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Page added on September 3, 2016
Driving to the end of the Oil Age
The $8 trillion energy industry is about to be turned on its head, says a futurist and tech pioneer.
Ramez Naam, who is heading to the SingularityU summit in Christchurch later this year, says that by 2030 the world’s oil consumption will have peaked and time is running out for coal as a viable fuel.
While his predictions differ markedly from the views of organisations such as the International Energy Agency, he says solar, batteries and wind generation are getting cheaper every year and will come to supplant fossil fuels.
“The big message is that energy is an exponential technology. The price of that technology is plunging.”
At the same time, political momentum is building around the world to tackle climate change and the businesses that adapt will thrive.
The head of the country’s biggest fuel retailer, Z Energy’s Mike Bennetts, expects big changes too, but says his company regards the move away from fossil fuels as an opportunity, not a threat.
Naam spent 13 years at Microsoft, where he led teams developing early versions of Microsoft Outlook, Internet Explorer and the Bing search engine. He holds 19 patents related to search engines, information retrieval, web browsing, artificial intelligence and machine learning.
He says around the world there is a willingness to make clean energy cheaper than dirty energy.
“Our only chance to beat climate change is through technological innovation. People will buy energy they find the cheapest and we’re on a path to doing this.”
He says the energy market will be upended and players in the industry will be “incredibly disrupted”.
While the price of coal recovered slightly in the first part of this year, its value is down dramatically from its historic highs, mines and export terminals in Australia are economically “under water” and the largest coal companies in the US have lost most of their market value in the past few years.
Naam says most oil consumption will have peaked within 15 years because of the penetration of electric vehicles. They will get cheaper and be powered by longer lasting, more robust batteries.
It is peak demand – not peak oil – that will end the oil age, he says, referencing a famous quote from a former Saudi Oil Minister, Sheikh Zaki Yamani, in the 1970s: “The Stone Age did not end because of a lack of stones and the Oil Age will end long before the world runs out of oil.”
While Naam acknowledges the number of electric vehicles (EVs) on the road now is minuscule – just over 1 million in a global vehicle fleet of more than 1 billion – the growth rate off this low base is about 60 per cent.
A decade from now about three to four per cent of cars will be electric, he forecasts. Light trucks will steadily be brought into EV fleets and then heavy trucks that could be charged up from wireless pads.
Naam lives in the US, where just 15 per cent of power is generated from renewable sources (in New Zealand it has been up to 90 per cent at times this year) but even there, he says EVs are still more environmentally friendly.
“Even if you fuelled up with coal generated electricity, it’s still better than burning petrol. If you buy an electric car it gets cleaner as the grid gets cleaner.”
If current trends hold, EVs will be the cheapest cars on the market.
Through a package of measures, the New Zealand Government wants to double the number of electric vehicles in this country each year, to reach 64,000 by 2021.
While Energy Minister Simon Bridges is enthusiastic about encouraging EV uptake, he also promotes this country as a good place for oil companies to explore and hopefully discover large fields, this week saying the transition to a low-carbon economy needs to happen in an “orderly” way and petrol will be needed for many years to come.
The big message is that energy is an exponential technology. The price of that technology is plunging.
He’s said in the past that this country could be like Norway – an oil exporting giant but with 100 per cent renewable power and a high number of EVs. Bridges reckons New Zealand, too, “can chew gum and walk at the same time”.
Naam says the transition to clean energy will be long and hard.
But coal workers can be retrained to work in the solar industry, and could earn more there.
During this transition fortunes will be made, and lost.
“Over the next 50 years US$200 trillion will be spent and the leaders in deploying these things – solar, wind, batteries and EVs – are going to be gigantic winners.”
Z’s Bennetts has spent more than three decades in the fossil fuels industry, once an oil trader for BP and for the past six years in his current role.
He’s as prepared as he can be for what’s around the corner.
“Whatever anyone says about the future, we’re probably all individually likely to be wrong. We work more in the realm of scenarios.”
Bennett’s doesn’t expect the service station industry to be disrupted overnight.
“We see ourselves as being able to take advantage of the opportunities, not the threat, of moving away from fossil fuels,” he says.
Z is “agnostic” about what sort of energy is flowing in the forecourt. “We’re in the energy business so we’re somewhat agnostic about what we sell. We don’t go around drilling for oil and gas so we have no upstream investment.”
