Problems/solutions That May Follow 'peak Oil'

[Martin]

Even the oil industry itself is now admitting consumption is much more than new discoveries, and economists are foreseeing dire effects on national economies.

One big effect is that, as a big proportion of present electricity production is produced by oil-burning power stations, there will be a lot less electricity available when oil gets too expensive for burning.

Also heating bills in a lot of Scandinavia, Northern Europe and North America may quite soon get beyond the ability of households to pay them.

Thailand seems to be one of the best placed countries to cope, since one can live here with no more electricity than is required for a fan.

But the knock-on effects of ever-increasing oil prices will be many and varied.

I have put this topic up as we veered on to it from a News topic today, and will post a sober discussion article from a few days ago when I can re-find it.

[Phil Conners]

A/C can quickly be more expensive than heating.

[Martin]

I have selected pieces of the article that show its main thrust.

It struck me that this was a more sober look at the future than is given in shrill, alarmist circles, such as "Life after The Oil Crash".

Main points from Vidal’s article:

The end of oil is closer than you think

Oil production could peak next year, reports John Vidal. Just kiss your lifestyle goodbye

Thursday April 21, 2005

The Guardian

The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age. ….

"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," he says. ….

Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works. ….

If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."

The study of "peak oil" - the point at which half the total oil known to have existed in a field or a country has been consumed, beyond which extraction goes into irreversible decline - used to be back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly because oil has always been cheap and plentiful.

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from "if" there is a global peak to "when". ….

According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide. He says 18 large oil-producing countries, including Britain, and 32 smaller ones, have declining production; and he expects Denmark, Malaysia, Brunei, China, Mexico and India all to reach their peak in the next few years.

"We should be worried. Time is short and we are not even at the point where we admit we have a problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the peak, which I think is 2008, is tomorrow in planning terms." ….

"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid expansion of industry, transport, trade, agriculture and financial capital, allowing the population to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital."

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There is no company on the stock exchange that doesn't make a tacit assumption about the availability of energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their mindset."

--------------------------------------------------------------------------------------------

It is hardly surprising that we have "a mindset" about energy availability. It has been getting cheaper and cheaper (in real terms) throughout our lives. The only time when we weren't able to consume more this year than last, that I can remember, was 1939 to 1949 in UK, when first the War and then the fact that the country was knackered meant that a lot of power stations went out of action.

[Martin]

A/C can quickly be more expensive than heating.

<{POST_SNAPBACK}>

Agreed. There used to be books for architects on the lines of "Building for tropical climates"; but somewhere around 30 years ago electricity got so cheap that ordinary expats could start affording A/C. and then the dictum seemed to become "Build concrete high-rises and bung in lots of air-con".

But out in the countryside, where there are no close buildings blocking off the breeze, a raised house with just fans (which use little electricity) are quite habitable by 'falangs'.

[plachon]

"Thailand seems to be one of the best placed countries to cope, since one can live here with no more electricity than is required for a fan."

You gotta be kidding right Martin? When was the last time you ventured onto a Thai road and noticed the ever so slight proliferation of gas guzzling pick-ups and 3 litre SUVs whizzing about as if oil flowed in rivers.

When was the last time you went into a mall and noticed the wall of air-cons at the wide open door doing their best to cool the entire planet?

When was the last time you heard a Thai talking about energy conservation? Or saw a university campus where the students (adults and decision-makers of the future) rode around on bicycles, as opposed to motorbikes or the latest model Toyota kindly donated by Khun Paw.

Seen many buildings fitted with solar cells? Or any houses/offices with energy saving features? Or not chop down all the trees for 50 metres around before building their dream house? Or noticed the amazing ability to walk 100 m to the shop for a packet of noodles, rather than get in the car/jump on the bike?

The difference between you being able to live with just a fan and what the majority of the population demand and expect now and in the future, would suggest that Thailand is not in the best position to cope with future energy crisis, unless there's a pretty speedy change in habits. That's just my ten satangs worth - anyone else more optimistic about Thailand coping with oil prices going up to 60, 70 , 80 bucks a barrel?

[ace]

Typical Guardian leftie scaremongering with scant regard to the facts. Oil based economy has a while to go yet, and we will develop new (Hydrogen cell) and better, IMO, technology way before then. Question is, will it ever hit $10 again?!?

