Carbon: too much, not too little

by John Quiggin on March 23, 2006

Like Henry George’s theory of land taxation, Peak Oil seems to be one of those ideas, reasonable enough in itself, and modest in scope, that attracts a cult following in which it becomes the answer to all kinds of questions. This piece in Salon gives a tour of some of the wilder fringes (apparently serious people suggesting we are going back to the 13th century for example), and indicates the need for a correction.

The basic idea is simple enough, and reasonably plausible. Oil is a finite resource and sooner or later, extractions of oil must reach a peak. Application of a fairly simple model, with some previous successes to its credit, the Hubbert Curve, suggests that we are now at or near this peak, though lots of others disagree. Even if we are at the peak, it’s arguable that increasing prices will drive improvements in efficiency and reductions in demand sufficient to allow us to continue relying on oil in its main use (fuel for cars) for a long time to come, even as aggregate consumption declines gradually.

Suppose though, that availabilty of oil is going to decline to levels far below those of today. The question is, so what? A decline in the availability of oil would have a significant impact on various activities, but the availability and relative price of different goods change all the time. The increase in the cost of health care, for example, is much more significant than anything that has happened to oil or is likely to happen. Where do the Peak Oil crowed get their predictions of disaster?

The trick in the argument is to equate oil with fossil fuels in general. This is plausible enough for natural gas, which commonly occurs in the same places as oil, and is also in fairly limited supply. But the elephant in the corner in these arguments is coal. The US has enough easily accessible coal to supply hundreds of years of consumption at current rates, and the same is true of the rest of the world.

The Salon article mentions coal only a couple of times in passing. Yet coal and coal-fired electricity already compete directly with oil in all major uses except personal transport. If current oil prices are sustained for long, we can expect to see electricity displacing oil in home heating, and electrification of rail transport at the expense of diesel, reversing the trend of recent decades when diesel has been cheap. This is already happening.

As for cars, there are at least three well-established ways in which they could be fuelled by coal. First, there are electric cars. Second, there is coal liquefication, used on a large scale by South Africa in the sanctions period. Third, gasification could be used to replace liquid petroleum gas. All of these options have problems, but none are insurmountable given a high enough price; they might be competitive if oil stays above $60 a barrel long enough, and they would certainly be competitive at $150/barrel. Then there are more exotic options, like fuel cells using coal-based methanol.

The real problem with fossil fuels is not that we have too little but that we have too much. If we keep on burning them at current rates, we’ll cause highly damaging climate change. If we burned enough coal to run seriously short, we’d risk setting off a runaway greenhouse effect and making the planet uninhabitable. If Peak Oil is coming, it’s probably a good thing.

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{ 84 comments }

1

Dan K 03.23.06 at 5:34 am

I second that. The problem with fossil fuels is that they are too darn cheap. Everything that makes them more expensive (exception: nuclear war between Iran and your country of choice) is a good thing.

2

brendan 03.23.06 at 6:00 am

The one thing that is unarguably true about the Peak Oil thesis is the amount of oil present in the United States (and, probably, in the UK). My understanding is that American oil production peaked in 1971 and has been slowly decling since then (to be fair, much more slowly than peak oil proponents suggest). So the US has been forced to rely more and more on other sources of oil (especially of course in the Middle East).

My understanding is as well this point recently occurred in the UK for oil and natural gas. (it’s also happened for Canada and Australia).

This hardly means that civilisation will disintegrate but it does mean that the so-called ‘Anglosphere’ will find their fates increasingly entwined with those countries that have NOT yet had their peak oil moments. According to wikipedia these include Saudi Arabia, Iran, Iraq (probably got a while to go there at current rates of pumping…..), UAE, and the ‘stan’ countries (Turkeminstan etc.).

Good articles about it on Wikipedia: (http://en.wikipedia.org/wiki/Oil_reserves) and here: (http://en.wikipedia.org/wiki/Peak_oil)

3

abb1 03.23.06 at 6:57 am

The US has enough easily accessible coal to supply hundreds of years of consumption at current rates, and the same is true of the rest of the world.

At current rates of energy consumption assuming that oil is replaced by coal, or at current rates of coal consumption?

4

abb1 03.23.06 at 7:04 am

Yeah, see, it’s the latter:

There probably is enough coal to last for 300 years. However, this estimate assumes no rise in population, and no increased use of coal to attempt to compensate for the depletion of natural gas and petroleum. A recent (2003) study by scientist Gregson Vaux, which takes those factors into account, estimates that coal could peak in the United States as early as 2046, on average.

You’re being way too optimistic (pessimistic?) here…

5

James Wimberley 03.23.06 at 7:11 am

“If we keep on burning them at current rates, we’ll cause highly damaging climate change.”
We are already causing highly damaging climate change. If we keep on burning fossil fuels at current rates, we’ll destroy human civilization. The only open question is how long we’ve got. Better start now.

6

Doormat 03.23.06 at 7:42 am

I own, but haven’t yet read, Half Gone by Jeremy Leggett. His thesis is, I think, that climate change together with peak oil are going to cause real, real problems to us. Furthermore, if some peak oil people are taking the idea to an extreme, then a lot of economists, the entire energy industry etc. seem to be living in complete denial about oil being in any sense a finite resource. Once we wake up to the fact that oil is going to start rising in price very quickly, very soon, Leggett suggests that the likely reaction of stock markets around the world might be enough to throw us into another Great Depression. Not exactly the 13th Century, but pretty damn unpleasant.

7

Ginger Yellow 03.23.06 at 7:53 am

One word: plastic.

8

aaron 03.23.06 at 7:55 am

Burning fossil fuels at current rates for long periods of time could potentially cause damaging change, but how can you go so far as to assert that we are causing damaging change?

9

Doormat 03.23.06 at 8:00 am

Ginger Yellow: I’ll add another word: fertilizers.

Oil and gas are used for *everything*.

10

Ketzl Brame 03.23.06 at 8:05 am

It’s true that there’s lots of coal, of course. But can coal really replace liquid petrochemicals? Well there’s the Fischer-Tropsch Coal to Liquids process which, as wikipedia says blithely, has a couple of problems.

One issue that has yet to be addressed in the emerging discussion about large-scale development of synthetic fuels is the enormous increase in primary energy use and carbon emissions inherent in conversion of gaseous and solid carbon sources to a usable liquid form. Recent work by the National Renewable Energy Laboratory indicates that full fuel cycle greenhouse gas emissions for coal-based synfuels are nearly twice as high as their petroleum-based equivalent.

