by Jay Hanson, June 25, 1998
By definition, energy “sources” must produce more energy than they consume, otherwise they are called “sinks”.
The green line is net energy production if investment begins before decline; the red line is production if investment begins during decline. In the short run, society loses some net energy (area A) if it invests early, but avoids a much larger loss (area B) soon after.
Joseph Tainter has studied about two dozen failed civilizations and found that the key to their survival is energy. Human civilizations collapse when they become too complex for their energy base. Gever et al. has calculated that if we wait until the oil “peak” before starting a crash program in alternative energy systems, net energy could drop to 30% of present values before starting to climb again. [p. 255]
Can our civilization can survive a 70% cut in energy production?
This net energy curve found empirically by R. Costanza and C. Cleveland (1983) working with Louisiana oil and gas wells. A very rough estimate is that the last 5% of production from a field might be at an energy loss.
The energy loss is partially due to economic subsidies. Recent research suggests that perverse subsidies total about $1.5 trillion per year worldwide. This is twice as large as global military spending each year and three times as much as the international narcotics industry. For more information, see http://www.websiteworld.co.uk/hot.htm
The global economy burns energy to make money—there is no substitute for energy. Although the economy treats energy just like any other resource, it’s not like any other resource. Energy is the precondition for all other resources.
The global economy receives almost 80% of its energy subsidies from nonrenewable fossil sources: oil, gas, and coal. They are called “nonrenewable” because, for all practical purposes, they’re not being made any more. The reason they are called “fossil” is because they were “produced” by nature from dead plants and animals over several hundred million years.
The key to understanding energy issues is to look at the “energy price” of energy. Energy resources that consume more energy than they produce are worthless as sources of energy. This thermodynamic law applies no matter how high the “money price” of energy goes.
For example, if it takes more energy to search for and mine a barrel of oil than the energy recovered, then it makes no energy sense look for that barrel—no matter how high the money price of oil goes. It will make no energy sense to look for oil in America after 2005.
During this coming century, the global economy will “run out of gas” as nearly all fossil energy sources become sinks. One can argue about the exact date this will occur, but the end of fossil energy—and its dependent: the global economy—are inevitable.
A good analogy is like having a motor scooter with a five-gallon tank, but the nearest gas station is 10 gallons away. You can not fill your tank with trips to the gas station because you burn more than you can bring back—it’s impossible for you to cover your overhead (the size of your bankroll and the price of the gas are irrelevant). You might as well put your scooter up on blocks because you are “out of gas”—forever.
It’s the same with the American economy: if as a country, we must spend more-than-one unit of energy to produce enough goods and services to buy one unit of energy, it’s impossible for us to cover our overhead. At that point, America’s economic machine is “out of gas”—forever.
Oil is the most important form of energy we use, making up about 38 percent of the world energy supply. No other energy source equals oil’s intrinsic qualities of extractablility, transportability, versatility and cost. These are the qualities that enabled oil to take over from coal as the front-line energy source in the industrialized world in the middle of this century, and they are as relevant today as they were then.
Forecasts about the abundance of oil are usually warped by inconsistent definitions of “reserves.” In truth, every year for the past two decades the industry has pumped more oil than it has discovered, and production will soon be unable to keep up with rising demand.
According to a March, 1998, Scientific American article by Colin J. Campbell and Jean H. LaherrÃ¨re Global oil production is expected to “peak” around 2005. See THE END OF CHEAP OIL
In November, 1997, the International Energy Agency (IEA) convened an Oil Conference in Paris. LaherrÃ¨re and Campbell presented three papers on oil depletion (against Adelman and Lynch from MIT).
As a result of this conference, IEA prepared a paper for the G8 Energy Ministers’ Meeting in Moscow March, 31, 1998. IEA followed Laherrere and Campbell’s view and forecast a peak in conventional oil for 2010 at 78.9 Mb/d and decrease in 2020 at 72.2 Mb/d. [ Source: Laherrere personal correspondence ] See WORLD ENERGY PROSPECTS TO 2020.
