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Financing The World Energy Industry Requires $22 Trillion

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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sat 06 Sep 2008, 09:06:35

$this->bbcode_second_pass_quote('seahorse2', '')$this->bbcode_second_pass_quote('', 'O')il production will begin its inevitable decline shortly, if it hasn't already.
That's seems a little doomerish Tyler. I personally don't think we are there yet. I sure hope not, bc the resulting economic ramnifications of that mean that there will be a depression (which we may be entering one already).
I don't see how that's doomerish. World oil decline is inevitable, and it could be upon us any day now. I actually watched a show on IFC and one guest stated we are already short of 1mbpd. That's his opinion, not mine; my oilstick doesn't reach that deep.

As for depression, the govt has been manipulating the "official" statistics for decades. I have no doubt we are in recession, which is second cousin to a depression.

That's not being doomerish.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sat 06 Sep 2008, 09:12:31

$this->bbcode_second_pass_quote('Tyler_JC', 'I') also think if we consume even a third of today's energy in 40 years, we'd still be living pretty decently. The infinite material growth mentality is not sustainable and I don't believe it is necessary.
Agreed. If we get passed the need to sustain constant growth, and live just a little bit more modestly, we can have wonderful lives and life-styles with half or less energy. It's like an engine; to maintain at 100mph is very easy, but to accelerate to 105mph and constantly 5% thereafter requires an enormous amount of horsepower.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby outcast » Sat 06 Sep 2008, 09:12:53

$this->bbcode_second_pass_quote('', 'N')ow, outcast, you don't read my posts very well do you. I have consistently said that the world will not come together, hold hands, and cooperatively invest $22 trillion in energy production and given several examples that fly in the face of that notion - like Russia, Venezuela, etc.


And not once did I say it would happen. It is each nations choice whether they invest the appropriate amount on their energy infrastructure, if they don't they suffer the consequences.

$this->bbcode_second_pass_quote('', 'E')ven with the western oil majors, the articles linked show that exploration budgets are essentially flat, meaning, not enough to make up for any increase in demand.


And yet Exxon is increasing it by several billion dollars.

$this->bbcode_second_pass_quote('', 'T')yler then suggested we are already spending that amount today, and nothing suggest we are.


Because different nations have different requirements, and in many places like the US there hasn't been as much investment as there should have been.

$this->bbcode_second_pass_quote('', '
')Now, I never said what would cause a depression did I?


A technicality. :P

$this->bbcode_second_pass_quote('', 'N')ow, as for your comment that oil will probably peak in 10 years, this is a guess based on what?


A crude awakening said something to this effect, although I can't recall the exact amount since it was late at night when I wrote this and I haven't seen the movie in a while.

$this->bbcode_second_pass_quote('', 'A')nd you think that 10 years is a long time? You must be young.

I turned 23 last summer.

$this->bbcode_second_pass_quote('', 'T')yler made the assumption that energy use would decline in a depression despite the fact that world population would continue to grow. I don't see how this is possible. More people means more energy use. I think your statement above confirms what I am saying, yet you seem to want to argue when we say the same thing. You said in the future fewer Chinese, who are growing in population, will live like cavemen. This means that China's energy use will continue to grow, which was my point to Tyler.

The African population has exploded and yet they [url=http://www.sudankpc.com/rockoil/rockoil.files/mideastafrcons.gif] don't use any more oil now than they did in 1980. China's increased energy use will not come from population growth (a little will) but rather it will be because of economic development and modernization.

$this->bbcode_second_pass_quote('', 'T')yler said China's population would peak about 2025. How he came up with that figure, I don't know.

UN

$this->bbcode_second_pass_quote('', 'B')ut I would hope it would peak now so that we could hope to possible contain their increasing energy needs. Now, you disagree with Tyler and argue their population will peak in 10 years, again, it is unknown how you arrive at this date or what their population will be in 10 years,

I arrived at this based on my guess work, I could of course be wrong. I think it might peak sooner than the UN estimates because the mass migration to the cities will make the one child policy more enforcable, of the young generation (people my age) in the cities a growing number dont want to have children, and even if they do they dont want more than one.

$this->bbcode_second_pass_quote('', 'Y')ou don't think India without a gov't would matter? You push the ridiculousness here. What about their nukes? It seems the world is very concerned with their neighbor Pakistan who is teetering on not having a gov't, so why wouldn't we be concerned with an India without a gov't? You need to think more about these extreme statements.