Between coal, nuclear, hydro, solar, and other experimental technologies there will very likely be plenty of electricity for years to come. But peak oil isn’t really about predicting a widespread an energy crisis, it’s really just about a liquid fuel crisis.

It seems to me that liquid fuel is crucial to the modern economy and not easily replaceable. So I’m not paniced about peak oil, but I think it’s worth taking seriously.

11

Barry 03.23.06 at 8:07 am

John, from my casual reading, there are two schools of ‘peak oilists’. The first, which Salon covered (stupidly, IMHO) is the group which is convinced that oil will run out soon.

The second is the group which notices that demand has been increasing at a higher rate than production for a number of years now. That has brought us to the current situation, where trivial production ripples cause substantial price spikes. For that group, it isn’t that the oil with run out, it’s that the era of cheap oil is at or near its end. With ‘cheap’ meaning

12

goatchowder 03.23.06 at 8:14 am

There is no free lunch.

13

ajay 03.23.06 at 8:22 am

11 – right. The big current problem is not that we happen to have tipped onto the downslope of the Hubbard Peak, but that there is very little surplus capacity, and thus oil is a) high and b) volatile. In the days when SA had plenty of idle wells, they could turn on the tap to smooth out spikes. Not now. Result – any disturbance to the oil supply propagates rapidly.
It’s not even that the era of cheap oil is over per se: what we have now is the end of loose oil.

14

David Weman 03.23.06 at 8:27 am

What about Kevin Drum’s point, that we’ll v. possibly cause a highly fluctuating oil price soon, that could be like the 70s only worse? IE a smooth gradual transition wouldn’t be too harmful, but it may be far from smooth.

15

gr 03.23.06 at 8:28 am

Even after having lived in North America for five years (I’m from Germany) I’m still flabbergasted by the extreme wastefulness of energy use over here. Peak oil probably won’t end modern civilization as we know it, but I suspect that some societies will have a much harder time to adapt to the end of cheap fuel than others.

16

David Weman 03.23.06 at 8:30 am

I and Ajay posted simultaneously. I wish you’d adressed volatility, and not the theories of the more unhinged peak oilers. I’d really love to hear a refutation so I’d have less thing to worry about.

17

jephary 03.23.06 at 8:39 am

Ginger Yellow and Doormat make an excellent and oft overlooked distinction; burning fossil fuels is a tremendous waste of a carbon resource. All our starting materials for plastics stem from cuts in the petrochemical stream, as well as most fertilizers (or the energy to make them), solvents and stock for finer organic chemicals from lubricants, paints, resins, and pharmaceuticals. As a chemist, I can already see the trends in the costs of what used to be commodity chemicals selling at a few dollars/10 L that are now ten times that much.

Burning the last remaining gasoline or methanol made from coal won’t mean squat if we no longer have the chemical stocks to make the lightweight composite materials for vehicles.

18

abb1 03.23.06 at 8:41 am

…they could turn on the tap to smooth out spikes. Not now.

Otoh, the US now has strategic petroleum reserve with maximum capacity equal to a couple of months of oil imports. I am sure other countries have strategic reserves too. These reserves could do a better job in smoothing out spikes than the Saudis – the oil is already here, delivered; it’s a better mechanism.

19

Barry 03.23.06 at 9:05 am

“I and Ajay posted simultaneously. I wish you’d adressed volatility, and not the theories of the more unhinged peak oilers. I’d really love to hear a refutation so I’d have less thing to worry about.”

Posted by David Weman ·

Agreed. That article was not to the credit of Salon; it was stupid. They looked for some extremists on an issue, and made the article 100% about them.

20

Ron F 03.23.06 at 9:23 am

Yet coal and coal-fired electricity already compete directly with oil in all major uses except personal transport.

This is such nonsense I’m going to repeat what has been said above –

Pharmaceuticals
Industrial and domestic chemicals
Plastics
Agricultural inputs

If coal competes directly with oil as raw material for these products it is failing spectacularly.

21

abb1 03.23.06 at 9:45 am

Yes, but what portion of oil extracted every day is used for all these things?

22

Cranky Observer 03.23.06 at 9:53 am

I think the Y2K problem is instructive in many respects here. There was a real Y2K problem, which anyone who worked with commerical software and older hardware knew had the possibility to cause business disruption (see the Finnish National Railway for examples). There was also the overhyped doomsday nonsense, rightly made fun of in the Nike commerical.

As far as the real problem went, it was solved and very little disruption resulted. The reason for this was that serious people got to work making serious changes reasonably far in advance (I knew of some projects underway in 1990, but everything was rolling by 1995). It was a coordinated, concerted, worldwide effort planned, managed, and executed by capable people. And, for perhaps the first time in human history, it worked.

The overhyped nonsense in turn made some people (mostly consultants) a lot of money, and cost a lot of people some money. Luckily no real harm was done, but at one point it was headed that way (the Pope’s “no apoclypse on the way – relax and party” speech helped keep that from getting worse IMHO).

I see the situation with peak oil being about the same. It looks to me as if we really are at or approaching the peak. More importantly, reading Exxon’s annual report in detail it looks like they think so too.

BUT – if we get to work now we can have a safe, clean, sustainable society _with_ personal transportation, in place when the oil really starts to run out (say 2020).

Of course, if we don’t get to work now (as seems the case), or succumb to fear-mongering and consultant-enriching, well, I leave imagining the consequences to you.

Cranky

23

jet 03.23.06 at 9:58 am

We are in zero danger of running out of liquid fossil fuels in the next 300 years. But everyone had better hope those researches working on alternative fuels come up with something very soon. Because at $60+/barrel this is starting to become profitable.

24

james 03.23.06 at 10:03 am

It really is about peak “cheap” oil. With the current prices, the tar sands in Alberta became viable. Official estimates of Canada’s oil reserves jumped from 4.9 to 180 billion barrels. This vaulted Canada to number 2 in the world for proven oil reserves.

There is also the carbon fuel source known as Methane Hydrates. “The worldwide amounts of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth.”

25

Steve 03.23.06 at 10:24 am

Is oil really a major agricultural input, other than as fuel? (As opposed to natural gas, which is the main feedstock for nitrogen fertilizers, I believe.)

Agreed on 13 — the Hubbard’s Peak thesis for non-crazies isn’t that we’re going to be plunged back into a pre-industrial world; it’s that oil is priced based on the cost of the marginal barrel, and we’ve pretty much exhausted the cheap sources of same. Predictions of near-term “superspikes” caused by supply disruptions in, say, Iran or Nigeria don’t seem out of the realm of possibility to me.

