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The price of peak fuel
Stephen Pincock, ABC Science (Australia)
Our need for fossil fuels is insatiable, but coal, oil, gas and uranium reserves are finite and some may even be in decline. How long will our energy resources last?
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It’s among the great ironies of modern life. In order to fuel our twenty-first century global society, we rely profoundly on fossil fuels that are millions of years old.
Most scientists believe that the oil, coal and gas we use to generate electricity, run our cars and transport food began their existence as ancient plants and algae. Buried under heavy layers of sediment, they transformed chemically under immense heat and pressure into rich sources of fuel.
These forms of energy have revolutionised human society over the past century and more, but they are irreplaceable resources, and reserves are inevitably dwindling. Many scientists and other experts warn that we are approaching the time when production of these fuels will reach its peak, and start to decline.
The concept of peak oil — and by extension, peak coal, gas and other fuels — was born in 1956, when American geophysicist M. King Hubbert calculated that the rate of production of fossil fuels would peak in the United States in about 1970 and then start declining. At first his calculations were dismissed, but ultimately he was proven correct.
“The peak that matters is a peak in production,” says Dr Mark Diesendorf, a senior lecturer at the Institute of Environmental Studies at the University of New South Wales. “And the peak wouldn’t matter so much if the demand for these fuels wasn’t increasing so much. But demand keeps going up and up and up. In that scenario only one thing can give, and that’s price.”
(5 June 2008)
Crude oil: Rounding up the bad guys
Fortune
Soaring energy prices have created a bull market in villains – some more plausible than others. A scorecard
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Oil companies
The theory: Big oil companies are pushing prices up to boost their profits, which have soared to record levels in recent years. Top industry executives recently got hauled before Congress, where legislators pressed them for an explanation for rising gasoline prices – and outsize executive pay at companies like Exxon, which earlier this year posted a $40 billion profit for 2007.
Reality check: Executives acknowledge that company profits are high, but argue that their share of the global oil market is small. Exxon, the biggest U.S. oil company, ranks 14th in the world in terms of oil reserves. …
Supply and Demand
The theory: Surging oil use in fast-growing developing economies, together with oil subsidies imposed by many governments, have pushed demand for crude oil above worldwide output, which is constrained by political and geological factors.
Reality check: “This is a fundamentally driven bull market,” says Howard Simons, a strategist at Bianco Research in Chicago. “The answer is that the bubble is super-imposed on an upward trend in oil prices that has a strong foundation in reality,” …
(5 June 2008)
Other “villains” include the Producers, the Dollar, the Manipulators and the Index Speculators. Clever format.
Coca-Cola and gasoline, The Coke index
Kjell Aleklett, Aleklett’s Energy Mix.
Around the world, truck drivers, taxi owners and almost everyone else are protesting against high gasoline prices. Many become angry when they see the charge for a full tank, and then the next moment they enter the shop of the gasoline station and buy a Coke without giving it a second thought. For this “black gold” they pay more per litre (or gallon) than they have just payed for gasoline.
We have a heatwave in Uppsala and when I filled the tank on my car I went in and bought a Coca-Cola (a half-litre plastic bottle). The price for that was more than double the litre cost of the gasoline.
It would be interesting to compare the price of Coca-Cola and gasoline in different parts of Sweden and the world and, in that way, get a global index. I hope that you will help me with it. The price for Coca-Cola should be only for a plastic bottle holding half a litre or the equivalent. Note down the price for normal (standard) gasoline and send it as a comment.
Here is a first example:
Nation: Sweden
Location: Uppsala
Gasoline station: Shell at Grindstugan
Price for Coke: 18 Swedish Crowns
Gasoline (normal) price: 13.95 Swedish crowns per litre
This means that the index for Coke – gasoline is 2.65, i.e. I payed nearly 3 times as much to quench my thirst.
One litre of gasoline contains energy equivalent equal to 10kWh, 10 kiloWatt hours. So that you can understand how much energy this is I will make the following comparison. A small “environmentally-friendly” car weighs approximately 1200 kg. We place this car at the foot of the Eiffel Tower that is 321 metres high. Then we attach a rope (in the spot where a towrope can be tied), climb to the top of the Eiffel Tower and, by hand, we pull the car to the top. We have then performed work equivalent to 1kWh. That means that the energy in one litre of gasoline is equivalent to lifting 10 cars or that one gallon could place 38 cars at the top of the Eiffel Tower. If you were paid for manual work (in kWh) at the same rate as the work that can be done using the energy in gasoline then you would call it slavery. The energy shortage before oil became available was the main reason for slavery.
If you consider the work involved in extracting, transporting, and refining crude oil, distributing the gasoline, and if you then add tax onto the cost, then you realise that the price of Coca-Cola must be far too high. You can cut your cost for Coke by drinking water, but it is hard to replace the gasoline.
(5 June 2008)
Kjell Aleklett is president of ASPO International and a professor (Global Energy Systems, Uppsala University, Sweden). His email address is [email protected] .
