Peak Oil and the Magic Free Market

[Uraniun235]

Supposedly, the "available reserves" estimates are based on what's considered "economically viable". Supposedly, if we're willing to accept increased fuel prices - which, supposedly, don't impact the total cost of nuclear energy as much as it would for, say, coal - the available reserves become even greater. (since I gleaned this from Wikipedia, I'm not going to assert it as truth)

It's the American asshat attitude of "omg we can't reprocess spent fuel!" that's really wasting a lot more fuel than needs to be. Uranium is actually a somewhat common element. And even if we burn up most of the available uranium, there's still the thorium fuel cycle - and thorium is even more common than uranium.

I'd say we've got plenty of nuclear fuel. But there still needs to be a push for reduced populations.

[J]

Yes. A substantial portion will have to be in place when decline begins. As has been noted countless times already, it takes an energy surplus to build the infrastructure for the next age, with an energy shortage there is no energy or labour to spare for building a massive new infrastructure.

So: we absolutely have to have a significant portion of the new energy source infrastructure available immediately when the oil industry currently has a 10% profit margin? You're a nut.

Profit margins? What the hell does a 10% profit margin have to do with this you loony? And you're calling me a nut.

Uh-huh. It only works if all the infrastructure magically appears overnight sometime in the next 5 years. Even with a crash program started right now, the coal liquifaction plants come online far too late to make a significant difference. Production takes time to ramp up, and that takes decades.

And it takes decades for the primary oil supply to decline. We don't need any "magic".

Lead times, moron. It takes about 5-10 years, best case, from when you build a plant before you get any output from it. It takes a few more years to ramp up to full capacity. In the case of mines, it takes at least a decade from production start to full capacity. You have to plan well ahead to keep up with the oil depletion curve. A crash program right now will start yeilding oil in 10-15 years. It's already behind the oil decline curve, which by then is falling at 5-10% a year. Translate that to the US and you need to add about million barrels a year of synthoil capacity. That's an infrastructure 5 times the size of South Africa's system every single year. It's an industrial effort which has not been seen since WWII.

The calculations I provided earlier, which you obviously don't understand, were minimal requirements for the US to match South Africa's synthoil production in terms of percentage, in other words, replace 37% of the US oil with coal oil. What you are now suggesting is the wholesale replacement of all US oil needs. If available oil drops by half, you need to replace that half with synthesized oil. That's 50%, works out to 1.5 trillion plus railroads, pipelines, heavy machinery, rolling stock, locomotives, and all the steel to build them. And of course the inevitable cost overruns. In the end you're looking at a number which is greater than the entire US GDP. Oh yes, and you're trying to spend this money with a stagnant or shrinking economy and soaring inflation rates. That's going to do wonders for market confidence, I can see China and everyone else dumping US treasury bills & currency as if it's radioactive waste.

The US GDP is 12.5 trillion dollars per year, moron. The 1.5 trillion is 12% of yearly GDP but spread over 34 years. Raise it by an order of magnitude to allow for miscellaneous factors, you have 3.5% of GDP over that period.

Wow, how convenient for you, GDP stays constant and inflation never happens! Like I said, straight out of a high school economics textbook.

I do seem to recall 10-14% annual inflation rates combined with stagnation or even shrinkage of the GDP during the oil shortages starting in 1973 and 1979. When oil production hits a permanent decline, not those dinky little temporary downturns in the 70's, you can look forward to hyperinflation combined with a shrinkage of GDP. And during this, you have to undertake the greatest industrialization effort since WWII on a shrinking energy base, food shortages, and a panicked population; an effort which will consume massive amounts resources comparable to the WWII effort. Right. You are completely out of touch with reality.

[Lord Zentei]

Yes. A substantial portion will have to be in place when decline begins. As has been noted countless times already, it takes an energy surplus to build the infrastructure for the next age, with an energy shortage there is no energy or labour to spare for building a massive new infrastructure.

