Sunday, February 8, 2015

Do not grow your own food

One of the major tenets of the peak oil collapse movement was that civilization will collapse and then revert to a medieval state. There will be no more electricity, gasoline, diesel, machinery, or any other conveniences of modern civilization. Instead, life will soon resemble what it was like in the 16th century. People will need to grow their own food, make tools by hand, and so on. These ideas are found throughout the works of Richard Heinberg, James Kunstler, and many, many others.

To that end, many peak oil doomers relocated to very rural areas and began growing their own food on small plots of land. Some of them also engaged in "re-skilling" which meant learning medieval crafts such as making shoes, weaving, sewing, blacksmithing, and so on. They believed (and some of them still believe) that doing so was preparation for the new medieval era which would happen after civilization collapsed from peak oil.

Some peak oilers are still doing this. Some of them are still trying to grow their own food or are considering moving to rural locations so they can grow their own food. Let me give an example from a comment I read today on peakoil.com:

I plan on buying a house in the middle of nowhere and starting to grow food there... The best way to prepare for peak oil is to grow your own food and help others grow their own food.

...and the same sentiments have been echoed thousands of times on peak oil forums. 

Unfortunately, the author of the above quotation is sadly mistaken. Growing your own food is a waste of time and is the worst way to prepare for collapse. Even if civilization were really collapsing, it would still be a waste of time to grow your own food.

Food is a about 50x cheaper now, relative to the average income, than it will be when the tractors stop running. For example, it takes a subsistence farmer about 100% of his labor to grow enough basic foodstuffs to survive, whereas it takes a modern American about 2% of his income to do the same. As a result, the rational strategy to prepare for collapse is to make as much money as possible now, and to stockpile food while it's easily obtained. You could stockpile far more food by purchasing it than you could by growing it. Furthermore, you could stockpile far more food now than you could ever hope to grow after the collapse. As a result, the best strategy is to stockpile food while it's still plentiful, not to grow it, which would be a waste of time even if civilization were collapsing.

I think the best thing to do would be to stockpile canisters of granulated sugar in some hidden remote location. Do not relocate to the hidden remote location, because that would interfere with your income and therefore with your ability to stockpile food. I would stockpile granulated sugar because it has an indefinite shelf life, is extremely cheap, is calorically dense, and could be bartered after the collapse for whatever other foods you would need. Granulated sugar would be like gold after the collapse and could be bartered for other goods.

Let's say I wanted to stockpile enough granulated sugar to provide calories for the remainder of my life. I have about 15,000 days left to live, which means I will consume (15,000*2500) 37,500,000 food calories in the remainder of my life. Since there are 4 food calories per gram of sugar, I would require 9,375,000 grams of sugar, or 9,375 kilograms, to provide enough calories for the remainder of my life. That's about 20,000 pounds of sugar, for those of us in the United States. I checked out the price of sugar at my local Sam's Club and found that it costs about $5 for a 10-pound bag. As a result, I could stockpile the 20,000 pounds of sugar I would need for approximately $10,000.

Let me repeat that fact:

I can stockpile enough food calories for the remainder of my life for $10,000.

That's about 2 months of my wages. Stockpiling food now is vastly easier than a lifetime of horrendous toil after the collapse.

Obviously, I can't live on sugar alone, but I could barter sugar for whatever other foods I would need. After the collapse, it will be calories that are in short supply. Sugar will be like gold. I could barter some of my sugar for other foods that provide the micronutrients I need. Let other people do the farming and back-breaking labor. Or, if I preferred, I could also stockpile some canned vegetables since vegetables are far cheaper now (relative to my income) than they will be after the collapse.

There is another advantage of stockpiling food rather than growing it. If the collapse prophecies fail, yet again, for the 50th time, then I've lost almost nothing. I spent $10,000 on sugar, and maybe also some money on canned vegetables, but it's still a fairly minor financial loss. By stockpiling food, I can continue living in a normal area and won't waste years or decades of my life preparing for something that doesn't occur.

In short, growing your own food is the worst way of preparing for collapse, for two reasons. First, food is about 50x cheaper now (relative to the average income) than it will be after the collapse, so it makes sense to earn money and buy food now, when it's cheap. Second, if the collapse prophecies fail yet again, then I won't have wasted my life.

Growing your own food simply doesn't make sense, even if civilization were collapsing. Even if you want to prepare for collapse, the best approach would be to stockpile food and get on with your life in the mean time.

-Tom S

Friday, January 16, 2015

Peak phosphorus is not happening

Phosphorus is an essential ingredient of fertilizer and is a basic building block of all life. Without phosphorus, it's impossible to grow crops or plants of any kind. Phosphorus has no substitutes, because phosphorus specifically is required for plant DNA, and it would take hundreds of millions of years (if ever) for life to evolve to use something else.

At present, the world uses about 140 million tonnes of rock phosphate, for fertilizer production. The total world reserve of rock phosphate is 8,000 MT. At current rates of usage, we will reach "peak phosphorus" in 2033 according to this Hubbert analysis. After which, extraction of phosphorus would gradually decline, and so would fertilizer production and food production, if that analysis were correct.

This point is repeatedly raised within "peak oil" type doomsday circles, and is provided as another reason for the imminent collapse of civilization. Bear in mind that this point is raised by precisely the people who have made a very long string of badly failed doomsday predictions. Obviously, they could be right this time, however their opinions on this matter should not be confused with scientific consensus.

In fact, the doomsday authors are entirely wrong about phosphorus. As usual, the doomsday group's point is totally wrong and is based upon a series of misunderstandings. We do not face declines of phosphorus in the foreseeable future. Quite the opposite, we have vastly more phosphorus available than we could ever use.

In my opinion, the idea of "peak phosphorus" is vastly less serious and more obviously wrong than the theories of peak oil were, and even those were wrong.


Analysis of "Peak Phosphorus" claims.

The doomsday advocates in this case are making a severe error which invalidates their analysis. They are confusing reserves of phosphate rock, with the total amount of phosphorus available in the Earth's crust. Reserves of phosphate rock refers to the amount of phosphorus which is found in a particular form and has already been discovered. The total amount of phosphorus available, however, is vastly greater than that.

It bears repeating here that published reserve figures of phosphate rock do not represent the total amount of phosphorus available. Instead, reserve figures only represent the very small amount of phosphorus which is found in highly concentrated form and so would be extracted first. Reserve figures of phosphate rock are only a very small fraction of the total phosphorus available.

As with many elements in the Earth's crust, phosphorus is distributed according to a resource pyramid. There is only very small amount of phosphorus available in a very concentrated form (the "tip of the pyramid"). In more dilute concentrations, there is vastly more phosphorus available. The greater the dilution, the more is available. Published reserve figures refer only to the very tip of the pyramid--the very small amount of resource which is highly concentrated and easily extracted. There is far more resource available in more dilute forms.

Mineral resources are very different from oil or gas. Whereas oil is found in underground reservoirs which are "depleted" at some point, mineral resources are found in gradations, and are available in vastly greater quantities at lower dilutions.

When current reserves are exhausted, prices for phosphorus will rise, and it will become economical to extract phosphorus from more dilute sources. In other words, we will take a step down the "resource pyramid" and start to exploit more dilute sources which are found in far greater amounts. The technology to extract phosphorus from more dilute sources is straightforward and already exists. Thus, the exhaustion of current reserves, does not mean we are out of phosphorus. It means only that we must start extracting phosphorus from more dilute sources.

If we wish to find out how much phosphorus is available to us overall, we must determine how much could ever be extracted. Please note that the total amount which could ever be extracted is completely different and far higher than published reserve figures of phosphate rock.

So how much phosphorus is there?

Phosphorus is a fairly common element. Phosphorus constitutes about 0.1% of the Earth's crust. It's the 11th most common element and is far more common than all sources of carbon in the Earth's crust. This figure was determined by statistical sampling and can be looked up in the wikipedia article about elemental abundance in the Earth's crust.

We can easily calculate the total amount of phosphorus in the Earth's crust:

1025 g total mass of the Earth's crust
1019 tonnes total mass of the Earth's crust (unit conversion)
1016 tonnes of phosphorus (1 part per 1,000, derived from wikipedia article)

1010 tonnes of phosporus in phosphate rock reserves

Thus, we have 10,000,000,000,000,000 TONNES of phosphorus available in the Earth's crust. That amount is approximately 1 million times higher than published reserve figures of phosphate rock.

Of course, most of the phosphorus in the Earth's crust will never be extracted. Much of it lies beneath Oceans, or deep underground, or in very diffuse deposits. However, if we are ultimately able to extract even 0.1% of the total phosphorus in the Earth's crust then we will have 1,000x more phosphorus available to us than the reserve figures indicate. In which case, phosphorus will not "peak" for centuries or millenia.

Since phosphorus is crucial, it would become far more expensive if it were ever scarce, which would justify extracting it even from very dilute sources. It's entirely plausible that phosphorus could be extracted from 1% ore concentration, which would provide vastly more than figures of phosphate rock reserves would indicate.