[Abandon]

I have been following this issue for years. There are lots and lots of energy saving devices, energy production machines, and free energy machines, that have been developed by inventors.

The reason they are not here and common ?? Well yes, there is a large vested interest in keeping these things quiet, especially in Oil lobbied US state rooms.

But mostly it is because of market rigidity. It is more profitable to refine an internal combustion engine than to develope an external combustion engine. Or take the Bourke engine - never developed...

Vast efficiency savings would come by using compressed air intakes on busses instead of breathing to atmosphere.

Pebblebed nuclear reactors are the way that China will be powering herself in the near future. But there are lots of totally free energy machines developed around the world already (not commercially developed) - The next majour revolution after the information revolution will be the Free Energy one. Roll on the day when oil becomes so scarce that we will be forced to implement all these amazing machines.

[haha]

back when I was in college, I met this guy. can't remember his name. but he lived in the same quad that I stayed in. one night he came up to me screaming out loud that he discovered something that will change the course of history. he said he found a way to decrease the loss of electricity as it traveled from point a to point b.

showed me charts, and all kinds of graphs which I didn't really understand. something about resistance. reducing it to close to zero by using some kind of white porcelain looking stuff that he made. ..I still remember him putting a piece of the stuff in my hand to look at.

now I am not a scientist, but he was so excited. within a week of his outburst, he told me he was hired by some company named rohm - I think that was the company. ..long time ago.

never heard from him again.

I too believe that many oil lobbyist have prevented more efficient means of energy to be introduced into the world because of their greed.

hopefully, that will now change. hopefully, our president will be strong enough to help this change come about.

with globalization occurring at a faster rate, oil will for sure increase in demand.

for the longest time, the usa with about 300 million people consumed most of the oil out there. now, we have china, and india both with over a billion people each progressing to the same level of oil consumption as the usa. imagine when other countries start to progress too.

it's time to wake up and make the gradual switch.

[PeaceBlondie]

The sky is falling very very very slowly. Unless there's an OPEC-type cartel that can avoid assassination attempts, it's very highly unlikely that we'll have a crisis within the next 20 years. And, like the government pension funds that are unfunded, twenty years sounds like an eternity because it's several election cycles into the unknown future.

I'm 62, so except for my grandchildren, do I care enough to limit my lifestyle here in Thailand, when my kids and their kids ride around the USA in SUV's and live almost continuously in air conditioning?

If you're below the age of 30, twenty years is way too far into the future.

Look right here, now, in Thailand. We're paying over 23 baht per litre for 91 octane petrol. Do you see Somchai walking to work?

[maerim]

I have a dishwasher, but she has gone to work, will be back at luchtime.

Does this count?

[otherstuff1957]

Nothing new here. We were talking about this when I was a Geology major in College 25+ years ago. At that time I think the prediction was that Oil would peak in about 2010. I annoyed some of my classmates by predicting that Nuclear energy would become the new standard for power plants.

Edited April 24, 2005 by otherstuff1957

[The_Other_Mac]

I guess the new thing is that 2010 isn't so far away now, and by the way some of us here on TV aren't yet falling apart at the seams

To the genius who mentioned hydrogen, well we have two choices. We can make hydrogen from natural gas (also depleting), or water+electricity. Now, what do you think we make electricity from?

Personally my main use for electricity is my fridge and this computer, and my bill could quadruple without it affecting me in the slightest. If you stop using air-con for a while, your body adjusts. Mind you, it helps that I sit beside an open door and this condo building allows the slightest breeze to blow through.

As for the 3 litre SUVs, I won't cry when they're forced off the road. I live a few metres from the skytrain.

More to the point, I'm glad Thailand is an agricultural country and a net exporter of food. I still worry about keeping those trucks coming to Tescos though.

All of which is completely beside the real point, which is that the world's economy is in big big trouble, starting with the U.S. but most countries do a significant amount of trade with the U.S. So it's looking like an unpleasant recession ahead... well a bit more than that, a depression... and one that doesn't have an end.

[The_Other_Mac]

Unless they invent a magical new source of free energy, that is.

