Energy Myths for the 21st Century

“To act in accord with a myth is the distinctive characteristic of all living things”. ─ Nicolas Georgescu-Roegen

Introduction, and Something About Oil

The title of this article is almost identical to the one I used for a paper that I published in the OPEC Bulletin ten years ago. During those wonderful days I eventually came to believe that – where energy economics was concerned – I was OPEC’s fair-haired boy, since they published everything I sent them, regardless of its content or quality. The same was true for several other journals – one of which listed me on the inside front cover as an editor.

As is said in a song that a neighbour of mine in Geneva (Switzerland) occasionally blared at the top of his obviously untrained voice, “Those were the days my friend; we thought they would never end.”

But end they did. Where my editorship was concerned, I was informed by the editorial director that there was to be an important change in his journal, and as I found out later the change that he was talking about consisted exclusively of eliminating my good self, both as an editor and a contributor. The OPEC Bulletin and the OPEC Energy Review also came to the conclusion that my work was a little too sophisticated for their readers, by which they meant much too honest, given the way that the oil market was developing. In any event, beginning several years ago my humble submissions were neither returned nor was I accorded a ‘Dear John’ after they received and rejected my work. As far as they were concerned, I was demoted to the rank of a non-person.

That brings me once more to the title of this paper. Taking oil as a case in point, it might be true that the most imaginative myths in circulation today are those being generated by OPEC. Having come to appreciate the supreme importance of oil – and how it functions as a benchmark for the world’s energy systems – that organization has informed the oil importing countries that if the oil price goes up and stays up, then they will invest in more production capacity, and also raise their output of oil.

That sounds good – in fact it probably sounds like something you heard in an introductory economics lecture, or read in your favourite textbook or newspaper – only it is completely untrue. It is a distinguished myth, and unfortunately a myth that is believed by many drowsy academics and their students, and probably more than a few influential but not very brainy decision makers. Instead, although there might be exceptions, the aggregate of OPEC producers is not going to invest in additional capacity, and they are definitely not going to produce or try to produce much more oil. Why should they? Would you if you were in their place?

OPEC has also launched the theory that high oil prices are due to speculation (i.e. gambling) and not fundamentals (or supply and demand). This allegation was supported by a finance professional named Michael Masters, who appeared before a sub-committee of the United States Congress, and offered virtually a sacred affirmation that it was speculation and not the physical market that was ruining the lives of American motorists. Both OPEC and Mr Masters were in turn supported by perhaps the most influential celebrity on Fox News, which is a television channel featuring some of the most obsessive voices on the U.S. conservative scene. The voice to whom I am referring on this occasion belonged to none other than Mr Bill O’Reilly, who informed his plethora of admirers that it was “little guys in Las Vegas” who created the problem.

Had this been true, President Bush could have taken the morning train or a helicopter to Wall Street, or jetted to Las Vegas, and using the very significant authority of his government, put things right before lunch was served. Instead he climbed into Air Force One and flew to Saudi Arabia, where he asked the Saudi King to produce more oil, and preferably sooner rather than later. That ‘hat-in-hand’ episode was concluded almost immediately after the delivery of the president’s request, with King Abdullah thanking him for his concern, and wishing him a safe trip home. Furthermore, the myth initiated by the Saudi oil minister some months earlier, which pictured Saudi Arabia raising its sustainable output to 15mb/d, and keeping it there for the next 50 years, was neither confirmed nor denied at that high level meeting. In fact it was ignored, because the Chief Executive was already in possession of enough energy fictions to keep him and his advisers occupied for the remainder of his term in office.

Before changing the topic, I want to emphasize that the successful dissemination of powerful myths cannot exclusively be attributed to the strong desire of TV audiences and blogosphere ‘buffs’ to expose themselves to the self-indulgence of the media. Instead, those ladies and gentlemen want to shine by demonstrating for their peers that they can latch on to what they think are a few perceptive nuggets in the torrent of nonsense that rushes through the ether every day. Where energy economics is concerned, these nuggets often turn out to be fools gold, because as once emphasized in physics, the important thing in science is not the pursuit of new ideas, since there are always plenty of those available, but abandoning bad ideas as expeditiously as possible.

