deserted cities, a landscape of ruins that he sees as he moves north along the Italian coast.

But Namatianus, really, understands nothing about what's going on. He can only interpret it on as a temporary setback. Rome has seen hard times before, he seems to think, but the Romans always triumphed over their enemies. It has always been like this and it will always be like this; Rome will become powerful and rich again. Namatianus is never direct in his accusations, but it is clear that he sees the situation as the result of the Romans having lost their ancient virtues. According to him, it is all a fault of those Christians, that pernicious sect. It will be enough to return to the old ways and to the old Gods, and everything will be fine again.

That's even more chilling than the report on the decaying cities and fortifications. How could Namatianus be so short-sighted? How can it be that he doesn't see that there is much more to the fall of Rome than the loss of patriarchal virtues of the ancient? And, yet, it is not just a problem with Namatianus. The Romans never really understood what was happening to their Empire, except in terms of military setbacks that they always saw as temporary. They always seemed to think that these setbacks could be redressed by increasing the size of the army and building more fortifications. And they got caught in a deadly spiral in which the more resources they spent in armies and fortifications, the poorer the Empire became. And the poorer the Empire became, the more difficult it was to keep it together. In the end, by the mid 5th century, there were still people in Ravenna whom pretended to be "Roman Emperors", but nobody was paying attention to them any longer.

So, Namatianus provides us with a precious glimpse of what it is like living a collapse "from the inside". Most people just don't see it happening – it is like being a fish: you don't see the water. And, then, think of our times. You see the problem?

The "De Reditu" arrived to us incomplete and we don't know what was the conclusion of Namatianus' sea journey. Surely, he must have arrived somewhere, because he could complete his report. Most likely he did reach his estates in Gallia and, perhaps, he lived there to old age. But we may also imagine a more difficult destiny for him if we refer to a contemporary document, the "Eucharisticos" written by Paulinus of Pella, another wealthy Roman patrician. Paulinus fought hard to maintain his large estates in France, despite barbarian invasions and societal collapse, but he found that land titles are of little value if there is no government that can enforce them. In old age, he was forced to retire in a small estate in Marseilles, reporting that, at least, he was happy to have survived. Perhaps something similar happened also to Namatianus. Even those who don't understand collapse are condemned to live it.

GOP and Coal Launch War on America

From the keyboard of Thomas Lewis
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First published at The Daily Impact  May 16, 2015

 

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To celebrate their coming to power in the United States Senate, Republicans this week launched their answer to the imaginary “War on Coal” by declaring war on clean air, and thus on all of us. Newly elected West Virginia Senator Shelley Moore Capito introduced a bill that would make it impossible for the Environmental Protection Agency to regulate emissions from coal-burning power plants. Climate-change-denier-in-chief James Inhofe, celebrated for bringing a snowball onto the floor of the Senate in February to prove that global warming is a hoax, cheered Capito on from his throne at the Senate Environment and Public Works Committee.

The bill would not only eviscerate the Obama Administration’s Clean Power Plan, which has not yet been put into effect, but it would forbid rewriting it. Senator Capito said she was pushing the bill not to pay back the coal companies for hundreds of thousands of dollars in contributions, and not to make American cities look more like Beijing, but to “protect families and businesses.” She proposes to do that by making sure that said families and businesses are subjected to ever more air pollution and climate change, forever and ever, amen.

In addition, the newly elected Republican Congressman from West Virginia’s Second District, Alex Mooney, has introduced legislation to roll back the EPA’s  half-hearted efforts to rein in mountaintop mining.

In the Republican faith, the federal government’s efforts to restrain the choking black smoke gushing from coal-burning power plants, and the trashing of Appalachia’s mountains to get at the coal that is left there, are destroying the industry. Those who regularly visit the real world know it is not this delusional “war on coal” that has brought the industry to its knees, it is the competing natural gas industry, which is providing power plants with a cheaper, cleaner alternative. It’s something we used to refer to, in the old days, as “free enterprise.” When you add to those unfavorable free-market conditions a heavy dose of incompetence and criminality, you get a coal industry in ruins — screaming that it’s Obama’s fault, and ordering their wholly owned politicians to do something.

A perfect example of reality emerged this week when Patriot Coal declared bankruptcy 18 months after emerging from bankruptcy. According to an industry analyst, the reasons for its demise were “a union strike, infrastructure failures, fatal accidents and persistently weak coal markets.” Environmental regulations, aka the War on Coal? Not mentioned.

About those weak markets: the coal industry world wide expanded its capacity feverishly when prices were high a few years ago. They glutted the market, drove down prices, and bankrupted themselves (that’s why Patriot went into bankruptcy the first time). Then the natural gas industry discovered fracking and did the same thing — glutting the market, driving prices down, and simultaneously shooting itself in the foot and cutting the throat of the coal industry. Natural gas prices got so low that every power company that could do so, converted its generators to gas, and coal’s share of that market drops from half to 39%. Did Obama do that? No, he did not.

Never mind the facts, the Republican faith is firm: if we just pollute the air and trash the mountains, everything will be all right. Thank goodness there’s a Democratic Senator from West Virginia, Joe Manchin, to bring a little common  sense into the discussion. Wait, what? He’s a co-sponsor of Capito’s War on America bill?

Better stock up on face masks.

 

 

 


Thomas Lewis is a nationally recognized and reviewed author of six books, a broadcaster, public speaker and advocate of sustainable living. He also is Editor of The Daily Impact website, and former artist-in-residence at Frostburg State University. He has written several books about collapse issues, including Brace for Impact and Tribulation. Learn more about them here.

 

 

The Oil Crash: Something Wicked This Way Comes

Off the keyboard of Ugo Bardi

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Published on Resource Crisis on May 11, 2015

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The recent oil price crash signals the impending demise of the oil and gas industry as a major world energy producer. That should be a good thing, in principle, but something wicked may still come out of the process.

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With the ongoing collapse of the oil prices, we can say that it is game over for the oil and gas industry, in particular for the production of "tight" (or "shale") oil and gas. Prices may still go back to reasonably high levels, in the future, but the industry will never be able to regain the momentum that had made its US  supporters claim "energy independence" and "centuries of abundance." The bubble may not burst all of a sudden, but it surely will deflate.

So, what's going to happen, now? The situation is, to say the least, "fluid". A great rush is ongoing to convince investors to place their money where there is still some chance to make a profit. I think we can identify at least three different strategies for the future: 1) more of the same (oil and gas) 2) a push to nuclear, and 3) a push for renewables. Let's see to examine what the future may have in store for us.

1) A push for more gas and more oil. The oil&gas industry has not yet conceded defeat; on the contrary, it still dreams of centuries of abundance (see, e.g. this article on Forbes). It seems unthinkable that investors would still want to finance uncertain enterprises such as squeezing more oil from exhausted fields or, worse, from difficult and expensive technologies such as coal liquefaction. But you should never underestimate the power of business as usual. If people feel that they absolutely need liquid fuels, then they will be willing to do anything to get liquid fuels.

The main problem with this idea is not so much its technical feasibility. By throwing every resource at hand at the task (and beggaring the whole economy in the process) it would not be impossible to fool peak oil for a few more years. The problem is a different one: it is with climate change and with the fact that we are running out of time. If we keep burning hydrocarbons, we just can't make it: the industrial society cannot survive the resulting warming and the associated troubles. That is true if we keep burning at the "natural" rate, that is along the bell shaped curve. Imagine if we try to keep growing, instead (as all politicians in the world say we should).

All this is becoming well known and, as a result, a push toward further hydrocarbon production (or, God forbid, more coal) will be possible only if accompanied by a strong propaganda campaign destined to silence climate science and climate activism. Some symptoms that something like that is in the making are evident enough to be disturbing. Consider that none of the Republican candidates for the US 2016 elections supports the need for action on climate change, that in Florida government employees are not allowed to use the term "climate change" or "global warming," that NASA has been defunded on anything that has to do with climate change, and more. Then, a certain logic starts to appear: "muzzle the science and keep on burning". Something very wicked this way comes…..

2. A new push for nuclear. This option would not be so bad as the first, more hydrocarbons. At least, nuclear plants do not directly generate greenhouse gases and we know that it is a technology that can produce energy. Nevertheless, the hurdles associated with its expansion are gigantic. The first and foremost problem is that the uranium mineral production is not sufficient for ramping up nuclear energy from a few percent of the world's primary energy production to a major fraction of it – to be able to do that would require investments so large to be mind boggling. To say nothing about the need for rare minerals in nuclear plants: beryllium, niobium, hafnium, zirconium, rare earths, and more; all in short supply. Then, there are all the nightmarish problems of nuclear waste disposal, safety, and strategic control.

Nevertheless, if it were possible to convince investors to pour money into nuclear energy, then it would be possible to see an attempt to restart it, despite the various problems and disasters that have given to nuclear a bad name. An attempt to do just that seems to be in progress. President Obama is said to be considering a massive return to nuclear and investors are told to prepare for a gigantic surge in uranium prices. Will it work? Unlikely, but not impossible. Something wicked this way comes……
 

hafnium as a neutron absorber, beryllium as a neutron reflector, zirconium for cladding, and niobium

 

 

 

Read more at: http://phys.org/news/2011-05-nuclear-power-world-energy.html#jCp


3. A big push for renewables. Surprisingly, the renewable industry may have serious chances to take over from a senescent oil industry, leaving the nuclear industry standing still and gasping at the sight. The progress in renewable technology, especially in photovoltaic cells, has been simply fantastic during the past decade (see, e.g., the recent MIT report). We have now a set of methods for producing electric power that can compete with traditional sources, watt for watt, dollar for dollar. Consider that the most efficient of these technologies do not need critically rare materials and that none brings the strategic and security problem of nuclear. Finally, consider that it has been shown (Sgouridis, Bardi, and Csala) that the present renewable technology could take over from the current sources fast enough to prevent major damage from climate change.

It looks like we have a winner, right? Indeed, the atmosphere around renewables is one of palpable optimism. If renewable energy picks up enough momentum, there will be nothing able to stop it until it has catapulted all of us, willing or not, into a new (and cleaner) world.

There is a problem, though. The renewable industry is still tiny in comparison to the nuclear industry and especially in comparison to the oil and gas industry. And we know that might usually wins against right. The sheer financial power of the traditional energy industry may well be enough to abort the change before it becomes unstoppable. Something wicked may still come……. (*)

(*) "Something wicked this way comes" is mainly known today as the title of a 1962 novel by Ray Bradbury. Actually, it comes from Shakespeare's Macbeth..

Old King Coal Stricken; Prognosis Grave

From the keyboard of Thomas Lewis
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A coal train once supplied the city of Holland, Michigan with fuel for its electric generating plant. They converted the plant to natural gas. Their costs are down, their emissions are down, and coal is down for the count. (Photo by wsilver/Flickr)

A coal train once supplied the city of Holland, Michigan with fuel for its electric generating plant. They converted the plant to natural gas. Their costs are down, their emissions are down, and coal is down for the count. (Photo by wsilver/Flickr)

First published at The Daily Impact  March 27, 2015

After bestriding the mountains of Appalachia, among many other places, like the proverbial Colossus for a century and more, the U.S. coal industry has been taken to hospice, a pathetic wasted shadow of its former self, its physical condition terminal, its thought processes derailed by dementia. It’s not a pretty sight (except perhaps to the survivors of the ruin, destruction and death it has brought to thousands upon thousands of helpless people) and there are those who say its fate foreshadows that of the oil fracking  industry, which is now in the ICU, and the legacy oil bidness, which has started to have dizzy spells and occasional sudden hemorrhaging.

A report out this week from the think tank Carbon Tracker, titled “The U.S. Coal Crash,” itemizes the problems listed on the patient’s chart:

  • 26 coal companies bankrupt in the last three years;
  • Peabody Energy Corp., the world’s largest private coal company, has lost 80% of its share value, and that is representative of the industry as a whole (or as a hole);
  • 264 mines were closed in just two years — 2011-2013.
  • The last best hope for coal, China, which burns more than the rest of the world combined, has rendered much of its territory including its capital virtually uninhabitable because of the resulting air pollution, and is cutting back. A little. Down 3% last year.

Oh, and the dementia part? Peabody Energy issued a “forecast” this year “foreseeing” increased coal demand of 10-30 million tons, and global demand increasing by 500 million tons. Not only that, but the industry professes to believe in “clean” coal, and that its woes are caused entirely by President Obama’s “war on coal.” It’s sad, really, next we’ll find them wandering in the WalMart parking lot, unable to remember where they put their car.

What the industry calls the “war on coal” — the U.S. government’s limp-wristed efforts to reduce air pollution before it a) boils the planet and b) makes all the monuments in Washington invisible, like the skyline of Beijing — is not the primary cause of the industry’s demise. That mortal wound was delivered by the natural gas frackers, who in 2008 began to flood the market with cheap, fracked gas and inspired every electric generating plant that could do it to convert to burning gas instead of coal.

There went coal’s last reliable market, and that is why the doctors expect to see a flat line on the monitor any day now. Incidentally, the gas frackers did so well at driving down the price of their product that many of them went under, too, and the rest are hanging on with teeth and fingernails. You can’t get poetic justice to rhyme any better than that.

You’ve heard of those people who get diagnosed as terminal, check into hospice, and five years later get kicked out because they refuse to die? Coal will probably be like that for the remainder of the Industrial Age. It will remain the cheapest option for some, and cheap trumps everything else in our values-deprived world. Same with oil. It will endure long past its prime, in palliative care.

Yes, the mighty are falling, and it’s hard not to gloat, until we remember their ultimate justification: they were only giving us what we wanted.

 


 

Thomas Lewis is a nationally recognized and reviewed author of six books, a broadcaster, public speaker and advocate of sustainable living. He also is Editor of The Daily Impact website, and former artist-in-residence at Frostburg State University. He has written several books about collapse issues, including Brace for Impact and Tribulation. Learn more about them here.

 

 

The Great Suffocation…

Off the keyboard of Ugo Bardi

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Published on Cassandra’s Legacy on December 13, 2013

China-Pollution.JPEG-0bfec-555x370

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…will we have enough oxygen to breathe?

 

The oxygen concentration in the atmosphere as recorded at the Mauna Loa observatory (link). It is going down and the obvious explanation is that it is the result of our burning of fossil fuels. But do we risk to suffocate ourselves in this way? Fortunately, that’s very unlikely, at least in the short run. However, looking at the “other side” of the carbon dioxide emission story gives us a good perspective of what’s going on with the ecosystem as the result of human activities.

