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This is the final post in a series [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

~ ~ ~

Obama’s outgoing energy secretary, Steven Chu, has frequently lauded the development of ‘clean’ energy technologies. In a February 1, 2013, letter to the employees at the Department of Energy in which he announced that he would not be serving another term, Chu declared that there was ‘innovation revolution’ happening at the agency….
The only mentions of oil in Chu’s parting letter to the employees at the Energy Department were made in reference to the Deepwater Horizon accident in the Gulf of Mexico in 2010, or to America’s ‘dependence on foreign oil’ or to ‘oil addiction.’

I’m no history buff, but I’m comfortable in asserting that there’s been a Republican President or two in years past who has raised the exact same concerns. Now it’s a problem? Why? We’re four decades deep into talking about this concern raised first by Richard Nixon, and the only solution for some is “drill, baby, drill.” That does eliminate the need to think or consider options….

And what’s a good oil industry cheerleading effort without an entirely irrelevant cheap shot while ignoring some fundamentally sound considerations (unless planning in its entirety is now solely a nefarious liberal plot of some sort):

In February 2013, Michael Brune, executive director of the Sierra Club, called shale gas ‘an extreme fossil fuel.’ He stated: ‘Natural gas is not a bridge; it’s a gangplank to a destabilized climate and an impoverished economy.’ He also said that ‘the potential to develop renewable energy is limitless—if we don’t allow ourselves to be seduced by the false economies of cheap shale gas.’ The Sierra Club—2011 revenues: $43 million—isn’t just opposed to natural gas, the cleanest of the hydrocarbons. The group also has a ‘beyond oil’ campaign and a ‘beyond coal’ campaign. The group claims that ‘we have the means to reverse global warming and create a clean, renewable energy future.’

What on earth does the Sierra Club’s 2011 revenues have to do with anything? Since that seems to have some significance, how about mentioning the revenues of the Heartland Institute, or the American Petroleum Institute? (A fair number of related issues were raised here and here, also.)

In the course of his excellent account of innovative progress, Mr. Bryce offers these observations about recent discoveries [my bold/highlight]:

That formation may hold up to 15 billion barrels of oil.

The Shenandoah-2 appraisal well found a deposit that may contain as much as 3.7 billion barrels of oil equivalent.

The Sverdrup field alone contains up to 3.3 billion barrels of recoverable hydrocarbons, making it the largest discovery in the North Sea since 1980.

A recent report by the Boston Company estimated that between 2002 and 2012, more than 100 billion barrels of new oil resources were discovered in offshore locations around the world.

In February 2013, the consulting firm PricewaterhouseCoopers (PwC) released a report that estimated that global shale oil resources could be as much as 1.4 trillion barrels.

[Conveniently omitted is the starting figure in that range: “estimated at between 330 billion and….Big gap, and that’s still only a talking point about resources.]

No argument here with his concluding statement:

Cheap, abundant, reliable energy supplies are essential for economic development.

The problem is one he himself just highlighted: “Cheap, abundant, reliable energy supplies” are not available! Spending billions to drill miles below deep ocean takes care of “cheap and reliable” all by itself. As for “abundant?”

How exactly should we plan for context-free and/or unexplained “may hold up to”; “may contain as much as”; “oil equivalent”, and “recoverable hydrocarbons?” And as I stated in the first post of this series, why isn’t there an explanation that “resources” are just numbers until they can be proven to be recoverable/produced with current technology? (Never mind that economic feasibility is an entirely different matter!) Any idea about how long production might take?

Telling the public that X amount of a possible resource will last X decades at current consumption rates ignores the fact that production of anywhere near those impressive totals will take a hell of a lot longer than X decades—assuming first that current technology allows then to be moved into the reserves column. How’s that math work otherwise?

How costly is the process expected to be? Just how long will it take to get from there to here, and what percentage of that big number has even a chance of being produced—ever? What about quality? Any geopolitical issues to consider? Any refining challenges? Certain about the means of distribution? Any operational problems to worry about?

That’s all just for starters….

The above-stated trillion-plus figure relied upon came from a wildly over-optimistic, fanciful report issued by PriceWaterhouseCooper. The caveats and assumptions [p. 8] upon which the report is based are stories in themselves. I couldn’t help myself, and added bold/italic comments in the brackets:

Scenario assumptions and considerations
The scenarios presented in this report rest on a number of key assumptions:
The successful development of shale oil resources is dependent on the presence of globally distributed, large scale, good quality resources, with overall technical and economic recoverability that is broadly in line with the produced shale oil resource in the U.S. Significant exploration and appraisal will need to be undertaken in future years to prove resource quantity and quality. [Well, Duh! So … a perfect set of conditions and we should be good to go!]
The second key consideration is the timing of large scale development of shale oil resources. Development of shale gas outside the US has arguably been disappointing to date and the same issues (including regulatory obstacles, infrastructure, logistics and skills challenges) may also influence the pace at which shale oil opportunities are pursued outside the US. [For a moment, I thought there might be some issues to be concerned about! But why worry about disappointing development and pesky inconveniences like “regulatory obstacles, infrastructure, logistics and skills challenges?” We should have those cleared up in no time!] We assume that shale oil production outside the US is phased in several stages, starting with small scale production from 2015, building up to one million barrels per day by 2018 and continuing to grow thereafter.
The third key requirement for shale oil to be exploited effectively is a supportive regulatory framework. This also needs, however, to take account of local environmental concerns and to be consistent with national government objectives on decarbonisation and energy security. [Nope .. not seeing any issues or problems here. A phone call or two oughta clear that up!] Different countries are likely to strike a different balance here and this is reflected, for example, in our assumption that shale oil production develops more slowly in the EU than in the US and some other territories.

