Fauster's Facts Either you're with us, or you're with the terrorists

Wednesday, April 26, 2006

Peak Oil


Life After The Crash

Also see interview with David Goodstein (Cal-tech physicist):
Crude Awakening

Interesting included merger timeline:

December 1998: BP and Amoco merge;
April 1999: BP-Amoco and Arco agree to merge;
December 1999: Exxon and Mobil merge;
October 2000: Chevron and Texaco agree to merge;
November 2001: Phillips and Conoco agree to merge;
September 2002: Shell acquires Penzoil-Quaker State;
February 2003: Frontier Oil and Holly agree to merge;
March 2004: Marathon acquires 40% of Ashland;
April 2004: Westport Resources acquires Kerr-McGee;
July 2004: Analysts suggest BP and Shell merge;
April 2005: Chevron-Texaco and Unocal merge;
June 2005: Royal Dutch and Shell merge;
July 2005: China begins trying to acquire Unocal

If the oil companies aren't monopolies now, what constitutes a monopoly? Exxon CEO gets $6 from every American family of 4 for his retirement. You better believe we already paid him that money at the pump. Efficient hand of the market?


Cache of the Time article:

Feb. 17 - Remember 1973? If you do, there are plenty of reasons to wish you didn’t. Chief among them (right after leisure suits) would be the oil crisis that began in October. The Middle Eastern OPEC nations stopped exports to the United States and other Western nations just as stateside oil production was peaking. The artificial shortage that followed had devastating effects: The price of gas quadrupled in the United States, climbing from 25 cents to more than a dollar, in a matter of months. The American Automobile Association reported that in one isolated week up to 20 percent of the country’s gas stations had no fuel; in some places motorists were forced to wait in line for two to three hours to gas up. The number of homes built with gas heat dropped.

But that was the 1970s and this is now, right? Not according to David Goodstein. Saudi princes and SUV drivers may do well to read his new book, “Out of Gas: The End of the Age of Oil” (W.W. Norton), in which Goodstein argues that our oil-dependent civilization is in for a crude awakening when the world’s oil supply really begins to run out—possibly within a few decades. “As we learned in 1973, the effects of an oil shortage can be immediate and drastic, while it may take years, perhaps decades, to replace the vast infrastructure that supports the manufacture, distribution, and consumption of the products of the 20 million barrels of oil we Americans alone gobble up each day,” he writes.

Goodstein’s book is not a happy read, but an important one. In layman’s terms, he explains the science behind his prediction and why other fossil fuels might not do the trick when the wells run dry. Goodstein, a physicist and vice-provost at the California Institute of Technology, recently spoke with NEWSWEEK’s Brian Braiker about the fundamental principles of oil supply and demand, and whether civilization can survive without fossil fuels. Excerpts:

NEWSWEEK: This is scary stuff. You’re saying that oil production will soon peak.

David Goodstein: The prediction that it will peak—that is to say the crisis will come when we reach a peak when half the oil has been used up—that prediction quantitatively is unquestionably true. But the quantitative question of when the peak will occur depends on extremely undependable numbers. The so-called proven oil reserves as reported by various countries and companies around the world are often just guesses and they’re often not even honest guesses. Among those who would analyze those figures, some have predicted that it will come as early as this year; others, within this decade. It could possibly be in the next decade. But I think that’s about as far as you can push it.

Let’s start at the beginning. What is oil and what do we use it for?
Oil is hydrocarbons that grew up in the earth when source rock full of organic inclusions sank to just the right depth—not too little and not too much—and got cooked over the ages. It took hundreds of millions of years for the world’s supply of oil to be created. The oil is used to make gasoline obviously, but also home heating oil, diesel fuel but also 90 percent of all the organic chemicals that we use. That includes pharmaceuticals, agricultural products, plastics, fabrics and so on. They are petrochemicals, meaning they originate as oil.

So our demand, regardless of supply, is unlikely to decrease anytime soon.
Well, the need for those hydrocarbon materials has been increasing for 150 years and will go on increasing especially because the world’s population is increasing. The poorer parts of the world want to increase their standard of living, which inevitably means using more energy. Fossil fuels are our principal source of energy.

You used an interesting word: “need.” Do we need the oil or is it something that we have just become dependent on?
We have certainly become dependent on it. This is a habit that will be very, very difficult to break.

Knowing human behavior and how hard the habit is to break, we probably won't, in all likelihood, break it.
I think we will not. One of the reasons I wrote the book was in the hope that enough people will become aware of the problem and we will be a little better prepared.

How do you suggest people prepare now?

Out of Gas: The End of the Age of Oil by David Goodstein
Right now we don’t have the kind of leadership that would take us in the direction that would make major changes. As individuals we can do things; I drive a hybrid car, for example. But as a society we have to redesign cities so that people live close to where they work. There are all kinds of measures. We are so profligate in the use of energy that even with the smallest effort we can reduce the rate at which we use energy very significantly, as Californians showed after the last energy crisis. But what we really need is massive infusion of research on all of the possible ways of ameliorating this problem.

