Peak Oil Matters

I’ve touched on the theme of transportation previously (here), and would like to devote the next couple of posts to exploring this vital topic a bit more.

“The automobile industry simply can no longer rely on oil to supply 98 percent of the world’s automotive energy  requirements.” Robert A. Lutz, General Motors’ vice chairman for marketing

Changes are coming. Not necessarily soon, but not too long from now, either.

Peak Oil will leave us with few options but to change—drastically—how we transport our goods, our services, and ourselves. Once production of oil reaches its peak (and there’s enough evidence to suggest that’s probably already happened), we’ll all begin seeing cutbacks here and there, rising prices that don’t really come back down much, if at all, and a dawning realization in industry, government, and its citizens that what we once had so easily and freely will no longer be ours again.

I’ll say again: this is not happening next week or next month, and probably not in the next year or two. But the scope of changes necessitate that we start acting as if they’ll change then, because we’ll have a lot of prep’ work to accomplish first.

This great recession has impacted almost every segment of society, transportation as much any other. Two of our Big Three automakers nearly ceased to exist; vehicle miles driven has been in a more or less steady decline for several years now; auto sales have plummeted, and that recovery will likely never reach its peak again. If lost jobs didn’t do it, then the fear kept buyers away.

The days of our auto-centered life may very well now be in our rear view mirrors. The recession has forced many families to abandon not just plans to buy or add new cars, but to cut back on the ones they already owned. Last year, more autos were scrapped than purchased, and trends suggest that will continue.

In my generation, owning a car as a teen was almost a religion. Not, not so much.

If we wanted jobs to pay for cars, we rarely had much trouble finding one, or two. Today’s teens clearly do not have that option, and since Moms and Dads aren’t usually in a position to buy one for them, that market segment has seen a marked change in purchasing in these last couple of years. More environmentally-conscious youths are more concerned about pollution and global warming and other consequences stemming from autos, so their urgency in owning a car may be curtailed in part for those reasons as well.

In the not-too-distant future … perhaps a decade or two at most, both suburban and urban modes of transportation will likely be very different creatures than the several thousand pound giants we use today to travel that long one-third of a mile to the store or bank. (The vast majority of Americans travel less than 50 miles per day.) Even though more people now live in urban area than anywhere else, the many who still reside in rural areas will be severely impacted. What will they do?

The simple fact that oil/gasoline will be both prohibitively expensive and not-so-easily obtained will mandate different ways of meeting our various needs. Our metropolitan areas will have no choice but to re-fashion themselves in ways more conducive to smaller modes of transport, with electric grids capable of “fueling” the vehicles of tomorrow, and urban and industrial design geared more towards walking and biking. Of necessity, most of our consumer needs will be met more locally than they are now.

We’re unlikely to discover, refine, and mass produce technologies or alternative sources of energy fast enough to permit a seamless transition to a new generation of those heavy, 5, 6, or 8 passenger beasts that dominate the roads today. We likely won’t have as many passable roads then! Repairs and maintenance will no longer be economically feasible in many instances. Asphalt will be harder to come by, as it already is.

This all sounds terrible because it will be so … different. What?! I can’t own a BMW 7 series and a Lexus SUV? I can’t even own one of them? How about just a basic Ford F-150 or a Honda Accord? No? No way!

Trust me: I’m one of those people! As I stated in my very first post, I am not Peak Oil’s poster child. My wife and I own a German luxury vehicle; we own a Japanese luxury SUV; and we own two more cars (one brand-spanking new) for our three children. I’m not even a little bit happy that someday in the not too distant future my enjoyment of these kinds of vehicles will be fond memories of  “the good old days.”

I’m not nearly smart enough to know with any certainty whether electric or hybrid vehicles will actually work in years to come. Is it even possible to mass produce those alternatives in anywhere near enough quantities to replace the several hundred million cars we now own? How can that possibly work?