According to Richard Duncan, this represents a significant reversal of IEA position: “This is a real stand-down for them because until recently they were in the Julian Simon no-limits camp.” [ personal correspondence ] See Duncan’s energy paper THE WORLD PETROLEUM LIFE-CYCLE
Franco BernabÃ©, chief executive of the Italian oil company ENI SpA, expects the world to experience 1970s-style oil shocks starting sometime between 2000 and 2005. http://www.forbes.com/forbes/98/0615/6112084a.htm
Also see http://reports.guardian.co.uk/articles/1998/7/26/13026.html [Dead Link]
Unlike oil, gas is not transported cheaply. It can be piped around the continent, or for export purposes liquefied for transport by sea. Unlike oil or coal, its main competitors, it cannot be stored easily either. According to Campbell, global natural gas production is expected to “peak” a few years either side of 2020. [ p. 119, THE COMING OIL CRISIS, by C. J. Campbell
BernabÃ© is more pessimistic and sees the peak in global natural gas production about ten years earlier. Also see Riva
The US Department of Energy says we have enough coal to last for 250 years: “… total coal resources of the Nation are large and that utilization at the current rate will not soon deplete them … [ DOE-EIA ] estimated that the United States has enough coal to last 250 years.” USGS Fact Sheet FS-157-96, July 1996
Gee, that’s a lot of coal, and they aught to know! Right? Wrong! It seems that the Department of Energy forgot to consider the energy costs of mining coal when computing the size of this energy resource.
According to Gever et al., by 2040 it will require more energy to mine domestic coal than the energy recovered. In other words, if present trends continue, domestic coal will be “depleted” (will become an energy “sink”) in 42 years (not 250 years) [ p. 67 ]!
COAL TO LIQUIDS [ Steve Morningthunder, Instituto de FÃsica, Universidad Nacional AutÃ³noma de MÃ©xico ]
The below is from “Energy Strategies: Toward a Solar Future”; Union of Concerned Scientists, 1980; Ballinger; Cambridge, Mass. pg 10 & 75.
“Severe impacts would also result from the conversion of coal to synthetic fuels. To produce significant quantities of synthetic oil and gas, coal mining, with its attendant impacts, would have to be greatly increased. Owing to fuel conversion efficiencies no better than 60 to 70 percent roughly 1.5 tons of coal would have to be mined to produce synthetic oil with the energy content of 1 ton of coal. In addition to the disruptive effects of mining, both coal gasification and liquefication plants would require large land areas, emit considerable quantities of pollutants to the air, generate large volumes of solid wastes, and consume prodigious amounts of water.”
“While the burning of all fossil fuels produces carbon dioxide, some are worse than others in this respect. Unfortunately, coal and coal derived synthetic fuels are among the worst offenders, releasing roughly twice as much carbon dioxide per unit of energy produced than an equivalent amount of natural gas. Thus, there is good reason to question the goal of increased coal and synthetic fuel production as a means of offsetting future shortfalls in oil supplies.”
“Coal liquefication and gasification consume and contaminate large quantities of water, a problem of particular significance in western states with limited water resources where many of the coal reserves are located.”
“Although coal will continue to be a necessary energy source, at least for the next several decades, its use will have to be subject to stringent environmental standards. Over the longer term, a large-scale expansion in coal consumption may prove to be unacceptable due to the possibility of irreversible climatic modification combined with other adverse environmental impacts.”
This below is from U.S. Energy Atlas, 2nd edition; Coff & Young, 1986, Macmillan, New York, 1986: pg 58 & 60.
“Each full scale plant producing 50,000 bpd of boiler fuel or syncrude per day … water requirements are estimated at 10,000 acre ft. per year.”
“Beyond the heavy burden placed on the environment by coal and water demand, liquefication plants produce carcinogenic organic compounds in the coal residue and in trace metal pollutants.”
NON-CONVENTIONAL OIL [Campbell]
I use the term non-conventional as a basket for oil that does not qualify as being conventional oil for any one of a variety of reasons. It is perhaps a better term than unconventional which is also used. It is a broader usage than, for example, that employed by the USGS, which restricts it to deposits having no clear water contact, being termed continuous-type resources. As discussed earlier, the boundary between conventional and non-conventional oil is fuzzy, although the general distinction is valid enough, and indeed critical.
Included in the non-conventional category are:
– oil from oil shale
– oil from tar sands
– heavy oil
– oil from enhanced recovery
– oil from infill drilling
– oil in very hostile environments
– oil in very small accumulations.
Together they comprise a substantial resource, and have two essential characteristics: they generally become viable only in a high price environment; and they have a different depletion pattern, rising only slowly to a long, low plateau before eventually declining. The production of some categories are closely linked to the production of the conventional oil with which they are associated. They will not make much of a contribution to world production until long after Conventional Oil production has peaked.
Whereas conventional oil is primarily resource constrained, non-conventional oil depends more on economic factors, and its production is more analogous to mining. The distinction between reserves and resources has more meaning when applied to non-conventional oil than is the case with conventional oil. The sheer scale of the operations needed to extract significant amounts of nonconventional oil is a major constraint.