His company is about to start producing commercial scale biodiesel, has tendered for a jet biofuel project for Air New Zealand and dipped its toes in the EV charging market in a handful of sites.
However, Bennetts says he is not keen on launching a headlong push into charging stations.
“As much as we’ve invested in some EV charging stations, I’d be reluctant to put in 210 of them across our network.”
It’s not just a question of will my business be a winner or a loser, but how do we train people, how do we educate our kids.
He says it could be like investing in VHS video technology at the point MP3 technology arrived. The future of charging could be swap-out batteries or charging pads on the road.
Z is the summit’s big backer. Bennetts says the decision to sponsor the conference was driven by the hope that small businesses will be able to share in some international thinking on exponential tech.
While he says the “big end of town” could get to technology hotspots like Silicon Valley, smaller firms couldn’t afford it.
“New Zealand suffers from being at the bottom end of the world and that’s why we’re sponsoring the summit.”
Bennetts says the gathering will also hear about the consequences of rapid technological change.
“Artificial intelligence is replacing professional jobs – it’s not just robots replacing manufacturing jobs.
“There’s a social perspective on this. It’s not just a question of will my business be a winner or a loser, but how do we train people, how do we educate our kids.”
Singularity summit
• SingularityU New Zealand Summit is a 3-day conference, hosted by Singularity University in tandem with NZ organisations and companies.
• The summit will be held in Christchurch on November 14 to 16.
• The goal is to uncover cutting edge, “exponential technologies” in New Zealand and how they can be used to create positive change and economic growth in the region.
• The conference will hear from experts in artificial intelligence, biotechnology, energy, self-driving cars, crime, technology and public policy, medicine, strategic relations, bioengineering and the future of work and education.
• It will look at how to create “exponential” organisations or adapt our existing corporations and organisations to work best in this new, evolving environment.
• Singularity University (SU) is a benefit corporation, headquartered in Silicon Valley, with alumni in more than 110 countries.
62 Comments on "Driving to the end of the Oil Age"
ghung on Sat, 3rd Sep 2016 8:22 pm
peakyeast9 said; “@cloggie: I agree that we could do a great power down to for example the level of Croatia or even lower and in SOME places keep a reasonable lifestyle.”
That’s a big part of the trap of surplus-enhanced economies that most folks don’t grok. I know from personal experience that individuals, families, and small groups can live a lower energy/consumption lifestyle and actually improve their lives in many ways. If enough people do that, or if it goes society-wide for whatever reason, [Chubb scores!] a lot of people lose their jobs, debts don’t get repaid; all sorts of consequences. Powering down necessarily means powering down GDP. Only the Big Reset will bring this about in any “equitable” way, and that will be oogly.
peakyeast on Sat, 3rd Sep 2016 8:32 pm
@ghung: I completely agree. I speculated about writing it explicitely, but settled on to referring to all the “other problems”.
peakyeast on Sat, 3rd Sep 2016 8:39 pm
The biggest problems will be that the rich will lose so much – and they are at the same time the powerful and the psychos and they are connected to all the other oligarks.
I will always remember bush the stupid saying “The american way of living is non-negotiable”.
ghung on Sat, 3rd Sep 2016 8:43 pm
These folks who advocate “planned degrowth” are going to have to find jobs for a lot of people who make their livings off of surplus consumption, and a way to forgive a shitload of debt. I’ve seen estimates that as many as 50% of people working in western economies are dispensable; don’t actually produce anything necessary or substantive; those “intermediaries” you read about.
peakyeast on Sat, 3rd Sep 2016 9:23 pm
Yeah – we already see the tent cities in USA.
We also have hordes of poor eastern europeans here in Denmark –
Besides ½ the population works in the public sector – where they pretend to create something of value, but are actually just controlling the freedom of the other ½.
I suspect the amount of useless workers are greater than 50% here in Denmark.
It is just like Chris Martenson said: “Mid-west regional communications coordinators for the special olympics would hmmmm have to find something else to do” 😀
ghung on Sat, 3rd Sep 2016 9:57 pm
I had a neighbor whose job was to “create demand for advertising”. I never quite figured out what it was she actually did, but she made a six-figure salary and spent a lot of money. Her hobby was travelling. Pure surplus-dependent employment, that.