Seriously?!

Despite many decades of dire predictions of energy shortages, along with the calamity and economic problems that would come from such shortages, the world continues to increase production of hydrocarbons. Those increases are a direct result of continuing innovation in the drilling sector, and those innovations provide plenty of reason to assume that oil and natural gas will remain dominant players in the global energy market for decades to come.

Drilling sector innovations are indeed impressive, but reality suggests some limitations in what we can reasonably expect during our lifetime! So while it sounds wonderful that these improvements “provide plenty of reason to assume” … facts suggest something far more tenuous.

If “plenty of reason to assume” is the strategy and expectation, even deniers might want to ponder that, and its implications. “Plenty of reason to assume” might not be the soundest basis to plan for a complex global future expected to meet the advanced needs of billions of people for decades and decades to come.

Finite resources are still finite. Cheap and Easy have left the building. We might want to start thinking about that more diligently—all of us.

~ My Photo: Rockport, MA – 09.11.10

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/
http://peakoilmatters.com/2013/04/16/peak-oil-denial-sticking-to-the-script-pt-3/
http://peakoilmatters.com/2013/04/18/peak-oil-denial-sticking-to-the-script-pt-4/

http://peakoilmatters.com/2013/04/23/peak-oil-denial-sticking-to-the-script-pt-5/
http://peakoilmatters.com/2013/04/25/peak-oil-denial-sticking-to-the-script-pt-6/

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Oil plays an essential role in almost everything that touches our everyday lives. From the food we eat to the means by which we transport ourselves, our goods, and our services, to what we grow, build, have, own, need, and do, oil is almost always an important element. But the painful truth now and soon is that the ready supply of oil and gas that we almost always take for granted is on its way to becoming not-so-ready—recent production increases notwithstanding.

What happens when there’s not enough to meet all of our demands, to say nothing of those of every other nation—including the many countries seeking more growth and prosperity? What sacrifices will we be called upon to make? Which products will no longer be as readily available? Which services? Who decides? What will be decided? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B? And how will we respond when decisions are taken out of our hands? Where exactly will the dominoes tumble?

There is nothing on the horizon that will work as an adequate substitute for the efficiencies and low cost and ease of accessibility that oil has provided us. We simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is. We’re going to have to be much better, much wiser, and much more focused. **

Here’s the latest contribution to my Peak Oil’s Impact series—observations and commentary on how Peak Oil’s influence will be felt in little, never-give-it-thought, day-to-day aspects of the conventional crude oil-based Life As We’ve Known It. Changes in all that we do, use, own, make, transport, etc., etc., are inevitable. A little food for thought….

For a few years, I attempted to play golf. I attempted well; played poorly. Golf is not something one does on occasion and expect to be anything other than terrible. I’m Exhibit A.

Still, there are worse ways to spend a pleasant spring or summer day than to walk alongside well-manicured and relatively pristine woodland areas.

Until I did just a bit of research, I was not aware that both golf balls [urethane] and golf bags use petroleum as an “ingredient” in their manufacturing processes. Certainly transportation and delivery of those products, along with countless others, make use of fossil fuels in some manner and at some point in the distribution chain.

A ten second internet search suggests that a box of a dozen quality golf balls can cost upwards of $40.00. One site reported that more than 1.3 million balls are lost each day. That’s a lot of money and a lot of production and a lot of energy inputs for items that are lost.

I could, and probably will, write more than just a few paragraphs about golfing and the many aspects of the game which depend at least in some part on fossil fuels for their existence.

But in the interests of keeping these Impact posts short and to the point, I’ll offer this to the millions of avid and not-so-avid golfers:

When the more widespread effects of the peak in oil production is clear to all, meaning less of a readily-available supply and higher prices for what is left, where on the all-important priority scale will the manufacture of golf balls land? My own guess: quite low. Supply and demand then kicks in. Less of a supply; higher prices.

What will that do not just to your golf outings (given that more expensive golf balls will be far from the only impact Peak Oil imposes on the sport) but to golf itself? There will be greater tragedies and sacrifices to be sure, but the enjoyment golf contributes to one’s well-being will be diminished. The cascade of similar impacts in other aspects of daily living won’t help.

Not earth-shattering in and of itself, but worth pondering. Golfers won’t be alone in their misery. Might be nice to consider some alternatives before we have no choice….

~ My Photo: The Ocean Course at the Ritz-Carlton, Half Moon Bay, CA – 09.15.04

** Opening paragraphs adapted from prior posts:

http://peakoilmatters.com/2010/02/15/looking-ahead-to-peak-oil-transition-part-iv/
http://peakoilmatters.com/2010/02/07/looking-ahead-to-peak-oil-transition-part-i/
http://peakoilmatters.com/2010/12/13/thoughts-on-peak-oil-planning/
http://peakoilmatters.com/2011/02/14/peak-oil-a-new-direction-pt-5/
http://peakoilmatters.com/2010/02/25/peak-oil-infrastructure-more-to-discuss-part-ii/

 

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This is the sixth in a series of posts [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post focuses on oil and our warming planet.