I forgot to put a smilie at the end, and it was intended to be just an exaggeration. Like I said, it was late at night. :P

$this->bbcode_second_pass_quote('', 'Y')ou base this on what? So far, you are wrong, so, how do you define "push comes to shove" some sort of depression? revolution?

I'm not wrong because "push comes to shove" = crisis that would force them to make a choice. We haven't had that yet.

$this->bbcode_second_pass_quote('', 'H')ave you ever been kicked in the ass real hard? Is that what you are waiting for? to get kicked in the ass real hard before you decide to act? Are you waiting for a blackout? before you go broke or can't find a job before you care? Maybe, just maybe, instead of being the victim, you should be proactive and demand more from your politicians instead of waiting for you to get kicked in the ass by something very preventable.

I don't want any of that to happen, but the problem is that so many people, especially my age, either don't care or don't get it. I tried on a limited scale to convince people of something like this a while back when I was still in the US, but I had no success. People were more concerned with gay marriage than this, if they were concerned with anything at all.

$this->bbcode_second_pass_quote('', 'B')ut, again, you and Tyler both saying it will take a good ass kicking to get anything done on the energy front is what makes me a pessimists. I don't like getting my ass kicked. No one that has ever had their ass kicked financially or physically enjoys the experience. It tells me you haven't been there, be careful what you pray for

I don't wish for it, but I know that is what is going to happen before something is done. I don't live in the US anymore, and so what goes down there isn't my problem anymore.

$this->bbcode_second_pass_quote('', 'S')o we shouldn't use that experience to teach us about how we should be moving to alternatives like solar, wind, whatever, which makes us less vulnerable to blackouts?

None of that would have helped since the blackouts were done on purpose.

$this->bbcode_second_pass_quote('', 'N')othing to be learned about changing laws to prevent this type of energy manipulation? You do realize that one of the criticisms of energy deregulation was the fact that it lead to energy manipulation and also - lack of investment in energy infrastructure.

Absolutly, but deregulation wasn't reversed because of pressure from the lobbyists.

$this->bbcode_second_pass_quote('', 'S')o, I believe there is a lot to be learned from the California experience, but the fact that you don't see that, well, is typical of the average American for sure.

Um, no. I did see that. :p
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sat 06 Sep 2008, 09:16:23

$this->bbcode_second_pass_quote('seahorse', '.')..alternatives are not predicted to provide much, percentage wise, to the world energy production even in 2025.
I can't speak for the whole planet, but here in the US, most RPS's or look-alike's, are targeting 20-25% by 2025. Granted, lots can happen by then, but that's mandate.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby seahorse » Sat 06 Sep 2008, 09:26:45

Vmar,

There is the belief that the world will somehow come together and cooperatively come up with over $22 trillion dollars over the next 20 years and spend it necessary infrastructure development to meet future world energy needs.

(1) my first disagreement is the world will cooperate on anything;

(2) since it will be left to individual countries to meet their own needs, I don't think that will happen either, for the simply reason that Tyler and Outcasts point out, it will take a serious ass kicking to get people moving;

(3) my third disagreement is that private enterprise is getting it done. I disagree with this statement because bc most of the energy in 2030 will come from oil, not renewables, and the big oil majors are not increasing their exploration budgets. For example, renewables only expected to provide 8% of electricity by 2030.

Article

Futher, saying private enterprise will take care of our needs overlooks the very important role that gov't plays in energy development. To show the key role that gov't plays, I mentioned coal, and said no knew coal plants are being built bc the gov't recently stopped backstopping new loans for coal plants. As you will see, the gov't quit doing this for two reasons: (1) the move to green and the ongoing credit crisis. So, it seems foolish in my opinion to automatically assume that in a credit crisis money will be available to develop any new energy projects; futher, it shows the continued power of NIMBY syndrome.

Now, if two new coal plants are being built in your area, they must have already had the financing secure. Keep in mind that the plants that aren't being built, are plants on the drawing board according to this article.

As for the no new coal plants being built, here is the article I posted on the Olduvai Gorge thread and which I will repost here (my post):

$this->bbcode_second_pass_quote('seahorse', 'U')S Federal Gov't is suspending gov't loans to build new coal plants, leaving me to conclude that our lack of foresight and lack of fuel are coalescing to bring us the gorge right on time.

