The Great Oil Fallacy

“But oil is no more special or critical than coal, gas or metals—let alone food.” Food is not critical? What does JQ live on?

“Food is not critical?”

Food is critical in the aggregate; having access specifically to foie gras is not. And with oil it’s like that, all or nothing: either you have, and can afford, fuel to put into the tank, or everything is paralyzed.

I kept reading this, hoping at least (since the claim is that oil has little relevance to US policy) to see an argument for what *changed* to make it that way. Instead I saw an argument that it didn’t matter even during the OPEC crisis. And yet, fact is, the Eisenhower did overthrow a democratically elected Iranian government because it wanted to nationalize its oil industry. And while Gulf 2 is hard to see as being largely about oil (or anything sensical), this is a much harder case to make for Gulf 1. Oil doesn’t have to dominate all other considerations in every war for it to matter a great deal in some, or to some extent in many or most…

“I kept reading this, hoping at least (since the claim is that oil has little relevance to US policy) to see an argument for what *changed* to make it that way.”

Isn’t the argument not that oil wasn’t important to US policy, but that US policy was flawed to put such importance on oil?

prasad @ 6:
I kept reading this, hoping at least (since the claim is that oil has little relevance to US policy) to see an argument for what *changed* to make it that way.

What changed is alluded to briefly, e.g.:

Oil has become steadily less important as an energy source in recent years. U.S. consumption of petroleum for gasoline peaked in 2005, well before the recession, and economic recovery has not produced a rebound. Consumption of oil per person has been declining since about 1980. At least as far as the United States is concerned, Peak Oil is an event in the past, not the future.

and:

High prices have already led to the abandonment of oil in many uses for which it was once the preferred fuel, such as electricity generation.

The argument, as I understood it, was roughly: “Oil really wasn’t as economically important back in the 1970s as people thought it was, and it’s become even less so (for the US, at least) since then.”

“Isn’t the argument not that oil wasn’t important to US policy, but that US policy was flawed to put such importance on oil?”

Rereading more carefully, I agree that this is exactly right in characterizing the argument. Thanks.

Hopefully LGM will just look at this post, squint, and then shrug it off.

Tho IIRC, a large motivation for the initial Western interest in Middle Eastern oil was … battleships!

The prosaic reality is that oil is a commodity much like any other.

This is only true if you ignore all the properties of oil that make it different from other commodities. Here are a few. First, lack of flexibility in supply. There is very little short term flexiblity in the global supply of oil and not much long term flexibility either. Second, difficulty of substitution. Oil is an energy source that cannot be substituted for in the short term and only to a limited degree in the long run. Third, there is not much flexiblity in demand. There is very little flexiblity in the economy to simply skip travel to save on gas. If the goods can’t be shipped around they can’t be used or sold. All of these factors together leave the market in oil extremely vulnerable to disruptions to supply. Most other markets for commodities miss at least one of these properties and no other commodity market remotely as large as the one for oil matches up on all three points. Contra your claim, this makes oil a very unique commodity. So US oil expenditures amount to “only” 4% of GDP at $100/barrel. As we have seen recently the price of a barrel of oil can change dramatically in a short period of time by 50% or more. And that’s without the kind of disruption imagined by an event like Iran attempting to close the straights of Hormuz. An increase in the price of oil to $150/barrel could lead to a demand shock for the rest of the goods in the economy of 2%. It may be a minority of economists who believe that oil price spikes as we have experienced them cause recessions, but is there any other commodity good that is even discussed in this way? And what percentage of economists would change their opinion if they thought $200 or $300 oil was a possibility with the attendant 5%+ impact to the economy?

It is certainly true that the $1T+ price tag for the Iraq war makes no sense as a war for oil, but arguing against the current levels of American military expenditures in the middle east (a point on which I generally would agree with you) using the claim that oil is not a particularly important commodity is only going to appeal to people who are already persuaded. For those who are not, I think it discredits the argument more than anything.

Isn’t though, one of the main claims of the peak oil movement that food supply depends critically on oil (via chemical fertilisers and pesticides).

It’s not the most solid claim, however, as natural gas is a more significant input for chemical fertilisers and pesticides.

Shipping is one of the other big issues for the peak oil collapse folks. Which I don’t quite get. I understand that shipping is very dependant on bunker fuel, but it also seems like big hulking cargo ships would be one of the easier things to convert to some sort of pulverized coal boilers or NG turbines. The navy is working on hybrids as we speak. I would think shipping would be one of the easier conversions.

