[Archivist]

dichotomy, I suggest you go back and read your own posts, or at least mine. No one here, especially me, is being a chicken little. Instead, I'm trying to outline a potential problem and my thoughts about it. Nor am I making any value judgements about climate change - it's only you that keeps bringing these things up. What I am pointing out is that you have made incorrect statements, and used faulty logic to dismiss a concern. Your response is to do, well, more of the same.

Frankly, given the quality and temperment of your comments so far, I could already care less about what you think and wouldn't expect that you would post anything thoughtful or reponsive to other posts, so I'm mostly posting for others at this point.

 

[Archivist]

Oh, and dichotomy, regarding the chicken little scenarios that you accuse myself and others of, I can tell you that those who have predicated a spike in oil prices have been in the minority, but they have been correct. Here's a few samples from hundreds available of those predicting a drop in prices.

--------------------
'Saudi's interested in keeping oil price at USD 50 a barrel'.

New York, Jan 28 2007 (PTI) Saudi Arabia, which benefited immensely from record oil prices last year, has sent signals in the past two weeks that it is committed to keeping oil at around USD 50 a barrel, down USD27 a barrel from the summer peak that shook consumers across the developed world.
--------------------
Oil price bubble about to burst, says business guru Forbes
08.30.2005, 05:20 AM

SYDNEY (AFX) - Oil prices are set to crash from this week's record highs as a speculative market bubble bursts with an impact that could make the hi-tech bust of 2000 'look like a picnic', business publisher Steve Forbes has predicted.

Forbes said the high oil prices currently dampening the US economy, which peaked at more than 70 usd a barrel yesterday as Hurricane Katrina headed for the US Gulf Coast, would fall to 30-35 usd a barrel within a year.
--------------------
So, I'll ask again, you've predicated a price of $100 for oil. What considerations are you taking into account for that. I would also ask what you were suggesting at this time last year - was it also $100. I stand by my assertion that if we were having this conversation last year, you'd be predicting something like $40 a barrel.

No sarcasm, just a question.

 

[Edward Skira]

Keep in mind that in both of these countries, governments, not the market place dictates the selling price. As such, both are currently selling oil/gas at less than cost and demand has escaped traditional inflationary pressures. You can run but not hide from inflation. The longer and greater the insulation occurs the greater future hyperinflation will be, causing catastrophe.

Perhaps but since they are starting from such low per capita usage any growth will still be massive. What happens when every family in China has one or two cars like here?

 

[Hydrogen]

But how high will it have to go for consumption to go down? There's a big difference this time around compared to the 30's. India and China are booming and their increased use will more than make up for any decline in North America or Europe.

That's a good question. The drop in the consumption of oil during the depression was a consequence and not a cause of that economic contraction. Even though we use oil and natural gas in a far more efficient manner than in the 1930's, oil is central to the contemporary economy and touches virtually every aspect of it. For example, compared to the 1930's there is now an immense global tourism market, and it will be deeply affected by increasing prices in oil and the growing cost of air travel. Products move to market by way of hydrocarbons, which means that every one of these products is affected to some degree by the change in the price of oil. Even public transit is affected by the price of oil.

Add to this the growing pressure to introduce new taxes onto hydrocarbon production and use.

There is no replacement to oil and its by-products available presently. Even if one is discovered, selected and brought to market, it will take many years to do so. We need to use oil.

The talk about peak oil is always fascinating, but also somewhat unrealistic. Almost 85% of the North American coastline is off limits to oil exploration and production. There is a large quantity of oil bound up in sand and shale. There are large areas of potential oil deposits on other continents that remain unexplored. Also, the oceans - which account for 70% of the surface of the planet - are almost completely unexplored. There is little doubt that somewhere out there is a vast quantity of oil. Some geologists even suggest that most oil has yet to be discovered.

The question is whether this pursuit is worth it in the long run? We've seen electricity production move away from burning oil for electrical generation. Certainly in the near term automobiles can be made more energy efficient with respect to gasoline, or switch over to hybrid or electric. Either way, even in the most ideal situation the price of oil will always be inching up because the cost of accessing it will rise. Drilling in deep ocean will be costly for a number of reasons; and if we really need that oil maybe we should be planning now to need as little of it as possible in the future.