One person who has not been able to discard bad ideas, at least about energy, is Mr Leopardo Maugeri, a director or former director of ENI – perhaps the most important corporation in Italy – and who may still be enjoying the hospitality of some faculty at the Massachusetts Institute of Technology, which is the most celebrated engineering school in the United States. Writing in Scientific American (2009), Signor Maugeri has fashioned still another fairy-tale about the lovely abundance of oil, and the unsoundness of wasting precious time and vitality contemplating what he thinks of as a hypothetical peaking of the global oil production.

In thinking about his foolishness, I hope that everyone who takes this presentation seriously will take careful note of the following. Output in the U.S. peaked at the end of l970 at a value of about 9.5 mb/d – which is approximately the present output of Saudi Arabia and Russia, the largest producers of oil in the world. When that peaking took place there was still an enormous amount of oil onshore or directly offshore the United States. Production then dropped to 7.5 mb/d, but when the giant Prudhoe Bay field in Alaska came on line, the total output in the U.S. turned up. Unfortunately however, the previous peak was never attained. Instead, total U.S. production stopped short of that peak and once again began to decline. Today U.S. output is approximately 5.5 mb/d, and there is only one way for it to go, which is down.

Now take a good look at the production curves for the 300 largest oil fields in the world. Following that, after satisfying yourself that a large majority of these fields have unambiguously turned down (i.e. peaked), ask yourself how is it possible, in these circumstances, for anyone to sincerely believe that a global peak will not take place. Since we are talking about myths, please note the word “sincerely”. What it means is that there are people who know better than I do that a global peak will arrive, but have excellent reasons – of a career and financial nature – for claiming the opposite.

One of these people is the director of global oil and gas resources at an influential consulting firm, who has employed the picturesque word “garbage” to describe the work of peak-oil believers. If you encounter him some fine day, tell him that the output of the U.S. has peaked, as has the oil in the UK and Norwegian North Sea. Given the opportunity you should also mention that what was the second largest field in the world just a few years ago – the Cantarell field in Mexico – is declining at a startling rate.

The Russian oil output is probably close to peaking, and in any event the director of one of the largest Russian firms says that his country will never produce more than 10 mb/d. This is a nice round number (that may be slightly wrong), but it happens to be one-tenth of the amount (= 100 mb/d) that the present CEO of Total (the French oil major) says is the absolute maximum for world production. If this is not sufficient, consider the following. The discovery of what we think of as conventional oil peaked in l965. In the early l980s the annual consumption of oil became larger than the annual discovery, and at the present time only about 1 barrel of (conventional or near-conventional) oil is discovered for every 3 consumed. According to a British Petroleum (BP) document, of 54 producing nations only 14 still show increasing production. 30 are past peak output, while output rates are declining in 10. To claim, as Mr Maugeri does, that all of this bad news does not imply an eventual peaking, is the same as implying that the (oil) whole is less than the sum of the parts, which is a myth that no intelligent observer would rush to accept if they realized what they were saying or thinking.

Natural Gas and Coal

In the last year or so I have heard or read a great deal about natural gas. The reason of course is that instead of collapsing, as some important scholars once thought, OPEC has become stronger, and since this is now increasingly understood by voters and consumers in the energy-intensive countries, an increasing amount of attention is being turned toward things like natural gas, nuclear and renewables. In the U.S. for instance, a popular expression that is making the rounds is ‘energy independence’.

