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Page added on October 12, 2014
Bill Reiner Interview: Peak Oil
This posting is the first in what will be a series of Monday posts which are portions of an interview that I was privileged to do with Bill Reinert this past summer. Reinert has about the most wide-ranging knowledge and understanding of energy issues of anyone that I’ve ever come across. I also happen to think that he’s one of the most logical voices you’ll ever see on energy, transportation, fuels, and other important environmental issues. His views are firmly grounded in reality since his life’s work was spent trying to solve energy problems in the industrial world. Because of this, they can be rather unpopular with wishful-thinkers or Elon Musk worshiper-types.
The first part of the interview which covered car technology and fuels (including corn ethanol and more ideal octane boosters) was published over at Yale Environment 360 last week. I encourage you to read it.
Today’s question (below) is about the subject of “peak oil”, a critical issue for an energy engineer who was responsible for future car technology at Toyota.
But first, his bio…
Bill Reinert was national manager of Toyota Motor Sales U.S.A. Inc.’s advanced-technology group for the past 15 years prior to his retirement in 2013. In his 23 years with Toyota, he also traveled millions of miles for the company as a spokesperson. He was responsible for long-range product planning of all alternative-fueled Toyota vehicles. He co-led the U.S. product-planning team for the second-generation Prius, and, also worked on several advanced hybrid electric products, direct hydrogen fuel-cell vehicles, and plug-in hybrid concepts. As an energy engineer, his career-long work in the area of renewable energies always centered around life-cycle analysis studies. A staunch environmentalist, he helped establish a global model for cleaner energy use in the Galapagos Islands in conjunction with the WWF. He has aerial-viewed the tar sands project in Canada and is concerned about water use in energy, believing that the clamor for energy security could eventually trump all environmental concerns worldwide. As a futurist, and a leading global expert on energy and transportation trends, he helped to found the annual “Meeting of the Minds” events which focus on future smart urban planning, transportation, and energy use, and at which he was an annual speaker from 2007 through 2012. He was in the Principal Voices Program with CNN, Fortune and Time, has testified before the U.S. House of Representatives Subcommittee on Energy and Air Quality, the National Academy of Science, and he has chaired sub-groups of the National Petroleum Council’s Future Transportation Fuels and Vehicle Systems studies for the Department of Energy.
K.M.: Over the years, you have been a trusted expert on the subject of “peak oil”. But, then, two years ago you said, “Conceptually, peak oil is not an accurate description.” Could you expound on why the term “peak oil” doesn’t describe the current and future energy situation very well?
Reinert: The idea with peak oil is that there’s a finite amount of oil that’s extractable from the earth, and if you look strictly with blinders, that’s more or less true. Peak oil theorists tend to look at oil only from the supply side and consider demand will continue unabated. Therefore they always see a gap in the demand for oil and the amount of oil that can be extracted in the future. Other oil analysts only look at the demand side and assume that somehow supply will always increase to meet demand.
The truth is different. The price of oil is generally judged by the spare capacity. Any amount under two or three percent spare capacity results in big price rises.
We watched the price mechanism work in 2008, and the peak oil theorists really ought to take a look at that. They are going on the notion that oil is inelastic, that you have to use it, and if it’s not there then the price is going to shoot right up and you’ll have angry villagers in the street with pitchforks. This is not going to happen.
What happens is exactly what happened. The price went up, we had a recession, and we quit using oil as much. It was painful, but today we’re still using less oil and we’ve become more fuel efficient. So it’s a stair step ratcheting process and each time the prices get too high for the economy, then the demand for oil goes down.
I don’t really ever think you’re going to see a peak oil. I think that what happens is after time the cars become more efficient, society changes, and you move on.
25 Comments on "Bill Reiner Interview: Peak Oil"
J-Gav on Sun, 12th Oct 2014 8:44 am
“Cars become more efficient, society changes and you move on.’ Makes it sound easy, doesn’t it?
I’ll admit I’m a little suspicious of a piece where the bio is longer than the article itself …
It’s hardly surprising for me that what is not said here is more important than what is: e.g. the pre-supposition that technological innovation will enduringly allow us to be ‘more efficient’ and to ‘move on’ with a vastly reduced use of fossil fuels. Hail Mary!
Makati1 on Sun, 12th Oct 2014 9:05 am
I suspect any of the 1% when they seem to talk about ‘saving the world’. Especially after a lifetime of chasing the buck. There is ALWAYS a profit in it for them. ALWAYS!
shortonoil on Sun, 12th Oct 2014 9:06 am
When an engineer puts economics ahead of thermodynamics the two questions to ask are:
1) What school did they go to?
2) Who are they working for?
The petroleum situation is not a volumetric problem, it is an energy problem. Any engineer analyzing petroleum, who has not taken a very close look at that, isn’t worth 10 cents an hour!
http://www.thehillsgroup.org/
Plantagenet on Sun, 12th Oct 2014 9:23 am
Mr Reinart doesn’t know what peak oil means. He denies peak oil will occur because he imagines it means something different then it actually does.
GregT on Sun, 12th Oct 2014 10:55 am
Mr. Reinart sounds more like a car salesman, than an energy expert. There is no such thing as ‘more or less’ finite. Something is either finite, or it is not.
