By Chris Nelder
Posting in Energy
Don't believe the hype: The U.S. will not overtake Saudi Arabia as the world's top oil producer, nor become self-sufficient in oil, nor become a net oil exporter.
Will the U.S. overtake Saudi Arabia as the world's top oil producer by 2020?
That's what every headline blared after the release of the International Energy Agency's World Energy Outlook (IEA WEO) on November 12.
Ever eager to report an upbeat story on energy, energy journalists everywhere seized on that part of IEA's forecast, while generally ignoring the caveats. Most of the increase in U.S. production is expected to come from additional "tight oil" production from shale formations like the Bakken in North Dakota and the Eagle Ford in Texas. But, as IEA's chief economist Fatih Birol noted, "Light, tight oil resources are poorly known ... If no new resources are discovered (after 2020) and plus, if the prices are not as high as today, then we may see Saudi Arabia coming back and being the first producer again."
Further, IEA warned that in order to limit global warming to 2°C above pre-industrial levels -- the generally accepted target to stabilize carbon emissions and avoid dangerous climate change -- no more than one-third of the world's remaining proven fossil fuel reserves can be burned, and massive global investments in energy efficiency and low-carbon energy technologies will be needed.
But why let dirty details like those get in the way of a good story? Tell us more about how we'll beat Saudi Arabia and become energy self-sufficient by 2035! Let's hear about North America becoming a net oil exporter by 2030! By all means, tell us how this report means that the "peak oil idea has gone up in flames!"
As always, I prefer to look at the data.
The IEA scenario
The core of the IEA's forecast for U.S. production is expressed in this chart:
U.S. tight oil production data is still notoriously hard to come by, as output is still growing rapidly and the data is reported by the states with various lag times. The most recent figure I could obtain from the U.S. Energy Information Administration (EIA) was 950,000 barrels per day as of April 2012, as cited in an August 2 presentation to the U.S. House of Representatives by EIA chief Adam Sieminski. Further muddying the waters, some analysts lump natural gas liquids in with their tight oil production figures, for a total of 1.2 million barrels per day (mb/d). Others, like the energy consultancy Wood Mackenzie, put U.S. tight oil production at 1.5 mb/d this year. For our purposes today, I'll call current tight oil production a round 1 mb/d.
In the IEA WEO, tight oil production is expected to reach over 3.2 mb/d by 2025 in their New Policies Scenario, implying an increase of around 2.2 mb/d over current levels.
According to the EIA's most recent data (in the October Monthly Energy Review), the U.S. produced an average 6.225 mb/d of crude oil plus condensates (natural gas liquids which are naturally associated and produced along with the crude) in the first seven months of 2012, including tight oil. Over the same period, Saudi Arabia produced 9.926 mb/d of crude plus condensates.
Adding the anticipated 2.2 mb/d increase in U.S. tight oil would bring the U.S. crude plus condensate total to 8.425 mb/d, which is less than Saudi Arabia's current production. Under the IEA's forecast that Saudi Arabia's production will be roughly the same in 2025 as it is today, the U.S. will not overtake it in oil production.
So how did the IEA come up with the figures suggesting that the U.S. would overtake Saudi Arabia? By including stuff that is not oil, mainly natural gas liquids (NGLs). Including these additional liquids would bring the U.S. total to 11.1 mb/d in 2020, versus Saudi Arabia's 10.6 mb/d.
There are just a few problems with this scenario.
First, as I detailed in May ("Fuel to Byrne"), natural gas liquids are not equivalent to oil. They contain only about two-thirds of the energy content of oil; they are far less versatile in their applications; and only about 19 percent of a barrel of natural gas liquids is actually usable as vehicular fuel. If the implication is that the U.S. is going to be able to drive around on its own domestically-produced fuel, then that implication is simply wrong.
Second, even in the IEA's model, the U.S. only surpasses Saudi Arabia for about five years, and only by about 0.5 mb/d at the peak. Australian energy blogger Matt Mushalik helpfully charted this brief, shining moment in his excellent summary of the IEA report:
Source: Crude Oil Peak
This also implies a reduced outlook for Saudi production, which the EIA projected last year would rise to 13.9 mb/d by 2025. Even if this optimistic scenario pans out for the U.S., it's hardly good news from a global standpoint.