So: we absolutely have to have a significant portion of the new energy source infrastructure available immediately when the oil industry currently has a 10% profit margin? You're a nut.

Profit margins? What the hell does a 10% profit margin have to do with this you loony? And you're calling me a nut.

If you really have to ask this question I honestly don't know what to say.

And it takes decades for the primary oil supply to decline. We don't need any "magic".

Lead times, moron. It takes about 5-10 years, best case, from when you build a plant before you get any output from it. It takes a few more years to ramp up to full capacity. In the case of mines, it takes at least a decade from production start to full capacity. You have to plan well ahead to keep up with the oil depletion curve. A crash program right now will start yeilding oil in 10-15 years. It's already behind the oil decline curve, which by then is falling at 5-10% a year. Translate that to the US and you need to add about million barrels a year of synthoil capacity. That's an infrastructure 5 times the size of South Africa's system every single year. It's an industrial effort which has not been seen since WWII.

The price of the infrastructure upgrade has already been made, and it is nowhere near what you claim here.

The US GDP is 12.5 trillion dollars per year, moron. The 1.5 trillion is 12% of yearly GDP but spread over 34 years. Raise it by an order of magnitude to allow for miscellaneous factors, you have 3.5% of GDP over that period.

Wow, how convenient for you, GDP stays constant and inflation never happens! Like I said, straight out of a high school economics textbook.

Ah, yes of course. Even if I show that this project will be within 3.5% of GDP over the next 34 years after increasing supposed costs by an order of fucking magnitude, you still pull lines like these. Moron.

I do seem to recall 10-14% annual inflation rates combined with stagnation or even shrinkage of the GDP during the oil shortages starting in 1973 and 1979. When oil production hits a permanent decline, not those dinky little temporary downturns in the 70's, you can look forward to hyperinflation combined with a shrinkage of GDP. And during this, you have to undertake the greatest industrialization effort since WWII on a shrinking energy base, food shortages, and a panicked population; an effort which will consume massive amounts resources comparable to the WWII effort. Right. You are completely out of touch with reality.

Well, one of us is.

[Lord Zentei]

GHETTO:

Crap:

The price of the infrastructure upgrade has already been made, and it is nowhere near what you claim here.

Obviously I mean "the calculation for the price of the infrastructure".

[aerius]

I think what you're missing here is the technology pyramid effect. Mines, coal liquifaction plants and so forth do not exist in isolation. You need the machines which build the machines which build the parts which go into the final products, in this case, the coal mines, the coal transportation network, the coal liquifaction plants, and the oil pipelines. Those things don't get counted into capital costs.

Let's say I want to build a nuke plant, the first ever nuke plant in your country. Capital costs would be the materials in the nuke plant and the labour to put it all together. That's $3 billion or whatever, sounds like a bargain. But there's a lot of costs that don't get added into that.

Reactor pipes, they have to withstand radiation & embrittlement. No one makes them yet, so you have to setup a factory to make'em. Guess what, it takes a special metal alloy, doesn't exist yet outside of a research lab, so you need to build or modify a steel mill to make it. The reactor vessel itself, same thing. The power turbines should be a piece of cake right? We'll just plug in turbine from a coal or gas generating station. Well, no. Nukes operate at different pressure & temperature points, and with their long duty cycles the requirements are quite different. Back to the drawing board all over again. Same as above, but not quite as bad. And the same goes for almost every nut & bolt in the nuke station. To build that nuke station, you need to build a huge support infrastructure, which ends up being many multiples of the cost.

Or another example. Sea Skimmer once noted that the cost of a nuclear warhead is only a few hundred thousand bucks, which puts the capital costs of the entire US arsenal at maybe 2-3 billion. But to make those warheads takes a support infrastructure worth hundreds of billions if not more.

Going back the coal liquifaction proposal. 1.5 trillion for mines & plants? Sounds like a bargain. Add in all the support infrastructure and you're easily looking at 10-20 times that, probably more. You are building an entire industry from scratch.