You’re talking about researching fusion and fuel cells and —
Fusion, fuel cells, biomass. There are all kinds of possibilities, but none of them are worth a thing unless you’ve shown that it actually works. You’ve got to prototype it; you’ve got to show that it can be scaled up, that it can be done on a large scale. And so on.

You write that the crisis doesn’t happen when we run out of oil, it happens when we reach the peak, the halfway point. Explain that.
We had a peak once before—it was in 1973. The production in North American had reached its peak in 1970 and was declining. Supplies were not available in North America and the Arab countries embargoed the oil; they shut down the pipeline. We had an immediate, instantaneous panic, mile-long lines at gas stations and fear for the future of our way of life. That was an artificial, temporary peak. And it’s just a slight foretaste of what will happen when we reach the real [global] peak and supplies start to decline and continue to decline forever.

So what happens then? Do we revert to coal?
It’s possible for us to revert either to natural gas or to coal or both. Among consequences are the increasing global climate change. But another consequence is, let us suppose you tried to substitute coal for oil. Natural gas is a good substitute and it will last for a while but it will have its own peak one or two decades after oil, so it’s only a temporary solution. If you turn to coal, we’re now using twice as much energy from oil as we are from coal. So if you want to liquefy coal as a substitute for oil in transportation—which is its most important application—you would have to mine coal at a rate that’s many, many times at the rate of what we’re doing now. But the conversion process is very inefficient. So you’d have to mine much more than that. If you put that together with the growing world population and the fact that the rest of the world wants to increase its standard of living, you realize that the estimates that say we have hundreds of years worth of coal in the ground are wrong by a factor of ten or more. So we will run out of all fossil fuels. Coal will peak just like any natural resource. We will reach the peak for all fossil fuels by the end of the century.

You mentioned transportation as one of oil’s greatest uses. Doesn’t alternative technology already exist?
Not exactly, no. We tried electric cars and that was sort of more or less withdrawn from the market. I think there was plenty of demand. But when I tried to buy an EV1 some years ago, they said that the car had a range of 50 to 100 miles, but there was an onboard computer that always told you what your range was and when it was freshly charged, it had a range of about 30 miles. And they only sold them in California and Arizona because they were useless in colder climates. So that’s not the solution. There are advanced batteries—the kind of batteries that we use now in our cell phones and laptops are lithium ion batteries and they have about five times the energy density of the old lead acid batteries. So if you could imagine something like an EV1 with five times the range, that starts to become believable. But nobody is showing that you can scale up the lithium ion batteries to use in transportation.

And another alternative is nuclear.
Nuclear is an alternative, but remember you’re not going to have any nuclear cars and nuclear airplanes. Nuclear is not a substitute for oil. There’s a lot of talk about hydrogen because of the president’s initiative—the governor of California has also announced an initiative. I think what people don’t understand about hydrogen is that it is not a source of energy. You have to use energy to make hydrogen—it’s just a way of storing and transporting energy. And with today’s economics and today’s technology, it takes the equivalent of six gallons of gasoline to make enough hydrogen to replace one gallon of gasoline.

How do we know that all the oil that will be discovered has been discovered?
We don’t know that all the oil that will be discovered has been discovered, and this is a somewhat controversial subject. But we do know that the peak in oil discovery occurred decades ago. The rate at which we’ve been discovering new oil has been declining for decades. That’s one of the arguments that the peak in oil supply must be coming soon because the supply curve follows the discovery curve by a few decades. The United States Geological Survey conducted an exhaustive study between 1995 and 2000 and gave out a statistical output in which they said that the amount of oil that we started with, we could be 95 percent certain, was at least 2 trillion barrels. But they also thought there was a 50 percent chance that there was 2.7 trillion barrels. The difference between those two is 700 billion barrels of oil—that’s the entire reserves of the Middle East. They were predicting discovering the Middle East all over again. That’s pretty implausible. But if you really did add 700 billion barrels to the world’s oil supply, it would delay the peak by about a decade. So we’re not talking about really something that does away with the problem.

And opening up the Arctic National Wildlife Reserve in Alaska?
It makes no dent at all. It isn’t even worth talking about.

Is there a silver lining here?
I really don’t think so. If the peak comes and we can’t get our act together fast enough to make up for it, you will end up with people all over the world burning coal as fast as they can just for the space heating and primitive industry. And if you do that the effect on the climate is completely unpredictable.

What about solar energy?
Solar energy will be an important component, an important part of the solution. If you want to gather enough solar energy to replace the fossil fuel that we’re burning today—and remember we’re going to need more fossil fuel in the future- using current technology, then you would have to cover something like 220,000 square kilometers with solar cells. That’s far more than all the rooftops in the country. It would be a piece of land about 300 miles on a side, which is big but not unthinkable. But making that area of solar cells one heck of a challenge because all of the solar cells every made probably wouldn’t cover more than 10 square kilometers. This is not impossible. It’s just difficult. It’s hard and we’re not trying.

You’re a physicist by training.
This is not my research field. I do research in a completely different field. I just thought that this was such an important problem that somebody ought to write a book about it. I am not an expert—there is no subject covered in that book about which I know more than anybody else. If you want to know about superfluid helium or certain kinds of phase transitions I may know more than anybody else in the world. I just thought I should lend my pen to this cause.

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