Peak oil – Jan 24

Click on the headline (link) for the full text.

Many more articles are available through the Energy Bulletin homepage

Prius Designer Says Industry Must Lose Oil Addiction
John Lippert and Alan Ohnsman, Bloomberg
Bill Reinert, who helped design Toyota Motor Corp.’s Prius hybrid, hovers in a helicopter 1,000 feet over Fort McMurray, Alberta. On this clear November morning, he’s craning for a look at one of the world’s largest petroleum reserves where there’s not an oil well in sight.

Instead, in a 2-mile-wide pit below, trucks head to refineries with loads of sand weighing more than Boeing 747s. Yellow flames shoot skyward as 900-degree-Fahrenheit (482- degree-Celsius) heat liquefies any embedded petroleum. Floating scarecrows and propane-powered cannons do their best to chase migrating birds from lethal wastewater ponds.

Eventually, nuclear reactors may surround the crater 270 miles (435 kilometers) northeast of Edmonton, Alberta, delivering the power required to wring oil from sand.

“This is what the end of the age of oil means,” says Reinert, 60, who plans the vehicles Toyota will make in a quarter century as national manager for advanced technology at the U.S. sales unit in Torrance, California. “The car-based culture, the business-as-usual of building cars and trucks, is going to change dramatically.”

Since Henry Ford introduced the moving assembly line in 1913, the world’s automakers have relied on a single source of power — the gasoline-dependent internal combustion engine.

Today, the twin threats of $100-a-barrel oil and global warming are convulsing an industry addicted to cheap, abundant petroleum. Auto companies, already hurt in 2007 by the lowest U.S. demand in a decade, are struggling to perfect cars that run on ethanol, diesel, natural gas, hydrogen and household electricity.

… Reinert says automakers are endangering themselves by basing sales and profits on the big, fast cars that many U.S. customers say they want in 2008.

In five years, as oil shortages and global warming intensify, car companies may be out of step with drivers’ demands for fuel-efficient vehicles. Even worse, degrading stretches of the planet like Fort McMurray will only delay –not prevent — the time when the world must function in a post-peak- petroleum economy.
(23 January 2008)
Contributor MNR writes:
Surprisingly candid, detailed and bleak story on Peak Oil from Bloomberg.

Energy: Centre of power is on the move
Ed Crooks, Financial Times
The story of energy in the 21st century has been the relative decline of the developed world as both a producer and a consumer.

New forces with serious global ambitions such as China National Petroleum Corporation and Russia’s Gazprom have emerged on the world stage, and global markets for oil, gas, coal and uranium are increasingly shaped by emerging economies’ rapacious demand.

Those trends are set to continue and intensify. The question for the US, the European Union and Japan will be how well they can adjust to that change.

On the demand side, the strongest sustained period of global growth for decades has been fuelled by a surge in energy use, which has naturally been fastest in emerging economies, being both faster-growing and less efficient in their energy use.

In 1990, countries that are not members of Opec, the rich nations’ club, accounted for 48 per cent of total energy use. By 2015, the International Energy Agency expects that figure to rise to 57 per cent.

The forms of energy consumed by developing countries are also changing: the proportion from biomass – traditional sources such as wood and dung – is expected to drop from 35 per cent to about 20 per cent over that 25-year period.
(23 January 2008)

The Universal Mining Machine
Ugo Bardi, The Oil Drum: Europe
In a science fiction story that I had in my hands, many years ago, a group of explores stranded on a remote planet needed to build a new spaceship using local materials. They had no time and no resources for traditional mining, so they built a “universal mining machine” that extracted elements from the planet’s crust. The machine crushed rock, heated it and transformed it into an atomic plasma. The ions in the plasma were accelerated and then separated according to mass by a magnetic field. In input, you had just ordinary rock; at the output, you had all the elements present in the original rock, each neatly packed in its own box.

That story (I think it was by Poul Anderson) has always fascinated me. Why can’t we build a machine like that here, on Earth, and stop worrying about running out of mineral resources? Some economists seem to think of depletion in these terms, indeed; as if they really had a universal mining machine ready. A favorite statement that you can hear on this subject is that there is no such thing as finite resources. Prices create resources depending on what you need. If prices are high enough, you can always make a profit even extracting from a very low grade ore. Since you can’t run out of crust to mine, you’ll never run out of anything or, at least, you’ll see no problems for a long, long time. Julian Simon, author of the successful book “The Ultimate Resource” (1985), was perhaps the champion of this school of thought. Among other things, he said that we have mineral resources for “7 billions of years” (Simon 1995).