$this->bbcode_second_pass_quote('', 'L')oans Program for Coal Plants Suspended
Wednesday March 5, 3:56 am ET
By Matthew Brown, Associated Press Writer
Feds Suspend Loan Program for New Rural Coal Plants Citing Climate Change, Cost Issues


$this->bbcode_second_pass_quote('', 'B')ILLINGS, Mont. (AP) -- The federal government is suspending a major loan program for coal-fired power plants in rural communities, saying the uncertainties of climate change and rising construction costs make the loans too risky.


My comment: In the past, it was argued that rising energy costs would create incentive to develop new resources. But the exact opposite is happening. Rising energy costs have fuelled inflation, raising the costs of construction, and quickly, as we see here, making new development too costly. Rising costs are affecting not only new coal plants, but new oil development as well.

$this->bbcode_second_pass_quote('', 'A')fter issuing $1.3 billion in loans for new plant construction since 2001, none will be issued this year and likely none in 2009, James Newby, assistant administrator for the Rural Utilities Service, a branch of the Department of Agriculture, said Tuesday.


My comment - Everyone who has looked at the electrical demand issues says there are two huge problems: (1) rebuilding and aging infrastructure and (2) building new capacity to meet growing demand. We aren't doing either as this article indicates. How will we meet rising demand if we are not building new coal plants? Especially since NG has peaked in the US and is getting ready to peak in Canada, probably in 2009? If we don't have the gas, we need the coal, but we aren't building the coal plants we need. This is not good and cannot possibly end well for you and me.

$this->bbcode_second_pass_quote('', 'T')he program's suspension marks a dramatic reversal of a once-reliable source of new coal plant financing. It follows the announcement last month that several major banks will require plant developers to factor in climate change when seeking private funding.


Hmmm, makes me think that this housing crisis problem, which has caused all credit to freeze, might be he real culprit behind stopping these loans for new coal plants. Its too easy to blame it on the politically correct statement that "we're worried about greenhouse gasses", that's nonsense. That's utter nonsense. The Bush admin has never worried about greenhouse gasses and has refused to sign the Kyoto Protocal, so, why the suddent interest in greenhouse gasses now? I suspect that stopping the loans has more to do with our banks going belly up in this housing crisis than it does with worry about the environment.

$this->bbcode_second_pass_quote('', '"')This is a big decision. It says new coal plants can't go to the federal government for money at least for the next couple years, [b]and these are critical times for companies to get these plants built," said Abigail Dillen with the environmental law group Earthjustice. The group filed a federal lawsuit last year seeking to block the loan program.

Yes, Duncan would agree this is a very critical time to be building new capacity, not stopping it.

$this->bbcode_second_pass_quote('', 'A')t the time of the suspension, at least four utilities had been lined up for loans totaling $1.3 billion -- for projects in Kentucky, Illinois, Arkansas and Missouri. A project in Montana was denied funding last month. Two more were recently withdrawn: last October in Wyoming and earlier this week in Missouri.

My comment: They obviously projected they needed this new capacity, so how will it be made up and by when? I see a real problem developing.


$this->bbcode_second_pass_quote('', '[')u]Newby said material and labor costs for new coal plants have been rising 30 percent a year, even as utilities struggle to pinpoint future costs of controlling greenhouse gas emissions. The 2 billion tons of those gases produced annually by coal-fired plants in the United States exceed the emissions of any other source.

My comment - Again, I suspect this has more to do with our bankrupt banks being unable to make loans than all the sudden the banks and gov't are worried about greenhouse gasses.


$this->bbcode_second_pass_quote('', 'N')ewby said those uncertainties prompted the White House's Office of Management and Budget to ask that new loans be put on hold until risks can be better quantified.

My Comment - Yes, the banks can't make the loans, they don't have the capital.


$this->bbcode_second_pass_quote('', 'R')ural utilities provide power to about 40 million customers across the nation. More than 60 percent of that electricity comes from coal.

Whether the plants that were awaiting federal loans can find alternative financing remains to be seen.

Associated Electric Cooperative Inc. announced this week it was "delaying indefinitely" its proposed plant in Norborne, Mo., after receiving word of the loan program suspension.

At least one developer, the East Kentucky Power Cooperative, is hoping to wait out the suspension of the loan program rather than seek more expensive loans on the open market, spokesman Nick Comer said.

Two more projects -- Southern Montana Electric's Highwood Generating Station and Basin Electric Power Cooperative's Dry Fork plant in Wyoming -- already are seeking private funding.

A representative of the East Texas Power Cooperative, which has proposed a plant in Plum Point, Ark., also said his utility would seek private financing if the loans are not resumed.