Everyone is worried about global warming, and correctly so. However, there is another side to the warming question: for every additional molecule of carbon dioxide (CO2) generated by burning fossil fuels, one molecule of oxygen (O2) must be consumed. That means less and less oxygen in the atmosphere. So, won’t suffocation be an additional problem to global warming? (some people seem to be actually worried that it could be)

Fortunately, the answer is “no.” We don’t risk to run out of oxygen; at least in the short run. But the story is not simple and we can learn a lot about what’s happening to our atmosphere, our climate, and our ecosystem if we look at the question in some detail.

First of all, what do we mean as “suffocation”? The present concentration of oxygen in the atmosphere is 21% in volume. We have evolved to live with this level of oxygen and the minimum level for humans to function normally is around 19% (See here). We are already in trouble below 17% and simply can’t survive below 10%. So, we have to be careful with what we do with our atmosphere; we can’t afford to lose more than 1%-2% of the oxygen we have.

Now, how much oxygen have we consumed with burning fossil fuels, so far? Not much, really. Keeling found a 0.0317% reduction in the atmospheric oxygen concentration from 1990 to 2008. Clearly, we are not going to suffocate, at least not right away.

But we need to go more in depth in the matter. Consider that we have been burning fossil fuels for a long time before 1990. We can roughly calculate the total loss considering that the concentration of carbon dioxide in the atmosphere has increased of about 250 parts per million in volume over the past century. A similar amount has been absorbed in the oceans, so we can say that we have produced the equivalent of 500 ppm of CO2 and hence some 500 parts per million of oxygen (0.05%) must have gone. But we are still well within the safety limits.

How about the future? The Keeling results tell us that, at the present rates, we consume about 0.02% of oxygen every ten years. To arrive near the 1% safety threshold we would need centuries but, of course, we will not be able to keep burning fossil fuels at the present rates for such a long time. As we roll on the other side of the Hubbert curve, we won’t probably be able to do more than double the amount already emitted (and perhaps much less, according to the Seneca scenario that sees decline much faster than growth).  Even in the most extreme assumptions, at most, we could emit no more than some four times the amount produced so far. That would correspond to a loss of about 0.2% of the total oxygen available. Not negligible but, as far as we know, not harmful.

So, burning fossil fuels would definitely not suffocate us; not directly, at least. But there are indirect effects. One is the loss of biomass caused by human activities. When plants and animals die, the carbon they contain is normally oxidized to carbon dioxide, consuming oxygen in the process. The total amount of carbon stocked in living creatures and soil is estimated as about 2100 billion tons (Gtons). If all this carbon were to react with oxygen, it would consume some 5600 Gtons of oxygen (taking into account that an atom of oxygen weighs more than an atom of carbon and that one atom of carbon consumes two atoms of oxygen). The total mass of oxygen in the atmosphere is calculated as of the order of 1.2×10^9 Gtons (see also this reference). So, even the total burning of the planetary ecosphere would make only a small dent in the total oxygen concentration; about 0.4%. And that, of course, is an extreme hypothesis that would see the whole biosphere destroyed – in this case, suffocation would be the least problem.

We could consider also the release of the methane hydrates stored in permafrost; something that could happen as a result of global warming. Methane is a strong greenhouse gas, and so the process reinforces itself, that’s the origin of the so called “methane catastrophe” that would result in a disastrous greenhouse runaway effect. The total mass of methane stored in permafrost is estimated as of the order of 500-2500 gtons of carbon. In the worst case, methane could consume another ca. 0.4% of the atmospheric oxygen.

Summing up everything we have considered so far, methane, organic matter, fossil fuels, we see that we don’t go over the 1% threshold, even making rather extreme hypotheses. So, we would seem to be on the safe side. However, we should also take into account that by far the largest stock of organic (and hence burnable) carbon in the Earth’s crust is in the form of  “kerogen”, the result of the partial decomposition of organic matter. (Figure below from Manicore.com).

10^10 gtons of kerogen is such a large value that if all of it were to combine with oxygen (about 10^9 tons), then there won’t be any oxygen left in the atmosphere. That would be, indeed, the “great suffocation”. 

Fortunately, that is unlikely to happen. Kerogen can react with oxygen and it is, actually, the original source of the petroleum we extract and burn today. But the natural process is very slow and the human-made one very expensive. Human beings won’t be able, ever, to burn more than a microscopic fraction of the kerogen of the earth’s crust.

So, we see that oxygen loss, the great suffocation, is not something we should be worried about because we have much more oxygen in the atmosphere than what we could consume even in the worst possible hypothesis. We have this safety margin because free oxygen is the result of billions of years of photosynthetic activity which pumped lots of oxygen in the atmosphere. Of this oxygen, most was absorbed in inorganic oxides; principally iron oxides. Only a small fraction has gradually accumulated in the atmosphere, as we see in the following figure. (from Wikipedia – take into account that there is a big uncertainty in these estimates)

Note that a peak in the oxygen concentration was reached in the remote past, perhaps in correspondence with the peak in planetary biological productivity. At the peak, oxygen concentration may have reached a value of over 30% in volume – humans could not have survived in those conditions! Then, it may have gone down to about 15% and, again, we wouldn’t have been able to survive with that concentration.

So, oxygen is not simply accumulating in the atmosphere to remain there forever. It is a reactive gas and its concentration is linked to the evolution of the ecosystem. There are factors that can strongly change its concentration, probably involving reaction with the kerogen stock. We can’t know for sure what factors cause this reaction but a new dip in oxygen concentration as the result of the ongoing planetary changes cannot be excluded – even though that would probably be extremely slow by human standards. What we can be sure about is that we should be careful in the way we treat the Earth’s ecosystem – we are part of it!

 

Mineral Resources and the Limits to Growth.

Off the keyboard of Ugo Bardi

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Published on Cassandra’s Legacy on September 18, 2013

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Visit the Podcast Page to listen to Part II & III of the conversation with Ugo Bardi

This is a shortened version of a talk I gave in Dresden on September 5, 2013. Thanks to Professor Antonio Hurtado for organizing the interesting conference there

So, ladies and gentleman, let me start with this recent book of mine. It is titled “The Plundered Planet.” You can surely notice that it is not titled “The Developed Planet” or “The Improved Planet.” Myself and the coauthors of the book chose to emphasize the concept of “Plundering”; of the fact that we are exploiting the resources of our planet as if they were free for us for the taking; that is, without thinking to the consequences. And the main consequence, for what we are concerned here is called “depletion,” even though we have to keep in mind the problem of pollution as well.
Now, there have been many studies on the question of depletion, but “The Plundered Planet” has a specific origin, and I can show it to you. Here it is.

It is the rather famous study that was published in 1972 with the title “The Limits to Growth”. It was one of the first studies that attempted to quantify depletion and its effects on the world’s economic system. It was a complex study based on the best available data at the time and that used the most sophisticated computers available to study how the interaction of various factors would affect parameters such as industrial production, agricultural production, population and the like. Here are the main results of the 1972 study, the run that was called the “base case” (or “standard run”). The calculations were redone in 2004, finding similar results.

As you can see, the results were not exactly pleasant to behold. In 1972, the study saw a slowdown of the world’s main economic parameters that would take place within the first two decades of the 21st century. I am sure that you are comparing, in your minds, these curves with the present economic situation and you may wonder whether these old calculations may be turning out to be incredibly good. But I would also like to say that these curves are not – and never were – to be taken as specific predictions. No one can predict the future, what we can do is to study tendencies and where these tendencies are leading us. So, the main result of the Limits to Growth study was to show that the economic system was headed towards a collapse at some moment in the future owing to the combined effect of depletion, pollution, and overpopulation. Maybe the economic problems we are seeing nowadays are a prelude to the collapse seen by this model, maybe not – maybe the predicted collapse is still far away in the future. We can’t say right now.

In any case, the results of the study can be seen at least worrisome. And a reasonable reaction when the book came out in 1972 would have been to study the problem more in depth – nobody wants the economy to collapse, of course. But, as you surely know, the Limits to Growth study was not well received. It was strongly criticized, accused of having made “mistakes” of all kinds and at times to be part of a worldwide conspiracy to take control of the world and to exterminate most of humankind. Of course, most of this criticism had political origins. It was mostly a gut reaction: people didn’t like these results and sought to find ways to demonstrate that the model was wrong (or the data, or the approach, or something else). If they couldn’t do that, they resorted to demonizing the authors – that’s nothing now; I described it in a book of mine “Revisiting the limits to growth“.

Nevertheless, there was a basic criticism of the “Limits” study that made sense. Why should one believe in this model? What are exactly the factors that generate the expected collapse? Here, I must say, the answer often given in the early times by the authors and by their supporters wasn’t so good. What the creators of the models said was that the model made sense according to their views and they could show a scheme that was this (from the 1972 Italian edition of the book):

Now, I don’t know what do you think of it; to me it looks more or less like the map of the subway of Tokyo, complete with signs in kanji characters. Not easy to navigate, to say the least. So, why did the authors created this spaghetti model? What was the logic in it? It turns out that the Limits to Growth model has an internal logic and that it can be explained in thermodynamic terms. However, it takes some work to describe the whole story. So, let me start with the ultimate origin of these models:

If you have studied engineering, you surely recognize this object. It is called “governor” and it is a device developed in 19th century to regulate the speed of steam engines. It turns with the engine, and the arms open or close depending on speed. In so doing, the governor closes or opens the valve that sends steam into the engine. It is interesting because it is the first self-regulating device of this kind and, at its time, it generated a lot of interest. James Clerk Maxwell himself studied the behavior of the governor and, in 1868, he came up with a set of equations describing it. Here is a page from his original article

I am showing to you these equations just to let you note how these systems can be described by a set of correlated differential equations. It is an approach that is still used and today we can solve this kind of equations in real time and control much more complex systems than steam engines. For instance, drones.

You see here that a drone can be controlled so perfectly that it can hold a glass without spilling the content. And you can have drones playing table tennis with each other and much more. Of course they are also machines designed for killing people, but let’s not go into that. The point is that if you can solve a set of differential equations, you can describe – and also control – the behavior of quite complex systems.

The work of Maxwell so impressed Norbert Wiener, that it led him to develop the concept of “cybernetics”

We don’t use so much the term cybernetics today. But the ideas that started from the governor study by Maxwell were extremely fecund and gave rise to a whole new field of science. When you use these equations for controlling mechanical system, you use the term “control theory.” But when you use the equations for study the behavior of socio-economic systems, you use the term “system dynamics”

System dynamics is something that was developed mainly by Jay Wright Forrester in the 1950s and 1960s, when there started to exist computers powerful enough to solve sets of coupled differential equations in reasonable times. That generated a lot of studies, including “The Limits to Growth” of 1972 and today the field is alive and well in many areas.

A point I think is important to make is that these equations describe real world systems and real world systems must obey the laws of thermodynamics. So, system dynamics must be consistent with thermodynamics. It does. Let me show you a common example of a system described by system dynamics: practitioners in this field are fond of using a bathub as an example:

On the right you have a representation of the real system, a bathtub partly filled with water. On the left, its representation using system dynamics. These models are called “stock and flow”, because you use boxes to represent stocks (the quantity of water in the tub) and you use double edged arrows to indicate flows. The little butterfly like things indicate valves and single edged arrows indicate relationship.

Note that I used a graphic convention that I like to use for my “mind sized” models. That is, I have stocks flowing “down”, following the dissipation of thermodynamic potential. In this case what moves the model is the gravitational potential; it is what makes water flow down, of course. Ultimately, the process is driven by an increase in entropy and I usually ask to my students where is that entropy increases in this system. They usually can’t give the right answer. It is not that easy, indeed – I leave that to you as a little exercise

The model on the left is not simply a drawing of box and arrows, it is made with a software called “Vensim” which actually turns the model “alive” by building the equations and solving them in real time. And, as you may imagine, it is not so difficult to make a model that describes a bathtub being filled from one side and emptied from the other. But, of course, you can do much more with these models. So, let me show a model made with Vensim that describes the operation of a governor and of the steam engine.

Before we go on, let me introduce a disclaimer. This is just a model that I put together for this presentation. It seems to work, in the sense that it describes a behavior that I think is correct for a governor (you can see the results plotted inside the boxes). But it doesn’t claim to be a complete model and surely not the only possible way to make a system dynamics model of a governor. This said, you can give a look to it and notice a few things. The main one is that we have two “stocks” of energy: one for the large wheel of the steam energy, the other for the small wheel which is the governor. In order to provide some visual sense of this difference in size, I made the two boxes of different size, but that doesn’t change the equations underlying the model. Note the “feedback”, the arrows that connect flows and stock sizes. The concept of feedback is fundamental in these models.

Of course, this is also a model that is compatible with thermodynamics. Only, in this case we don’t have a gravitational potential that moves the system, but a potential based on temperature differences. The steam engine works because you have this temperature difference and you know the work of Carnot and the others who described it. So, I used the same convention here as before; thermodynamic potential are dissipated going “down” in the model’s graphical representation

Now, let me show you another simple model, the simplest version I can think of a model that describes the exploitation of non renewable resources:

It is, again, a model based on thermodynamics and, this time, driven by chemical potentials. The idea is that the “resources” stock as a high chemical potential in the sense that it may be thought as, for instance, crude oil, which spontaneously combines with oxygen to create energy. This energy is used by human beings to create what I can call “capital” – the sum of everything you can do with oil; from industries to bureaucracies.

On the right, you can see the results that the model provides in terms of the behavior as a function of time of the stock of the resources, their production, and the capital stock. You may easily notice how similar these curves are to those provided by the more complex model of “The Limits to Growth.” So, we are probably doing something right, even with this simple model.

But the point is that the model works! When you apply it to real world cases, you see that its results can fit the historical data. Let me show you an example:

This is the case of whaling in 19th century, when whale oil was used as fuel for lamps, before it became common to use kerosene. I am showing to you this image because it is the first attempt I made to use the model and I was surprised to see that it worked – and it worked remarkably well. You see, here you have two stocks: one is whales, the other is the capital of the whaling industry that can be measured by means of a proxy that is the total tonnage of the whaling fleet. And, as I said, the model describes very well how the industry grew on the profit of killing whales, but they killed way too much of them. Whales are, of course, a renewable resource; in principle. But, of course, if too many whales are killed, then they don’t have enough time to reproduce and they behave as a non-renewable resource. Biologists have determined that at the end of this fishing cycle, there were only about 50 females of the species being hunted at that time. Non renewable, indeed!