Davy on Sun, 4th Sep 2016 8:17 am
The “degrowth disconnect” and the “power down” fantasy are alive and well with those who want to bargain with collapse. If degrowth had any benefits to the status quo global system it would be practiced. Instead all economies and their central banks I watch are doing everything in their power to avoid deflation and the decline in economic velocity. A small amount of degrowth and reduced energy intensity is possible without breaching minimum operating levels. This small degrowth is a mild recessions. Mild recession are beneficial and part of the normal course of the business cycle. The inconvenient fact today is we have been extending a recession now for multiple years making the next recession extremely disruptive because of multiple distortions and dispersed risk. I equate it to the disruptive effects of extinction in our earth ecosystem. Our economic system is a mirror image of our earth ecosystem.
The problem is today we are already in recession by many normal economic metrics. This is distorted because we are in a new normal of adapted metrics that cloud this condition with manipulated indicators. We have markets that are repressed with low rates along with easing all of kinds which distort and change normal dynamics. This easing is overt and covert. It is psychological and physical. It has now beyond control and become maladaptive. This is disruptive and regressive. We have an economic pie that has stalled and not in real growth. Wealth transfer is keeping part of the economy in growth as other parts decays.
There are always consequences and trade-offs in the real world. It is our modern civilization that can manipulate consequences with narratives. A powerful tool of governments and central banks today is the narrative. We know how powerful propaganda is. Our civilization that is locked in competitive cooperation has one common denominator across the board and that is confidence in trade and exchange. We have become so large the only way to maintain liquidity is confidence. In the past normal growth and the habituated comfort of knowing future growth was ahead kept us growing. It allowed us to progress and leave behind old ways. Once confidence is breached with fear we are going to degrowth systematically. The authorities know this and are doing everything in their power to reflate economic velocity and maintain confidence. We are on a knife edge of confidence and fear as a result.
Degrowth is not going to solve our predicaments that are catch 22 traps. Lowering carbon will lower economic activity which will destroy our global system. We need more activity to solve problems of every kind. We need more energy. All energy is dirty and disruptive. Renewables are not going to solve the problem of degrowth of carbon because they require a healthy economy to produce them. A healthy economy must be energy intensive. Our techno-greens want to think we are becoming more efficient and decoupling economic activity from energy intensity in addition to thinking we are making energy cleaner. We know NUK and gas are not clean despite the talk they are. We laugh at the dead cat bounce of coal claiming it could be clean with carbon sequester. You cannot lower energy intensity and or economic activity today beyond a mild recession and continue the system. This includes the reality that surrounds energy. Renewables are not clean because they can only be produced in a robustly dirty economy.
We cannot add much debt to the system for systematic reasons. Debt is misunderstood as being a quantity but it is more a state of being. There is a fixed amount of physical product. Debt is just the economic relationship between participants. The problem with debt is systematic. Too much debt means too many will be exposed to debt service as returns on economic activity shrink. Too much investment without productive applications do not produce returns. Malinvestment leads to bad debt and bad debt to collapsing economic activity. The authorities are fighting this with extend and pretend polices. They are in a command and control mode of an economy that was built on market fundamentals of price discovery and accounting standards. Debt has been misused so it is now a liability not a tool.
If we try to degrowth then we are lowering economic participation at a time of limits and diminishing returns. We are in a situation of multiple industrial sectors that are not productive but we must keep them operating because of excessive debt. They are in effect bad debt and not producing real returns and they are being discounted, disregarded, and or relabeled. This only created decay and dysfunction in the longer term. We clearly see that today with monetary and economic realities. We see it in distorted prices. We see it is skewed trade relationships. Degrowth is happening but not the kind we think would be beneficial. An economic collapse will bring a reset but at great cost and with little understanding of what will result. Degrowth is the catalyst of collapse in our growth based system. Anyone who preaches it as a remedy needs to also mention the cost. Today in a world of 7BIL that cost is a die off.
Kenz300 on Sun, 4th Sep 2016 9:31 am
Climate change will impact all of us and future generations
It is time to move away from fossil fuels and embrace renewables like wind and solar.