"We'll have to look elsewhere for funding, which will increase the interest expense, which will increase the electric bill for the consumers at the end of the line," said the cooperative's Ryan Thomas.

My comment - Assuming they can find someone to loan them the billions they need in this credit crisis, the next question will be whether the cashed strapped consumers, who may not even have jobs a year from now, can afford the new, higher rates.

$this->bbcode_second_pass_quote('', 'N')ewby, with the Rural Utilities Service, said his agency is considering imposing upfront fees on coal plant developers as a way to mitigate taxpayer exposure through the loan program. Initial discussions have centered on a 0.2 percent fee -- equivalent to $2 million on every $1 billion in loans.

Newby added he was confident the government would work through the concerns over risk and resume issuing loans possibly as soon as 2010.

My Comment - 2010? That may be too late. How will we meet demand in the meantime? I assume they were planning these additional plants for a reason. But assuming they get all these funding issues worked out by 2010, how long will it take to get the plants built and brought on line? And how do we make up for the shortage in production in the meantime?

$this->bbcode_second_pass_quote('', 'G')lenn English, chief executive of the National Rural Electric Cooperative Association, said the program's suspension was a sign of "nervousness" among lenders anxious over the potential ramifications of climate change legislation now before Congress.

Depending on what policies are adopted, retail electricity prices could increase sharply once the costs of reducing greenhouse gases are factored in, he said. Utilities that drop coal-fired power proposals will be forced to shop for more expensive electricity on the open market.

My comment - Assuming the consumer can pay for the more expensive electricity, that also assumes that the extra power can be found on the open market. But with none of these numerous plants being built, with all of them on hold, it sounds like there will be lots of bidding for what little, if any, spare capacity there is. It sounds like the California brown outs were a precursor to what we may be experiencing nationally in the next few years.


$this->bbcode_second_pass_quote('', '"')What you're seeing (with the Rural Utilities Service) is a general reflection of the attitude we find in the financial community, mainly this apprehension about what the future holds and what can be expected out of government," English said.

My Comment - Yes, we wonder the same things here at PO. What does the future hold and what can be expected of our government? Welcome to PO.

Yahoo Business

In the end, human stupidity, lack of foresight, will push us right into the abyss of the gorge. Everyday that passes, I lose just a little more hore hope that we, as a people, will take a step back. I do believe that all problems are solvable, but I guess not by people.

We also see the current credit crisis affecting new LNG facilities:

$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('seahorse', 'T')he news is only getting worse. Not only is there no financing for new coal plants, apparently, the banking subprime issue is also adversely affecting new financing for LNG facilities (which are so necessary for the US to make up for a decline in NA NG production).

$this->bbcode_second_pass_quote('', 'D')espite such a recent golden age for the borrowing parties in LNG project finance deals, recent events seem to be conspiring to mark a turnaround in financing conditions.

$this->bbcode_second_pass_quote('', 'S')everal events have had a major impact on financing:

The US subprime debt crisis of August 2007 and the consequential global tightening of debt markets.
Fiscal instability and toughening terms for international oil companies (IOCs) in upstream gas supply contracts.
Rampant and sustained oil and gas industry cost inflation (2005-07).
Devaluation of the US dollar by some 67% against the euro since 2002.
Volatility and future uncertainty in gas markets, in terms of both supply-demand fundamentals and price. For example, the UK LNG market has deteriorated with the commissioning of new pipelines in 2006; the Japanese market for LNG strengthened in 2007, with significant loss of nuclear power capacity; and the US LNG market remains uncertain because of possible increases in domestic gas exploration and production and the delays in building key LNG receiving terminals.
Less security of offtakes underpinning LNG sales contracts.
Substantial delays and massive cost overruns in some large liquefaction projects such as Sakhalin II and Snohvit.
Lack of skilled personnel and the unavailability of experienced engineering, procurement, and construction (EPC) contractors.
Difficulties gaining regulatory approvals to build new LNG receiving terminals in key markets: California and New England.

Despite a strong global LNG demand and a lack of sufficient supply increases, these events have substantially increased the risks and costs for lenders, which may lead to increased lending margins and make debt financing for LNG projects more difficult to secure.