26

paul 03.23.06 at 10:49 am

Oil and natural gas aren’t just (currently) cheap and easy to use, obtaining them is also rather easier on the environment than tar sands or coal. When you look at maps of the admittedly massive US reserves of coal, for example, remember that most of that coal would be obtained by stripmining. I don’t think anybody has figured out how to stripmine an area on the order of a million square miles (even over a period of centuries) without causing massive upheaval and using several times the amount of water available in the region to be mined. (Analogously for methane hydrates, which are not stable when disturbed, and underly large areas of continental shelf that we would all rather not become prone to mudslides.)

So in addition to the economic dislocations resulting from increased price volatility, there’s the risk of some really bad environmental decisions being made in an attempt to chase after new large sources of hydrocarbons. (And that’s even ignoring the global-warming issue, except to note that even a medium-sized methane-hydrate dump would void pretty much all the CO2 reduction you can imagine.)

27

joel turnipseed 03.23.06 at 10:51 am

13th century. Heh–just when again did oil become a significant driver of industry and commerce?

W/r/t to a lot of the comments on this post, I have a question: has anyone ever done a serious study of rates of GDP per natural resource consumption against changing population patterns? That seems like the curve to watch. My intuition is that certain things like oil price spikes due to political events are about our only worry (other than the environment, which, as John suggests, will probably only be saved by rapid oil depletion).

As to gardening, I’ve got about 700 square feet of raised beds in my yard and it would be a stretch to say I grow $200 worth of fruits and vegetables in a given year. If I didn’t enjoy it, especially the undeniably better taste of the produce, I sure as hell wouldn’t do it because I was saving anything (whether money or resources).

28

Simstim 03.23.06 at 11:00 am

One of the emerging issues over on The Oil Drum, which is the best Peak Oil site I’ve come across so far, is that the improvements in oil extraction techniques have increased the amount of oil coming out of a field on the upslope, but at the cost of a much steeper decline once the peak is reached. The UK/Norway fields in the North Sea are seeing some major declines in production at the moment. The danger is that the decline in oil production will be quicker than the world can comfortably adjust to.

29

Urinated State of America 03.23.06 at 11:38 am

“Second, there is coal liquefication, used on a large scale by South Africa in the sanctions period. Third, gasification could be used to replace liquid petroleum gas. “

IIRC, these are the same thing. Both are Fischer-Tropsch chemistry. Coal liquefaction sometimes also refers to making a combustible slurry (trade-name oriemulsion) from coal, but that’s not suitable as a motor fuel.

“Ginger Yellow and Doormat make an excellent and oft overlooked distinction; burning fossil fuels is a tremendous waste of a carbon resource. All our starting materials for plastics stem from cuts in the petrochemical stream, as well as most fertilizers (or the energy to make them), solvents and stock for finer organic chemicals from lubricants, paints, resins, and pharmaceuticals.”

This just isn’t a big deal. Petrochemicals, like ethylene, account for less than 10% of naphtha consumption (plus using ethane and propane that don’t have much other economic use). So there’s no real crisis there.

“As a chemist, I can already see the trends in the costs of what used to be commodity chemicals selling at a few dollars/10 L that are now ten times that much.”

Nah, that’s just Sigma-Aldrich screwing you.

“His thesis is, I think, that climate change together with peak oil are going to cause real, real problems to us.”

There’s no particular need for that to be the case. We can probably capture most power-plant emissions of CO2 for ~2-3% of Global GDP, and that would account for ~40% of CO2 emissions. However, we probably aren’t going to take the necessary steps in time.

30

saurabh 03.23.06 at 11:40 am

Probably we could do without oil/gas for agricultural inputs. CERTAINLY for plastics. There’s enough non-sweet crude lying around to last us for eons, so we’re probably not going to run out of that. Even if we aren’t able to produce nitrogen fertilizers, not that big a deal – we’ll live. That’s replacable.

If we’re searching for one word to describe a crisis, I’ll suggest it’s this: airplanes. The highest quality refined fuel goes into jet travel, and it represents both the largest fraction of oil usage and the majority of the cost of air travel. There is no substitute for jet fuel; no coal-based fuel will ever be of high enough quality to suffice.

We’re already seeing this happen – the airline industry is in paroxysms even while oil companies enjoy super-profits because the two are directly opposed. If the price of oil goes much higher, air travel will quickly become economically impossible.

Whether we’re a world that critically depends on airplanes, I’m not sure. Just-in-time shipping will have to vanish, and a lot of the “boons” of globalization will, too (like oranges from Chile). But I dunno if that, by itself, represents an unsurmountable crisis.

31

saurabh 03.23.06 at 11:45 am

Also, a note on coal: estimates of coal availability I’ve seen put the amount at ~360 years worth of current consumption. This probably contracts spectacularly if coal has to replace gas for electricity, oil and gas for heating, and oil for transportation. But also bear in mind that coal is mined. Not only is mining one of the most environmentally destructive things we do, it’s also expensive and variable. Some deposits are easier to mine than others. The amount of -easily accessible- coal might be much less than the total amount of available coal. This means that coal mining as a profitable enterprise has a limited lifetime, even if we’re not worried about all the mercury, nitrates, sulfuric acid, CO2, etc., that coal produces.

32

Cranky Observer 03.23.06 at 11:48 am

> There is no substitute for jet fuel;

Gas turbines can burn biodiesel, should it prove possible to actually make the stuff in quantity.

Cranky Observer

33

Cranky Observer 03.23.06 at 11:52 am

To back up that last point, click this link and scroll down to Biomass Derived Oils for Turbo-Generators a little way down the page.Cranky Observer

34

jlw 03.23.06 at 11:55 am

Mr. Turnipseed touched on this at comment #27, but it bears digging into: The world may not be “running out of oil” but neither is it prepared to deal with a world on $100 a barrel oil. No business plans at present have been written with $100 a barrel oil as an input. Once you start factoring that in, suddenly many things that seemed quite reasonable ten years ago–factories in Vietnam, suburbs a two-hour drive from the central business district, car lots filled with Ford Instigators–become absurd. The “flat” world hailed by the Friedmans of the world goes all wrinkly.

Granted, it’s not all a disaster–as someone who is quite concerned about global climate changes, I think using energy less wastefully would have all sorts of benefits. But when the going rate for a barrel of oil’s worth of energy is $100 or so, a lot of important things won’t get done. And there will still be a lot of waste, as the word’s rich will be able to outbid the world’s poor and might be every bit as inclined to torch petroleum in a bonfire of SUV commuting as they are in investing that oil into building wind turbines, say, or solar panels.