Phosphorus recycling

Even if phosphorus extraction peaked and started declining, it would not be particularly worrying. Although phosphorus is used to grow food, it's not being "used up" at any rate. Humans excrete all the phosphorus they consume from food, in their feces and urine. The average human excretes about 1kg of phosphorus per year. In other words, phosphorus is not really being used up at any rate, because as much of it exists on Earth after we've used it as existed beforehand. If phosrphorus became significantly more expensive, then sewage and food scraps would have monetary value and would become additional sources of phosphorus. It would become profitable to "mine" sewage and garbage for phosphorus, and sewage utilities and trash utilities would begin doing just that. In so doing, we would "recycle" the phosphorus we had mined from the ground. If we managed to "recycle" 90% of our phosphorus by using it judiciously and extracting it from sewage and garbage, then the amount we'd need to mine from the ground would obviously decline by 90%, in which case, actual declines in phosphorus available to us would be perhaps 10,000 years away (just eyeball estimating how long a 90% depletion would take on a Hubbert curve with 1,000x more phosphorus than published estimates of phosphate rock reserves). These adjustments and recycling programs would happen automatically, the result of basic market mechanisms, as phosphorus becomes more expensive. It would become profitable to extract phosphorus from sewage and garbage, and so would be done by companies which would never leave any obvious profit opportunities unexploited.

We may never reach peak phosphorus

Even if we have 1,000x more phosphorus available to us, and we also start recycling ("mining sewage"), won't we reach peak phosphorus eventually? In 10,000 years, perhaps?

Not necessarily. That depends upon demographic trends.

At present, fertility is declining everywhere. In almost all advanced nations, fertility is below replacement rate meaining their populations are shrinking, or would shrink without immigration. Furthermore, there is every reason to believe that fertility rates will also decline below replacement in poorer countries as they develop (in fact, their fertility rates are already declining fairly rapidly). As a result, it's probable that the human population will start declining absolutely at some point during the next century. As a result, we will probably reach peak phosphorus DEMAND long before we encounter peak production.

If the human population declines below 1 billion people over the next few thousand years, then no phosphorus extraction would be required for agriculture at that point, because phosphorus is recycled in the soil and environment (by natural means) more quickly than would be necessary. In which case, we would never reach peak phosphorus, or at least not in the sense that doomsday believers are claiming. We would reach a peak of phosphorus extraction because of reduced need, not because of any kind of shortage. We may never face a shortage of phosphorus.

Whether we face a shortage of phosphorus in the future depends upon demographic factors over the next few thousand years. It's impossible to predict. However, there is no inevitable shortage of phosphorus, over any time scale, just from current trends.

If current trends reverse themselves, and the human population starts growing again and keeps growing, then we will face shortages of something at some point. The growth of the human population would eventually be limited by some factor. However, it is not just inevitable and is not imminent.


Civilization is definitely not collapsing because of peak phosphorus

Some of the doomsday believers have claimed that peak phosphorus will cause the collapse of industrial civilization. As phosphorus declines, industrial agriculture will decline, and with it, industrial civilization. This concern was raised here and here, and has been raised repeatedly over the years within doomsday prepper groups.

The theory that peak phosphorus will cause the collapse of civilization, is entirely wrong and is based upon severe misconceptions of how the world economy works. Even if we assume that phosphorus extraction will soon start declining (which it obviously won't; see above) it still would pose no risk of the collapse of civilization. Instead, it would cause FAMINE in the poorest countries of the world, probably those of sub-saharan Africa, because citizens of the first world can easily outbid them for gradually declining amounts of fertilizer.

Of course, every effort must be made to prevent famine in Africa. However, it's counter-productive to engage in doomsday prepper activities like hoarding ammunition, relocating to rural locations, or growing their own food, because doing so is preparing for an event (collapse of civilization) which is not happening. It would do nothing to prevent famine in Africa to engage in activities like that. Thus, doomsday prepping is just counter-productive in this case and would do nothing to ameliorate the effects of phosphorus shortages even if they occurred.


Conclusion

The whole notion of the collapse of civilization because of "peak phosphorus" is just totally wrong, for many different reasons. As follows:

  1. Doomsday authors are confusing reserves of phosphate rock, with the total amount of phosphorus available. They are under-stating the total amount of phosphorus available to us by at least a factor of 1,000.
  2. Doomsday authors are failing to account for obvious recycling opportunities which would become profitable and would happen automatically as a result of basic market mechanisms.
  3. Doomsday authors are conflating a fertilizer shortage with the collapse of civilization, when the two have nothing to do with each other. A shortage of fertilizer would cause starvation in sub-saharan Africa, but not the collapse of industrial civilization. Any such problems would be better addressed by birth control programs in Africa, and not doomsday prepping.
  4. Doomsday authors are ignoring demographic trends which will reduce the demand for phosphorus long before any shortages occur.

Each one of the above errors is fatal to the doomsday thesis. Thus, the doomsday idea of collapse because of "peak phosphorus", is refuted four times over.

If the above errors are avoided, then it's not clear that phosphorus shortages will ever occur, over any time scale. Whether there will be phosphorus shortages ever, is something which can't be predicted at present. However, there are definitely no imminent shortages of phosphorus, and there won't be shortages for a very long time.

In closing, I should point out that these doomsday theories are NOT SERIOUS SCIENTIFIC THEORIES. These doomsday theories and speculations are filled with so many severe errors that their conclusions are just not supported.

Sunday, November 16, 2014

The argument from big numbers

Energy decline adherents often claim it would be impossible for our civilization to transition to renewable energy. They have various arguments for that, all of which are wrong.

One of the more common arguments is what I like to call the “big numbers argument”. The argument consists of throwing out huge-sounding numbers, and thereby making the task of transitioning to renewables sound daunting. Some examples are as follows:

If we wanted to convert the entire world electricity system to wind turbines, it would take 333 gazillion TONNES of steel to make all those wind turbines. That’s FIVE TONNES of steel every SECOND, for the next 30 years. Therefore, it just can’t be done.

If we wanted to convert the entire world electricity system to nuclear reactors, we would need to build a nuclear reactor EVERY SINGLE MONTH for the next 40 years. Therefore, it just can’t be done.

The diesel trucks which are used to carry wind turbines, burn a gallon of gasoline every HOUR. Therefore, we can’t install very many wind turbines.

Usually, the units are CAPITALIZED in this argument to make them sound formidable. The point is that the number sounds so big that it sounds implausible to do anything about it.

The problem is, those huge numbers thrown around by energy decline adherents are usually relative to the entire world economy. Although those numbers are huge, the world economy is also huge. The question is: which is bigger? It may take gazillions of tons of steel to build all those windmills, but we may be capable of producing far more steel than that.

It’s meaningless just to throw around some huge number by itself, because any number by itself (no matter how huge) provides no basis for comparison. In order to compare the scale of some task with the scale of our solutions, we need TWO numbers, not just one.

If we wish to find out if some number is bigger than another number, we need to know both numbers, not just one of them. This is an elementary principle of mathematics. You cannot just say “five billion must be bigger than some other number I don’t know, because five billion is just so big”. The other number might be bigger still.

We’re talking about the entire world economy here. The scale of our problems may be huge, but the scale of our solutions is also huge. The question is: which is bigger? That question is never answered by the doomer authors.


An example

Let’s look at a prominent example of the “big numbers” argument. Let’s take an example from the sunweb website. That website is written by someone who subscribes to energy decline theories and who uses the “big number” argument repeatedly throughout his website.

What follows is an argument from that website. It details the difficulty of transitioning to a renewable energy system:


[Some people] proposed that starting in 2012, 50% of the worlds needs could be supplied by 3,800,000 five megawatt wind capturing devices to be installed by 2030.  Here are the numbers:
            
3,800,000  5 megawatts each supply 
THIS MEANS  
211,111.11 Machines a year 
578.39 Machines a day for 18 years
24.10 Machines each hour each day for 18 years


[To build each wind turbine would require:]
For the Concrete 
478.8 Barrels of oil in 630 yards of concrete. 
409.5 Tons of CO2 released for 630 yards of concrete.

For the Rebar 
Taking a conservative 3 barrels of oil per ton the rebar would require 135 barrels of oil for the base of the 2.5 MW Turbine.89 tons of C02  released for 45 tons of steel for the base.

All Together 
The concrete and steel together for one base use 613 barrels of oil for each base alone. Each base release 498 tons of CO2(A barrel of oil is 42 gallons)


[To build all the wind turbines would require:]
Each hour we would need 14,773 Barrels of oil for these smaller [wind turbines]. And each hour we would release 12,000 tons of CO2.

Yikes! Just to build all those wind turbines would take 14,773 barrels of oil PER HOUR!! That’s a lot. That's a scary big number.

At the end of the article, the author concludes by saying “YOU DO THE MATH” (capitalization in original).

Okay, let’s do the math. It would take 14,773 barrels of oil per hour to replace 50% of the worldwide electricity grid with renewables. The question is, how big is 14,773 per hour, relative to the world economy?  After all, the world economy is also huge. Which one is bigger?

In fact, the figure of 14,773 barrels of oil per hour is trivial compared to the world economy. At present, the world burns 32 billion barrels of oil per year, which is 3.6 million barrels of oil per hour. Therefore, in order to replace 50% of our worldwide electricity system with wind turbines would require (14773/3652968), or approximately 0.4% of worldwide oil supply. In fact, even this number is exaggerated, because the wind turbines would be built in 15 years but would last for at least 40 years, so no construction would be happening most of the time. If we wish to measure how much oil is required to replace the entire world electricity system with renewables and keep replacing it as we go every 40 years, we’d find that it would take 0.3% of our current global oil supply.