I think the issue with oil is that it does have pretty low elasticity in the short term, and has a huge impact on consumer sentiment. Yes, we can convert to a number of alternatives, but the cost of substitution for individuals is steep, and there are a number of critical infrastructure issues involved (it is not hard to get a car that runs on CNG, but the fueling infrastructure is limited).

Of course, if the US prioritized building that infrastructure rather than spending 1 trillion on a war, it would be a much different transition. Oil has portability advantages, but they are not unsurmountable.

(In fairness, one of the arguments of the peak oil crowd is that substitution could happen, but nobody is doing the planning to make it happen in time – there is recognition that oil is critical because of institutional choices, rather than only a fact of nature).

On the US/Iran/Saudi relationship during the period this new book is meant to be decent (and the review below goes into a good bit of detail)

http://www.thenational.ae/arts-culture/books/the-oil-kings-how-nixon-courted-the-shah#full

Oil has never carried out revolutions in protest about its commodification.

19–would you be uncomfortable knowing your position was one held by the Bay Area Situationist collective? A chapter in _Afflicted Powers_ (Verso) lays out this position, iirc…

While it may be true I can grow food without oil it would be virtually impossible to support even a fraction of the U.S. or world population without it. Oil and any other energy source is an enabling commodity….food, copper, gold, iron ore are raw materials for actual production.

Oil is like a dollar bill – its only good for what it can do, not what it is.

The only reason the U.S. has never gone to war over food is because we’re the best in the world at producing it….if ever had a shortage you can be darn sure we’d warm up the battleships and find some nice chunk of Africa or South America to plant and control (look at Coca-cola in Belize or Starbucks in Costa Rica).

Converting shipping, rail and industrial oil users to other fuel sources is comparatively easy–and comparatively cheap–compared to converting road transport to an oil alternative.

That’s true but misleading. What you are missing is turnover time. Re-equipping every vehicle owner in the US with a new vehicle would be tremendously expensive. But it’s going to happen over the next 10 years or so – because that’s how long the average vehicle lasts! You don’t have to do it with a massive compulsory purchase/junking/replacement process right now.

Ships, on the other hand, last thirty years. Railway engines last twenty. Industrial plant could be even more than ships. Retooling all of that lot may be technically easier, but the longer fleet halflife means that it is practically much more difficult.

@Sandwichman If all commodities/factors are equally special, then none are especially special. Labor is special, in all sorts of ways, energy much less so, particular energy sources like oil hardly at all.

In particular, notice that Costanza’s energy theory of value implies that labor input must be unimportant as a source of value unless it is highly correlated with embodied energy, which it is not.

John,

Let me put it this way: Machines displace workers. Machines consume fuel.

As long as we can deal with those two propositions in isolation, we have no problem. 1. Make the machines more efficient so they consume less fuel per unit of output. 2. Expand the economy to reabsorb unemployed workers displaced by machines. Voila! Perpetual prosperity!

It’s only when we recognize that the machines that displace workers are the same machines that consume the fuel that we run into the double paradox that having more jobs entails consuming more energy or that consuming less energy means having fewer jobs.

I beg to differ on what Costanza’s energy theory of value implies with regard to labour. Costanza derived his correlations between energy input and monetary value by redrawing the system boundaries for an input-output analysis so that it could evaluate households and government as inputs. In what capacity are households and government inputs? In their capacity as suppliers of labor.

This is not solely my own eccentric interpretation. There’s a 1989 article in Ecological Economics by D.H. Judson, titled “The convergence of Neo-Ricardian and embodied energy theories of value and price,” that comes to substantially the same conclusion.

If labor is “special” and energy (oil) displaces labor, then that makes energy kind of special in my book.

Now it may be just a coincidence that both the paradoxical Doctor Jevons and the peakish Mister Hubbert thought there was some kind of affinity going on between fuel and labor. Jevons, as I’ve pointed out before, based his notorious rebound effect on a “a principle recognized in many parallel instances,” namely in the case of workers displaced by machinery. Twenty years or so before issuing his peak predictions, Hubbert was Technocracizing about “Man-hours Distribution.”

“Ships, on the other hand, last thirty years. Railway engines last twenty. Industrial plant could be even more than ships. Retooling all of that lot may be technically easier, but the longer fleet halflife means that it is practically much more difficult.”