And please, let’s dispense with the “hundreds of years of reserves” crap. We in the U.S. use nearly three times as much oil and gas as we do coal, so should switching back to a coal-based economy (as Abb1 pointed out) will draw down that reserve rapidly. And we’ll have hundreds of years of oil reserves, too, once the price per barrel is high enough to preclude its everyday use. Market-fundamentalist economists like to use that example to bamboozle the public, but it ought to be used as a warning instead.

35

Doormat 03.23.06 at 12:02 pm

Just looking at reserves is a bit disingenuous: almost by definition, all of the easy to extract oil/gas/coal has been extracted. So we’re faced with both rising demand (e.g. China) while having to get oil (etc.) from ever more difficult reserves. That both increases the price twice (as it were) but also means there is less energy. In one of Kunstler’s books, he says that oil was once extracted at a 20:1 ratio of energy (i.e. we got 20 times the energy out than we had to put in). I think things like tar oil are closer to 2:1. No doubt we’ll be extracting oil at a negative energy output at some point (just to get nice liquid oil, and not electricity, which’ll presumably be what we put in).

My point is that for a whole load of reasons, the “tail” of oil production is likely to be much steeper than the lead-in was. As *jlw* says, no-one seems to be even planning for a 2 times increase in price, nevermind worse, at *any* point in the near future.

36

reno 03.23.06 at 12:12 pm

Even if we are at the peak, it’s arguable that increasing prices will drive improvements in efficiency and reductions in demand sufficient to allow us to continue relying on oil in its main use (fuel for cars) for a long time to come, even as aggregate consumption declines gradually.

I see Adam’s smith invisible hand is alive and well here.. So you think the market(whatever that may be) is going to solve the problem of oil depletion?? I believe Kunstler calls that the Jiminy Cricket syndrome and I fully agree.. The market forces are not going to put more oil into the ground..

37

Ginger Yellow 03.23.06 at 1:04 pm

“This just isn’t a big deal. Petrochemicals, like ethylene, account for less than 10% of naphtha consumption (plus using ethane and propane that don’t have much other economic use). So there’s no real crisis there.”

That’s all very well, but 100% of petrochemicals come from petroleum. If petroleum is prohibitively expensive, so are petrochemicals.

38

joel turnipseed 03.23.06 at 1:23 pm

A little basic math…at $60/barrel and consumption of 21M barrels/year, the U.S. spends about $465 billion a year on oil. Our GDP is about $12T. So, I’m not at all concerned with price of oil affecting my ability to buy a computer or pacemaker twenty years from now–the value-add vs. raw materials cost of those items is not-quite-astronomical, but vast.

Cars, trucks, airplanes–I worry about. Transportation accounts for more than 40% of our oil use. We could, with existing technologies and laws, rapidly cut that in half if it became economically necessary. We don’t now, because we don’t need to.

As for all that, even if oil cost doubled to $120 barrel it would, in effect, amount to a 5% universal tax on our economy–a severe drag, yes: but not a catastrophe.

Which is to say, to drop out of society and go live on a farm is great–if you’re Wendell Berry or Verlyn Klinkenborg, both of whom I enjoy reading. But we have way more pressing issues than worrying about the world’s oil disappearing & moving us back to the 13th century.

39

joel turnipseed 03.23.06 at 1:26 pm

NB… s/be (and math is right) 21M barrels/day.

40

Martin James 03.23.06 at 1:31 pm

This is such a fascinating issue.

Some approach it as an environmental issue.
Some as a technical supply issue.
Others as a speed of demand accomodation issue.

I’ll approach it as a problem of the inadequacy of social science and imagination point of view.

In order to predict the future, we need to be able to predict the future state of knowledge and the future state of preferences.

And as far as I can tell, everyone sucks at knowlege prediction.

As to the issue at hand as good a place to start as any is Reno’s point that the market won’t put more oil in the ground.

But surely Reno will concede that it was the market helped get the oil out of the ground. What changed between 2,000,000 BCE and today to get that oil out of the ground? I think it was know-how.

The question is how will know-how fare against supply constraints in the future?

This is where our current know-how fails us.

We have one side saying the resources and nature will beat know-how and another side saying know-how will beat resources and nature?

From a biological point of view, nature seems to have the upper hand because most species eventually lose.

But from the point of view of the thermodynamics of happiness, the available energy (nuclear and solar) would seem to be able to drive a vastly increased number of brains to bliss for much time to come. The grossest inefficiency is in the external processes we use to drive pleasure rather than going directly to the brain.

My predictions of the future are no better than anyone elses but my money says that the future will be futuristic.

41

Jake McGuire 03.23.06 at 1:43 pm

The highest quality refined fuel goes into jet travel, and it represents both the largest fraction of oil usage and the majority of the cost of air travel. There is no substitute for jet fuel; no coal-based fuel will ever be of high enough quality to suffice.

The largest usage of oil is gasoline for cars and light trucks; jet fuel is maybe a quarter of this. Jet fuel isn’t even a plurality of the cost of air travel (labor), much less a majority. There’s also no basis for the statement “no coal-based fuel will be high enough quality to suffice”, it’s just a matter of removing impurities and tightening up fractions.

Expensive oil is a) coming and b) going to be inconvenient, but “Peak Oil” is just poorly-founded doom-mongering.

42

Prof. Goose (TOD) 03.23.06 at 1:46 pm

We have informed discussions of many of these topics over at The Oil Drum, where we have a community oriented around technical discussions of these complex and interrelated ideas that fairly analyzes them through trial by empiricism and logic, instead of sheer polemic and rant.

I hope you will stop by. I recommend this post (which is our “first time here?” post).

43

Maynard Handley 03.23.06 at 1:56 pm

The problem with economists is that they think the problems are the world resolve themselves by price mechanisms. This frequently ain’t so. Regardless of what you say about replacements, there are those in positions of power who think the appropriate response is not to listen to the market but to start shooting.
Exhibit (a) is, of course, Iraq, but it won’t be the last such exhibit.

44

Rick DeMent 03.23.06 at 2:12 pm

One thing that is not really talked about is the impact on the productivity of current business practices that cheap oil has made possible. Think about things like “just in time inventory” and Wal-Marts “Rolling Warehouses” Not to mention globalization in general. It will become increasingly less profitable to do this stuff, few people appreciate the productivity gains due to cheap oil of the last 40 years. That will vanish and all of the alternatives mentioned, sand tars, Bio diesel and such will not be able to deliver the kind of productivity that oil cheaply extracted and refined offers. Those productivity gains will be lost and replacing them will be a multi generational effort.