~ ~ ~

What even remotely sane/rational person will disagree with this assessment:

Oil is a miraculous substance. If oil didn’t exist, we would have to invent it. No other substance comes close to oil when it comes to energy density, ease of handling, and flexibility. Those properties explain why oil provides more energy to the global economy—about 33 percent—than any other fuel. They also explain why, despite a century of effort, oil still dominates the transportation sector, with more than 90 percent of all transportation being fueled by petroleum products.

All true … and also the big problem for all of us. Finite resources are still finite, and limiting options isn’t our wisest course of action. Simple points worth keeping in mind … while also recognizing that the high prices needed to sustain these impressive displays of drilling and production technology aren’t viewed with the same delight by consumers. When they’re obliged to make changes as a result, the dominoes tumble in many different directions.

So when higher prices curtail demand, investment options narrow. What happens to the “assured,” constant supply then? And after that, then what?

Those facts haven’t stopped Obama, or his political appointees, or leading environmentalists from demonizing oil at every opportunity.

“Demonizing?” Seriously? I’m sure that’s another buzzword sure to enflame supporters, but, come on! (That’s not to say environmentalists don’t use that tactic, but painting all with the same broad brush lacks a few things needed for meaningful discussions and solutions—if those things matter.)

A related question: why laud the innovation in the fossil fuel industry yet chastise the relatively new kid on the block renewables for attempting to do the same—on a field where financially and historically it is way behind? (Worth taking a look at what other countries are doing in this regard.)

Shouldn’t an exceptional nation act and think and plan as an exceptional nation? We’re talking about energy supply. All options need to stay on the table, and the long-term perspective needed suggests we’re already behind in preparing for a different world of energy supply in the decades to come.

At some point, fossil fuel industry supporters can either voluntarily or not accept that (among other considerations): fossil fuels are now more costly and time-consuming to acquire, refine, and supply; they are not as energy “dense” as the unconventionals, so more needs to be made available to provide the same energy bang for the buck; optimistic projections ignore several very important facts: rapid decline rates in shale gas/oil production together with ongoing depletion of finite conventional s and resulting financial/investment challenges; reliance on the expertise of James Inhofe and his merry band of shortsighted climate change deniers won’t protect anyone from the reality of a warming planet.

Let’s not forget this, either:

Not just energy is important here, but net energy.  It’s the energy left over after we find and produce energy that is available for society to do all of its complicated and clever things.
Not only is the world struggling right now to increase global oil production, but all of the new and unconventional finds offer us dramatically less net energy to use as we wish. [1]

Waiting instead until most options are useless … not the approach of intelligent minds.

Who’s to blame is irrelevant at this point! Our planet is warming, changes are already underway, and it’s not getting any better. Is waiting for some cataclysmic event before we all accept reality a good idea?

Choosing to rely on the wisdom and expertise of industry to fashion solutions and adaptations based on reality and evidence and facts seems a bit wiser than keeping fingers crossed that the evidence (and overwhelming majority of professionals who actually know what they are talking about) is entirely wrong. Or more insane, still: thinking that these experts are all part of a vast conspiracy to do … something … for some reason which remains a secret—even to them!

It will screw up ideology to be sure, but future generations will still be around to argue the clumsiness and ignorance of the debate. Better than not being around at all or suffering who-knows-what kind of consequences in the decades ahead.

Just saying….

~ My Photo: Long Beach, Rockport, MA – 10.26.04

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/
http://peakoilmatters.com/2013/04/16/peak-oil-denial-sticking-to-the-script-pt-3/
http://peakoilmatters.com/2013/04/18/peak-oil-denial-sticking-to-the-script-pt-4/
http://peakoilmatters.com/2013/04/23/peak-oil-denial-sticking-to-the-script-pt-5/

Sources:

[1] http://www.peakprosperity.com/blog/80506/really-really-big-picture; The Really, Really Big Picture by Chris Martenson – 01.15.13

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This is the fifth in a series of posts [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post focuses on general considerations about oil exploration and policy.

~ ~ ~

While admittedly impressive—and a genuine testament to ingenuity and technological progress—I’m hard-pressed to understand why devoting nearly 2000 words of this report to the minutiae of drilling enhancements should be extended/interpreted to suggest it’s another nail in peak oil’s coffin. A terrific recitation offered by Mr. Bryce, but … so what? Inventing more powerful vacuum cleaners to suck the last few pennies from the innards of everyone’s sofas is still about sucking those last few pennies here, there, and everywhere.

Perhaps a different strategy and focus would be worth considering? No one doubts there are great minds available to consider other options.

I can’t imagine anyone writing about or involved in energy would doubt the marvels of progress in the industry  as Mr. Bryce meticulously explained, (no matter which side of a debate they might be on). It is extraordinary! But we could just as easily discuss advances over the past century or so in medicine, manufacturing, computers … the list is a long one.

