Posts Tagged ‘Peak oil’

Energy Question For The USA

March 23, 2012

THE AGE OF OIL PRODUCED THE AMERICAN CENTURY. NOW WHAT?

No Vision, No Mission, No Energy

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Another editorial of Paul Krugman firing volleys at republican “paranoia” for accusing Obama of driving up oil prices. As he observes in “Paranoia Strikes Deeper“: …“the president of the United States doesn’t control gasoline prices, or even have much influence over those prices. Oil prices are set in a world market, and America, which accounts for only about a tenth of world production, can’t move those prices much. Indeed, the recent rise in gas prices has taken place despite rising U.S. oil production and falling imports.”

American households tend to borrow as much as they can. Thus, when oil prices increase markedly, Americans have to cut in crucial budgets, such as house payments. I said at the time that it would lead to a peak in housing prices, and it did.

Why such a drastic influence of oil prices on the economy of the USA? Because Americans, except in a few places such as New York, commute by private car to work. So Americans have to feed the car, if they want to feed themselves.

It was not this way a century ago, or so. At the time public transportation systems using electric tramways and trains were found all over, even in Los Angeles. Car companies put an end to that outrage in the late fifties by buying, and then destroying, all the public transportation system they could put their greedy hands on.  Fossil fuel plutocrats were delighted.

But let’s set aside Krugman’s fake indignation. He is smart enough to know that Romney will do what Romney needs to do to win the Obama, I mean, the election. Waxing lyrical about Romney doing as Obama, does not beat going lyrical about sunrise.

Gasoline prices in the USA are way down in real dollars to what they used to be, decades ago. And so is the gas tax. This means that, far from adapting to the gathering multiply pronged world ecological and energy crisis, the USA has gone the other way, denying there is any crisis. “What? Me worry?” That’s got to be anti-American indeed.

Now real blooded Americans are all into strip searches and the death panel at the White House.

In Europe, gas prices are more than twice that of the USA, thanks to heavy taxes (stations in France have sported two euros a liter, that is 8 euros per gallon, or more than $10.50).

This means that far from being down and out, Europe is efficient enough to operate at that high price level. It also means that Europe is much more motivated than the USA to get much more efficient. In other words, high gasoline prices in Europe are a safety margin. The high prices force the European free market to adapt to a situation that the free market of the USA will encounter someday. Adaptation takes decades: new energies take in the average, historically speaking 50 years to become dominant. Same, one would guess, for energy efficiencies.

Basically, if oil prices doubled from here, gasoline prices would double in the USA. Whereas, even if the Europeans decided to keep the same high taxes, gasoline prices would only augment by 50%. And, in the much more efficient European economy, with plenty of public electric transportation available, the noxious effects on the European economy would be much less than one would expect from a 50% oil price rise. 

The world gets 55 × 1018 joules of useful energy from 475 × 1018 joules of primary energy produced by fossil fuels, biomass and nuclear power plants. That tremendous inefficiency (less than 13%!)  needs to be corrected. It will be, if, and only if, prices are kept high. Thus energy taxes are necessary to adapt to the looming penury.

Why looming penury? Because the reserves of other fossil fuels may have been vastly overestimated (by a factor of 5 in the case of coal). Various fossil fuel lobbies have interest to over-estimate the reserves (because it keeps the world addicted, as they present their industry as a long range solution, which it is not).

Looking at the raw production numbers, as exhibited below in the graphs paints a completely different story: production from existing fields is going down dramatically (at 5% rate, per year).

In other words we are in the treachorous waters between the catastrophe of CO2 poisoning and the disaster of running out of energy to burn.

The unavoidable rise of fuel prices will be less grave in Europe than in the USA, because many Europeans would opt for the available electric based public transportation system (the combination of much more efficient electric motors and central generation is much more efficient than distributing oil to put in SUVs all over, as done in the USA; SUVs, because there are too many holes in the asphalt. A problem partly related to high oil prices!).

Yet, the increase of the cost of imported oil corresponds exactly to the Italian deficit ($55 billion). Although that deficit increase had many causes, oil price increase was by far the most important. And the same for other Southern European countries. So the rise of oil prices was the barrel that broke the back of European debt.