45

eudoxis 03.23.06 at 2:47 pm

Professor Quiggin makes a good point. It’s often thought that hydrogen fuel will be clean fuel for cars but if the source for hydrogen is from coal, the final result will be far more polluting than the use of gasoline in cars. There is an effort to implement clean coal technology but it isn’t nearly progressed enough.

41: “The largest usage of oil is gasoline for cars and light trucks; jet fuel is maybe a quarter of this.”

At the same time, kerosene is a much smaller fraction of a total unit of crude than gasoline mixtures are. The ratio in a quality benchmark may be 4 gasoline: 1 kerosene.

46

tylerh 03.23.06 at 2:51 pm

The more excitable “environmentalists” among thePeak Oil crowd had better hope they are wrong. Consider these two simple facts:

(1) Nuclear fission is already capable of meeting all of our current and future electricity needs
(2) Albert tars sands can provide all of North American’s transport fuel needs for decades at less than $60/bbl.

Given those two facts, does anyone think the politicians are going idly watch their voters dragged back into medieval squalor when YANToND ( Yet Another Nuclear Trashing of Nevada Desert) and polluting faraway Alberta are all that is needed to make the problem go away for Joe Sixpack?

47

tylerh 03.23.06 at 3:01 pm

There is also a strong case for “green” optimism. Simple engineering arguments have consistently shown that Solar will become competitive with Natural gas for bulk electricity generation somewhere between 2030 and 2040… at the Natural Gas prices that prevailed in the 90s.

The calmer “Peak Oilers” are almost certainly right: convenient liquid fuels for transport are going to get less cheap. While this will certainly affect *how* the economy works, it’s unlikely to be catastrophic for the economy or society, as several posters have already shown.

48

saurabh 03.23.06 at 3:22 pm

The largest usage of oil is gasoline for cars and light trucks; jet fuel is maybe a quarter of this. Jet fuel isn’t even a plurality of the cost of air travel (labor), much less a majority. There’s also no basis for the statement “no coal-based fuel will be high enough quality to suffice”, it’s just a matter of removing impurities and tightening up fractions.

Sorry; you’re right, I was wrong. On three counts! that’s a new record.

However, now that oil is $65/barrel, fuel has overtaken labor costs as the major fraction of travel expenses, and it certainly represents the biggest chunk of rise in cost for the airline industry. Maybe they’ll be able to control this with fuel hedging now that the price is dipping a little bit and by purchasing newer, more fuel-efficient planes.

As to coal-to-liquid fuels, I’m dead wrong there, it turns out: in fact you can make extremely high-quality fuels of arbitrary hydrocarbons using the Fischer-Tropsch process without the need for much scrubbing at all. What the cost per gallon is, I dunno. Sasol (South African company which has been doing this for years) claims they can get down to $1/gallon, but I dunno what sort of environmental regulations/constraints they’re operating under.

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saurabh 03.23.06 at 3:26 pm

Alberta tar sands can’t match oil productivity – first, they require heavy natural gas inputs and even heavy water inputs (for steam injection), and second, the easily accessible stuff is surface-mined, which is not where most of the deposit lies. The best projections don’t have it producing more than 5 Mbd by 2030, which is a drop in the bucket. I wrote about it here.

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Doormat 03.23.06 at 3:47 pm

(1) Nuclear fission is already capable of meeting all of our current and future electricity needs

I have been fairly convinced that this is utter rubbish, unless you mean breeder reactors. We simply don’t have enough uranium which is easily accessible. No to mention plenty of worry about nuclear proliferation. And, of course, breeder reactors are a brilliant way to make nukes.

Someone, on CrookedTimber I think, mentioned that also, no-one has actually ever got a breeder reactor working at anything close to economical costs, which is why they are currently only used for making nukes. Of course, rising oil costs might make this a mute point.

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pinoytom 03.23.06 at 4:21 pm

5 million barrels per day of oil production from tar sands dose not sound like a “drop in a bucket” to me – that’s almost 25% of current U.S. oil consumption.

Saurabh accurately states that oil production from tar sands requires large amounts of natural gas to provide hydrogen and fuel for the upgrading process. One solution to this problem is to gasify the by-product asphaltenes from the upgrading process to provide the hydrogen and fuel required. (The gasifier will be similar to those used for coal gasification.) For more info on tar sands asphaltene gasification, see
http://www.gasification.org/Docs/2004_Papers/20RETT_Paper.pdf

It seems to me that an effort to make use of diversified energy sources will occur in the U.S. (and the RoTW). Aside from the obvious sources (tar sands, imported LNG), some of the so-called alternatives (coal to liquids, IGCC, imported gas-to-liquids, biodiesel, ethanol, wind) are feasible when oil remains at $60/bbl and natural gas at $6/MMBTU. The question remains whether market forces are sufficient to make this happen, or whether legislation is required to give it a necessary push.

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katuah 03.23.06 at 4:27 pm

as previously mentioned, the environmental damages from “acquiring” all that coal are likely to be rather extreme, and are certain to fall hardest on the poorer and less-powerful in any nation. we’re already seeing the disruptive capacity of local/indigenous people’s actions against systems of resource extraction in Nigeria and elsewhere – what happens as the local damages get worse? more anger and unrest in local populations, probably suffering under higher energy prices and inflation, too.

the “problem” is hugely interconnected and systemic, and the results of large-scale “failures” in the system are chaotically unpredictable. we could go on and on about the various influences of stable supplies on prices, social perceptions of shortage, effects of global warming on infrastructure (Katrina, anyone?), but the reality is we just don’t know. we can only make best guesses and work for transitions and solutions that act on as many problematic areas as possible. why transition from one fossil fuel to another? transition instead to a renewable energy source.

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ed_finnerty 03.23.06 at 4:39 pm

for the doomsters – there is no realistic limit on fission. see below. worry about something else.