Third, the IEA's forecast for the U.S. through 2035 depends on about 2 mb/d of fields "yet-to-be found" and "yet-to-be developed." This has become a regular feature of the IEA's forecasts, and it remains as uncertain as ever. Energy journalist Mason Inman referred to it as the "wedge of hope" in his discussion of the IEA's WEO 2010. If that wedge of hope fails to materialize, then U.S. production in 2035 would be around 7.2 mb/d, below the roughly 8 mb/d of crude and NGLs the U.S. now produces according to the EIA's AEO2012 Reference case. (Including biofuels and refinery gains, U.S. production is now 10.21 mb/d in the AEO2012 Reference case.)
Fourth, the forecast of 3.2 mb/d by 2025 in the IEA WEO is significantly higher than even the most optimistic EIA scenarios published four months earlier, as another of Mushalik's helpful charts shows:
Source: Crude Oil Peak
Fifth, the IEA's forecast is also substantially higher than a bottom-up reckoning of U.S. tight oil production suggests. A new analysis of the HPDI database -- one of the few comprehensive well-by-well databases in existence -- by veteran Canadian geologist David Hughes calculated the average decline rates for recent tight oil wells against the number of remaining prospective drilling locations estimated by the EIA. He found that at current rates of drilling, U.S. tight oil would peak at around 2.23 mb/d in 2016 -- a full 1 mb/d below the IEA's scenario. At a slower rate of drilling, U.S. tight oil would peak at around 2 mb/d in 2018. If Hughes is correct, then the entire US tight oil boom will have crested and begun its decline by 2020, the year in which IEA expects the US to overtake Saudi Arabia. (Hughes' report is scheduled for released in January 2013 by the Post Carbon Institute.)
A recent analysis by Bernstein Research matches Hughes' forecast quite closely, seeing production from crude, condensates and NGLs of 10.5 mb/d by 2015, a 2 mb/d increase over their 8.5 mb/d estimate for this year. After that, they expect U.S. production to fall back to 9 mb/d by 2020.
Sixth, the IEA's scenario depends on what appears to be a simplistic assumption for future oil prices. Their base price scenario depends on a crude oil import price of $120/bbl (as compared with an average $108/bbl in 2011), a highly uncertain assumption for a 23-year forecast period. In his note to clients about the IEA report, Deutsche Bank analyst Paul Sankey wrote that the anticipated increase in tight oil would overwhelm U.S. refiners' already-falling demand for light sweet crude, driving prices and profits below the threshold needed by U.S. producers to sustain such an increase in drilling. Profit margins could decline to $10 - $20/bbl and stifle the appetite of investors in a highly debt-driven business. "In short, a prediction that the US will become the world's largest oil producer is a self-defeating proposition," Sankey summarized.
While I agree with Sankey's point, I'll reiterate that there is also a limit to what consumers will pay for gasoline and diesel. As I detailed in June, the current ceiling for oil prices appears to be around $125/bbl for the global Brent benchmark (or $105/bbl for the WTI U.S. benchmark). The IEA's average price assumption is just below that ceiling, implying that prices would certainly exceed it repeatedly over their 23-year scenario, killing demand and further weakening investor appetites each time it did. Indeed, energy analyst Gail Tverberg calculates that on current trends, the real cost of a barrel would be $169 in 2020 and $467 in 2035. The IEA does not recognize a price floor nor a ceiling in its scenario. If global crude production begins its long decline around 2015, as I (and others, including former IEA forecaster Olivier Rech) expect, then the stable, modest prices IEA assumes through 2035 are simply off the table.
More dubious assumptions
To complete the picture of U.S. energy self-sufficiency, IEA assumes that oil demand can be cut by 5 mb/d, a 26 percent drop from the current consumption level of 19 mb/d. This would reduce net U.S. oil imports to 3.4 mb/d.
The vast majority of the reduction would come from "demand-side efficiency," which I assume means more efficient vehicles. As I explained in September, the majority of the decline in U.S. oil consumption in recent years owes more to the recession than to improving vehicle efficiency, so I am skeptical of this claim.
