Oil and Gas--The Next Meltdown
If you're wondering what Clearthinker is so worried about in his post, This Isn't the Great Depression 2.0, watch this very illuminating 26:58 minute YouTube video from the ASPO convention. Matt Simmons gives one mic-in-the-face interview, narrates a powerpoint presentation called, "Oil and Gas--The Next Meltdown," then takes written audience questions read by Randy Udall. One of the questions concerns whether our leaders will ever be able to admit the bad news.
"Once we're out of gas, we're out of food in a week." Simmons thinks we have the tools to manage the financial crisis, but is worried that Gustav and Ike have left our gasoline reserves so dangerously low. He once again dismisses the "drill, baby, drill" meme by pointing out that we don't have the rigs available to do that.
He even offers some investment advice.
"Once we're out of gas, we're out of food in a week." Simmons thinks we have the tools to manage the financial crisis, but is worried that Gustav and Ike have left our gasoline reserves so dangerously low. He once again dismisses the "drill, baby, drill" meme by pointing out that we don't have the rigs available to do that.
He even offers some investment advice.
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How about Water?
October 12, 2008 1:33 PM | Reply | Permalink
Water is not a finite natural resource (unlike petroleum). Water is not consumed unless you are creating hydrogen and oxygen via electrolysis. You drink water, but then you excrete water unchanged on a molecular level.
There are dry areas of the planet, but we just can't live there without a large expenditure of energy.
October 12, 2008 4:40 PM | Reply | Permalink
Not precisely true.
Snowpacks are critical for water to maintain a regular flow throughout the year. In a global warming scenario, for example, you can have most of the water run off after the rains into the ocean where it is no longer in useful form.
Moreover, the Ogallala Aquifer is running dry, and is a major source of water:
http://en.wikipedia.org/wiki/Ogallala_Aquifer
Remember: whiskey is for drinking, water is for fighting. And there will be fighting a plenty. R
October 12, 2008 5:10 PM | Reply | Permalink
Yes, what I said was precisely true.
Your statement is unrelated to mine, and does not reveal any imprecise falsehoods in my statement.
I know this is old, but I tried to reply just as the site changed over and I still wanted to get that off my chest.
October 16, 2008 12:03 AM | Reply | Permalink
Neither water nor fuel will stop cold. Disregarding local suppply interruptions, oil will be delivered for a very long time. But its constantly-increasing price will percolate through the world economy. We will get stagflation, if we invent money to buy it with, or we will just get poorer, spending more of our wealth on fuel.
But there won't be a sudden collapse like the financial one, since that one is the evaporation of an illusion. Fuel is still quite real.
We can avoid that poorer future by building the means of production of energy, starting now. Once energy is not a problem, water becomes much less of one, also.
October 12, 2008 1:46 PM | Reply | Permalink
Tom, I disagree. I think it will be a sudden and dramatic increase in price. There will be shortages and hoarding. Petroleum is much more than just fuel, and it is finite. The first half of the "petroleum mass" was easy to "harvest." The second half will be very difficult and expensive to extract.
October 12, 2008 1:53 PM | Reply | Permalink
There is no sharp line between that easy first half and a difficult second half. Which half is offshore oil? Or shales? Even in the beginning, there were fields handled efficiently and others that were wasted through poor management. Those can be pumped but it wasn't worth it at the time.
There certainly will be interruptions, but more because of the price encouraging keeping little inventory. When everything is "just in time" little problems cascade. But economic ups and downs will also alter the simple straight-line extrapolation of consumption.
And as we accommodate higher prices, synthetic fuels become competitive, and so does extending gasoline with ethanol. These factors mean we won't actually hit an oil wall. We'll find something a bit more subtle and unexpected, perhaps, maybe a lack of catalyst for refining, or a pipeline failure, or a war, which is the most likely catastrophic influence on oil markets and supply.
Bringing alternatives online, such as electric cars using power from non-oil sources, will be another damper on sudden collapse of the oil economy. But as oil becomes more expensive and harder to drill, pump, or deliver, those economies that move early to stop using it will be the winners. Economies that depend on it for income will be more subject to whipsawing prices and demand, and will be at great risk.
October 12, 2008 3:33 PM | Reply | Permalink
There is indeed a sharp line. Hubbert predicted way back in 1956 that US oil production would peak sometime around 1970. He was pretty close. His theories are applicable to any finite natural resource. This is very sound science.
I certainly hope you are correct, but I think you are underestimating the problem. It will be extremely difficult to find a replacement to petroleum. Any replacement will also require extensive changes in our current hardware and infrastructure which will cost billions (trillions?) and take time to implement.
I just hope gas prices don't drop too much in the US or we will once again quickly forget about this until it is too late.
October 12, 2008 4:26 PM | Reply | Permalink
I am pretty much in Hubbert's camp, and that asks this question: if we are already in the decline, where is the sharp line?