World Uranium Reserves

By James Hopf
Nuclear Engineer
October 2004

One important fact that must be understood is that, unlike the gas and oil, the cost of the uranium ore is a negligible fraction of the cost of nuclear power (with almost all of nuclear power cost being in the form of value added by domestic labor). Specifically, at today’s price of ~$40/kG of uranium, the ore costs amount to only ~0.1 cents/kW-hr (i.e., only ~2-3% of nuclear’s total power cost). The ore cost could increase by a factor of 10 (to ~$400/kg) and nuclear’s power cost would only increase by ~1 cent. Thus, whereas gas and oil applications are extremely sensitive to the cost of fuel, and can be rendered uneconomical by even a small increase in fuel price, nuclear power is almost immune to ore price increases. Thus, the maximum price for uranium ore, above which nuclear power would become uneconomical, is extremely high indeed.

If an extremely high ore price is tolerable, then very low grades of uranium ore can be considered as possible reserves. As the permissible ore grade (uranium concentration) goes down, the amount of recoverable uranium (i.e., reserves) goes up exponentially. As is discussed in more detail later, limitless supplies of uranium are present in seawater and in the earth’s crust, which can be extracted at some price. The question is how much uranium is available at a cost that doesn’t truly price nuclear power out of the market.

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bob mcmanus 03.23.06 at 4:47 pm

Worse than a Fool

James Wolcott gives attention to some idiot(Rainwater? what a name) in Texas who has made a billion in real estate and another billion in oil and thinks Peak Oil is a serious problem.

“‘This is a nonrecurring event,” he says. ‘The 100-year flood in Houston real estate was one, the ability to buy oil and gas really cheap was another, and now there’s the opportunity to do something based on a shortage of natural resources. Can you make money? Well, yeah. One way is to just stay long domestic oil. But there may be something more important than making money. This is the first scenario I’ve seen where I question the survivability of mankind. I don’t want the world to wake up one day and say, ‘How come some doofus billionaire in Texas made all this money by being aware of this, and why didn’t someone tell us?’” …Richard Rainwater

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Doormat 03.23.06 at 4:58 pm

Ed: That’s a classic bit of “economics over physics” thinking: “limitless supplies of uranium are present in seawater and in the earth’s crust, which can be extracted at some price.” Yes, but also at “some energy cost”. What about when the energy input is close to the energy output?

Anyway, I raise you this link: Australian Governments own predictions

At current rates of consumption, existing and estimated uranium reserves recoverable at up to $US80/kg (compared with current spot prices around $US20/kg) are sufficient for only about 50-60 yearsgrowth in the nuclear industry will reduce this period. Of course, further uranium discoveries can be expected, and very substantial higher cost uranium resources exist (e.g. seawater offers a virtually unlimited supply, albeit at about 10 times current prices). Higher costs, however, will make inefficient resource use even less sustainable.

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ed_finnerty 03.23.06 at 5:04 pm

doormat

thats a good link

so uranium from seawater at about $800 a kg – much cheaper than I would have expected

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Nathan Williams 03.23.06 at 5:36 pm

38 (Joel): The chart you linked to is easy to misread. The percentage of oil used for transportation is about 65% on that chart, not 40%. (The chart’s main lines are MB/d, against the scale on the left, plus a “transportation percentage” against the scale on the right).

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bob mcmanus 03.23.06 at 6:01 pm

Emptywheel on Wolcott and Rainwater …Next Hurrah

I can’t believe what I am reading here. Check out a little history. By the time we are extracting uranium from seawater there may be a billion people left on Earth, so we won’t need it as bad.
The last time we changed the resource basis of the economy, after an unsustainable period of peasant oppression in order to maintain the old political structures(1870-1910) we got, well, why don’t y’all try to remember what 1910-50 was about.

This time will be much worse.

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Doormat 03.23.06 at 6:03 pm

Ed: yeah, based on today’s prices, which are backed up by cheap fossil fuel…

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Doormat 03.23.06 at 6:07 pm

Which, less flippantly, is to ask the question: why does the Ozzie report suggest that getting uranium from sea-water is unsustainable, if they also (in Ed’s words) claim it’s rather cheap?

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soubzriquet 03.23.06 at 6:26 pm

48: It may be worse that that, economically speaking. Short term explosive growth in vehicles worldwide (esp. china, which represents a potential market approximately the same size as the current world market, not to mention india) coupled with a domestic agricultural system that fairly dependent on cheap oil (and exporting of these techniques) may well represent, economically, a rock-and-a-hard-place scenario. Especially with having constructed rather stupid dependence on cheap automotive transport all over north america (both personal and shipping), and quality of life may be in for a pretty bumpy ride…..

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Urinated State of America 03.23.06 at 6:54 pm

“That’s all very well, but 100% of petrochemicals come from petroleum. If petroleum is prohibitively expensive, so are petrochemicals.”

But there are other components of cost of petrochemicals (and their chemical derivatives). Raw material cost for olefins runs ~60-70% of cost. For polymers, the cost is ~40-60%. As you move up the derivative chain, you get more and more of the cost being capital & labor, and less the raw materials.

“Gas turbines can burn biodiesel, should it prove possible to actually make the stuff in quantity.”

Problem with that is that making biodiesel consumes fertilizer, which is made using ammonia. And for ammonia you need syngas, which is made from natural gas or coal gasification. According to the US DoE, taking into account those inputs, biodiesel gives out only ~20% more energy than it consumes. So if the price of energy goes up, so does the cost of making biodiesel.

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John Emerson 03.23.06 at 6:59 pm

Substitutability is the solution to all resource problems whatsoever. All economists know that; it’s taught on the first day of class.

There are no problems with nuclear power, coal power, coal mining, or CO2, and if there were, our fine governments would deal with them effectively, the same way they’re dealing with today’s problems.

There will be a transition, but like all transitions, it will be painless once equilibrium is restored.

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bob mcmanus 03.23.06 at 7:18 pm

Went to Wikipedia, for I was sure Norman Angell had to be an economist. Nope, a mere journalist and autodidact. Nice guy, I don’t want to put him down. Anyway, he was right. It wasn’t his fault that people acted irrationally.

Guess I will have to go look up Schelling, who is also a nice guy and a real economist. Maybe he will explain to me via game theorey why, even tho people not rational, the pain and costs of the transition will be voluntarily spread equally according to Rawlsian proportions or something.

In the meantime I want Quiggin and the Australians to pay my air conditioning bill here in Texas. If they think that is unfair, well, how many nukes have they got?

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Martin James 03.23.06 at 7:19 pm

Bob Mcmanus:

In 1900 world population was 1.6 to 1.8 billion and per capita GDP in 1990 dollars was about $679.

By 1950 there were about 2.5 billion people with average per capita GDP of about $1,600 in 1990 dollars.

So 50% more people who are more than twice as wealthy on average.

Maybe John Emerson wasn’t being ironic.