Then there's the idiotic idea that all we need is a phased program starting when oil starts its decline. You're going to start a long-term multi-trillion dollar project in the middle of a market crash and runaway inflation? Yes! Let's spend our way out of a recession! It worked for Bob Rae & Ontario, it'll work for the US too! Oh, wait a minute, Ontario was completely fucked over by Bob Rae. Not only have lead times been completely hand-waved away, it also assumes the US will somehow be able to survive trillion dollar spending sprees in a financial setting which makes Black Tuesday look like a market boom.

[Dennis Toy]

Dennis Toy wrote:
The person who runs this site is Matt Savinar, He doesn't ramble or bring about the "END OF THE WORLD, HEAD FOR THE HILLS" kind of thingg. He speaks of peak oil using research from top notch experts and even tells us how to prepare.

He even addresses the denial and the emotional difficulties involved in finding out that Peak oil is coming and the end of our technological civilization is at hand.

The man is not speaking of the end of the WORLD! but of our civilization, there is a difference between world and civilization.

now read carefully, our world is not ending, the world will keep on turning, animals will keep on living, humans will keep on living, only not the way we want. What he says is ending is our civilzation our technology and our way of life.

[Lord Zentei]

I think what you're missing here is the technology pyramid effect. Mines, coal liquifaction plants and so forth do not exist in isolation. You need the machines which build the machines which build the parts which go into the final products, in this case, the coal mines, the coal transportation network, the coal liquifaction plants, and the oil pipelines. Those things don't get counted into capital costs.

The cost of the coal plants and infrastructure was included in the estimates.

The man is not speaking of the end of the WORLD! but of our civilization, there is a difference between world and civilization.

now read carefully, our world is not ending, the world will keep on turning, animals will keep on living, humans will keep on living, only not the way we want. What he says is ending is our civilzation our technology and our way of life.

And who, pray tell, is claiming that the "world" in that particular context will end because of peak oil? Where is such an absurd claim ascribed to anyone? You wear your title well.

[Stuart Mackey]

lignite to deasil plant costs

L&M studies feasibility of South Island gasification plant

1.00pm Tuesday August 15, 2006

L&M Group is planning a feasibility study next year into a proposal for an estimated $6 billion petrochemical plant in Otago or Southland.

The regions contain up to 12 billion tonnes of the low grade coal lignite, which could yield a barrel of diesel for every tonne of lignite processed.

Exploration company L&M is completing initial analysis on three of five permitted areas it holds at Kaitangata in South Otago, Hawkdun, in Central Otago, and Ashers-Waituna in Southland, including test drilling in preparation to begin the feasibility study.

L&M managing director Greg Hogan emphasised the initial studies were a long way from turning lignite into diesel, petrol, aviation gas or methanol, but he was adamant a southern petrochemical plant could be operating by 2012, The Otago Daily Times reported today.

The figure of $6 billion for a petrochemical coal gasification plant was based on estimates from around the world, where there were 130 gasification plants operating and producing more than 40,000MW of energy annually, Mr Hogan said.

L&M intended to take the results of its feasibility study to the Government, to clarify regulatory requirements, and would most likely seek offshore financing for a gasification plant.

The company wanted to identify which of its three permitted areas would be best to develop, estimating the lifespan of any single operation would be a minimum 20 to 30 years.

Mr Hogan estimated 50,000 tonnes of lignite could be processed a day with a guideline production of about 50,000 barrels of diesel a day -- totalling about 18 million tonnes of lignite a year.

Initially, L&M was concentrating on diesel production, because of the high grade which could be produced, and then the other fuels, all of which had huge potential as export earners, he said.

Mr Hogan said the lignite was generally in easily accessible places, in seams 10m thick.

Last month, coal producer Solid Energy purchased farms and lifestyle blocks surrounding its former lignite mine near Mataura , in Southland, containing an estimated 2.1 million tonnes.