Recently, this kind of enthusiasm about the abundance of resources seems to have become less popular. However, the general opinion is still one of optimism, as shown in innumerable articles in the mainstream press whenever the question of depletion is taken up. Unfortunately, there are problems with the idea that non-physical entities, prices, can create physical entities, mineral resources. Prices are just tags, labels that you stick on something. If you need to extract and process something, it is not enough to change the label on it: you need energy.

Energy is the physical entity that defines what you can extract and what you can’t. In a way, Simon and his followers are right in saying that the amount of mineral resources is not fixed. But the amount of extractable resources is defined not by prices but by the amount of energy you can afford to employ for extraction. And, unlike prices, energy is a limited resource.

In the future, the energy supply it may well go down as fossil fuels are gradually depleted. If we consider also the problem of the progressive depletion of high grade ores, it is clear that the extractive industry faces a a formidable challenge. How long can we keep on mining at the present levels? Will we be able to keep the industrial society working? Is there anything like “sustainable mining?”

These questions are difficult to answer but can’t be ignored any longer. Several recently published papers emphasize the finiteness of the resources and the likely problems that we will be soon facing (Gordon et al (2006), Ayres (2007), Pickard (2007), Cohen (2007)). In a recent work published on “The Oil Drum” Ugo Bardi and Marco Pagani (2007) have shown that the mineral production of several metals and compounds has peaked and is now declining. Other metal commodities show signs of impending peaks. All that, of course, is evidenced also by the increasing price trends of all mineral commodities in the past few years. Clearly, we are not talking of something far away in the future but of something that may be starting to occur right now.

…We don’t need to wait for the actual production peak to see a resource becoming more expensive both in terms of energy and in monetary terms. If it takes more energy to extract and refine oil, this extra investment in energy will directly affect the extraction processes that make use of oil as an energy source. So, if the present trend of decline in the production of fossil fuels continues, we won’t be able to exploit all the mineral resources that exist on the “good” side of the mineralogical barrier. If nothing changes, in a not far future we are going to see a decline in the production of all mineral commodities: “peak minerals” (See Bardi and Pagani 2007). Peaking of minerals production poses a serious and immediate problem in terms of maintaining a supply of mineral commodities to the world’s economy.

…We inherit from past generations a planet that is very different from what it was before the industrial revolution. The cheap and abundant minerals that our ancestors have used to build the industrial society are no more. If we want to keep going along the industrial path, we’ll need to develop new strategies to insure a sufficient supply of materials. That will depend mostly on energy. It will be our capability of producing energy that will determine the future choices of society.
(23 January 2008)
The argument sounds similar to that of the Greek-Romanian economist, Nicholas Georgescu-Roegen, who in the last century championed the idea that an economy faces limits to growth, due to entropy. One of his ideas was that minerals will become increasingly difficult to extract as the poorer and poorer grades of ore are available (higher entropy). Though not as well known as H.T. Odum and Hubbert, Georgescu-Roegen deserves recognition as one of the pioneers of peak-oil thought.

On the web:
Energy and Economic Myths by Georgescu-Roegen (1975)
Interview with Nicholas Georgescu-Roegen (in English, scroll down)
Solar Communism (Review of G-R’s ideas, then applying them to Marxist concepts)
Brookings Papers on Economic Activity: 2, Macroeconomics (a section about G-R)
-BA

Oil Pimping: Kunstler interview (Video)
The Stimulator, It’s the END of the WORLD as We know it
This Week:
1. Rate Cut and Run
2. Oil Pimping
3. Asian Rice Blues
4. Nano Disaster
5. DangerMouse and Jemini
6. Klusterfuck Nation
(22 January 2008)
In-your-face news video and commentary. James Howard Kunstler is interviewed, starting at about 3:50 minutes into the video. If you object to four-letter words, stay away. Kunstler appears to shock the interviewer when he says that he doesn’t think that current events mark the end of the world – just economic and political turmoil. -BA