Progress does not mandate abandoning all other approaches. It’s essential that all other options be explored and embraced as needed—assuming progress for the greater good is the objective.

Given a hundred years’ lead time and countless billions in profits available for research and testing, I’d wager the renewables industry might conjure up an impressive innovation or two….Given what’s at stake, that actually might be worth testing out!

[E]very year, the U.S. oil and gas sector is spending more than $120 billion drilling new wells. Given that level of spending, the industry has huge incentives to improve its processes, hardware, training, and personnel.

Of course it does! Who doubts that? Doesn’t that apply to every business? But the obvious question is unchanged: Why go to such lengths and incredible expense, unless…?

Although ongoing innovation in the drilling industry is obvious, the ‘clean’ energy sector is the one that gets most of the attention from politicians, political appointees, and environmental groups.

Which politicians and appointees? All of them? Probably not too many Republicans in that group; but if we mention that, then the complaint loses some steam.

“Environmental groups” are focusing on clean energy? Really? Shocking! What’s that? The oil industry is focusing on oil and gas? Are you kidding? Politicians and appointees are giving those corporations most of their attention? Stop the presses!

Supporters’ instincts are to support who and what they believe in. Shocking! Still, it’s good every now and then to take stock and assess objectives balanced against means. Now and then, different paths are the only way to get “there.” Ideology at all costs would be a cute bumper sticker, but the “at all costs” factor carries a big downside.

All of these astounding investment numbers and complaints also obscure another point the author and his peers seem determined to skirt: the emphasis on renewables is an attempt to actually consider the facts below and above ground regarding our future supplies of finite energy resources and reserves.

Doesn’t every organization expect its leaders to make some prudent policy determinations and strategic decisions about the future by assessing what’s available to meet objectives? Shouldn’t even a minimal recognition that change and adaptation is the norm factor into planning? Given the evidence, how can these other factors be rationally ignored or trivialized any longer? I’ve said it before and say it again: Blind Faith is still and always a better rock band than business strategy.

Single-minded zeal is a hallmark of success, but so isn’t wisdom—and an ability/willingness to adapt as needed. (If not, that’s going to surprise the hell out of a lot of coaches and business leaders in every industry….)

Where’s the wisdom in continuing to shovel piles of money at the wealthiest corporations in this planet’s history so they can continue to be the wealthiest corporations for at least some years longer—consequences to the rest of us be damned? Finite still means finite; harder-to-come-by and more expensive, less efficient energy resources are still harder-to-come-by, more expensive, and less efficient; and oh by the way: more people around the globe are seeking to advance their societies just as we have.

How’s that math supposed to work out if we aren’t exploring all options and recognizing that some paths will inevitably lead us away from where we want to be?

Facts still suck! Perhaps one day (soon) these advocates of the Magic of Technology might devote some of their considerable and impressive talents to providing more information and resources to help our and their children with better and healthier environments—even if that removes a zero or two from the bottom line.

It’s a thought….

~ My Photo: Florida Keys – 02.22.05

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/
http://peakoilmatters.com/2013/04/16/peak-oil-denial-sticking-to-the-script-pt-3/
http://peakoilmatters.com/2013/04/18/peak-oil-denial-sticking-to-the-script-pt-4/

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Oil plays an essential role in almost everything that touches our everyday lives. From the food we eat to the means by which we transport ourselves, our goods, and our services, to what we grow, build, have, own, need, and do, oil is almost always an important element. But the painful truth now and soon is that the ready supply of oil and gas that we almost always take for granted is on its way to becoming not-so-ready—recent production increases notwithstanding.

What happens when there’s not enough to meet all of our demands, to say nothing of those of every other nation—including the many countries seeking more growth and prosperity? What sacrifices will we be called upon to make? Which products will no longer be as readily available? Which services? Who decides? What will be decided? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B? And how will we respond when decisions are taken out of our hands? Where exactly will the dominoes tumble?

There is nothing on the horizon that will work as an adequate substitute for the efficiencies and low cost and ease of accessibility that oil has provided us. We simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is. We’re going to have to be much better, much wiser, and much more focused. **

Here’s the latest contribution to my Peak Oil’s Impact series—observations and commentary on how Peak Oil’s influence will be felt in little, never-give-it-thought, day-to-day aspects of the conventional crude oil-based Life As We’ve Known It. Changes in all that we do, use, own, make, transport, etc., etc., are inevitable. A little food for thought….

With baseball season upon us, I thought it might make sense to dust off and borrow portions of the very first Impact post I wrote nearly three years ago. Edited for clarity, updated just a bit, and restricted to portions relevant to baseball, here it is:

It’s easy enough to mention the fact that balls, and helmets, and cleats are all made with crude oil as an essential component—either in the product itself or used to create/deliver/transport some materials before and after manufacturing is completed. It’s also safe to assume that once we begin dealing with curtailed availability of fossil fuels, some needs will have lower priority than others. Ambulances will probably have access to fossil fuel-based crude oil (gasoline) before manufacturers get the supplies and equipment they need. Obviously there will be ripple effects across the industry when this happens, and the end users (from the junior leaguers and the neighborhood kids all the way up to the professionals) will also have some problems to contend with: either the products will become less available, or they will become prohibitively expensive for many along the chain of users. What happens?