In the short term, trials were under way for burning the coal as an energy source but Solid Energy was also investigating a gasification plant for coal-to-diesel production.

- NZPA

[K. A. Pital]

So now we're building a fifth reactor right (going to break the power record I heard) and a sixth reactor is being discussed.

Niiice. I also know you have the highest share of Linux users Finland: the loco of progress

Opinion-wise nuclear is also quite liked in the country and we have no bans or freezes on research, we just don't have much in the way of being able to build our plants, relying instead on other countries for that.

So you could, theoretically, buy our floating nuclear stations in the future? Like this one:

[Dennis Toy]

Lord Zentai said

Dennis Toy wrote:
The person who runs this site is Matt Savinar, He doesn't ramble or bring about the "END OF THE WORLD, HEAD FOR THE HILLS" kind of thingg. He speaks of peak oil using research from top notch experts and even tells us how to prepare.

He even addresses the denial and the emotional difficulties involved in finding out that Peak oil is coming and the end of our technological civilization is at hand.


One of these statements is not like the other

and i will ignore that quip at the bottom.

[Darth Wong]

It's a good thing to know we've got a few decades left of oil at current consumption rates. It's not as if oil consumption isn't continuing to trend upwards because of the "ignore the problem" types in America, nor is there a huge country in Asia with a population of more than a billion people which is rapidly ramping up its consumption of oil.

[aerius]

I think it's time for a thread summary.

Thanks to the free market we won't have to worry about peak oil
Peak oil is many decades in the future and we have plenty of time
The free market will allow the development of marginal fields
The free market will allow us to find shitloads of undiscovered oil
The free market will allow us to violate geology and suck oil from existing reservoirs at constant rates until they're empty
The free market will provide alternatives
The free market will be able to make multi-trillion dollar investments in a market collapse
The free market will build a multi-trillion dollar infrastructure in a matter of years, neglecting all industry lead times
The free market will solve our peak oil problems, no need to panic, nothing to worry about

What a load of free market wanking bullshit.

[Darth Wong]

I think people are just reluctant to admit that long-term planning has never been one of the strengths of the free market. When shareholders are breathing down your neck for profits right fucking now, investing in something with a 10 or 20 year payoff just doesn't make sense if you want to keep your job. Not unless the investment is small, and this one won't be. Smith's free-market writings and "invisible hand" theories never accounted for the concept of long-term R&D costs vs shareholder demands and willful ignorance on both ends.

One might argue that such costs should be borne by the government, which should be thinking of the long-term welfare of the nation, but ... well, look at the current government.

[Darth Wong]

Is there a politician out there who would actually have the balls to declare that the US is going to put forth a great national effort to lead the world beyond the fossil-fuel era, by building large numbers of nuclear power plants along with a robust infrastructure for electrical or fuel-cell cars? Something like a new Space Race to wean the country off gasoline and show the world how it's done?

I can't imagine a politician doing such a thing in Canada, and I certainly can't see it in the US either. Never mind the question of whether anyone in the general public would be on board for this.

[Lord Zentei]

I think it's time for a thread summary.

Thanks to the free market we won't have to worry about peak oil
Peak oil is many decades in the future and we have plenty of time
The free market will allow the development of marginal fields
The free market will allow us to find shitloads of undiscovered oil
The free market will allow us to violate geology and suck oil from existing reservoirs at constant rates until they're empty
The free market will provide alternatives
The free market will be able to make multi-trillion dollar investments in a market collapse
The free market will build a multi-trillion dollar infrastructure in a matter of years, neglecting all industry lead times
The free market will solve our peak oil problems, no need to panic, nothing to worry about

What a load of free market wanking bullshit.

No. I'll summarise the thread:

1)
I was asked to name alternative sources of oil that would take the bite out of the oil crisis and prevent a collapse of the economy. I was asked to provide such a source that we could afford in principle to upgrade our infrastructure to and that provided a net energy gain. I chose the South African oil liquification programme, since that is being used commercially and at profit.

