Peak Oil is You
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Page added on April 29, 2012
$200 Oil Still May Not Be All Bad
I am deviating somewhat from my weekend think pieces on sectors of the economy and returning to my past life in global infrastructure development. I am at a convention of sorts of energy industry professionals who are at the front lines of implementation of energy processes – not the fat cats viewing the world from the 40th floor.
The consensus is that the world is far from peak energy if cost is ignored. The difference between professionals and politicians is that professionals explore all options – and are only removed from the table for technical issues (such as process reliability, costs). Environmental issues play second fiddle to professionals – not because environmental issues are not important – but because environmental issues are solved through the design and process improvement cycle. Even after processes come on line, they are constantly reformed for a variety of issues – including cost and environmental.
This natural flow is called continuous improvement. No successful organizations limit development of options or block continuous improvement cycles.
I listened to field tests being done in oil / gas extraction, nuclear and renewables. No one believed any one form of energy had the potential to dominate based on cutting edge technologies on the drawing boards. However, as a group – we believed when viewed as whole, there is no reason for a net importation of energy into the USA. Instead of forcing stricter regulations (such as done with auto industry fuel consumption) – government policies literally have removed coal and nuclear from the table, while significantly restricting expansion of gas and oil “mining” and pipelines.
- I am not a big fan of coal, especially the big lignite fueled power stations in the West based on current methodology. Wasting 1/3 of the potential energy output on environmental systems (bag-houses and precipitators) means we are wasting much of this resource ahead of its time when technology could prevent this waste.
- The current crop of nukes had a 40 year design basis – and they need to be replaced with the new “fail safe” technologies. To most of us building this past generation of nukes, the concept of suppression pools to contain a loss-of-coolant (LOC) accident was viewed as peeing on a forest fire. Current state-of-the-art plants are exponentially safer as LOC situations are theoretically prevented.
Based on current technology and price structures – the reason the USA is not energy independent is only political. The USA could not be energy independent at spot oil prices of $38 per barrel. At $100, massive hydrocarbon reserves which are now commercially extractable within USA property lines. Combine this with “fail safe” nuke power generation, natural gas, renewables, and continued emphasis on conservation.
Interesting on the above graphic that the EIA sees a falling share of GDP consumed by energy.
Back in August of 2008, I posted a piece at Seeking Alpha arguing $200 oil may be a good thing for the USA. Long term, high energy costs favor local made products. No question high energy prices are disruptive, but over long spans so are trade imbalances.
Politicos criticize China for developing an export centric economy, yet roughly half of the current USA trade deficit is oil. It seems politicians not only do not explore options, but are good at transferring blame of conditions they cause to others.
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11 Comments on "$200 Oil Still May Not Be All Bad"
BillT on Mon, 30th Apr 2012 12:40 am
“… The consensus is that the world is far from peak energy if cost is ignored…”
They should also say: ” The consensus is that the world is far from peak energy if EROEI is ignored.”
Both are impossible for too many reasons to try to state here. Only fools believe that $200 oil will not bring down the world economy, ending the system that the West is built on.
solarity on Mon, 30th Apr 2012 1:35 am
The article correctly states “the world is far from PEAK ENERGY.” There is a vast difference between peak OIL and peak ENERGY.
Besides oil, there are nine other sources of energy: coal, gas, nuclear, bio, hydro, wind, solar, tidal and geo-thermal. Excepting hydro, all of these are years from peaking. Natural gas has a very reasonable EROEI. As would coal and nuclear if politics were set-aside. So it is also a correct statement that “government policies literally have removed coal and nuclear” from consideration.
VP on Mon, 30th Apr 2012 1:49 am
The peaking of oil moves forward in time the peaking of all other forms energy, since they must be explored more intensively to make up the reduced amount of oil. I refer you to the posting about a week ago of a class taught in the school of business at Cornell. It is one of the best sources of information I have seen on peak oil (and peak everything) and, yes, it was being taught at Cornell school of business.
dsula on Mon, 30th Apr 2012 11:08 am
$200 is very cheap.
Arthur on Mon, 30th Apr 2012 1:51 pm
The main reason why the West almost collapsed financially in august 2008, was because oil prices had reached a record $147/barrel. Prices have come down since because of demand destruction but are now on the increase again due to an economic recovery of sorts, enabled by massive financial injections (inflation tax = theft from the middle class). There is no way we can have the old pre-2008 economic conditions back with $200 oil. It is going to happen anyway, this $200 oil. What should be done is: produce local, sell local, buy local. The hell with free trade, those days are over for ever. Go into maintenance mode of your material life. Forget about going to Acapulco and a new BMW, instead play chess with a friend in the coffee house, start reading books, pick up playing a violin in a local orchestra. And first of all, start a vegetable garden with a few disciplined friends. Read about conserving food during the winter. Put surplus fresh food for sale on the internet. Start a local barter chain, using coupons as an alternative money, and trade goods and services (garden produce, baby sitting, tutoring, house maintenance like painting and plumbing, car repair, programming websites, etc.).
BillT on Mon, 30th Apr 2012 2:36 pm
I’m going to throw out a wild thought…
What if…the whole oil situation is being orchestrated to destroy the world economy thereby facilitating a one world currency? Not that peak oil is not here, but that it is the means to cause the collapse that will lead to a one world currency and then to a one world government?
Why do I think that? Because as long as there is a middle class holding a significant percentage of the world’s wealth and power, the 1/10% cannot make their plans work. But…if that middle class was destroyed, it would be easy. Serfs have no say in the plans of the Masters who could care less what happens to the serfs as long as there are enough left to serve them.
You say they would never do that because…? Why not? Power is addictive. And who holds the power? The 1/10% more and more. Who owns the governments of the world today? The 1/10%. Look around with your mind and eyes open. And think about it.
Arthur on Mon, 30th Apr 2012 3:56 pm
The tiny elite you are talking about only has a stranglehold on the West and first and foremost the US. But since 2003 they created involuntarily a new Shia giant Iran + Iraq. The US is losing grip on Egypt and on Pakistan as well as Afghanistan and a few Stans more. Russia and China are not under their control. France under president Hollande will go at a distance to Washington. And I would not count too much on Germany either. Ten years ago I was very afraid the NWO was inevitable. Today I think it is not going to happen.
Rick on Mon, 30th Apr 2012 4:47 pm
The NWO will not happen.
Kenz300 on Mon, 30th Apr 2012 5:26 pm
How much of the worlds oil is used for transportation fuels? 40+ mpg is better than 9 mpg and reduces the impact of higher prices.
BillT on Tue, 1st May 2012 1:58 am
Arthur, are they losing grip of financing the Muslim Brotherhood? They play both sides and always have if it makes them richer and gives them more power.
Can’t happen? I think it is well on it’s way! No, all countries will not be joined when separate countries can exist economically, but that can end abruptly if the whole system collapses and panic sets in. Anything can happen then, and a panic inducing event is what they are creating.
BillT on Tue, 1st May 2012 2:04 am
Rick, anything can happen in the financial and political climate of the world today. Don’t rule it out because you do not know all of the plan. Wait and see. It is beyond what you or I can do to prevent it.