Russia is the largest owner of natural gas reserves, and it produces and exports a great deal of that resource. Outside the United States, the activities of Russia gas exporters are frequently observed and commented on, and very often some politics are involved in these discourses. I try to avoid paying attention to this sort of thing, because as far as I am concerned the overwhelming interest of the Russians is obtaining as much money as they can as fast as they can, and things like ideology and geopolitics no longer play a crucial role in their exertions, if they ever did. Of course, that country has created a considerable amount of apprehension or antagonism among customers and potential customers, and it has happened that I found myself wondering if their behaviour in regard to natural gas is completely rational.

Lacking even a superficial interest in the political aspects of this and similar issues, I prefer to concentrate on the matter of resource scarcity – or for that matter resource abundance. I presented a quotation by the late Professor Georgescu-Roegen at the beginning of this paper, and on the one occasion that I heard him lecture he expressed a belief that all wars are caused by the desire to come into possession of physical resources. War is a different thing today than it was when he made that statement because of the widespread availability of nuclear weapons, but even so the tensions caused by resource shortages – or the likelihood of severe resource shortages in a not too distant future – will eventually be very difficult to ignore.

To my way of thinking, Russia has an enviable advantage in the natural gas game, and as a result cooperation with that country makes more sense than confrontation. My argument here turns on the theoretical value of Russian gas if it is exported to China instead of Europe. Like Europe, China needs natural gas, and ceteris paribus should have no difficulty paying for it. Many of the pipelines from major Russian gas fields go towards the large gas consumers in Europe, and at the present time it is in the economic interest of both Russia and Europe to keep these lines filled, but in the medium to long run the natural direction for Russian gas is South, and this is where it is likely to go.

Moreover, the predictions that we often confront about the profusion of natural gas are not easy for me to accept. The sudden increase in U.S. gas reserves strikes me as too good to be true, although it could be the real thing. However even if it is, given the historic and predicted rate of growth of global gas consumption, somebody important should start thinking about the peaking of global natural gas production, and also the possible forming of a GAS-PEC. When I look at the rate of growth of gas consumption, and the reserve-production ratio for that resource, I immediately see the genesis of another myth that will result in voters and serious investors being tricked into believing certain things about natural gas that will not serve their countries well in the future. For instance, the occasional talk in the U.S. about energy independence that would be based on huge domestic supplies of gas might turn out to be bunkum.

Bunkum is a word that I seldom use in my lectures on natural gas, but it almost always finds a place in my lectures on coal. For instance, in a brilliant article Peter Huber (2009) points out that China is adding 100 ‘gigawatts’ of coal-fired electric capacity a year – which is one third of the total coal burning capacity of the U.S. The bottom line here, according to Huber, is that the U.S. does not control the global supply of carbon, and I would like to make it clear that neither does e.g. Sweden and Denmark, despite their posturing and courting attention as environmental know-it-alls and icons in the corridors and restaurants of the European Union headquarters in Brussels.

Regardless of the outcome of the circus that will convene in Copenhagen this December, when so-called and would-be experts from every corner of the globe assemble for the purpose of drafting resolutions for improving the world’s environmental health, it would be nice if the governments of energy-intensive countries began thinking in terms of economically and technologically optimal energy sectors, instead of thermodynamic travesties like carbon sequestration, whose only merit is their popularity with the anti-nuclear booster clubs.

Carbon Capture and Storage (CCS) is probably one of the most grotesque myths in modern times, and here I always point to the Swedish utility Vattenfall. They are shouting to the high heavens praise for a pilot installation that they have opened in Germany that, in reality, is only about a twentieth of the size of an average modern coal plant. Just as important, it will not be fully evaluated for at least another decade. By that time the man doing the most shouting, Vattenfall’s director, will be retired and dividing his time between a luxury apartment somewhere in Germany, and his summer house in some part of the gorgeous Swedish archipelago. One of his successors will therefore have to explain that if this nutty practice is to make environmental sense, it may cost at least a trillion dollars in the U.S. alone.