Obviously, it would be possible to produce that additional 0.3% of energy from renewables.


A few side points…

The author of the above-mentioned article also points out, that building windmills requires dump trucks, mining machinery, and so on. Those machines run on OIL, not electricity, but renewables only produce electricity. How would we power those dump trucks and mining machines, if we wanted to transition the entire economy to renewables?

Fortunately, it’s entirely possible to manufacture liquid combustible fuels using renewable electricity. For example, we can manufacture anhydrous ammonia, using air, water, and renewable electricity. Anhydrous ammonia is a liquid, combustible fuel, which will burn inside diesel engines. The technology to make such fuel from renewables is not complicated, and has existed for at least 100 years. And there are dozens of other alternatives for liquid fuels which do not require oil.

Granted, alternative liquid fuels like anhydrous ammonia are much more expensive than diesel fuel at present—approximately twice as expensive. However, we’re talking about 0.3% of present worldwide oil supplies needed to replace the entire electricity system with renewables. Even if we have to pay twice as much for that 0.3%, the result is—0.6%.


Another example

The same article referenced above, contains all kinds of scary-sounding big numbers. It uses the “big number” argument over and over again. For example, it points out that a typical iron mine has front end loaders, which consume:

“19,400,000 Btu/hour”

Yikes! 19,400,000 Btu per HOUR!

Is that a lot? Is that more than ever could be provided by renewable sources of energy? The author provides no clue.

It’s worth pointing out here that he’s using a unit of energy (BTU) which is actually very small. That’s like measuring distance in millimeters. That’s like saying “I could never make it to the supermarket, because it’s FOUR MILLION millimeters away! (which is actually just four kilometers)"

In fact, all mining equipment put together consumes only a very small fraction of worldwide energy production. Now that I mention it, all mining equipment and manufacturing equipment and agricultural equipment and transport of goods put together, still consumes only a small fraction of worldwide oil production. Most oil is used in just driving around on discretionary trips.

The vast majority of the worldwide transportation infrastructure could be electrified. The vast majority of transportation is performed using cars, trucks, and trains. Cars can use batteries, and trains and trucks could use overhead wires. There are isolated pieces of machinery (such as mining equipment, tractors, trucks in very rural areas, and so on) which could not be electrified. Those applications added together consume only a few percent of worldwide oil production. I’m using a percentage here because a percentage is relative to the global economy and is not just some isolated figure. That few percent of worldwide oil production could be provided by the alternative liquid fuels I listed above.



But the current fossil fuel system of energy is MIND-NUMBINGLY COMPLEX

Another related argument which crops up, is to point out how complex the current fossil fuel based economy is. This argument is raised repeatedly in energy decline circles. Usually the argument consists of showing how many steps are required to manufacture a given piece of equipment. Or, showing how complicated are supply chains worldwide. Or, showing how complicated are the many interactions between various industries. Presumably, the point is that it would be impossible to transition a system which is so complex as the world economy.

Once again, the argument provides no context for comparison. It’s meaningless just to say “a renewable energy system for the whole world would be very complex”. The question is: HOW complex? Is a renewable energy system more complex than the global economy could manage? Is it more complex than the current fossil fuel based economy? The doomer authors provide no answer.

Although it’s a very complex task to replace the entire energy system, we are capable of very complex things. The economy consists of millions of economic decision makers who communicate via prices and who can collectively handle complicated procedures. That is how we built the incredibly complex economy we have now, which doomer authors are describing. That is how we got to this point, and how we could build a different economy.

A renewable energy system would be no more complex than our current fossil fuel one. Most complicated devices operate using electricity and would  be the same whether the electricity came from fossil fuels or solar power. Most manufacturing procedures would have the same number of steps whether the source of heat were renewables or fossil fuels. Windmills are not drastically more complicated than combined cycle natural gas turbines.

Apparently it was possible for us to build a global energy system as complex as the current one, because we’ve already done it.  If we are capable of building something as complex as this, isn’t it possible for us to build something else as complex?

For that matter, we replace the entire industrial civilization every 40 years anyway, because machines wear out. If we have already undertaken the very complex procedure of replacing the entire economy, and do so every 40 years, couldn’t we do it again?

The renewable economy is no more complex than the current one. If we can handle this economy, we can handle that one also.


Summary

A recurring argument in energy decline circles is just to throw out some huge number (“windmills for the whole world would require BILLION OF TONS of steel”) and then just assume it must be impossible. Or, just to say “it’s VERY complex” and then assume it must be impossible.

Those arguments are totally wrong because they provide no context for comparison. In fact, those arguments are not even really arguments. They are just an attempt to sound scary by throwing around big-sounding numbers without context.

All those HUGE numbers which are thrown around by the energy decline movement, are actually small numbers when compared to the world economy. There is enough energy, materials, and money to transition to a renewable energy system.

We know this because renewable sources of energy are so much more abundant than fossil fuels ever were. Just using solar panels in deserts could deliver more than 10x more energy than the entire world uses at present. Furthermore, solar power can produce liquid fuels, and heat for industrial purposes. What's more, solar power is not dramatically more expensive than fossil sources of energy. Finally, solar panels are made out of SILICON which is approximately 10,000x more abundant than all fossil fuels in the Earth's crust ever were, and silicon is not being "burned" when we use the solar panels. As a result, we can conclude that solar power is vastly more abundant than fossil fuels ever were and could substitute for all the uses of fossil fuels. Even though fossil fuels deliver HUGE AMOUNTS of energy, solar power could deliver many times more.

There is also more than enough time to convert the entire world economy to renewables before fossil fuels are exhausted. Fossil fuels won't be totally gone for centuries, which is a lot of time to transition. The entire industrial economy is replaced approximately every 40 years anyway as machinery wears out, and industrialism is younger than 40 years old in many countries (such as China). If we could build or replace such an energy system in less than 40 years, then we could transition our energy system to renewables over centuries.

Granted, a renewable energy system would be more expensive than a fossil fuel one. That is why we haven’t done it already. However, it’s definitely possible to transition to renewables while retaining an advanced industrial civilization.

Monday, September 1, 2014

World trade is not ending

Peak oilers and energy decline theorists both believed that world trade would rapidly come to an end around 2005. They believed that world trade would collapse as oil peaked and started declining, or as a consequence of declining ERoEI. This was one of the cornerstone beliefs of the peak oil and energy decline movements.

As usual, it was totally wrong. World trade did not collapse. In fact, the opposite happened. World trade, and especially ocean-going trade, has increased tremendously since that time. For example, the panama canal is now booked to capacity every single year, and must be expanded. The Suez canal must also be expanded.

In this article I will examine why world trade has not collapsed, and why it is not collapsing in the foreseeable future. I will divide my discussion into separate sections for the different modes of transportation (ships, trains, and trucks) and will explain why the transportation of cargo for that mode is not declining.


SHIPS

Cargo transportation by ship will not decline in the foreseeable future. That's because ships are becoming more fuel-efficient at a rate of about 2% per year and will continue doing so for decades, thereby offsetting any declines in oil production.

To a significant extent, shipping companies choose the fuel efficiency they want. Shipping companies could easily order ships with twice the fuel efficiency as those of today. Or, they could order ships with half the fuel efficiency. Ships which are more fuel-efficient are more expensive, so are only worth it when fuel prices are high enough to justify the added cost of the more expensive ship. As fuel prices increase, however, shipping companies order more fuel-efficient ships, and thereby drive down the amount of fuel consumed per ton-mile, and offset the decline in oil production.

The fuel efficiency of ships is a function of their size and speed. Larger and slower ships are far more fuel efficient. By halving the speed of a ship, fuel consumption is reduced by 75% per ton-mile. Furthermore, by quadrupling the size of a ship, fuel consumption is reduced by another 50% per ton-mile. As a result, a ship which is 4x the size and half the speed, consumes only about 12.5% as much fuel per ton-mile.

Ships have been getting much larger and slower over the last few decades. As a result, the amount of fuel per ton-mile has been deceasing for decades, and continues to decrease. When oil prices tripled back around 2006, the largest shipping company (Maersk) responded by ordering the triple-E class of ships which consume half the fuel per ton-mile as the average long-distance ocean ship of today. Other shipping companies followed suit. By just ordering the same kind of ship for the next 30 years, shipping companies will reduce the amount of fuel per ton-mile by half over that period, as they gradually retire their older and less-efficient ships and replace them with more efficient ones.

As a result, even if oil peaked today and declined by 2% per year for the next 30 years, we could still deliver the same amount of cargo in 30 years as today, because of increases in fuel efficiency which are happening anyway and will offset declines in oil production. By just ordering the same kind of ships which they are ordering now, the fuel consumption per ton-mile will drop by half over the next 30 years as older and less-efficient ships are retired.

Of course, there is a limit to the fuel efficiency of ships. When ships are traveling at only 8 knots, it saves no fuel to slow down any further. Also, ships could only be made approximately 4x larger than those of today before they start to buckle under their own weight. As a result, it would be impossible to improve the fuel efficiency of ships by more than 8x relative to today.

However, that is still enough to offset any plausible declines in oil production, well into the future. Even if oil production peaks in 2020 and follows a bell-shaped Hubbert curve, the shipping industry will offset the declines of oil by increasing the efficiency of ships, until at least 2050.