SHALE OIL [Campbell]
Oil can be distilled from certain shales rich in organic material, in the same way as oil can be distilled from coal, as was done in Germany during the War. The organic material consists of kerogen that has not been converted to oil. Accordingly, the liquid so produced is strictly speaking not a natural oil at all. Shale oil should in fact better be classed as part of the coal domain rather as a hydrocarbon source, but it is mentioned here because it is often considered in connection with oil.
The most advanced exploitation of shale oil is in the Piceance Basin of Colorado. It is reported that deposits yielding more than 10 gallons per ton are potentially commercially exploitable. The process carries a high environmental cost in terms of the disposal of waste, some toxic, and the large amount of water consumed. The waste material has a very fine particle size and occupies more space than it did before it was processed. It is unstable when heaped up in tips.
Although considerable investments were made in US shale oil projects in the aftermath of the Oil Shocks of the 1970s, most projects have now withered away. There are similar deposits in many other countries, including Australia, Brazil, FSU, Zaire, and China. The resources are very large, but actual world production is unlikely to exceed 500 000 b/d for a long time to come.
Australia, which has limited oil resources, has recently started exploiting shale oil near Gladstone on the coast of Queensland. The project has been encouraged by government tax relief. Production is expected to start two years from commencement, rising to 14 800 b/d in the eighth year. If all goes well, further developments may be undertaken, eventually yielding 250 000 b/d. Production costs are anticipated to be about $11.50/b, possibly falling to US$6.50 when the facility is in full operation. While it is evidently a very promising and valuable project, doubling Australia’s present Bass Strait production, the long timeframe of such operations is well demonstrated. The slow rise in production to a long low plateau is very characteristic of non-conventional oil.
OIL FROM BITUMEN, TAR SANDS AND HEAVY OIL DEPOSITS [Campbell]
When oil migrates to shallow depths on the margins of basins, it is attacked by bacteria, which remove the light ends, leaving behind sticky viscous materials known variously as bitumen, asphalt and tar. These substances grade into heavy oils, and there have been difficulties in knowing how to classify them precisely. Their characteristics vary, depending on the composition of the oil from which they were derived and the subsequent alteration processes. The boundary between bitumen and Heavy Oil is drawn at 10Â°API gravity and a viscosity of 10 mPa-s. Asphalt is a type of bitumen with a gravity around zero degrees API.
The two largest deposits are the tar-sand deposits of Athabasca in Canada and the heavy oil deposits of the Orinoco area of eastern Venezuela, which are each estimated to have over one trillion barrels in place.
Of the two, the Canadian deposit is at the more advanced stage of exploitation. The deposit is mined in mammoth open pits, as well as being exploited by in-situ steam stimulation. A new development has been the use of horizontal wells for steam injection as well as production. The mining operation involves stripping off the overburden; separating the bitumen with steam, hot water and caustic soda, and then diluting it with naphtha. After centrifuging, liquid bitumen at 80Â°C is produced, which is then upgraded in a coking process and subjected to other treatments, eventually yielding a light gravity, low sulphur, synthetic oil. The process is economically viable, and it is estimated that costs can optimally be reduced from $12-13/b to about $9/b by 1998, depending on the cost of capital etc. About 400 000 b/d are being produced to-day, and there is clearly scope for expansion. A huge work force is engaged in the operation.
In Venezuela, the heavy oil, which has an average gravity of 9.5Â°API, is extracted with steam stimulation and chemical dilutants from reservoirs at depths of 150 to 1200 m. It is estimated that about 270 Gb could be recoverable. Typically, patterns of five wells are drilled on a regular grid. Steam is injected through the peripheral wells. It drives the oil to the central well, which can produce initially at up to 600 b/d, for a period of a few months until the catchment is drained. There are new proposals to extract it directly with the help of horizontal wells and submersible pumps, expanding the catchment area to increase flow rates to 1400 b/d, even without steam injection. In the 1980s, Venezuela commenced marketing a product made from bitumen, known as Orimulsion, which is used as a commercial boiler fuel for electricity generation. It consists of an emulsion of 70% bitumen, processed to a particle size of 20 microns, mixed with water and 2000 ppm surfactant. It has a relatively high sulphur content, which can, however, be largely removed by conventional scrubbers in power stations. Production is expected to rise to about 400,000 b/d by 2000 and 600,000 b/d by 2005. Almost half the investment is in processing facilities. Exports to Europe have dwindled, however, partly because of the emissions, but new markets may be found.