The thing to remember here is that about half of the world’s energy is supplied by coal, and many of the politicians who are now busy on the environmental front could not possibly expect to obtain a renewed mandate if they informed the electorate of the cost they would have to support if the noble intention to suppress or store only a small amount of the carbon dioxide emissions generated every year was realised. Carbon sequestration is liable to be an important subject in Copenhagen, and I think that the best expression for describing what will be taking place in that wonderful Copenhagen is a STING, whose main purpose is to enhance the lives and careers of certain politicians and bureaucrats, as well as celebrity environmentalists.

Nuclear and Renewables

The basic issue here is that many persons feel that they have a choice between nuclear and renewables, when in reality they have no choice at all. I am thinking in particular of persons who desire more money as compared to less, and less work as compared to more. Also people who want more security, more options concerning leisure and entertainment in their everyday lives, and who hope that the future will feature the kind of communities in which they and their descendents will have agreeable prospects in regard to incomes and life styles. For me that means communities in which nuclear is allowed to play a larger role if that makes economic sense, though perhaps not to the extent as in today’s France, and almost certainly not a larger role than renewables. Many more renewables are essential, but so is the reliability and flexibility of nuclear.

Flexibility? How can someone look at a nuclear facility and talk about flexibility? I wonder if people like Amory Lovins and Dr. Michael Dittmar were thinking of my position on this subject when they challenged me to on-line debates – challenges which I ignored in the same manner that the king of Saudi Arabia probably ignored President Bush when the subject of increasing the output of oil in his country came up. What I mean of course is the next generation of nuclear technology – the fourth generation (Gen 4), as compared to Gen 3 that is just going into operation in Finland and France. Gen 4 could being the same benefits to the countries that adopt it as Gen 2 brought to Sweden. It made Sweden the richest country in Europe, although of course this situation was abandoned for ‘silly and illogical’ reasons that cannot be taken up here.

I have been informed by several physicists that the Gen 4 reactors may never come into existence. The only thing I remember about physics is that I failed the beginning course twice, and since I had also failed the beginning mathematics course twice also, the director of the engineering school I was attending in Chicago called me into his office and expelled me as a hopeless case. But the fact of the matter is that Gen 3 is quite sufficient for the time being, at least according to the economics and finance that I have taught, and the history that I have read.

The reason for my saying this is that the optimal way to produce nuclear equipment is in factories, rather than in more or less piece-meal or custom-made operations. This has not been economical because only a handful of reactors are produced and put into operation every year; but at the present time about 400 new reactors have been planned or proposed. This is just the beginning, and the benefits from increasing-returns-to-scale could change a great deal when the manufacture of reactors takes place in an optimal setting. For instance, the new Gen 3 reactor in Finland, the largest in the world, was supposed to be constructed in five years, but it might take eight. This is discouraging, however on the basis of my study of this issue, I happen to be convinced that if standardized reactors are produced in factories, it should not take more than four years to produce such a reactor, and it could take less. When I am certain that it will take less, then I might agree to participate in debates with physicists like Lovins and Dr. Dittmar, and among other things I will announce and try to prove to them – and myself – that nuclear energy can absolutely and certainly produce electricity for a lower cost than any other source.

In the Shadow of Malthus

A paper that I disliked on an initial reading was ‘The return of Malthus (2008), by Jorgen Orstrom Moller (2008). The reason I disliked it was because I kept focussing on the part where Professor Moller seems to indicate that technology and free market capitalism can save the world from the depletion of non-renewable resources, and the miseries that we will suffer in the event of severe over-population. This is the kind of myth that the late Milton Friedman once gratuitously presented to Nobel Prize winners in Science and Medicine in Stockholm many years ago, and which they branded as absurd – though unfortunately not to his face, and only after the meeting was concluded. I was especially annoyed by the mention of the late Professor Julian Simon, who was naive enough to believe that large populations are better than small populations, because then larger quantities of brainpower will be available (and willing and able) to solve the more vexing of the world’s problems.