Of course, it would be possible for shipping companies to accelerate the improvement of fuel efficiency if fuel became scarce, so the shipping industry could withstand greater than 2% yearly declines without a reduction in cargo ton-miles.

Even after oil production has peaked and declined by 80%, it still will pose no serious problem for the shipping industry. Ships fundamentally do not require oil for their propulsion. Ships can be built with STEAM TURBINE engines, and such engines do not require oil. Steam turbine engines can be designed to use virtually anything that will burn as fuel. Ships with steam turbines could use coal, gas, wood pellets, old newspapers, pelletized switchgrass, pelletized animal shit, sewage, corn husks, weeds, old paper plates, or whatever else. Steam turbine engines can also use very low-quality fossil fuels, such as oil shale (without extracting the oil), which are found in vastly greater quantities than crude oil ever was. Steam turbine engines were the most common kind of ship propulsion from 1950 to 1970, and could become so again. Since those ships can use almost any fuel, we are not running out of fuel for ships.

Some of the possible fuels are renewable, such as wood pellets or switchgrass. These fuels have an ERoEI of approximately 10 (or 3 if you subtract waste heat losses), making them only slightly worse than oil in terms of ERoEI. Such fuels can be grown indefinitely on marginal land.

TRAINS

Cargo transportation by train is not ending. More likely, it will increase in the decades ahead.

Trains fundamentally do not require oil for their operation. Trains can easily operate using electricity from overhead wires. This is already the case in many parts of Europe and Russia. The technology to do this is older than the widespread adoption of internal combustion engines. As a result, we could gradually replace diesel-burning trains with electric ones and so remove oil as a fuel from train transport altogether.

Already, much of Europe has electrified its rail lines. Russia has already electrified the entire trans-Siberian route. A large fraction of cargo delivered by rail in the world is already propelled by electricity. This transition away from fossil fuels is already underway, and will gradually reduce and then eliminate the oil required for rail transportation.

The rail network could easily be expanded to come within 5 miles of 95% of the population.  In fact, in 1910 in the US, the rail network was approximately three times longer than today, and actually did come within 5 miles of 95% of the population. There was a rail line going to almost every little town, in 1910. If we revive and electrify the rail network which existed in 1910, then cargo could be delivered to almost every town or city in the US without using any oil.

Bear in mind that the United States has vastly greater wealth, infrastructure spending, and manufacturing capability than it did in 1910. As a result, the rail network of that era could be revived much more easily than it was built. Europe would have an easier time still, because of higher population density.

It’s worth mentioning briefly that trains could be powered by reciprocating steam engines (like old-fashioned steam locomotives) which could use almost anything as fuel. Apparently, modern reciprocating steam engines can be about 18% efficient which is double what the old locomotives achieved in the 19th century. There is even an association in the USA that wishes to start making steam trains and powering them with “bio-coal” (apparently some kind of charcoal made from trees). Personally, I’m not sure it’s a viable idea, but if you’re a nostalgia buff then you might want to look at the coalition for sustainable rail (http://www.csrail.org/).

TRUCKS

What about trucks? Long-haul trucking isn’t even necessary. In the United States, in 1910, most cargo was delivered by rail. The interstate highway system didn’t exist back then. In fact, long-haul trucking is fairly recent. As oil became cheaper, we gradually shifted from trains to trucks. When fuel becomes more expensive, we will gradually shift back the other way, from trucks to trains, thereby using less fuel.

If we revive the rail network from 1910, then long-distance trucking wouldn’t even be necessary. We could use short-haul battery-electric trucks to deliver goods the final few miles from the railway depot to the store. If it were necessary, we could also use trolley-trucks powered by electricity from overhead wires.


CONCLUSIONS

We do not face significant declines in long-distance transport of cargo, over any time period, at least not from energy shortages. We have vastly more fuel than is required, and vastly more options than are required. We could increase the quantity of cargo delivered, far into the future, regardless of when oil peaks and starts declining. We could easily offset any plausible rate of oil decline, using obvious and well-understood technologies.

These adjustments will be carried out automatically, as the result of basic market mechanisms. As prices for one thing become higher, shipping companies automatically switch to something else. When it becomes cheaper to electrify rail, then rail is gradually electrified. Shipping and transport companies already carry out these calculations and procedures routinely. They already order ships or trains based upon fuel prices going forward, and thereby gradually adjust to changing fuel availability and cost. This is already happening and will continue to happen. Also, municipalities will allow the re-activation of long-dormant rail lines if fuel prices are high enough to require it. No action on your part is required to make this happen.

Peak oilers and energy decline theorists reached a different conclusion. They believed that world trade would collapse around 2005. However, they made four incorrect assumptions, as follows: 1) peak oil was imminent; 2) oil is the only fuel which can power long-distance transportation; 3) ships and trains cannot be any more efficient than they are today; 4) the mode of transportation used must be the same as today. All four of those assumptions were clearly and obviously wrong. Peak oil has not occurred yet. Even after peak oil has occurred, we could increase the efficiency of ships, and so offset oil declines for at least 4 decades. Even after oil has been practically exhausted, we could switch fuels, from oil to any number of other fuels. Furthermore, we could change the mode of transportation from trucking to rail. As a result, we do not face any inevitable decline in long-distance transport of goods, regardless of when oil peaks, or how rapid the decline is.

Of course, world trade may decline slightly or gradually in the future, for a variety of reasons. For example, it may become uneconomic to ship extremely bulky and inexpensive products (like iron ore) over long distances, since those products are barely worth shipping long distances now (they can be mined almost anywhere), and would become uneconomic to ship long distances with even slight increases in shipping costs. Also, there are other factors such as wars, depressions, and disasters which could decrease world trade. Furthermore, there is wage convergence, whereby wages in the third world are gradually catching up with those of the first world, which may reduce the volume of trade in the future. However, there will never be any abrupt drop-off in world trade because of energy shortages. World trade will remain more extensive than it was in 1990, far into the future, unless some genuinely unexpected event (like war) changes that.

(Note: This article was edited on Sept 7, 2014)

Sunday, July 27, 2014

Renewables have higher ERoEI than fossil fuels

One the central claims of the peak oil/energy decline movement, is that renewable sources of power have extremely low ERoEITherefore, it is claimed, renewables are no substitute for fossil fuels, because they cannot provide enough “net energy” to power civilization. In support of this claim, energy decline adherents often post graphs like this one, showing that renewables (especially solar PV) have low ERoEI compared to fossil fuels. More recently, Hall and Prieto have published a book, Spain's photovoltaic revolution, in which they claim that the ERoEI of solar PV in Spain is only 2.45, which is far lower than the ERoEI of fossil fuels.

In fact, those claims are entirely wrong. Renewables have ERoEI ratios which are generally comparable to, or higher than, fossil fuels. Although peak oilers reach a different conclusion, that is because they are carrying out the calculation incorrectly. They are ignoring or not including massive waste heat losses (generally 60% or more) from combustion engines which drastically reduces the ERoEI of fossil fuels. Those waste heat losses provide no energy services to society, and should be counted as losses, but are wrongly counted as "energy returns" by peak oilers. Furthermore, peak oilers are ignoring or not counting other large energy losses of fossil fuels. Those omissions exaggerate the ERoEI of fossil fuels relative to renewables. When the calculation is carried out correctly, renewables have higher ERoEI ratios than fossil fuels.

In other words, the notion that renewables have ERoEI ratios which are lower than fossil fuels, is simply mistaken. It arises from performing invalid, apples-to-oranges comparisons, or from not counting energy losses of fossil fuels.



Fossil fuels have very low ERoEI ratios


Take this graph as an example. It compares the ERoEI of solar PV for electrical power, against the ERoEI of coal and gas for heat. That comparison is invalid, because it’s an apples-to-oranges comparison. Thermal power plants (like coal-burning plants) waste approximately 2/3ds of their energy as waste heat. Waste heat is radiated out into the atmosphere from the power plant, and provides no energy services to society. This massive energy loss from fossil fuels is not counted in that graph of ERoEI, thereby artificially inflating the ERoEI of fossil fuels. If we subtract the energy losses from conversion of thermal energy to electricity, then the ERoEI of fossil fuels declines by approximately 2/3rds relative to solar PV. Conversely, we could also increase the ERoEI of solar PV by approximately 3x, thereby providing an energy quality correction. As a result, the ERoEI for thermal power plants which generate electricity is approximately 2/3rds lower than the graph indicates, or (conversely) the ERoEI of solar PV is approximately 3x higher.

It’s simply meaningless to compare the ERoEI of electricity generation from renewables, against the ERoEI of heat from fossil fuels, because heat is an extremely low-quality kind of energy which is far less capable of performing work. This is an elementary principle of thermodynamics. In order to convert heat to work, we must lose the vast majority of that heat as waste. For example, the vast majority of energy from fossil fuels is simply rejected as waste heat from power plants or internal combustion engines, and so shouldn’t be counted as an “energy return” in ERoEI calculations.


In general, the ERoEI of fossil fuels is extremely low. Natural gas may have an ERoEI of 10, but that falls to 5 when considering the massive waste heat losses emitted from natural gas turbines (generally less than half of the energy in gas is converted to electricity). Coal may have an ERoEI of 30, but that declines to 10 when considering that coal power plants lose approximately 2/3rds of the energy of the coal as waste heat.

