Peak Oil Matters

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/

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/

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

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

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

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….

Bringing winter to a merciful close!

Recently, Theo Spence offered a post from his blog on Switchboard (from the National Resources Defense Council – NRDC), about climate change’s effects on the winter sports industry (skiing, snowboarding, and the snowmobiling) and its impact on its 23 million+ participants. The NRDC has teamed up with Protect Our Winters and issued a report on the subject. The link can be found in that NRDC post.

Theo summarized some key statistics about the industry worth pondering by more than just the enthusiasts:

The report finds that a bad snow season hits the economies of ¾ (38) of U.S. states–clearly showing that lower snow years result in fewer skier visits compared to higher snow years. That translates into money, and people’s livelihoods, jobs, and lifestyles.
Snow is ‘currency’ in these 38 U.S. states: more specifically, $12.2 billion in 2009/2010. If that ‘currency’ continues to be undermined by climate change, the industry –  manufacturers, resorts, hotels, grocery stores, restaurants, and bars – is in serious trouble. An estimated 211,900 jobs are either directly or indirectly supported by the industry, our study shows, and  snow-related economic activity resulted in $1.4 billion in state and local tax revenue and $1.7 billion at the federal level….
Our report finds that if we have a season like last year, winter tourism employment is expected to drop by 6% to 13% (13,000 to 27,000 jobs) compared to a higher snowfall seasons. That will cost the US economy between $800 million and $1.9 billion.
A recent survey cited in our analysis found that 50 percent of responding ski areas in 2011 opened late and 48 percent closed early, with every region in the country experiencing a decrease in overall days of operation.  The snowmobiling industry — one entirely reliant upon natural snow — has had relatively flat registrations since 2000.

Yikes!

But what if you are, say … a former insurance company executive and now a United States Senator—meaning that this vast professional expertise of course endows you with similar levels of expertise on climate science—and you think climate change is a hoax. Might there be a chance that declining supplies of fossil fuels would produce similar, unpleasant financial impacts on this winter sports industry?

You don’t need fossil fuels to power your skis or snowboards, of course. Snowmobiles are different. However, chances are the overwhelming majority of skiers and snowboarders don’t have facilities in their back yards. That means they have to go from home to ski/snowboarding resorts of some kind to enjoy their recreational activities, and that almost always means they need gas in their vehicles to get from A to B.

It’s a good bet that the manufacturers of the skis and snowboards and snowmobiles need more than a bit of fossil fuel energy to obtain the raw materials needed to build all that equipment and then transport it to end users. Safe to say that the suppliers of all the raw materials and the transportation outlets used need some of that same energy supply to fulfill their obligations in this chain. That also means a lot of personnel employed up and down the line also depend—directly and indirectly—on a continuing supply of affordable, availability, same-quality fossil fuels to keep themselves employed.

So when the supply of depleting conventional crude oil continues to decline, and reliance turns to the inadequate supply of inferior quality, more expensive, harder to come by unconventional sources such as the tight shale formations in the U.S. and the Canadian tar sands cheered on by certain factions of the energy and media industries, what gets prioritized in such a way that the winter sports products/services are still available at current levels? What gets sacrificed as a result?

Who benefits? How many more up and down the line will suffer as a result? Fair to say that the adverse impact of climate change (humor me, Senator Hoax Expert) will be more than matched by the adverse impacts of insufficient energy supply?

Plans? Opportunities?

~ My (wife’s) Photo: above Vancouver, BC – 02.10.07

** 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/

Last week, I ran a couple of posts (here and here) about an especially-egregious example of the Cornucopians’ magical world of energy abundance (with its by-now obligatory preference to trip lightly over anything other than a few cherry-picked and out-of-context facts).

I’ve already had my say on that article’s most glaring offense: the particularly shameful/shameless failure to mention that fracking for oil and gas also involves a fair amount of chemicals (whose properties are rarely-disclosed) as part of the production process.

A different spin results when a reader moves from an initial understanding that “water and sand” appear to be the only “ingredients” to the truth that fracking actually requires “water, sand, and chemicals.” Not too difficult to understand the reasons for the omission. Not too difficult to judge the behavior, either. Wouldn’t want to answer any of the obvious questions that come to mind when “chemicals” become part of the discussion, Right?

Before I let that awful effort go, I just had to clean up a bit more of the mess it offered.

What does this mean?:

Canadian production is expected to increase to 6.5 million barrels per day, and even Mexico is now expected to join the North America energy renaissance under a new government interested in exploiting its resources….

First up: Who expects Canadian production to increase? How soon? Any potential obstacles?

