Peak Oil is You
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Page added on January 17, 2015
Get Ready For Life Without Oil
Saudi Arabia isn’t the nicest ally to have. The desert kingdom just handed out a sentence of 1,000 lashes to a blogger for running a website devoted to freedom of speech. Not exactly the kind of regime we want to have in our circle of friends, especially once you figure in their financial support for Islamic State and other radical Islamist groups.
But you go to war with the allies you have, not the allies you wish you had. And in the global oil price war against Russia and Iran, Saudi Arabia is the U.S.’s indispensable ally. By continuing to pump the black stuff at an undiminished rate, the Saudis are repeating the trick they pulled in the mid-’80s, allowing oil prices to plunge in response to Western supply increases, thus depriving their rival (Iran) and ours (Russia) of revenue — and, in the process, temporarily tanking the U.S. shale industry.
It would be nice if we could escape this cycle — to say nothing of limiting global carbon emissions. But oil remains the indispensable commodity, without which industrial civilization will be thrown back to the coal age — or worse. So we’re stuck with the Saudis, stuck with Russia and Iran, and stuck with our dependence on a single nonrenewable pollution-generating resource.
But what if we had a real-life Iron Man, to build us magical “arc reactors” and solve our energy needs forever. Well, we do have the man who inspired the movie version of Tony Stark –Tesla founder Elon Musk.
Musk and Tesla haven’t invented the arc reactor, but they are making rapid incremental improvements to a more down-to-earth technology — the lithium-ion battery. Tesla’s planned “gigafactories” in Nevada and (possibly) New York will harness economies of scale to an unprecedented degree, building on improvements that have slashed battery-based energy storage costs during the past two decades.
Just to give you an idea of how fast battery costs have declined, here is a chart (via futurist Ramez Naam) showing how the amount of energy that can be stored in lithium-ion batteries per $100 rose from 1991 to 2005:
That data is from a 2009 study by Duke University. Nor did storage efficiency stop after 2005; according to Naam, the cost of electric-car batteries declined by 40 percent from 2010 to 2013. The Tesla gigafactories are projected to drive costs down at an even faster rate.
These declines, unlike the recent 50 percent drop in oil prices, are not temporary. They are driven by increasing demand, which spurs technological progress — not by reduced demand, which lowers the oil price. In the case of oil, new technologies such as fracking allow us to get more oil, but always at a higher cost than before — in the case of batteries, technology just keeps getting better and better.
A 2011 McKinsey & Co. analysis reported that battery prices would have to drop by about three-quarters to make electric cars cost-competitive at gas prices of $2.50 per gallon. But that was four years ago, and battery prices have continued falling. We could see cost-competitive electric cars taking over the road in as little as a decade. That’s how fast the cost trend is moving.
Of course, that will require extensive modifications to our transportation-energy infrastructure — we’ll need to replace gas stations with charging stations. That’s why Iron Man – er, Elon Musk – has decided to allow other companies to use Tesla’s patented technology free of charge. When other car companies get in on the electric-car game — such as General Motors, which just announced a new electric car, the Chevy Bolt — the incentive increases to build more electric-charging infrastructure. The more charging infrastructure gets built, the more incentive there is for consumers to buy electric cars, and so forth — a classic case of a network effect.
Electric cars won’t free humanity from the need for oil. We also use oil for making plastics and other products, and for heating. Heating oil will eventually be supplanted by solar power, of course, for which Musk’s batteries will also come in handy (bye bye, utility industry!). And we use oil for jet fuel, which can’t easily be replaced with batteries.
But ground transportation still makes up the bulk of our oil use. So when batteries advance to the point where oil is no longer used for cars and trucks, the Saudis, Russians and Iranians will find themselves selling what is suddenly a niche product. And simultaneously, the U.S., Japan, Europe and other energy importers will find themselves free from the yo-yo of global oil prices.
In other words, it’s less than two decades until we are free from the yoke of the petrostates and their nasty, backward regimes. Go Iron Man! …Um, I mean, Elon Musk.
30 Comments on "Get Ready For Life Without Oil"
Plantagenet on Sat, 17th Jan 2015 4:33 pm
Unfortunately, cheap oil is likely to hurt future electric car sales. EV sales have stalled and dropped, while sales of SUVS and giant pick-ups have jumped since the price of gas dropped due to the oil glut.
James on Sat, 17th Jan 2015 5:17 pm
Lithium is a non-renewable resource. After we get everything on lithium battery power, the cost of lithium will go up.