Its amazing to me that our education systems focus so much on political history and not on economic and technological history.

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bob mcmanus 03.23.06 at 8:52 pm

Great, Martin. May you and your family live in the equivalent of Nanking or Kiev during the next easy transition. You are right, Europe came out of the Black Death more prosperous and eventually regained its population. All things reach equilibrium.

Let me see, just minimum extrapolation, assuming say 200 million died unnecessarily 1900-1950, and assuming the next transition would be worse, probably only a billion dead in 50-100 years. Of course many would say the thirty years war and imperialism/fascism/communism had nothing to do with economics, but only evil leaders and bad irrational ideas. Economists would probably say not my yob, man.

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Jackie 03.23.06 at 9:04 pm

The big current problem is not that we happen to have tipped onto the downslope of the Hubbard Peak, but that there is very little surplus capacity, and thus oil is a) high and b) volatile.

I doubt greater volatility will be much of a problem, either. Why? Because the economy won’t just adjust for higher real oil prices, it will also adjust for greater price volatility. If enough actors are pretty certain there will be more uncertainty with respect to the price of oil, arrangements and plans will be made to deal with the situation. Already we’re seeing some of this, I suspect. The price of oil seems to be pretty erratic over the last few years, with no visible negative effects on growth.

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joel turnipseed 03.23.06 at 10:26 pm

bob mcmanus–

Aren’t you being, well, a little overwrought here? Surely there are social justice issues involved in the shrinking supply of oil relative to demand (though there are far greater ones than even this to be solved), but do you really think we face a world-wide cataclysm like 1914-1945 (not sure what your 1900-1950 represents… not early enough for Spanish-American War, too early for Russo-Japanese War, ends after WWII but before Korean Conflict, etc.)?

It took a pretty uniquely stupid set of consequences to stretch that conflict out (high tariffs, excessively punitive reparations–and here, we’re lucky we got Marshall plan after WWII and not Morgenthau’s, the restrictive gold standard, to name just three): I just don’t see anything on the horizon that could rock the world like that. Not to say something won’t or that it can’t happen (I loved Martin James’ comment at #40)–just that, well, “peak oil” isn’t going to bring it on.

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bob mcmanus 03.24.06 at 12:57 am

“but do you really think we face a world-wide cataclysm like 1914-1945 (not sure what your 1900-1950 represents”

Well, I originally said 1910-50 (China;Eastern Europe, could have been longer) and adjusted for Martin. The answer is yes. The justification can be either very simple (human nature) or very involved. I do not accept the conditions you cite as sufficient explanations for the events of the first half of century, and you didn’t even mention the causes of WWI or the Russian Revolution.

Determinism I guess cuts both ways; but foreseeing an era of declining resources and increased competition I suspect a Neo-Angellism, dependent on rational actors, saying the next century will be much better than the last has the tougher argument.

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aaron 03.24.06 at 2:22 am

Martin, we were much better off than ~3X the grow growth in poductivity you suggest for 1900-1950. Finance only measures a portion of economic gain, plus many economic gains have a compounding effect.

Goods and services are generally sold at a fixed price available to everyone. All the people who make purchases value the good and service more than the price, so for most consumer purchases, a large portion of economic gain is not measured.

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Peter 03.24.06 at 9:44 am


The US has enough easily accessible coal to supply hundreds of years of consumption at current rates, and the same is true of the rest of the world.


That would only be true if the US used coal at the rate we used it 30 years ago. If we use coal as coal at the 2005 consumption, plus gasify coal to use as gas/diesel at the 2005 consumption, you’d be looking at far less than 50 years of supply.

I think you’d get a better understanding of just how stupid the hundreds of years remark is, if you first study the year in which it was made, and the growth in coal consumption since that remark was made.

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Alex 03.24.06 at 9:59 am

Meanwhile, a wind turbine with a design life of 25 years pays off the energy used to build and install it within the first year. That implies an EROEI figure equal to or better than oil, no?

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Martin James 03.24.06 at 11:09 am

Thought experiment: Wouldn’t one consequence of increased energy costs be that everything will get lighter?

The motto will be “light or local”.

Aaron:

What I can’t figure out is why in common discourse people don’t “feel” their lot has improved as much as the economic measures would suggest. Maybe its just that first postulate of economics that people have unlimited wants.

If you look at the time use statistics for the USA at the BLS site, for the entire population the daily time spent on work and work-related activities is 3.65 hours and leisure is 5.18 hours. Television time on its own is 2.64 hours. Its really phenomenal how much things have changed in the last 100 years.

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JimT 03.24.06 at 12:43 pm

When the employees of PDVSA went on strike and shut down production Venezuela’s reserves took a tremendous hit. Many producing wells stopped working as the tar sands congealed. Getting enough heat down the pipe to restart them wasn’t practical, compared to starting new wells. As the price of oil goes up, more and more tar sands become economically viable, because the cost of starting or restarting a well becomes a smaller relative to the value recovered.

The main points, however, are two: first, nuclear power will replace major uses of other fuels for the production of electricity sooner or later, like it or not, and second, in the long term oil is much more valuable as feed stock than for almost any other use.

As for coal, it depends on what you mean by extraction. I read of a mine in southern Illinois that ‘extracts’ coal by setting it on fire and pumping air down the shaft. The coal goes to Chicago in the form of electricity. Tough on the Illinois Central Railroad, but great for everyone else. As coal becomes more valuable as a replacement for oil, it would seem that doing the earlier stages of processing nearer the source would become more viable. Coal mining is a lot more labor-intensive than it needs to be. Like everything else, when the price is right, someone will build a machine to do it cheaper.

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Martin James 03.24.06 at 2:14 pm

Thought Experiment 2.

The best market measure of future supply constraints in oil would seem to be owners of oil taking it off the market.

In other words, if the price of oil is expected to increase faster than the return on capital( and the cost of leaving the oil where it is is low), then it does not make sense to sell the oil at the current price. For example, if one expects oil to sell for $100 in 3 years and it is $60 today, then one would only sell the oil if one has a greater than 18.5% discount rate in nominal dollars.

So the current spot rate for oil reflects the expectation that current rates will not increase in price faster than alternative real returns(2% to 7% depending on the risk assessment).

Now the market may be incorrect, but one sign of supply constraint would be an increase in the number of players finding oil and then not using it or taking their current supply off the market.

The kicker for doomsday scenarios is that under those scenarios one might reasonably expect real returns to fall (if the built investment in the current industrial-oil economy results in defaults and little return to investment) then it makes even more sense to hold onto the oil one has rather than sell it at current rates.