IEA also foresees a significant increase in biofuel usage, a particularly dubious proposition considering that corn ethanol production is no longer subsidized and is more likely to decline than increase from here. Apparently IEA hopes that alternative biofuels made from crop waste, switchgrass, and other biomass (some of it imported) can supply this wedge, but after many years of watching such sunny forecasts wreck on the rocks of real-world price and scalability issues, I am inclined to disregard this portion of their forecast as well. Only their tiny expectation for increased natural gas transport looks reasonable, and in fact may be too pessimistic. By 2035, I think switching transport trucks to natural gas could save as much as 1 mb/d, at least from a technical and economical standpoint.
The remainder of the IEA's forecast, in which the U.S. "becomes all but self-sufficient in net terms by 2035" [emphasis mine] presumably relies on additional exports of coal and natural gas. But even with their optimistic assumptions, they do not appear to have eliminated U.S. oil imports by 2035.
In summary, the IEA's forecast shows the U.S. exceeding Saudi Arabia in liquids (not oil) production for a brief period of time, under highly optimistic assumptions. The U.S. might become energy self-sufficient on a net BTU basis, after accounting for increased exports, but it would not eliminate oil imports. And the prospect of North America becoming a net oil exporter by 2030 depends on a host of additional uncertainties in Canada and Mexico; even if that headline-grabbing milestone were achieved, which I think is unlikely, it would not result in lower fuel prices for North Americans.
Finally, a puny 3.2 mb/d of U.S. tight oil production by 2035 hardly dismisses the prospect of peak oil in a world that burns over 90 mb/d with a background decline rate of over 5 percent per year, according to the IEA's own calculations. Indeed, in the new report the IEA forecasts "peak demand" before 2020 in several scenarios, which longtime observers will instantly recognize as code for "oil supply is going to be a problem, but we'll get around it through better efficiency and fuel-switching without uttering the dread words peak oil."
Nov 27, 2012
Thanks meant for sharing this type of satisfying opinion, written piece is fastidious, thatâs why Iâve read it completely. http://www.topfishoilbenefits.com/fish-oil-benefits/
Verbatim launches MR16 LED lamp based on RGB phosphor mix A violet [url=http://www.mp-led.com/][b]LED[/b][/url] combined with red, green, and blue phosphors yields a lamp that Verbatim says will render fine details and color nuances in objects better than other white-LED approaches...
[url=http://www.mp-lightings.com/index.html][b]MP[/b][/url] Prime Mover
[url=http://mp-lamp.cn/][b]MP[/b][/url] LED tube lights is using MCOB Patented Technology lighting source, are energy efficient lighting in shops, restaurants, hotels, offices and homes. [url=http://mp-lamp.cn/productgrouplist-218731364/LED_Bulb.html][b]LED tube lightings[/b][/url] Much safe for the consumer and contain no harmful environmental elements.
Xiamen Mutual Prosperity (MP) Trading Co., Ltd. MP cultures:Adhering to western freedom and fraternity together with Chinese traditional culture to set up a bright,civilized ,happy ,passionate atmosphere for business. MP ideas:Tolerance, integrity ,thanksgiving,responsibility. We are always trying our best to realize the new commercial civilization. MP makes full use of modern science and technology,keep improving product quality and users' experience for one brighter world and one dream of better life. MP clients from industry ,reputed food discounters,hardware store chains,lighting fixture manufacturers,electrical distributors ,end customers and last but not least the environment : With our products they all beam with joy Worldwide. At MP lighting,you'll find our goal is your solution-to continually seek out emerging technologies and design innovative products the lighting needs of tomorrow. At MP ,we're changing the way you think about the lighting. We hope we establish a long-term stable relationship; We hope that our cooperation is win-win.
Unfortunately for consumers the oil companies have a long history of buying up most inventions that would compromise their monopoly business. They buy the patents and sit on them. Boy do I wish there were a list of what exactly they are sitting on and I'm sure what ever it is it will easily replace the obsolete oil. Some entrepenuer with foresight should get behind the alternative energies and force the obsolete to become obsolete.
We won't produce more oil, but we'll always consume more - and thereby send our trillions to the Ssudis who are the Wahabis to underwrite the Jihadis, worldwide. Boy, are we dumb.
