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Page added on August 11, 2014
Peak Oil: Written on Tombstones
Not too long, another in the endless procession of skate-past-facts-we-don’t like articles made its way into publication via a piece entitled “Here’s The Statistic That Will Be Written On The Tombstones Of Peak Energy Believers”
Those concerned about the peak in oil production have apparently earned themselves a promotion! Now we are peak “energy” advocates. Who knew? Seriously … who knew? A nice little attempt to distract from the facts, but use whatcha got!
‘Peak oil’ proponents – the guys and gals who believe overconsumption combined with scarce resources will lead to stratospheric energy prices – are now clinging* to the hope that the shale oil and gas boom will fizzle out as the cost of drilling climbs.
For the most part, the boom has held up, though no one believes it will last forever.
But there is a fifth-column phenomenon this group has completely overlooked that will once-and-for-all obliterate their arguments: energy consumption efficiency. (* link in original article does not reference a specific item in support of the “clinging” insinuation, if honorable reporting matters)
Yep! That’s us: doom-and-gloomers just a-hopin’ and a-prayin’ with all our hearts that everyone—including us!—will experience the sheer joy of “stratospheric energy prices.” If only that day were here right now, all of our dreams would be within reach: conflict, dismay, fear, anger, sacrifice and so much more! We can just taste it!
And shame on us for not having even considered that energy efficiency might be one available option. Shame on us even more for not realizing the glory of energy efficiency as the savior of all saviors! What were we thinking, occupying ourselves with facts and concerns about our future well-being?
Just wondering: Are there strategy sessions in place to decide what inane comments might work today, and which lucky member of the Let’s-Ignore-Facts Club gets to utter them?
Contained in Exxon’s new Outlook for Energy report is the following damning statistic: Electricity generation will grow by 90% by 2040, but the amount of fuel needed to generate that electricity will only have to grow by 50%. And the projected increase in energy demand is 20% less than the demand increase seen from 1980 to 2010.
Uh … isn’t a “50%” increase in the amount of fuel needed to generate a “90%” increase [?!] kind of a lot all by itself? Of course, if the facts about current and future oil production don’t matter, then it is definitely not a big deal, but if one wished to humor us sad-sack hopers and pray-ers for catastrophe by considering some facts, perhaps that’s not such a once-and-for-all Obliterator (even if we buy in for even a moment that Exxon might not be the most unbiased source of energy information)?
Worth noting that in the very same report is this little tidbit:
[F]rom 2010 to 2040, the number of light-duty vehicles — the global ‘fleet’ is expected to more than double from about 800 million to about 1.7 billion, as the world’s population grows and more people in developing economies are able to afford cars.
And this:
Global demand for energy for commercial transportation is expected to rise by 70 percent from 2010 to 2040, driven by the projected increase in economic activity and the associated increase in movement of goods and freight.
As an indication that other regions of our planet are elevating their standards of living, that’s certainly an upbeat statistic. Mobility is a key contributor to societal and industrial progress, with the benefits attendant to those improvements in the quality of living. But from an energy consumption and demand standpoint, that’s not quite so uplifting—but again, only if the current and future facts about oil production matter.
For some of us, they actually do.
Should anyone complain that lesser-developed nations are expected to greatly improve the standards for their citizens? If that is such a positive sign of progress and advancement (it is!), shouldn’t we also take a look at just how that’s all going to happen for them, and what plans and adaptations might be necessary … given that finite resources are not projected to become infinite in Exxon’s Outlook?
Knowing all of the facts rather than being fed a steady diet of fluff would make those encouraging prospects a bit more attainable. Just saying….
13 Comments on "Peak Oil: Written on Tombstones"
shortonoil on Mon, 11th Aug 2014 8:18 am
If you take one gallon of 35.7 deg API crude you can get a maximum of 99,400 BTU of usable energy out of its 140,000 BTU content. That is a calculated value that is based on the most fundamental laws of physics that are known to man. The laws of physics inform us that some of that 140,000 BTU content MUST be given up as waste heat for the process to go forward. Mother Nature is telling us that: “sorry, you don’t get something for nothing”!
The petroleum industry is a 150 year old industry that has developed some of the most sophisticated technology on earth. As provider of the world’s most important extractive commodity it has had access to a large portion of the world’s capital resources. If one sits down an computes (like we have done) the operational efficiency of the world’s petroleum process you will find that it is now working at very close to its maximum theoretical efficiency. The petroleum industry is probably the most efficiently run industry on earth.
For petroleum there is just not much room for improvement. Anyone stating that efficiency is going to save the day from depletion is selling smoke, and mirrors dissolved in snake oil. From this point forward there is only one solution to our petroleum depletion problem: USE LESS OF IT! And, that is guaranteed to happen!
http://www.thehillsgroup.org/
Makati1 on Mon, 11th Aug 2014 8:36 am
shortonoil, as usual, you are correct. We have to use less of it, and that is already happening in the 1st world. Cost to the consumer will be the deciding factor going forward. There is more room for higher prices in the East as they use it for production and make things that can pay for more expensive oil.
Here in the Ps, a gallon does a lot more when the jeepney is hauling 12 adult passengers vs in the US where an SUV of similar gross weight, hauls one obese Walmart shopper. Gas is ~$5 per gallon and has been for the last 6+ years. No effect on the Philippine economy that is growing at 6%+ per year. What would $5 gas do to the US economy?