In the USA, ten out of 11 post WWII recessions followed oil price spikes. Why are American minds so closed up to the looming strangulation of their economy by oil? Because the fossil fuel plutocracy is on a rampage in the USA. It uses a red hot propaganda to persuade the vast American public of undifferentiated sheep that there is no CO2 ecological crisis, and no energy crisis. (Although the latest polls indicate that two thirds of the public, in a splendid turn-around, believe that there is indeed a man-made climate change crisis; never mind that the New York Times had the latest tornado rampage, with 40 dead, presented as discreetly as possible.)

Why are the fossil plutocrats hysterical? Well we are past Peak Cheap Oil. Moreover, the “majors“, the world’s largest oil companies, have been pushed out of more and more countries, and replaced by national oil companies. Desperate, the majors have gone for riskier and riskier drilling in the deep ocean. Now Chevron, and Transocean, after a 4 day leak off Brazil, see prosecutors asking for lengthy prison sentences and enormous fines.  

Most of these oil companies are American, so they have pushed for fracking (destroying the underground with poisons to extract fossil fuels). Superficially, it works: USA imports of fossil fuels went quickly from 60% down to 40%.

However, that did not make a dent in the world price situation, because the demand keeps rising, but the world, overall, is PAST PEAK OIL (as I have long argued and the Nature article alluded to below confirmed, using the obvious argument found in the graphs).

So, basically, American fracking finances Chinese oil consumption. Here are some graphs extracted from Nature and the USA government:

 
 
[From James Murray and David King in Nature, 26 Jan 2012, vol 481, p. 435.]
 

When the horrid sun of diminishing resources rises over the parched American oil desert, while fracking reveals itself to be an unfathomable catastrophe, the howling is going to be very great, and one more reason for a depression will blossom.

Much of the USA’s superiority, in the last 150 years, has come from abundant and cheap oil. First in the North-East, then down to Oklahoma, Texas, Colorado, California. Compare with Western Europe, which had basically no oil.

Oil was not just a question of cheap, convenient energy. Oil has, short of nuclear energy, the highest energy density of any material (OK, nuclear energy is millions of time more energy dense).

Oil gave the USA enormous diplomatic and conspiratorial leverage. American oil plutocrats helped Lenin and Stalin develop their colossal fields in the Caucasus and Caspian. One of those plutocrats, Harriman, son of a railroad magnate, and brother of another Harriman, was one of the main operators of the democratic party. Let alone banker to Hitler. He was decorated both by Stalin, and by Hitler. He then went on as U.S. ambassador to major European capitals, and stayed one the main operators of the government of the USA for decades. “Democrats” have long been impure.

Interestingly, I searched the Internet for a document mentioning Harriman’s Stalino-Hitlerian decorations, but could not find it (I have seen the pictures in the past). All I could read is how much Harriman resisted Stalin each time they met, and that was all the time (a total lie that Harriman resisted Hitler, or Stalin: Harriman was an accomplice of Stalin, and helped give him half of Europe, in exchange for manganese and other stuff. But now Internet agents are obviously paid to reconstruct a truth where American plutocrats look good,  knights in shining armor, fighting Stalin or Hitler, each time they met for tea, dinner, lunch, breakfast, and interminable conferences, for years on end, decade after decade).

A famous example of the clout oil provided the USA with: Texaco fueled Hitler’s conquest of the Spanish republic (this one is hard to hide, because the U.S. Congress slapped Texaco with a symbolic fine, well after the deed was done). That used to amuse Hitler a lot (Hitler gave elaborated reasons to his worried supporters for being in bed with American plutocrats; as the Nazi Party was officially socialist, and anti-plutocratic, that awkward situation may have led him to declare war to the USA on December 11, 1941, to ward off the German generals’ argument that he was just a little corporal in above his head).

Another example: Mussolini was hanged from an American gas station in Milan. Italian communists hanged him from his sponsors’ works.

The fueling of the fascists by American fossil fuel companies helped bring the American Century to the world in general, and Europe in particular. Without Stalin and American plutocratic oil, Hitler’s Panzers could not have moved in 1939 or 1940.

The dignified Elie Wiesel, instead of crying crocodiles tears, wondering how such a thing as Auschwitz was possible, should ask how and why the Nazi extermination machine was fuelled by American plutocrats, and how come he, himself, never talks about that.