Actually Moller is quite reasonable where this topic is concerned. Like (Reverend) Thomas Malthus, he believes that runaway population growth could result in a very bad scene, and goes so far as to suggest that environmental (i.e. Malthusian) issues “present a challenge to the global commons that neither new territories, technology nor the function of markets alone can solve.” What about adding to those annoyances a shortage of space, pretentious and sub-optimal technological ambitions, malfunctioning markets, declining educational and moral standards, together with a world population of 9 billion souls – which is a likely scenario for 2050 or thereabouts. Some climate woes can also be thrown in, which may or may not be due to human activities.

In an article dealing with these matters, David Stipp (2004) noted that perhaps the most realistic study of the political and sociological aspects of this kind of situation is taking place in the U,S, in that very large building called the Pentagon. That being the case, it seems appropriate to cite a particularly germane observation by Professor Moller. “Mr Malthus is a man that we would not like to meet in person. He is an unwanted guest, one well worth working to avoid.” To which Stipp or one of his readers might add after the cognac had gone around the table a couple of times, ‘ if he cannot be avoided, then he will have to be convinced by fair means or foul to visit other locales.’

This article is the text for an invited lecture for a ProM workshop at Siena University (Italy), 23-24 October, 2009.

References

Banks, Ferdinand E. (2007). The Political Economy of World Energy: An Introductory Textbook. London and Singapore: World Scientific.

Cooke, Ronald R. (2009). ‘The clean energy act is not going anywhere’. 321 Energy (July).

Huber, Peter W. (2009). ‘Bound to burn’. City’ Journal (Spring).

Hutzler, Mary J. (2009). ‘The Pickens plan: is it the answer to our needs?’(.pdf) IAEE Energy Forum.

Lounsbury, John (2009). ‘Natural gas: another great thing from a lobby near you.’ Seeking Alpha (August)

Maugeri, Leonardo (2009). ‘Squeezing more oil from the ground’. Scientific American (April)

Moller, Jorgen Orstrom (2008). ‘The return of Malthus: scarcity and international order ’. The American Interest (July/August).

Stipp, David (2004). ‘Climate collapse’. Fortune (Feb. 9, 2004).

Comments

[LilBob]

Need to work on your conclusion. You raise a lot of good points but don't come together at the end with a strong take-away.

Discussions of energy always bring me back to the "threshold of elasticity" concept. "Threshold of elasticity" is defined as "The price point at which a good which was intitially thought to have inelastic demand characteristics begins to show significant signs of increasing demand elasticity." What I mean by that is oil will not go up forever. Natural gas, solar and wind, among others will be more heavily relied upon to meet energy needs as oil prices continue to increase. Eventually, conservation will become a necessity of human existence. We will always have some oil, but at some point in the future oil, and in turn internal combustion engines won't be largely reserved for critical (emergency and military) uses.

Now, if you don't mind while I don my tinfoil/salad colander hat I'll get to the really crazy part: Human society may eventually revert to a manner of living more akin to the pre Industrial Revolution age, albeit with the advantage of a lot more information. The industrial revolution may come to be seen as an exciting, albeit unsustainable phase of human existence.

2009 Sep 29 12:15 PM

[ArtfulDodger]

Mr. Banks:

A lot of good points I suppose, along with dozens of topics and names dropped here and there, but I don't get the main point—if there is one?

Could you tell me what I'm missing? I mean, what is your central conclusion?

A favorite writing teacher of mine used to keep this on her blackboard: Find a topic. Plan a design. Write. Edit. Rewrite. Edit. Rewrite. Let the piece rest. Reread. Edit. Final rewrite.

Her advice would seem to apply here, unless I'm too dumb to understand the central point.

I do certainly agree that the save-the-world "environmental meeting" this December in Copenhagen is a dirty joke most of us are not going to enjoy hearing; and in my view will come to no good end for those who relish freedom, because it's most likely a How-Can-We-Scare-the-H... farce.