I don’t think there are many industrial plants running on oil – some remote small plants and generators maybe, but I think most industry uses n-gas, coal or electric.

I still suspect that ships would be a relatively inexpensive refit, rather than having to build ships anew.

Furthermore, John posted above the opening paragraph to his National Interest piece. His closing sentence re-iterated the nothing special about oil theme:

“It’s time to recognize that in the second decade of the 21st century, oil is just one commodity among many in an economy that is mainly driven by services and information.”

Pardon me for borrowing a metaphor, but isn’t this “economy driven by services” precisely the zombie that Costanza killed 32 years ago in “Embodied Energy and Economic Valuation” with its analysis of the interdependence of primary factors?

The possibility for large changes in energy efficiency is small since, all things considered, total energy efficiency is fairly constant from sector to sector. Any reductions in direct energy consumption are offset by increases in indirect energy consumption through increased use of labor, land, or capital.

In conclusion (Costanza’s) there is no free lunch, only the illusion of a free lunch by looking at small parts of the system in isolation. “When the whole system is analyzed, however, it becomes clear that all you can do is transfer the cost of your lunch to another part of the system.”

@13: “The U.S. commitment to the Middle East is quite small.

We have about 19,000 troops stationed there(15,000 in Kuwait), plus a few ships patrolling the Persian Gulf.”

ponce, where are you sourcing those figures from?

Here says 67,000 in Afghanistan alone:

http://www.military.com/daily-news/2012/11/26/report-us-aims-to-keep-10k-troops-in-afghanistan.html?comp=700001075741&rank=1

And I can find recent-ish quotes from Centcom that put total toops in the ME up around 125,000…am I missing something?

Ponce, I think, is talking about troops specifically in Arab countries, ignoring those in Afghan and offshore, which seems to be closer to 125,000. Also ponce seems to be ignoring Iraq and Jordan, aswell as Pak and Afghan, when making claims about US ‘bribe money’, (the six top recipients of US mil aid, according to wiki) because ponces thesis is ludicrous when presented factually

@36

Sounds like you’re forgetting the bribes we pay to Jordan (over half a billion) and Iraq (over 1.5 billion).

Cars can run on liquefied natural gas, ethanol or biodiesel, not to mention electricity.

Ethanol production cannot be increased much because of the limits of arable land and food production. LNG has all sorts of transportation problems that make it difficult to compress and transport, and getting enough out of the ground to make a serious dent in oil consumption removes gas’s price advantage. Electric cars are as crappy as they were 110 years ago, because of the limits of batteries. If you’re going to drive, there just isn’t a good substitute for oil.

Oil is essential for motorized transportation, and motorized transportation is essential to the economy. Cars, trucks, trains, planes and ships. Quiggin breezily dismisses this critical point with the observation that “cars can run on liquefied natural gas, ethanol or biodiesel, not to mention electricity.” Well yes, they can. It’s technologically possible. But we are decades away from those alternatives providing a practical and economically feasible alternative to oil at a national scale for our automobiles (250 million of them). Let alone for planes, trains and ships as well. It’s taken 12 years just for hybrid-electric technology to achieve a 2.5% share of the automobile market — and that didn’t require any new infrastructure. Oil is essential to the economy and will be for many decades to come.

@44

“I hesitate to resume naval warfare, but that seems like an inadequate description of the US 5th Fleet”

It’s gotta be somewhere. Doesn’t mean it’s doing anything.

We’ve got 50,000+ troops sitting in Germany, for example.

@47

I think you are mistaken.

Is Russia part of the “Middle East” too?

And more on topic, how much oil does Afghanistan export each year?

@49

Okay. From Centcom’s homepage:

“Located between the European and Pacific combatant commands, U.S. Central Command’s area of responsibility covers the “central” area of the globe and consists of 20 countries — Afghanistan, Bahrain, Egypt, Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Oman, Pakistan, Qatar, SaudiArabia, Syria, Tajikistan, Turkmenistan, United Arab Emirates, Uzbekistan, and Yemen.”

How much oil does Afghanistan export, Nick?