Wiesel got the Nobel Peace Prize, just as Jimmy Carter (who launched the American attack on Afghanistan). Was it for disinformation? (And how come waging war in Afghanistan is a big plus for the Peace Prize? Is it related to the same mood which made Sweden help Hitler before and during WWII, and never having a serious look at that, ever since? I know the prize is ostensibly given by Norwegians.)

Wikipedia is big on the notion of “weasel words“, and rightly so. Deeper than that is what I would call weasel logic. And ever deeper, weasel worlds. To talk about Hitler without ever wondering who his sponsors were, and what they were after, is to live in a weasel world.

I like Elie Wiesel personally. Yet, just as I like Krugman, Obama, and countless others, such as the infamous Jean-Paul Sartre, he likes power even more than truth. OK, It is unfair to put Sartre, who really espoused the most abject terrorism, with the others… As long as individuals prefer power to truth, the spontaneous generation of infamy is insured.

Total oil sales, per day are about 100 million barrels (in truth the cap is lower, see graph above), at, say $100, so ten billion dollars a day, 3.6 trillion a year. The USA uses about 25% of that. Some have incorporated the price of the part of the gigantic American war machine and (what are truly) bribes to feudal warlords insuring Western access to the oil fields, and found a much higher cost up to $11 a gallon.

Ultimately, and pretty soon, in 2016, specialists expect oil prices to explode up, from the exhaustion of the existing oil fields. Then what?

Moreover, in 2016, the dependence upon OPEC, or, more exactly Arab regimes, is going to become much greater than now. What’s the plan of the USA? Extend ever more the security state, and go occupy the Middle East with a one million men army? To occupy, or not to occupy, that is the question.

Is it time for a better plan? And yes, any better plan will require consumers to pay higher energy prices. As consumers apparently want the army to procure the oil, they ought to pay for it.

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Patrice Ayme

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Note 1: Flying cost at least ten times more in CO2 creation than taking a train. And jet fuel is not taxed, at least until the carbon plan of the European Union starts charging next year, in 2013. In spite of the screaming from the USA and its proxies: it’s funny how attached to subsidies American society can be.

Note 2: Refusing to pay for necessary military expenses through taxation and mobilization, was a big factor in the downfall of the Roman Principate.

The Principate then tried to accomplish defense on the cheap, by using more and more mercenaries. Many of these mercenaries or their children and descendants were poorly integrated in Roman republican culture (say emperors Diocletian or Constantine, let alone Stilicho the Vandal, a century later), so they established the Dominate, itself a negation of the Roman republic. Amusingly the Western Franks, those salt water (“Salian“) Franks remembered the Roman republic better than all these imports from the savage East… who could not remember it, they, and their ancestors, having never known it.

Guess what? The USA’s army presently employs 300,000 “private contractors” (aka, mercenaries). Curiously, in that case, it’s not so much to save money, than to extract more money from the system (but that’s another story). Still, it will have the same effect.

Peak Cheap Oil Passed.

January 1, 2012

Expensive Oil Means No Oil.

January 1, 2012

By Patrice Ayme

In nature, for reasons not clear to me, distribution laws often follow “Normal Distributions” (aka “Bell Curves“, because they look like bells cut in half). Henri Poincare’ himself, admitted that he found Normal Distributions mysterious, and that experimentalists believed theorists had established them, whereas theorists believed experimentalists had done so… Poincare’ contributed to probability theory as he did in so many subjects, with his characteristic honesty.

This, (pre-)supposing Normal Distributions, allows to make predictions of a “scientific” character:

  1. Suppose the phenomenon at hand satisfies a Bell Curve distribution law.
  2. Identify, from know data, the inception of said curve, hence the curve itself.
  3. Read out on the graph its extent and peak.

Thus geologist Marion King Hubbert predicted in the 1950s that the US oil production would peak out around 1970. His prediction was verified. He applied his model to world oil production. The model predicted peak oil around 1995.

Due to deep off shores discoveries, a new technology, the peak was displaced to 2005 (as it turned out). However, as the cheap oil was depleted oil prices went up, making it economic, in appearance, to get oil from tar sands, and ever deeper underwater drilling. The cost to the companies did not reflect the true cost to the economy of society at large.

