Discussion on:

The cost of new oil supply

until battery technolgies can be developed (and the power grid beefed up) to make electric more affordable

Coal-to-liquids barely even exists at this point, so data is hard to find. Stuart Staniford took a good stab at it in 2010 though: http://earlywarn.blogspot.com/2010/01/coal-to-liquids-production-statistics.html
My guess is that CTL production globally is still under 200,000 barrels per day, and that the production cost is toward the high end of the range I've outlined here - probably on the order of $100/bbl. If anyone has more current data, feel free to share it here.

When someone puts a Billion Dollars into a CTL plant, then we will see a transformation in that industry, until then expect to see nothing more than "feel good" demonstration projects that do nothing but further delay an actual implementing a new way to "get" gasoline and or Diesel fuel from Coal!

Celanese claims they can do it for around $60 bl (they are making ethanol at this point - but the world consumes a lot of ethanol)

http://www.bloomberg.com/news/2011-05-10/celanese-says-ethanol-from-coal-process-is-a-game-changer-1-.html

They are spending close to a billion getting this set up.

For anyone who keeps their cars for longer than a three-year lease, considering a hybrid or EV has got to be in the mix. Oil price volatility can be somewhat more easily absorbed if you are getting 40+ mpg. I also think carpooling is vastly underrated and should be expanded and promoted more in cities. Many municipal bus websites offer carpool matching services, which a woefully small number of people use. It's a great way to save money, reduce carbon emissions and maybe even network.

Sure carpooling saves gas but unless a huge number of folks all work very close together and keep the same hours it just is more wishful thinking by Planners that are planning "More" and really doing "less"...

As for mass transit, those in cars that are commuting in from expensive neighborhoods a good distance from their Office will NEVER take mass transit because who wants to be tied to a BUS that runs on a varying schedule, have to sit next to a bunch of people that you don't know and or have to walk home at night from a darkened bus stop in poor weather.

Smaller electric vehicles, mopeds and or mobility scooters will become THE way to travel to work in the future, unless you are young and healthy in which case you will probably ride a bicycle and or take a shower before reporting to work!

Middle class families in the USA are used to living far from work. People live in "good" subdivisions & commute by car for long distances. Well paid workers "turn over" urban centers to transients after business hours. This pattern was made possible by low fuel prices. The middle class is willing to endure long commutes to live in larger homes in "good" subdivisions. As fuel prices rise, the cost of commuting by car will cancel out the low prices of land in distant subdivisions. People will live closer to work and/or along commuter rail corridors. 1 problem will be that a couple may not be able to live close to the jobs of both partners. The working poor will be worst off, as usual, because an individual may not be able to find affordable housing within a short commute of either of the 2 jobs they have. They make less to begin with & will have to spend more of it on fuel.

CaptD wrote, "Smaller electric vehicles, mopeds and or mobility scooters will become THE way to travel to work in the future, unless you are young and healthy in which case you will probably ride a bicycle and or take a shower before reporting to work!"

Ah, a person after my own heart. Exactly! We haven't even seen the e-vehicles of tomorrow yet (closer to e-bikes than e-cars), except as experiments and prototypes. Once it get's started the shift will be dramatic when as Chris says, "...the U.S. and Europe are forced to park their cars for good." (And the scrap, recycled value climbs)

You'll enjoy this pic (if it comes through). Ugly as sin but doesn't have to be:

http://www.facebook.com/photo.php?fbid=267834289972722&set=p.267834289972722&type=1&theater

Smaller, slower, but still personal transport, will keep us moving with low carbon, if we physically compact our lives a bit. In a resource constrained future there just won't be the capital and resource inputs for huge subway, trolley or highway projects, but we don't have to back up all the way to the 19th century to hang onto the best of civilization.