You run into a lot of conflation of oil with energy, and energy with economic production. The usage of oil as the primary energy supply was more true half a century ago, as a lot of oil was combusted to generate electricity and/or industrial process heat. The oil price spikes of the seventies largely displaced these uses. Oil is also used as an important chemical feedstock, for chemicals, and plastics, and even pharmaceuticals. I believe it is also possible to turn oil plus bacteria into food. But all of the uses can in principle be substituted by other means, although not necessarily at today’s scale. The original industrial use of oil (discounting the use of natural seeps of for instance asphalt, which has been used for more than a thousand years), the first modern use of oil in volume was kerosene for lighting (displacing whale oil lamps). Only later was it used as fuel for portable and fixed-point power.

Liquid fuels and chemical feedstocks will still be possible even after the last oil well has been shutdown, although anything approaching current volumes seems unlikely. The largest current usage of liquid fuels which seems almost impossible to replace is airplane fuel. But we can probably maintain some form of global aviation industry on a couple of million barrels per day.

“anything approaching current volumes seems unlikely” is not good enough when what is required for system stability is the ability to expand perpetually beyond current volumes.

Just read the data from 1948 to now. Only from 1973 to the mid-1980s did energy intensity per hour of employment actually decline in the U.S. Arguably that was a one-time-only, low-hanging fruit opportunity.

But not to worry, folks, the big technological breakthrough is just around the corner. And Godot said he would come.

The most important “substitute” for oil in the economy is likely to be “conservation”: we will switch to less energy-intensive arrangements. In transportation, jet air travel will become very expensive indeed, but shipping and rail will gain, at the expense of long-distance autos and motortrucks. As rail gains, urban density will increase: we will simply live closer together. No source of energy will be as convenient in its portability and density, and no source will be as cheap, all-in, as we pretended fossil fuels were.

The 150 years during which the petroleum industry has expanded steadily, seeking reliable rents from a vast network of systems for extracting, refining, transporting and distributing petroleum products established patterns, which will be turned upside down by the decline of volumes. Never shy about externalizing costs in the gogo years, the damage to the environment will escalate as the impossibility of producing oil products profitably becomes an increasing challenge. At the same time, the temptation to seek a subsidy from running down the excess infrastructure will add to the hazards.

“. . . arguing that oil is a commodity of “modest importance” appears to me to be a misreading of the situation.”

Indeed, it seems that way to me.

Many other have made the same points already that I would make.

From the article: “In the second decade of the 21st century, oil is just one commodity among many in an economy that is mainly driven by services and information.”

Try eating services and heating your home with information, then we’ll talk.

I think the peak oil people have a point when they point out that the energy density and ease of transportation of petrol is unmatched by anything we have ever had before and, unfortunately, anything we seem to get in a hurry. Unless fusion power, which is perennially 30 years away, and much better rechargeables are invented pretty damn soon we may run into a lot of trouble. (Not of the end-of-the-world type, but of a series of crises that will catalyze a world that produces food much closer to where the population is concentrated and that will be considerably poorer than it is now.) Solar and wind won’t power a couple of billion cars, trucks, airplanes and harvesting machines.

Energy is the master resource. And Oil is the daddy of them all:

http://en.wikipedia.org/wiki/Economic_growth#Energy_and_energy_efficiency_theories

“Ayres and Warr have presented a model that aims to address deficiencies in the neo-classical and endogenous growth models. It claims that physical and chemical work performed by energy, or more correctly exergy, has historically been a very important driver of economic growth. Key support for this theory is a mathematical model showing that the efficiency of a composite indicator using electrical generation and other energy efficiencies is a good proxy for the Solow residual, or technological progress, that is, the portion of economic growth that is not attributable to capital or labor.”

Dissecting each resource omits the complex interactions between them. Many energy sources and essential resources (such as food, medicine, mining etc) are interwoven in a web of complements, and are not substitutes for each other. For instance, oil is essential for large scale agri-business (machinery, processing, water pumping, fertiliser).

Sounds like someone needs to look at the work being done around ‘Far From Equilibrium’ (FFE) systems – energy is ‘not just another commodity’. It’s the crucial element of dissipative systems such as economies, cities, cities, and yes life forms like ourselves.

No access to energy – no maintenance of steady states. Period.

Or we could just consider the supply of energy as an externality… whatever.

Greg @ 59:
… wherever there are fun hegemonic wars to be fought or elites to purchase, the US will be there to fight them and buy them? And doesn’t that “wherever” just happen to be in the ME and the Muslim world right now?