So, that is, of course, one of the several cases where we found that the model can work. Together with my co-workers, we found that it can work also for petroleum extraction, as we describe in a paper published in 2009 (Bardi and Lavacchi). But let me skip that – the important thing is that the model works in some cases but, as you would expect, not in all. And that is good – because what you don’t want is a “fit-all” model that doesn’t tell you anything about the system you are studying. Let’s say that the model reproduces what’s called the “Hubbert model” of resource exploitation, which is a purely empirical model that was proposed more than 50 years ago and that remains a basic one in this kind of studies: it is the model that proposes that extraction goes through a “bell-shaped” curve and that the peak of the curve, the “Hubbert peak” is the origin of the concept of “peak oil” which you’ve surely heard about. Here is the original Hubbert model and you see that it has described reasonably well the production of crude oil in the 48 US lower states.

Now, let’s move on a little. What I have presented to you is a very simple model that reproduces some of the key elements of the model used for “The Limits to Growth” study but it is of course a very simplified version. You may have noted that the curves for industrial production of the Limits to Growth tend to be skewed forward and this simple model can’t reproduce that. So, we must move of one step forward and let me show you how it can be doing while maintaining the basic idea of a “thermodynamic cascade” that goes from higher potentials to lower potentials. Here is what I’ve called the “Seneca model”

 

***

You see that I added a third stock to the system. In this case I called it “pollution”; but you might also call it, for instance, “bureaucracy” or may be even “war”. It is any stock that draws resource from the “Capital” (aka, “the economy”) stock. And the result is that the capital stock and production collapse rather rapidly; this is what I called “the Seneca effect”; from the roman philosopher Lucius Anneaus Seneca who noted that “Fortune is slow, but ruin is rapid”.

For this model, I can’t show you specific historical cases – we are still working on this idea, but it is not easy to make quantitative fittings because the model is complicated. But there are cases of simple systems where you see this specific behavior, highly forward skewed curves – caviar fishing is an example. But let me not go into that right now.

What I would like to say is that you can move onward with this idea of cascading thermodynamic potentials and build up something that may be considered as a simplified version of the five main stocks taken into account in the “Limits to Growth” calculations. Here it is

Now, another disclaimer: I am not saying that this model is equivalent to that of the Limits to Growth, nor that it is the only way to arrange stocks and flows in order to produce similar results to the one obtained by the Limits to Growth model. It is here just to show to you the logic of the model. And I think you can agree, now, that there is one. The “Limits” model is not just randomly arranged spaghetti, it is something that has a deep logic based on thermodynamics. It describes the dissipation of a cascade of thermodynamic potentials.

In the end, all these model, no matter how you arrange their elements, tend to generate similar basic results: the bell shaped curve; the one that Hubbert had already proposed in 1956

The curve may be skewed forward or not, but that changes little on the fact that the downside slope is not so pleasant for those who live it.

Don’t expect this curve to be a physical law; after all it depend on human choices and human choices may be changed. But, in normal conditions, human beings tend to follow rather predictable patterns, for instance exploiting the “easy” resources (those which are at the highest thermodynamic potential) and then move down to the more difficult ones. That generates the curve.

Now, I could show you many examples of the tendency of real world systems to follow the bell shape curve. Let me show you just one; a recent graph recently made by Jean Laherrere.

 

 

These are data for the world’s oil production. As you can see, there are irregularities and oscillations. But note how, from 2004 to 2013, we have been following the curve: we move on a predictable path. Already in 2004 we could have predicted what would have been today’s oil production. But, of course, there are other elements in this system. In the figure on the right, you can see also the appearance of the so-called “non-conventional” oil resources, which are following their own curve and which are keeping the production of combustible liquids (a concept slightly different from that of “crude oil) rather stable or slightly increasing. But, you see, the picture is clear and the predictive ability of these models is rather good even though, of course, approximate.

Now, there is another important point I’d like to make. You see, these models are ultimately based on thermodynamics and there is an embedded thermodynamic parameter in the models that is called EROI (or EROEI) which is the energy return for the energy invested. It is basically the decline in this parameter that makes, for instance, the extraction of oil gradually producing less energy and, ultimately, becoming pointless when the value of the EROEI goes below one. Let me show you an illustration of this concept:

You see? The data you usually read for petroleum production are just that: how much petroleum is being produced in terms of volume. There is already a problem with the fact that not all petroleums are the same in the sense of energy per unit volume, but the real question is the NET energy you get by subtracting the energy invested from the energy produced. And that, as you see, goes down rapidly as you move to more expensive and difficult resources. For EROEIs under about 20, the problem is significant and below about 10 it becomes serious. And, as you see, there are many energy resources that have this kind of low EROEI. So, don’t get impressed by the fact that oil production continues, slowly, to grow. Net energy is the problem and many things that are happening today in the world seem to be related to the fact that we are producing less and less net energy. In other words, we are paying more to produce the same. This appears in terms of high prices in the world market.

Here is an illustration of how prices and production have varied during the past decades from the blog “Early Warning” kept by Stuart Staniford.

And you see that, although we are able to manage a slightly growing production, we can do so only at increasingly high prices. This is an effect of increasing energy investments in extracting difficult resources – energy costs money, after all.
So, let me show you some data for resources that are not petroleum. Of course, in this case you can’t speak in terms of EROEI; because you are not producing energy. But the problem is the same, since you are using fossil fuels to produce most of the commodities that enter the industrial system, and that is valid also for agriculture. Here are some data.

Food production worldwide is still increasing, but the high costs of fossil fuels are causing this increase in prices. And that’s a big problem because we all know that the food demand is highly anelastic – in plain words you need to eat or you die. Several recent events in the world, such as wars and revolutions in North Africa and Middle East have been related to these increases in food prices.

Now, let me go to the general question of mineral production. Here, we have the same behavior: most mineral commodities are still growing in terms of extracted quantities, as you can see here (from a paper by Krausmann et al, 2009 http://dx.doi.org/10.1016/j.ecolecon.2009.05.007)

These data go up to 2005 – more recent data show signs of plateauing production, but we don’t see clear evidence of a peak, yet. This is bad, because we are creating a climate disaster. As you seee from the most recent data, CO2 are still increasing in a nearly exponential manner

 

But the system is clearly under strain. Here are some data relative to the average price index for aluminum, copper, gold, iron ore, lead, nickel, silver, tin and zinc (adapted from a graphic reported by Bertram et al., Resource Policy, 36(2011)315)

So, you see, there has been this remarkable “bump” in the prices of everything and that correlates well with what I was arguing before: energy costs more and, at the same time, energy requirements are increasing because of ore depletion. At present, we are still able to keep production stable or even slowly increasing, but this is costing to society tremendous sacrifices in terms of reducing social services, health care, pensions and all the rest. And, in addition, we risk to destroy the planetary ecosystem because of climate change.

Now I can summarize what I’ve been saying and get to the take-home point which, I think can be expressed in a single sentence “Mining takes energy

Of course, many people say that we are so smart that we can invent new ways of mining that don’t require so much energy. Fine, but look at that giant wheel, above, it used to extract coal in the mine of Garzweiler in Germany. Think of how much energy you need to make that wheel; do you think you could use an i-pad, instead?

In the end, energy is the key of everything and if we want to keep mining, and we need to keep mining, we need to be able to keep producing energy.  And we need to obtain that energy without fossil fuels. That’s the concept of the “Energy Transition”

Here, I use the German term “Energiewende” which stands for “Energy Transition”. And I have also slightly modified the words by Stanley Jevons, he was talking about coal, but the general concept of energy is the same. We need to go through the transition, otherwise, as Jevons said long ago, we’ll be forced to return to the “laborious poverty” of older times.

That doesn’t mean that the times of low cost mineral commodities will ever return but we should be able to maintain a reasonable flux of mineral commodities into the industrial system and keep it going. But we’ll have to adapt to less opulent and wasteful life as the society of “developed” countries has been accustomed so far. I think it is not impossible, if we don’t ask too much:

h/t ms. Ruza Jankovich – the car shown here is an old Fiat “500” that was produced in the 1960s and it would move people around without the need of SUVs

____________________________________________

Acknowledgement:

The Club of Rome team

Daphne Davies
Ian Johnson
Linda Schenk
Alexander Stefes
Joséphine von Mitschke-Collande
Karl Wagner

And the coauthors of the book “Plundering the Planet”

Philippe Bihouix
Colin Campbell
Stefano Caporali
Partick Dery
Luis De Souza
Michael Dittmar
Ian Dunlop
Toufic El Asmar
Rolf Jakobi
Jutta Gutberlet
Rui Rosa
Iorg Schindler
Emilia Suomalainen
Marco Pagani
Karl Wagner
Werner Zittel

Net Energy End Game Theory…

Off the keyboard of Steve from Virginia

Published on Economic Undertow on January 23, 2013


The time frame is less than two years: the world becomes net energy negative. At that point there is no turning the clock back.


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Gregor Macdonald discusses the end of inexpensive crude oil and the so-called production ‘Revolution’ hoopla with Chris Martenson’s (Peak Prosperity).

Gregor makes the point that the increase in crude prices after 1998 took a lot of analysts by surprise. Many predicted a decline to historical levels with drillers simply adding to output from inventory. This is a critical idea that remains in force to this day: that crude production is essentially low-cost, that crude is mis-priced, that manipulation is forcing prices higher, that prices will return to historical levels once manipulators are ‘surgically removed’ from the marketplace.

A fundamental principle of industrial modernity is oil can be wasted because it is cheap, it’s cheap because the only thing it’s good for is waste. The waste process is monetized, it is collateral for loans which ratchet the wasting process further along. After we borrow the first time, we borrow additional amounts in order to waste more as well as to service and roll-over the previous rounds of loans … Both the loans and the waste compound exponentially along with pressure on resources, the entire economy becomes saturated with debts and waste products while resources are exhausted.

What’s there not to like?

Problems emerge when crude oil is depleted and it becomes too costly to waste. If oil isn’t ‘waste-ably cheap’ customers cannot afford it, if the crude is not costly enough there are no returns for the driller. Our economic infrastructure has been built assuming cheap petroleum into the far distant future, our empire of ‘stuff’ is stranded by the high-priced variety … meanwhile, costly, difficult to extract crude is all that remains! Cost is the reef upon which the modern world has run aground: there isn’t enough margin remaining after paying the fuel bill to offer as collateral for new loans or to service debts … the fuel bill has to be very high or there is no more fuel!

A hundred years into the petroleum era and there are no ‘innovative’ scalable economic uses for crude other than to burn it! Despite massive conversion losses, cheap oil provides energy returns sufficient to support current living standards, not-wasting under the current regime doesn’t provide anything. Because of the absence of imagination and a shortage of high-cost/real value uses, the exhaustion of low-cost crude means the end of waste-based modernity: there is no ‘Plan B’.
Triangle of Doom 012113

Figure 1: From TFC Charts, continuous Brent monthly contract (click on for big). The top line represents what customers are able to pay, above that price there are no petroleum sales and price must decline as producers holding petroleum products cut their losses. The bottom line represents the ‘floor’ price that drillers must receive otherwise they cannot afford to bring new crude oil to the marketplace. There are a few things to keep in mind at all times:

– Since 2000, each incremental dollar (euro, yen or other currency) produces less crude than the dollar before. That is, today’s dollar produces less crude than yesterday’s dollar, tomorrow’s dollar will produce less crude than today’s. What is important is the relationship between the real cost of gaining fuel relative to the ability of the customers to meet this cost. This relationship is driven by the need of the driller to spend more in order to return less: this is net energy, it is currently declining, at some point net energy will become negative, that is, the use of energy will not provide returns, in the form of credit, sufficient to bring new energy supplies to the market.

– The gross amount of incremental credit available is the amount that the so-called customers are able to service at any time of roll-over credit that the establishment can cajole from lenders including central banks over a period of time. This incremental ‘serviceability’ or productivity of debt is decreasing … due to the negative feedback effects of high crude prices over time. See Charles A. S. Hall: ‘discretionary’ spending declines because more funds are diverted toward obtaining energy and away from the consumption of other goods and debt service, (PDF warning) Even though finance is creating more credit, that added credit is bringing less crude to the marketplace.

– It doesn’t matter how many discretionary dollars the establishment is able to cajole: at all times, the producer’s dollar is the same as the consumer’s dollar! Alternatively, the gallon of diesel fuel used by the driller is the same gallon (identical energy density) burned by the customer.

A change of the customer’s condition will have an adverse effect on the driller. The customer’s leverage or ability to borrow is increased at the expense of the driller’s leverage … and vice-versa … This is because money represents the same ‘energy cost’ to both.

Currency is nothing more than a proxy for the fuel used by the customer … which is the same fuel required by the driller to bring more crude into the marketplace. The driller cannot use one kind of dollar to gain fuel while the customer uses a different kind to waste the fuel.

Because modern ‘labor’ is waste, the customer must borrow … or some firm or institution must borrow for him. Gregor suggests workers were able to gain greater amounts in wages in the past when fuel was less costly: wages are credit, high wages represent the historical productivity of credit. Prices cannot rise further because the ability of customers to earn (borrow) is constrained by (relatively) high crude prices, the productivity of credit is diminished.

There are two sets of borrowers: customers and drillers. Both need to borrow to gain fuel. It costs more for the driller because he is constrained by geology while the customer is limited only by access to credit itself/wasting infrastructure. The relationship between the sets of borrowers conforms to game theory:
Crude Game Theory 1

Figure 2: Energy relationships in 1998 and prior, drillers and customers each borrow or don’t borrow. Not borrowing by either meant no economy and no petroleum produced which obviously did not occur. Both customers and drillers chose to borrow: drillers added to excess petroleum capacity making fuel more affordable. Customer borrowing became added gross domestic product (GDP). This amplified driller borrowing which made even more crude available at still lower prices!

There was no need to allocate between drillers or customers, they could ‘have it all’: by March, 1999 the world was …

 

Economist Cover 1

The famous cover for the Economist Magazine: it was an ugly cover … it was also incorrect about the future.

From 1998 onward, the productivity of each dollar invested in crude production over time has continually declined. This is the basis for the argument that Peak Oil occurred in 1998: that the baleful economic effects predicted to occur after Peak Oil started to be felt in 2000. To gain more crude oil drillers were required to add more wells, each well was more costly than the last, each well offered less crude oil than previous wells: the effect of this effort has been felt by oil consumers who have had to compete with the drillers for each dollar of credit.
Crude Game Theory 2

Figure 3: Post-1998, brutal new game, new mutually-assured-destruction theory!