We do need to make the decisions of what we must keep, and what we can do without, in an low exploitation, sustainable civilization. The vehicle in the pic is about a 3rd the weight of a horse, less carbon intensive than the horse or a seat on the subway or bus particularly when fed by on-site sun or wind, and whole lot faster and more reliable. It's not as comfortable as a car, but fun, and will still move and protect our butts from the elements.

We took the bus, because we did not have a car. But the bus and trolley system that was in place worked very well, there were reasonable schedules, you could transfer easy to get where you needed. I don't know what they did to the bus systems, but I know where I live you can't get there from here. We had to be at a hospital apt. at 5:30 a.m. and there was absolutely no buses connecting from the 3 cities we had to cross. We ended up in a cab that cost us $50 each way.

Good information to counter the BS that comes from partisan factions (both sides) that is being mindlessly repeated in the news. The take away is that no one should be making energy policies based on unsupported optimism that $2/gallon gasoline is in the future or that we will become energy independant by drilling everywhere. It is time for us to start thinking about using what oil is left for those things that are important. A lot of oil goes into agriculture in many forms from fertilizers to transporting crops to the market; without the use of oil the crop yields will not be enough to support the 7 billion people on this planet. Homo Sapiens translates as man the wise, but history does not support that statement.

...and thanks for helping people understand they roller coaster we're all on and about to tilt towards the long descent.

Now, if only we'd concentrate on allocating what we have left to local rail/trams and waterways transport development --rather than saving Business-As-Usual and bailing Too-Big-To-Fail-- we'd easily adapt and with grace.
But we won't, and thus things will be needlessly very painful instead.

At least let's keep our eyes wide open, it'll be quite memorable and hopefully the Titanic won't be a better analogy.

The Big's (Big Nuclear, Big Oil and Big Gas) are now engaged in market share Warfare, where they seek to maintain and or increase their percentage of the American Energy "PIE". Left unsaid is that the American consumer is no longer part of the picture, having been eliminated since they have no real choice as to where they get their Energy from.

Pick a form of Energy and the other Two Big's will spend huge bucks to promote for less of "theirs" and more of "our's" Energy.

New Oil, New Nuclear are going to be too expensive before they even come on line as market forces and the RISK of another Fukushima continue to make Solar THE source of energy from now on. Look to the Germans to model the way and provide the new tech that America will pay big bucks for soon!

While Solar (of all flavors) is ready for prime time, the BIG 3 have the political clout to make sure that any new GREEN projects that might cut into their bottom line are never approved unless they are controlled by one of the BIG's or their Utilities...

Here are 4 books that model how to go SOLAR:

The High Frontier by Gerard K. O'Neill,
Colonies In Space by A. Heppenheim??er.
The Third Industrial Revolution by G. Harry Stine
The Space Enterprise by Philip Robert Harris

While I like your book suggestions, and I own two of them, I disagree with your total overall assessment.

First, there is a new generation of Nuclear out there. US Nuclear plants are second generation (Chernobyl was a First Generation Plant, Fukishima was a Second Generation system). The new designs are passive safety based. They are much safer, and may well be smaller. We will see a lot more Nuclear in the overall mix, that will take about a decade to come on line.

Ground based Solar isn't cost comptetitive with existing old Nuclear. Coal is still the least expensive electrical generation method, followed by Hydro, then Nuclear, then oil and gas. That's using present life cycle costing.

Solar also has huge environmental impacts on any large scale deployment scheme, as does Wind power.

Space based Solar is still over 20 years away, even if we were spending real money to develop the infrastructure. (It would cost around $20 Billion a year for 20 years to do it.

One final thought, I would add "Mining the Sky" to your suggested bookshelf.

I'll read it!
RE: Space based Solar is still over 20 years away

That is what they said in the 70's when O'Neill wrote his book!

Until the "current" BIG energy Corp's get on board, we will continue to always be 20+ years away as they squeeze US for every cent they can...

". One need look back no farther than 2005 to find plenty of pollyannish projections in reports from the EIA and IEA, and in op-eds in the Wall Street Journal. None of those projections panned out."