There have been quite a few wars in sub-Saharan Africa during the last ten or twenty years (and plenty of elites to be purchased, given the number of corrupt governments); US military involvement there has been pretty minimal — probably less than that of France.

In general, I would agree the importance of oil is commonly overrated, especially when compared to less fungible goods like arms, education and infleunce.

On the other hand, the distinctive thing about oil, compared to pretty much any pther commodity, is the way in which it is easy to transport, but _only in peacetime_. There is no such thing as a coal pipeline or tanker. And no such things as a pipeline or tanker that can navigate a war zone unguarded; they have too much of a tendency to add their own conveniently dense energy to whatever explosive input the locals provide.

That does tend to mean that small wars far away that would otherwise be easily ignorable are less so. In a competitive market you can’t afford not to buy at the cheaper prices during peacetime, and then when a war does start you’ve already got the infrastructure built around those prices.

I suppose the trick is to find something to do, other than ignoring them, that does less harm than help. Easier said than done of course.

Looks as though Peter’s open italics tag is bridging time and space… Fixed now, I hope – JQ

There is just no good substitute for oil.

… besides nuclear power.

Z, at @3, sums it up best.
We can argue all day about the specialness of oil and the value of energy, but the fact is that it’s very hard to see the Middle East policy of the US on the last 30 years as having any conceivably desirable effect on the price of oil.
It’s not that oil or its price aren’t important, is the difficulty of affecting its supply/demand on a sufficient scale in a desirable direction what makes its strategic value doubtful ….during peacetime.

“Embodied energy does not generalize to embodied oil.”

True that oil is not the only game in town. But it is the game in which some very big players have some very large stakes. And over time much of the infrastructure of the world has been arranged to ensure a hefty return to those players.

One thing I agree with Amory Lovins on is that we could live on less energy than we currently waste. But that waste is the flip side of superprofits. Who profits from conservation? Everybody and nobody. Everybody a little bit and nobody big time.

Anything you prodigiously and systematically waste becomes toxic. It’s not in the peculiar nature of petroleum to be evil guck. When the problem is viewed as one of systematic wasteful consumption rather than of this or that particular commodity, then replacing oil with whatever doesn’t look quite so warm and fuzzy.

” replacing oil with whatever…” (as a driver of perpetually expanding waste, that is).

I was hoping someone would say something about oil as the new gold, i.e. the USD backed by oil markets priced in dollars rather than bullion reserves.

In particular, I’m worried that the current idea that replacing oil isn’t as simple as just finding a cheaper substitute, but instead about reforming the whole political and economic apparatus built around the petrodollar.

Personal vehicles will probably have to disappear, at least the kind of personal vehicle that you can jump into and drive anywhere on the continent you live on.

Given the enormous benefits of personal vehicles and the fact that we have spent 60 years and trillions of dollars building urban areas designed around them, it’s very unlikely that personal vehicles will disappear. Personal vehicles powered by gasoline engines will probably disappear, but not for decades, and they will be replaced by personal vehicles powered by other forms of energy, most likely electricity.

The future is probably $1000 mopeds, not $40,000 Volts.

Mopeds and motorbikes are too dangerous and impractical to be a large-scale substitute for cars. As batteries (and maybe fuel cells) get better and cheaper, electric cars will get better and cheaper. Hybrid vehicles like the Volt are a transitional form. Taking into account tax incentives, lower fuel and maintenance costs and other benefits, electric vehicles can already be an attractive alternative to conventional vehicles for limited applications.

“The prosaic reality is that oil is a commodity much like any other.”

Absolute wishful-thinking

In fact oil is not ending, what is ending is “cheap” oil with the deterioration of EROI due to the depletion of conventional oil and the surge in deep-water, artic and “uncoventional” oil, much more expensive (energetically), dangerous and environmentally harmful

All the product we use are “embedded” in energy, and it is very difficult to have a energy “source” with an EROI bigeest than 10:1 in the renewable sector, and all the renewables depend on oil for their construction, transport, installation, maintenance, etc…Biofuels have less than 2:1 EROI, and some of then less than 1:1, so, in fact they are merely “sinks” of energy or “vehicles”, but not real “sources”, because the crops depend heavily on fertilizers. machinery, transport, transformation, etc…

Due to our extreme use of energy is hard to imagine a world of energy resources with an EROI of less than 5:1, probably an industrial society cannot survive in this case