Control in the name of the fake global warming scheme, to control production which they do and limit production by creating artificial shortages. There by ripping us off at the pump for a toxic waste by-product that can't be put into the ground so they burn it in our cars for us to breathe. Peak oil is a sham and always has been because the planet produces oil abiotically it's not from Deano the dinosaur leaving his body behind for us to find. We already have enough oil for two hundred years and it sits in Alaska near Prudoe Bay. This field is much bigger than any Saudi field out there. Ask Linsey Williams the source of the info which is right from the horses mouth, the oil execs. This field is being shut down so to create control over the market and artificial bantering to keep us occupied. The oil companies could easily go back to one dollar a gallon gas. Tell the oil companies what you think or vote with your dollar and stop the cards. We are not cattle to be milked at your convience nor are we going to put up with this out dated archaic technology thats keeping us in bondage while they ruin the planet as they claim they are saving it with illegal carbon taxes. High gas prices means they can limit our movement and keep us down. I think this article looks great but I think your rearranging deck chairs on the Titannic. We need the hidden fields opened up for production not false hope.
First, the basic premise of this article, as with the vast majority of resource projection pieces is that what we have available is limited to the outer few miles of the Earth. This is not and has not been true for over 40 years. Had we bothered, we could now be living in an era of nearly limitless energy...we proved that we could collect solar power in space and transmit it to the Earth in 1975. Had we done so, the USA could now be completely free of hydrocarbon fuels, with access to thousands of times our entire civilization's energy use on a daily basis. We did not. And we didn't primarily to protect the power and control of those in possession of 'scarce' resources. To protect a created scarcity used to control people. Energy is the single limiting factor of life. While the Sun is not 'infinite' it is, for the next few hundred years, limitless so far as human needs are concerned. Having that energy makes ALL other scarcities artificial and needless. Hydrocarbons aren't particularly rare on Earth, and there are literally hundreds of thousands of Earth masses of hydrocarbons available within our reach within the Solar System. Burning them for fuel a uses for such compounds. Humans no longer live in a world of scarcity--save when we CHOOSE! This has been true for decades, and carefully ignored by our 'leadership' so that they might retain the trappings of power and wealth that their ancestors assumed generations ago when they first took control of the lives of others by force. We live in a universe of abundance. Far, far more energy is within our reach than our species has used in 3 million years--we need only harvest and utilize what is within our grasp. The economics of abundance is very, very different from the economics of scarcity...the beginning of the change is that no currency has any intrinsic value. Since scarcity is a fiction, we can and should recycle all resources--the limiting factor has been energy and will, not ability. Since scarcity is a fiction, hoarding of resources is an anti-social act at odds with the interests of the species...and should not be tolerated. With energy, anything the Universe doesn't deny, becomes possible. The problems of scarcity--the 'I win, someone must lose' zero-sum game assumption is dead. There is enough of everything for everyone to have their needs met at a very high level, provided only that we have the will to do so. Provided we have outgrown our need for dominance games and have matured slightly to the point of working together as a group to achieve the kinds of tasks which we are uniquely capable. Hydrocarbons are a stepping stone to get us off the planet and accessing the Sun's tremendous energy...there is no need or even desire for us to continue using such valuable resources in such an inefficient and filthy manner to generate energy we can easily collect much more cheaply and cleanly. Over the next 7-12 years, the society we have based upon scarcity of resources, which has served us poorly for over 200 generations, will be replaced with a society based upon abundance--a base so distant from our notions of the world today, that it is literally inconceivable to the vast majority of adults today. This change will happen, regardless of the many people and groups who will attempt to prevent the change in order to secure themselves of the resources they think scarce, and the power they believe is to be had by controlling 'scarce' resources. The world of 2030 will not work or look like the world of 2015, and failure to adapt will, as usual, be fatal.
