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Medicine After Oil
It could be distributed a lot more democratically
Daniel Bednarz, Orion magazine
The scale and subtlety of our country’s dependency on oil and natural gas cannot be overstated. Nowhere is this truer than in our medical system.
Petrochemicals are used to manufacture analgesics, antihistamines, antibiotics, antibacterials, rectal suppositories, cough syrups, lubricants, creams, ointments, salves, and many gels.
…Despite this enormous vulnerability, public discussions of health care routinely ignore the prospect of peak oil. The proposed reforms, which seek to cover more people while holding down escalating costs, amount to little more than fiscal maneuvers. They take no notice of ecological resource constraints that will set limits on our ability to give people access to medical care.
The coming scarcity of fossil fuels, on top of inflationary costs in medicine (the prices of oil and natural gas are approximately four times what they were in 1999 and rising) and the expenses of treating Baby Boomers (a cohort twice the size of its predecessor), could overwhelm a medical system already in crisis. We can avoid collapse, however, by reducing medicine’s present consumption of energy and creating a health-care system that reflects our actual relationship to resources. Ironically, peak oil can be a catalyst for creating a health-care system that is cost-effective, ecologically sustainable, and congruent with a democratic social ethos.
(July/August 2007)
Congratulations to long-time Energy Bulletin author, Daniel Bednarz, for getting published by Orion. -BA
Steve Andrews of ASPO on CNBC (YouTube)
CNBC via The Oil Drum
Steve Andrews, ASPO co-founder, discusses the last IEA report with John Kilduff (Man Financial energy analyst and CNBC contributor). Cheers Steve!
(10 July 2007)
ASPO-USA has made it to talking head status. May this be the first appearance of many!
Direct link to YouTube.
Interview: Les Magoon on USGS 2000 report (Audio)
M. King Hubbert Tribute site
Jason Brenno Interviews Les Magoon of the USGS on the USGS 2000 Report in late 2006.
(18 May 2007)
Peak oil in BBC play: Second To Midnight
Friday Play, BBC
Friday Play – Second To Midnight
Friday 13 July
9.00-10.00pm BBC RADIO 4
Western governments, oil companies and business analysts have long predicted that the “peak”, when oil reserves become finite and the markets begin to panic, is as far away as 2030. However, Rob Turner, oil company geologist, has just uncovered that the peak is not tomorrow. It was yesterday.
In his private life, Rob had a secret affair a few years ago with Geraldine, the wife of a good friend, Henry – the Deputy British Ambassador in Nigeria. Liz, Rob’s wife, never found out but his daughter, Helen, did. It damaged the relationship between father and daughter for good and is still a source of unspoken conflict for them. Liz and Rob are in the middle of an argument when Henry rings from Lagos. Helen has been killed in a car crash in the Nigerian Delta.
Rob travels to Nigeria to bring Helen’s body back, but discovers there is no body and the facts surrounding Helen’s accident don’t seem to add up. And there are more surprises. Unbeknown to her parents, Helen recently married Kolo Djouba – an environmental activist and chair of the Ogoni people’s liberation front.
Second To Midnight is written by Andy Walker and Chris Reason.
Producers/Susan Roberts and Gary Brown
(19 July 2007)
Contributor A1 writes:
This is the first time peak oil and the associated geo-political issues have been addressed in a radio play on the UK’s most important speech and news station. The programme will be broadcast at 9pm on Friday 13th July with the second half a week later. It will be available on the internet live and for seven days on the BBC’s ‘listen again’ service
Back-to-the-Future Look at Oil Prices–Will Higher Prices Bring More Supplies?
Glenn Morton, The Oil Drum
In 1982, I had a fascinating lunch with my boss’s boss’s boss, Arco’s VP of the Southern Region, Tom Neal. This was at the height of the last oil boom. The price of oil was $32/bbl headed to $100 (everybody knew).
I was a 30 something oilman wannabe, Neal had achieved significant success. He taught me about economics that day. He and the VP of the Northern Region, Tom Wilkinson (one had to be a Tom to be a VP in those days), had had a meeting with Peter Drucker. At the time of the meeting, oil had just begun to show some signs of weakness and people were expecting a slight near-term decline in the price of oil.
Drucker had asked these two very savvy VP’s how low the price of oil would go. Both had mentioned numbers in the low $30s. Neal then told me that Drucker asked them to tell him their worst case scenario. What is the absolute worst that could happen to the price of oil? Neal said he responded with a value of $28 as the absolute worst. Drucker told them that he thought the price would drop to $14, which is about what the price was when the oil boom started in the mid-1970s.
Both VPs were aghast, but disbelieving. But by the time of my lunch with Neal, he was beginning to think Drucker was correct.