On the other hand the article ingnore the tremendous importance of the oil in, for example the monetary policy and the reasons because the US$ is the international currency even today. The Nixon’s security agreements US-Saudi Arabia in 1974, plays a giant role where the saudis and other members of the OPEC will only accept US$ as money to buy oil, and US will be the “bodyguard” of the 9.000 Saudi princes (of course against the other poor arabs, Israel was never a threat to the wealth of the saudi family)
Thanks to this agreement the US$ has an intrinsic value, like the gold, and everibody need US$ to buy oil, but, who does not need oil?, rise your hand!, so you can print US$ as much as you can, and all the world has to buy them or starve…I consider this a huge advantage of the “oil policy”, and a way to avoid the negative effects of the ending of the Bretton Woods regime in 1971 (end of the gold standar), and the flood of fiat US$

The last part of the puzzle of the oil “threat” is the declaining of net oil available to export, and the case of Malaysia, UK, Vietnam, Egypt. Argentina and Indonesia, show clearly how quickly a country can pass from an exporter to an importer of oil, and if the internal oil consumption of the oil export countries continue at the same pace (as for example the case of Saudi Arabia), and the same trend in growth of oil consumption of China + India, before the end of this decade ALL the oil available to export will cover only the needs of China + India, so we have some few years to change all the autos, all the infraestructures for new cars moved by an “unknown”, and “secret” new energy source, and all this transformation has to be made in the middle of a huge recession due to the energy scarcity

Dont worry, something magic will happens, …or not

Re “40000$ Volt vs 1000$ moped”, the following posts from “Do The Math” are of interest:

energy requirements of electric cars ( plus focus onbattery development and
solwr- powered cars)
personal transportation efficiency
MPG for a Human

Also check out Lowtechmagazine.com, whose current top story is “Electric Velomobiles: as Fast and Comfortable as Automobiles, but 80 times more Efficient”.

xana, I loved that MPG for a human link. Thanks.

People interested in seeing high-quality bike infrastructure should check this out:

http://bicycledutch.wordpress.com/

“As long as people think oil is essential to their way of life…”

Slippage much? Oil is essential to their accustomed “way of life” of, say, North Americans. That’s not the same as being irreplaceable.

According to the International Energy Agency, fossil fuels account for 81% of the world’s primary energy use. Not all that is oil, of course, but if you’re just talking about replacing conventional petroleum with coal and “unconventional hydrocarbons” then its “oil” as far as I’m concerned — snake oil. The “way of life” is unsustainable, oil or no oil. And why shouldn’t everybody in the world be entitled to the same, unsustainable “way of life”?

The “way of life” was designed with the express aim of enlarging the market for petroleum products. That lends it a certain logic. Once upon a time there was a surplus of oil. So what’s the point of finding substitutes so that we can keep living as if there was a vast surplus? This is Say’s Law on steroids. Or the ill-begotten spawn of Say’s Law and the Sorcerer’s Apprentice. The ghost of overproduction past keeps on creating its own demand even after the supply is gone!

The idiocy of US policy in the Middle East is a side issue. The key here is that as oil has become more expensive, we have eliminated much of the easily replaceable demand for it (home heating, power generation), but the remaining uses – primarily transportation – are proving hard to deal with. There are alternatives, but they are more expensive in themselves and require very large investments in infrastructure and associated major changes in patterns of living. The last time we did anything like this (roughly 1935-55), it was under the pressure of a major war, involved massive social and political mobilisation and enormous public expenditure. And that allowed the industrial economy to tap cheaper, more convenient sources of energy. This time the transition will be to allow us to get by on more expensive, less convenient sources. Any pretence that it will be easy, or can be met through some simple acts of political will, are just hand-waving.

JQ @98
But John don’t you think this runs the danger of mistaking price for value. Air has no price, but in an environment where it is in danger of becoming scarce it is more valuable than anything else.

