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.

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.

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

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.

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.

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.

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.

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?

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.

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.

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.