Oil and Gas Journal, Feb 25, 2008

Notice that the subprime issue was the first issue listed that is affecting financing for LNG facilities.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby seahorse » Sat 06 Sep 2008, 09:56:49

$this->bbcode_second_pass_quote('', 'I') don't want any of that to happen, but the problem is that so many people, especially my age, either don't care or don't get it. I tried on a limited scale to convince people of something like this a while back when I was still in the US, but I had no success. People were more concerned with gay marriage than this, if they were concerned with anything at all.


Outcast, I agree with the above, and that's what makes me pessimistic. In all the years I've been here, I don't think I've ever tried to predict what a good "ass kicking" to society means. I only predict that I can see one coming if people don't recognize problems in energy and attempt to deal with them. However, I generally subscribe to the beliefs of Michael Klare in his book "Blood and Oil" that rather than work to solve energy problems, the world will most likely fight to solve those problems. Further, how bad an ass kicking will we take? Hirsh in his report to the DOE outlines a pretty scary picture of an economic ass kicking.

Now, I'm 43, an attorney, and have for years dealt with people who had their asses kicked financially. Its not pretty. I'm seeing more and more of those people lately. What I take issue with is the view by you and Tyler that this "ass kicking" the world is going to take is somehow not that big a deal or is in fact, a good thing. Its not. Maybe you and your families will be insulated from it, but the vast majority of people will not be, and it will be difficult and is already difficult for many.

You made this statement earlier:

$this->bbcode_second_pass_quote('', 'T')he African population has exploded and yet they [url=http://www.sudankpc.com/rockoil/rockoil.files/mideastafrcons.gif] don't use any more oil now than they did in 1980. China's increased energy use will not come from population growth (a little will) but rather it will be because of economic development and modernization.


The way you and I look at the African example is the difference between u. You seem to suggest or imply that Africa is an example of how populatin can grow even without increasing energy use, like this is a good thing. Africa is a horrible tragedy, where disease, war, famine, crime, inflation, unemployment, genocide, infanticide, are all rampant. You somehow hold this out as an example that everything will be okay. I have said many times that when we look at Africa, we may be looking into our own future. To me, that's a very pessimistic future, and I would like to avoid that future at all costs, especially for my kids. Its no way to live, when it is or should be completely unavoidable. But, as you say, most people only care about gay marriage, so, it seems we have sealed our fate.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby outcast » Sat 06 Sep 2008, 11:05:59

$this->bbcode_second_pass_quote('', 'T')he way you and I look at the African example is the difference between u. You seem to suggest or imply that Africa is an example of how populatin can grow even without increasing energy use, like this is a good thing. Africa is a horrible tragedy, where disease, war, famine, crime, inflation, unemployment, genocide, infanticide, are all rampant.


I didn't mean to imply that it was a good thing, but it is a simple fact. Energy usage didn't increase because of severe economic underdevelopment, and since the vast majority of future population growth will be in Africa, I didn't agree that it will cause energy usage to skyrocket. Sorry for not making that clear earlier.

$this->bbcode_second_pass_quote('', 'T')o me, that's a very pessimistic future, and I would like to avoid that future at all costs, especially for my kids.


Indeed, it will be us who looks at you (collectively) and ask "why didn't you do something earlier?" It is my generation that will have to deal with the problems your generation refused to fix (not that I'm patronizing you, just everyone else who is around your age).


I don't think any of those things will happen to us. In the early 70's before the 18%+ inflation at the end of the 70's there were fuel shortages and (by the standards of the time) massive energy price increases. The economy dragged but it didn't collapse. What we're facing now isn't a sudden shock, but a gradual decline (which hasn't even started yet) which does give us time to develop alternatives which should be ready to go by the time the peak actually happens. Will it get rid of our oil dependance right away? No, but the adoption will happen gradually.

And besides, we aren't even sure when the peak will happen, melting permafrost in Siberia and the Arctic has opened up more oil reserves. I don't have the numbers in front of me, but surely it will push the peak back a few more years.

Besides, not every nation is like the US, some actually try invest in and build up their energy infrastructure. They will make mistakes and sometimes not do things right (like China's debacle in the last winter storm and general coal cock up) but at least they are trying to do something, and they will learn. If you look at Tyler's chart for energy investment, the vast majority is happening in Asia.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby seahorse » Sat 06 Sep 2008, 12:35:50

$this->bbcode_second_pass_quote('', 'I') don't think any of those things will happen to us. In the early 70's before the 18%+ inflation at the end of the 70's there were fuel shortages and (by the standards of the time) massive energy price increases. The economy dragged but it didn't collapse. What we're facing now isn't a sudden shock, but a gradual decline (which hasn't even started yet) which does give us time to develop alternatives which should be ready to go by the time the peak actually happens. Will it get rid of our oil dependance right away? No, but the adoption will happen gradually.