GregT on Sat, 17th Jan 2015 5:23 pm
EV sales never accounted for much to begin with Plant. A niche market for the few that can afford to put the money up front, with the hopes of recuperating it at some point long down the road.
Giant pick-ups and SUVs have dominated the markets for the past several years, when oil prices have been at all time historical highs. While your statement may be factual, it is misleading, and a misrepresentation of reality. As usual.
DMyers on Sat, 17th Jan 2015 6:54 pm
Can we front enough EVs and other electrically powered machinery to provide a stream of raw materials to make batteries to run the EVs and other machinery that provide the stream of raw materials to make batteries, which are necessary to run the EVs and machinery that provide a stream of raw materials to make batteries?
“So when batteries advance to the point where oil is no longer used for cars and trucks, the Saudis, Russians and Iranians will find themselves selling what is suddenly a niche product.” [quoted from the article]
I can almost taste the sweet revenge. The Ruskees, sheiks, and various survivors of our military attacks in the Middle East left with nothing but a lousy “niche product” to their names. And all it will take is a cheaper battery.
shortonoil on Sat, 17th Jan 2015 7:06 pm
There seems to be a complete lack of comprehension regarding the oil crisis we are facing. The problem is not a lack of oil, it is a lack of oil that can be economically converted into fuels. We have already consumed 86% of the world’s usable supply, and the remainder will be of ever lower value. The price will decline, production cost will increase, and the highest cost producers will be continually priced out to the market.
http://www.thehillsgroup.org/depletion2_022.htm
It doesn’t seem likely that the world of tomorrow will have much resemblance to world that we know today.
http://www.thehillsgroup.org/
Perk Earl on Sat, 17th Jan 2015 7:11 pm
“In other words, it’s less than two decades until we are free from the yoke of the petrostates and their nasty, backward regimes. Go Iron Man! …Um, I mean, Elon Musk.”
I’d like to remind this Author that we still have the problem of declining EROEI. Energy must come from somewhere and so far we’ve built civilization on cheap energy. It remains to be seen if we can run things on expensive energy.
Think of it this way; take that energy pie chart which shows oil provides 33% of the world’s energy and start eliminating it as more EV’s take the place of ICE’s. If that energy is going to be replaced by renewables, then someone better get real busy. If most of the energy for EV charging is going to come from NG & coal plants, then we’re only shifting from one FF to another.
The bigger question is; Can a modern civilization like this be run on renewables? I mean use it to liquefy steel, fly jets, propel aircraft carriers, as well as continue to grow the economy. That’s the part that seems untenable.
Newfie on Sat, 17th Jan 2015 7:13 pm
Electricity is not an energy source. It’s a means of transmitting energy. Where is the energy for electric cars going to come from ?
Makati1 on Sat, 17th Jan 2015 7:42 pm
Another BS article from the techie dreamers. Gotta wonder what they smoke or swallow.
shallowsand on Sat, 17th Jan 2015 9:30 pm
Newfie, why our 100 year supply of clean burning natural gas, of course.
Speculawyer on Sat, 17th Jan 2015 9:33 pm
“EV sales have stalled and dropped”
No, that is NOT true. Hybrid sales have dropped . . . EV sale have continued to grow.
There is a divide, the progressive early adopters are still moving forward. The more casual consumers that have looked at a hybrid as a way to save on gas have backslid. I think those people will be regretting their purchases a couple years from now.
Speculawyer on Sat, 17th Jan 2015 9:35 pm
“Another BS article from the techie dreamers. Gotta wonder what they smoke or swallow.”
Yeah. Why even try or have hope? Much better to become a bitter old doomer that calls everyone stupid. That’s so much more fun and useful.
Speculawyer on Sat, 17th Jan 2015 9:37 pm
“Lithium is a non-renewable resource.”
You might want to take some science courses. Lithium is an element . . . the third most abundant element in the universe. It is recyclable.
Thor on Sat, 17th Jan 2015 9:44 pm
“Yeah. Why even try or have hope? Much better to become a bitter old doomer that calls everyone stupid. That’s so much more fun and useful.”
Better that than being a fucking retard.
Kenz300 on Sat, 17th Jan 2015 10:49 pm
Electric / hybrid technology and battery technology continues to improve every year……
The first/second generation of the Iphone was really cool but the next generations were much better………..
The next generation of electric/hybrid cars, batteries and charging stations will all improve the owners experience.