It is obvious that the resources of tar-sand oil are enormous. The largest are the Canadian and Venezuelan deposits, but there are many others around the world, including two large ones, known as Aldan and Siliger in the Former Soviet Union. Although they may be economic to produce, at least to a certain scale, they use a large amount of oil in steam generation and are very environmentally unfriendly both for producer and consumer. Undoubtedly, production will rise in the future, but probably to a low ceiling, constrained by the sheer scale of the operation, and only when conventional oil is much scarcer than now.
OTHER HEAVY OIL DEPOSITS [Campbell]
The classification of what constitutes heavy oil is somewhat arbitrary, the boundary being variously drawn at 10, 15 or 20Â° APl – here we prefer the upper number. There is a very large number of heavy oil fields, which are found in virtually all producing basins, generally at shallow depth. Heavy oil generally has a high viscosity, and production rates are low, commonly requiring the pump. The production profile consequently rises slowly to a long low plateau before declining gradually. Many heavy oil deposits have been neglected, or produced slowly, in the past, because their economics compared unfavourably. A larger proportion of what will be produced in the future will be heavier oil: one estimate suggests as much as 37% of the undiscovered will be heavy. Deepwater finds tend to hold heavy oil because of low geothermal gradients from the thick water cover. [ pp. 121, 122, Campbell, 1997 ]
OIL SANDS [Youngquist]
“Much of the oilsand is too deep to be reached by strip mining. Other methods are being tried to recover this deeper oil, but the economics are marginal. With the strip mining and refining process now in use, it takes the energy equivalent of two barrels of oil to produce one barrel. To expand the strip mining operation to the extent which could, for example, produce the 18 million barrels of oft used each day in the United States would involve the world’s biggest mining operation, on a scale which is simply not possible in the foreseeable future, if ever. Canada will probably gradually increase the oil production from these deposits, but until the conventional oil of the world is largely depleted these Canadian deposits are likely to represent only a very small fraction of world production. The production will always be insignificant relative to potential demand. Oilsands are now and will be important to Canada as a long-term source of energy and income. But they will not be a source of oil as are the world’s oil wells today.” GeoDestinies, by Walter Youngquist; National Book Company, 1997
OIL SHALE [Youngquist]
“As of 1997 no oil from oil shale is being produced in the U.S… or anywhere else. A variety of processes have been tried. All have failed. Unocal, Exxon, Occidental Petroleum, and other companies and the U.S. Bureau of Mines have made substantial efforts but with no commercial results.”
OIL SANDS COMPANIES DESTROY ALBERTA FARMING COMMUNITIES [News article]
Environmental groups and farmers are speaking out against the environmental impacts of major oil and gas extraction projects in northern Alberta.
The Alberta oil sands are thought to contain approximately one third of the world’s oil resources; it is estimated that some 300 billion barrels of oil from the sands are ultimately recoverable, equal to or greater than the reserves of Saudi Arabia.
A report by conservation biologist Brian Horejsi of Western Wildlife Environments Consulting shows that over 225,000 wells have been drilled to date and 1.5 million kilometers (938,000 miles) of seismic road access have been cut and an estimated 25 billion dollars in investment has been predicted.
In Hythe, some 480 kilometres (300 miles) northwest of Edmonton, former Christian Reform evangelical pastor Wiebo Ludwig says that oil and gas projects that now encircle his farm have killed more than 50 of his livestock, caused three miscarriages among women in his family and caused birth defects in four grandchildren.
“We have to do something. It’s not only our problem, but we have to do this for all of Alberta. We have to stop this awful pollution,” says Mamie Ludwig, his wife. The Ludwigs have battled in vain for government hearings on the health effects of gas production.
Backing the Ludwigs is the Rocky Mountain Ecosystem Coalition (RMEC) in Calgary. “It’s easy to discount the Ludwigs as lunatics. But the issue they’re dealing with, emissions from oil and gas facilities, is not a made-up problem. It’s very real,” says Mike Sawyer, director of RMEC.
A war of words has broken out between the oil companies and the environmental protestors. The companies allege that the protestors have sabotaged equipment, claiming that the Ludwig was responsible for an oil well explosion at a Suncor Energy wellsite on August 24.
The charges were dropped in September. “The prosecutor reviewed all of the evidence that the police had collected and concluded that there was no reasonable likelihood of a conviction based upon the evidence,” said Peter Tadman, justice department spokesman.