The argument of “size” of money spent in oil is a fallacy itself.
I weight around 85 Kg but I am pretty sure that if I lose “only” 4 Kg of blood I’ll have very big health problems, and you can say that “only” 4 Kg is “low”, but it is the way our body feed the cells, transmits the energy, and maintain the organism alive, similarly the oil is the “blood” of our economic organism, and it is hard to imagine how costly is to change the way we do the “things” if we do not see the problem, o neglect it (as for example CO2 emmisions or peak-oil & gas)

About the renewable energy, due to our brutal energy consumption, the EROI problem is due to the “diminishing returns” caused by the scale they should be deployed if we try to cover the existing primary energy production to the present levels in a significant proportion with them, to decrease the CO2 footprint and the effect of peak-oil and gas

In contrast the reasearch around the nuclear fusion are having a chronic lack of resources and political interest, and in the current context it should be prioritized as Nº 1 project for the whole world, as Stephen Hawking and Brian Cox defend, and should have more money than the Apollo project had, we (and the rest of the world) are in a much more dangerous situation then in the 60’s, but our politicians ignore it

Okay, so it’s not that oil lacks strategic significance, but that oil should be considered in the context of other items of strategic significance and not as an item of strategic significance that outranks all others?

I agree with that, although if oil is in the same category as “food” and “financial stability” then it’s pretty high on the list.

Also, and I could be wrong about this, didn’t high energy prices play a role in the 2007-2008 food crisis? My limited and second-hand understanding is that high energy prices added costs on the supply side and also, by increasing demand in biofuels, shifted the demand curve for certain foods out at the same time. If so, then – depending on the state of other variables – couldn’t the type of supply shock I asked about also result in another food crisis, among other things?

xana (@81): “Of special interest to John Quiggin (and other economists): ‘Dinner conversation with an economist'”

Yeah, I loved that when I first saw it a few months ago.

@ 81, 106

at least one economics blogger thought it was a cruel parody:

http://noahpinionblog.blogspot.com.au/2012/11/murphys-law.html

@ Matt

There are plenty of limitations if we try to avoid decrease our current level of consumption in the developed world, specially in US, and subsitute them for renewable sources, for example it is not true that the energy conversion will be 1:1 from PV or wid turbines to charge batteries, transmissión lines, and others massive means of storage, so the ratio will be much less effectivelly, and these are unavoidable “diminishing returns” compare to an isolated PV panel for some light bulbs in a rural house
¿Do you know how much copper will be required to electrify the whole countries to substitute the oil usage?, for the world scale there is not enough copper reserves, and the energy required to build this infraestructure will be astonishing, and then the pace will be very very low

One of the main problems with the post-carbon energy, is the case of transportation, there are clear limitations for the battery capacity and efficiency, and if we want to maintian the usage of SUV, Humvees, etc… y a masive scale, that means serious problems to substitute the very high energy density of the gasoline, also to solve the energy storage of big family cars, and in general transport trucks if very far from solved, and if you try to storage the electricity by means of chemical bonds (producing, for example H2) then lost of efficiency will be again very big

Certainly there are improvements in the EROI, but some systems are far from compete with the oil now, for example, the standar PV cell, in the life cycle estimations, need to operate at least 9 years to star to recover the energy spent in their manufacturing and installing, and this in very high radiation places, for example in North Europe, there are sinks of energy and never will give the same amount of energy to make them, this panels were a carbon subsidy from China, that makes cheap PV panels not taking account the real costs of the coal

We have to change the way we live or….

In a decade we’ll be able to see whether it’s empire or oil, since the US should be producing more oil than it needs and won’t need foreign oil at all.

dax
Was that meant to be sarcasm. I want to see your work. Maybe you mean North America and not “the US”. Perhaps. Otherwise – how much do you want to bet!

One of the main problems with the post-carbon energy, is the case of transportation, there are clear limitations for the battery capacity and efficiency, and if we want to maintian the usage of SUV, Humvees, etc… y a masive scale, that means serious problems to substitute the very high energy density of the gasoline, also to solve the energy storage of big family cars, and in general transport trucks if very far from solved, and if you try to storage the electricity by means of chemical bonds (producing, for example H2) then lost of efficiency will be again very big

Large SUVs like Humvees were never more than a small share of the automobile market. Since electric vehicles are so much more efficient than gasoline ones, we don’t need batteries with anything close to the energy density of gasoline for electric vehicles to be practical. The main obstacles to large-scale adoption of electric vehicles are price and the lack of recharging infrastructure. Batteries will almost certainly continue to get better and cheaper, and hybrid-electric technology (especially plugin-in hybrids) provides a way to dramatically reduce gasoline consumption as we transition to fully electric vehicles.