The transition to electric vehicles has begun. Every auto manufacturer is now producing an electric vehicle.
It is time to end the oil monopoly on transportation fuels.
China rolls out the world’s largest electric car charging network – YouTube
https://www.youtube.com/watch?v=UkYHxiSrsHY&spfreload=10
GregT on Sun, 18th Jan 2015 12:26 am
“Yeah. Why even try or have hope? Much better to become a bitter old doomer that calls everyone stupid. That’s so much more fun and useful.”
Your fear is showing again Spec. How about acknowledging the reality of our predicaments, and then trying to come up with solutions?
GregT on Sun, 18th Jan 2015 12:34 am
“You might want to take some science courses. Lithium is an element”
Then of course, according to our science courses, Lithium is a renewable resource. We will never run out of Lithium because it is an element, and it is recyclable.
Rodster on Sun, 18th Jan 2015 5:50 am
Lithium won’t work because of the costs associated with it. EV vehicles are expensive and in order for it to work everyone or at least the vast mojority would need to convert. Batteries are expensive and the MAIN problem is real wages have gone down to levels of 30-40 years ago, so most won’t be able to go out and buy an EV vehicle.
As Short and Gail Tverberg have mentioned many times. It’s NOT the amount of oil available but the price at which the consumer can pay. Our entire industrial civilization was built on inexpensive oil. The exponential growth required in the global economy is based on cheap oil. As the cost goes up, the growth of the economy goes in the opposite direction.
Lithium technology would have a greater negative impact on the economy becuase people are tapped out around the world. It’s like trying to squeeze blood out of a turnip.
Whatever replaces oil needs to be readily available and CHEAP with minimal cost to the end consumer. Sadly, it doesn’t exist.
Dredd on Sun, 18th Jan 2015 7:16 am
In the political brainless storm and circular reasoning world, the only thing that will replace crude “the lifeblood” oil is the era of catastrophe we have entered.
It gets worse.
Kenz300 on Sun, 18th Jan 2015 10:18 am
Electric cars are the future…….
We can deal with the cause of Climate Change (fossil fuels) or we will deal with the impact………
Pope Francis’s edict on climate change will anger deniers and US churches | World news | The Guardian
http://www.theguardian.com/world/2014/dec/27/pope-francis-edict-climate-change-us-rightwing
UK13 AMP on Sun, 18th Jan 2015 11:15 am
If you take a step back, infact if you go back so far that you are at the other side of the field, you can see the whole story..
American shale has flooded the market. Where did it come from? Experts spent 26 years developing it, then waited. Then in 2007/8 their chance came. Oil was trading at a record high of $147 BBL and interest rates had just plummeted from 6% to 0.5%. Bingo, record low borrowing costs to finance something selling at a record high price! In they piled…
They have spent years doing the same thing.. Now there are too many of them, Doh! Too much oil has caused the price to crash. If you look on the specialist websites they will not admit that they are losing millions a day, their backers have a $660 trillion exposure, so you will not read anywhere that they are panicking. But if you look at the well caps and onshore rig counts you will see that they are rushing into hibernation mode, just as we are properly coming out of global economic collapse
Result? Booming world economies and not enough oil being produced. Little hope of extra oil coming online as last time the “experts” backed exploration, extraction & refining, they lost big time. Nobody thought it could plummet, so why invest when you know that will happen. So, oil shortages mean spikes in prices… How many electric cars could you buy in 2008?? Anybody??
In the 2015 oil price spike you will be able to choose from over 30 proven electric cars that already have a refuelling infrastructure in place.. Bring it on….
Bob Owens on Sun, 18th Jan 2015 12:40 pm
Can this dream come true? Maybe. It is just on the outer edge of possible. Still, I have a more fundamental problem. We are unable to maintain our current bridges and roads; even if the car fleet is everything this article says it is, we will need roads. Roads are almost all oil; nothing else except concrete substitutes. So if we can’t maintain our roads, now or in the future, what good will the cars do us? This is more dream than reality, I am afraid.
hculliton on Sun, 18th Jan 2015 12:43 pm
Someone please correct me if I’m wrong, but I think that any battery is basically just a way of storing energy, not making it. Thus the problem is the same: we are still an incredibly energy-intensive civilization made possible by use of an energy-dense non-renewable source: oil. And we still don’t have any power source as dense as oil.