2)
I noted that the decline according to Hubbards pessimistic forecast involves a halving of production by 2040, meaning 34 years (a forecast that I do NOT grant is accurate, but, for the sake of the argument, I was willing to play along with).

3)
The South African programme provides 37% of South Africa's fuel needs, South Africa uses 1/50 of the oil the US does, and its total capital resources are about 10 billion dollars. This means 500 billion dollars over the next 34 years for a comprable programme.

4)
It was pointed out that new coal fields would be needed. Well and good, I found some prices for coal fields and the procetag went up to 1100 billion dollars over the next 34 years.

5)
It was pointed out that the South African programme only provided 37% of South Africa's fuel needs - what about the remaining 13%? Raise the price to 1500 billion dollars.

Sure, whatever. (Even though I had also mentioned coal shale from Canada and Venezuela, which it is reasonable to assume would produce about that much - 2.5 million barrels per day for both countries total 34 years hence. But there would also be new transportation infrastructure needed, so whatever).

6)
1500 billion dollars is 12% of ONE YEAR of GDP at current rates. This is to be spread over 34 years: about 0.34% per year: well within what the market can handle. Even if you increase costs by an order of magnitude (absurd, but, for the sake of the argument lets grant it), its still 3.4% per year, less than current millitary expenditures, well within what society can handle.

7)
It was claimed that panic would set in immediately at the onset of the decline, destroying the validity of these predictions. Sorry, no. The most pessimistic forecasts set the start of the decline a decade hence. Besides, I have already added an order of magnitude to the requirements.

8)
Lead times were mentioned: it would take a decade to ramp up production. It was claimed that this would raise the annual cost to WWII industrialization levels. This is nonsense: I have shown that only if you expend the resources in ONE year will you reach 12% of annual GDP. Remove a decade from the time we have, and costs go up by a factor of 1.4 (i.e.34 years : 24 years) to 0.5% per year of GDP, or 5% of GDP for an order of magnitude increase in cost. Still doable.

Incidentally, it was at this point also claimed that we would be faced with a 5%-10% decline rate. This too is nonsense. If the decline starts in 2015, halving the oil production by 2040, that's 50% in 25 years: TWO percent per year. Where did this 10% come from? And this is from the pessimist graph!


So. In the end, technological civilization will not collapse. End of story.

[Lord Zentei]

Lord Zentai said

Dennis Toy wrote:
The person who runs this site is Matt Savinar, He doesn't ramble or bring about the "END OF THE WORLD, HEAD FOR THE HILLS" kind of thingg. He speaks of peak oil using research from top notch experts and even tells us how to prepare.

He even addresses the denial and the emotional difficulties involved in finding out that Peak oil is coming and the end of our technological civilization is at hand.


One of these statements is not like the other

and i will ignore that quip at the bottom.

OK, let's see. You are signing in to say that you are going to ignore "the quip at the bottom" which is what my post consisted of... even after you have already posted a response to it before now.

And what is up with your goddamn quote tags? You have been here FOUR YEARS and still cannot use them properly?

Moron.

[Lord Zentei]

I think people are just reluctant to admit that long-term planning has never been one of the strengths of the free market. When shareholders are breathing down your neck for profits right fucking now, investing in something with a 10 or 20 year payoff just doesn't make sense if you want to keep your job. Not unless the investment is small, and this one won't be. Smith's free-market writings and "invisible hand" theories never accounted for the concept of long-term R&D costs vs shareholder demands and willful ignorance on both ends.

Well, as far as this thread's particular issue is concerned; the alt-oil source I chose for my back of the envelope scribbles were based on currently-used technology.

I'm not so sure that the market cannot have foresight on the order of a generation: the fact that lead times can be up to a decade has been mentioned in this thread, and companies usually prefer for their investments to provide returns for as many years as possible.

One might argue that such costs should be borne by the government, which should be thinking of the long-term welfare of the nation, but ... well, look at the current government.

