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Depletion & peak oil - May 16

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Many more articles are available through the Energy Bulletin homepage


Book Review: On Borrowed Time? Assessing the Threat of Mineral Depletion

Rembrandt, The Oil Drum
For the last couple of weeks, I have been reading about the issue of mineral depletion, since I want to do some research on this topic. The basic question is whether we can keep relying on producing (rare) metals from the earth to (re-) build our society in the foreseeable future.

The only recent book that I could find on the topic was On Borrowed Time? Assessing the Threat of Mineral Depletion, published in 2002. It was written by John E. Tilton, who is an Emeritus Professor in Mineral Economics at the Colorado School of Mines. He has studied the topic for over 30 years.

I can recommend this book to non-experts as it gives a good concise overview on the thinking on mineral depletion. The text is less than 140 pages long and is presented in an accessible non-technical manner. This made it possible for me to read the book in less than 3 hours.

One major drawback to the book, in my opinion, is a pervasive bias regarding how impending scarcity is assessed. Because of the author's background, he believes that price change is the best way to foresee whether mineral scarcity is approaching. Nonetheless, John E. Tilton is honest in stating his views and has done his best to provide an objective text by incorporating other views critical of his own. These views include arguments raised by Ecological Economists, something which in my experience is rare in books written by economists of the traditional school.
(15 May 2009)



Letter in Science on Hubbert Linearization

Michael Lardelli, Science
Science 15 May 2009:
Vol. 324. no. 5929, pp. 880 - 881
DOI: 10.1126/science.324_880c

Letters

Mining the Data on Coal

R. A. Kerr's News Focus story "How much coal remains?" (13 March, p. 1420)
gave welcome attention to the results of curve-fitting according to the
methods of M. King Hubbert to predict future coal utilization. Gratifyingly,
it also mentioned the technique known as Hubbert linearization (HL), where
annual production as a fraction of cumulative production is plotted against
the cumulative production, allowing simple but powerful predictions of the
ultimately recoverable reserves of resources. As an example, the article
mentioned the HL analysis for UK coal production performed by David
Rutledge. The actual analysis shows an almost perfect linear fit spanning
about 150 years of UK coal production. This should make us very skeptical of
claims reported in Kerr's article that the decline in UK coal production is
the result of diversification into other energy sources that began only in
the last 100 years.

Although energy economists might see price as the only barrier to
utilization of a resource, scientists (including geologists) should place
greater trust in the predictive value of the laws of thermodynamics. When
the energy required for mining coal becomes greater than the energy obtained
by subsequently burning it, then the mining will not occur-no matter how
high the coal price or how much coal remains in the ground.

The true power of HL analysis is that it uses the past behavior of a system
to indicate possible future performance rather than relying on the usually
overoptimistic opinions of resource "experts." Using the past to predict
future behavior always carries uncertainty. However, on large scales
spanning decades of time, humans' energy-dependent behaviors (such as growth
of the population or the use of fossil energy) appear to follow curves
resembling the growth and decline of populations of other organisms
temporarily released from resource constraints.

Another worrisome example of resource reserve optimism that conflicts with
HL analysis is mining of rock phosphate, upon which world agriculture
currently depends. HL analysis suggests that rock phosphate reserves are 75%
depleted and that production will soon collapse (1), whereas authorities
such as the United States Geological Survey (whose past predictions of
recoverable world oil reserves now appear overly optimistic) see no such
problem (2).

Michael Lardelli
School of Molecular and Biomedical Science, University of Adelaide, SA 5005,
Australia.
(15 May 2009)
Michael Lardelli is an Energy Bulletin contributor.



Kjell to speak on peak oil in Sydney

Transport and Logistics News
Kjell Aleklett, professor of Physics at Uppsala University and president of ASPO, the Association for the Study of Peak Oil and Gas, has warned that the global financial crisis and resultant drop in oil demand does not mean that we can go on with ‘business and usual’ and the imminent threat of peak oil must be addressed now.