[Gary A]

Depleted nuclear fuel rods are reprocessed by most countries EXCEPT the USA. The USA worries about fissionable material suitable for dirty weapons so they bury the depleted rods. Relatively safe storage has always been a problem but by chopping them and mixing them with high temperature silica (glass) the material remains at a relatively constant 400 degrees F for over a hundred years.

Here's the thought. Why can't we use these hot glass balls and develop a steam engine for vehicles. Lead has a high enough melting point to use for shielding and 400 F is more than hot enough to boil water. I'm not nearly smart enough to know if this could be safe and even if it is not safe enough for personal vehicles couldn't it at least be used for heating systems maintained by the cities that would heat homes? All that wasted heat contributes to global warming anyways so why not use the heat?

[PeaceBlondie]

I was just saying that 20 years is a long time for old people, youngsters, and politicians. But as for radioactive fuel, what's their half-life, and how many MILLION YEARS does it take before the garbage is no longer dangerous? Oh yes, LEAD - a very dangerous substance, as well.

I still don't see how nuclear fuel can be the answer in the long run. The nuclear power industry used to say that a nuclear power plant has a life span of 50 to 100 years.

[Ijustwannateach]

The half-life of your average sample of pure uranium is roughly 4.5 billion years- that's not counting that when it decays, many of the products are ALSO radioactive with their own half-lifes- it doesn't simply turn into half-lead in that time!

Of course, the rods used in reactors are not pure uranium, but nothing to play around with, either.

"Steven"

[Ijustwannateach]

Old-fashioned anti-liberals will yell "yah-boo-sucks," but solar power will always be plentiful and cheap, especially when they iron out the details of launching orbital microwave relay stations to beam down concentrated, collected power to ground-base receiver stations. The only problems will be deciding near whose city to locate them, and how to guarantee they are not used as ground-guided space death-rays- beaming down hundreds of megawatts in a tightly-focussed beam. Well, and how to get them off the ground while NASA is still busy pointing fingers.

"Steven"

[The_Moog]

I'm going to accumulate shares in oil or gas companies as my hedge.

[Martin]

I'm going to accumulate shares in oil or gas companies as my hedge.

<{POST_SNAPBACK}>

Is gold a good hedge?

I was asked for my opinion on this yesterday, and the more I thought about it, the better it seemed. Certainly it looked better than buying a 'Bangkok-condo-to-rent', which we had been discussing on another thread.

But I would like to hear more opinions, as I am only a retired electrical engineer, not an investment analyst.

In the original Vidal article that sparked off this thread, he says:

"Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," ....

but one must have a go at predicting in order to guide one's hedging.

Just doing nothing is, in effect, predicting that things will go on as they are.

One's previous hedges (state and occupational pension schemes and personal saving schemes and some share purchases etc.) were entered into in the expectation that they would suffice for one's old age and leave a useful legacy to the next generation(s) of the family.

Will they suffice, in a radically changed economic regime?

I think that the "Life After The Oil Crash" doommongers are 'over the top'.

It will be more like a car that has been rolling down a gentle, smooth slope finding itself on a steepening, rough surface.

The car will only crash if the driver panics and loses his nerve.

No need for that---my parents were living adequately (albeit differently) when they brought me into the world 70 years ago when oil was a lot more expensive than it is now.

"Adjusting to lower oil-availability" would be a better title for our unavoidable future.

But is getting a stash of gold likely to be a good adjustment?

[BrissyBoy]

Is gold a good hedge?

<{POST_SNAPBACK}>

I have been wondering the same thing.

Many claim that gold has quite a good potential to get to $600 by the end of the year and a lot bigger in the future.

[Khun Jean]

Thailand has the possibility to use hydropower. Where i come from (The Netherlands) we can use wind. All the renewable energy sources are not used to their full potential because it is cheaper and easier to use oil. First thing to do is save energy. this will give time to develop renewable energy. Unfortunately i think we need an energy crises before this will happen. Maybe even fight a war to get control of the oil fields. When such a crises is too far away in the future (+10 year is already far) it will not put people in motion. When prices for oil are 100-200 dollars or more for a barrel renewable energy will get economical. When it gets economical it will be developed and marketed and mass produced.

[buadhai]

Is gold a good hedge?

