[extropy-chat] Debate on Peak Oil

Hal Finney hal at finney.org
Sun Apr 24 17:25:53 UTC 2005


The Los Angeles Times has a debate today between Peter Huber, author of
"The Bottomless Well: The Twilight of Fuel, the Virtue of Waste and Why
We Will Never Run Out of Energy," and Paul Roberts, author of "The End
of Oil: On the Edge of a Perilous New World," on the topic of Peak Oil.
This link will probably only work for a few days:
http://www.latimes.com/news/opinion/commentary/la-op-edebate24apr24,0,7963584.story?coll=la-news-comment-opinions

The debate unfortunately quickly departs from the topic of whether we
will see a near-term peak in oil production and what its impact might be.
Instead the authors fall back to arguing about the need for a carbon
tax and the role of nuclear energy.  The main value for me was the
pointer to Huber's book, which I hadn't heard about.  It sounds like a
useful source of contrarian commentary.

I did read one other Peak Oil book, "Out of Gas" by David Goodstein,
who was my physics professor when I was in college in the 1970s, and
again my son's instructor three years ago.  Unfortunately this very thin
volume was a disappointment.  Much of the content was a recap of the
scientific discovery of conservation of energy and the meaning of entropy.
The information specific to Peak Oil was basically what you can easily
find online.

The best factual backgrounder on the Peak Oil situation I've found
is <http://www.hilltoplancers.org/stories/hirsch0502.pdf>, a Feb 2005
report by a government think tank.  One weakness is that it is America
centric and doesn't have much information about the rest of the world.
But for America, the report notes that in 1973 the U.S. used 35 quads
(quadrillion BTUs) of oil; then after the "energy crisis" usage declined
to 30 quads by 1983.  Since then it has grown and has reached 39 quads
in 2003.  Personally, I think it is amazing that oil usage has grown so
little in the U.S., from 35 to 39 quads in 30 years of overall strong
economic growth.

In most sectors of the economy, oil usage has become much more efficient
in the past few decades, and consumption has remained the same or even
decreased.  The one glaring exception is transportation.  Almost half of
oil goes for gasoline, and an additional 20% for diesel fuel.  This is
where the U.S. has been unable to economize effectively, and this is
where the economy would first feel the pinch as oil prices rise due to
a production peak.

Anyone who has driven in the U.S. recently will be aware that the
current fleet of vehicles is not optimized for low fuel consumption.
The good news is that tremendous efficiency improvements are possible
even just given current technology.  The bad news is that this takes time
and is expensive.  Under normal circumstances, half the cars on the road
will be replaced by consumers in the next 10-15 years at a cost of 1.3
trillion dollars.  If gas prices continue to rise this will probably
accelerate, but the costs are likely to be even greater.

One other concept which has come out of my reading is an acronym used
by Peak Oil supporters, EROEI: energy return over energy invested.
It is mostly used to disparage alternative sources of energy like
ethanol, solar panels or tar sands.  The idea is that for many of these
alternatives, you have to put in a great deal of energy to produce a unit
of energy out.  That makes them look artificially inexpensive today (or
at least last year) with generally low energy prices, giving a too-low
estimate of break-even pricing.  With oil becoming more expensive, these
alternatives will also be more expensive to produce and the break-even
cost will climb.

Saudi oil is said to have an EROEI ratio of about 30: spending the power
of 1 barrel of oil produces 30 barrels.  But many of these alternative
fuels have EROEI ratios of more like 2-5 and some are even less than 1,
depending on the production methods.  This is a problem with government
attempts to jump-start alternative fuels; the subsidies and market
stimulation may make it profitable to exploit low-EROEI, energy-wasting
methods of production.  The result is an alternative fuels industry that
is unsustainable when energy prices rise.  The subsidies can actually be
counter-productive by encouraging work on wasteful production methods
instead of technologies that will be efficient even when energy becomes
expensive.

Hal



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