Again, the future is unknowable. What is an "ass kicking" that wakes up society? Hopefully, its not a knock out blow that fundamentally changes the democratic system we live in. Although you could be right, you could just as well be wrong. People look back to the Great Depression or the 70s as reasons why we will make it this time. However, things were different then, and they may be guides, the past doesn't determine the future.

My concern is that, at least for the West, there is a polar shift in world events. We are very likely at the peak in power of not only US influence, but European influence in world events. Energy is power. In the old days, wood, coal, just fertile land was power. Now, oil to drive a complex society is power, which the West doesn't have and which will never regain. So, not only is the west literally peaking in its oil production, and most likely NG production, it is also peaking in its financial dominance. In my opinion, the worse case scenario is that an economic depression hits at the same time world oil peaks, leaving us like Africa. Americans, and probably most Western countries, refuse to believe that what is happening in Africa can happen in the West. To me, this is an ego centric ideal not based in fact.

For an interesting read, you may look at "The Coming Anarchy" by Robert Kaplan, who in the 90s wrote an interesting article that what was happening in Africa would be "exported" and indicate the future for the rest of the world.

The Coming Anarchy

Is he right? He could be right, and will be right if people in the west don't recognize the seriousness of the energy issues and need to revamp and proactively change things. Thus, when you and I both say the West and world will get an ass kicking, its no guarantee that we will survive that ass kicking and move up to something better. "We" could easily find ourselves in a downward spiral like Africa for a whole host of reasons.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby Tyler_JC » Sat 06 Sep 2008, 12:49:03

$this->bbcode_second_pass_quote('seahorse', '
')
Tyler made the assumption that energy use would decline in a depression despite the fact that world population would continue to grow. I don't see how this is possible. More people means more energy use. I think your statement above confirms what I am saying, yet you seem to want to argue when we say the same thing. You said in the future fewer Chinese, who are growing in population, will live like cavemen. This means that China's energy use will continue to grow, which was my point to Tyler.

Tyler said China's population would peak about 2025. How he came up with that figure, I don't know. But I would hope it would peak now so that we could hope to possible contain their increasing energy needs. Now, you disagree with Tyler and argue their population will peak in 10 years, again, it is unknown how you arrive at this date or what their population will be in 10 years, but at any rate, it only suggests that China's energy demands will continue to grow and alternatives to oil will not be producing enough to offset any declines in oil production at this time. So, something has to give.


Image

Image

How can they consume energy that they don't have?

There is a limited supply of energy and a growing population. By definition that means energy use per capita must go down.

I've never understood charts like this:

Image

What exactly are they insinuating? That future demand will grow despite a lack of supply?

What the heck does "future demand" even mean?

Demand is purely a function of price and income. If oil was $10 a barrel and fell like mana from Heaven, I think future demand growth would be significantly higher than 1.8%.

Most people will always want to consume ever increasing amounts of resources. Price and income is the only thing that stops them (and in some cases, laws/police). When oil production begins its decline in earnest, oil prices will increase until enough demand is destroyed to reach a market clearing level.

You bring up the example of governments subsidizing fuel use. This can only continue so long as the governments can afford to do it. Many of them are already running huge deficits just trying to keep petrol prices below market rates. This is clearly unsustainable. Something has to give. More poor countries will have to abandon fuel subsidies because of fiscal realities. As more people are exposed to the real world of prices, they'll start parking their jalopies and go back to using their bicycles. If you look at the past 3 years' data, nearly all of the growth in oil demand was in countries that subsidized their fuel. How long does this seem likely to continue?

Extrapolating current trends into the future without acknowledging economic and physical realities is what got us into this mess in the first place.

We won't need $22T worth of new energy infrastructure in the next "several decades" because there is a distinct possibility that we won't be using enough energy to justify it.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby seahorse » Sat 06 Sep 2008, 13:10:29

Tyler, all this boils down to a growing population and decreasing energy production which is not a good situation. How will it adjust? We all apparently agree there is a societal "ass kicking" in the cards somewhere. I don't look forward to it. I for one do not believe that the West or Americans are immune to what is transpiring in Africa. We are certainly not immune to history, which shows just how violent humans can and have been.