The ERoEI of oil is particularly low because it's used in inefficient internal combustion engines inside of vehicles. Most car engines lose about 80% or more of the energy from gasoline, as waste heat, when you include both engine and transmission losses. As a result, the ERoEI of energy which actually turns the wheels of the car (rather than heating the outside atmosphere) is not 14.5 for oil, as commonly claimed, but only 2.9.

Renewable sources of energy do not suffer from those tremendous losses. Although renewables sources of energy do suffer from power grid losses, those losses are minor (usually less than 5%).

As a result, the ERoEI ratios of renewable sources of power are often much higher than their fossil fuel counterparts. Wind turbines have an ERoEI of 18, compared to 10 for coal or 5 for natural gas. Solar PV panels powering battery-electric cars have an ERoEI of about 7 (deducting grid losses and recharging heat losses), compared to 2.9 for oil in gasoline-powered cars.

Incidentally, the extremely low ERoEI of oil for driving cars and trucks (2.9), refutes the notion that an ERoEI less than 8 would lead to the collapse of industrial civilization. That claim is extremely common in energy decline circles, but it was pulled out of thin air and was wrong to begin with for several other reasons. In fact, modern industrial civilization has been growing for decades (especially China and Korea) with ERoEIs far lower than 8.


Hall and Prieto’s criticism


More recently, a book by Hall and Prieto, has become all the rage in energy decline circles. That book claims that the ERoEI of solar PV is grossly exaggerated. Hall and Prieto adjust the ERoEI of solar PV downwards, by adding all kinds of incidental energy costs. They add every incidental energy cost they can think of, like the energy costs of building fences around the solar farm, and so on. They even add energy costs for things like corporate management, security, taxes, fairs, exhibitions, notary public fees, accountants, and and so on (monetary costs are converted into energy by means of a formula). Sometimes, their estimates of those costs are absurdly high. According to Hall and Prieto, the ERoEI of solar PV is only 2.45 when all those things are added.

Once again, the calculation is incorrect, and the comparison is invalid. Hall and Prieto are adding every incidental energy cost to solar that they can think of. However, such energy costs are not included in the ERoEI calculations of fossil fuels. For example, the ERoEI of oil does not include the costs of security in the middle east, or the costs of pipelines, tankers, tanker trucks, road wear from tanker trucks, construction of gas stations, energy costs of driving to the gas station to refuel, the highway patrol, and countless other things. If those costs were counted, then ERoEI of oil (which is already low, at 2.9, when including waste heat losses) would only decline further.

It's necessary to perform an apples-to-apples comparison here. If we're going to add up every incidental energy cost of solar PV, then we must perform the same procedure for oil. Only then would we have a valid comparison.


If you carry out a detailed accounting procedure for both solar and oil, then the ERoEI of oil will be even lower in comparison, than it already was. The incidental costs of oil are almost certainly higher than those for PV. Whereas oil is a scarce substance which requires massive extraction and transportation costs, silicon is the most abundant mineral in the Earth’s crust (sand, rocks) and does not require expensive or elaborate techniques of extraction or transportation. Whereas oil comes from unstable regions and requires massive security and military costs, silicon requires only a few security cameras. Whereas oil is subject to ongoing transportation costs, silicon needs to be transported only once during the lifetime of the solar cells. In general, the incidental costs of oil are far higher than those for solar PV. As a result, if we include those incidental costs in both cases, the adjusted ERoEI of oil will be even lower in comparison than it already was.

Again, when you perform valid, apples-to-apples comparisons, the ERoEI of solar PV is higher than that of oil or natural gas. Oil for transportation in cars has an ERoEI of only 2.9 (because of waste heat losses), but that is before we include incidental costs such as security, infrastructure, and so on, so oil’s total ERoEI would only decline, and would likely be lower than 2.

Hall and Prieto’s analysis is mistaken in other ways. Their estimate of 2.45 for PV is certainly far too low. They include things like taxes and land leases, which are not energy costs, but redistributions of money. Taxes provide services for society, so they should be counted as energy returns, not energy costs. If taxes in Europe on gasoline were counted as an energy cost, then the ERoEI of oil there would certainly fall to below 1. Also, Hall and Prieto include massive energy costs for premature retirement of solar cells because of rapidly advancing technology, but those cells won't be prematurely retired because they are paid for in advance and almost free to operate at that point, regardless of their efficiency compared to newer panels (newer panels would simply be added for future projects). Also, Prieto and Hall include things like administrative expenses, employees’ salaries, and so on, using a formula for converting dollars to energy which is far too high and is just wrong. You would obtain a far lower figure by 
converting salaries to energy using a more reasonable formula, of dividing the entire energy expenditure of a country by its entire GDP in order to obtain a conversion factor.

A correct calculation of the the ERoEI of solar PV including everything, would be more like 6, not 2.45. You can derive this figure by removing everything from Hall and Prieto’s analysis which is not an energy cost (such as taxes or land leases), and by using a more reasonable formula to convert monetary costs to energy.



Conclusions


In short. Renewables generally have higher ERoEI ratios than their fossil fuel counterparts. When you carry out a valid, apples-to-apples comparison, the ERoEI of renewables is generally better. This is because the ERoEI of fossil fuels is actually very poor--generally less than 5--when you correctly subtract the massive waste heat losses of combustion engines, and also subtract the massive incidental costs (such as security costs) of fossil fuels.

The only circumstance where fossil fuels have a higher ERoEI for renewables is when generating heat for smelting of ores or making cement or glass. That’s because such applications do not take place inside inefficient combustion engines, and so don't require subtracting the enormous waste heat losses of such engines. As a result, such applications still favor fossil fuels. Coal has a much higher ERoEI for this purpose than solar thermal plants, and (more importantly) is much cheaper. However, those uses are only a small fraction of total energy usage. Those uses will probably be the last energy uses which are converted from fossil fuels to other sources of energy, possibly more than 100 years from now.

Not that ERoEI matters much anyway. The whole idea is a mistake. What matters is the cost (in money) of net energy, for an energy source. If the cost of net energy is low, then the ERoEI is just totally unimportant. For example, if it were possible to build a 1 GW fusion power plant very easily out of duct tape for only $10, then it wouldn’t matter at all if it had an ERoEI of less than 2. We could just build more of them, and thereby produce the same amount of net energy as a higher-ERoEI (but more expensive) energy source. As long as an energy source has an ERoEI higher than 1, the ERoEI ceases to matter, and what matters is the total cost of net energy. This is discussed further here.


Monday, July 22, 2013

Being A Peak Oiler Means Never Having To Say You're Sorry

It has been about 15 years now since Colin Campbell and Jean Laherrere published their famous article in Scientific American, entitled "The end of cheap oil?" in which they predicted that oil supplies would soon peak and then decline. That article kicked off the modern peak oil movement1. So we can say that the peak oil movement is approaching its 15th birthday.

With that in mind, I think we should have a little retrospection. The peak oil movement1 is old enough now to reflect upon its history, its prior predictions, and its track record.

The peak oil movement has produced a long series of predictions, such as:

  • Production of all liquid hydrocarbons would peak in the mid-2000's or shortly thereafter (predicted by Campbell, Deffeyes, Laherrere, Aleklett, and may others)
  • Production of all liquid hydrocarbons would decline almost immediately thereafter, at about 2% per year (Campbell, Deffeyes, Laherrere, and many others)
  • Unconventional sources of oil, such as fracking, tar sands, and so on, would make little difference, and would not significantly delay the decline (Campbell, many others)
  • Oil production in the Kingdom of Saudi Arabia (KSA) would peak and then start declining in the mid-to-late 2000s. (Simmons, Stuart Saniford, WestTexas, and many others)
  • Natural gas production from all sources (including unconventional gas and fracking) would peak before 2010, and would immediately start declining rapidly (Simmons, Hughes, ASPO newsletter, ASPO Ireland, and many others)
  • Coal would peak around 2011 (Patzek)
  • Civilization would collapse (Savinar, Duncan, Heinberg, Kunstler, Orlov, Hansen, Ruppert, McPherson, and many, many others)
  • Global trade would end or be severely curtailed. Agriculture would re-localize. (Rubin, Kunstler, many others)
...and many other predictions, many times.

All of those predictions have been wrong. The peak oil movement has nearly a 100% failure rate of prediction, across many years, across an astonishing variety of domains.

What's more, many of the predictions of the peak oil movement, have not only been wrong, but drastically wrong. Predictions about a "natural gas cliff" in the late 2000's; predictions about civilization rapidly collapsing, and then reverting to a pre-industrial state; predictions that fracking would never work, or would amount to almost nothing; predictions that ocean shipping would soon end; and so on. Predictions like those were broadly shared within the peak oil movement. They were not only wrong, but drastically wrong.

Failed predictions are not the biggest problem of the peak oil movement, however. The biggest problem is how they respond when one of their predictions fails.

Every time a peak oil prediction fails, which is often, the prediction is immediately forgotten about within the peak oil movement, and is never mentioned again. There are no questions about why the prediction failed. Nobody ever asks, "what went wrong?" There is no retrospection. The theories are not modified in light of new evidence. Every time a prediction fails, peak oilers immediately forget about it and then just issue a new prediction; and when that fails too, which inevitably happens, it too is forgotten. Sometimes a few peak oilers will try vigorously to change the subject, when asked why a prediction failed, or will claim implausibly that the prediction had never been made. They do not, however, address the issue. Clearly, peak oilers are capable of forgetting.