What happens when high school sports programs with limited funds as it is have to replace cleats and helmets and other accessories and their prices have doubled, or tripled, or the helmets and cleats are simply not being manufactured any longer on a scale sufficient enough to meet demand? What happens then?

Let’s also take a broader view. How do teams (high school, college, the pros) deal with travel issues and schedules when gas is much too expensive to enable teams to transport their players even short distances, or when air travel is severely curtailed and wildly expensive because not enough jet fuel is being processed to meet demand (and airports are shuttered because air travel has diminished markedly*), or when the fans cannot afford to put the gasoline in their vehicles that in the past allowed them to attend the games without a second thought?

What happens when half, or a third, or one-tenth the number of fans can afford to attend games because budgeting all that money to drive to an in- or out-of-state stadium no longer makes financial sense? Pure supply and demand: when demand continues and supply is reduced, prices go up. Decisions are then made about where to allocate funds. Does a trip across the state to attend a Red Sox game make more sense than paying for your children’s basic needs for the next few months?

Where will the revenue to pay players come from when the majority of fans are no longer traveling to see the games either because limited gas supplies are now being allocated or it’s simply become too expensive for “frivolous” trips? How do owners continue to fund their vast operations (office staff, marketing, scouting staffs, minor leagues, utility services for the stadiums and training facilities, and on and on it goes)? What happens to the vendors and other suppliers when the majority of fans just stop attending … permanently?

For all their current revenue, what happens to the Red Sox or Yankees when they are scheduled to travel to Tampa Bay, or Texas, or to the West Coast, and it costs a small fortune in fuel costs alone for charter planes? What rail services currently exist that offer a practical alternative? Exactly how far out does the ripple effect extend?

No organization, no group of individuals no matter what their financial status, and no industry that currently utilizes fossil fuels to any extent will escape the effects of Peak Oil. For all the magic and excitement and joy of athletic events, sports will suffer the impact of Peak Oil every bit as much (if not more) than many or most other industries.

What happens then?

~ My Photo: taken at Fenway Park, Boston – 05.05.06

** Opening paragraphs adapted from prior posts:

http://peakoilmatters.com/2010/02/15/looking-ahead-to-peak-oil-transition-part-iv/
http://peakoilmatters.com/2010/02/07/looking-ahead-to-peak-oil-transition-part-i/
http://peakoilmatters.com/2010/12/13/thoughts-on-peak-oil-planning/
http://peakoilmatters.com/2011/02/14/peak-oil-a-new-direction-pt-5/
http://peakoilmatters.com/2010/02/25/peak-oil-infrastructure-more-to-discuss-part-ii/

 

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This is the fourth in a series of posts [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post examines the issue of forecasting.

~ ~ ~

Just wondering: the Manhattan Institute author devoted several paragraphs to what he labeled “doomsday energy predictions,” including the by-now almost obligatory smack down of 1972’s The Limits to Growth with their allegation that the book “predicted that the world would be out of oil by 1992 and out of natural gas by 1993”. Unfortunately, there’s the truth about this allegation conveniently overlooked, as Ugo Bardi points out here and here.

These assertions are another in the line of arguments deniers make all the time as evidence that those of us urging greater awareness and understanding of peak oil are constantly wrong. There’s wisdom in the financial world’s cautionary adage that “Past performance is no guarantee….” Extrapolating statements of some along the way as blanket projections by all is convenient, but accurate? Not so much.

By the way, what makes the deniers’ forecasts any more certain?

It’s more than a bit curious that they consistently and conveniently overlook their at-least-equally sorry-ass track record of predictions (see this, also), which shows a healthy and regular deviation from the ultimate outcomes. But then again, evidence does muck-up a good ideological narrative.

I mentioned at the beginning of this series (and in most of my discussions about peak oil denial)  that the absence of context and a fuller recitation of facts are certainly helpful, but only if not explaining all the essential details is the motivation. For instance, the Manhattan Institute paper offered this statement:

… (C)onsider what has actually happened. Between 1980 and 2011, global natural gas production increased by 129 percent, and oil production jumped by 33 percent. What happened? Why were so many forecasters—including the chairman of Exxon, one of the world’s biggest and most technically savvy companies—so wrong? The answer: all of them underestimated innovation in the Oil Patch.”

Although it’s not uncommon to find variations of these statistics from different sources, let’s agree that the numbers above are correct. There’s no question that production in certain areas at various times in those past thirty years has increased. What’s not mentioned: increases here in the U.S. are still well-below the 1970-1971 peak as predicted (correctly) by the often-maligned M. King Hubbert; and crude oil production has been on a plateau for almost a decade. Among many analyses detailing that fact is this [ links in original quote ]:

US Energy Information Administration (EIA) data confirms that despite the US producing a ‘total oil supply’ of 10 million barrels per day, up by 2.1 mbd since January 2005, world crude oil production and lease condensate – conventional production – remains on the largely flat, undulating plateau it has been on since it stopped rising that very year at 74 million barrels per day (mbd).
The IEA’s  ‘World Energy Outlook’ actually corroborates this picture – but the devil is in the largely overlooked details….
[T]he report’s projected increase in ‘oil production’ from 84 mbd in 2011 to 97 mbd in 2035 comes not from conventional oil, but ‘entirely from natural gas liquids and unconventional sources’ (and half of this from unconventional gas including shale) – with conventional crude oil output (excluding light tight oil) fluctuating between 65 mbd and 69 mbd, never quite reaching the historic peak of 70 mbd in 2008 and falling by 3 mbd sometime after 2012. [1]

And Robert Rapier offered this:

Because U.S. production has fallen over the years (even though production has been rising, 2011 production was still 31% below the peak level of 1970) and because global production has risen, the U.S. percentage of global crude production has declined from 24% in 1970 to 9% in 2011….
One final note about oil production that gets very little attention is the fact that the 83.6 million barrels produced in 2011 is of a lower quality than the 32 million barrels produced in 1965.