My experiences as a lawyer tell me that most people are completely naive about the world they live in. For example, one never knows who they are standing next to in a grocery store. I've personally sat and visited with two local murderers, and it is interesting how completely normal and rational they otherwise appear, but what lurks just below that facade is a cold blooded murderer. Even knowing that I was talking to a cold, calculating murderer, there was a part of me that wanted to believe that what they did was somehow not normal for even them, that they would see me differently, that we could have a normal relationship, but that's not realistic.

So, what I see below the surface of society as a lawyer in my own community makes me worry about what lurks below the surface in society as a whole. It makes me realize that Africa is not an exception, and that we are not an exception to history. So, when there is a serious enough ass kicking to get people to quit worry about stupid stuff like gay marriage, you never know what that will bring out. It could bring out the best or the worst, or the best in some and the worst in some, but who will win. Its a fight I would rather not see happen.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sat 06 Sep 2008, 14:03:37

$this->bbcode_second_pass_quote('Tyler_JC', 'W')e won't need $22T worth of new energy infrastructure in the next "several decades" because there is a distinct possibility that we won't be using enough energy to justify it.
Good point. Despite posting the article, I didn't read the whole thing. (How bad of me!) I imagine the author, as many, is not looking at PO, or perhaps believes PO is decades away, or perhaps doesn't believe in PO. Who knows? I look at PO as a real and present thing, and cross it with other facts, ie, carrying capacity, global warming, oceans, lands, etc. But I also think life will continue as is for decades, given or taken a few bumps. Population will grow to a whopping 20-30-40 billion before die-off hits us. (God willing I will be gone much before.) Thus, I imagine the author thinks we'll need energy and it will have to come from somewhere. I'm putting words in the author's mouth, and just offering a possibility. My 2 cents.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby Tyler_JC » Sat 06 Sep 2008, 16:56:08

$this->bbcode_second_pass_quote('VMarcHart', 'G')ood point. Despite posting the article, I didn't read the whole thing. (How bad of me!) I imagine the author, as many, is not looking at PO, or perhaps believes PO is decades away, or perhaps doesn't believe in PO. Who knows? I look at PO as a real and present thing, and cross it with other facts, ie, carrying capacity, global warming, oceans, lands, etc. But I also think life will continue as is for decades, given or taken a few bumps. Population will grow to a whopping 20-30-40 billion before die-off hits us. (God willing I will be gone much before.) Thus, I imagine the author thinks we'll need energy and it will have to come from somewhere. I'm putting words in the author's mouth, and just offering a possibility. My 2 cents.


20 billion?

Highly unlikely.

Population growth is slowing down rapidly. Even ignoring peak oil, climate change, resource depletion, etc, I doubt we will ever hit 10 billion people.

The world's fertility rate has fallen in half over the past 30 years. That's why the predictions of Population Bomb failed to come true. Women throughout the world are simply having fewer children.

Increased urbanization, more educational opportunities for women, AIDS in Africa, and cultural progress is causing an unprecedented fall in birth rates.

Image

Even in the baby-happy Middle East, fertility rates are falling off rapidly. Iran is already below replacement. Egypt, Turkey, Kuwait, and others are joining the club.

Mexico fell from 2.41 to 2.2 only in the past 8 years. Brazil fell 2.35 to 2.25. India showed a decline from 3.11 to 2.76.

This is all in the past 8 years. http://en.wikipedia.org/wiki/List_of_countries_and_territories_by_fertility_rate

The Demographic Transition has gone global.

Again, another reason why we current growth patterns aren't likely to continue into the future. Parents are finally deciding that quality over quantity is the way to insure a better life for their children.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sat 06 Sep 2008, 18:18:09

$this->bbcode_second_pass_quote('Tyler_JC', 'E')ven ignoring peak oil, climate change, resource depletion, etc, I doubt we will ever hit 10 billion people.
God willing, you're right. If not, you have my permission to throw me to the sharks. I don't want to be here with 10 billion people. :)
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby Tyler_JC » Sat 06 Sep 2008, 21:23:18

$this->bbcode_second_pass_quote('VMarcHart', '')$this->bbcode_second_pass_quote('Tyler_JC', 'E')ven ignoring peak oil, climate change, resource depletion, etc, I doubt we will ever hit 10 billion people.
God willing, you're right. If not, you have my permission to throw me to the sharks. I don't want to be here with 10 billion people. :)


If we hit 10 billion, we won't stay there for long. :twisted:

Economic recession tends to lead to fewer births, not more births. Compare the birth rates of the 1930s, 1950s, and 1970s.