The problem is, that nobody outside of the peak oil movement, forgets. People outside of the peak oil movement, are not part of the unspoken consensus to forget every failed prediction. They wonder why these predictions have failed. When they see the leaders of the peak oil movement simply dodging this issue, over and over again, it makes the movement appear like quackery. By forgetting their failures, the peak oil movement may comfort its members, but it further alienates itself from the wider public.

An example of this, is a recent post on The Oil Drum. The Oil Drum is shutting down at the end of this month, after 8 years of service. It's authors claim that the reason for it shutting down has nothing to do with the decline of readership after repeated failed predictions. No. Instead, one of the editors of The Oil Drum earnestly claims that they decided to shut it down because they've been so right that it would be pointless to continue repeating such correct things:

"The facts, in neither case, change, but the amount of new information while accumulating ... is often repetitive or confirmatory of earlier stories and thus harder to turn into interesting and exciting new material"

I don't feel that is an accurate recounting of the history of the peak oil movement. Nor is it an accurate recounting of the past content on The Oil Drum, or other peak oil websites. If I went back to 2007, I could find a fairly broad consensus, in peak oil circles, that industrial civilization was about to collapse and revert to a pre-industrial state. It's not clear to me, at all, that current stories are confirmatory of that. Even if I ignore the doomsday prophecies, and focus only upon the more sober elements of the peak oil movement, I come across graphs like this one (from Colin Campbell), showing that production of all liquid hydrocarbons should have declined by 25% by now.

This issue of the "memory hole" is very important, because of frequent claims by peak oilers that their movement is a science. Peak oilers frequently claim that their theories are scientific, that their predictions are based upon science, that their conclusions are derived in a straightforward fashion from the laws of thermodynamics, and that their theory is akin to climate science (people deny it because they're misled).

I must remind peak oil adherents that being scientific has nothing to do with just throwing around scientific-sounding terms. Nor does it have anything to do with mentioning the word "thermodynamics" frequently, or drawing tenuous analogies between themselves and climate scientists. Actual science requires falsifiable theories, something which the peak oil movement conspicuously lacks. In science, if a hypothesis fails in its predictions, completely, over and over again, then the hypothesis is wrong and must be modified or abandoned. You cannot just use the same hypothesis to issue another prediction (like, peak oil is perpetually five years in the future) because that method lacks any criterion of falsification. That method could simply be repeated, indefinitely, until peak oil actually occurs, whenever that will be.

It's not useful to retreat into saying "oil must peak some day" and call that a "fact". That is the method employed most recently by many peak oil writers. They say that peak oil is a "fact" because oil must peak some day. While true, that claim is obvious, extremely imprecise, and not a useful prediction. Even the major oil companies, such as Exxon, Shell, and Total, acknowledge that oil will peak some day, have always acknowledged it, and realized it before the peak oil movement ever came along. It's simply repeating a truism to say that oil must peak some day. It's simply a case of forgetting their earlier predictions, and then making their subsequent predictions less and less precise, until what they are saying is so general that it says almost nothing.

The question is whether the peak oil movement has been correct about any specific prediction, or anything which others denied. On the points upon which peak oilers differed from anyone else, they were mistaken. Although oil will certainly peak some day, and then decline, still, the methods from the peak oil movement for predicting when that will occur, how rapid the decline will be, and what will happen to civilization more generally, have been totally incorrect.

The peak oil movement is not science--quite the opposite. It does not contain any valid, specific, predictive hypotheses which were confirmed by subsequent evidence. It has not been honed in light of new evidence. It contains mistaken theories and methods, which have not been abandoned. Thus, the peak oil movement cannot be called science.

The peak oil movement is an ideology which is committed to a specific conclusion, no matter what. As such, the peak oil movement is more like an ideological group. It pretends to be scientific in order to comfort its members, but its pretensions to science are totally superficial. It lacks anything resembling a scientific method.

I realize these points must be very difficult for peak oilers to accept. Many peak oilers have devoted a considerable fraction of their lives and their resources, to the conclusion that oil would soon peak and civilization would soon falter. It must cause them significant suffering to consider that everything they thought about this topic, everything they spent so much time upon, has been wrong. That goes doubly for the many peak oilers who expressed very little uncertainty about these predictions.

Why, then, am I writing this? Do I want to embarrass peak oilers?

It has been fifteen years now since the peak oil movement began. That is long enough. It's time to acknowledge that there are serious problems with even the most fundamental tenets of peak oil theory2. I am not saying that the entire thing has been a waste. I'm sure many people learned a great deal about oil extraction, energy, and other topics, from reading The Oil Drum. However, it's time now to acknowledge that peak oil theory was wrong. It's time either to move on, or to make serious modifications to the theory, and to explain why its predictions have failed and why the newer theory avoids the prior mistakes.

There is a peak energy blog called "question everything", which has the following byline:

"When what is happening in your world doesn't make sense, when it doesn't conform to your beliefs about how things should work, it's time to ask hard questions."

Indeed, it's time to ask hard questions. It has been time to ask hard questions, for at least the last five years. So far, those hard questions have not been asked. Better late than never.

Endnotes

1. By "peak oil movement", I'm referring to the movement unintentionally started by Colin Campbell, Jean Laherrere, and so on. The movement was based upon the theory that global hydrocarbon production could be predicted using extrapolations of curves, such as creaming curves, Hubbert linearization, and so on. Using such curves, the movement predicted that global hydrocarbon production would imminently peak and then decline, which would cause severe disruption to industrial civilization, such as re-localization, and so on. The movement mostly congregated on websites such as "The Oil Drum", "PeakOil.com", "Life After The Oil Crash", and so on. That's who I'm referring to, when I say "peak oil movement". I'm not referring to everybody who believes that oil will peak some day.

2. By "peak oil theory", I'm referring to the theory that global hydrocarbon production could be predicted using extrapolation techniques such as Hubbert linearization, creaming curves, and so on. I am referring to the theory that peak oil was very imminent, and subsequent declines would be fairly rapid. I am also referring to the related belief that imminent peak oil would cause major disruptions to industrial civilization, such as re-localization, and so on. Those things are what I'm referring to, when I say "peak oil theory". I'm not referring to the idea that oil will peak some day, which almost everyone believes.

Tuesday, December 25, 2012

New Year Predictions


Introduction

In this article I will offer some of my own predictions for what the future holds, with regard to energy supplies. I have three reasons for doing this. First, I wish to provide an alternative set of predictions which does not commit any of the errors of the peak oil camp. Second, I wish to provide a set of predictions which does not assume either business as usual OR collapse, thereby avoiding the "either-or" thinking prevalent in peak oil circles which posits that either business as usual must continue (impossible) or we must collapse to a pre-industrial state. Third, I wish to counteract the notion (very common in peak oil circles) that economists or students of economics assume that the world is infinite or extends to infinity in all directions, or that new resources magically appear as a consequence of demand. By offering these predictions, I hope to provide material which hasn't been considered by peak oil adherents, because of their unfortunate tendency to ascribe magic-infinite beliefs to all those who do not accept their conclusions.

Unfortunately, I cannot give all my reasons for believing the predictions I'll put forth here. Each prediction would require an essay-length treatment. For example, my prediction regarding ocean shipping would require an explanation of the basic physics of ships, of the alternative fuels available, of the time required to build a new fleet of ships, of capital expenses, of the methods that ship buyers use to calculate the size and speed of new ships, of basic optimization problems, and so on.

Although I can't give a fully detailed explanation of my reasons (because I don't write peak oil blogs for a living), I still can give my reasons in overview, or explain briefly why I think something is the case. For example, I can explain that ship builders could easily build ships that are more than 5x as fuel-efficient as today, but it only becomes cost-effective to do so when fuel is more expensive than now; that ship builders pick the most cost-effective ship given their anticipations about the future prices of fuel; that we have more than enough time to transition the shipping fleet to more efficient ships; and that these things imply that ocean shipping will not increase by more than 15% in the long run because that is how much the costs would increase with a tripling of oil prices, and if oil prices increased by more than that then shipping companies would switch to alternative fuels like anhydrous ammonia which do not require any fossil fuels. This degree of explanation is possible here.

I will offer basic reasons along with each of my predictions. In some cases, I will leave out the basic explanation when I feel it's fairly obvious.

With that in mind, here are my predictions for the future.

Predictions

Oil production will peak and start declining some time in the next 12 years (before 2025). I gather this figure from Jean Lahererre. Please note that prior predictions from peak oil pessimists, and from people using linearization methods, have been quite incorrect. Nevertheless, I will make a worst-case assumption here, and will assume that peak oilers finally get it right. Once the declines begin, oil will decline at less than 1% per year for the first decade or more.

Similarly, coal and natural gas will both peak before 2100 and will decline gradually thereafter.

A few years before the peak of oil, speculators will detect that oil production is nearing its peak. The speculators will immediately bid up the price of oil to over $200/barrel*. This could happen fairly rapidly, like within 2 years. Speculators will bid up the price of oil to what they believe the longer-term price will be. Speculators do this because they make money by anticipating things, thereby moving forward the date of price increases, and prompting the transition to alternatives long before any declines have actually occurred. I'll assume (for simplicity and convenience) that gasoline will cost $7/gal* after at the pump after the initial increase, in the USA, and will cost more in European countries where petrol taxes are higher. It's possible that the price of gasoline will briefly go higher than this.