Hydraulic fracking was also used increasingly in the USA as Western oil companies got chased out of the developing world (to be replaced by national oil companies). Texas, and the Bakken formation of North Dakota became targets of extensive fracking.

Fracking in the USA for gas and oil is changing quickly the energy balance of the USA. It has been immensely profitable, for now, for the companies indulging in it, and the production of fossil fuels in the USA has augmented enormously.

Fracking, in the present state of technology, consists into injecting enormous quantities of water charged with various poisons and rock devouring bleach or acid. The poisonous water is injected again and again to break the rock, releasing gas, or oil. And also countless poisons held by Pluto down below, such as radioactive materials (checking for workers for radioactivity is standard when fracking).

Thanks to the personal intervention of Vice President Cheney, CEO and shareholder of Halliburton, in 2005 hydraulic fracturing was exempted by US Congress from any regulation under the Safe Drinking Water Act.

During the period November 2001 to November 2011, the general government inflation index in the USA, CPI-U, grew from 176.7 to 226.23, an increase of about 28%. But, during the same period, the CPI motor fuels index went from 96.1 to 294.049. The same volume of gasoline roughly tripled in price over the last decade. (In Europe, because of enormous energy taxes, and cheaper oil close at hand, the effect has been attenuated; whereas in the USA, my interpretation is that the oil spike played a role in the subprime crisis!)

People have debated whether we passed Peak Oil or not. Maybe not. Why not? Because we have cheated. The enormous exploitation philosophy in the USA, overruling anything else, such as, for example, common sense, has allowed to cheat, by going into fracking and tar sands.

It is likely that the cost of fracking on the environment is going to be catastrophic. It causes even earthquakes. Meanwhile, fossil fuel companies will make lots of money, and give off many campaign contributions to their pet politicians, in the country where these corrupt practices are legal, namely the USA.

France, followed now by South Africa, and Russia, has outlawed fracking in its present state of technology, as they fear for their water table. We can have life without gas and oil, but not without water. At least so think the silly French, who should go back to drinking wine, so that they can reason like real Americans.

In any case, Canadian fossil fuel interests are firmly determined to frack and to heat up sands full of tar, to extract fuel. The cost in terms of CO2 pollution and energy is enormous. And it will get bigger: Canada has sold its soul to the fossil fuel burning Satan. But, when one has started with an ethnic cleansing of the French (!) and the Indian natives, one may be forgiven, to stupidly hope, to do the same to the entire planet…

The real currency of economy ought to be energy. As it was in prehistory. Peak CHEAP oil means that it costs more and more to extract fossil fuels, in terms of the only currency which really counts, energy (every word in this sentence was carefully considered).

Actually there is such a notion as EROEI (Energy Return On Energy Invested). An energy source is exploitable when the EROEI is well above 1. Nuclear energy gets a very positive EROEI (even with any waste disposal!) because its energy density is a million times higher than that of fossil fuels.

Oil production is meeting a ceiling. The most recent graph from the USA government, which I have been unable to copy, as my computer system plus WordPress refuses now to copy any picture (!), and will erase my posts if i try (!!!) shows a pronounced production dip.

It is found in the Nature article (published weeks after the initial version of this essay): Climate policy: Oil’s tipping point has passed: There is less fossil-fuel production available to us than many people believe. From 2005 onwards, conventional crude-oil production has not risen to match increasing demand. We argue that the oil market has tipped into a new state, similar to a phase transition in physics: production is now ‘inelastic’, unable to respond to rising demand, and this is leading to wild price swings. Other fossil-fuel resources don’t seem capable of making up the difference.”

The reason for this is that fracking’s production falls off quickly, so it’s no long term solution, just a flash in the pan..

The exploitation philosophy has been the ruling philosophy in many Anglo-Saxon lands, ever since it got pushed by the “West Country Men” (circa 1600, the Elizabethan Age) ). Historically the Anglo-Saxon colonies deeply believed that no exploitation of the land, or the peoples, was harsh enough. The assault of the USA against Afghanistan, since July 3, 1979, to jump on the gigantic minerals reserves found by the French there, is an example of this avoir plus grand yeux que grand ventre philosophy (having bigger eyes than stomach philosophy: in Afghanistan, the USA tried to swallow more than it could chew).