NONE of them? Really?

Tell that to the folks getting rich in the Bakken . Tell that to the factories and utilities enjoying the cheapest natural gas in modern history. Shale energy production has far, far exceeded even the most optimistic predictions.

Most of the shale yields have been in the form of dry gas. This makes sense, since gas was quite expensive throughout the 2004-2008 time frame. (More expensive than oil, if one bases the comparison on long term historical ratios.)

Now this situation has reversed. Gas is cheap and oil is expensive. So we shall have the next 2-3 years to see how the wet shales perform.

At any rate, this dovetails with Mr. Nelders prediction. A "major tipping point" is only 2-3 years away. So, if we link back to this page in 2015, and nothing catastropic has happened with re: to global energy supply and production, it will give us a nice piece of information with re: to the integrity and accuracy of Mr. Nelder's world view.

I don't think so! Not only does it not avoid the catastrophe that becomes ever more inevitable when finite, non-renewable resources are viewed as short term ultimate values, but it leaves behind ruined air, water and soil resources that could have contributed to long term sustainability. Whether it happens by 2015 or later is of little matter.

I have to thank you, Mr. McMurtry for being such a prime example of crushing, myopic denial. Is someone paying you to be so disagreeable?

I don't think planning on new extraction technologies is myopic. This is the way it's been since the start of the Industrial Revolution.

Mr. Nelder is saying "this time it's different". The 4 most expensive words in the history of investing.

I suspect you think a catastrophe is farther around - like 20 years or so. Good luck with that prediction.

I guess that CaptD has not heard of Solyndra, Abound Solar, Energy Conversion Devices, BrightSource, LSP Energy, Evergreen Solar, Ener1, SunPower, Beacon Power, ECOtality, A123, Uni-Solar, Azure Dynamics, and Solar Trust

Why are only western nations subjected to tight emission laws and higher fuel standards?

Why are China, India and the rest of the DEVELOPED world exempt?

Why are we being punished for their wasteful and polluting ways?

Yep, vehicle owners paying less long term for fuel (higher fuel standards) and living better and longer by breathing air that is not brown (remember the Beijing Olympics) is a punishment fer sure! Dunno why we'd want to do that?

Sure lets keep investing in fossil fuel choke the planet a bit more as well as our wallets. What we sould all be thinking about is putting our efforts into renewable energy and say goodbye to mid 20th century practices and thinking.

http://solarpowerenergy1.com/blog/

Let private technology provide the best solutions. It brought us from wood and coal stoves to power plants that improved the living standard for the world.

"All of the above" is the only answer with the cost-benefit analysis made by experts at companies specializing in the various sources. Technology available today can scrub CO2 emissions from smokestacks in the 85-95% range and we have a 1,000 year supply of coal. But we're selling it to the Chinese/Indians/etc at sale prices while they build dirty plants and undercut the West with subsidized solar/wind/etc.

We really need new nuclear, coal and natural gas power solutions to make the economy work. Yes to wind but no to solar in the short term. Invest in R&D but stop with the pie-in-the-sky theories of solar saving us. Yes to R&D in fuel cells and other exotics but don't hold your breath.

We either produce the power needed for our economy to grow or we will reduce our standard of living for all Americans - especially the middle and lower classes.

Get the lawyers and government out of it and let the experts figure it out. Obama says "All of the above" but I think he has his fingers crossed behind his back. Lovely politics.

The Nuclear Industry was his largest donor and he is their greatest supporter, which is keeping the USA from racing Germany toward a GREEN, less risky future... This is not the CHANGE so many voted for!

Obama's always been forthright about being all the above when it comes to energy.

Perhaps you should vote for the Green Party candidate.