Oil companies like the Alberta Energy Company have tried to buy out the Ludwigs, offering them C$520,000 (US338,000) to leave the province, which they have rejected.
Meanwhile in northeastern Alberta industry experts say that the waste created by Suncor near Fort McMurray, some 400 kilometres (250 miles) northeast of Edmonton, poses an environmental threat worse than the Exxon Valdez disaster.
Brian Staszenski of the Edmonton-based Environmental Resource Centre, an information agency funded by government and industry, has warned that if a flood or earthquake were to knock holes in the massive sand dikes containing the lakes, the spill of toxic waste could pollute the Athabasca River all the way to the Mackenzie Delta in the Northwest Territories.
The oily waste water is a byproduct of the process used to recover oil from the tarry sands. For every barrel of oil recovered, two and a half barrels of liquid waste are pumped into the huge ponds. The massive Syncrude pond, which measures 22 kilometers (14 miles)in circumference, has six meters (20 feet) of murky water on top of a 40-meter-thick (133 feet) pudding of sand, silt, clay and unrecovered oil.
SOURCE: “In rural Alberta, resource firms targeted by sabotage campaign,” by David Crary, Associated Press, October 28, 1998. “Charges dropped against pastor, kin in oil-well blast” Grande Prarie Herald-Tribune, September 10, 1998. “Alberta’s black gold rush” by Christopher Genovali, Canadian Dimension, March 13, 1997. “Critics say oil-sands waste poses major environmental problems” By Larry Johnsrude, The Ottawa Citizen, January 19, 1992
“Methane occurs in hydrates, which are ice-like solids found in Arctic regions and deep water. Hopes of exploiting such deposits appear to be doomed because, being a solid, the gas is unable to migrate and accumulate in commercial volumes. Reports that the Messoyakha Field in Siberia produced gas from hydrates is apparently erroneous.” [ p. 120, Campbell, 1997 ]
“Several studies indicate that to enjoy a relatively high standard of living, America’s human population should be 200 million or less (Pimentel et al., 1994a).” With 100 million being “ideal”
“The United States could achieve a secure energy future and a satisfactory standard of living for everyone if the human population were to stabilize at an estimated optimum of 200 million (down from today’s 260 million) and conservation measures were to lower per capita energy consumption to about half the present level (Pimentel et al. 1994). However, if the US population doubles in 60 years as is more likely, supplies of energy, food, land, and water will become inadequate, and land, forest, and general environmental degradation will escalate (Pimentel et al. 1994, USBC 1992a). Renewable Energy: Economic and Environmental Issues
“Ethanol production is wasteful of fossil energy resources and does not increase energy security. This is because considerably more energy, much of it high-grade fossil fuels, is required to produce ethanol than is available in the ethanol output. Specifically, about 71% more energy is used to produce a gallon of ethanol than the energy contained in a gallon of ethanol.” Pimentel
So-called hydrogen energy consumes more energy than it produces — it always has been, and always will be “depleted”.
[ Table from p. 192, Net-Energy Analysis by Daniel T. Spreng, Oak Ridge Assoc. Univ. & Praeger, 1988] .
|Fuelsa [106 Btu]
|Mining of 5682 metric tons of natural uranium
|Milling of 5682 metric tons of natural uranium
|Conversion of 5682 metric tons of natural uranium
|Enrichment of 3022 Ã— 103 separative work units (kg)
|Fuel fabrication of 822 metric tons of enriched uranium
|Power plant; 30 years of operation
|Reprocessingb of 822 metric tons of fuel
|Waste storage; 30 years of operation
|Transportation of 5682 metric tons of natural uranium
|822 metric tons of fuel
|Total required energy
TABLE IV. 3. Lifetime Energy Requirement for a 1000-MW (e) Pressurized Water Reactor with No Recycle, 0.30% Enrichment of Chattanooga Shale Producing an Output of 197,100,000 MWh.
aNot including any fuels used to generate electricity.
bWithout recycle of either uranium or plutonium, there probably would be no reprocessing. On the other hand~ we have not evaluated the energy required for storage of spent fuel. Since this is a very small item, we allow the reprocessing and waste storage to stand as an estimate for the unevaluated storage of spent fuel. Sources: Perry, Rotty, and Reister 1977; Rotty, Perry, and Reister 1975.
