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Big Oil’s big optimism
Steve LeVine, Foreign Policy
Oil prices are up today, another apparent notch in the belt of conventional wisdom, which is that we are on the way to another historic price spike — $200 to $300 a barrel and $5 a gallon at the U.S. pump. The way this narrative goes is that these sky-high prices finally so aggravate U.S. consumers that they act on them: switching for good to hybrids and other high-mileage cars, weather-protecting their homes and buildings, and generally using much, much less oil. On the other side of all this, a decade or a bit more from now, we get a long, slow decline in global oil demand, paradise, and other fine things.
But is this valid? Not necessarily, if one considers a pair of reports out today from Barclays Capital, the research arm of the investment bank. Start with what leads people to such conclusions. First is the theory of peak oil:
… The other factor is that oil companies have in recent years curtailed their spending to find new oilfields. Together, these trends suggest that supply will stop keeping up with demand about mid-decade.
Where Barclays takes the punch away from this pessimists’ party is a semi-annual survey of 402 oil and gas companies of all sizes around the world. Barclays finds that these drillers are back in the spending game.
(15 December 2010)
If efficiency hasn’t cut energy use, then what?
Charles Komanoff, Grist
One of the most penetrating critiques of energy-efficiency dogma you’ll ever read is in this week’s New Yorker (yes, the New Yorker). “The efficiency dilemma,” by David Owen, has this provocative subtitle: “If our machines use less energy, will we just use them more?” Owen’s answer is a resounding, iconoclastic, and probably correct Yes.
Owen’s thesis is that as a society becomes more energy-efficient, it becomes downright inefficient not to use more. The pursuit of efficiency is smart for individuals and businesses but a dead end for energy and climate policy.
… A short form of the Jevons paradox, and a good entry point for discussing it, is the “rebound effect” — the tendency to employ more of something when efficiency has effectively cut its cost. The rebound effect is a staple of transportation analysis, in two separate forms. One is the rebound in gallons of gas consumed when fuel efficiency standards have reduced the fuel cost to drive a mile. The other is the rebound from the reduction in car trips after imposition of a road toll, now that the drop in traffic has made it possible to cover the same ground in less time.
Rebound effect one turns out to be small. As UC-Irvine economics professor Ken Small has shown, no more than 20 percent of the gasoline savings from improved engine efficiency have been lost to the tendency to drive more miles — and much less in the short term. Rebound effect two is more significant and becoming more so, as time increasingly trumps money in the decision-making of drivers, at least better-off ones.
Rebound effects, then, vary in magnitude from one sector to another. They can be tricky to analyze
This idea isn’t wholly original. It’s known as the Jevons paradox, and it has a 150-year history of provoking bursts of discussion before being repressed from social consciousness. What Owen adds to the thread is considerable
… I said earlier that Owen offers an escape from the Jevons paradox, and he does: “capping emissions or putting a price on carbon or increasing energy taxes.” It’s hardly a clarion call, and it’s not the straight carbon taxers’ line. But it’s a lifeline.
(15 December 2010)
U.S. Called Vulnerable to Rare Earth Shortages
Keith Bradsher, New York Times
The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products — from compact fluorescent light bulbs to electric cars to giant wind turbines.
So warns a detailed report to be released on Wednesday morning by the United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies, calls for the nation to increase research and expand diplomatic contacts to find alternative sources, and to develop ways to recycle the minerals or replace them with other materials.
(15 December 2010)