But with changing demographics and a soon-to-be-urgent need to reconfigure our urban areas to reflect an increasingly car-less society, I do know that in just a couple of short decades, our modes of transportation will be different; our communities will be different; our ways of life will be different. I’m an optimist, so I’m thinking “different” will be okay, and maybe even a lot better. Quieter.

It’s all about what we do with the opportunities we’re now presented.

Truth is, we won’t have any choice. Using whatever precious reserves of oil might then be feasible for extraction to fill up cars and SUVs and pickups will seem insane to most of us.

Suburban sprawl will pose new challenges for us in the years ahead. Largely designed for access by automobiles, those far-flung residential centers will require a new face and new means of egress and ingress. Of necessity they will have to be more self-sufficient. The challenges are daunting, make no mistake. The sheer volume alone is staggering to contemplate. It’s easy to understand why those transitions will not take place in a time period anyone could rationally consider “short.” Opportunities….

We need to begin planning now for a 21st century transportation system, one that addresses our desires and expectations for mobility, productivity, and a better, healthier environment. We can’t afford to get caught wondering “what the hell happened?”

We’re ten years in already. We cannot be having these same discussions at the outset of our next decade.

Next: More Transportation Considerations

Following up once more on my January 11th post about China’s increasing demand for oil (http://peakoilmatters.com/2010/01/11/the-world-of-transportation/), some more information courtesy of Tom Whipple and today’s Energy Bulletin:

China ended 2009 with oil imports averaging some 5 million b/d in December for the first time ever. Chinese demand is  expected to remain strong in 2010….Evidence abounds that China now is growing at an extraordinary pace

The Chinese Expressway system is growing in length so fast that it will likely surpass the US Interstate Highway system in two  years…Between the rapid growth of private passenger transportation, and the remaining diesel powered railroads, Chinese  transportation is probably almost as oil dependent as US transportation

Source:

http://www.energybulletin.net/node/51213 – Peak oil review – Jan 18 by Tom Whipple, ASPO-USA

On the heels of my post earlier this week regarding automobiles (http://peakoilmatters.com/2010/01/11/the-world-of-transportation/) and the impact on Peak Oil resulting from the increasing worldwide demand (notably in China and India), a recent article from the Financial Times notes the following:

China yesterday underlined the power shift from western car markets to Asia as data confirmed car sales in the country shot up  last year and the government said it expected a strong 2010.

Car sales rose by nearly 53 per cent to 10.3m while total vehicle sales – including buses, trucks and the small commercial vans  that powered much of last year’s growth – rose 46.2 per cent to 13.6m units.

This allowed China to coast past the US and become the leading global auto market, several years ahead of expectation. US  cars and light truck sales last year were 10.4m.

More demand for oil … and it’s not going to stop anytime soon. Just one of the many little facts about oil usage we ought to keep in mind.

Source:

http://www.ft.com/cms/s/0/ca637a30-ff1a-11de-a677-00144feab49a.html?nclick_check=1  – China vehicle sales underline power shift By Patti Waldmeir, January 12

Hello again, and Happy New Year!

I’ll now be posting with greater frequency, and hope that you’ll feel free to offer commentary on these posts and the ideas they generate.

So far I’ve tried to set out some of the basic considerations about Peak Oil. As I stated at the outset, I’ll leave it to others more knowledgeable than me to provide more detailed analyses and greater technical material in their own posts. To that end, I do hope you’ll consider reviewing the sites suggested in my Blog Roll.

The theories and overviews about Peak Oil are of course vitally important. We need a solid grounding on this subject in order to not just properly understand Peak Oil and its implications; so too do we need that level of understanding in order to begin addressing the challenges that will confront us in the years to come.

Overnight fixes are not an option, and a reliance on the magic of technology may prove to be a horrendous miscalculation.

I’ll continue to provide more information about Peak Oil in future posts, but today, I’d like to take the opportunity to provide some very basic considerations about the ubiquitous automobile. Most of us own at least one, and most if not all of us drive. The automobile is one of this country’s most prominent success stories (at least until this Great Recession), and the lifestyle promoted and encouraged by the great American (and European and Japanese) car is a hallmark of our society. (My family owns models from all three categories.)