When I was a kid back in the early '60s, gas cost about 12 cents per gallon (sometimes getting as low as 8 cents per gallon). Accounting for inflation (see http://www.bls.gov/data/inflation_calculator.htm ), that's 90 cents today. If you told people back then that they would one day have to pay 27 cents per gallon (or $2 per gallon in today's dollars), they would have said they simply couldn't survive. To us today, $2 per gallon is a bargain. Nobody today would have any problems with gas at that price.

My point is that Mr. Neider telling people what they can or cannot deal with does not make it so. When left to their own devices, people come up with their own ways to deal with pinched budgets. They can combine trips, buy more efficient cars (yes, even hybrids or electrics) and take public transit. Or they can bite the bullet and cut back on their daily Starbucks.

What's interesting is that even at current gas prices, only the Prius and Lincoln MKZ hybrids pay for themselves in any reasonable time (see http://www.globalautomakers.org/media/industry-news/2012/04/payoff-for-efficient-cars-takes-years ). So anybody who believes that hybrids and electric are the wave of the future had better hope for much higher gas prices.

What's forgotten in the current debate is that the US has tens of billions of barrels of "conventional" oil offshore, in Alaska, and other places that were simply taken off the table (hence the deception that the US currently has only 2% of the world's oil reserves). No other country in the world has artificially denied itself such resources. The irony is that even if Mr. Neider is right about "tight" oil, this oil will act as a buffer.

Government mandates in the US contribute in other ways to the high price here. We all know about the Keystone XL pipeline. However, the EPA requirement of "boutique" gas mixtures in the summer for each region is a big factor in price spikes. There is only one refinery that can supply Chicago's unique blend, so it's no surprise Chicago has one of the highest gas prices in the nation. A lack of pipeline capacity to where gas is needed is another problem. The northeast can't take advantage of the glut of oil in the lower midwest because there's no cheap way to get the oil there. Even if there was, refineries in the northeast couldn't use it because of stringent EPA regulations. As a result, these refineries have to import Nigerian and North Sea oil which is $18 per barrel more expensive and they can't make money even at today's prices at the pump. We can't even ship gasoline from the refineries in the Gulf to the northeast because the Jones Act says it must be done with very expensive US tankers manned with US crews. As a result, the northeast is expected to import more gasoline from abroad, even as its refineries shut down because they can't get cheap oil to refine.

Finally, while world demand for oil is growing, it's fragile. We complain about $4 per gallon gas in the US, but that same price is an appreciable fraction of a day's wage in India and China. Back in 2008 at the last price peak, both India and China subsidized gas at the pump, allowing their citizens to use as much gas as before. But that broke both countries. Now India no longer subsidizes gas, and China has greatly cut back on its subsidies. When gas goes up today, who will better be able to afford the price increase? Someone in India or someone in the US? It may not be "fair", but when the price goes up it will just free up more supplies for us.

Make no mistake, gas prices will continue to go up in the future. But to say that we in the US can't deal with prices above $4 or $5 is a joke, especially since Europe deals with prices of $7 to $8 today because of their taxes. However, it's exactly rising gas prices, not government mandates, that will drive the success of alternatives such as electrics.