Borrowing by customers returns less GDP, borrowing by drillers returns less crude. When drillers borrow alongside their customers, they cannot keep pace because demand is easier to create than supply: automobiles are more easily had than new oil fields. Attempting to add to GDP (borrowing by customers) increases demand for crude which exhausts inexpensive fields faster, this in turn adds to the credit requirements of the drillers.

– When drillers borrow alongside customers for diminished return, borrowing costs pyramid. The outcome is the same as when neither drillers nor customers borrow, there is no economy, all are bankrupted by credit costs.

– The choice is for the customer to borrow at the expense of the driller or the other way around. Both customer and driller must compete for the same credit dollar: one gains at the expense of the other. The customers’ need for funds is absolute, they must borrow more than drillers or they cannot buy anything and there is no GDP growth. Drillers need for funds is absolute, they must borrow more than the customers otherwise there is less fuel for the customers:
Bakken 012013

Figure 4: Bakken output declines by Darwinian: when drillers cannot borrow, local oversupply of crude cannot be sold to meet costs, the drillers retire drilling rigs. Meanwhile, Bakken wells deplete rapidly, there is no way for drillers to ‘catch up’ after they have stopped drilling. If crude is not affordable now it will be less affordable — to both customers and drillers — tomorrow.

A few more things to keep in mind as we descend into the net-energy rat hole:

– Oil prices can only decline as there is diminished returns on each energy dollar … diminished GDP, diminished credit availability, diminished ability to meet ever-higher real extraction costs. Real energy costs will increase relative to the ability to meet them … even when nominal costs decline. The result is a net-energy death spiral or ‘energy deflation’ similar to Irving Fisher’s Debt Deflation. Whatever the fuel price happens to be at any given time it is too high. The price falls to meet the market, but fuel is removed from the market because of the drop in price, the ongoing shortage reduces the ability of customers to meet the price which is still too high … etc. The ‘real’ price of petroleum becomes higher over time accelerated by inadvertent ‘conservation by other means’.

– The inability of drillers to meet costs or to borrow sufficiently is illustrated by Royal Dutch Shell’s pathetic efforts to drill exploratory wells in the Chukchi and Beaufort Seas, (Rolling Stone):

 

The year closed on a particularly low note when, on New Year’s Eve, the Kulluk – one of two drilling rigs Shell sent to the Arctic – broke free from its tow ship in rough weather and ran agroundon the rocky coast of Stikalidak Island while carrying more than 150,000 gallons of diesel. But even before this mishap, the experiment had already been a severe disappointment to the company. In July, the Kulluk’s sister ship, the Noble Discoverer, slipped its anchorage and narrowly avoided a similar fate. Construction problems and equipment failures delayed drilling; just a day after work finally began in September, the Noble Discoverer had to stop again to make way for an incoming ice floe more than 30 miles long. An oil spill containment dome failed a required safety inspection, “crushed like a beer can” by underwater pressure. The Coast Guard, which is already investigating the Noble Discoverer for criminally inadequate pollution and safety controls, is now launching an investigation of the Kulluk incident. And in further bad news for Shell (and the Arctic), the Environmental Protection Agency announced yesterday that both the Kulluk and the Noble Discoverer repeatedly violated the Clean Air Act during the 2012 season.

 

The Kulluk is a 30-year old drilling barge that had been mothballed for 20 years before being brought back into service, the Noble Discoverer is 37-year old rust-bucket intended for duty in the relatively placid Gulf of Mexico. Shell’s Arctic effort is an improvised, cost- and corner-cutting jury rig rather than a serious effort, which would cost tens of billions of dollars and require many years of preparation that Shell seems unwilling to invest.

– Pretty much all the oil that has been- recovered since 1858 has been wasted in automobiles and to fight wars. When shortages appear, the contestants for the oil that remains will be militaries and drivers.

– When net energy becomes negative — when the cost to extract oil cannot be met by the customer — there will be physical shortages. These shortages will be permanent: oil that cannot be afforded by customers in the present will not be magically affordable when these customers are poorer in the future. There will be no further rationing by access to credit, reduced amounts of oil will not deliver additional credit.

– Oil producing states tend to be autocratic: look for Norway, Denmark, the US, Canada and Mexico to become single-party states like Saudi Arabia or Iran. Because of autocrats ability to control access to energy, they will gain ascendancy with their populations’ eager consent. What is at stake for Americans and the West is democracy itself: a choice between the right to have a say in our own affairs versus the false-promises of energy-driven ‘prosperity’ offered by autocrats … the choice between driving a car or having a functioning republic.

– Oil shortages will manifest themselves as food shortages: even though there is likely to be plenty of food in general, there will be areas without food due to distribution problems.

– The time frame is less than two years then the world becomes net energy negative. At that point there is no turning the clock back. Not every oil producing region is showing diminished returns, these exceptions are the remaining large conventional fields that offer equal- or greater returns for each energy-dollar invested in them. At current rates of draw, these fields are being depleted rapidly. It is not necessary to note the field or the rate of decline, only to note the price of crude relative to the ability of the customer to meet that price. The time that remains to our current way of doing business is how long it takes for these last conventional fields to decline.

– This in turn is the time remaining to ‘prepare’: to move yourself or your family to a more pleasant place, to become an activist, to find a less petroleum-dependent job, to learn a post-petroleum skill or gain a post-petroleum avocation. When the US becomes net energy negative, the amounts of fuel available will diminish sharply. So to will be the ability of ordinary citizens to access that fuel … this will be so until a new allocation regime is in place, likely to be some form of hard rationing. In the new regime, the only citizens that will be free from the reach of authorities will be those who do not use fossil fuels or petroleum at all.

EDIT: Coal, nuclear, hydro-power, solar and wind, natural gas and other prime movers are dependent upon cheap, plentiful supplies of petroleum to power the necessary ships, trucks, trains and other forms of transportation. When supplies of petroleum diminish (finger cutting across throat gesture).

 

2013

Off the keyboard of Monsta666

 

 

Discuss this article at the Diner Newz Channels Table inside the Diner.

So 2012 has ended and we can look forward to another year tentatively wondering if 2013 will finally be the year when TEOTWAWKI arrives. In a morbid kind of way we find ourselves in a most peculiar position; on the one hand we wish for extra time to get some extra preps in but on the other we almost wish for it to come and finally get rid of the doomer fatigue that seems to plaguing the old veteran doomers. I know it is next to impossible predicting what will come in 2013 with any degree of certainty. In fact predicting such stuff is largely a fool’s game which could explain why economists and politicians like to base their careers on such predictions. Still, despite this fact I am willing to lay my neck on the line and try and predict what may come about in the following year. I just hope my predictions are not so bad so I end up being a head shorter.

USA

The beginning of the year promises to start with a bang as we get front row seats on how the fiscal cliff will be handled. Even now I wonder as I type this on December 30th whether I have started too early with the guessing game and should allow the year to end properly before dishing out the predictions to see if a deal is finally made on the eleventh hour. If the worst does indeed come to pass we can expect a series of ($370 billion) tax hikes and ($230 billion) spending cuts which will amount to about $600 billion.[1] Seeing as that is half the entire deficit one has to wonder how that will affect the economy. I should add that the main thing that has kept the US afloat has been this wild deficit spending, without it we are likely to see a big plunge in growth rates if we can even believe the massaged GDP numbers. According to Filch Ratings they are saying that this fiscal cliff could cut world GDP growth in half.[2] And toadd to all these fiscal cliff dramas is the fact that Timothy Geithner recently stated that the US will hit its debt ceiling of $16.394 trillion on December 31st 2012 and can only extend this limit by two months at which point the US would default so at this point congress will have to decide on what to do about the fiscal cliff AND debt ceiling.[3]

What seems most likely to me is the debt ceiling will be raised while the payroll tax holiday will be allowed to expire; people will need to make more payments towards Medicare, long-term unemployed benefits will end and people will see a hike in personal taxes. To me I predict and this is only based on a hunch that the Bush-cuts, at least for the vast majority of Americans, will be extended for a little longer. However if we are to assume the worst then the combination of taxes rises will cost the average American $3,500 or $2,000 for middle-earners which consist of 60% of the population.[4] Scary numbers and the results should be pretty predictable if this cliff really comes to pass. One need only look at the experiences of the UK and other European countries who engaged in cuts to see what will happen. Not only did those cuts cause a recession but they did not even reduce the budget as much as promised. In fact if the subsequent recession is bad enough then deficits could even rise on the count of lower tax revenues and higher expenses that need to be paid for the rising unemployment. On this end I predict the deficit will be cut but only to about $900-800 billion.

As for broader US energy situation, I foresee softening prices for oil with WTI oil prices likely to remain around the $90 mark and may even dip as low as $75 if the fiscal cliff induced recession really bites hard, a bold prediction perhaps especially coming from a peak oiler. The shale gas situation should see some more dramas developing here as the rig count for gas has consistently been dropping throughout this year.

US Active rigs engaged in oil/gas drilling, according to Baker Hughes.[5]

 

Seeing as these shale gas wells have such steep decline rates it seems quite possible that a peak of natural gas production will come at some point in 2013. As a result I predict natural gas prices to exceed $5 per million BTUs. These higher natural gas costs are likely to raise energy bills for the average US consumer thus reducing discretionary incomes even further. Speaking of high costs the drought of 2012 is also likely to lead to an inflation in food prices although I do not expect it to hit the wallets of the American too badly, the ones that are likely to suffer the most from these food price hikes are the people who live in poorer nations that rely on US food exports.

So with all those points put into consideration, I predict a recession coming (official one that is) for the US how big it will be is an interesting question…

UK

2013 promises to offer much of the same as 2012, despite an almost year long recession that only showed growth in the quarter following the Olympics Cameron seems hell bent on carrying out further austerity measures. It is all done under the misguided belief that spending cuts will reduce the colossal deficit. It doesn’t take a genius to see this strategy has clearly failed in mainland Europe but in typical Tory fashion which takes clear abandon of common sense they will consider the UK a special case that is different to the irresponsible pigs. Problem is the fundamentals of high debt:

UK Public Debt with growth projections until 2015.[6]

 

And exploding deficit says there is not much difference between the two and despite assertions to the contrary these cuts have done nothing to bring the deficit down. England’s deficit for the financial year of 2012/13 is projected to be even higher than the financial year of 2011/12. For those unfamiliar the austerity measures only began in earnest in 2012.

UK budget deficit according to ONS sources[7] with projected 2012/13 deficit calculated by extrapolating current deficits from first seven months of 2012/13 financial year.[8]

 In fairness to Cameron as big as the public debt problem is it is not the main issue. You see if you aggregate British private and public sector debt then the amount comes to 507% GDP![9] What’s more it maybe even as high as 900% if you want to include liabilities and obligations such as public sector pensions.[10] That is no typo! It is all the product of an economy that is too heavily centred on banks not to mention having a debt based monetary system (again no word in the media or schools about how money is REALLY made) but that is another story that deserves its own tale… To put this into perspective the PIIGS states of Portugal, Ireland, Italy, Greece and Spain have total debt loads of 356%, 663%, 314%, 267% and 363% respectively.[9] The only thing staving Britain from bankruptcy is the low interest rates it pays on bonds but those low rates can’t last forever especially if foreign investors finally catch on we are broke… It would seem the EU crisis can have some unintended benefits for Britain!

In any case with higher energy bills, petrol, housing and food prices coupled with anaemic growth in wages it is hard to see anything but another year of recession. Overall I predict the economy will contract over the full course of the year but “official” unemployment will hover around the same total which is 7.8% or 2.51 million people.[11] I should add however that this unemployment is clearly massaged as many unemployed people will be shifted into training programs that go nowhere or the unemployed will be encouraged to become “self-employed” for one hour a week… In addition some of the people on job seekers will be booted out of their benefits. Nothing will really change as a result of these shenanigans but Cameron can at least look smug with the outstanding improving figures these games will produce.

I can see the papers trumpeting any news that suggest extra jobs are being created; the thing they will be loath to mention is the fact most of these jobs are part-time or worse zero contract hour jobs which pay hardly anything. It continues to amaze me how senior economists such as Stephanie Flanders can continue to be baffled that service jobs paying £6 an hour for 30 or less hours a week cannot create a recovery! It is times like this where I almost want to hide the fact I studied economics…

As for the energy situation in England well the island is mostly tapped out. The North Sea continues to post double digit decline rates (this year it is 18%) and could even dip below 1mb/d next year which is a far cry from its peak of 2.7 mb/d in 1999.[12] Hardly any mention of this in the media but it will have a significant effect on the economy as we will need to import more expensive oil (assuming demand does not fall) and that will increase the trade AND fiscal deficit. The same story holds true for natural gas although as usual the government has the hair brained idea that UK fracking of shale gas can somehow solve that problem. In any case the overall energy strategy for the UK can at best be described as muddled and the name of the game seems to be denial. If we can deny the worsening energy situation hard enough then maybe, just maybe, it will go away and solve itself. Alas it is never so. My advice, look at the energy bills as an indicator of how much gas and oil this country has. The onward trend is up. Oil prices have only levelled off recently due to the poor economy and the continued postponing of the planned rises in fuel tax duty. We can expect those breaks in fuel duty to end going into January 2013 however.[13] My prediction for UK gas prices is it will top £1.50 a litre for unleaded petrol at some point in 2013.

 EU

I am almost at a loss to say what will happen in the EU. Upon reflection of 2012 I am actually a little surprised by how well the people from the PIIGS nations are taking austerity considering the sky-high unemployment and worsening future outlook. It cannot last and it is only a matter of time before Europe experiences its own “Arab Springs”. Saying that I do not see an implosion of the Euro as an imminent event so I am predicting there will still be a Euro come the end of 2013. Super Mario has made his intentions very clear that he will buy bonds in unlimited quantities to keep European banks afloat.[14] While I am not suggesting this can ever be the ultimate solution I do think if Mario keeps true to his words then the sinking ship should hold for another year. Italian and Spanish bonds which are arguably the most important factors to consider have declined in recent months in light of this news so it is having its intended effect.[15]

What’s more the temporary rescue funds provided used to help Greece, Ireland and Portugal will become permanent with the establishment of the European Stability Mechanism (ESM). This coupled with the relaxation of meeting various fiscal targets and the likely restructuring (politically correct way of describing a default) of Greek debts should ensure some measure of stability so that this charade can go on a little longer. Sure these measures are never a REAL solution but they do buy time which is what can kicking is all about. I am sure if need be extraordinary measures will be taken to safe to the Euro as there is no way the Euro will collapse on the year Merkel runs for election this coming November.