Ours is a culture defined in no small part by the automobile and the images of success and freedom ownership has afforded us. It is a great American story!

Our highway systems, residence in our countless suburban locations, mall-shopping, the daily commute, and innumerable other aspects of our daily lives (most of which we barely give a first thought to, let alone a second) have been created, designed, and perpetuated on the ready availability of cheap oil and the expediency of automobile travel. Our continuing love affair with the automobile remains unabated notwithstanding our current economic downturn, (and is one I am just as guilty of embracing as anyone).

More driving has lead to more driving, which means more oil/gas consumption. The United States uses more than nine million barrels of oil per day for our cars and trucks [1], which translates into several hundred million gallons of gas each day. We cannot afford to continue our belief that the supply of cheap oil and cheap gasoline will continue indefinitely. Just today, we’re seeing signs that gas prices are starting to inch up yet again. It’s a trend we’re going to have to become accustomed to.

From our local urban planning decisions and zoning by-laws to our national transportation legislation and construction and everything in between, there are few state/city/neighborhood planning aspects that have not been predicated on automobile usage. For all the talk of public transportation and biking, we’ve built our lives as we know it on our ability to just jump in the car and drive. I doubt there are many of us who would instantly know what to do to meet daily responsibilities and needs without the beloved automobile parked just outside our doors. Few things required to sustain us in daily living (or for our enjoyment, for that matter) have been designed for access via alternative transportation. It’s almost all about the car.

(In just fifteen years, it is estimated that the U.S. will have to import seventy-five per cent of the approximate thirty million barrels per day of consumption we’re expected to require. Two-thirds of that is devoted to our transportation needs. [2] How can we sustain this?)

And therein resides a looming problem few of us are aware of, and even fewer know how to deal with … yet. More opportunities….

We’ve seen automobile mileage totals drop by nearly 100 billion miles per year during this Recession. It’s likely that trend will persist into the foreseeable future, notwithstanding occasional rises in usage. That’s wonderful from an environmental standpoint, but it comes at a price … our way of life as we’ve known it is changing. That may not necessarily be a bad thing, but it is fraught with great uncertainty.

How well we choose to prepare now will determine how effortless, or how disruptive, this transition will prove to be. It will take a great long while to unfold, but unfold it will.

Those of us hoping that gas prices will remain low (or at least low enough that we can justify traveling here and there just as we always have) may be in for a rude and unpleasant shock. My prior posts have attempted to provide the simplest overview of the problems we’ll be confronted with in the face of Peak Oil. I can only suggest that they be given due consideration.

A Goldman Sachs Group Inc. report suggests that the number of automobiles in use in China by 2050 will approach a half-billion (and even more than that in India). By 2010, China will have 36 times more cars than it had twenty years earlier! Hello! [3]

Economists at the International Monetary Fund estimate that the number of cars worldwide will more than quadruple to 2.9 billion in 2050. They expect China’s car fleet will have overtaken America’s (which itself will have increased by more than half) in just twenty more years, and by 2050 their prediction is that China will have almost as many cars as the entire world has today. India isn’t too far behind, as estimates suggest that that country will by 2050 have 45 times the number of automobiles on the road as it has today. [4]

China expects to add 120 million vehicles over the next decade, requiring 11.7 million barrels per day of new crude oil supplies. (As noted in the sourced material, that’s more than Saudi Arabia’s entire annual output—and all of that just to provide for China’s new cars!) [5]

The International Energy Agency recently estimated that the total number of motor vehicles could increase to as many as 1.2 billion by 2013, from the current 800 million.
 
Where is all the extra oil/gasoline to power those vehicles supposed to come from (to say nothing of the increasing non-transportation energy requirements)? Which nations will be required to curtail their usage and slow down the pace of their progress in order to feed this enormous appetite?

World population is not slowing down. And with the rise in population and the desire of developing nations to enhance the way of life for their citizens, more energy is a fundamental necessity to ensure the prosperity they rightfully seek. What are we to do?