Davy on Mon, 11th Aug 2014 8:39 am
Short, you always give great data to chew on. Why is it so hard to see diminishing returns in the petroleum industry? Well it is a well honed marketing sell job from TPTB/ Wall Street mafia. The subject is sufficiently complex to use smoke and mirrors to sell snake oil. The problems in the petroleum industry can be explained away by blaming other sectors or crisis. It can also be explained away by the time tested propaganda of technology will save the day and we can substitute all kinds of liquid fuels for one another and still grow our economy. This is a dangerous game or maybe a necessary game. The systematic risk of the loss of confidence from the reality of Shorts’s comment would greatly complicate the efforts to control growth. It would result in a downward spiral of known consequences and unintended consequences. Sometimes I find ignorance is bliss. Yet, a part of me says the doctor prescription is immediate crisis to realize the last great low hanging fruit of efficiency and that is lifestyles and attitudes. The population growth can only be nipped in the butt by crisis and by extension food insecurity.
forbin on Mon, 11th Aug 2014 8:54 am
correction to title
Peak Oil: Written on Tombstones of the Cornucopians
Sorry , couldn’t resist 🙂
Forbin
solarity on Mon, 11th Aug 2014 10:20 am
After the plateau that heralds peak production, fossil fuels (in all iterations) will have a half-live of about 100 years. In other words, production over time will be a Poisson distribution (rather than binomial), because of alternative substitution and improvements in efficiency. In the year 2100, the world will probably be producing about 50 mbpd, (and 30 mbpd in 2200, 15 in 2300, etc.)
shortonoil on Mon, 11th Aug 2014 10:48 am
“What would $5 gas do to the US economy?”
Over the last 60 years, that we have calculated crude to gasoline price ratios, they have been very consistent. Crude costs have averaged 71% of the price of gasoline. The Texas RR states 72%. $5.00 per gallon gasoline in the US would put WTI at $149/barrel. Looking at the present precarious state of the economy, at $100/barrel oil, it is reasonable to assume that the US would be in a very deep depression.
Our model which has a 47 year variance of zero (0) indicates that WTI should now be $119/barrel. Its present price of $98 is at the lower end of the 99.5% confidence interval. This present extraordinarily low price we contribute to shale production. It is keeping the inventory numbers elevated, even though the larger majority of it is not usable to directly produce fuels. If one needs an explanation for the immense amount of hype that has been dedicated to shale, one needs to look no further than the health of the US economy.
http://www.thehillsgroup.org/
shortonoil on Mon, 11th Aug 2014 11:52 am
“In the year 2100, the world will probably be producing about 50 mbpd, (and 30 mbpd in 2200, 15 in 2300, etc.)”
Very optimistic projection. Undoubtedly, it is a reference model, and not based on basic principals of physics. Our model indicates that conventional crude production will fall to 44 mb/d by 2030. Thereafter, it goes into catastrophic decline. The energy dynamics imply that once conventional crude is depleted, that other alternative liquid fuels will not be able to maintain enough of the economy needed to produce them, or provide for their demand. Shale is a good example of this phenomenon. Most shale is incapable of driving the economy, and its only use is as a feedstock for other processes. It requires a strong general economy to provide for its demand. Even though its OOIP is gigantic, its market is limited. Because of conventional crude’s extraordinary energy content, and more importantly its very high energy delivery capabilities, it is a commodity of unique characteristics. Replacing it is likely to be impossible!
http://www.thehillsgroup.org/
pat on Mon, 11th Aug 2014 1:11 pm
the question is the huge rising demand of the oil vs the accelerated rate of decline of the high energy conventional crude. the geopolitical, geological, natural factors is only going to add to the accelerating depletion. how long will the last few old and dying giant oil fields continue to maintain the current rates of output and the importers. the huge bumpy downhill ride has already started 2005 and the world is going to see a huge crisis begin not far as 2015 ….
Meld on Mon, 11th Aug 2014 1:49 pm
The world is definitely improving just look out the window. Smiling faces, cheap energy, booming business’..oh no wait that was my 1990s window.. I’ll just look out the 2014 windo…….HOLY SHIT!!
shortonoil on Mon, 11th Aug 2014 2:56 pm
“the question is the huge rising demand of the oil vs the accelerated rate of decline of the high energy conventional crude.”
What our analysis indicates is that the largest user of the energy that comes from oil is now the oil industry itself. That transition began in 2012. As time progresses the general economy will be using less and contracting, while the industry will be using more. Demand will therefore not be falling rapidly as the oil industry will be picking up most of the slack that is now occurring in the general economy. The Red Queen is up to full speed, and falling behind every day!
http://www.thehillsgroup.org/
sunweb on Mon, 11th Aug 2014 6:01 pm
Shortonoil -thank you for your clarity and the work you do. Much needed, much appreciated.
Davy on Mon, 11th Aug 2014 6:49 pm
Short add in the global defense departments to the oil cue and there is not much left.
rockman on Tue, 12th Aug 2014 9:16 am
“What our analysis indicates is that the largest user of the energy that comes from oil is now the oil industry itself.” Actually the largest single oil consuming enterprise on the planet is the US Dept of Defense. Although these days one might say they are spending a fair percentage of that energy protecting oil production around the globe.