“The U.S. nuclear industry is a sobering example of what can happen when energy profit ratios are ignored altogether. It now appears that the United States will be lucky if the nuclear industry eventually produces as much energy as it has consumed. Although individual plants have an energy profit ratio of approximately 4, the energy profit ratio of the whole industry is lowered by two additional energy investments: federal subsidies, which aren’t included in the energy (or dollar) investment in individual plants, and the energy invested in the 22 unfinished nuclear plants that have been cancelled. When these costs are included, the energy profit ratio of nuclear power turns out to be no greater than 3.4 over the lifetime of all plants now on line and under construction, which is much lower than that of many fuels the United States could have exploited with far less controversy. And this estimate doesn’t include the substantial (and probably monumental) energy costs associated with decommissioning or permanent waste storage. Of course, the experts could not have foreseen all the problems that ultimately beset the nuclear industry, but to a great extent the experts allowed themselves to be swept along by the general euphoria of the Atomic Age. Confident of their ability to overcome all problems with the new technology, policymakers simply knew that nuclear power would ultimately be ‘too cheap to meter.’ Thus, the United States needs to scrutinize proposed alternatives far more closely than it did nuclear power. Energy profit ratios, and how we expect them to change in the future, are an indispensable tool in that scrutiny. It is especially vital that the energy costs associated with government subsidies, pollution, environmental degradation, and other ‘externalities’ be included in the calculation of energy profit ratios.” [p. 223, Gever et al.]
“Overall, uranium is relatively scarce in the earth’s crust, at about 4 parts per million on average. Therefore, a significant expansion of nuclear power — even the five-fold expansion widely canvassed before the incidents at Three Mile Island and (much more disturbing) at Chernobyl — would out-run readily accessible supplies. These supplies include both deposits previously exploited but mothballed due to lack of current demand, and known high concentration pockets that could be opened up quite quickly. Therefore, the expansion of nuclear would highlight the need to bring rapidly back on course the development of fast-breeder reactors and pursue fusion technology.” [ p. 90, ENERGY FOR TOMORROW’S WORLD; World Energy Council, 1993 ]
FAST-BREEDERS and FUSION
“There is a considerable literature relating to the ‘breeder’ type of nuclear reactor, which has been claimed to produce more fuel than it consumes. For some people, this possibility has engendered confidence that humans can continue to treat the world’s resources as limitless. In fact, the claims are illusory, resulting from a misunderstanding of some fairly simple facts of physics. The fuel for conventional (fission) nuclear power plants is the uranium isotope U-235. But the most common form of uranium in the world (around 99 percent of known reserves) is the nonfissionable form U-238. To obtain fuel for nuclear plants, the small quantities of U-235 have to be separated out, producing an ‘enriched’ uranium.
“It was soon realized that if a neutron from a fission reaction is captured by an atom of U-238, it is converted into plutonium 239, a highly fissionable material. The so-called breeder reactor (of which a few prototypes exist) converts nonfuel U-238 into fuel Pu-239. It does not make fuel out of nothing; it is simply a resource-upgrading plant that embodies energy in one material in order to turn it into a more ‘useful’ one. All that the process does is multiply the known reserves of fissionable material by a factor that is substantial but by no means unlimited. That Pu-239 is an extremely dangerous material, and one that is very suitable for making nuclear weapons, is a further reason for us to be on our guard against sloppily worded claims as to the importance of the breeder option. The further fact that breeder reactors are both costly and troublesome to operate is yet another reason for caution.
“The ‘ultimate,’ unlimited form of energy is believed to be nuclear fusion. In this, deuterium, a naturally occurring isotope of hydrogen, would serve as fuel for plants that would duplicate the reactions that occur in the interior of the sun — at temperatures of millions of degrees. Although claims of breakthroughs in this area have been with us since I left school some thirty-five years ago, fusion reactor programs have so far produced nothing more than the ability to absorb vast amounts of money. They have also absorbed vast amounts of energy in construction and operation of ever more elaborate experimental machines. Whether they will ever show an economic or energetic benefit nobody knows, but even if they do, the results will be available only to a few rich nations; fusion power will almost certainly be too expensive (and too dangerous) for anybody else. This option involves too many unhatched eggs to be part of realistic plans.” [pp. 92-93, ENERGY AND THE ECOLOGICAL ECONOMICS OF SUSTAINABILITY, John Peet; Island Press, 1992 and Here.
The energy efficiency of heat engines (including internal combustion petrol and diesel, jet engines, stationary power plant steam turbines, etc., that burn the vast majority of our oil and coal) has been vastly improved since the days of the Newcomen steam engine 300 years ago. There is little room for further improvements in any of these designs because they have been tweaked in the labs and further fine-tuned (over the past 50 years) by the computer modeling and simulation of alternate designs to try to maximize their efficiencies.