Saudi Arabia’s production is in decline [see this discussion of mine with its additional references]; conventional crude oil fields continue their inexorable depletions ** [a critical fact never mentioned by peak oil deniers—all the more critical since current rates of production from shale aren’t exceeding those rates of decline and depletion, leaving us essentially on a treadmill—as China/India demands screw up the math even more); current oil exporting nations are keeping more of their production to meet domestic needs, as Jeffrey Brown takes great pains to explains via his Export Land Model (see this, along with other links and Jeffrey’s clarification in the Comments), and so the challenging future we urge officials and the public to consider more carefully rounds into shape because of reality. An amazing concept!

Amazing too is how a fuller offering and explanation of facts provides a different perspective on energy supply reality.

More to come….

** [Kurt Cobb has a nice summary here]

~ My Photo: Key West, FL – 02.24.06

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/
http://peakoilmatters.com/2013/04/16/peak-oil-denial-sticking-to-the-script-pt-3/

Sources:

[1] http://truth-out.org/opinion/item/13629-age-of-cheap-oil-abundance-a-myth; Rosy Forecast of Cheap Oil Abundance, Economic Boom a Myth by Dr. Nafeez Mosaddeq Ahmed – 12.31.12

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This is the third in a series of posts [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post continues with a brief discussion on taxes and subsidies. As with most issues, one set of convenient facts tends not to be the whole story … not even close.

~ ~ ~

Mr. Bryce’s report offers this:

In 2011, according to the Congressional Budget Office, federal tax preferences for the energy sector totaled $20.5 billion. Of that sum, $2.5 billion was allocated to the hydrocarbon sector. Producers of (non-hydro) renewable electricity—the vast majority of which came from wind energy— received production tax credits worth $1.4 billion. Non-hydro renewable-energy projects also got $3.9 billion in federal stimulus funds, and producers of ethanol and biodiesel got an additional $6.9 billion in the form of tax credits. In total, the non-hydro renewable-energy sector got tax preferences worth $12.2 billion, or nearly five times as much as those provided to the hydrocarbon sector. And the renewable sector got those tax preferences despite providing about 2 percent of America’s total energy needs. Hydrocarbons provide about 87 percent, and oil and gas together provide nearly 60 percent.

I’ve read just enough articles, studies, and op-eds discussing tax preferences, credits, etc., etc. to know that (a) I’m not the one anyone should rely upon for in-depth analyses of these complex issues, and (b) both proponents and opponents can and do select their own set of tax laws, preferences, credits, subsidies, dodges, etc., etc. to make a strong argument for one proposition or another.

I’ll defer to this author’s expertise and accept that the specific issues he raised are factually correct. But they’re a distraction to the issue of energy supply. That’s the important matter affecting all of us. Getting supporters overheated about important but ultimately secondary financial issues may serve a purpose, but it’s not the one we should be focusing on.

As an aside, here’s my own contribution to cherry-picking and borderline relevancies: it seems that federal legislation is serving as ExxonMobil’s very own Santa Claus right now, in the wake of the god-awful oil spill in Arkansas. This terrific article informs us that this corporate giant had no obligation to pay into the clean-up fund which will cover the costs of the spill. How nice! Wonder how that found its way into the statutes? (And there’s been a “no-fly” zone over the spill guarded and enforced by … ExxonMobil! The explanation for that would be…? See William Boardman’s excellent yet disturbing account here.)

However, as is usually the case but not usually mentioned when these types of fiscal issues are raised, there’s another set of facts worth considering, carrying their own weight and significance.

In conjunction with The Hamilton Project, a recent study by Prof. Joseph E. Aldy of Harvard University offered this:

Today, the U.S. government effectively transfers by way of tax expenditures more than $4 billion annually from taxpayers to fossil fuel producers (primarily oil and gas firms) with very little to show for it….
Unlike the tax credit that supported fracking for natural gas, none of the current tax expenditures for fossil fuels targets novel techniques or explicitly promotes innovation….
In total, there are twelve provisions in the tax code that subsidize activities associated with the production of fossil fuels that impose an estimated $41.4 billion ten-year revenue loss on the federal treasury (Office of Management and Budget [OMB] 2012). Revenue losses may turn out to be even higher, as the significant increase in domestic drilling activity— there were four times as many rigs drilling in the United States in 2012 as there were in 2008 (Morse et al. 2012)— could translate into greater claims on these tax preferences….[1]

Skewed? Ideology is rarely a shield to facts. [But, to be fair, Robert Rapier challenged the “$4 billion in subsidies per year” argument (here)].

