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Physics in the Economy I: Physical Work
Stuart Staniford, The Oil Drum
This is the first in an occasional series of posts on the role of physics, particularly energy, in the economy. I’ve noted that on several sides of the peak oil debate that there is a serious lack of literacy in basic physical theory. On the one hand, classical economics seems to have been developed with an almost complete lack of consideration of the role of energy.
For example, I have a college level Macroeconomics textbook by my side. It devotes about two out of 519 pages to consideration of energy, wherein it says nonsense like:
Because energy constitutes a small proportion of the nation’s total expenditure on inputs, most statistical studies suggest that higher energy prices did not contribute much to the slowdown [in the 1970s].
My Microeconomics textbook is even worse: energy is not in the index. The reasons for this lack of consideration have been understandable in the past, as I will discuss later, but I believe will pose serious problems in the future.
On the other hand, there is a tendency for some peak-oil writers to throw around the Second Law of Thermodynamics as though it proves beyond doubt that any reduction in available energy must immediately result in a collapse of society, which is equally nonsensical.
(12 September 2005)
Kudos to The Oil Drum for their ongoing effort to educate us on the different aspects of Peak Oil: oil drilling, the psychology of denial and now, physics.
Rocks in our Heads
James Howard Kunstler, Clusterf*ck Nation
The impediments to clear collective thinking about the problems we face were not washed away by Hurricane Katrina — and may still be there after Hurricane Ophelia romps up the Atlantic coast later this week
One Big Thought making the rounds of the editorial pages is that “fuel efficiency” will be the cure-all for our energy predicament — that if everybody could trade in his Ford Explorer for a Toyota Prius, life in the USA would just purr happily forward. This has been the position of the more metaphysical branches of the enviro sector, as
personified by the Rocky Mountain Institute and its preposterous “hyper-car” project.
The truth is that it does not really matter whether the freeways are crammed full of SUVs or nimble hybrid cars. The problem is car-dependency and the infrastructure for daily living predicated on it, not the kind of vehicles we run. I have yet to hear one US senator of either party propose that part of the recent $300 billion highway bill ought to be redirected to rebuilding America’s passenger rail system — even after the bitter lesson of Katrina, which demonstrated that people who don’t own cars can’t get out of harm’s way in this country.
Another Big Thought still clogging the collective imagination is the idea that if only we switch to “alternative fuels” we can run the interstate highway system, Disney World, and WalMart just like before. The country is full of people now who want gold stars for running their household car fleet on discarded Fry-Max oil from the local Dunkin Donuts. . . or on oil squeezed from hemp seeds. Notice that the premise of a drive-in society remains.
Now the scary part of this is that these ideas are coming generally from the smarter people in our society. The dumb ones are are praying for the Rapture, or waiting for the market to magically fix everything, or sitting around the suburbs of Houston oiling their riot guns in front of the Nascar telecast.
(12 September 2005)
Rep. Roscoe Bartlett interviewed on “The Right Hour”, Rightalk Radio
Paul Weyrich, The Right Hour via Global Public Media
Host Paul Weyrich discusses oil depletion with Rep. Roscoe Bartlett and attempts to convince Bartlett that oil shale will save us.
(12 September 2005)
Bartlett is sponsering a Peak Oil conference on September 26 in Frederick, Maryland.
On September 7, Bartlett gave a speech on Hurricane Katerina and energy efficiency.
Peak Oil and Britain
Roland Watson, New Era Investor
So Britain’s Chancellor, Gordon Brown, has firmly put his finger on the current oil supply problem. It’s all the fault of OPEC. If they would open up the valves a bit more on those “inexhaustible” resources, we could all breath more easy again. This flies in the face of what Saudi oil officials were saying some weeks back when they firmly put the finger of blame on lack of oil refining capacity in the USA and beyond.
Britain is facing some short to long term problems when it comes to oil and natural gas. North Sea production has been falling at precipitous amounts of up to 15% since it peaked in 1999. This was against the analysis of experts who saw a more gradual decline as Britain moved into the underclass of net energy importer. What they and a host of other over-optimistic analysts did was to assume that new production would significantly cancel out depletion. It has not and the government has been desperately auctioning of new exploration zones in the hope that something, somehow will come online in the next few years to mitigate this looming disaster in production.
…Meanwhile, the next few months in Britain could be an interesting little “trailer” for the big movie “Peak Oil” coming to a country near you soon. A combination of Hurricane Katrina, depleting North Sea supplies, fuel protests and the inadequacy of the current LNG and continental supply could set Britain up for a “Winter of Discontent” as fuel prices continue to rocket upwards.
(12 September 2005)
2007: Solving Peak Oil
Meridian International Research, press release
While much has been written recently on the Peak of Global Oil Production, very little has been written to demonstrate how we can overcome these problems and manage declining oil supplies with workable and effective strategies.