The most dramatic change I can see is the globalization of the oil market, that it is so totally fungible now, unlike gas and coal. The money has becmoe so dominating that Iran and Venezuela and Russia still pump pretty much all they can, and don't seriously try to influence other nations with oil. They can't do much since someone else will come in and make money those countries will miss out on.
As to how hard it will be to live without burning something so valuable (for your mentioned feedstock uses) consider that all we need are better batteries, for storing the abundant power falling as sunlight. Since roughly one thousand times our energy demand falls as sunlight there should be room for manuever, even after allowing for the ten percent needed for the world's plants life.
And that battery exists already in the design called flow batteries. It's the switchover that will be clumsy, with technological inertia fighting against the new, and economies of scale not yet happening for the replacement systems.
October 12, 2008 5:18 PM | Reply | Permalink
Tom,
Here are several curves that Hubbert predicted. One was discovery... there is a 40 year lag between discovery peak and production peak. Discovery in the lower 48 states peaked in 1935, and we peaked in production in 1973. Discovery in world oil peaked in 1965...and you can do the math.
But a discovery peak doesn't mean that no more oil will be discovered. For example, the huge reserves in the North Sea and Alaska came after we hit the world discovery peak.
Finally, shales, and the like are not the same as oil like we know it. There is a energy return on your investment for spending energy to get at it:
http://en.wikipedia.org/wiki/EROEI
Finally, it should be obvious that the easy oil is the first bit discovered. We are now going down the other side of the slope. This is the hard oil. And much of it isn't coming up on the markets like it used to (like China's special deal with Venezuela). Remember that Mexico will decrease exports to maintain their own internal supply at proper levels, for example.
October 12, 2008 5:15 PM | Reply | Permalink
Isn't water an issue in the Middle East? I know it is an issue in California.
October 12, 2008 4:55 PM | Reply | Permalink
I work with growers. Huge numbers of farms do not get water on demand, in fact only those farms with well water can do that. A huge fractions of farms place their water orders in weeks in advance...and get it for 24 hours straight and then it's shut off.
Water can stop cold because of this system.
October 12, 2008 5:00 PM | Reply | Permalink
Peak oil has been frightening me for a few years now, we have probably already passed peak oil production. Petroleum is not just used for our cars, but it is a truly unique resource.
We use petroleum to make medicine, plastics, artificial fibers for clothing, and many other vital objects. This will significantly affect our current modern lifestyles. There is nothing right now that would replace petroleum.
People talk about global warming, but that is a distraction. If it is true, we can't fix it anyway. Peak Oil will affect the US more than any other country. It will ruin us.
Fortunately, we have more coal and natural gas than most other countries, but it will take time to convert. Many people will suffer in the interim. We should have adequate (or at least enough) electricity to keep us from collapse. But where can you buy an electric car? I have looked for one...
Eventually, only the military will have petroleum.
And, your first link is broken.
October 12, 2008 1:50 PM | Reply | Permalink
I think you're right. Especially about the military.
I have to practice getting over my anger with this administration.
There was no worse time in our history to have this particular group of neocons run our country than the last eight years.
The century has changed--their ideas didn't.
Just when it was critical to invest big time in alternative energy, we hear drill, baby, drill.
Just when other major countries and small countries alike start creating their own flourishing economies, and we all become more interdependent, we alienate the rest of the world, and start wars and belt out "it's our way or the highway".
Bush, Cheney, the whole lot of them; the wrong people at the worst time.
While our entire financial structure was collapsing, the administration sent out $600 stimulus checks thinking that ought to do it.
That's as effective as jumping up while inside a free-falling elevator.
How is it even possible that this Presidential race is close?
Does Joe-six pack say "I lost my job, my pension, half my 401k, I can't afford health insurance for my kids, I can't even afford to fill the tank of my pickup--you bet I want more of the same"?
October 12, 2008 2:58 PM | Reply | Permalink
Try this one:
http//tpmcafe.talkingpointsmemo.com/talk/2008/10/this-isnt-the-great-depression.php
October 12, 2008 5:57 PM | Reply | Permalink
I wrote about trying to find EVs earlier this year: http://www.thetruthaboutcars.com/donal-fagans-field-guide-to-electric-vehicles/
One can reserve a 2009 $35K Twike, or get in line for the $104K Tesla, or various kinds of LSVs - Low Speed Vehicles and NEVs - Neighborhood Electric Vehicles. Ed Begley sports a Phoenix truck and George Clooney rides a Tango, but neither of those are for sale yet.
http://www.twike.us/
http://www.teslamotors.com/
http://www.phoenixmotorcars.com/
http://www.commutercars.com/
October 12, 2008 6:08 PM | Reply | Permalink
Thanks for the shout-out, Donal, and the interesting link! I am hoping this blog makes it to the rec list today... but am going to hype it on the other list well.
October 12, 2008 5:01 PM | Reply | Permalink