One can compare Australia with French held, nickel rich New Caledonia next door: the dumb French forgot to massacre the natives to the exacting Anglo-Saxon standards. Thus, they have had to face an independence movement.

The French ruled New Caledonia archipelago is made of half aboriginal descendants, while the natives were essentially extinguished from Australia. In Australia, up to the 1960s, methods now classified by the United nations as genocide were used.

In any case, the mentality that no exploitation of natural resources is harsh enough has to be thrown into the garbage of history, or reserved to the outer planets. It’s important to be able to diagnose all its ramifications.

In the case of the energy policies of the USA, that country, and the entire planet, is led into a trap. Subsidies to expensive fossil fuels make continuing with a very dangerous form of energy possible. What’s more dangerous than destroying the air we breathe, and the oceans we rule? When the subsidies will run out, the real cost of fossil fuels will show itself to be unbearable. But then new forms of energy will not have been deployed in a timely manner. The rats will be many, but the food short, the air unbreathable…

Historically, it has taken 50 years to fully deploy new energy systems. It is true that going all electric would spare a lot of energy (electric engines are much more efficient, as they do not depend upon a flow between a hot source and a cold sink). Making fossil fuels pay their true cost is another must. Some of the cost is to maintain enormous, and enormously expensive British, French and American military forces to be ready to keep forcefully open the Strait of Ormuz (say). 35% of the world oil passes below the noses of gasoline starved Iranians (don’t ask).

Another example:  Since ever and ever, fossil fuels for air transportation have not been taxed, worldwide. The European Union has decided to fix that, and its new taxation policy for air transportation is going into effect today, January 1, 2012, for all flights flying into Europe.

The USA has protested loudly, threatening economic sanctions. The USA, through Hilary Clinton’s voice box, called the correct pricing of air transportation an attack against the free market.

Apparently we are far from having reached peak impudence!

 

$200 OIL YES, WORLD WAR NO.

May 1, 2008

Some want the world simpler than it really is… Curiously few saw expensive oil come. Now some predict war as the way out all too readily (and that prediction can be used as an excuse to not look for (policy or energy) alternatives, in the name of entrenched interests). In truth, what should be predicted should rather be the end of US waste and preset ways…

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WORLD OIL RECESSION ONLY ABOVE $200:
The $120 per barrel oil price of April 2008 regained the inflation adjusted price peak of 1980 (in 2008 dollars; in 1980, an Arab oil embargo was enacted to protest the US military support of Israel in the Yum Kippur war).

In 2004, investor Marc Faber, of “The Gloom Boom & Doom Report” observed that the Chinese car population had decupled already, while if China used as much oil as Mexico, per person, it would consume as much as 30% of the existing world’s oil production (an impossibility, except if China accepted to pay more for its oil that anybody else… or if China played Tibet with the Middle East, a role in which others are already starring). The supply of oil cannot grow: no major oil field was discovered in more than 40 years.

World oil production is not augmenting anymore, but demand is: the five billion strong world underclass, the fastest growing segment of the world population, unsatisfied with its lack of power, wants energy too. Oil has the highest density of energy (short of nuclear). Some say there is plenty of oil to be had. They evoke tar sands (as in the Canadian province of Alberta). Others suggest to make oil out of coal (as Hitler did in his little plan to conquer the world). Both cause such immense pollution and carbon emission problems that they have no positive long term economic justification, on a planetary scale. True, long term we are all dead, but coal and tar, a form of smoking, is a bit too quick that way.

Still another proposition has been to exploit the super gigantic deposits of oil in shale rock in the mountains of the US West. Unfortunately, the easiest way to get the oil out is to heat the rock in situ, and lots of it would escape and pollute the water table (although the flight of fancy of freezing back the rock in vast cylinders has been grotesquely suggested). Clean water itself will soon be more precious than oil (all the more since one needs energy to extract it from shrinking, deep underground aquifers).

Thus the price of oil will go the sky: there is no substitute (yet). Even if the West became super efficient, cutting its energy usage by half, the six billion who want to go from close to zero energy usage to something non negligible will cause most of the future demand. Demand will abate only when the price is so high that it causes a world (growth) recession.