Image

If you compare the birth rate to the unemployment figures, you get a rather interesting result. There appears to be a correlation between economic stability and family size.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby yesplease » Sat 06 Sep 2008, 22:45:50

$this->bbcode_second_pass_quote('seahorse2', 'T')yler,

Where to begin with you? Energy companies will just borrow from private industry? First, do you realize the US is not building any new coal plants until at least 2010 bc the Federal Gov't is not backstopping all those private industry loans? Go read the Olduvai thread for the links on that.
I think you're mixing your P's and Q's. The feds probably aren't backing coal because it's externalized costs are just too high. They are otoh backing renewables.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Sun 07 Sep 2008, 09:12:40

$this->bbcode_second_pass_quote('yesplease', 'T')he feds probably aren't backing coal because its externalized costs are just too high.
Sit down for this, coal and other non-renewable R&D, is heavily subsidized. Yours and my money at work.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby outcast » Sun 07 Sep 2008, 10:55:08

$this->bbcode_second_pass_quote('', 'A')gain, the future is unknowable. What is an "ass kicking" that wakes up society? Hopefully, its not a knock out blow that fundamentally changes the democratic system we live in. Although you could be right, you could just as well be wrong. People look back to the Great Depression or the 70s as reasons why we will make it this time. However, things were different then, and they may be guides, the past doesn't determine the future.


That's true, but so much of the doom and gloom that comes from the media is sensationalist and/or misleading. I don't buy into theories like Olduvai because that isn't where a lot of these long term trends are going. This latest oil shock is certainly getting a lot of people to pay attention, so lets see where that leads us. On top of that the Russian bear extending its claws is finally forcing a major rethink about nuclear energy in western Europe (excluding France for obvious reasons) and so it is likely we will see new investment in that area along with a renewed push on the cars without oil front. After all, it's either get off oil and gas or be at the mercy of Russia.

$this->bbcode_second_pass_quote('', '
')My concern is that, at least for the West, there is a polar shift in world events. We are very likely at the peak in power of not only US influence, but European influence in world events. Energy is power. In the old days, wood, coal, just fertile land was power. Now, oil to drive a complex society is power, which the West doesn't have and which will never regain. So, not only is the west literally peaking in its oil production, and most likely NG production, it is also peaking in its financial dominance. In my opinion, the worse case scenario is that an economic depression hits at the same time world oil peaks, leaving us like Africa. Americans, and probably most Western countries, refuse to believe that what is happening in Africa can happen in the West. To me, this is an ego centric ideal not based in fact.


Europe's peak of influence was actually right before World War I, and it had been declining steadily ever since, and it dropped significantly after WW2.

We would actually have to fall a very long way to get the Africa's position. Africa has massive AIDs infection rates, inter-tribal wars, corruption and cronyism on a scale that makes the Bush administration look squeeky clean. It would have to be by far the greatest depression ever to do that much damage, something way bigger than the great depression.

$this->bbcode_second_pass_quote('', '
')For an interesting read, you may look at "The Coming Anarchy" by Robert Kaplan, who in the 90s wrote an interesting article that what was happening in Africa would be "exported" and indicate the future for the rest of the world.


I'll be sure to take a look, thanks.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby yesplease » Mon 08 Sep 2008, 02:24:04

$this->bbcode_second_pass_quote('VMarcHart', '')$this->bbcode_second_pass_quote('yesplease', 'T')he feds probably aren't backing coal because its externalized costs are just too high.
Sit down for this, coal and other non-renewable R&D, is heavily subsidized. Yours and my money at work.
I wouldn't be surprised. How is it subsidized?
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby VMarcHart » Mon 08 Sep 2008, 08:25:58

$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('VMarcHart', '')$this->bbcode_second_pass_quote('yesplease', 'T')he feds probably aren't backing coal because its externalized costs are just too high.
Sit down for this, coal and other non-renewable R&D, is heavily subsidized. Yours and my money at work.
I wouldn't be surprised. How is it subsidized?
Subsidies and grants for new technologies for more efficient designs of turbines, sequestration methods, etc, governmental contracts and purchases, etc.
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Re: Financing The World Energy Industry Requires $22 Trillio

Unread postby yesplease » Mon 08 Sep 2008, 23:31:57

Money, money, money, moneey. Moneeey! All I can find for wind is a few hundred million spent on research spread over a few years and the PTC.
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