As always though, it is the issue of growth that will continue to be an issue that can undermine all the plans mentioned above. I don’t think it really counts as a prediction to say Greece, Spain and Italy will experience further recessions as austerity measures continued to bite. What becomes harder to predict is how Germany and some of the northern states will fair. The Bundesbank currently projects that growth for the German economy will be around 0.4% in 2013.[16] Considering how these predictions are invariably over optimistic I will stick my neck out on this one and predict an overall recession for Germany in 2013. Could get burnt as the call is a little dicey but let us see how things fair out, eh?

Far East

The Far East, which for the purpose of this article consists of the Asian tigers (Hong Kong, Singapore, South Korea and Taiwan) plus China and Japan. These economies are generally regarded by many pundits as the future of the world economy with the influence of west waning in favour of the east. Indeed some go so far to claim that the 21st century will be the Asian century in the same token the 20th century was the US and 19th UK. Yet when we look back on 2012 we find the growth rates of several of these economies have been slipping.

To take the poster child of Asia let us look at China which posted a robust growth rate of 7.2% for the last quarter (if you can even believe the numbers). While this may sound impressive it has been the seventh consecutive quarter of declining growth.[17] However seeing as much of their governmental figures are manufactured to the extent that even Li Keqiang – the favourite to become the next head of state – suggests that the figures are manmade[18] we might need to consider that maybe, just maybe these numbers are bogus. As usual most of the mainstream press seem to ignore this inconvenient fact preferring to side with the China bulls. Fact is the best way to gauge China’s economic performance is not through GDP numbers but by monitoring electricity production/consumption, rail cargo volume and bank lending (as recommended by Li Keqiang).[18]  On that front China’s performance has not been doing so well with some regions reporting a 10% year-on-year decline. It remains to be seen how accurate this form of measuring is but what we can say is that since 2008 China has depended less on exports and more on investments to drive its economy. What is more investment now makes up a whopping 48% of GDP. To put this into context Japan and South Korea; who are other export driven economies that are also heavily dependent on fixed capital investments reached a peak investment rate of just under 40% of GDP.[19]

Such a high investment figure suggests there is likely to be numerous bubbles as there an oversupply AND misallocation of capital, witnesses the ghost cities, bridges to nowhere and empty malls as proof of this wasted industrial capacity. So what do I predict for 2013 for China you ask? Well the Chinese government will NEVER report negative growth numbers so I can only predict growth if I hope to be right. However I do think China will actually grow in real terms not by much but some however since we can say the numbers are so fudged we will never really know how right (or wrong) my prediction will be, well I suppose there is always the chance of another Chinese revolution and in that case I would definitely be wrong if I predicted growth. But I don’t think the time has come for that… Yet!

As for the other economies of Asia Japan continues to experience more woes with recessions and more surprising their balance of trade going negative for a number of quarters. For an export nation to have the value of their imports exceed exports for numerous months can only be described as a disaster. To stop the rot newly elected president Shinzō Abe has pledged to fully open the money printing press spigot to devalue the yen.[20] In addition in an attempt to shore excess imports of fossil fuels and bring back the trade deficit to the positives he has foolishly pledged to restart Japan’s nuclear plants. I guess nuclear disasters don’t have the impact they once had or consensus based group think is unusually strong in Japan… In any case despite such measures I do not predict many good things for the land of the rising sun and see another recession in 2013 with Abe being the next prime minister to pass through the revolving doors of Kantei soon after 2013. Some people suggest that Japan will be the surprise package that implodes financially due to its burgeoning public debt levels of 235.8% GDP but I do not see that crisis happening in 2013 later certainly but not now.[21] For the crisis to really take effect bond rates need to rise and since about 90% of bonds are held by Japanese investors [22] the risk of interest rates rising quickly are not high, for now. The number of foreigner holders of Japanese bonds is rising however due to the fact that Japanese pension pay-outs to pensioners now exceeds pension contributions from existing employed workers so in time interest payments on bonds will rise.[23]

The Asian tigers should see more promising growth and I expect them to show more positive results for 2013 so I will make a fairly bullish prediction and say that growth for these economies will exceed about 3%. A fun fact to keep in mind is that South Korea’s economy is heavily based on big conglomerates which are known as chaebol in South Korea. In fact the five largest chaebol control 57% of the GDP of South Korea so if you want to monitor the countries fortunes just look out for how Samsung, Hyundai, LG, SK and Lotte are performing.[24]

Global Summary

It is hard to make any firm bets on what the outlook for the global economy will be for 2013 especially since the whole fiscal cliff issue has yet to be resolved. What we can say with some degree of certainty is the economic conditions in Europe are likely to worsen as further austerity measures are applied. Greece has been in a solid recession for many years and there is little evidence to think why this should not continue. As for the other PIIGS nations, wage reductions will be made in order to make the southern European states more competitive but this will lower economic output and increase unemployment. Expect to see more protests and strained nerves as the economic troubles we have seen in Greece begin to spread in earnest to Spain and Italy and as always low economic growth will lead to more bank problems/bails outs. These lower wages will also harm Germany who is a major exporter to these regions and since those nations are poorer they will buy less BMWs.

Poor performances in Europe is also likely to negatively impact other exporting nations such as China and the Asian tigers so growth is likely to slow there as well. Japan on the other hand will continue losing ground to its competitors so at best they will see further stagnation but more likely there will be another recession. The low interest rates in Japan and its perception as a safe haven will insure the Yen remains strong much to the chagrin of its exporting industries.

As for overall growth of the world economy, it is likely that there will be some growth overall but it will be small and it will be less than what we have seen for 2012. I will not discount the possibility of an outright global recession especially if the fiscal cliff is handled poorly in the US. Other issues to be aware of is the effects of the 2012 drought which is likely to lead to food inflation across the globe. The poorer countries in Africa the Middle-East and India will suffer to a disproportionate degree to these higher food prices. This will lower growth in those regions as incomes become squeezed and we cannot discount the possibility of food riots erupting in localised regions if prices rise high enough.

On the energy front 2013 should mark a few interesting landmarks namely that global coal consumption is likely to exceed oil for the first time in 60 years. This has come about because oil production since 2005 has roughly plateaued at 74mb/d while coal production has ramped up due to high growth of Asian nations which primarily use coal for electricity generation.

However these Asian nations have not just increased their consumption of coal, they have also increased their thirst for oil and 2013 should also mark the time when total oil consumption of the developed OECD countries will fall below 50% which will be an unprecedented event.

Predicting oil prices for 2013 will be a challenge, on the one hand you have rising demand with a constrained supply which will serve to higher prices but at the same time the on-going demand destruction in the West will lower prices. As a result I predict that average Brent prices of oil will for the most part stagnant at around $110 for the year which has been the average price for 2012. I cannot say with any certainty when we will leave the plateau in global crude oil production but according to the grapevine the year I keep hearing is 2015 which finally enough is what a former expert in the IEA is suggesting.[25] In any case, global oil net exports are likely to decrease over 2013 as has been the general trend since 2005.[26]

References:

[1] = US Senate leader Harry Reid voices fiscal cliff fear (BBC)
[2] = All-out U.S. ‘fiscal cliff’ could cut world growth in half: Fitch (REUTERS)
[3] = Geithner: Debt Limit of $16.39 Trillion Will Be Met New Year’s Eve (CNSNews)
[4] = Q&A: The US fiscal cliff (BBC)
[5] = Rotary Rig Count (Baker Hughes)
[6] = Total Planned* Public Spending (UK Public Spending)
[7] = Office for National Statistics (ONS) data
[8] = Osborne Says He Needs More Time to Rid U.K. of Budget Deficit (Bloomberg)
[9] = Total Debt in Selected Countries Around the World (Global Finance)
[10] = The End of Britain (MoneyWeek)
[11] = UK unemployment falls by 82,000, says ONS (BBC)
[12] = North Sea oil tax revenues fall offers glimpse into a diminishing future (the guardian)
[13] = Labour loses fuel rise delay vote (BBC)
[14] = All hope not lost (The Economist)
[15] = Spanish Bond Yields Drop to 8-Month Low (Bloomberg)
[16] = Bundesbank Slashes 2013 German Growth Forecast to 0.4% (Bloomberg)
[17] = China’s economy slows but data hints at rebound (BBC)
[18] = China’s GDP is “man-made,” unreliable: top leader (REUTERS)
[19] = Capital controversy (The Economist)
[20] = Yen Weakens to 20-Month Low on Abe BOJ Pledge; Euro Drops (Bloomberg)
[21] = IMF urges Japan to tackle debt problem (Financial Times: Google headline name to see full story)
[22] = OECD: Japan Public Debt in ‘Uncharted Territory’ (Wall Street Journal)
[23] = Japanese pension assets fall as payouts exceed contributions (Pensions & Investments)
[24] = Business as usual for South Korea’s chaebol under Park (Yahoo! News)
[25] = Oil will decline shortly after 2015, says former IEA oil expert (The Oil Drum)
[26] = Updated “Gap” Charts, using annual data through 2011 (The Oil Drum: westexas)

Energy: Part I

Off the keyboard of Monsta666

Discuss this article at the Energy Table inside the Diner

Energy despite its utmost importance is a topic that doesn’t receive much attention and is a subject that is poorly understood particularly in the mainstream media or even economics. It is curious to think that this is the case especially if we consider that without energy nothing would literally happen. Taken in this context it is easy to see why energy could be regarded as the most critical resource for without it there would be no life on planet Earth.

It seems that one of the major reasons we forget about the importance of energy and take it for granted is the fact energy is ubiquitous in modern day society. If one cares to look outside their window it is likely they will see numerous cars whizzing around at high speeds (they are high if we compared their speeds to humans and animals which was the historic norm before the industrial age). If one thinks about this last point it can be quite an enlightening process; how much energy does it take to cart an object that weighs in excess of 1000kg at around 30MPH? Then think all this energy can be found in a single gallon of gasoline/diesel. And as startling as this thought maybe we can say we consume even more energy in total in our homes and workplaces and that is despite the fact there are over one billion cars – which nearly all run on oil – running across our planet. Quite a thought isn’t it? [1]

So in short we can say we are addicted to using energy. However this should not come as any surprise because man has always needed SOME energy to ensure his survival. The amount needed for basic survival is relatively modest however since the only real energy source man needed at first was direct consumption through food to stay alive. However through time man found other external inputs of energy that made life easier for him. The heat from fire allowed man to keep warm not to mention allowed him to cook and provide a source of light in the dark. Domesticated animals also reduced the burden of labour in the fields and allowed great productivity not just in hunting but also in managing the fields when man shifted to agriculture.

These external inputs of energy not only allowed man to extend his natural range of environments he could live on but it also spurred growth in population and prosperity as external energy meant more of the burden of labour could be shifted away from man. As time went on the number the external sources of energy increased and so did the amount of energy used by man. It was not until man began harnessing fossil fuels in earnest however that his energy use suddenly exploded. The graph below can clearly attest to this fact.

While this final fact is widely known it is still quite difficult to fully grasp and appreciate how much of a boon these fossil fuels were to mankind. To illustrate just how much energy we can obtain from these fossil fuels I feel it is best to apply a little maths. To make comparisons between different energy sources it is necessary to know what a BTU is. For people unfamiliar with the term a BTU stands for British Thermal Unit and one BTU represents the energy required to heat one pound (454g) of water by one degree Fahrenheit which comes to approximately 1055 joules. [2] Now if we consider the most expensive fossil fuel, which is oil, then we will find that burning one barrel of oil (42 US gallons or 159 litres) releases 5.8 million BTUs or 6.1 gigajoules of energy. [3] These large numbers may seem rather abstract and arcane but if we covert this total energy content into man hours then the facts can be more easily absorbed. The energy delivered from 6.1 gigajoules would equate to a man spending 1.45 million kilocalories. If we assume a man consumes somewhere between 100-200 kilocalories an hour then that would mean a barrel of oil produces the equivalent amount of energy as 7,290-14,597 hours of labour depending on how hard the man works. Assuming there are 48 forty hour weeks a year that equates to 3.8-7.6 years of human labour. Armed with this information it makes you wonder how we can ever consider a barrel of oil is overpriced at $90 dollars a barrel when one barrel delivers the equivalent of 3.8-7.6 years labour!

To put this into an even greater context if we decided to pay the man a decent wage of $10 an hour then we would need to pay him anywhere between $73,000-$146,000 to deliver the same amount of work as a barrel of oil. With this perspective it becomes clear what a boon fossil fuels have been proven to be as effectively we have been using these fuels as “energy slaves” due to the fact they produce so much energy at such a low cost. With energy being so cheap it becomes obvious just how profitable the exercise of replacing man and animal labour with capital powered by cheap fossil fuels has been as the price differential between the two markets is simply enormous. And let us not forget in all this that oil is the most expensive fossil fuel in today’s market and its price is abnormally high when compared to historical prices so it was even more economical in the past than it is today.

Saying all that we do need to recognise the flaws in making such comparisons or more generally, using BTUs in general. That is not all work achieved with a certain resource can be easily substituted with another resource for example no amount of men dragging a car would make it travel at 30MPH as could be achieved if the car was powered by oil. Therefore the figures above can only deal with the total energy expenditure and allow comparisons on that end but they say nothing about the quality of the work achieved nor can they describe how easily the work can be substituted with another resource. This is an important concept to grasp as quite often it is stated that we can substitute oil consumption with renewable, nuclear or even coal and gas energy which while such statements are true to a certain extent, not all uses can be substituted for. Coal, renewables and nuclear energy cannot be easily made into a liquid fuel as these energy inputs are primarily used for electrical generation or home heating. It is this lack of fungiblity which results in people often making the distinction between a liquid fuel crisis and an energy crisis as these are two distinct phenomenon as each crisis poses a different set of problems and will therefore require a different set of solutions (assuming solutions even exist) to solve or manage if there are no viable solutions.

Despite these limitations or perhaps because of them we can reach certain conclusions. The increase in the availability and affordability of energy has done more than reduce the cost and amount of work that can be achieved. It has also played a big part in increasing productivity. This increase in productivity comes because, as described in the previous paragraph, there are certain forms of work that can only be utilised with fossil fuels and these activities cannot be done regardless of the amount of men employed in particular tasks. Jobs that are energy intensive such mining, steel production or heavy vehicle transport all require intense and constant inputs of energy. Since they require intense AND constant energy inputs these tasks cannot easily be substituted into labour nor is renewable energy a suitable candidate for substitution due to its intermittent nature. However it cannot be denied all these economic activities contribute to increased productivity as less labour will be needed to be deployed to accomplish these tasks (assuming these tasks could be completed at all without fossil fuels).