This type of analysis is still consistent with severe supply constraints because compound real reutrns produce some pretty big numbers, but if oil prices will really jump in the next 5 to 15 years, why the heck is anybody selling oil now for $60?

Who knows who is hoarding oil?

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John Quiggin 03.24.06 at 3:06 pm

Peter, maybe you should reread the last para of the post.

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aaron 03.24.06 at 11:17 pm

Martin, I think it is human nature to have only a certian amount of satisfaction. I think much of our emotions are biological, and therefore we set standards based on our experiences. That is why our perceptions of good pay and working conditions are different than that of people in the third world. It is all relative to your surroundings and previous experience.

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derrida derider 03.24.06 at 11:35 pm

I used to be firmly anti-nuclear, but I think it’s time we started down that track seriously. Otherwise it’s all too likely that we’ll melt the polar ice caps with the coal we burn to replace oil and gas.

Other alternatives just look like wishful thinking to me (yes, alex, putting up wind turbines in prime sites pays and we should do it – to hell with the birds, the noise and the aesthetics. But there aren’t anywhere near enough prime sites to meet our energy needs, and there are even fewer prime sites for the very large scale water storage that’s needed to make sure the electricity’s available when people need it, not when the wind blows. Similar problems apply in spades to solar).

I think wise governments would be making the very large scale development effort needed to mitigate nuclear’s problems *now*.

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Alex 03.25.06 at 4:43 am

But there aren’t anywhere near enough prime sites to meet our energy needs..

Debating error 1. Incorrect factual assertion. Please contact your brain administrator.

According to the Stanford renewables lab, the Class 1 sites globally (i.e. the top third) offer as much as 72 terawatts of energy – now, the total primary energy use is about 14 TW, so if we can get only 20% of that we’re laughing, especially as converting primary energy to electricity and then to mechanical power is a far better deal in terms of efficiency than converting primary heat to work through an internal combustion engine.

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J. Powers 03.25.06 at 2:19 pm

Oil and coal provide very different concentrations of energy. We can continue to produce electrical power using coal (although current technologies are almost unbelievably inefficient) for quite some time. But we have no viable substitute for oil when it comes to providing the sheer energy punch needed for intensive transportation. As noted in comment #11 here, oil isn’t going to run out right away, but it will rise in price quickly enough to traumatize those industries that depend heavily on it being cheap. The two principal casualties of this will be (1): air transport (both cargo and passenger), and (2) the trucking industry. Major price increases throughout an industry mean that it will get fewer customers, which hurts the scale of its operations, producing further price increases. Air transport and trucking will probably become high-end speciality services.

As sustainability advocates have been saying for some time, almost everything in the U.S. travels a LOT of miles between its origin and its final use. Each of those miles is about to get a LOT more expensive. Bottom line–and this is all that sustainability has ever meant–present trends will not continue indefinitely. We’re going to have to do things differently.

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David Roberts 03.28.06 at 4:30 pm

Oy. This post and thread remind me of global warming discussions circa about 2002. People (say, liberal arts types) with no relevant training or background would wander in and say something like, “dude, what about water vapor? Global warming is obviously a farce!” As though hundreds of people who’d devoted much of their lives to studying the phenomenon had never thought of that.

You think it just never occurred to anyone in the peak oil community that we have a lot of coal left? You think it hasn’t been discussed? All those folks lacked the minimal analytical rigor to consider the consequences?

Head on over to Oil Drum and do some reading. I suspect any slogan-size take you have on the energy situation will dissolve in the acid bath of what really is an enormously complex field of study.

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Ender 03.28.06 at 11:56 pm

As I posted on JQs site we do not have that much coal left. There are known reserves of 1000 billion tons. It takes about .4 of a ton of coal to make a barrel of oil. If we used coal to replace the 83 million barrels per day that we use now we would burn through the coal in about 80 years.

However this does not take into account that the rate of oil use and electricity use is increasing. I confirmed Gregson calculations with some rough ones of my own. You can download the spreadsheet that I used here
http://stevegloor.typepad.com/sgloor/2005/12/coal_reserves.html

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Lads 03.29.06 at 1:47 am

Mr. Quiggin,

First of all, please tell one thing that you do in your where you don’t use oil. Just one.

If you managed to find one, you don’t understand the place oil has in modern life.

It is incredible how some people think that prices solve everything. Simple, if oil goes up to 150$ a barrel, Fischer-Tropsch comes into the scene and saves us. Let me ask you something, what kind of world are you expecting to have with 150$/bbl?

Your comments about coal show how litle you understand of the subject. “Current rates of consumption”, do you know how much coal consumption has grown since 2004? Now apply that to the known reserves and come back here again.

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Kim Bax 03.29.06 at 2:26 am

I’m not an expert, just a mum & part time with a keen interest these issues. I also heard John Quiggin speak at the Brisbane Hilton last year, when Prof. Kjell Aleklett of Upsalla University (Sweden), gave a presentation on Peak Oil. May I suggest something? I think John should read Richard Heinberg’s book, “The Party’s Over.” It clarified many things for me, not the least being “EROEI,” and the inherent viability of many “alternative” fuels. Here’s a link to a short pdf booklet summary of Heinberg’s publication:-

http://www.postcarbon.org/files/EndOfOilBooklet_0.pdf

And here’s me crossing swords (so to speak), with Federal Australian Resources Minister, Ian McFarlane (just recently), in relation to so called “Alternatives” (coal liquefaction amongst them). Here’s his reply to me, and my further answer (widely circulated, as you’ll see):-

http://www.kimspages.org/ianmcfarlane.htm

“Point 3″ (scroll down, it’s on the right hand side of the page), is my answer to McFarlane on this point (coal liquefaction). Also, as a qualified and practising psychiatric nurse of over 30 years experience, I’d like to say that phrases like “Cult following” – in relation to peak oil – are cheap shots that substitute for reasoned debate. It smears and denigrates, something like the term “Loony left” was used to put people beyond the pale. Richard Heinberg (for instance), is one of the coollest, most reasoned and most meticulous writers I’ve ever read. Neither do I think people like Bruce Robinson (ASPO Australia), Colin Campbell, Prof Kjell Aleklett and Matt Simmons (for example), are wild-eyed, irrational people (and I’ve met a few over the years). In fact, they’re frighteningly sane, sober and well reasoned. Come on John, I’m not a Professor – and I can grasp these things, and so can another Brisbane economist that comes to mind, Richard Sanders.

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