I’m curious because this PDF, courtesy of the Canadian Association of Petroleum Producers, seems to suggest that Canada has a ways to go.

The Executive Summary page shows total 2011 production of 3 million barrels per day. An accompanying chart indicates a 2030 landing for that 6.5 million barrel per day forecast. I wonder why that information didn’t show up in the article? No explanations about investment obstacles either … or pretty much anything else one might consider as supporting evidence to give credence to the forecast. Standard M O.

Given that depletion in existing conventional oil fields occurs pretty much ‘round-the-clock at anywhere from 4 million barrels per day to approximately twice that amount, 6.5 million barrels per day [guaranteed, Right?] nearly 20 years from now … not so special.

And are we assuming Canada is going to sell it all to us? Canadian citizens might have different ideas in mind.

But, as Citigroup’s Edward Morse was reported as saying: “The U.S. could in theory need to import only from Canada within five years.” Pigs, in theory, could fly, too.

How much production should we look forward to from Mexico, given that it has “a new government interested in exploiting its resources?” How many barrels per day does “interested in exploiting” work out to be? When should we expect that supply to come on line? Is June too early? [June in a decade or two, I mean.]

Of course, there’s that little problem about successfully converting exploitable resources into … you know, actual production. Usually, that involves taking care of a consideration or two, first. [That whole investment, testing, proper technology, staffing, quality, etc., etc. set of issues.] But why explain any of that to readers, Right?

What’s more offensive: making an unwarranted assumption that readers are too ignorant to ask questions, thinking they don’t deserve enough respect to be properly informed, or the arrogance of the already-informed in thinking they can get away with this? Payback, as they say, is a bitch.

Before my head officially explodes, one more observation regarding a rather creative commentary and explanation included in the article:

Some energy analysts are concerned that the new ‘unconventional’ supply is limited and will be quickly tapped because some of the impacts of the new drilling are unknown and the history is so new.

Actually, the reason energy analysts are concerned is because of those whatchamacallits … facts. Must be nice to live in a world where facts, studies, evidence, and truths can all be ignored whenever it’s convenient. “Gee, fracked wells deplete, too? Faster than conventional supplies? Wow! Resources aren’t reserves? Reserves aren’t automatically produced? It costs more? Water concerns? Environmental issues, too? Who knew?”

An especially thorough, well-researched, and terrific report by J. David Hughes/Post Carbon Institute should provide the parties to this nonsense an explanation or two about why energy analysts are concerned. Perhaps someone might show those fine people that Internet thing … you know, the Google.

Then again, why would investors and readers want to know more before committing themselves to business endeavors or policy support, Right?

Silly me … I always thought being kept in the dark was useful only when someone wants to go to sleep.

* My Photo: morning sky in Ft. Lauderdale – 02.08.13

An observation worth noting … and pondering, from William James more than a century ago:

The most significant characteristic of modern civilization is the sacrifice of the future for the present, and all the power of science has been prostituted to this purpose.

We’re spending countless hundreds of billions of dollars each year to extract every last drop of oil from deep below the oceans, or from shale formations trapped thousands of feet below us, or disguised as some reasonable approximation of conventional crude oil buried amid tar sands in western Canada, or hidden below the formidable Arctic landscape (among other endeavors).

We do so for a simple reason: that’s pretty much all that’s left to us now.

Our wisest strategy?

When does the madness begin to register with industry—and government officials too steeped in ignorance, self-preservation, and denial to understand what’s at stake?

Nothing changes about simple facts: fossil fuels or their presumed replacements/substitutes are finite resources. The more we extract, the less we have … not exactly astrophysics or NASA-level math. The resources left to us are more difficult and expensive to produce now for any number of reasons. Their quality is inferior to the conventional crude oil supply we’ve relied upon more more than 150 years now—in ever-increasing amounts and for ever-increasing needs.

And so the headlong rush to squeeze out whatever is left dominates our planning, policies, and activities. If we aren’t taking significant and immediate steps to drastically reduce what we consume, engage in meaningful dialogue to plan for a different energy future, and stop allowing a select group of spokespeople to mislead, shade truths, or raise irrelevancies, we’re in for one hell of a ride right up to the point we smash headfirst into the realities of geology’s and technology’s and economics’ limitations.

That won’t be nearly as much fun as it seems.

~ My Photo: Ana Nuevos, the California coast – 09.15.04

I have offered several posts on Jeffrey J. Brown’s Export Land Model [here, here, and here]. The ELM is a too-often overlooked yet critically important aspect of (declining) global oil production.