Crude oil is the basis for different forms of transport fuel. These forms (fractions refined from crude oil) are divided between petrol (23.8%), aviation fuel (6.3%), diesel (33.1%) and bunker oil (16.1%). The remaining products from crude oil are used for other purposes.

“The basis for globalisation is global transport and Australia’s future is dependent upon this,” professor Aleklett said. “The future that the aviation industry project is ‘business and usual’ with growth of 5% per year. What happens when ‘business and usual’ is not an option?

“Shipping uses primarily bunker oil but more and more refineries are now converting this fraction to increase production of diesel. What will happen to shipping without ‘business and usual’ as an option?

“When future energy scenarios are discussed, a ‘business as usual’ scenario is always included,” he said. “The most well known ‘business as usual’ scenarios are those delivered by the International Energy Agency, IEA, in its yearly publication World Energy Outlook, and those that form the foundation of the IPCC’s climate scenarios.

“The nations of the world are now gathering to make decisions to reduce global emissions of carbon dioxide,” professor Aleklett said. “Since 2004, CO2 emissions from oil have levelled off and peak oil means that these will soon decrease, regardless of political decisions. Natural gas will also reach a production maximum and its emissions will decline. What will happen with coal in the future? It is time to discuss the future of the climate without ‘business as usual’ as an option.”

Professor Kjell Aleklett will give the keynote address on “Future transportation fuels without ‘business as usual’ as an option” at the upcoming Smart 2009 Conference in Sydney. Click here for more information and to register.
(14 May 2009)




Are we moving towards a new oil crisis?

Andris Piebalgs, Andris Piebalgs European Commission blog
One of the few good pieces of news in the current economic crisis (maybe the only one) is that oil prices have gone from the 147$ a barrel of July 2008 more than 100$ down to less than $50 a barrel on the international markets...

...However, we should not be under any illusion. The current fall of oil prizes is just the consequence of an even more dramatic fall in demand due to economic crisis. I add to that the fears in the financial markets you will understand why investments in futures of any commodity except the safest ones (gold, for instance) are so rare. But the fundamentals that drive the energy markets have not changed...

...The world is aware that the production of the existing oil wells is decaying and that new discoveries are more scarce and more expensive. Some experts consider that global oil production may have peaked at 94 million barrels a day. The current economic crisis can make the situation worse. The lower prices that we are enjoying now can be in fact bad news...
(8 May 2009)
Piebalgs is the European Commissioner for Energy. The sentence in which he seems to assert that 94 million barrels/day has already been achieved is a bit confusing. Still, here is the commissioner forecasting a coming oil crisis.-SO


The Slavery of Oil

Francois Cellier, The Oil Drum: Europe
Last week, I attended a round table discussion of ASPO Switzerland held here in Zurich. The topic of the discussion concerned the price of oil. Can we explain what happened in recent months to the price of crude oil? Why did it rise sharply last spring to a value of $147/barrel to then drop again down to a value of $36/barrel? What can we expect that the next few months and years will bring?

The aim of this short article is not to discuss that meeting in any detail. Such issues have been discussed to quite some depth already here at the Oil Drum. The purpose of this article is to discuss a single remark that one of the attendees, a Professor of Economics of the University of Geneva, made during the discussion.

This gentleman, unfortunately I didn't get his name, claimed that the price of crude oil could not rise much above $120/barrel in a sustainable fashion, because at such prices, we would use up our entire GDP for the procurement of energy only.

We all know that, after the peak, the oil must invariably become more expensive. We also know that, as the oil becomes expensive, demand destruction sets in that reduces the demand for the commodity, driving its price back down again.

What I had not come across before was a methodology that would allow me to quantify the price level at which our economies will stall, and this is precisely what my colleague from Geneva suggested.

The goal of this article is to review his proposed methodology.
(14 May 2009)

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