I guess there are still those in this World, who can only see the Future of Oil in our Glass as only ever being HALF FULL!!! ....Chris Nelder is one of those. Of course his writing career depends on no glass ever being full in this World! ;-P The industry is at a point now, where it's finally saying, "hey.... those rocks in our own backyard have a ton of energy hidden in them if we just took a better look at getting it out". Canada seems to be the only country on earth to have realized that years before we did. While we waste time looking for every reason not to develop our own resources and instead dwell on spending more money on foreign oil first and making them richer. Our Future Lies in Deep Waters in Natural Gas!!! His point on Natural Gas reserves and it's not producing as much energy as oil, is just as ludicrous and pessimistic. There again we're running in last place to foreign oil companies spending more money on developing the means to extract, compress and store it more economically. Samsung right now (built largest Offshore Oil Platforms) is in a 1st ever venture in co-operation with Royal Dutch Shell. They will be forming the hull of a vessel 6 Times the weight class of a Nimitz Class Carrier to compress and store offshore Natural Gas. http://www.bloomberg.com/news/2012-09-19/shell-leads-lng-competitors-out-to-sea-with-biggest-ship-energy.html They are designing and building this first Compressed Natural Gas Storage Facility on the planet, at a cost of $55 Billion Dollars (there's profit in it's future or they wouldn't be doing it). That'll be capable of producing and storing a massive amount of LNG for the Japanese market. Where cleaner burning natural gas is used more widely than any place in the World for years now! ......and yet this author attempts to minimize the impact of the future of Natural Gas in itself, as less valuable than Crude Oil and foreign at that. But pulled from the bottom of the ocean, it's just as valuable as the oil Samsung is again about to be pulling up out of the deep oceans, in conjunction with some Smarter Foreign Countries and Oil Companies! http://www.businessweek.com/news/2012-11-01/shell-profit-rises-2-dot-3-percent-on-income-from-liquefied-natural-gas Royal Dutch Shell's profits are up, despite the fact that this will be the first year they'll be pumping more Natural Gas, than Crude Oil for this year!!! ......so therefore I think your "Glass is only Half Full" pessimistic scenario is really more half full of hyperbolic FUD and misinformation than truth. This DumbPlanet forecast, rather than looking at the whole Brighter Picture that's possible, is a rather narrow look at it. If we'd (like Royal Dutch Shell) took the time to look around our own deep water back yard and pessimistic view of Natural Gas hidden resources laying just out of our ignorant reach. All because of People like you... always looking for the negatives to write about. Always ever seeing our glass as being only half full, instead of searching for ways to fill it up instead! ......excluding LNG is yours and our country's biggest mistake!
Chris, did you really write this entire gigantic article? Wow!! You did miss the point lost to most freedom loving people - the Wahabis (saudi religious dictators) have an agenda to spread their ferocious form of Islam throughout the entire world. The money we send them each and every minute (we say, "Fill'er up!) is converted to mosque building, school building, budgetary support for militant (jihadist) groups here, in Europe, and everywhere. It's a bit like that idea - every system contains the tools of its destruction, it's called dialectical materialism. Similar to the idea that the oh so properous fossil fuel "industry" will kill off all life before Nuclear Winter.
Although Nelder takes his usual self-righteous tone, calling everyone else a hype artist, his discussion does raise valuable concerns about IEA's new projection. Back when Peak Oil advocates were arguing more consistently over crude oil production, I performed an expert elicitation using techniques developed for the nuclear waste disposal program in the U. S. I concluded that the uncertainties were such that the Peak of global oil production would most likely occur after 2005 (when I did the analysis) and before 2060. My best estimate at the time was 2018, which is in reasonable accord with Mr. Nelder's 2015, given the very large uncertainties that actually exist. At about the same time, I applied the famous Hubbert curve to U. S. crude production as if I were making a prediction each year since 1879. When the curve gave a real answer (sometimes it did not), the prediction was consistently that the peak was past or would happen in less than ten years. Even after the peak, the peak year continues to slide outward in time as a consequence of the asymmetry of the production history. No other predictive model that I am aware of has been subjected to such an analysis. I would suggest that most predictions of the future I have read do not even consider whether their prediction is uncertain, and the actual future is likely to lie within the range of the hotly defended prognostications of the pundits. Humans are addicted to energy, and they will get the cheapest street fix they can. They will also argue that their preferred energy source is the ultimate answer. Advocates of crash programs to convert to renewables should beware that many crash programs do just that - crash. There is an Arab proverb that goes something like, "If you think the problem will be solved in your lifetime, you have not taken on a big enough challenge." The energy transition we are in does not suffer this flaw. I personally have seen enough progress in the past 40 years that, despite the messy complications of capitalism and global and national politics, I have some faith that we will make that transition without the dire consequences of the Club of Rome predictions, but not without some hardship. We certainly will not arrive there without there being more pious and ardent proclamations from pundits like Mr. Nelder.