 

[Dichotomy]

The last time oil reached these levels (adjusted for inflation), we read the same articles: doom and gloom, the end of oil, the end of civilization. Energy consumption in the West in general, and North America in particular, did actually abate. If memory serves me correctly, most of the '80s experienced a leveling off, and even a decline, of oil consumption. Many factors weighed in on that, particularly hyper-inflation and a screwy economy throughout the '80s, but a lot of the reason is that North Americans downsized their vehicles.
That worked for about 10 years or so, until we discovered the pickup and SUV. If we look at the progress made throughout the '80s in fuel consumption of every day vehicles, we probably would be driving around in cars that got 60 mpg by now; however, we became obsessed with horsepower and 'bigger is better' once again, which derailed all the progress made in the '80s.
I, for one, am hoping that we do NOT see cheap oil again. If we are to lessen the impact of Saudi Arabia and others on the world stage, we (well, not us, but Europeans, at least) have to stop sending them cash. Fuel cells and hybrids cannot survive in sub-$100 a barrel oil. Work needs to progress in these arenas so that we can gradually wean ourselves of the oil addiction.
Oil may or may not last forever, but I think most of us would agree that there will come a time, should China and India even acheive 50% of our standard of living, where the environmental impact will be devastating for all of us.
The future U.S. at 500 million, Canada at 50 million - these are probably very sustainable numbers in the long term, but where will it end for Asia and South Asia? We can pray that their populations will level off in the not too distant future, but that would require a major cultural shift on their parts and I am not overly optimistic about that.
In the meantime, we are doomed to live in very interesting times.

 

[Hydrogen]

High prices for oil make reserves like the Alberta oil sands more economically viable. The United States sits on the world's largest shale oil reserves - and most of it is on federal lands. High prices also may eventually make this 800 billion barrel reserve viable.

 

[Archivist]

There is no current method for recovering synthetic oil from shale, though that could (and almost certainly will) be developed. In my opinion, and this is very much a guess, by the time that synthetic oil from shale is developed, it will be used primarily for military purposes, with some going to chosen industries, and very little making it down to commercial uses.

The oil sands are already economically viable, but they are unlikely to provide cheap oil ever, because they require large amounts of energy themselves to extract and refine. Canadian natural gas production has peaked, there is talk of using nuclear to power Ft. MacMurray's production, but costs for all power are going up, which will make the oil up north more expensive too.

Remember, peak oil is not "when we run out of oil", peak oil is merely when we run out of cheap oil, ie., when supply can no longer be met by demand.

 

[Hydrogen]

The term "peak oil" (and its variations) has meant different things to different interest groups over time. For example, what was once considered to be a difficult oil reserve to access has become, through technological advancement, a secure source of production. Ocean exploration and drilling are a perfect example of this. It's important to remember that concerns over the idea of "peak" oil go back to the 1920's.

There was a time (the very early 1970's) when tapping the reserves of the Alberta oil sands were neither economically nor technologically feasible. Things have changed considerably since. Over the between, oil has become more expensive, but cars and other transportation technologies have become far more fuel efficient. It's not beyond the imagination to think that oil will remain a viable source of energy even as price increases, but as technologies become more efficient. Cost eventually triggers the economic viability of shale oil reserves, and they remain a viable source because there is a technological base that both allows these reserves to be tapped and consumed to an ever greater degree of efficiency . In such a scenario, oil will still has a long lifetime ahead of it, and any "peak" ill remain far off in the future.

 

[Archivist]

Re: Predictions of oil peaks. Yes, many people make many predictions. At least one, that Hubbert made in the 1950's (which cost him his career) turned out to be absolutely accurate: the US oil production would peak in 1970. I think Hubbert's was lucky in some regards on that calculation, and he was less accurate in others he made, but his central insight, I believe, is that oil production for any given geographical range follows a bell curve. As this has been true of fields in Norway, the UK, the USA, Indonesia and many other countries, and will ultimately be true of world production some day. You don't hear anybody credible saying that we will continue to increase production of crude for another 50 years now, the most optimistic estimates seem to be in the 15-20 year range now.

Re: efficiencies. I am certain that more efficient vehicles are on their way, and as people get rid of their gas-guzzlers, cars overall will become more efficient. However, fuel efficiencies have not typically resulted in any savings of actual fuel. This is at least partially because of Jevon's paradox, which boils down to the proposition that there is a rebound effect when machines use something more efficiently, they tend to use it more (badly stated, on my part). For instance, the current generation of planes is far more fuel efficient than previous versions, but we aren't using less jet fuel because of it. Efficiency alone is unlikely to keep us from lowering our consumption of this non-renewable resource by enough to make a difference.

Re: shale oil. I am less convinced about the viability of this resource. Technology is not a fixer for everything. With energy sources, there is a hard line when the energy used to recover the resource exceeds the energy you get from that. Technology can improve this, but not indefinitely. Around 1900 the world average for obtaining oil was to spend one barrel to get 100. Currently, that's at about one barrel to get four, and despite all the technology that has been thrown at it, that continues to fall. Oil recovered from land-based sites peaked quite a few years ago; the only reason we haven't peaked as a whole is because of underwater sites. But those closest to shore (in the UK, Norway, Indonesia now Mexico) have peaked. Does this mean we won't recover resources that are farther out? No. However, it is hard to see how we will do so at the same efficiencies. The development of shale oil is essentially so far away and likely to be so energy intensive that it won't have a major effect on "peak oil", in the sense that we are unlikely ever to be filling the tanks of our cars with synthetically produced shale oil. I believe it will be developed, at enormous cost, but by the time this happens it will be not for commercial purposes.