Many mining operations such as the tar sands mining operation in Canada would be much harder if not outright impossible without cheap abundant energy inputs provided by fossil fuels.

A more troubling fact does emerge from this however and that is it becomes apparent that our modern industrial society is heavily dependent on not just abundant energy but cheap energy to remain viable. Even today with oil priced at $90 a barrel which is still an excellent deal when taken in the context described above this price is sufficiently high that many developed economies struggle to grow quickly due to the “high” energy costs as we are repeatedly reminded by the media. In fact these high energy costs have resulted in much demand destruction in the major OECD countries for oil that are most sensitive to price changes as demonstrated in graph below.

This demand destruction primarily manifests itself through higher unemployment and reduced oil consumption from remaining employed workers due to a decline in real wages. This high price of oil has not curbed demand in all countries as the developing economies, which are less sensitive to price increases, continue to demand more of the product. This demand increase of the non-OECD countries is roughly equal to the decreased demand in the OCED countries so overall global oil demand has remained constant at around 30 billion barrels per annum.

The more significant trend has not been with changing patterns in oil consumption but with the changing energy mix in which the global economy utilises. Since oil is priced at $90 it is the most expensive fossil fuel in the market. In the US the next most expensive fossil fuel is coal which is priced at $68.15 per short ton.[4] Seeing as one short ton on average releases 19.6 million BTUs[5] of energy which is roughly three times that of a barrel of oil we see that coal is just over 4 times cheaper than oil on BTU basis. In light of this fact it would be natural to think and expect coal consumption to rise rapidly during this period however coal consumption has actually declined in recent years (for the US at least) because the cheapest fuel in recent years has been natural gas which reached levels as low as $1.90 per million BTUs earlier this year. Seeing as coal has been priced generally been priced at around $3 per million BTUs for the last three years[6] it is easy to see how natural gas consumption has surged.

It should be noted however that at this present moment natural gas is currently priced at $3.48 per million BTUs (accurate at time of writing)[7] and seems to be rising in the past few months. If natural gas price rise much further then coal will become the cheapest fossil fuel in the US and demand for this fuel should increase provided the trend of rising natural gas prices continues. If we talk about fuels on a global basis the story is quite different as globally coal is by far the cheapest commodity and it is these cheap prices that have caused global coal demand to surge in recent years. The high price of oil and the fact that main users of coal (Eastern Asia) have seen rapid economic growth in recent years have been other contributing factors in the increase in the amount of coal demanded.

If this trend of growing coal consumption continues it will not be long before coal becomes the top source of energy in the world and this is a fact that is likely to catch many people by surprise. Saying that, one should throw some caution to this current trend of surging coal demand as it is quite likely that growth in the global economy will slow down and may even decline. If that is the case then the rate of increase in demand will decline or demand may even decline entirely should the world enter a global recession.

Another important consideration and one that is almost universally overlooked in the mainstream is the concept of Energy Return on Energy Invested (ERoEI). In the second part of this topic I will discuss this concept in more detail and also explore the laws of thermodynamics that is largely neglected in the media and economics in general. Do not worry; it will not be a boring physics session with lots of large scary numbers. In any case I wish all diners a merry Christmas and a happy new year.

References:
[1] = World Vehicle Population Tops 1 Billion Units (WARDSAUTO)
[2] = British thermal unit (Btu) (Business Dictionary)
[3] = Barrel of oil equivalent (Wikipedia)
[4] = Coal News and Markets (EIA)
[5] = What is the average heat (Btu) content of U.S. coal? (EIA)
[6] = Coal News and Markets Archive (EIA)
[7] = Commodity Prices (CNN Money)

Why Natural Gas isn’t Likely to be the World’s Energy Savior

Off the keyboard of Gail Tverberg

Published on Our Finite World on October 17, 2012

Discuss this article at the Epicurean Delights Smorgasbord inside the Diner

We keep hearing about the many benefits of natural gas–how burning it releases less CO2 than oil or coal, and how it burns with few impurities, so does not have the pollution problems of coal. We also hear about the possibilities of releasing huge amounts of new natural gas supplies, through the fracking of shale gas. Reported reserves for natural gas also seem to be quite high, especially in the Middle East and the Former Soviet Union.

But I think that people who are counting on natural gas to solve the world’s energy problems are “counting their chickens before they are hatched”. Natural gas is a fuel that requires a lot of infrastructure in order for anything to “happen”. As a result, it needs a lot of up-front investment, and several years time delay. It also needs changes on the consumption side (requiring further investment) that will allow this natural gas to be used. If the cost is higher than competing fuels, this becomes a problem as well.

In many ways, natural gas consumption is captive to other things that are happening in the economy: an economy that is industrializing rapidly will easily be able to consume more natural gas, but an economy in decline will find it hard to scrape together funds for new ways of doing what was done previously, now with natural gas. Increased use of renewables seems to call for additional use of natural gas for balancing, but even this is not certain, because in many parts of the world, natural gas is a high-priced imported fuel.  Political instability, often linked to high oil and food prices, creates a poor atmosphere for new Liquefied Natural Gas (LNG) facilities, no matter how attractive the pricing may seem to be.

In the US, we have already “hit the wall” on how much natural gas can be absorbed into the system or used to offset imports. US natural gas production has been flat since November 2011, based on EIA data (Figure 1, below).

Figure 1. US Dry Natural Gas Production, based on data of the US Energy Information Administration.

Even with this level of production, and a large shift in electricity production from coal to natural gas,  natural gas is still on the edge of “maxing out” its storage system before winter hits (Figure 2, below).

Figure 2. US natural gas in storage, compared to five-year average. Figure prepared by US Energy Information Administration, Weekly Natural Gas Storage Report as of October 5, 2012.

 

World Natural Gas Production

The past isn’t the future, but it does give a little bit of understanding regarding what the underlying trends are.

Figure 3. World natural gas production, based on BP’s 2012 Statistical Review of World Energy data.

World natural gas production/consumption (Figure 3) has been increasing, recently averaging about 2.7% a year. If we compare natural gas to other energy sources, it has been second to coal in terms of the amount by which it has contributed to the total increase in world energy supplies in the last five years (Figure 4). This comparison is made by converting all amounts to “barrels of oil equivalent”, and computing the increase between 2006 and 2011.

Figure 4. Increase in energy supplied for the year 2011, compared to the year 2006, for various fuels, based on BP’s 2012 Statistical Review of World Energy data.

In order for natural gas to be an energy savior for the world, natural gas consumption would need to increase far more than 2.7% per year, and outdistance the increase in coal consumption each year. While a modest increase from past patterns is quite possible, I don’t expect a miracle from natural gas.

Natural Gas: What Has Changed?

The basic thing that has changed is that fracking now permits extraction of shale gas (in addition to other types of gas), if other conditions are met as well:

  1. Selling price is high enough (probably higher than for other types of natural gas produced)
  2. Water is available for fracking
  3. Governments permit fracking
  4. Infrastructure is available to handle the fracked gas

Even before the discovery of shale gas, reported world natural gas reserves were quite high relative to natural gas production (63.6 times 2011 production, according to BP). Reserves might theoretically be even higher, with additional shale gas discoveries.

In addition, the use of Liquified Natural Gas (LNG) for export is also increasing, making it possible to ship previously “stranded” natural gas, such as that in Alaska. This further increases the amount of natural gas available to world markets.

What Stands in the Way of Greater Natural Gas Usage?

1. Price competition from coal. One major use for natural gas is making electricity. If locally produced coal is available, it likely will produce electricity more cheaply than natural gas. The reason shale gas recently could be sold for electricity production in the United States is because the selling price for natural gas dropped below the equivalent price for coal. The “catch” was that shale gas producers were losing money at this price (and have since dropped back their production). If the natural gas price increases enough for shale gas to be profitable, electricity production will again move back toward coal.

Many other parts of the world also have coal available, acting as a cap on the amount of fracked natural gas likely to be produced. A carbon tax might change this within an individual country, but those without such a tax will continue to prefer the lower-price product.

2. Growing internal natural gas use cuts into exports. This is basically the Exportland model issue, raised by Jeffrey Brown with respect to oil, but for natural gas. If we look at Africa’s natural gas production, consumption, and exports, this is what we see:

Figure 5. Africa natural gas production, consumption, and exports, based on BP’s 2012 Statistical Review of World Energy.

In Africa, (mostly northern Africa, which exports to Europe and Israel), consumption has been rising fast enough that exports have leveled off and show signs of declining.

3. Political instability. Often, countries with large natural gas resources are ones with large oil resources as well. If oil production starts to drop off, and as a result oil export revenue drops off, a country is likely to experience political instability. A good example of this is Egypt.

Figure 6. Egypt’s oil production and consumption, based on BP’s 2012 Statistical Review of World Energy.

No matter how much natural gas Egypt may have, it would not make sense for a company to put in an LNG train or more pipeline export capability, because the political situation is not stable enough. Egypt needs oil exports to fund its social programs. The smaller funding amount available from natural gas exports is not enough to make up that gap, so it is hard to see natural gas making up the gap, even if it were available in significant quantity.

Iran is a country with large natural gas reserves. It is reportedly looking into extracting natural gas for export. Again, we have a political stability issue. Here we have an international sanctions issue as well.

4. “Need the natural gas for myself later” view. A country (such as Egypt or the United States or Britain) that has been “burned” by declining oil production may think twice about exporting natural gas. Even if the country doesn’t need it now, there is a possibility that vehicles using natural gas could be implemented later, in their own country, thus helping to alleviate the oil shortage. Also, there are risks and costs involved with fracking, that they may not choose to incur, if the benefit is to go to exporters.

5. Cost of investment for additional natural gas consumption. In order to use more natural gas, considerable investment is needed. New pipelines likely need to be added. Homeowners and businesses may need to purchase gas-fired furnaces to raise demand. If it is decided to use natural gas vehicles, there is a need for the new vehicles themselves, plus service stations and people trained to fix the new vehicles. Additional natural gas storage may be needed as well. Additional industrial production is difficult to add, unless wages are low enough that the product being sold will be competitive on the world market.

Existing “pushes” toward better insulation have the effect of reducing the amount of natural gas used for heating homes and businesses, so work in the opposite direction. So do new techniques for making nitrogen-based fertilizer using coal, rather than using natural gas.

6. Touchy balance between supply and consumption. If additional production is added, but additional uses are not, we have already seen what happens in the United States. Storage facilities get overly full, the price of natural gas drops to unacceptably low levels, and operators scramble to cut back production.

The required balance between production and consumption is very “touchy”. It can be thrown off by only a few percent change in production or consumption. Thus an unusually warm winter, as the United States experienced last year, played a role in the overly full storage problem. A ramp up of production of only a few percent can also cause an out of balance situation. Unless a developer has multiple buyers for its gas, or a “take or pay” long-term contract, it risks the possibility that the gas that is has developed will not be wanted at an adequate price.

7. Huge upfront investment requirements. There are multiple requirements for investing in new shale gas developments. Each individual well costs literally millions of dollars to drill and frack. The cost will not be paid back for several years (or perhaps ever, if the selling price is not high enough), so debt financing is generally needed. If fracking is done, a good supply of water is needed. This is likely to be a problem in dry countries such as China. There is a need for trained personnel, drilling rigs of the right type, and adequate pipelines to put the new gas into. While these things are available in the United States, it likely will take years to develop adequate supplies of them elsewhere. All of the legislation that regulates drilling and enables pipeline building, needs to be in place as well. Laws need to be friendly to fracking, as well.

Growth in Exports to Date

Exports grew as a percentage of natural gas use through about 2007 or 2008.

Figure 7. World natural gas exports as percentage of total natural gas produced, by year, based on EIA data (older years) and BP’s 2102 Statistical Review of World Energy for 2010 and 2011.

In recent years, natural gas exports have fallen slightly as a percentage of total gas extracted. Thus, if world natural gas supplies have risen by an average of 2.7% per year for the past five years, exports available for import have risen a little less rapidly than the 2.7% per year increase. A major ramp-up in export capability would be needed to change this trend.

While we hear a lot about the rise in exports using LNG, its use does not seem to be adding to the overall percentage of natural gas exported. Instead, there has been a shift in the type of export capacity being added. There are still a few pipelines being added (such as the Nord Stream pipline, from Russia to Germany), but these are increasingly the exception.

The Shale Gas Pricing Debate

Exactly what price is needed for shale gas to be profitable is subject to debate. Shale gas requires the payment of huge up-front costs. Once they are drilled and “fracked,” they will produce for a long period. Company models assume that they will last as long as 40 years, but geologist Arthur Berman of The Oil Drum claims substantial numbers are closed down in as few as six years, because they are not producing enough natural gas to justify their ongoing costs. There is also a question as to whether the best locations are drilled first.

Logically a person would expect shale-gas to be quite a bit more expensive to produce than other natural gas because it is trapped in much smaller pores, and much more force is required to extracted it. In terms of the resource triangle that I sometimes show (Figure 8, below), it epitomizes the low quality, hard to extract resource near the bottom of the triangle that is available in abundance. We usually start at the top of the resource triangle, and extract the easiest and cheapest to extract first.

Figure 8. Author’s illustration of impacts of declining resource quality.

Berman claims that prices $8.68 or higher per million Btu are needed for profitability of Haynesville Shale, and nearly as high prices are needed to justify drilling other US shale plays. The current US price is about $3.50 per million Btu, so to be profitable, the price would need to be more than double the current US price. Prices for natural gas in Europe are much higher, averaging $11.08 per million Btu in September 2012, but shale gas extraction costs may be higher there as well.

The US Energy Information Administration admits it doesn’t know how the economics will work out, and gives a range of projected prices. It is clear from the actions of the natural gas industry that current prices are a problem. According to Baker Hughes, the number of drilling rigs engaged in natural gas drilling has dropped from 936 one year ago to 422, for the week ended October 12, 2012.

Backup for Renewables

One area where natural gas excels is as a back up for intermittent renewable energy, since it can ramp up and down quickly. So this is one area where a person might expect growth. Such a possibility is not certain, though:

1. How much will intermittent renewables continue to ramp up? Governments are getting poorer, and have less funds available to subsidize them. They do not compete well on when they go head to head with fossil fuels, nuclear, and hydroelectric.