Fail.
eugene on Sun, 12th Oct 2014 11:10 am
He’s a car man. Agenda/product to sell.
Nony on Sun, 12th Oct 2014 11:17 am
Peakers have failed to understand how price mechanism would drive long-term changes in usage and would enable new extraction. Even how price would drive R&D.
Kenz300 on Sun, 12th Oct 2014 11:28 am
High oil prices will cause reduced demand and more use of alternatives.
Some of those alternatives will be walking, biking and mass transit.
Nony on Sun, 12th Oct 2014 12:11 pm
Just cutting out the random trips does a lot. Why do you need to drive your SUV to Starbucks for overcooked coffee? The worst was my enviro-buddy who would drive his SUV across his townhouse compound (less than a half mile) to drop off recycling in special bins. Foofoo Californian.
I walk or bike to most things (live in a city loft, urban Republican). Bike to the city Y to lift with the brothas. Get cardio just from the transit. Just use the car for commutes for work, doc visits, and groceries (and sometimes I haul groceries by hand…if not a lot, or the streets have that occasional urban uncleared snow).
yoananda on Sun, 12th Oct 2014 1:09 pm
yeah, everybody can buy a new car twice (or 10x) the price of the old one to consume a little bit less gasoline !!!
Evebody knows that !
This guy should take a look a the average miles driven in USA … he would know that his theory of “efficiency gain” is just bullshit in the real world.
Jerry McManus on Sun, 12th Oct 2014 1:19 pm
Notice how he slipped in “It was painful” and then glossed it over.
Describing the greatest global economic disruptions since the last great depression as “it was painful” has got to be the understatement of the century.
So, that obviously begs the question: At what point does the “ratchet” become so painful that the angry villagers do in fact come out in the street with pitchforks?
Something tells me we will soon find out.
rockman on Sun, 12th Oct 2014 1:45 pm
Plant – Yep… same old ploy: change the definition of PO and then criticize its analysis. Not sure if he made any valid points since that statement stopped further reading.
Rivaz Ahmed on Sun, 12th Oct 2014 1:51 pm
OPEC claimed that $25 / barrel of oil is fair price. Later they bumped it to $45, then $75 and then $100.
They would have increased this to $130, but the rapid acceleration in fuel efficiency, hybrids, electric and alternative fuel vehicles has stopped this.
We have to credit Toyota for selling 7 million hybrids. But they don’t want to move beyond hybrids, this is the point where Tesla, Nissan & BMW want to take over.
This engineer may or may not accept peak oil, but the single dimention vertically drilled crude oil has PEAKED and its the 2 dimensional horizontally drilled shale that continues to increase the supply.
seahorse3 on Sun, 12th Oct 2014 2:21 pm
Toyota says PO 2020
http://m.youtube.com/watch?v=yVEZE2vM2oM
john on Sun, 12th Oct 2014 2:47 pm
Despite your heavy promo of this guy he clearly doesn’t understand what he is saying.
Westexasfanclub on Sun, 12th Oct 2014 3:16 pm
Peak oil is about the all time maximum of oil extraction. Period. If you have very fuel efficient cars on the downslope that is fine for the drivers. But nor a technofuturistic vision nor an apocalyptic one does change the concept of PO.
GregT on Sun, 12th Oct 2014 3:29 pm
Cornies have failed to understand how changes in usage, new extraction, and price driven R&D are merely one step down the staircase to depletion, and not the end result.
No more Starbucks, no more recycling programs, no more groceries from the downtown supermarket, and no more BAU.
Apneaman on Sun, 12th Oct 2014 3:38 pm
“7 million hybrids”
There are over a billion cars.
GregT on Sun, 12th Oct 2014 4:46 pm
People get somewhat confused by big numbers with lots of zeros behind them. 7 million hybrids are only .007% of the world’s fleet of automobiles.
MSN Fanboy on Sun, 12th Oct 2014 5:19 pm
7 million hybrids is just the start, if we truely lived in a expotential growth system, this will double every year.
MSN Fanboy on Sun, 12th Oct 2014 5:20 pm
Supply and demand, whoosh
JuanP on Sun, 12th Oct 2014 7:31 pm
Greg, I think you meant 0.7%, or seven thousandths of one billion. 😉
jmb on Sun, 12th Oct 2014 7:49 pm
“…it’s a stair step ratcheting process and each time the prices get too high for the economy, then the demand for oil goes down.”
Here he just undid his whole argument. For practical purposes the limits of fuel efficiency have been reached. Greater fuel efficiency will always be at least 15 years in the future.
GregT on Sun, 12th Oct 2014 10:17 pm
Sorry Juan, you are correct.
People get somewhat confused about big numbers with lots of zeros behind them.
Apparently myself included.
pinkdotR on Tue, 14th Oct 2014 10:20 am
In fact he admits peak oil WILL happen. It will just not result in infinite prices growth but in continuous reduction of demand. I can imagine that because most of our oil use is a waste. Just one of the examples of this waste is ~90% share of cars in transporting people and 10% share of public transit and not the other way round like it used to be before GM messed it all up. I can list more examples like that if anyone is interested.