2009 Sep 29 12:59 PM

[Leftfield]

Al Gore's company which purports to have some sort of green technological application, just got 526 $million from Washington. Those people aren't shy about impropriety; they take care of their own.
Their plans are for crony environmentalism, writ large. I appreciate the reminder of their crackpot CO2 sequestration idea. Somehow their plans always involve big checks for themselves and no plans for middle class American prosperity any more.

2009 Sep 29 12:59 PM

[jimmy46]

as Gen 2 brought to Sweden. It made Sweden the richest country in Europe, """"""""""

BALONEY, SWEDEN & SWITZERLAND BECAME RICH COUNTRIES IN THE 20TH CENTURY BECAUSE THEY WERE "NEUTRAL" IN THE 2 WORLD WARS & MADE A KILLING (pardon the pun) SELLING WAR MATERIALS TO GERMANY FOR GOLD.

2009 Sep 29 01:03 PM

[Tack]

The goofy notion that fossil fuels are so limited as to reach exhaustion in any near future is akin to Thomas Malthus concluding that the world would exhaust its food supplies in short order. That was 211 years ago and counting. Food production expands each and every year.

Hardly anybody reading the mass media would believe this next statement, but it's true: world oil reserves are presently --as I write this-- at their highest levels in recorded human history, and more huge finds are made almost monthly, as just happened off Brazil.

The U.S., alone, has the world's largest coal reserves, more than enough to power the entire country for hundreds of years.

The U.S., also, has vast natural gas supplies, again enough for many generations of clean power.

And, let's not even talk about nuclear because its power potential is virtually unlimited.

The whole phony nonsense about "environmentalism," "climate change" and "sustainability" has nothing to do with any of them and everything to do with the assertion control over people's success, enjoyment, freedom --their lives-- by a group of losers, who would rather punish success than to pursue it themselves.


On Sep 29 12:15 PM LilBob wrote:

> Need to work on your conclusion. You raise a lot of good points but
> don't come together at the end with a strong take-away.
>
> Discussions of energy always bring me back to the "threshold of elasticity"
> concept. "Threshold of elasticity" is defined as "The price point
> at which a good which was intitially thought to have inelastic demand
> characteristics begins to show significant signs of increasing demand
> elasticity." What I mean by that is oil will not go up forever. Natural
> gas, solar and wind, among others will be more heavily relied upon
> to meet energy needs as oil prices continue to increase. Eventually,
> conservation will become a necessity of human existence. We will
> always have some oil, but at some point in the future oil, and in
> turn internal combustion engines won't be largely reserved for critical
> (emergency and military) uses.
>
> Now, if you don't mind while I don my tinfoil/salad colander hat
> I'll get to the really crazy part: Human society may eventually revert
> to a manner of living more akin to the pre Industrial Revolution
> age, albeit with the advantage of a lot more information. The industrial
> revolution may come to be seen as an exciting, albeit unsustainable
> phase of human existence.

2009 Sep 29 01:45 PM

[chap08]

Ferdinand, your directionless ramblings are worth reading even if they don't come to any conclusion.

By the way, I think I can imagine what your boss meant by "too honest".

2009 Sep 29 01:46 PM

[Eamon Keane]

Thanks for that Ferdinand, good stuff. I agree with the other commenters, I was waiting for the conclusion! I was also hoping for your assessment of oil sands and shales.

2009 Sep 29 02:02 PM

[Tony Petroski]

I see why you lost your job as editor, but does that prevent you from employing one? You have the makings of an interesting article here.