2. When intermittent renewables are subsidized with feed in tariffs, and requirements that wind power be given priority over fossil fuels, it can provide such an unlevel playing field that it is difficult for natural gas to be profitable. This is especially the case in locations where natural gas is already higher-priced than coal.

The Societal “Recipe” Problem

Our economy is built of many interdependent parts. Each business is added, taking into account what businesses already are in place, and what laws are in effect. Because of the way the economy currently operates, it uses a certain proportion of oil, a certain proportion of natural gas, and more or less fixed proportions of other types of energy. The number of people employed tends to vary, too, with the size of the economy, with a larger economy demanding more employees.

Proportions of businesses and energy use can of course change over time. In fact, there is some flexibility built in. In particular, in the US, we have a surplus of natural gas electricity generating units, installed in the hope that they would be used more than they really are, and the energy traded long distance. But there is less flexibility elsewhere. The cars most people drive use gasoline, and the only way to cut back is to drive less. Our furnaces use a particular fuel, and apart from adjusting the temperature setting, or adding insulation, it is hard to make a change in this. We only make major changes when it comes time to sell a car, replace a furnace, or add a new factory.

In my view, the major issue the world has been dealing with in recent years is an inadequate supply of cheap oil. High priced oil tends to constrict the economy, because it causes consumers to cut back on discretionary spending. People in discretionary industries are laid off, and they tend to also spend less, and sometimes default on their loans. Governments find themselves in financial difficulty when they collect fewer taxes and need to pay out more in benefits. While this issue is still a problem in the US, the government has been able to cover up this effect up in several ways (ultra low interest rates, a huge amount of deficit spending, and “quantitive easing”). The effect is still there, and pushing us toward the “fiscal cliff.”

The one sure way to ramp up natural gas usage is for the economy as a whole to grow. If this happens, natural gas usage will grow for two reasons: (1) The larger economy will use more gas, and (2) the growth in the economy will add more opportunities for new businesses, and these new businesses will have the opportunity to utilize more natural gas, if the price is competitive.

I have compared the situation with respect to limited oil supply as being similar to that of a baker, who is trying to bake a batch of cookies that calls for two cups of flour, but who has only one cup of flour. The baker is able to make only half a batch. Half of the other ingredients will go unused as well, because the batch is small.

To me, discovering that we have more natural gas than we had before, is analogous to the baker discovering that instead of having a dozen eggs in his refrigerator, there are actually two dozen in his refrigerator. In fact, he finds he can even go and buy more eggs, if he is willing to pay double the price he is accustomed to paying. But the eggs really do not fix the missing cup of flour problem, unless someone can find a way to change eggs into flour very cheaply.

Basic Energy Types

To me, the most basic forms of energy resources are (1) coal and (2) oil. Both can be transported easily, if it is possible to extract them. Natural gas is very much harder to transport and store, so it is in many ways less useful. It can be made work in combination with oil and coal, because the use of coal and oil make it possible to build pipelines and make devices to provide compression to the gas. With coal and oil, it is also possible to make and maintain electric transmission lines to transport electricity made with natural gas.

I sometimes talk about renewable energy being a “fossil fuel extender,” because they hopefully make fossil fuels “go farther”. In some ways, I think natural gas is an extender for oil and coal. It is hard to imagine a society powered only by natural gas, because of the difficulties in using it, and the major changes required to use it exclusively.

In the earliest days, natural gas was simply a “waste product” of oil extraction. It was “flared” to get rid of it. In many parts of the world, natural gas is still flared, because the effort it takes to collect it, transport it, and make it into a useful product is still too high.

The hope that natural gas will be the world’s energy savior depends on our ability to make this former waste product into a product that will replace oil and coal. But unless we can put together an economy that needs and uses it, most of it probably will be left in the ground. The supposedly very high reserves will do us no good.

The Long-Term Tie Between Energy Supply, Population, and the Economy

Off the Keyboard of Gail Tverberg

Published originally on Our Finite World on August 29th, 2012

Discuss this article at the Epicurean Delights Smorgasbord of the Diner

The tie between energy supply, population, and the economy goes back to the hunter-gatherer period. Hunter-gatherers managed to multiply their population at least 4-fold, and perhaps by as much as 25-fold, by using energy techniques which allowed them to expand their territory from central Africa to virtually the whole world, including the Americas and Australia.

The agricultural revolution starting about 7,000 or 8,000 BCE was next big change, multiplying population more than 50-fold. The big breakthrough here was the domestication of grains, which allowed food to be stored for winter, and transported more easily.

The next major breakthrough was the industrial revolution using coal. Even before this, there were major energy advances, particularly using peat in Netherlands and early use of coal in England. These advances allowed the world’s population to grow more than four-fold between the year 1 CE and 1820 CE. Between 1820 and the present, population has grown approximately seven-fold.

Table 1. Population growth rate prior to the year 1 C. E. based on McEvedy & Jones, “Atlas of World Population History”, 1978; later population as well as GDP based on Angus Madison estimates; energy growth estimates are based on estimates by Vaclav Smil in Energy Transitions: HIstory Requirements, and Prospects, adjusted by recent information from BP’s 2012 Statistical Review of World Energy.

When we look at the situation on a year-by-year basis (Table 1), we see that on a yearly average basis, growth has been by far the greatest since 1820, which is the time since the widespread use of fossil fuels. We also see that economic growth seems to proceed only slightly faster than population growth up until 1820. After 1820, there is a much wider “gap” between energy growth and GDP growth, suggesting that the widespread use of fossil fuels has allowed a rising standard of living.

The rise in population growth and GDP growth is significantly higher in the period since World War II than it was in the period prior to that time. This is the period during which growth in which oil consumption had a significant impact on the economy. Oil greatly improved transportation and also enabled much greater agricultural output. An indirect result was more world trade, which enabled production of goods needing inputs around the world, such as computers.

When a person looks back over history, the impression one gets is that the economy is a system that transforms resources, especially energy, into food and other goods that people need. As these goods become available, population grows. The more energy is consumed, the more the economy grows, and the faster world population grows. When little energy is added, economic growth proceeds slowly, and population growth is low.

Economists seem to be of the view that GDP growth gives rise to growth in energy products, and not the other way around. This is a rather strange view, in light of the long tie between energy and the economy, and in light of the apparent causal relationship. With a sufficiently narrow, short-term view, perhaps the view of economists can be supported, but over the longer run it is hard to see how this view can be maintained.

Energy and the Hunter-Gatherer Period

Humans, (or more accurately, predecessor species to humans), first arose in central Africa, a place where energy from the sun is greatest, water is abundant, and biological diversity is among the greatest. This setting allowed predecessor species a wide range of food supplies, easy access to water, and little worry about being cold. Originally, predecessor species most likely had fur, lived in trees, and ate a primarily vegetarian diet, like most primates today. The total population varied, but with the limited area in which pre-humans lived, probably did not exceed 1,000,000, and may have been as little as 70,000 (McEvedy).

Man’s main source of energy is of course food. In order to expand man’s range, it was necessary to find ways to obtain adequate food supply in less hospitable environments. These same techniques would also be helpful in countering changing climate and in mitigating deficiencies of man’s evolution, such as lack of hair to keep warm, limited transportation possibilities, and poor ability to attack large predators. The way man seems to have tackled all of these other issues is by figuring out ways to harness outside energy for his own use. See also my previous post, Humans Seem to Need External Energy.

The earliest breakthrough seems to be the development of man’s ability to control fire, at least 1 million years ago (Berna). The ability to cook food came a very long time ago as well, although the exact date remains uncertain. A diet that includes cook food has a number of advantages: it reduces chewing time from roughly half of daily activities to as  little as 5% of daily activities, freeing up time for other activities (Organ); it allows a wider range of foods, since some foods must be cooked; it allows better absorption of nutrients of food that is eaten; it allows smaller tooth and gut sizes, freeing up energy that could be used for brain development (Wrangham).

There were other advantages of fire besides the ability to cook: it also allowed early humans to keep warm, expanding their range in that way; it gave them an advantage in warding off predators, since humans could hurl fiery logs at them; and it extended day into night, since fire brought with it light. The wood or leaves with which early man made fire could be considered man’s first external source of energy.

As man began to have additional time available that was not devoted to gathering food and eating, he could put more of his own energy into other projects, such as hunting animals for food, making more advanced tools, and creating clothing. We talk about objects such as tools and clothing that are created using energy (any type of energy, from humans or from fuel), as having embedded energy in them, since the energy used to make them has long-term benefit. One surprising early use of embedded energy appears to have been making seaworthy boats that allowed humans to populate Australia over 40,000 years ago (Diamond).

The use of dogs for hunting in Europe at least 32,000 years ago was another way early humans were able to extend their range (Shipman). Neanderthal populations, living in the same area in close to the same time-period did not use dogs, and died out.

With the expanded territory, the number of humans increased to 4 million (McEvedy) by the beginning of agriculture (about 7,000 or 8,000 BCE). If population reached 4 million, this would represent roughly a 25-fold increase, assuming a base population of 150,000. Such an increase might be expected simply based on the expanded habitat of humans. This growth likely took place over more than 500,000 years, so was less than 0.01% per year.

Beginning of Agriculture – 7,000 BCE to 1 CE

Relative to the slow growth in the hunter-gatherer period, populations grew much more quickly (0.06% per year according to Table 1) during the Beginning of Agriculture.

One key problem that was solved with the beginning of the agricultural was, How can you store food until you need it? This was partly solved by the domestication of grains, which stored very well, and was “energy dense” so it could be transported well. If food were limited to green produce, like cabbage and spinach, it would not keep well, and a huge volume would be required if it were to be transported.

The domestication of animals was another way that food could be stored until it was needed, this time “on the hoof”. With the storage issue solved, it was possible to live in settled communities, rather than needing to keep moving to locations where food happened to be available, season by season. The domestication of animals had other benefits, including being able to use animals to transport goods, and being able to use them to plow fields.

The ability to grow animals and crops of one’s own choosing permitted a vast increase the amount of food (and thus energy for people) that would grow on a given plot of land.   According to David Montgomery in Dirt: The Erosion of Civilization, the amount of land needed to feed one person was

  • Hunting and gathering: 20 to 100 hectares (50 to 250 acres) per person
  • Slash and burn agriculture: 2 to 10 hectares (5 to 25 acres) per person
  • Mesopotamian floodplain farming: 0.5 to 1.5 hectares (1.2 to 3.7 acres) per person

Thus, a shift to agriculture would seem to allow a something like a 50-fold increase in population, and would pretty much explain the 56-fold increase that took place between from 4 million in 7,000 BCE, to 226 million at 1 CE.

Other energy advances during this period included the use of irrigation, wind-powered ships, metal coins, and the early use of iron of tools (Diamond) (Ponting). With these advances, trade was possible, and this trade enabled the creation of goods that could not be made without trade. For example, copper and tin are not generally mined in the same location, but with the use of trade, they could be combined to form bronze.

In spite of these advances, the standard of living declined when man moved to agriculture. Hunter-gatherers were already running into limits because they had killed off some of the game species (McGlone) (Diamond). While agriculture allowed a larger population, the health of individual members was much worse. The average height of men dropped by 6.2 inches, and the median life span of men dropped from 35.4 years to 33.1 years, according to Spencer Wells in Pandora’s Seed: The Unforeseen Cost of Civilization.

Deforestation rapidly became a common occurrence, as population expanded. Chew lists 40 areas around the world showing deforestation before the year 1, many as early as 4000 BCE. Montgomery notes that when the Israelites reached the promised land, the better cropland in the valleys was already occupied. In Joshua 17:14-18, Joshua instructs descendants of Joseph to clear as much of the forested land in the hill country as they wish, so they will have a place for their families to live.

Energy, Population, and GDP: Year 1 to 1820

Table 1 shows that during the period 1 to 1000, both population and economic output were very low (population, 0.02% per year; GDP, 0.01% per year). During this period, and as well as in the early agricultural period (between 7,000 BCE and 1 CE), there was a tendency of civilizations that had been expanding to collapse, holding the world’s overall population growth level down. There were several reasons for collapses of well-established societies, including (1) soil erosion and other loss of soil fertility, as people cut down trees for agriculture and for use in metal-making, tilled soil, and used irrigation (Montgomery) (Chew), (2) increasingly complex societies needed increasing energy to support themselves, but such energy tended not to be available (Tainter), (3) contagious diseases, often caught from farm animals, passed from person to person because to population density (Diamond), and (4) there were repeated instances of climate change and natural disturbances, such as volcanoes (Chew).

Even after 1000 CE, growth was limited, due to continued influence of the above types of factors. In most countries, the vast majority of the population continued to live on the edge of starvation up until the last two centuries (Ponting). Most growth came from expanded acreage for farming.

There were exceptions, however, and these were where growth of population and GDP was greatest.

Netherlands. Kris De Decker writes about the growing use of peat for energy in Netherlands starting in the 1100s and continuing until 1700. Peat is partially carbonized plant material that forms in bogs over hundreds of years. It can be mined and burned for processes that require heat energy, such as making glass or ceramics and for baking bread. Because it takes hundreds of years to be formed, mining exhausts it. Mining also causes ecological damage. The availability of peat for fuel was important, however, because there was a serious shortage of wood at that time, because of deforestation due to the pressures of agriculture and the making of metals.

Wind was also important in Holland during the same period. It produced primarily a different kind of energy than peat; it produced kinetic (or mechanical) energy. This energy was used for a variety of processes, including polishing glass, sawing wood, and paper production (De Decker).  Measured as heat energy (which is the way energy comparisons are usually made), wind output would have been considerably less than the heat energy from peat during this time period.

Maddison shows population in Netherlands growing from 300,000 in the year 1000 to 950,000 in 1500; 1,500,000 in 1600 and 1,900,000 in 1700, implying average annual population growth rates of 0.23%, 0.46%, and 0.24% during the three periods, compared to world average annual increases of 0.10%, 0.24%, and 0.08% during the same three periods. Netherlands’ GDP increased at more than double the world rates during these three periods (Netherlands: 0.35%, 1.06%, and 0.67%; world: 0.14%, 0.29%, and 0.11%.)

England. We also have information on early fuel use in England (Wigley).

Figure 1. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley.

Here, we see that coal use began as early as 1561.  To a significant extent coal replaced fire wood, since wood was in short supply due to deforestation. Coal was used to provide heat energy, until after the invention of the first commercially successful steam engine in 1712 (Wikipedia), after which it could provide either heat or mechanical energy.  Wind and water were also used to provide mechanical energy, but their quantities remain very small compared to coal energy, draft animal energy, and even energy consumed in the form of food by humans.