Politicians only need to have a profit-foresight whose duration is one term of office in order to stay in power. Alas, they too can rely on quick returns for their careers.

Is there a politician out there who would actually have the balls to declare that the US is going to put forth a great national effort to lead the world beyond the fossil-fuel era, by building large numbers of nuclear power plants along with a robust infrastructure for electrical or fuel-cell cars? Something like a new Space Race to wean the country off gasoline and show the world how it's done?

I can't imagine a politician doing such a thing in Canada, and I certainly can't see it in the US either. Never mind the question of whether anyone in the general public would be on board for this.

The closest I can think of is Al Gore. Don't know how far he would have been prepared to go. I am hopeful that if society were forced to switch to a pell-mell of alternative oil sources people would become less blinkered.

[K. A. Pital]

I'm not so sure that the market cannot have foresight on the order of a generation

It depends. I'm sure large companies, which are essntially smaller forms of association than governments but somewhat similar, can and will pursue long-term planning. But their resources would be arguably more limited than the governments, even as now some megacorps do have more resource and information to plan than some governments do. But I can't see them being for any reason caring for the populace in case of an oil crash. Previous oil and other crises and crashes have proven time and again that private companies will not give a bloody fuck, at least in Russia it is so.

Alas, they too can rely on quick returns for their careers.

Might be. However, if the time in power is limited, what sort of good future dividends could a politician get if he steers the country into a crisis? These are serious issues; for managing a country into a crisis post-yourself you still may be selected as target of vengeance. For example, many in my country want not only to have revenge of trial upon Yeltsin, but also on Gorbachev. Look at the U.S. - why do people also stretch hatred to Clinton when Bush has been the prime leader of debacles?

[Lord Zentei]

I'm not so sure that the market cannot have foresight on the order of a generation

It depends. I'm sure large companies, which are essntially smaller forms of association than governments but somewhat similar, can and will pursue long-term planning. But their resources would be arguably more limited than the governments, even as now some megacorps do have more resource and information to plan than some governments do. But I can't see them being for any reason caring for the populace in case of an oil crash. Previous oil and other crises and crashes have proven time and again that private companies will not give a bloody fuck, at least in Russia it is so.

The amount of resources any single company possesses is not going to prevent each from upgrading their businesses. This does not mean that total resources are going to be insuficient.

Russia's plight in the 90s was not comprable to the more mature market economies where rule of law prevails. Hell, Russia today is quite different from the 90s.

Long-term investors will care about the welfare of the people to the extent that the people can afford their future services. That won't promote welfare programmes such as the government provides, granted, but their function is to provide energy in this case, while the function of the government is to provide releif.

Alas, they too can rely on quick returns for their careers.

Might be. However, if the time in power is limited, what sort of good future dividends could a politician get if he steers the country into a crisis? These are serious issues; for managing a country into a crisis post-yourself you still may be selected as target of vengeance. For example, many in my country want not only to have revenge of trial upon Yeltsin, but also on Gorbachev. Look at the U.S. - why do people also stretch hatred to Clinton when Bush has been the prime leader of debacles?

A leader can seek profit for himself, thus increasing the likelyhood of future collapse, even if this does not happen in the immediate future. And regardless of the imminence of the hardships, such corrupt politicians still abound, as I'm sure you'll agree.

Moreover, he need not be soley motivated by greed for personal profit, but merely for the satisfaction of staying in power and not undertaking neccesary but difficult projects that he should - witness the Socialists in Hungary for example.

As for Clinton - that's just an example of the "liberal" media in the US sucking the GOP off.

[GrandMasterTerwynn]

Is there a politician out there who would actually have the balls to declare that the US is going to put forth a great national effort to lead the world beyond the fossil-fuel era, by building large numbers of nuclear power plants along with a robust infrastructure for electrical or fuel-cell cars? Something like a new Space Race to wean the country off gasoline and show the world how it's done?