So the debate over interpretation of tax benefits vs. tax favoritism is not likely to end any time soon. And while that rages, we’re still dealing with realities of depleting conventional oil fields; inferior, harder-to-extract and more expensive unconventional supplies, and a host of other considerations covered in this series and by many others. That is still the issue.

There is no alternative to oil that can be as easily extracted, transported, stored and used as oil.  There is no alternative to oil that will let us continue our lifestyles unaffected. To misunderstand this critical point is to misunderstand the predicament that peak oil puts humanity in entirely. [2]

More on the way….

Update (04.22.13): Shortly after posting this, I came across a September, 2011 report by Nancy Pfund of DBL Investors, and Ben Healey [What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future].
The Executive Summary offered this [the charts referenced below can be found in the original PDF]:

–  As a percentage of inflation-adjusted federal spending, nuclear subsidies accounted for more than 1% of the federal budget over their first 15 years, and oil and gas subsidies made up half a percent of the total budget, while renewables have constituted only about a tenth of a percent. That is to say, the federal commitment to O&G was five times greater than the federal commitment to renewables during the first 15 years of each subsidies’ life, and it was more than 10 times greater for nuclear.
–  In inflation-adjusted dollars, nuclear spending averaged $3.3 billion over the first 15 years of subsidy life, and O&G subsidies averaged $1.8 billion, while renewables averaged less than $0.4 billion.
The charts below clearly demonstrate that federal incentives for early fossil fuel production and the nascent nuclear industry were much more robust than the support provided to renewables today.

~ My Photo: Monterey, CA – 08.31.04

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/

Sources:

[1] www.brookings.edu/research/papers/…/eliminate-fossil-fuel-subsidies; Eliminating Fossil Fuel Subsidies by Joseph E. Aldy – 02.26.13
[2] http://www.southernlimitsnz.com/2012/06/myth-busting-polyannas-1-roger-harrabin.html; Myth Busting The Polyannas 1: Roger Harrabin by Andrew McKay – 06.25.12

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An observation worth noting … and pondering, from Kjell Aleklett:

The IEA now considers that conventional crude oil production reached its maximum in 2008 and that it will decline by 2035. We, the IEA and IHS CERA all agree that crude oil production from currently producing fields is declining by 0.4 Mb/d per year  [see Update below] and that the oil industry will not be able to compensate for this decline with new conventional crude oil production. We see that the total of current production and planned new production from the Canadian oil sands gives a level of possible production in 2020 of 3.2 Mb/d. This means that 15 years of expansion of Canadian oil sands production does not replace even one year’s decline in production from existing conventional crude oilfields. At the same time we can note that it is doubtful if, in 2020, there will be sufficient refinery capacity to handle 3.2 Mb/d.
Canada’s oil sands will not stop Peak Oil.

The news isn’t any matter from shale (tight) oil production in the Bakken and Eagle Ford basins, either—Happy Talk from industry shills noted and notwithstanding. And the Arctic? Seriously?

Denial remains a strategy, as does barreling headlong into a wall. Not the best of choices, but they remain available.

Math being what it is; reality being what it is; and geology being what it is as well, perhaps we might persuade at least a few more “leaders” in industry, media, and government to start explaining reality to the public so that more of us can get on with the essential business of planning?

Update (04.21.13): Thanks to Jeff O. who noted the typo in the quote above [which I’ve now boldfaced]. That should read “… declining by 4.0 Mb/d per year…”

~ My Photo: Seals in La Jolla, CA – 02.24.06

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This is the second [first here] in a series of posts examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post will focus on a few of the production and research funding figures highlighted by Mr. Bryce.

~ ~ ~

In 2012, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859. In 2013, the Energy Information Administration expects production to rise yet again, by 815,000 barrels per day, which would set another record. Domestic natural gas production is also at record levels.

Correct, although Chris Nelder pointed out (here) the fact that monthly gas production had apparently not exceeded the totals from January of 2012, at least as of a few months ago. I guess we’ll all have to wait until early next year to confirm.

Stating a primary theme of the paper, the author notes:

The dramatic increase in oil and gas resources is the result of a century of improvements to older technologies such as drill rigs and drill bits, along with better seismic tools, advances in materials science, better robots, more capable submarines, and, of course, cheaper computing power.

Shouldn’t we expect that from pretty much every industry and technology?

Advocates of solar, wind, and other renewable technologies like to claim that the innovation occurring in that sector will transform the energy landscape.

Shouldn’t we expect innovation and improvement from renewables technology as well? Aside from the fact that this would be done at the expense of the Manhattan Institute’s benefactors and audience, what’s the problem?

Environmental groups like to point out that in 2012, some $268.7 billion was spent globally on ‘clean energy.’ But many of those same advocates for renewables ignore the innovation—as well as the staggering sums of money being spent—in the oil and gas sector. In 2012 alone, global spending on oil and gas drilling totaled more than $1.2 trillion, more than four times the amount being spent on ‘clean energy.’ Of that sum, approximately $400 billion was spent in North America alone. The vast amount of money being spent in the drilling sector, combined with the ongoing innovations, has had a clear result: over the past century or so, oil and gas drilling has been transformed from an industry dominated by hunches and wildcatters to one that is more akin to the precision manufacturing that dominates aerospace and automobiles.