As the price of raw material rising, plastic recycling is more and more important, how to reduce the plastic recycling cost is also a important part, for this purpose, Harden Industries Ltd manufacture series environmental protection machine, maybe is a good choice for plastic recycling business.
The development of cheaper onsite electricity generators has been largely neglected as governments have focussed on the requirements of the existing energy suppliers. Electrochemical energy conversion is twice as efficient as the combustion process, but cheaper alkaline fuel cells have received little backing. There may also be potential for small wind energy collectors, which operate in variable wind conditions, to provide cheaper onsite electricity. Highly efficient drive trains developed by the electric vehicle industry have received no backing. Proper evaluation and demonstration is needed of a variety of small scale energy technologies developed by innovative engineerng companies.
If Nelder is right and everyone else wrong, then oil is dramatically underpriced right now. Well nelder put his money where his mouth is, in the oil futures market? I doubt it. Will he even make a public bet (proceeds going to charity) with me? Or anyone else? I doubt it. Once this prediction is proved false, Nelder will have moved on to some new bit of nonsense. But maybe he'll prove me wrong. Public bet Chris? How about it?
notably, this: "Further, IEA warned that in order to limit global warming to 2Â°C above pre-industrial levels â the generally accepted target to stabilize carbon emissions and avoid dangerous climate change â no more than one-third of the worldâs remaining proven fossil fuel reserves can be burned, and massive global investments in energy efficiency and low-carbon energy technologies will be needed." ************************************************************************* Then, the "study" goes on to do comparisons between current oil production and "expected" future production between the U.S. and Saudi Arabia. The study didn't go deep into the production which is easily available if the government would get out of the way and allow the oil and gas and coal industries to drill and dig out those resources. We can, for certain and for the long future, be energy independent. But, we won't ever be energy independent if the environmental agenda continues to stifle the search for that independence. That study ain't worth the bits it took to display it on the screen.
I was told we were in a critical energy crisis in 1974. I was told in 1980 that gasoline would cost $10 per gallon within 5 years. In 1985 it was 67 cents per gallon. We were not lied to, the truth is the future is unwritten. One thing I can say is that we have the brains to prevent us from poisoning ourselves and running out of space. The spirit is willing but the flesh is weak. I hear a lot of good ideas but see no political will. One thing I know for certain, that is our reduced carbon resources are limited both in supply and utilization. The time for sustainability is now. It does not really matter, in the long run, who produces the most oil in 2020. What does matter is Human Nature and its need to kill each other over scarce essential resources. This is what really needs to be changed. Our greedy nature must change or we will commit collective suicide.
While I doubt we will actually become oil exporters as we once were (look it up, we were) I do think that combined with other sources we might become more self sufficient. And, we might still end up exporting refined gas and the like if it makes sense. As to the keeping the consumption under some arbitrary amount I say "Ha!". The simple truth is people are going to continue to use what they enjoy. While those at the top would be quite content to reduce what the rest of the world uses, they are not about to give up "their" limos, private planes, over sized homes, and other toys. And since the "little people" like to ape "their betters" I can't see them easily giving them up either. Many of the wealthy have their wealth based on such consumption, so they have a vested interest in continuing along that path. Over time, if prices rise, more people will switch to more efficient vehicles, public transportation, etc. provided it actually makes sense for them to do so. More people would use public transportation if it got them where they needed to go in a timely/safe fashion. Really, the world we live in has too many competing interests to really know what tomorrow will bring. We can make educated guesses, but our models had better be able to be adjusted. In other words, the theory that we will become a net exporter is NOT impossible, I just would not count on it.