2009 Sep 29 02:21 PM

[Jasper M]

I here the distinct winging of wounded pride, and total commitment to his Own mythology. Seriously, how can I be expected to take seriously someone who presents himself as an expert on energy, but can't do physics?
1) Population statistics show us pretty solidly that, in any given population, pop growth tends to drops off within 2 generations fo urbanization. We'll be just Fine.
2) Gen 4's are already being built (mass-produced, in fact), Google "Hyperion" (private company, I was So disappointed).
3) "The reason I disliked it was because I kept focussing on the part where Professor Moller seems to indicate that technology and free market capitalism can save the world from the depletion of non-renewable resources, and the miseries that we will suffer in the event of severe over-population."
Bias, anyone? That is in fact the experience of humanity so far - any dislike of a historically supported conclusion implies prejudice.
4) More minds Are better than fewer. Ask any fighter - the more opponents you face, the more you learn.
5) No mention of fusion energy, an idefinite consumable.

I could go on and on. But thinking people have better things to do. This article is a fine example of the kind of mythbound thinking that underlies the junk science behind the Green agenda. Expect more desperate ramblings, as reality draws them ever closer to the ashbin of history.

2009 Sep 29 02:25 PM

[Richard K]

"...Professor Julian Simon, who was naive enough to believe that large populations are better than small populations, because then larger quantities of brainpower will be available (and willing and able) to solve the more vexing of the world’s problems."

Also known as the Genius of Mobs Theory.

2009 Sep 29 02:58 PM

[akapital]

It is always a question of more or less really. I take issue with those who prima facie conclude that Malthus was wrong? More or less.... Yes, food production increased due to technological advances and yet we still do not see "full consumption" (e.g. a great number of people are starving.)

Well, people might counter, that is simply a distribution problem or the simply necessity of inequity. But wait, are not those key variables of the equation? So too it is with Oil production, supply, and demand. I think that point ought to ring polemical to any audience today should you wish to wake people up from their slumber and as Kafka wrote "have the effect of an axe on the frozen sea within."

But hey maybe its just me that has an overabundant need for drama...

2009 Sep 29 04:09 PM

[Living4Dividends]

Prof Banks made several points which are embedded in a sea of pointless, but nonetheless beautifully written and entertaining prose.

Point One (Prose Free):
"Carbon Capture and Storage (CCS) is probably one of the most grotesque myths in modern times ... if this nutty practice is to make environmental sense, it may cost at least a trillion dollars in the U.S. alone."

CCS is one of the grand con jobs that is being foisted upon the masses. The myth of CCS says that we can have abundant, cheap energy AND prevent Global-Warming AND it will create alot of green jobs. We can have our cheap energy cake and eat it too.

The promoters of CCS conveniently disregard the basic laws of thermodynamics. Energy is created when the carbon is burned and then the hot CO2 gas is belched into into the atmosphere. CCS requires power plant operators to capture that hot gas, cool it down and store it underground. This will consume a tremendous amount of energy. Studies by the CCS promoters themselves state that 30% of the energy output will be consumed by the process of sequestration. That means that plants will consume at least 30% more capital for the power plant PLUS the extra capital for the sequestration equipment. As well, the cost of the fuel (coal) will rise 30%. This leads to far more expensive wholesale energy prices.

2009 Sep 29 04:50 PM

[wind4me]

maybe CCS would make companies invest into more renewables and get away from CCS and coal! As a former Nuke , Gen 2 reactors worked very well but the FRENCH actually run the best nuke units in world cause everything is standardized and government run!

Jan 18 04:04 PM

[mna]

In terms of reserves, the world isn't gonna run out anytime soon. What will run out is cheap oil at < $10 a barrel in the ground. Increasingly, cheap ground oil is being replaced by offshore oil at a base extraction cost of $20+, and then if prices warrant, oil sands at $50+ a barrel. Think again if you think this isn't going to affect prices going forward.

Another point: because there's massive infrastructure investment involved in extracting the "new" sources of oil, there's considerable lag time for oil companies to supply unexpected demand even at high prices. This means there's a significant chance of price spikes not because of insufficient oil reserves, but because of insufficient ability to react and produce reserves in a timely manner.