All the wishing and hoping in the world won’t change the fact that we are simply not finding enough oil fast enough to meet increasing need. We may be okay right now, but it’s not going to take too much longer for the scales to tip. Then what?

A recent Business Week article touted a new project in the Netherlands that is expected to produce 120 million barrels of oil over a twenty year period, hailing it as an indication that we indeed have, as the article’s title suggests, “Endless Oil.” [6] Twenty years to produce an amount of oil that, if 100 % of it became available at breakfast this morning, would have been consumed by dinner tomorrow. This is what we rely on?

Can we afford to devote so much of ever-declining quantities of precious oil just so we can all drive around? That’s a question we’re all going to have to start pondering. Better to ask it a day too early than a day too late

Next: Some Other Things To Think About

Sources

[1]: http://www.washingtonpost.com/wp-dyn/content/article/2008/07/26/AR2008072601025.html?sid=ST2008072601558&pos= This Time, It’s Different: Global Pressures Have Converged to Forge a New Oil Reality By Steven Mufson, July 27, 2008
[2]: http://world.mediamonitors.net/content/view/full/53791 – A Vision for Change: An American Energy Policy by William John Cox, August 18, 2008
[3]: http://www.peakoil.com/modules.php?name=News&file=article&sid=47228 (citing a 3/30/09 story published in the Miami Gerald and also referencing Daniel Sperling and Deborah Gordon’s book, “Two Billion Cars: Driving Toward Sustainability” (Oxford University Press, $24.95)
[4]: http://www.economist.com/specialreports/displaystory.cfm?story_id=12544947 “The art of the possible” – Economist magazine, Nov 13th 2008
[5]: Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century – Brian Hicks and Chris Nelder, (p61). Wiley Publishing. See also  http://www.profitfromthepeak.com/
[6]: http://www.businessweek.com/magazine/content/10_03/b4163046952385.htm – “Endless Oil: Technology, politics, and lower demand will yield a bumper crop of crude” By Stanley Reed, January 7, 2010

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In order for us to begin thinking differently about Peak Oil and its implications, and to begin envisioning what kinds of changes we can make (and will likely have no choice about), we should first understand our oil situation and consumption. This post is an introduction.

If the Peak Oil proponents are correct, we are in for a rude awakening in the near or immediate future (as measured against our ability to transition effortlessly to new energy sources).  Many of us won’t understand why. I’d like to help.

At first glance, addressing the potential fuel/oil replacement problems will appear to be quite daunting. A second glance will suggest that we have incredible opportunities to effect changes that could carry us for decades to come into a safer, cleaner, prosperous future.

At the risk of excess hyperbole, we may very well be at the dawn of a potentially new industrial and economic revolution, if we all understand what’s involved and what’s at stake….I won’t even pretend that this will be easy. It won’t be. But we own the choices. We can prepare, or we can ignore and keep our fingers and toes crossed that some way and some how, we’re going to find the tens of millions of barrels of oil everyone is going to need each and every day, and that we will continue to find those same/increasing amounts … well, forever. I’m an optimist, but not that much.

For those of us more familiar with peak oil statistics, this is a popular one: The United States represents approximately 4% of the world’s population, yet it consumes more than a quarter of the world’s oil each year. (By way of comparison, Europe’s population is nearly 50% greater than ours, yet it uses less than half of the oil we do.)

We own more than a quarter of a billion 2-axle vehicles, and have approximately 200 million drivers. For those of us near large cities, most days it seems as though all 200 million drivers are parked on the same highways as we are.

Two-thirds of the nearly seven billion barrels of oil we use each year is used by those same quarter of a billion cars, trucks, and vans. That’s more than any other nation’s total usage! Almost 90% of America’s workforce uses those cars and trucks to get to work. Our gas mileage standards are remarkably poor for a nation such as ours, and so we waste a tremendous amount of oil and gas. (One estimate suggests that lost productivity and wasted fuel caused by traffic congestion in the U.S. costs us more than $80 billion per year. And German auto mileage standards, for example, are nearly twice as high as ours.) This is not good math.