It sounds good, but in the big picture, so what? (Which advocates are ignoring those efforts? Might it be that their focus is simply not quite so narrow?) Should we be surprised that after a “century or so” we’re witnessing great technological advances? It would be fairly appalling if that wasn’t the case! And don’t those “vast” sums expended suggest this might not always be such a good thing?

Despite the advances in oil and gas production, government policies continue to be skewed toward renewable energy.

“Skewed”? The fossil fuel subsidy issue might offer a different notion about what’s actually “skewed.” Since Mr. Bryce makes it a point in his report of touting the International Energy Agency [IEA] estimates, perhaps he might be interested in the reported observations of the IEA’s very own Dr. Fatih Birol:

The International Energy Agency’s (IEA) chief economist has today again urged governments around the world to end the $0.5tr of annual subsidies given to oil and gas production, while also warning that policy instability has become the greatest challenge facing renewable energy markets….
Dr Fatih Birol described fossil fuel subsidies as ‘public enemy number one’ for the production of sustainable energy.
Figures from the IEA show that global fossil fuel subsidies jumped to $523bn in 2011….
‘On one hand these countries talk about renewable energy, efficiencies and climate change, and at the same time subsidises fossil fuel energy – [it] does not make sense,’ he said. ‘All the countries and governments of the world need to pay attention to this issue.
‘In the presence of these fossil fuel subsidies… we have no chance whatsoever to meet these climate change targets and provide room for renewable energies to compete with coal, oil and gas as they are artificially cheap as a result of those subsidies.’ [1]

I’ll end on that note, and continue the discussion of taxes and subsidies in my next post.

~ My Photo: Florida Everglades – 03.02.12

Sources:

[1] http://www.businessgreen.com/bg/news/2241226/iea-chief-fossil-fuel-subsidies-are-public-enemy-number-one-for-green-energy; IEA chief: ‘Fossil fuel subsidies are public enemy number one for green energy’ by Jessica Shankleman – 02.04.13

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The latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism—is a nearly 6800 word ode to the technology wizards and ingenuity gods of our fossil fuel industry, courtesy of the Manhattan Institute. (I’ve commented on that organization’s efforts before: here and here.)

Good to be consistent. Disingenuous at best; wrong in other matters, but consistent.

The deniers’ script is a simple one, and almost always featuring these same talking points [discussed at greater length in a prior series; links below *]. This latest effort does not disappoint:

1. Be certain to mention—falsely, not that it matters—that we proponents of peak oil, who are concerned about the challenges we’ll all confront as a result, continue to insist that we’re “running out of oil.”

2. When discussing production or “possible/potential, etc.” current and future supplies, be sure to indicate that production increases have been “dramatic/staggering, etc.,etc.” and that the supply is “vast/massive/will last for centuries, etc., etc.”

3. Related to “strategy # 2”: freely interchange the terms “reserves” and “resources,” but with an important caveat to both # 2 and # 3: never explain the critical distinctions and do not supply context. Facts screw with the ideology and the Happy Talk, and we can’t have that, Right?

“Our side” then replies with slight variations of the following rebuttals—which I’ll elaborate upon in this new series:

1. Just about every writer/analyst relying on fossil fuel production facts in support of our position never make that “running out of oil” claim. We thus repeatedly point out the lie, and duly note that the straw man argument is the product of the deniers’ vivid imaginations and questionable motivations.

We then move on in faint hopes that some honest discussions might take place soon. But that might benefit the public, and we can’t have that, Right?

2. While acknowledging that the U.S. has indeed and in fact witnessed a remarkable surge in production (due in no small part to hydraulic fracturing, a/k/a “fracking”—a remarkable technological innovation), we then add more facts and context.

A novel concept, but we like it. The story becomes a different one, to be sure, but reality will do that to the best of ‘em.

3. We then provide the not-even-a-little-bit-complicated explanation about the difference between “reserves” and “resources.” (I’ll get back to these points, of course.)

The difference between the two terms is fundamental to any discussion about fossil fuel production and supply. It’s almost inconceivable that those ardent deniers don’t understand that basic distinction and how important it is to any honest, meaningful discussion about our energy future. Hurling big numbers at readers without a glimmer of context or clarification is … well, draw your own conclusions. At the very least, it’s certainly a curious tactic.

Part of that very simple offering to make the distinction clear for readers is a related question addressed to but as-yet unanswered by the deniers: Why do they do and say these things?

I’ll get into more of this in my next post.

~ My Photo: storm damage from Nemo, Good Harbor Beach, MA – 03.10.13

* referenced links to the Peak Oil Denier Test Criteria series:

http://peakoilmatters.com/2011/11/15/spot-the-peak-oil-denier-test-criteria-pt-1/
http://peakoilmatters.com/2011/11/22/spot-the-peak-oil-denier-test-criteria-pt-2/
http://peakoilmatters.com/2011/11/29/spot-the-peak-oil-denier-test-criteria-pt-3/
http://peakoilmatters.com/2011/12/06/couldnt-resist-peak-oil-denier-test-criteria-pt-4/