<{POST_SNAPBACK}>

I have been wondering the same thing.

Many claim that gold has quite a good potential to get to $600 by the end of the year and a lot bigger in the future.

<{POST_SNAPBACK}>

If you think gold is a good hedge, check out what the price was during the period 1979-1981.

Hisorical Gold Prices

[Martin]

Yes, buadhai. But the early 1970's were a time of tight oil supplies and rising prices of oil, and this resulted in a lot of buying of gold as a hedge and the price went up dramatically.

I think that some people are feeling that 2005 onwards may bear a fundamental sameness as then, and the result may be the same.

My memory is that the drop through 1979-81 was a re-adjustment to the panic-stricken hedge buying that had taken gold to a crazy price in 1979. When oil prices levelled off at 'merely' around three times what they had been (as some quite major energy-saving habits kicked in with the western populations) it was seen that the private little hoards of gold could safely be turned back into cash for small-business working capital.

Clearly there are differences between the present time and the early 1970s, but the similarities are enough to make one wonder whether the next year or two or more might not see quite a demand for gold as a hedge against creeping currency devaluations.

But I ain't got no crystal ball---hence my question about what other people were thinking.

[phormio]

... First thing to do is save energy.

Excellent point. Every US school kid is taught that we're 6% of the population, but use up 25% of the resources, of the world. In fact, I'm guessing the US could cut energy usage by 40-50% without too much disruption in their lifestyle if the political corruption, mass ignorance, and failure in leadership could be overcome; There is still time too do this before supply shortages become disruptive, but the window of opportunity for avoiding serious negative consequences appears to be rapidly closing.

As for

...Unfortunately i think we need an energy crises before this will happen. Maybe even fight a war to get control of the oil fields.

<{POST_SNAPBACK}>

.. in case you haven't noticed (unless you're being witty), these wars have already begun.

When such a crises is too far away in the future (+10 year is already far) it will not put people in motion. When prices for oil are 100-200 dollars or more for a barrel renewable energy will get economical....

Lets not forget the negative environmental consequences of burning fossil fuels coupled with the petro-agricultural systems currently being relied upon. It could get ugly, very ugly. If we're unlucky its extinction of homo sapienus - which may not be a bad thing, if you consider that we may do to the universe what we are doing to good ole planet earth. If we're smart about it,

(a very big IF - and I'm entirely unoptimistic about this - having spent 10 years of my life working towards avoiding heading into the mess we're getting into - by going for a phd in Nuclear Engineering to develop fusion power reactors for large scale energy production),

we'll bust our humps to get off the idiotic path we're heading down(first have to throw out the bums who are running the freaking planet though, starting with the ruling classes in the good 'ole USA).

Its refreshing to see the comment above dealing with fuel cells - they are no fix for the problems of energy supply - you still need huge quantities of power for people.

Lets hope people realize that we're all in this together as humans and we are going to have to solve these very serious problems together. It is the only hope.

I am not optimistic.

[Martin]

Don't lose hope, phormio.

Humanity has always been in the position that of being engaged in a desperate race between education and catastrophe.

If hope that education can win the race dies......

(Of course by education I mean "What you have still got when you have long recovered from being incarcerated in bloody schools" (i.e. things like this forum).)

[johnh101]

You want to save some energy, read the article recently in The Independant about the energy wasted whilst leaving houshold equipment on Standby.

Each year they waste enough electricity to power a city the size of Birmingham for a year or keep Britain's street lights burning for four years, and are a major contributor to the emissions which are polluting the atmosphere. Millions of "sleeping" video recorders, set-top boxes, washing machines and radios in homes and offices accounted for one million tons of carbon emissions.....

http://news.independent.co.uk/uk/environme...sp?story=649018

[buadhai]

You want to save some energy, read the article recently in The Independant about the energy wasted whilst leaving houshold equipment on Standby.

<{POST_SNAPBACK}>

This is a valid point, but you also have to think about the cost of turning things on and off. I used to work for a large US Federal Government agency. We had about 70,000 desktop PC's. At one point in one energy crisis or the other we were directed to turn them off at night instead of letting them sleep. Every morning we lost enough monitors and PC's due to the shock for turning them on and off day after day that the order was quickly rescinded and now they leave everything on, night and day.