I can't imagine a politician doing such a thing in Canada, and I certainly can't see it in the US either. Never mind the question of whether anyone in the general public would be on board for this.

The closest I can think of is Al Gore. Don't know how far he would have been prepared to go. I am hopeful that if society were forced to switch to a pell-mell of alternative oil sources people would become less blinkered.

Al Gore combined with a Republican-controlled Congress would've been only slightly more effective at dealing with Peak Oil than the current batch of lunatics we have now. At least if only because an Al Gore presidency would've resulted in the same benign neglect (due to gridlock between the Legislative and Executive branches) that marked his prececessor's presidency after the Republicans took control of Congress. He certainly couldn't have done any worse, at least.

But the only way he'd have been prepared and able to go as far as he talks about going is if an unfortunate asteroid imact in Washington D.C. and a freaky quantum accident (like a genie encountering a would-be Midas with a severe speech impediment) resulting in his relentless duplication left him and his copies in control of both the Executive and Legislative branches.

[Darth Servo]

Is there a politician out there who would actually have the balls to declare that the US is going to put forth a great national effort to lead the world beyond the fossil-fuel era, by building large numbers of nuclear power plants along with a robust infrastructure for electrical or fuel-cell cars? Something like a new Space Race to wean the country off gasoline and show the world how it's done?

No, because there is no rival superpower to beat. Face it, without the USSR, the space race wouldn't have been anything like it was.

[Lord Zentei]

The closest I can think of is Al Gore. Don't know how far he would have been prepared to go. I am hopeful that if society were forced to switch to a pell-mell of alternative oil sources people would become less blinkered.

Al Gore combined with a Republican-controlled Congress would've been only slightly more effective at dealing with Peak Oil than the current batch of lunatics we have now. At least if only because an Al Gore presidency would've resulted in the same benign neglect (due to gridlock between the Legislative and Executive branches) that marked his prececessor's presidency after the Republicans took control of Congress. He certainly couldn't have done any worse, at least.

But the only way he'd have been prepared and able to go as far as he talks about going is if an unfortunate asteroid imact in Washington D.C. and a freaky quantum accident (like a genie encountering a would-be Midas with a severe speech impediment) resulting in his relentless duplication left him and his copies in control of both the Executive and Legislative branches.

Hey, he asked for a politician.

[Straha]

3) The free market will indeed raise prices and increase incentive to develop secondary sources and use alternate fuel sources. However, what J has pointed out is that no one has established the rate at which this mechanism will compensate for dwindling reserves, and whether this will be sufficient to avoid a the kind of global economic disaster that people are worried about.

The reason why an established rate can't be established is two fold: First Economics is an (relative to, say, physics) imprecise science which has hundreds of socio-political variables which cannot be pinned down without a crystal ball. Second, in order to establish the rate at which prices will be raised in accordance to the drop in Oil supply you need to have an accurate model for the future of Oil and practically every prediction given on this in the past (from both ends of the spectrum, might I add) has been horribly horribly wrong.

I will add, as a side note, that the Free Market has proven itself in this respect before from timber shortages (before anyone starts harping about how timber is a renewable resource the point is not resource availability but rather that the market and technology changes due to percieved shortages,) to percieved ore shortages, to (the most recent and relevent point) the Jevons' coal scare of 1865.

(Sorry for the delayed reply to this, I meant to post this a while back, but got distrtacted and saved it on my hard drice, and just found it.)

[K. A. Pital]

No, because there is no rival superpower to beat.

Maybe China? ... Or no? They did run a tokamak-type thermonuclear reaction recently, so they must be in the list of nuke-capables. Or, um, Russia getting powerful again and reassembling the Union of Soviet Nonaligned Republics (the most likely variant)

Although I doubt that even a Sino-Russian superstate hellbent on massive nuclear power construction could force the US to reconsider it's energy policy. That's not like sending ships to space. It also requires a strong line of thought for shifting over to a new type of power.