Maddison shows population and GDP statistics for the United Kingdom (not England by itself). Again, we see a pattern similar to Netherlands, with UK population and GDP growth surpassing world population and GDP growth, since it was a world leader in adopting coal technology. (For the three periods 1500-1600, 1600-1700, and 1700-1820, the corresponding numbers are Population UK: 0.45%, 0.33%, 0.76%; Population World: 0.24%, 0.08%, 0.46%; GDP UK: 0.76%, 0.58%, 1.02%; GDP World: 0.29%, 0.11%, 0.52%.)

Growth “Lull” during 1600s. Table 1 shows that both population growth and GDP growth were lower during the 1600s. This period matches up with some views of when the Little Ice Age (a period with colder weather) had the greatest impact.

Figure 2. Winter Severity in Europe, 1000 to 1900. Note period of cold weather in 1600s. Figure from Environmental History Resources. Figure based on Lamb 1969 / Schneider and Mass 1975.

If the weather was colder, crops would likely not have grown as well. More wood would be needed for fuel, leaving less for other purposes, such as making metals. Countries might even been more vulnerable to outside invaders, if they were poorer and could not properly pay and feed a large army.

Coal Age for the World – 1820 to 1920 (and continuing)

When the age of coal arrived, the world had two major needs:

  1. A heat-producing fuel, so that there would not be such a problem with deforestation, if people wanted to keep warm, create metal products,  and make other products that required heat, such as glass.
  2. As a transportation fuel, so that walking, using horses, and boats would not be the major choices. This severely limited trade.

When coal arrived, it was rapidly accepted, because it helped greatly with the first of these–the need for a heat-producing fuel. People were willing to put up with the fact that it was polluting, especially in the highly populated parts of the world where wood shortages were a problem. With the availability of coal, it became possible to greatly increase the amount of metal produced, making possible the production of consumer goods of many kinds.

Figure 3. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 01965 and subsequent

Between 1820 and 1920, which is the period when coal came into widespread use, the world’s use of energy approximately tripled (Figure 3). The large increases in other fuels later dwarf this increase, but the use of coal was very significant for the economy. Table 1 at the top of this post shows a fairly consistent rise in GDP growth as coal was added to the energy mix in the 1820 to 1920 period.

With the invention of first commercially successful steam engine in 1712 (Wikipedia), coal could also be used for processes that required mechanical energy, such as milling grain, running a cotton gin, or weaving cloth. It also helped as a transportation fuel, in that it could power a railroad train or steam boat. Thus, it did help with the second major energy need noted above. It was not very suitable for airplanes or for private passenger cars, though.

One invention that was made possible by the availability of coal was the widespread use of electricity. Without coal (or oil), it would never have been possible to make all of the transmission lines. Hydroelectric power of the type we use today was also made possible by the availability of coal, since it was possible to create and transport the metal parts needed. It was also possible to heat limestone to make Portland cement in large quantity. The first meaningful amounts of hydroelectric power appeared between 1870 and 1880, according to the data used in Figure 3.

Agriculture was helped by the availability of coal, mostly through the indirect impacts of more/better metal being available, more ease in working with metals, improved transportation, and later, the availability of electricity. According to a document of the US Department of Census,  changes were made which allowed more work to be done by horses instead of humans. New devices such as steel plows and reapers and hay rakes were manufactured, which could be pulled by horses. Later, many devices run by electricity were added, such as milking machines. Barbed-wire fence allowed the West to become cropland, instead one large unfenced range.

Between 1850 and 1930, the percentage of workers in agriculture in the US dropped from about 65% of the workforce to about 22%. With such a large drop in agricultural workers, rising employment in other parts of the economy became possible, assuming there were enough jobs available. If not, it is easy to see how the Depression might have originated.

If we look at the coal data included in Figure 3 by itself, we see that the use of coal use has never stopped growing. In fact, its use has been growing more rapidly in recent years:

Figure 4. World annual coal consumption, based on same data used in Figure 3. (Vaclav Smil /BP Statistical Review of World Energy)

The big reason for the growth is coal consumption is that it is cheap, especially compared to oil and in most countries, natural gas. China and other developing countries have been using coal for electricity production, to smelt iron, and to make fertilizer and other chemicals. Coal is very polluting, both from a carbon dioxide perspective, and from the point of view of pollutants mixed with the coal. For many buyers, however, “cheap” trumps “good for the environment”.

A look at detail underlying China’s coal consumption makes it look as though the recent big increase in coal consumption began immediately after China was admitted to the World Trade Organization, in December 2001. With more trade with the rest of the world, China had more need for coal to manufacture goods for export, and to build up its own internal infrastructure. The ultimate consumers, in the US and Europe, didn’t realize that it was their demand for cheap products from abroad that was fueling the rise in world coal consumption.

Addition of Oil to World Energy Mix

Oil was added to the energy mix in very small amounts, starting in the 1860s and 1870s. The amount added gradually increased though the years, with the really big increases coming after World War II. Oil filled several niches:

  1. It was the first really good transportation fuel. It could be poured, so it was easy to put into a gas tank. It enabled door-to-door transportation, with automobiles, trucks, tractors for the farm, aircraft, and much construction equipment.
  2. It (and the natural gas often associated with it) provided chemical fertilizer which could be used to cover up the huge soil deficiencies that had developed over the years. Hydrocarbons from oil also provide herbicides and insecticides.  Oil also enabled the door-to-door transport of mineral additions to the soil mix, enhancing fertility.
  3. Oil is very easy to transport in a can or truck, so it works well with devices like portable electric generators and irrigation pumps. It can be used where other fuels are hard to transport, such as small islands, with minimal equipment to make it usable.
  4. With the huge change in transport enabled by oil, much greater international trade became possible. It became possible to regularly make complex goods, such as computers, with imports from many nations. It also became possible to import necessities, rather than using trade primarily for a few high-value goods.
  5. Hydrocarbons could be made into medicines, enabling defeat of many of the germs that had in the past caused epidemics.
  6. Hydrocarbons could be used to make plastics and fabrics, so that wood and crops grown to make fabrics (such as cotton and flax) would not be in such huge demand, allowing land to be used for other purposes.
  7. Hydrocarbons could provide asphalt for roads, lubrication for machines, and many other hard-to-replace specialty products.
  8. The labor-saving nature of machines powered by oil freed up time for workers to work elsewhere (or viewed less positively, sometimes left them unemployed).
  9. The fact that tractors and other farm equipment took over the role of horses and mules after 1920 meant that more land was available for human food, since feed no longer needed to be grown for horses.

If we look at oil by itself (Figure 5, below), we see much more of a curved figure than for coal (Figure 4, above).

Figure 5. World annual oil consumption, based on the same data as in Figure 3 above. (Vaclav Smil /BP Statistical Review of World Energy)

My interpretation of this is that oil supply is more constrained than coal supply. Coal is cheap, and demand keeps growing. Oil has been rising in price in recent years, and the higher prices mean that consumers cut back on their purchases, to keep their budgets close to balanced. They can’t afford as many vacations and can’t afford to pave as many roads with asphalt. Oil is still the largest source of energy in the world, but coal is working on surpassing it. In a year or two, coal will likely be the world’s largest source of energy. Together, they comprise about 60 percent of today’s energy use.

If we look at per capita fuel consumption based on the same data as in Figure 3, this is what we see:

Figure 6. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

Figure 6 indicates that there was a real increase in total per capita energy consumption after World War II, about the time that oil consumption was being added in significant quantity. What happened was that coal consumption did not decrease (except to some extent on a per capita basis); oil was added on top of it.

If we look at world population growth for the same time period, we see a very distinct bend in the line immediately after World War II, as population rose as the same time as oil consumption.

Figure 7. World Population, based on Angus Maddison estimates, interpolated where necessary.

Clearly, the arrival of oil had a huge impact on agriculture. Unfortunately, the chemical fix for our long-standing soil problems is not a permanent ones. Soils need to be viewed as part of an ecological system, with biological organisms aiding in fertility. Soils also need an adequate amount of humus, if they are to hold water well in droughts. There are natural things that can be done to maintain soil fertility (add manure, terrace land, use perennial crops rather than annual crops, don’t till the land). Unfortunately, using big machines dependent on oil, plus lots of chemical sprays, tends to operate in the opposite direction of building up the natural soil systems.

Our Energy Niche Problem

There are other fuels as well, including nuclear, wind energy, solar PV, solar thermal, biofuels, and natural gas. The production of all of these are enabled by the production of oil and coal, because of the large amount of metals involved in their production, and because of the need transport the new devices to a final location.

All of these other fuels tend have their own niches; it is hard for them to fill the big coal-oil niche on the current landscape. Solar thermal and natural gas are both directly heat-producing, and play a role that way. But it is hard to see how adequate metals production would continue with these fuels alone. Of course, with enough electricity, we could create the heat needed for metal production. The catch would be creating enough electricity.

“Cheap” is a very important characteristic of fuels to buyers. Coal is clearly beating out oil now in the area of “cheap”. Natural gas is the only one of the other energy sources that is close to cheap, at least in the United States. The catch with US natural gas is that producers can’t really produce it cheaply, so its long-run prospects as a cheap fuel aren’t good. Perhaps if the pricing issues can be worked out, US natural gas production can increase somewhat, but it is not likely to be the cheapest fuel.

One of the issues related to finding a replacement for oil and coal is that we already have a great deal of equipment (cars, trains, airplanes, farm equipment, construction equipment) that use oil, and we have many chemical processes that use oil or coal as an input.  It would be very costly to make a change to another fuel, before the end of the normal lives of the equipment.

Wrapping Up

Over the long haul, energy sources have played a very large and varied role in the economy. In general, increases in the energy supply seem to correspond to increases in GDP and population.  Necessary characteristics of energy supply are not always obvious. We don’t think of low-cost as an important characteristic of energy products, but in the real world, this becomes an important issue.

As we move forward, we face challenges of many types. The world’s population is still growing, and needs to be housed, clothed, and fed.  None of the energy sources that is available is perfect. Our long history of using the land to produce annual crops has left the world with much degraded soil. The way forward is not entirely clear.

I will look at some related issues in upcoming posts.

Lights OUT!

Off the Keyboard of RE 

 

Discuss this article at the Energy Table of the Diner 

Another “Official” thread to join the Earthquake, Flood, Tornado and Hurricane threads here in the Diner.  Main difference, this thread isn’t in “Natural” disasters under Geological and Cosmological Events, its in the Man-Made category under Energy problemos.  OK, I know a few of you think HAARP is causing the Weather problems and a few more than that think the Climate change is Anthropogenic, but Blackouts aren’t open to dispute or conspiracy theorizing. They ARE a man made problem.

Anyhow, to lead off this thread, Newz of the Day is that India had a major Blackout Monday Morning during the Rush Hour Commute, knocking out power to more than 300M people.  That’s right, power to approximately a population size equal to that of the ENTIRE FSofA!

According to the story, power was being restored after the grid collapse, but meanwhile for a few hours SEWAGE TREATMENT PLANTS went offline also.  Once the power goes out for more than a few hours, how long do you think it takes for Cholera to spread through Delhi and Calcutta?

Also according to said story, India is chronically short of electric power with 100sM people still not connected to the grid, and has an aging transmission network in need of upgrade, AND needs to build some NUKES!

Who is gonna front up money for India to upgrade here to Electric v2.0?  The guys who did the IPO on Electric v1.0 left with the credit and they ain’t coming back here.

Some speculation on stuff not included in this story.  What caused the grid to crash?  It is unlikely there was a major surge in demand that overwhelmed the transformers, so likely it came from the supply end.  All it really takes is for a couple of decent size power plants to go off line and the rest of them become overloaded unless you can adjust quickly by rolling around Brownouts to the customers.  I’ll bet a coupleof plants are just FRESH OUT of Coal to burn here and the municipalities running them are FRESH OUT of MONEY to buy more.

So the Indians are getting the grid up again here, but one has to suspect probably 10% of the customers won’t get their lights back on here anytime too soon if EVER. In order to make sure the Delhi trains keep moving and Calcutta Sewage Plants keep processing the shit, somebodies out on the periphery will have to go back to Candle Power.

How long before Delhi and Calcutta go Lights Out for GOOD?  Over/Under on this, 5 years MAX IMHO. When they do, call in the Zombie Squad, that’s 30M people easy who also go Offline.

Probably a bit longer before it’s Lights Out permanently on this side of the pond.  Make no mistake though, this Show IS Coming Soon to a Theatre Near You.

RE

 

Power cut hits northern India causing major disruption Trains were stranded after the outage

Continue reading the main story Related Stories Indian workers protest power cuts Watch Indian students who study on railway platforms

A massive power cut has caused disruption across northern India, including in the capital, Delhi.

It hit a vast swathe of the country affecting more than 300 million people in Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Rajasthan states.

Power Minister Sushil Kumar Shinde said 60% of the supply had been restored and the rest would be reinstated soon.

It is unclear why supply collapsed, but states using more power than they were authorised to could be one reason.

Mr Shinde said he had appointed a committee to inquire into the causes of the blackout, one of the worst to hit the country in more than a decade.
Travel chaos The outage happened at 02:30 local time (2100 GMT) on Monday after India’s Northern Grid network collapsed.

Monday morning saw travel chaos engulf the region with thousands of passengers stranded when train services were disrupted in Punjab, Haryana and Chandigarh.
Delhi Metro railway services were stalled for three hours, although the network later resumed service when it received back-up power from Bhutan, one official said.

Traffic lights on the streets of the capital were not functioning as early morning commuters made their way into work, leading to gridlock.

Water treatment plants in the city also had to be shut for a few hours.
Officials said restoring services to hospitals and transport systems were a priority.
Power cuts are a common occurrence in Indian cities because of a fundamental shortage of power and an ageing grid. The chaos caused by such cuts has led to protests and unrest on the streets.

Earlier in July, crowds in the Delhi suburb of Gurgaon blocked traffic and clashed with police after blackouts there.

Correspondents say that India urgently needs a huge increase in power production, as hundreds of millions of its people are not even connected to the national grid.
Prime Minister Manmohan Singh has long said that India must look to nuclear energy to supply power to the people.

Estimates say that nuclear energy contributes only 3% to the country’s current power supply. But the construction of some proposed nuclear power stations have been stalled by intense local opposition.

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