The book, Why Energy Conservation Fails, by Herbert Inhaber, 1997, Quorum Books, Westport, CN, 237 pages, says it very well. Thus, despite their eco-appeal, efficiency and conservation (combined) will make little difference in avoiding the coming crunch.
POSITIVE FEEDBACK LOOP
The decreasing “net energy” of oil sets up a positive feedback loop: since oil is used directly or indirectly in everything, as it becomes less “energy efficient”, everything else will also become less “energy efficient” — including other forms of energy. For example, oil provides about 50% of the fuel used in coal extraction.
When global oil production “peaks”, prices will quickley ripple through the economy. From 1972 to 1982, the fraction of GDP allocated to natural resource extraction grew from four percent to ten percent.
Some alternate energy is presently being produced at a net energy loss (e.g., oil sands and ethanol). This can only continue as long as we can afford to subsidize it with cheap oil. Ironically, some alternate energy is viable only as long as we don’t need it!
The positive feedbacks of oil depletion are going to provide a lot of unpleasant surprises in the next couple of decades. What economists have been calling the “Valhalla Economy” is already falling apart: was Asian miracle, now Asian nightmare. I suspect it is due to declining natural resource quality. When resource quality is defined in terms of energy investment, the record clearly shows that quality is declining across almost the entire spectrum of resources.
Hubbert, the Persistent Prophet
by Garrett Hardin
Petroleum prophecy took a new turn in 1948, the 150th anniversary of Malthus’s essay. M. King Hubbert (1903-1989), a petroleum geologist employed at that time by Shell Oil, introduced a sophisticated new method of analysis. His method was based on effort per barrel the drilling effort expended per barrel of oil discovered and brought to the surface. The money price of oil will, “other things being equal,” increase with scarcity; but as long as people are willing to pay the price, oil companies have no reason to stop drilling. Ultimately, however, the energy price of obtaining oil will exceed the energy derivable from the product; beyond that point there is no rational defense for “producing” more fuel oil. Hubbert noted that the barrels of oil produced per unit effort required for the discovery of the reserves had been decreasing regularly for a long time. Projecting the curve into the future he predicted the “end of oil” for the United States and for the world. These terminal dates were much closer to hand than the ones assumed in the front office of the major oil companies. Understandably, Hubbert was Promptly labeled as the latest reincarnation of Chicken Little.
Hubbert persisted, extending and refining his methods during the next two decades. He predicted that in the early 1970s the price of petroleum would take a sharp turn upward. When the oil shock of 1973 came — the first oil shock we now call it — Hubbert was vindicated. We cannot ignore the fact that international politics played a role in producing the oil shock of 1973: price fixing by OPEC, the cartel of the major oil-exporting nations, touched it off. But the cartel could not have made its high prices stick in the absence of the relative shortage predicted by Hubbert.
The decade preceding the 1973 oil crisis was marked by sharp debates between the supporters of Hubbert (the “pessimists”) and his opponents, the “cornucopists” — who occupied positions of power in industry and government. While Hubbert estimated that the lifetime production of petroleum in the United States would be from 150 to 200 billion barrels, A. D. Zapp, of the U.S. Geological Survey, estimated 590 billion. The opponents were working with the same data.
A significant difference in their methods involved the estimate of oil found per foot of drilling in the future. Zapp assumed that the future would be like the past. This approach no doubt seemed conservative to many people, but it was not: Zapp was assuming that the extended future would be like the immediate past, which is a mere moment in time. A true conservative would use not the moment but the trend in constructing a telescope for looking into the future.
Hubbert was a conservative of the second sort. Extrapolating the trend of increasing effort that was apparent in the history of drilling, Hubbert concluded that the future will be worse than the past. Cornucopists of course called this attitude “pessimism.” Perhaps it is: but history has vindicated Hubbert. The yield per effort has gotten steadily worse. To expect otherwise would be to assert that petroleum geologists are incompetent. Faced with many possible drilling sites, a company geologist will advise his firm to drill the most hopeful ones first. If he is competent, the potential of the yet undrilled sites will diminish steadily with the passage of time. Productivity per foot drilled goes down, cost goes up. (If Zapp were right — if petroleum geologists were incompetent — then oil companies might as well save money by firing their geologists and choosing their drill sites by flipping coins.)