[aerius]

1)
I was asked to name alternative sources of oil that would take the bite out of the oil crisis and prevent a collapse of the economy. I was asked to provide such a source that we could afford in principle to upgrade our infrastructure to and that provided a net energy gain. I chose the South African oil liquification programme, since that is being used commercially and at profit.

We'll get back to this later, but if by "afford in principle" you mean spend 10% of GDP and the economy doesn't crash and there ain't any inflation and nothing that can go wrong does, then sure. In theory. Here's a $1,000,000 check post-dated to 14 years from now, in theory my bank account should have a million bucks by then.

3)
The South African programme provides 37% of South Africa's fuel needs, South Africa uses 1/50 of the oil the US does, and its total capital resources are about 10 billion dollars. This means 500 billion dollars over the next 34 years for a comprable programme.

Which neglects lead times again. 10 year leadtimes are actually very optimistic for a project of this magnitude. For production to hit the curve, the plants must be paid for and construction started 10 years before they're needed. That's 24 years.

4)
It was pointed out that new coal fields would be needed. Well and good, I found some prices for coal fields and the procetag went up to 1100 billion dollars over the next 34 years.

Lead times. Start digging a coal mine now and it won't hit full production for at least 15 years. Which means the latest that all the coal mines must be fully paid for and digging started is 20 years from now.

5)
Sure, whatever. (Even though I had also mentioned coal shale from Canada and Venezuela, which it is reasonable to assume would produce about that much - 2.5 million barrels per day for both countries total 34 years hence. But there would also be new transportation infrastructure needed, so whatever).

The existing heavy oil projects are worth hundreds of billions and can't be scaled up past 4-5 million barrels a day due to resource contraints. There's only so much water to go around, no water, no oil, and no amount of money will change the laws of physics.

6)1500 billion dollars is 12% of ONE YEAR of GDP at current rates. This is to be spread over 34 years: about 0.34% per year: well within what the market can handle. Even if you increase costs by an order of magnitude (absurd, but, for the sake of the argument lets grant it), its still 3.4% per year, less than current millitary expenditures, well within what society can handle.

Wrong. Spread over 20-24 years because of the lead times. Paying for a plant in 34 years means it comes online in 44 years, which is 10 years too late. 1.5 trillion is the capital costs for the mines & coal plants ONLY. It does not count any of the supporting infrastructure. The supporting infrastructure is almost always worth at least 10 times more than the capital cost of the final product.

For instance the natural gas mines and gas refineries in the US are worth a few trillion bucks at most in capital costs. The pipelines which enable the system to work are worth 100-200 trillion bucks. Nevermind the worth of all the specialized steel mills & pipe fabricators who made it all possible. For reference, global GDP is around 45 trillion.

15-20 trillion for the entire coal liquifaction project is a very optimistic estimate.

7)
It was claimed that panic would set in immediately at the onset of the decline, destroying the validity of these predictions. Sorry, no. The most pessimistic forecasts set the start of the decline a decade hence. Besides, I have already added an order of magnitude to the requirements.

Outright lies. The more pessimistic estimates say that we've already hit peak and the decline will start in the next 3-5 years depending on how big the plateau at the top is. As for adding an order of magnitude, if you're really lucky you've just accounted for the costs of the supporting industries and infrastructure.

Incidentally, it was at this point also claimed that we would be faced with a 5%-10% decline rate. This too is nonsense. If the decline starts in 2015, halving the oil production by 2040, that's 50% in 25 years: TWO percent per year. Where did this 10% come from? And this is from the pessimist graph!

It's actually an optimist graph which assumes we'll somehow get another 10 million barrels a day before the peak hits, and that the mid east can keep up current production for a good 30 years. Both of which are bullshit. It also assumes large deepwater & polar finds and production, neither of which exist. Plus gas condensates don't count, they ain't oil, nor can you use'em in your car. Take all that away and the curve gets a lot steeper and starts earlier. The chart is accurate for past production, but not for future projections.