So when will there be an oil price induced world growth recession? Energy usage efficiency has roughly doubled since 1980, thanks to more advanced tech: twice more GDP is created for the same energy unit. Thus oil would have to reach around $240 to create a stress comparable to that of the seventies (except this time the rise is slower, so it may need to go even higher). The USA would be badly hit well before that, considering its inefficient economy. The EU could muddle through by reducing the taxes on gasoline to keep it around $10 a gallon as it is now; in some regions of France local taxes on gasoline have been decreased.

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… BUT NO WORLD WAR:
Marc Faber has a simplistic view of what brought the two world wars in which fascism was involved. He wrote: “in the case that oil prices were to rise in real terms to their 1980s highs – well over US$ 100 – then the foundation for World War Three would be laid … “

Indeed it is true that oil contributed both to W.W.I and its second round, W.W.II. Hitler’s friends at Texaco gave him the oil he needed for his early years, true. Yes, Texas oil was all over Guernica, thank you, Uncle Sam! In both world wars, Germany, which had no oil, but frustrated imperialistic dreams, desperately wanted to get some (oil is much more efficient than coal in ships, let alone in tanks and planes!). Hitler and company used oil as still one more reason for invading Poland. But the invading Nazis got short circuited by their buddy, the crafty Stalin (who got to Polish oil first). Then Hitler targeted the Soviets’ main oil, in the Caucasus. The Nazi assault through North Africa targeted another major oil source, Iraq.

Marc Faber (not an American but a Swiss), seems to be implicitly assuming that the USA is as badly obsessed as Hitler’s Reich, and will keep on invading for oil (as Hitler did). But that is overestimating the present gullibility of the US public and his military men (even Hitler’s military men rebelled in the end, in a society that had not known democracy for 2,000 years). Since everybody now knows that powerful armies have been sent to invade for oil by the world’s worst criminal idiots, many times over, another world war should not happen again that way.

True, for years, US opinion makers have insisted that the USA could not afford an energy policy of research and innovation. Even in 2008, all money towards the US contribution to the experimental thermonuclear reactor ITER was cut off. Meanwhile, France, with a much more efficient economy, emits not even a third of the CO2 that the US does, per person. But such facts as this are slowly percolating up common US consciousness… Even bomber pilots on giant US aircraft carriers in the Gulf are starting to wonder what they are doing there.

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WORLD WAR TWO OCCURRED WHEN AGGRESSION WAS LEFT UNPUNISHED:
The fundamental path to W.W.II was purely psychological. Before Hitler (and militaristic Japan) got obsessed by oil, they got used to get things by force, and get away with it. Thus, as what happened then, the real danger is that several of the major powers engage in a competition of unpunished brutality, encouraging each other down the pernicious slope of stealthy fascism.

Mussolini started “fascismo”, Lenin the “dictatorship of the proletariat”, both encouraged the rise of Nazism; in turn Hitler made Mussolini more fascist, and then the “Axis” was formed with Japan, boosting the later’s fascism, and then Hitler, worried by France, allied with Stalin; at that point all the fascists were allied with each other, in a terminal fight with democracy (only France was really in the way;  US capitalists were massively helping Hitler; the UK was doing an awkward 180 degree turn).

Thus, should one want to avoid W. W. III, one would discourage drifts towards unnecessary brutality: they can be contagious and mutually sustaining. Fascism was in fashion before W.W. II. That’s why it’s encouraging that enough people make enough waves about Iraq and Tibet to cause great powers to reconsider (maybe). The tipping point into generalized fascism (hence world war) would be reached if not enough people could be found to accomplish this.

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Patrice Ayme

Ref.: Marc Faber http://www.ameinfo.com/47129.html.

P/S: OPEC President Chakib Khelil on April 28 2008 declared that the sharp rise of oil had to do with the fall of the US Dollar (which it obviously does, in part). What we said above is that there is a natural (and increasing) upper bound to the rise of the price of oil, and that it is pretty high, and naturally rising, as energy efficiency rises. But it’s way higher than what the USA can stand, and that is why it invaded Iraq, as peak oil was reached (the audacity of hoping for IRAQ AS THE NEW AMERICAN OIL STRATEGIC RESERVE). That theoretical peak oil production could be higher by using very deep, or very heavy oils and coal is irrelevant, the global cost being way too high.