For a decade the influential director of the USGS “bought” Zapp’s estimate and opposed Hubbert. When the first oil shock came, two national committees (one within the USGS) were appointed to evaluate the situation. Both committees endorsed Hubbert. Finding his professional authority undermined, the director of the USGS resigned. Hubbert, for so long a “prophet without honor in his own country,” was fully vindicated.
Yet the biblical description of a “prophet without honor” is not entirely appropriate in this case. Pessimistic prophets and whistle-blowers are often given a hard time by their bosses. It is, therefore, a pleasure to report that the executives of Hubbert’s own company, the Shell Oil company, though not pleased with what he was saying, supported him during his “years in the wilderness.” In 1963 M. King Hubbert joined the faculty of Stanford University, from which he retired in 1968. After his victory in 1973 the “retired” prophet was in great demand as a speaker on the significance of physical resources for the survival of civilization. [pp. 138-139, LIVING WITHIN LIMITS, Garrett Hardin; Oxford, 1993 ]
BOGUS ENERGY MARKET
by Jay Hanson
Three major reasons account for the market’s failure to reflect the declining amount of oil in the ground (it has been declining ever since we started pumping it out and burning it).
- “The U.S. spends $25 billion annually to subsidize the extraction, processing and use of oil, coal, and natural gas.” [ Diane Francis, from the Davos Switzerland World Economic Forum held in early February 1998. Also see the Executive Summary of the report “Fueling Global Warming” available Greenpeace.
- Most of the world’s oil is supplied by a price-fixing cartel. Saudi Arabia has received American military hardware and intelligence to first lower OPEC prices and then raise them to about $20 per barrel. VICTORY: The Reagan Administration’s Secret Strategy That Hastened the Collapse of the Soviet Union, by Peter Schweizer; Grove/Atlantic, 1996
- But the main reason that the market is unable to reflect the declining oil in the ground is structural:The market is like the float in a carburetor, as the engine demands more gas, the float falls and allows more gas to flow in from the tank. But the float has no information concerning the amount of gas left in the tank until the fuel line is unable to keep up with demand.So it is with the market. As the demand for oil increases, the increase in price signals oil companies to pump more oil out of the ground. But the market will have no information about the amount of oil left in the ground until production is unable to keep up with demand.
by Peter Schweizer
For a fascinating account of how American government operates in the black, read VICTORY: The Reagan Administration’s Secret Strategy That Hastened the Collapse of the Soviet Union, by Peter Schweizer; Grove/Atlantic, 1996.
Schweizer book is endorsed New York Times, the Washington Times, and Forbes. Schweizer was sponsored by the Hoover Institution. “This extensively researched study is fast-moving, exciting, and accurate.” — FORBES magazine about Schweizer’s VICTORY.
According to Peter Schweizer, the Saudis cooperate with the US in exchange for intelligence on dissidents [p. 31], satellite pictures, AWACS [p. 51], Stinger missiles [p. 190], advanced fighters, direct military protection, and were even “leaked” information when Treasury Department planned to devalue the dollar so they could shift investments into nondollar assets. [p. 233]
During the Cold War, the Saudis worked in the black with the CIA to lower global oil prices and thereby deprive the USSR of the much-needed hard currency it needed to operate. Each $1 drop in oil price cost the USSR about one billion dollars in revenue.
A $5 drop in the price of a barrel of oil would increase the U.S. GDP by about 1.4 percent. Poindexter: “It was in our interest to drive the price of oil as low as we could”. [p. 218]
Weinberger: “One of the reasons we were selling all those arms to the Saudis was for lower oil prices.” [p. 203]
Alan Fiers: The Saudis were also providing financial aid to the mujahedin and the contras. [p. 202]
“In the first few weeks of the Saudi push, daily production jumped from less than 2 million barrels to almost 6 million. By late fall of 1985, crude production would climb to almost 9 million barrels a day.” [p. 242]
“Shortly after Saudi oil production rose, the international price of oil sank like a stone in a pond. In November 1985, crude oil sold at $30 a barrel; barely five months later it stood at $12.” [p. 243]
“In the spring of 1986, the downward plunge in international oil prices was causing serious worries around the world but also among some quarters in the Reagan administration. Vice President George Bush was preparing for a highly visible ten-day tour of the Persian Gulf area. A product of the Texas oil country, Bush saw danger, not hope, in the dramatic and recent decline in oil prices.” [p. 259]
Bush was acting on his own against the Reagan administration! While Reagan, Casey and Weinberger were trying to talk oil prices lower, Bush was meeting with Yamani and Fahd trying to talk oil prices higher! [p. 260]