What's amazing to me is that we argue over the numbers of where and when we run out of all economically accessible fossil fuels. The fact is that at some point (which has to be in the near term based on current production cost increase slopes) the cost of developing and processing fossil fuels will exceed their value to society. The volumes and dating is of little consequence, unless we aren't prepared to replace them with other energy sources - before this happens. It's amazing that the first warnings of our fossil fuel tank approaching empty happened forty years ago - the little yellow light started flashing. Fossil fuel producers being the clever people they are - used the warning as marketing ploy to raise prices far beyond actual production/availability costs - and do still. This has created an artificial elasticity in fossil energy pricing. This does two things - it makes fossil fuel producers unimaginably wealthy and it allows fossil energy producers to stave off the competition from alternative energy producers by lowering the prices of their fossil energy products when alternative energy production costs approaches the market prices of fossil energy. The supply side economist - capitalist, see this as a normal function of the market place and that everything will fall into place - as fossil energy runs out alternative energy will smoothly replace it. Unfortunately, the supply side economist aren't energy technicians and they over simplify the complexity of fossil energy product web. Many, many components of our modern society come from fossil derivatives - plastics and countless manufacturing and processing chemicals and 95% of our food supply is dependent on fossil dependent fertilizers, food processing chemicals and harvest energy. Moving to sustainable energy source doesn't provide these fossil products either at all, or within the same economic paradigms as fossil energy has. Therein in lies the potential for underestimating the difficulty of transitioning from fossil to alternative energies in a non-disruptive fashion. By failing to address the difficulties of this transition and postponing it ever closer to the finite end of fossil energy only shrinks the technical solution windows for the transition and compounds the disruptive affects of failure to replace fossil energy and its derivative products equally with alternative energy.
Extraction of unconventional oil and fracking for NGL consumes a lot of fresh water, which is scarce in Utah. And once the water has been contaminated, the best available technology (according to the producers) is to dump it into toxic sludge ponds. Look at what happened to Alberta from oilsands extraction -- that will not be tolerated, especially where the end result is to ship the oil or refined products overseas. The water-energy nexus is being ignored in these EIA projections, and it will be a major constraint on production.
I have been reading Nelder's columns for a while. They all boil down to this: 1. Conventional crude resources are playing out(agreed). 2. We must transition to something else or we are in big trouble(sort of agreed). 3. And then he's off to the races with smart grids, and wind and solar, blah, blah, blah. My gripe with Nelder starts with item 2. He acts as if we haven't started to transition away. But we are transitioning away from conventional crude to other hydrocarbons. But he doesn't like that and insists that non-traditional hydrocarbons just don't count. And new cost-effective production and refining techniques don't count either. Nothing counts if it's a hydrocarbon. The only thing that counts as a transition is his preferred wind-solar-smartgrid mode.
...that marijuana causes cognitive difficulty is silly and wrong, as is the supposition that now legal somewhere, *everybody* will start....so, if crystal meth was suddenly legal in your state, you think YOU would start up with it?! Lay off the flouride and aluminum, jon6er, and try to stay on topic. Thank you.
Only Steve Jobs had greater arrogance than Chris Nelder does and he died while hallucinating about Samsung stealing Cell Technology Samsung had developed years before helping Apple make their 1st cell phone. This won't be the first time Chris gets has gotten his nose rubbed in another "Missed Prediction" on the future of Oil as compared to IEA. So don't expect him to take you up on that bet any time soon. But... you can bet that he will indeed have dug up something new to be Hyperbolic and Negative about by then! ;-P
It will be a great day for the planet and all who inhabit it, when the dinosaurs that push and make outrageous profits from Coal, Oil and Nuclear become extinct. I consider the cost of the military, the Coastguard overseeing cleanups, the groups that study areas after spills, the environmental damage and the costs to fisherman and others as hidden subsidies. These costs should all be in the price at pump so the true cost is seen. If we drill at home, these costs are still there. There was a time when people hunted whales for their oil. Like it or not times change. Time and money would be better spent switching to renewable energies. This is a jobs program waiting to happen. Even if you do not believe in global warming, doesn't it make sense to use items that will not pollute the oceans, rivers, lakes, land and air? We know our ways of producing energy with fossil fuels and nuclear have negative impacts on water, air, land, fish and wild life. We didnât realize this when we started but now that we know it would be irresponsible to keep doing things that we know have a negative impact. I understand we cannot change overnight but we should be replacing old facilities with renewable sources be it solar, wind, geothermal or some other undiscovered source that will come along. We are a very creative species we just have to decide to do it.