Do you know how much copper will be required to electrify the whole countries to substitute the oil usage?, for the world scale there is not enough copper reserves, and the energy required to build this infraestructure will be astonishing, and then the pace will be very very low

…

Certainly there are improvements in the EROI, but some systems are far from compete with the oil now, for example, the standar PV cell, in the life cycle estimations, need to operate at least 9 years to star to recover the energy spent in their manufacturing and installing, and this in very high radiation places, for example in North Europe, there are sinks of energy and never will give the same amount of energy to make them, this panels were a carbon subsidy from China, that makes cheap PV panels not taking account the real costs of the coal

There is little difference in copper infrastructure needs between a nation with an electrical grid that uses (e.g.) internal combustion engine vehicles and one that uses electrical vehicles. High-voltage and medium-voltage electrical distribution, used for long and intermediate distance distribution of electricity, typically uses wire made of aluminum and structurally supported with steel. Household copper wiring does not need to be upgraded to accommodate electric vehicle charging. Charging runs when people are sleeping and vehicles are stationary, getting a higher duty cycle from the same infrastructure.

Your energy payback time for PV cells seems way too long under high-insolation conditions. Are you referring to 30 year old data? I’ve spent a lot of time reviewing PV EROI studies over the past 5 years and can’t recall any numbers so dire.

As a counterexample,
24th European Photovoltaic Solar Energy Conference, 21-25 September 2009, Hamburg, Germany
UPDATE OF PV ENERGY PAYBACK TIMES AND LIFE-CYCLE GREENHOUSE GAS EMISSIONS
Fthenakis, Kim, et al.

Estimates energy payback time of about 1.8 years for bog-standard 13.2% efficiency polycrystalline silicon PV under southern European insolation of 1700 kWh/year.

I haven’t seen any studies that PV modules are lifetime net energy negative, even in pretty low-insolation locations like Scotland, dating later than the 1970s.

Thanks Matt, for your rebuttal of DFC. A somewhat older Sandia study had PV payback of 3years, because the stuff is always improving 1.8 years sound emminently credible. I saw a reference that claimed the insolation difference between the best and worst mainland US sites for PV was only a factor of two (coastal Washingtom versus Mojave desert), I doubt Germnay is worse than coastal Washington.

Obviously, transport with the current paradigm of oversized and overpowered vehicles traveling at high speeds is problematic for electric. I have a plug in Prius, and even with the government and Toyota incentives (I figured zero percent financing assuming a 6% interest rate was a 15% discount), had I based the purchase simply on cost benefit beancounting I wouldn’t have bought it. I’m enough of an energy geek, that a couple of thousand isn’t too much to pay to have an interesting “toy”. But this shows just how far we are from ubiquitous electric transport. Batteries are from from what we’d like, both in terms of performance and cost. And they were a fairly mature technology a century ago. There is no guarantee that throwing money at them will lead to a breakthrough. I have more hope for grid-scae storage. There are a couple of innovative ideas for compressed air energy storage (dealing with the heat of compression is the big issue, otherwise efficiency is terrible). So storage is finally receiving enough attention that it looks like progress is being made.

Batteries are from from what we’d like, both in terms of performance and cost. And they were a fairly mature technology a century ago. There is no guarantee that throwing money at them will lead to a breakthrough. I have more hope for grid-scae storage. There are a couple of innovative ideas for compressed air energy storage (dealing with the heat of compression is the big issue, otherwise efficiency is terrible). So storage is finally receiving enough attention that it looks like progress is being made.

I agree that storage is the remaining big challenge for electrical transportation and dominant use of renewable energy. I think that you’re a little too pessimistic about battery progress. A 1912 Detroit Electric couldn’t go much faster than 40 kph, and it cost $2800 or $3410 depending on whether it had a lead-acid battery or Edison nickel-iron battery, $65000 or $80000 in inflation adjusted terms. A Tesla Model S in that price range has more than twice the range at 3 times the speed, despite being nearly 4 times as heavy and having a much larger interior. This is possible due to large improvements in battery technology, including switching chemistry from lead/acid to lithium ion.

In fact I think that battery technology is already good enough on technical metrics (lifetime, specific energy, power) to electrify 75%+ of the American passenger vehicle market, if the cost were much lower. Lithium ion batteries can contain some relatively expensive materials, such as cobalt, but the finished battery cost is many times that of the purified material inputs. It reminds me of the solar PV market 10 years ago, when completed modules had a much larger cost over the purified silicon that went into them. I don’t know if batteries can demonstrate similar cost reductions but it’s suggestive.