Another estimate suggests that the 20 million or so barrels of oil we use each day translates into 10,000 barrels of oil per second!  (I won’t do the math to verify it, but feel free to do so on your own.)

About 60% of our oil is now imported, to the tune of hundreds of billions of dollars each year. Those numbers will only increase as time passes. Fifteen years from now, it’s expected that we’ll be importing close to 75% of the oil we need. Some suggest the amount will be much higher. Other nations (notably China and India) are increasing their oil consumption exponentially. At some point limited supply will crash headfirst into increasing worldwide demand as more and more nations seek to improve their standards and emulate our way of life. What happens then?

Our military alone uses close to half a million barrels of oil each and every day. Its entire infrastructure has been built on the foundation of readily-available oil. Limit oil’s availability or supply and what happens to our military operations, our national and international commitments, and the protection of oil transport from the Middle East?

Fortunately, we’re already seeing signs that the military leadership understands this. The rest of us ought to start doing so as well. As I try to emphasize, this is either a disaster in the making or an incredible opportunity. I am an optimist on that score.

We’re sending hundreds of billions of our dollars to Saudi Arabia, Russia, Venezuela, and many other nations each year—dollars we no doubt could find good use for here in the United States. We do so in part because our oil peaked in production about 40 years ago. (Even Prudhoe Bay in Alaska, our largest oil field, is now at about one-fifth of its peak production.) We are still finding oil, as the there’s-more-than-enough-oil optimists like to point out in their snarky criticisms of peak oil proponents. We’re just not finding enough, and that hasn’t changed for decades. We’re using more and finding less, and third-grade arithmetic will tell you that that is not a good outcome.

For all the talk of  the “massive” amounts of oil offshore and in Alaska and the “obvious” need for us to just “drill, baby, drill”, we’re several decades away from full production in those regions, and the amounts anticipated will wind up meeting far less than even 5% of our needs. None of it will come cheaply. Drilling in the Arctic is a wee bit more challenging than punching a hole in the ground in Texas, and one does not require an engineering degree to understand that. The “drill, baby, drill” crowd never gets around to spelling any of that out for us. Magical thinking is nice, as is a denial of pesky truths, but on the planet we occupy, it’s a fairly useless exercise.

Data from the Energy Information Agency as of 2007 indicates that our “proven” reserves of conventional oil are about 21 billion barrels. That’s about a 3 year supply for us. More bad math.

One-third of those reserves are “light sweet crude,” which is considered the easy, good stuff. The rest is the not-so-easy and not-so-good stuff … the kind of oil that isn’t produced or refined very efficiently, or inexpensively. Few of our refineries can convert that heavy crude oil into gasoline. None of this is good news.

Opportunity….

There just aren’t any more places on this planet where we can find bottomless pools of oil flowing freely, easily, and inexpensively. That’s certainly true here in the U.S. We’re tapped out. It’s starting to take a lot more effort, many more years, and a lot more money to find and produce what was once so readily available. We’re paying for that, too. Even more bad math.

Cantarell in Mexico has long been considered of the supergiant oil fields on the planet. As recently as 2004 it was producing about 2.5 million barrels a day of oil, and about half of that was shipped here. Production has fallen off a cliff since then, and in 2 – 3 years, it’s expected that production will have declined by close to 80%. Aside from the enormous financial, political, and social problems that will create for our neighbor south of the border (Cantarell was the major source of income to the Mexican government), this also poses a dilemma for us. Where and how do we make up that shortfall?

None of these statistics are especially pleasant to consider. Potential bad news rarely is. But if we understand our situation, if we understand our needs, if we understand that we must individually and collectively begin making better choices and devoting our incredible talents to creating and implementing new means of energy production while revising and improving how we use energy, the bumps in the road we’re destined to confront might be a bit smoother. And in these times, that may not be such a bad option.

Next: More Considerations About American Oil Consumption