The "yellow light" started blinking long before the artificial oil shocks of the 1973 Yom Kippur war. I remember reading articles in the '60s that pointed to increasing reliance on oil imports by the US. But the truth is that despite the dire outlook of the time, global oil reserves have increased significantly since then because of better technology. Back then according to the "Club of Rome" predictions of rising shortages in all commodities, by 2000 we were supposed to all be dying of famine in a hopelessly polluted world. Somehow it just never happened, which the greens today always overlook. You talk about learning from the past, but somehow the greens never do. Fossil fuel producers don't have nearly the profit margins other industries have. It's consistently under 10%, which is puny compared to Apple and other high tech companies. They make a lot of money in absolute terms because energy is the biggest business on the planet, not because they are forcing us to pay artificially high prices. Besides, even if they did, isn't this a good thing? How often do you hear greens clamor for the government to raise prices artificially high through taxation? You seem to be arguing on the one hand that energy companies are ripping us off with artificially high prices while on the other hand saying that everybody is "failing to address the difficulties of this transition". You make claims without citing any examples that the oil companies artificially lower prices anytime alternatives threaten them. Have you been to the gas pump, in say, the last 10 years???? Look at economic history. Rising prices are the one thing that effectively causes the transition to new technologies. Mr. Neider seems to think that there is an absolute cap on what consumers will pay. But back in the '60s, nobody would *ever* have paid as much as 35 cents per gallon. That's about $2.50 today, and yet everybody today would be quite happy with that price. The truth is that our cars are much more efficient today, and people make other adjustments. The history of commodity depletion is that we never somehow actually do fall off that cliff. Centuries ago Europe faced a shortage of wood to heat its homes, but managed to develop coal mining with increasing technological sophistication (the steam engine was originally developed to pump water out of coal mines). In the 1850s the world was running out of whale oil to light its lamps. First kerosene was developed as a substitute, and then electric lighting was invented. People who see continual disaster always lurking around the corner ignore history and are actually the ones who most easily fall prey to their emotions.
There are already several processes that allow fracking without the use of water. This only reduces some of the hazards of fracking and it doesn't add to the limited affect that fracking will have on the overall longevity of the fossil energy paradigm. It's just one of the last desperate acts of dependent consumption of a finite declining resource. Unfortunately, we are only in the early stages of this phase and we'll see quite a bit more before we make the transition (apparently with minimum preparation) to a more sustainable energy source.
and takes over the conversation, then, the study and the conversation and the article lose all credibility. It was apparent from the start that, the "study" was more about the global warming agenda than about any real concerns about energy or oil or the U.S. vs Saudi Arabia. When the study starts out with a premise to prove, then the study ends up being garbage. GIGO!
"..we'll see quite a bit more before we make the transition (apparently with minimum preparation) to a more sustainable energy source. " I think the key to the expanded use of renewable energy has always been making it more affordable. You cannot expect a large number of the worlds population to become destitute by forcing a switch to expensive energy sources. Poverty is not the answer, although some people posting here seem to have the 'throw away all technology and go sustainable agrarian' mentality when it comes to energy usage. Personally I think the installation prices of key renewable technologies, wind and solar, have been kept artificially high by people in the industry who still feel they are a niche market that can ask a premium price. Few renewable energy companies have taken the step to making their products affordable to install and operate. If the cost of renewable energy were to come down, many ordinary people like myself, would install renewable power where applicable. In my case because grid power almost always fails in a storm. Leaving me without power, often for days. And please do not tell me solar has become so cheap recently. I have been shopping and this alleged glut of cheap solar panels is not reaching the consumer. Prices for the systems I have looked at have dropped less than 10% in the past 3 years. That hardly covers one year of the property tax increase I will see from an installed solar unit. So forget about how it impacts overall system ROI.
I agree with the idea that if the cost of installing solar was lower then everyone would be able to reduce their energy needs on fossile fuels. This would be a better step towards energy independance .