When I was in college, The "energy crisis" of the 1970's had just taken place. I was told that in ten years there would be "no" oil and gasoline would cost $15 per gallon. Petrochemical engineering was the highest paying field for new graduates. Steel plants were closing left and right. Carter was President and the Ayatollah took control of Iran. They held our embassy crew prisoner for 444 days until Reagan took office. I expected Jimmy Carter, being a Nuclear Engineer, to be able to solve our problems. Then there was that little incident at Three Mile Island. The Soviets were on the offensive and things looked very bad.
Ten years later, fuel gobbling "SUV's" were all the rage in the US. Gas was down to 60-90 cents a gallon. It stayed like this for 10-15 years. They were pretty good times.
Then early this century fuel prices began their gradual ascent. As the pendulum swings prices keep going up. Most production jobs are now in the "newly developing countries" where people are beginning to buy cars. Like the US of the early 19Th Century there are no Workers' Comp laws in places like India and China, people work like slaves for relatively low wages, and are so plentiful that the lowest paid set the wage (unlike the price of oil described above).
So where am I going with this little history lessson? Right now it looks like the developing world is positioning itself to be the "demand driver" for crude oil. In fact they are already there. Excess demand for oil raises prices as much as decreased supply. We are no longer the energy glutton of the world so an economic shock here will not drive down prices. The cat is already out of the bag. It will not be long before we will really not be able to afford personal automobiles here in the US and Europe. It looks to me like what I was told in college is actually going to happen, but in the next 10 years, not in 1984. And if it does we are up the creek without a paddle. This problem was foreseen in 1974 but we stuck our head in the ground like an ostrich.
Once again, the future is unwritten. We do not have an inkling of where things are going. There are a few truisms, for example the rich get richer and the poor get poorer. There are also some absolutes, e.g. we will all (hopefully) get old and die. What we leave to our children is up to us.

I'd just like to add that as the radio of those getting richer vs those that are getting poorer affect our overall economy america will not be the land of the Free any longer but morph into the land of the indebted...

Right Now the USA is running on the wealth of our Past, as the baby boomers start to draw down on their savings and or look for a place to relocate too!

I have preserved a copy of an article published in Scientific American in 1953 that predicts the WORLD will run out of oil by 1970.

Ahh here's the thing - the world ran out of "easy oil" in the 70s. The key to the post 70s growth in oil produiction was the "hard to get" oil in the North Sea. Feezing cold, a mile or more down, that oil was very, very hard to get.

So when the burden of new production shifted to "difficult" oil, it resulted in a tipping point - like the 1980s.

See - Mr. Nelder *does* make sense.

The rising marginal cost of a barrel affects everyone who purchases any oil-based products. The more efficient economies and those with access to more, less expensive energy will do better. But all those economies aren't located in Asia. One reason why consumption is shifting to Asia is due to the fact that India and China both subsidize oil consumption. This masks the effect of high oil prices to consumers and, so, they have the illusion of economic growth for a little while. But they pay for this in the form of deficits. India recently had to pass on higher oil prices to consumers and, if marginal costs keep rising, it's just the beginning.

There's nothing magical that makes Asian economies immune to the high cost of oil. They're in the problem along with the rest of us. Further, the mythical 'reserves' of the middle east are belied by the rising cost of producing a barrel there. China receives most of its oil from the Middle East and these countries have been notoriously murky about their reserves figures. Saudi Arabia requires $100 oil for its economic stability. Russia is starting to run to stand still on production. At some point, probably now, these prices start to hurt the so-called Asian growth engines. There's really no way out of the depletion trap unless you have large-scale government and industrial programs to rapidly increase efficiency and to transition away from fossil fuel energy sources.

Honestly, that's the only way out. And the longer we wait for large-scale transitions, the more pain we will feel as the marginal costs of fossil energy ratchet ever-higher.

Why aren't the car companies doing more to push their alternative fuel cars. With the price of gas now you would think they would be in a great position to recommend them. I live in the southwest, and we have sun most of the year. Solar really makes sense here. But our politicians have been fighting it, and when a solar company goes under it is See it's a bad idea.

Supply and demand tends to set what car companies can do. If there is little demand for an alternative fueled car then the auto makers will make what sells rather than have an inventory of cars that do not sell. If the demand is for large, gas guzzling SUVs then that is what the auto makers will focus on. When an economic shock hits is when people demand more efficient vehicles.

Your assumption is logical, but personally no car co. ever solicited my opinion as to what I was looking for in auto design or features. In fact, it's are really difficult to figure out exactly whose and what needs car designs actually cater to.

There are small scale alternative fuel programs with the major car companies. But not mass produced alt fuel "cars" that can compete at an equal footing with actual mass produced "cars" which benefit from a hundred years of process innovation, market expansion, and economies of scale..