This report “2007: Solving Peak Oil” fills that gap. It focuses on the answers to Solving Peak Oil.
“2007: Solving Peak Oil” explains how known, tried and tested and cost effective technologies can be implemented quickly to reduce oil consumption in step with falling oil supply and maintain security of global transport without major disruption to society.
That Peak Oil is real and imminent is now beyond doubt. Action must be taken to reduce Global Oil Dependence. By 2010, Oil Production will have fallen to 82Mb/d from some 85Mb/d at present. By 2020 it will have fallen further to 65Mb/d. Half of global oil consumption is used by the transportation sector and the majority of that by Road Transport.
Fuel consumption by road transport can be cut sufficiently by conversion to existing Electric Vehicle technologies: the Battery EV and the Plug In Hybrid EV. The Plug In Hybrid technology could reduce the fuel consumption of road vehicles by a factor of 5. Battery EVs eliminate petroleum use entirely. Battery technology has now evolved both in performance and cost to the point that at the very least, urban transport could be provided entirely by the Battery EV with no inferiority in cost, performance or operability. These technologies have major environmental benefits as well as being much more energy efficient.
(12 September 2005)
Electric vehicles are here presented as a techno-fix. Note that this is article is a press release, not a news story. -BA
Petrocollapse: social isolation or solidarity?
October 5 conference in NYC
Petrocollapse Conference
Speakers:
John Darnell, Ph.D., Congressman Roscoe Bartlett’s environmental/energy coordinator
James Howard Kunstler, author of The Long Emergency
Jan Lundberg, oil industry analyst, founder of Auto-Free Times and culturechange.org
Andrew McKillop, editor of The Final Energy Crisis
Jenna Orkin, peak oil “lobbyist”, World Trade Center Environmental Organization
David Pimentel, Ph.D., agricultural economist at Cornell University
David Room, Post Carbon Institute, and Global Public Media website
Panels include:
Michael Ruppert, From the Wilderness Publications and author, Crossing the Rubicon
Catherine Austin Fitts, investment advisor for local economics
Pincas Jawetz, U.N. correspondent for culturechange.org
Dan Miner, New York nonprofit development executive
Cal Simone, writer and west coast coordinator for Petrocollapse conference
(September 2005)
See conference website for details.
Energy policy of the New Zealand Labor Party
(NZ Labor Part recognizes Peak Oil)
NZ Labor Party, press release via Scoop
…Although the date at which world oil production will peak and then begin to decline is not certain, the effects of this decline on our economy and society are so significant that we must be proactive by reducing our dependence on oil, and by contingency planning in case the decline happens before we are fully prepared.
While renewable electricity generation capacity grows every year, our transport sector, which accounts for about half of our total energy use, is still almost 100% reliant on oil based petrol, diesel and aviation fuel. Given our small size, remote location and oil import dependency, New Zealand is particularly vulnerable to international supply shocks.
(13 September 2005)
Mentioned by rogerhb at peakoil-dot-com.
Oil, the times, and Pascal’s wager
Stephen Leeb, The Complete Investor
…In some respects, what we are facing today regarding the oil situation resembles Pascal’s Wager.
Blaise Pascal was a theologian who wrote a series of notes called Pensees as part of an unfinished treatise on Christian apologetics. In these notes, he suggests that it is a better bet to believe in God than to disbelieve. His reasoning is that if God doesn’t exist, then believing in God will do you no harm. But if God does exist, then disbelieving in Him will do you harm. So if nothing else, belief in God is worthwhile as a kind of insurance policy.
…we are pretty sure oil production cannot be increased to infinity, nor will oil reserves last forever. What’s more, enough evidence exists to back up the possibility that oil could fall behind demand quite soon. It’s not just some lunatic fringe who are talking about peak oil. Many intelligent, experienced people – including geologists and some oil executives – are treating it as a serious possibility.
Yergin, on the other hand, is mainly a historian. We think he has just as much a chance of being wrong as we do, possibly more. The energy sources he expects to come online in the next few years are mainly exotic fuels such as liquefied natural gas. His numbers, in our opinion, do not add up.
A world where energy supply falls behind demand would be a world with negative growth and a lot of suffering. So clearly, the prudent thing to do is to act as if an energy crisis is a real possibility. We should be developing alternative energy sources that will safeguard our civilization even if oil runs out sooner than we hope. And if we’re wrong, so what? We’ll still be able to sleep at night, maybe even in an air-conditioned room.