Once the price of oil has increased, the world economy will accelerate its gradual shift from oil to other sources of energy for transportation. Also, the world economy will accelerate its gradual shift to more fuel-efficient kinds of transportation. Ships will become larger and slower, and thereby much more fuel-efficient. Trains will displace trucks to some extent, and new track will be laid. Cars will become more fuel efficient. Plug-in hybrids will become common. Eventually, transportation will be electrified. This is because the entire economy automatically and always transitions to the next-best alternative when something becomes too expensive.

The price of oil will eventually level off and will never go higher than $200/barrel* for long, because prices higher than that will cause car makers to switch to battery-electric drivetrains, thereby driving the price back down. Higher prices will also cause cargo carriers to switch fuels, electrify, and switch modes (like from trucks to trains), thereby driving the price back down.

Once oil has been declining for a few years, further declines will be accompanied, simultaneously, by improved efficiency, fuel switching, and greater electrification. The long-term price of oil will hover around the cost of its next-best alternative energy source and carrier (batteries in cars), continuously, until oil is nearly exhausted, 100+ years from now. There may be temporary periods of higher prices, however the price of oil will always ultimately revert to the cost of its next best alternative energy source and carrier.

In the long run, the economy will adjust in the best manner possible to much higher oil prices. This is not the same as saying that resources are infinite. It implies that people will drive plug-in hybrids and will end up paying modestly more for personal transportation. Cargo shipping will cost slightly more. That is all.


More detailed predictions

I wish to go into further detail about these predictions. However, from this point forward it will be necessary to divide my predictions into SHORT-RUN and LONG-RUN predictions. By SHORT-RUN I mean that period of time which is shorter than the replacement time for the auto fleet (like 15 years), plus the amount of time necessary to shift production lines to more efficient cars. By LONG-RUN I mean that period after all transportation sectors have turned over their fleet of engines, ships, cars, trains, etc.

It's necessary to divide predictions into short-run and long-run predictions, because there will be a period during which we transition to a more efficient transportation infrastructure. There will be a period during the transition, and a period after the transition, and the economy will look different during these two periods. After declines have begun, however, car manufacturers will anticipate further declines.

There will be a transition period because people and firms will not correctly anticipate the date of peak oil or the amount of price increases. This is because the exact date of peak oil is essentially uncertain, and also because consumers do not anticipate things, but essentially just respond to changing circumstances as they occur.

The short-run effects of high oil prices

In the short run, the abrupt increase in oil prices, caused by speculators, will trigger a nasty recession.

The world economy will eventually recover from the recession and continue growing even though oil prices will never return to their prior levels, and even though oil production will never again increase to its prior levels. Economic growth does not require increasing oil extraction.

At that point, car manufacturers will scramble to increase production of ultra-light cars, hybrids, plug-in hybrids, electrics, etc. Car manufacturers will take more than 5 years to shift their production to more fuel-efficient cars. Car manufacturers will "aim ahead" and will transition to producing cars which they think are appropriate for the longer run, given further gradual declines in oil supplies. This is because firms attempt to anticipate, just like with the Y2K bug. They may be imperfect at this, but they will anticipate further declines once declines have begun.

During the transition to more fuel-efficient cars, many people will be stuck with old gas guzzlers which are then obsolete. There will be an "interim period" of about 10 years during which many people drive old cars which get less than 30 mpg. Some of these people will need to curtail discretionary travel, like long-distance road trips, because fuel will be too expensive. Those people will need to drive somewhat less until they can replace their gas guzzlers with new and more fuel-efficient cars. Eventually (within 14 years) most of the car fleet will have shifted to much more fuel-efficient cars, and to plug-in cars. At that point, if there are further declines in oil supplies which are more rapid than car manufacturers had anticipated, then a few consumers will have to curtail discretionary longer-distance transportation (in other words, they will be limited to the range of their batteries some of the time).


The long run-effects of high oil prices (30 years after the peak)

In the long run (30 years after the peak) the entire transportation infrastructure will have been converted to more efficient modes of transportation, and to alternative energy sources.

In the long run, $7/gal* gasoline will make very little difference for first-world living standards. The economy will adjust to higher oil prices. Cars will require far less gasoline to travel a given distance, and will be able to travel a considerable distance without any gasoline at all. When this transition has occurred, the nastiest effects of peak oil will have passed.

In 30 years, personal transportation will be modestly different. A few more people will take public transportation. Most drivers will have plug-in hybrids that look like priuses.

The total cost of automobile transportation will be slightly higher than today. After the car fleet has transitioned to plug-in hybrids, the average person will pay about $50/month* more for driving a car than they do now, even with $7/gal* gasoline. This figure of $50/month increase is derived from the additional cost which prius-like plug-in hybrids impose, assuming that battery costs come down somewhat as a result of both mass manufacture and technological innovation, and that gasoline costs $7/gal* and people drive 1000 miles per month, on average. (People will drive 750 miles per month using batteries and 250 miles using gasoline. The cars will get 60 mpg when using gasoline, so gasoline costs will be $30/month, plus another $40/month for electricity, which is much cheaper than we pay for fuel now. However, the savings on fuel will be more than offset by a $6000 increase in the cost of the car).

Cargo transport by sea will be change a bit. Shipping companies will switch to ships which are much larger, and which travel at 2/3rds the speed of current ships. Shipping companies will do this because they are always replacing old ships with the most cost-effective new ships for what they anticipate fuel costs will be for the next 20 years. These decisions will cause a 60% reduction in fuel consumption per tonne-mile, while increasing the capital expenses of the shipping fleet by a modest amount. The ultimate result will be a very small increase (less than 15%) in shipping costs, per tonne-mile.

The figure for cost increases (~15%) is easily derived by looking at the additional capital cost of ships which use 1/3rd the fuel, and assuming 3x more expensive fuel and slightly higher operating expenses. You can look up a few basic figures and then solve a basic optimization problem using Calculus 1 to figure it out. I have not bothered to do this, however I can "eyeball estimate" what the approximate result would be. Shipping companies will figure it out since they know more about the topic than you and I, and they carry out optimization problems like that routinely. Their price of fuel will never increase by more than 3x in the long run since synthetic fuels are then much cheaper, thereby encouraging switching and driving down the price of oil, and this implies that total costs for ocean shipping will not increase beyond 15% in the long run.

Shipping companies may also switch fuels at some point, to natural gas or to coal (with steam turbines).

Cargo transport by land will change a bit. More cargo will be transported by rail, and less by truck, because rail uses about 1/4th the energy per tonne-mile. New rail will be laid. Trucks may have 3 or 4 trailers and may travel at slower speeds, thereby reducing fuel consumption. Other innovations are possible, such as trolley-trucks. Some rail ways will be electrified. Ultimately, costs of cargo transport by land will increase modestly, but definitely not more than 25% per tonne-mile.

The increases in shipping costs (both land and ocean) will cause negligible increases in the cost of transported goods. For example, a pair of shoes will cost about $0.15* more. Food will cost very slightly more.

Plastic will become more expensive and rarer. Food packagers will switch to other materials, such as glass bottles, aluminum cans, cardboard boxes, etc. Clothing and toy manufacturers will switch to other materials, such as silicone, rubber, canvas, and other materials not derived from fossil fuels.

Air travel will be considerably more expensive than today, perhaps more than 40% more expensive. This will be the most visible and dramatic long-term effect of declining oil supplies.

Competition from Chinese people for oil supplies will cause far more rapid declines in the supplies available to Westerners during the next 20 years than any geological constraints.

Ultimately, we have the technology available to us today, to reduce fuel consumption by more than half without any reduction in miles traveled per person, or or any reduction in cargo tonne-miles. We could simply switch car production to prius-like cars (thereby doubling mpg) and use more trains and larger ships. The market economy will optimize a solution which is at least as good as this.


The very long-run effects of fossil fuel depletion (After all fossil fuels have been exhausted, 100+ years from now)

People will ride in battery-electric cars. Energy for the cars will come from solar power plants, wind turbines, and nuclear power plants.

Electric power generation will shift to nuclear plants and renewable plants. This will happen smoothly and without any major disruption, since the entire fleet of power plants will be replaced several times in the interim, and power companies order new plants based upon anticipation of the cost of fuel over the next 20 years. Prices for electricity will probably be lower than today, because renewable energy costs are decreasing over time and already are not much higher than prices for fossil fuel plants.

Total energy production worldwide will be far higher than today, despite a concomitant decline of fossil fuels. This is because China and India are growing rapidly and ultimately do not require any fossil fuels to continue that growth.

Ships will use anhydrous ammonia for fuel, I would guess (speculative). The ammonia will be derived from wind power, taken from stranded wind resources. Overall, ocean shipping will cost slightly more than it does today.

Truck transportation will be rarer. There will be far more rail in the world, and far less truck transportation. Very large retail outlets (like Wal-Mart etc) might have their own rail terminals (obviously this is very speculative).

Housing will have better insulation and will make greater use of "passive heating" techniques.

The world economy will have gone through many recessions. Each time, the economy will recover, and will continue growing despite a near-total exhaustion of all fossil fuels.