I will be the very first person to acknowledge that my math skills and my understanding of economics hover somewhere just about the “pitiful” marker. I am among the last people anyone should turn to for explanations about even simple concepts. My brain simply does not work that way, and long ago I made the decision that the investment needed to develop a reasonable level of understanding was not worth the potential benefits, and so I rely on many others to offer information and explanations.

Having said that, even I appreciate that in its simplest form, the ELM provides detailed analysis and explanations for an obvious and simple mathematical principle: Oil-exporting nations, whose own economies are growing—or hoping to—require for their own use ever-increasing amounts of the very same fossil fuels they traditionally export.

So when they keep more of what they have to offer, what’s left is less for the rest of us to divvy up. Those of us who “get,” thus get less.

I’m duly acknowledging the production increases from shale, the potential for Arctic production, and the tar sands of Canada. But the Happy Talk and Magic Technology Fairy won’t make up for depletion from existing crude oil fields, so that argument has a limited shelf life once facts are added to the discussion.

Dr. Brown recently published a detailed [and to my way of thinking, quite wonky] explanation and analysis of current trends and clear warnings about the future of fossil fuel availability for nations such as our own. If I was able to understand most of it, mostly everyone else who reads the article will understand it even more.

It’s well-worth the read [graphs, charts, and all]. Sobering to be sure, but more information is always a good thing, and Dr. Brown’s article offers us all not only a great deal of that, but of perhaps greater benefit, he provides us all with stronger reasons to start making plans based on the realities of fossil fuel supplies. Facts still suck, but we ignore them at our increasing peril.

* My Photo: Key Largo, FL – 02.20.05

Two years ago, I offered a brief comment about well-known and well-respected journalist David Frum:

I don’t usually agree with David Frum’s politics, but I always respect his approach. He’s a conservative whose proffered opinions—and those of most of his contributors—show no signs that his eyes are bulging out of his head as he critiques the Left. I’m confident the only tin foil in his home is found in a kitchen drawer and not on his hat rack. We could use a few hundred more on the Right just like him.

That was then. While I still respect his work and his usually well-reasoned approaches to the divisive issues of the day (probably a prime reason why the Right has disowned him), he has gone off the rails in a recent commentary he shared about Peak Oil. I’ll give him the benefit of the doubt and assume (hope) it’s a one-time event. His is too influential and important a voice to be joining the cornucopian nonsense crowd.

Frum first raises the “running out of oil” accusation against those of us seeking to explain the reality of oil production and supply unadorned by the good wishes of the Magic Technology Fairy.

As I stated here:

The instant a criticism of Peak Oil and/or its proponents is prefaced by an assertion that Peak Oil proponents are claiming that ‘the world is running out of oil’ meme, any credibility is lost. Repeating that nonsense makes it clear those authors do not understand even the most basic of issues regarding Peak Oil. The deniers are nonetheless quite determined in their insistence that we (who believe that Peak Oil is an imminent reality and great challenge to future prosperity) are always raising alarms that ‘the world is running out of oil.’
The problem is that anyone who has any working knowledge of the facts about Peak Oil and oil production in general never makes that claim! But again, why let facts get in the way of opinion?
I have repeatedly stated, as have others far more knowledgeable than me (Jeff Rubin, Kjell Aleklett, Richard Heinberg, among dozens of other leading lights) that the issue for us is not and has never been the notion that ‘the world is running out of oil.’
It’s not! We agree on that point.

His curious observation that “For all practical purposes, the world’s supply of oil is not finite. It is more like a supermarket’s supply of canned tomatoes,” suggests something less than a full understanding of our concerns about decline, depletion, rates of production, inferior quality, fracking, etc., etc.

He mentions fracking as having “made available vast new supplies of cheap natural gas,” but like every other claim about this process [see my discussion here], nettlesome facts about the many drawbacks of fracking weren’t raised by Frum, either.

Citing context-free discoveries in the Gulf of Mexico or expectations about peaceful, infrastructure-solid, well-developed industrial powerhouse Iraq’s production capabilities doesn’t help. [My bad. Looks like there was no mention about Iraqi production issues at all.]

Peak Oil isn’t fun to discuss or anticipate. But when important, reasonable voices start repeating talking points with tenuous connections to the realities of fossil fuel supply and production, the task becomes that much harder. If that were the only consequence, few would lament the challenge.

Unfortunately, anyone who relies on fossil fuel supplies for whatever reason (which would be … ah, almost everyone) isn’t being helped when they’re getting only wisps of the facts and the truth. It’s worse when the source is someone who enjoys so much well-deserved credibility as David Frum.

* My Photo: Gloucester, MA – 09.06.10