We are much more likely to turn back to coal, in my opinion, for some of our energy needs.

 

[Glen]

Re: shale oil. I am less convinced about the viability of this resource. Technology is not a fixer for everything. With energy sources, there is a hard line when the energy used to recover the resource exceeds the energy you get from that. Technology can improve this, but not indefinitely. Around 1900 the world average for obtaining oil was to spend one barrel to get 100. Currently, that's at about one barrel to get four, and despite all the technology that has been thrown at it, that continues to fall. Oil recovered from land-based sites peaked quite a few years ago; the only reason we haven't peaked as a whole is because of underwater sites. But those closest to shore (in the UK, Norway, Indonesia now Mexico) have peaked. Does this mean we won't recover resources that are farther out? No. However, it is hard to see how we will do so at the same efficiencies. The development of shale oil is essentially so far away and likely to be so energy intensive that it won't have a major effect on "peak oil", in the sense that we are unlikely ever to be filling the tanks of our cars with synthetically produced shale oil. I believe it will be developed, at enormous cost, but by the time this happens it will be not for commercial purposes.

We are much more likely to turn back to coal, in my opinion, for some of our energy needs.

Looking at the Raytheon microwave tech bought by Schlumberger, I think that shale oil might have a future.

http://www.klewtv.com/news/business/13971337.html

 

[Archivist]

Re: Shale. Quote from the article you posted: Much as a microwave oven heats food, Raytheon Co.'s technology relies on microwaves to generate underground heat and melt a waxy substance in the shale called kerogen so that it can be converted into oil. Carbon dioxide heated and pressurized into a liquid form then is used to extract the oil from the rock and carry it to a well .... Because microwaves can generate heat faster than convection heating, shale can be adequately heated to extract oil within a month or two of beginning production activities, rather the year or longer for other methods, Raytheon says.
.

With all due respect, inserting microwaves into the ground and having them do their stuff for two months, then heating carbon dioxide and forcing it underground, sounds pretty energy intensive. I wonder if the four to five theoretical barrels retreived for each one spent that the developers claim might be possible includes this heating of the carbon dioxide (or the processing of the resulting crude).

Also, this would clearly require diversion of masses of electrical energy from other uses on the grid, such as, electric cars (if these are popular in 10 to 20 years when this technology might first go into production). Where, in the absence of large new finds of crude oil or natural gas, are they going to get that surplus electricity from?

Still, not uninteresting. Exploration into ways of making shale commercially viable are certainly blossoming again, after earlier efforts collapsed in the 1980's.

 

[Hydrogen]

Archivist,

I would agree that the global consumption of oil has increased even during great improvements in efficiency. Overall, consumption of oil will continue to increase, but the curve has been - and will continue to be - attenuated by improvements in efficiency.

One area where oil consumption has dropped off is in the generation of electricity. It has, in many instances, been replaced with coal. Coal burning has been greatly improved in terms of emissions reduction, but of course the contemporary fears over carbon dioxide will probably greatly limit any expansion in the use of coal for producing electricity. Any carbon capture technology (based on present and unproven technologies) will greatly reduce the efficiencies of coal as a means of producing electrical power.

The perceived limits on the electric grid are largely that: perceptions. Nuclear power and coal offer possibilities for greatly expanding electrical production. Wind and solar offer limited, but potential, generation as well. The limits placed on coal and nuclear sources are, by and large, political in nature.

In the end, the problem of oil is one that largely affects transportation, and aircraft account for a small portion of that consumption when compared to other forms of transport such as automobiles and trucks.

 

[Glen]

With all due respect, inserting microwaves into the ground and having them do their stuff for two months, then heating carbon dioxide and forcing it underground, sounds pretty energy intensive. I wonder if the four to five theoretical barrels retreived for each one spent that the developers claim might be possible includes this heating of the carbon dioxide (or the processing of the resulting crude).

IIRC the energy inputs are not much different for tar sands. In addition, it uses much less water.

 

[Archivist]

Glen, from the article posted they are "hoping" to move beyond laboratory tests, "so that they can eventually deploy in the field". I don't see anything in the article that supports a conclusion that a technology that hasn't even had a single field test will have energy inputs that are not much different from the tar sands.

In 20 or so years, perhaps we'll know. Others have actually theoretically discussed using nuclear devices to generate the heat and break the shale all at once, but I imagine that is some ways away from working as well.

 

[Glen]

It comes from a different company with similar tech.

http://www.globalresourcecorp.com/