Big Oil’s Nightmare Comes True – EcoWatch
http://www.ecowatch.com/california-climate-policy-1988157045.html
Boat on Sun, 4th Sep 2016 3:04 pm
G20 Summit: Japan warns it will take banks and car makers out of UK – unless it gets Brexit trade deal
In particular, the document says Japanese firms would like to see the following agreed between Britain and the EU:
Maintenance of trade in goods with no burdens of customs duties and procedures
Unfettered investment
An environment in which services and financial transactions across Europe can be provided and carried out smoothly
Access to workforces with the necessary skills
Harmonised regulations and standards
It called for Britain to avoid trade tariffs and suggested that it should also enable workers to move easily between the UK and Europe.
Half of Japanese investment in the EU comes to the UK including companies such as Nissan, Honda, Mitsubishi, Nomura and Daiwa.
The report concludes:
“Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to continental Europe if EU laws cease to be applicable in the UK after its withdrawal,” the report concludes.
It says: “In light of the fact that a number of Japanese businesses, invited by the government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”
http://www.telegraph.co.uk/news/2016/09/04/g20-summit-us-president-barack-obama-says-britain-was-wrong-to-v/
JuanP on Sun, 4th Sep 2016 9:35 pm
Peaky “I suspect the amount of useless workers are greater than 50% here in Denmark.”
In Miami the amount of useless workers is probably more than 98% and the amount of useless people is definitely higher than 99%. In Uruguay the amount of useless people is at least 90%. Most people in the world are completely useless, IMO.
Cloggie on Mon, 5th Sep 2016 3:50 am
Here pictures from Calais with trucks on the way to the EuroTunnel and Britain. Here the cursings of an Hungarian truck driver (with English subs.lol), Hungarians are hands down my favorite Europeans, not been a US colony and hence not political correct:
https://youtu.be/Rkaw2YLyX3Y
What you see is the controntation between truckers from all over Europe and rapefugees/invaders from Arabia and Africa. The latter attempt to brake into trucks in order to get to Britain as a stoaway.
Since the anti-authoritarian 1968 revolution there are no authorities anymore in France, just leftist human rights cowards, so thousands and thousands of these colonizers are allowed to terrorize economic processes with impunity. India has holy cows, we have rapefugees who can do what they want.
Since the British have begun to fine any trucker who unintentionally brings in a rapefugee with 1200 euro, a lot of Dutch and other truckers now refuse to transport goods to Britain, just because the French police refuses to do its work and bulldozer these monkeys from the road.
Birds-eye view Calais situation (or Kales rather because it used to be a Dutch town, like Duinkerken/Dunkerque until Lou14 decided otherwise):
http://www.geenstijl.nl/mt/archieven/2016/08/luchtfotoos_zo_groot_is_campin.html
Dailymail reports about practices by rapefugees to blockade roads with trees, climb on trucks and use knives to cut the trucks open from above and hide in the truck:
http://www.dailymail.co.uk/news/article-3772571/Carnage-Calais-Horrific-crash-jungle-migrant-gangs-target-tourists-cars-MoS-journalists-badly-hurt-terrifying-new-ambush-technique.html
The French proposed a solution to, well, transfer the camp to Dover and let the British deal with it.lol That btw was until last year the approach every southern country applied by waving through the invaders to the frontier in the north, until Orban the Great, peace be upon him, began to build a fence, forcing all countries south of Hungary to do the same, otherwise they would be stuck with hundreds of thousands undiserables. Currently Greece is stuck with them.lol Well, let them do something for a change for all these hundreds of billions of euro’s northern Europe pumped into that sorry excuse of a country.
Yesterday the voters of Mecklenburg-Vorpommern, the home base of Merkel the Small, did their duty and gave Merkel a huge electoral slap in the face by voting the Fortress Europe party AfD (Alternative for Deutschland) from 0 into second position, ahead of the CDU. The position of Merkel has become very shaky and the Bavarian branch CSU of the Cristian Democrats are already hinting that it is perhaps a better idea that Obama’s bitch will pack her bags.
Big changes are coming to the West. Won’t be long until everybody there attempts to be a Putin clone, in Europe and in America.
Kenz300 on Mon, 5th Sep 2016 10:37 am
Too many people and too few jobs………….
Yet the world adds 80 million more people to the planet every year………