Drucker’s reasoning was based upon the idea that a cartel can’t control the price forever and when the price of a commodity goes above the long term average (inflation adjusted) price, it will inevitably fall back.
…Drucker’s suggestion at the time made perfect sense with the historical data. Anytime over the past 100 years that oil went above its average price, it would inevitably fall back to that level again. The average price was $15 dollars in 2004 dollars.This is especially true post-1879. In general, after commercialization, oil prices remained relatively flat during the early stages of production history. Eventually Drucker was correct, the price for oil in April of 1986 was below $10 per barrel. This phenomenon is quite widespread and is implicitly believed in by the economists. As price rises, entrepreneurs go out and produce more supply driving the cost for the commodity back to its historical inflation adjusted average.The purpose of this article is to refute the concept that non-renewable commodities follow the same curve.
…It is clear that the historical view of economists, that high prices will bring new supplies and thus drive down costs, may not be efficacious in the case of non-renewable commodities.
Now, let’s go back and look at oil. Above, I showed the chart, used by the economist Drucker to convince my vice presidents that oil prices would always be flat. But let’s look at what happened, in inflation-adjusted dollars since that time. The collapse in the price of oil was caused by the development of the big North Sea fields, which, by 1982, had brought to the market 2.6 million barrels per day which hadn’t been there in 1975. The collapse of the prices in the 1980’s was caused by new supply. But today is very different. We are increasing supply, and the price is rising, indicating that world demand is driving this round of price increases. Oil, like rhodium, is now a demand driven market. Unlike rhodium,oil can’t be recycled from old gas tanks.
This is a guest post by Glenn Morton, a geophysicist in the oil industry. For Kerr-McGee Oil and Gas Corp., Glenn served as Geophysical Mgr Gulf of Mexico, Geophysical Mgr for the North Sea, Dir. Of Technology and as Exploration Director of China. Currently he is an independent consulting geophysicist. – Prof. Goose of The Oil Drum
(10 July 2007)
Marchetti’s Curves
LuÃs de Sousa, The Oil Drum: Europe
This is a brief account of the Energy Susbstitution Model developed by Cesare Marchetti in the 1970s at IIASA. Using data from the latest BP Statistical Review the evolution of the energy market is compared with the model to understand why the Hubbert Peak of fossils fuels represents a problem today.
…This post in large measure addresses the “Energy source X will do it” claims, and can be considered part the Contrarian Arguments series.
Cesare Marchetti was born in Lucca (Italy) in 1927 and got a degree in Physics from the Scuola Normale at Pisa in 1949. We would then leave Academia to never return back.
…Marchetti tried using logistic curves to describe the way energy sources enter and leave the market. Using the Fischer-Pry analysis technique he plotted the share each energy source had on the market. This kind of analysis was introduced as a tool to study the market penetration of new technologies.
…Beyond those elegant curves drawn in a logarithm-scale by the Fischer-Pry technique, this chart showed a very important thing: all of the Industrial Age energy sources follow a similar trend when entering the market. It takes 40 to 50 years for an energy source to go from 1% to 10% of market share and an energy source that eventually comes to occupy half of the market will take almost a century to do so, from the epoch it reaches 1%.
Internal Clocks
“Internal clocks” was a term Marchetti used to put in simple ways the deterministic behaviour of the energy market observed in the 1970s. From his analysis it seemed clear that energy sources enter and leave the market on a pre-determined fashion, beyond outside control.
…Later, in 1978, Marchetti was invited to address the methodology of energy systems analysis at the IIASA Third Energy Status Report. A written version was published in 1979 entitled Energy Systems – The Broader Context [pdf] where he took a somewhat informal approach on the subject:
I am originally a physicist, a bit of the Bridgman school, and I always try to find an operational description of certain statements. The best operational description for our case is that of Alice in Wonderland who sees flowers and flowers, picks them, and then sees better flowers, so she throws the old flowers away and so on.
Marchetti also tried to grasp who decides which flowers Alice picks:
But the question now is who pick the flowers […] perhaps politicians, or the heads of large companies, are decision makers. Well, I had long discussions with them and a lot of them say: “We seem to be decision makers but we are so strongly conditioned that finally we don’t recognize any decision in our decisions. We are just optimizers.”
…Thirty years later it is interesting to see how the market behaved. Using the data from the latest BP Statistical Review of World Energy, the result is the following: …In large measure the real data moved away from the model of the 1970s. This was probably due to the Oil shocks that upset the market, but the prolonged effects are not as easily explainable. What immediately emerges to view is that after the Oil crisis was surpassed in the 1980s, the market seems to have frozen, with each energy source maintaining its market share.
…What is the importance of the Energy Substitution Model? It seems that it broadly failed to achieve its intents: to predict future market dynamics.
(10 July 2007)