(12 September 2005)
The Complete Investor website requires a login, so the complete article is not available for most people. The snippet here gives the flavor of the original. -BA
End of oil era in sight, Rifkin warns
Andrew Rettman, EUobserver.com
Controversial US thinker Jeremy Rifkin told the EU on Monday that the world will witness the end of the oil era in the present generation’s lifetime, as MEPs launched a new initiative to promote hydrogen fuel.
The chief of the Washington-based NGO Foundation on Economic Trends indicated that the world will have used up over half its oil reserves by 2027 at the latest or between 2010 and 2020 at the earliest.
“Let’s hope and pray that we don’t peak in the next two to three years, or we are going to be in trouble like we have never been before in human history”, he said.
Mr Rifkin urged world leaders to focus research and investment on developing renewable energy over the next 25 years in order to usher in a third industrial revolution after steam and oil power.
(12 September 2005)
Also posted at Fuel Cell Works.
Book review of Simmons and Kunstler:
Oil supply facts, forecasts provide fuel for thought
Mark Hertsgaard, Fort Wayne Journal Gazette (Indiana)
It used to be that only environmentalists and paranoids warned about the world running out of oil and the future it could bring: crashing economies, resource wars, social breakdown, agony at the pump. Not anymore – and certainly not this summer, with the average national price of a gallon of gasoline around $2.60 in late August, up 73 cents from last year, and with Hurricane Katrina’s aftereffects bound to push prices still higher. A growing number of industry insiders believe that the era of cheap, abundant oil is ending and that governments, corporate elites and ordinary people are utterly unprepared for the challenges ahead.
Matthew R. Simmons is an investment banker with 30 years of experience advising the industry’s major players, including briefing President Bush and Vice President Cheney. How long abundant oil will last, Simmons has asserted, is “the world’s biggest serious question.” The answers he provides in “Twilight in the Desert” are nothing less than alarming – all the more so because of his pro-industry sympathies and the prodigious research and fair-minded reasoning he brings to his task.
(11 September 2005)
Interview with Jeffrey Brown:
“Katrina’s aftermath is glimpse of world’s energy future”
Mella McEwen, Midland Reporter Telegram via MyWestTexas.com
Soaring energy prices, long lines at the gasoline pump and supply shortages in the wake of Hurricane Katrina should serve as a wake-up call about the nation’s energy situation.
“This is really the squall line in front of the big storm,” said Jeffrey Brown, a Dallas-area independent geologist. He visited Midland recently to address the Forum for Exploration, Production and Acquisitions to discuss “Peak Oil: It’s Impact on the Oil Patch Economy and on the U.S. and World Economies.”
Brown, who is helping Matt Simmons and James Kuntsler prepare a presentation on the topic to be given in Dallas in November, believes the world is at, near or perhaps just past its peak of sustainable oil production.
It took, he noted, a coordinated effort of release from the nation’s Strategic Petroleum Reserve and from the European Union to calm markets after the hurricane hit, an indication that capacity has been reached.
“I use Texas as a model for the future of the world’s oil production,” Brown said, noting that Texas production peaked in 1972 and has been falling at a rate of 2 percent a year since.
He took the formula devised by Dr. Kenneth Deffeyes, a retired professor from Princeton who has written two books on the prospects of falling oil production and its impact on world economies. Applying Deffeyes’ method to Texas production, Brown said, was accurate to within one or two years. Deffeyes’ methodology, Brown said, showed Saudi Arabian oil production at its peak and world oil production near its peak.
“Texas peaked when it had produced 54 percent of its estimated ultimate cumulative oil production. Saudi Arabia has produced 55 percent of its estimated ultimate cumulative oil production; they’re at the same point Texas was at in 1972,” he said.
This leaves oil and gas producers with two exploration models: Searching for small pockets of overlooked reserves in existing fields and ‘mining’ in areas such as the Spraberry, Barnett Shale and Canada’s tar sands.
“You’re not going to have many more billion-barrel oil fields left,” he said. “You have to bring unconventional sources to the marketplace.”
(11 September 2005)
Our float down the River de Nial
Michael Abraham, Roanoke Times (Virginia)
…Last, we need to accept the coming reality of Peak Oil, the point at which no matter how hard we explore, we won’t find enough to slake our amazing thirst and there will be less availability with each succeeding year. Our national economy is whitewashed in a patina of cheap oil, as the patterns of everyday life have adjusted to reap its affordable abundance. The ramifications of a shortage are immense. If you think our current situation at the gas pumps is bad, imagine a permanent energy crisis, worse each year. We can debate when Peak Oil will happen and how much misery will result, but it’s coming. You’ve been warned.
Nature bats last. Life along the River de Nial is doomed. It’s a new day in America; the alarm has rung. It’s time to embrace reality and to reclaim our pride and our country. The survival of everything we care about depends upon it.
Abraham is an environmental activist who lives in Blacksburg
(11 September 2005)