GregT on Sun, 18th Jan 2015 2:02 pm
According to:
http://www.greencarreports.com/image/100484503_plug-in-electric-car-sales-in-canada-september-2014
There have been 9200 electric vehicles sold in Canada from January of 2011 until September of 2014. During that same time period, there were ~7 million non-electric passenger vehicles sold in Canada. There are currently 21 million vehicles under 4500 kilos registered in Canada. If current EV sales numbers are maintained, it will take 2,282 years to replace the entire Canadian fleet of passenger vehicles with EVs. That would be approximately 2,250 years too late.
doug on Sun, 18th Jan 2015 4:45 pm
The energy stored in oil comes from the energy stored in covalent bonds. The energy stored in batteries comes from energy stored ionic bonds. No contest
You need about 100 lbs of batteries to get the energy stored in one pound of oil.
Makati1 on Sun, 18th Jan 2015 7:13 pm
GregT, you are using facts to prove that the dreamers are wrong, but their brains (if they have any) are not programed to accept facts. You and I know that, just because something seems possible, does not mean that it can or will happen. (Remember the Jetsons?) Any number of “facts” get in the way.
First, and number one in importance, you need a lot of consumers with the ability to consume. That is a dying breed, even in Asia where Tesla sales are way down.
Then you need the infrastructure to actually make the product and distribute it. Thousands of people all over the world, not to mention equipment and transport.
Then you need the facilities (roads, bridges, fueling systems, etc.) to actually use it. The US is already condemning bridges and not replacing them and it’s electric grid could not handle any significant increase in electric vehicles.
ALL of the above require cheap, abundant oil. Not techie dreams.
Makati1 on Sun, 18th Jan 2015 7:15 pm
doug, thanks for the “facts”. Most don’t realize how under valued oil has been for the work it can do. But, I think we are all about to find out, when that work has to be done by our own tired muscles.
Keith_McClary on Sun, 18th Jan 2015 9:16 pm
Re the graph, I’ve been looking for up-to-date data, but can’t find any for some reason. Even Bloomberg can’t. Hmmmm.
steve on Sun, 18th Jan 2015 11:22 pm
while I don’t think lithium will save us I am not completely averse to the idea that something might change our dynamics. What was our world 100 years ago….200 years ago…I am pessimistic that we will not come up with something…but I am also optimistic enough that that I still leave the door open….so spending your time attacking people for their optimistic views is just a waste of f### time which none of us have much left of….
Makati1 on Mon, 19th Jan 2015 2:04 am
steve, leaving the door open is not a bad thing, IF you realize that it is not likely to be a plus. I gave up on ‘miracles’ a long time ago and it is easier to live in the real world. I found out that it is more likely that a hungry lion will come through that open door than a unicorn.
Davy on Mon, 19th Jan 2015 5:55 am
Short’s message rings true and his figure of societies 85% of available economic oil used should turn heads. That equates to a few more years of BAU. BAU is highly efficient at extracting oil. We are peaking in this ability to extract oil through markets and technology. Our financial system is also peaking from limits of debt and diminishing returns of financial repression. We are now on the bumpy descent down with new rules. Descent has a whole other set of parameters that will shape progress. And yes descent is progress because BAU is not exceptional. BAU is not the center of the universe so the end of BAU is progress of another sort.
What we have now is much of what we are ever going to have in the descent as far as the physical. Not much more population growth or infrastructure build out is likely to occur because we lack the energy and the time. Limits of growth and carrying capacity will most likely stop population dead in its tracks. Our good attitudes and knowledge are limited for mitigation and adjustment efforts. There is just not the time to properly educate enough people in sound resilient and sustainable practices with the depletion of ETP oil and lack of available time to transition.
What is needed at this point is every resources and tool available for the power down civilization is heading into. Each technology has a niche and application to a local somewhere. It is finding the right match in time to help locals transition. We have the need for a thousand different strategies and tools to negotiate this power down. We are heading from global to local with a regional flavor. The various regions in the world have comparative advantage where these different technologies will take root. The seeds are there currently. We just don’t know how much time there will be to implement and build out some of these great technologies.
We know time and energy is limited. It appears the financial system will be limited. These three factor are vital for transition and unstable currently. We need BAU to transition out of BAU. I am optimistic paradoxically for a crisis that will change attitude and lifestyles away from failure towards resilience and sustainability. The crisis coming will be from the financial and oil sector. The unfortunate reality is time, energy, and capital will not be there for a painless transition. Let us utilized good technologies in their sweet spots. There are no silver bullets but there are many arrows.