The average temperature of the surface of the earth will be 4 degrees centigrade warmer.

In 100 years, most people in the world will have first-world living standards, despite the exhaustion of fossil fuels. Fossil fuels are not needed for economic growth. In fact, fossil fuels are not needed for any purpose. They are the cheapest fuels right now. That is all.

No Disruptions Will Ever Occur

Most importantly. There will NEVER BE ANY MAJOR DISRUPTION to industrial civilization as a result of declining supplies of fossil fuels. More specifically, there will never be any major disruption to food supplies, food transport, electricity production, or any other essential thing, in any industrialized country, as a result of declining fossil fuel supplies.**

The economy transitions to alternatives when it's appropriate to do so. There are alternatives for every use of fossil fuels, and the economy will use them when the time is right. The economy transitions very reliably, like clockwork. It is always transitioning, even right now, and it will continue to do so as fossil fuels decline.

Long-distance transport of goods will never end. Long-distance transport consumes less than 5% of all oil supplies now, so it wouldn't be sacrificed during the next 100 years even if oil were the only possible fuel. However, oil is not the only possible fuel, since ships and trains can easily use other fuels such as synthetic fuels or electrification (for trains). As a result, there is more than enough time to transition (100+ years), and more than enough alternatives to do so.

Industrial growth will continue despite the decline of fossil fuels. This is because fossil fuels are not needed for industrial growth. Growth could occur with any source of energy which returns more than was required to obtain the energy. For example, it is entirely possible to use a single solar thermal plant to smelt the ores, melt the glass, and manufacture the synthetic fuels needed to build five more solar thermal plants, and so on. As a result, industrial growth does not require any fossil fuels and has never required any. Fossil fuels were selected first because they were cheapest.

The economy has more than ten times as much time as required to transition to alternatives, while avoiding any disruption of essential services. In fact, the economy could reduce its consumption of oil by 90% within 10 years without any risk of collapse. Transitioning that quickly would impose severe restrictions on personal travel in the interim (such as fuel rationing) until new vehicles were built, but would pose no risk of collapse. There are two reasons the economy would avoid collapse in this case: 1) the economy sacrifices the most important things last; and 2) the economy starts transitioning right away to alternatives. Thus, even if we underwent a 90% reduction in oil supplies over ten years, there would be absolutely no risk of collapse, because 10% oil supplies are more than enough to provide essential services (~3% for tractors, food transport, public transport) and to provide for the remainder of the transition at the same time (building an electric transportation infrastructure).

I realize this point requires far more elaboration. Look at it this way: look up the amount of energy used by truly essential purposes in the US economy (i.e. food production and transport, etc). Could you devise a way to transition to trolley-buses and trolley-trucks throughout suburbia while continuing essential services? Try to think of ways to avert collapse with 10% oil supplies. What if you banished all personal auto transport, except to and from work in carpools? What if you diverted all construction resources to rapidly putting up wooden poles (like old telephone poles) with cables strung between them for trolley buses, throughout suburbia? If this were done in parallel everywhere, and you employed 25% of the population in doing only that, how long would it take to have working trolley-bus service almost everywhere? How much steel is made right now, and how much electrical cable could be built per year for the trolley buses? If all lumber were diverted to poles, how many could we make? Wouldn't it be possible to convert the densest suburban areas to electrical transport first, within a few years, thereby freeing up some of the 10% oil supplies for additional purposes almost right away? Couldn't we replace the wooden poles with sturdier structures once the new infrastructure was going? Also, could we build natural gas cars for rural residents within 10 years? How many cars do we build now, and how different are natural gas cars? How long would it take us to build synthetic fuel plants, at the same time as our trolley-bus system? Could that also be done with the 10% oil budget? The answers to these questions are fairly basic. We could build enough of an alternative transportation infrastructure within a few years. We could produce enough steel, poles, and trolley-buses within 3 years to transition enough of the economy to an alternative transportation infrastructure. Not to mention, we could start mass-manufacture of natural gas vehicles almost right away since they are nearly identical to the vehicles constructed now. These sudden changes would be at massive cost, and tremendous inconvenience, and would require the abandonment of much capital equipment; but it would avoid any possibility of collapse. Bear in mind that the petroleum shortage would start easing as soon as any fraction of our hypothetical alternative infrastructure was complete.

If you can figure out a way to avoid collapse, off the top of your head, the economy will do that or something better. The economy is like a giant learning machine. It optimizes, evolves, and finds solutions. That is how our economy got to this point. That is how the network of rail lines, mines, factories, suppliers, sub-contractors, fiber optic lines, retail stores, etc, developed in the first place and operates now. If the economy were so stupid that it cannot manage a simple optimization and reallocation problem, then the economy would collapse within a month, regardless of peak oil. The problems entailed by just operating the economy now, are vastly more complicated and difficult than the problems of adjusting to peak oil.

Again, there will not be any disruption of essential services in first-world countries due to peak oil. Anyone who claims there will be, is badly misunderstanding the speed with which the economy could adjust, how it adjusts, the alternatives available, and the likely pace of fossil fuel declines. Any serious analysis of these matters would not permit even the minutest chance of collapse due to fossil fuel declines.

Alternative Possibilities

Of course, I can't really predict the future. I'm relying upon certain assumptions while making predictions, and those assumptions may turn out to be incorrect. If some of my assumptions are incorrect, then obviously my predictions above would be incorrect to some extent also.

My major assumptions are as follows.

First, I am assuming that we don't suffer unpredictable disasters like a nuclear war, or an emergent disease which kills of 90% of the population, or a meteor strike which decimates the biosphere, or any other similar disaster. Things like that are non-linear and essentially impossible to anticipate. Obviously if any of them occurred, then we could have an interruption to civilization. I am only claiming that fossil fuel depletion will never cause any interruption.

Second, I have assumed that oil will soon peak and decline. In effect, I have graciously granted this point, and am willing to accept the prognostications of ASPO and Jean Laherrere about future oil production. I should point out, however, that their prior predictions have been overly pessimistic, and quite incorrect. Also, their predictions are controversial. There are petroleum analysts who believe we'll be able to exploit the massive resources of unconventional oil such as tar sands and shale. Were this to happen, then petroleum prices might inch up gradually over decades (in fits and spurts, to be sure) and the economy would face only a gradual transition to alternatives, without the irritating "transition period" described above. In this case, auto manufacturers would have more than enough time to transition production to more efficient cars, and there would never be any irritating "transition period". In this case, my predictions above would be too pessimistic, and we might never face anything more severe than slight recession and modestly higher prices as we transition to alternatives to oil.

Third, I have assumed that there will be no major technological developments in the ensuing years. To be more specific, I have assumed that batteries and other energy storage devices remain at their present level of development. Clearly, this may not be true. Someone may invent the better battery one day, and I have no way of predicting whether this will occur. If a better battery were invented, then the economy could transition off of oil before the peak even occurs, in which case peak oil would be a complete non-event of no interest to anybody except toy manufacturers and airlines, who would then face a century-long transition to other materials or fuels. Or, if the better battery were invented after peak oil, then we could return to "energy guzzling" cars again.

Summary

  • Oil may peak and decline before 2025.
  • If that happened, oil prices would increase fairly rapidly to over $200/barrel.
  • In the SHORT RUN, this would cause:
    • A nasty recession
    • An "interim" period, during which some vehicles are "gas guzzlers" relative to what is then required. This "interim period" will last until the car fleet can be transitioned to plug-in hybrids.
    • People who own these "gas guzzlers" will need to curtail discretionary travel, and drive less, until they can buy a more fuel-efficient car.
  • In the LONG RUN, peak oil will cause:
    • Very little difference.
    • People will drive prius-like plug-in hybrids
    • People will pay about $50/month* more for car transportation.
    • Slight (meaning barely perceptible) increases in the cost of goods due to increased shipping costs
    • Plastic will be rarer for food packaging, cases for electronics, and toys. Other materials (silicone, aluminum, paper, cardboard, glass) will become more common for these purposes.
  • In the VERY LONG RUN, the exhaustion of all fossil fuels will cause:
    • Very little difference in day-to-day living compared to continued fossil fuels. Obviously there will be major technological changes in that time, but most changes in day-to-day living won't be imposed by declining supplies of fossil fuels.
    • Energy and transportation prices will be slightly higher _per person_
    • Energy will come from renewable sources
  • There will never be any major disruption, to any essential services, in any industrialized country, over any time period, due to declining fossil fuel supplies
    • The economy adjusts rationally to declining fossil fuel supplies
    • We have more than 10x longer than would be required to adjust to declining fossil fuels
    • Peak oil poses absolutely no risk of collapse
  • If APSO's projections about oil supplies are incorrect, and we exploit the large amount of unconventional oil resources, then the transition away from oil could be very gradual and may never pose any difficulty more serious that mild recession and modestly higher prices.



* Throughout this article, the prices quoted are in 2012 US Dollars. Obviously they could be much higher in the future because of inflation.
** Of course there will be transient disruptions to electricity grids, etc. There will be brown outs and other things, which happen all the time and have always happened. I'm claiming there will be no sustained, severe interruption.
*** NOTE: I made several minor modifications to this article as of July, 2013, as follows: I took a more negative stance on the prior predictions of ASPO etc in light of recent events. I also clarified the section about the interim period, by adding the word "discretionary".