In short the Big's control our choice of Energy by supporting the same old choices (with "established" market shares) and promote against any new choices unless they hold all the shares...

Germany will be the model of how a Country can "shift" from one source of energy and replace it with another GREEN form of Energy!

I'm a big fan of Chris's - but I think his argument/predictions have a critical weak link - almost all hinge on the assumption that the market price of crude - is a functional component of energy prediction and planning. His production cost assumptions are not verifiable - and don't agree with the oil industry insiders that I have discussed the subject of production costs. It has always struck me as suspicious why no one publicly reports the actual audited production costs of oil (especially public companies) - field by field, region by region, country by country - wherein a real avg. cost of crude oil and related energy product production can be determined. I suspect if they did report this we wouldn't be paying $4.00/gal for gas today.

I don't think that the world gives a damn whether the Saudi's or the Russian's or US oil producers have mortgaged their reserves in advance. Their lack of planning shouldn't and doesn't constitute and emergency for the rest of the world regarding high oil prices. In 1998 crude oil sold for $11.91/barrel avg. - and the majority of oil companies were making money - from that we know that the avg. crude oil production cost was well below that. As recently as Dec. of 2008 crude was $32.94, having ranged all the way up to 126.33 during the same year. Folks - the production cost of crude is far more constant that this kind of ranging and it is always well below the lowest market price. You don't see 300% changes in production costs from existing wells in one year - but you do in market price. (http://www.ioga.com/Special/crudeoil_Hist.htm)

Sure, there will always be higher new tech costs and incompetent producers that go out of business when prices drop, but the point is that market price is neither an indicator of the costs, or the availability of oil - and never has been. Consequently, market price of crude is useless in real energy planning. To make the assumption that oil market price is anything other than producer (national or private) marketing decisions of how much the market will bear is exceptionally naive.

Not knowing and understanding the real cost of petroleum production when planning alternative energy strategies that must be competitive with petroleum, or changing national transportation strategies without this info - is a fatal deficiency. We have already seen high oil prices generate alternative energy ventures in the 1970s, only then to kill them by lower oil prices. I'm not saying that peak oil isn't a current problem, or that we don't need need alternative sources. I am saying that we have to know the cost that alternatives are competing with in order to make real business plans for them - and currently that info isn't widely available - if at all and what does exists requires independent verification. I would also think as oil consumers we might also want to know exactly how badly we are being ripped off to support oil producers failed budget planning and or luxury life styles. In addition, if oil is so precious not considering our existing oil and gas reserves as strategic resources and legally stopping their exports - is an exceptionally bad long term survival strategy.

I agree, prices for gasoline creap upward as our Leadership BOW$ to Big Oil and their donations...

That is all you need to know... Greed has taken over DC Politics...

Expect to see a historic decline in automobile and truck sales as folks realize that buying a new vehicle is a LO$ING proposition for end users and a sure sign that our Economy is going further down the toilet...

I don't understand most of the oil price talk. Everyday we find new oil fields. Some deep some shallow, at different grades. Overral technology improves, overral costs fall. Very simple. So why the general rise in oil prices? Artificial. There are viable replacements, just relatively little initiative. Example, 10 years ago we had small credit card sized torches that could stay powered for 25 years. 3 batteries, one in use, powers the other two as its being consumed. Sort of recycling the energy. Cheaper than buying battery replacements! Forget this, philips has the everlasting light bulb patent. We have a critical mass of people who want change. Enough who supply the tools. But large corporations keep standing in the way. Once a brilliant invention is made they clamp down on it. Look at the Tesla example. Governments keep saying they need to protect corporations because they invest in R&D, employment.... Only to bring it out of the cup board a few decades later!

Small Companies have almost no luck getting R & D funding,
... But the BIG's get plenty of funding for their R & D...

What is best for the Country is now what is best for THEM...

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