Is there a chance that the world will always have spare capacity built up to buffer demand increases and supply shocks? sure. But it's not wise to count on that. The last thing the world needs is $200+ barrel oil, with the closest relief being large developments 3-4 years away from production. Allowing such a scenario will destroy the global economy.

To be honest, I'm also not completely sold on global warming and other environmentalist sound bites. However, looking into alternative energy and fuels is not a bad idea for the reasons I listed above. It might just turn out to be the right solution for the wrong reasons.

2009 Sep 29 08:12 PM

[genghis khan]

Tack: what you say regarding the having of the highest volume of reserves ever recorded may be roughly true. But, what you fail to note is that there is also a record level consumption taking place at the present time and it IS GROWING dramatically with each passing day! So, what may have been recorded as tens of years of reserve supply based upon some consumption level of bygone eras, is today merely a few years worth.

2009 Sep 29 10:58 PM

[A Barrel Full]

You would think that someone with a great technology to sell would place a link to his website in his comment. Unless he was a big timewaster that is.

He posted the same comment on WT website.


On Sep 29 11:11 PM DRCAL wrote:

> There is no gloom and doom. The age of fossil fuels is over. There
>
> is a replacement technology.
> REVOLUTION IN HYDROELECTRICITY

2009 Sep 30 04:38 AM

[Dirk McCoy]

Global living standards, including here in the US, have risen as population has risen. Julius Simon made a bet decades ago that as more people had better living standards, commodity prices would fall- he was right. We now recycle more steel from old cars than use it to build new cars.

We will never run out of oil because, at some point, we'll have converted so much sand (which we won't run out of any time soon) into solar panels that it will be cheaper than $200 oil- and the oil that's left will rot in the ground.

2009 Sep 30 09:43 AM

[Ferdinand E. Banks]

Thanks for the comments: I think that I get the message. But you see, we've got a problem here. Energy economics is a very important AND a very easy subject, but the wrong people are teaching it. The articles and comments in this forum (SA) are useful and interesting, but the so called 'learned literature' is absolutely terrible.

This article will be a fairly short talk at a conference, but the only thing that I am really concerned with here is the oil-price 'thing'. I have no choice but to believe that the major oil producers in OPEC are NOT going to invest in nor produce much more oil, and since demand might start moving up rapidly again, another price escalation is very possible. What I want is for people to digest my argument as to why oil supply is likely to outrun demand, although other people in this forum have equally valid arguments. What I don't want to hear is that there is plenty of oil in the US or somewhere in the middle of the Atlantic Ocean, and besides OPEC has fantastic amounts of reserves which they will have to sell before oil goes out of style, etc etc..

2009 Sep 30 10:31 AM

[John Petersen]

I've always hated debating peak oil issues because there are so many different theories and so many things we simply don't know, like where did Brazil's sub-salt oil come from and why do the salt domes of the gulf coast appear to be recharging themselves. In the end I think it's easier to think in terms of "peak cheap oil" because that's an event you can date in the late 90s and we're never going back to the $0.249 gasoline of my youth.

2009 Sep 30 10:52 AM

[Erich J Knight]

* Living4Divi...said;
"We can have our cheap energy cake and eat it too".
That is an absolute truth when Biomass Carbon Capture & Sequestration (BCCS) is utilized.
Building soil carbon is the common bond that unities all political persuasions.
Senator Baucus is co-sponsoring a bill along with Senator Tester (D-MT) called WE CHAR. Water Efficiency via Carbon Harvesting and Restoration Act! It focuses on promoting biochar technology to address invasive species and forest biomass. It includes grants and loans for biochar market research and development, biochar characterization and environmental analyses. It directs USDI and USDA to provide loan guarantees for biochar technologies and on-the-ground production with an emphasis on biomass from public lands. And the USGS is to do biomass availability assessments.

Biochar Soils.....Husbandry of whole new orders & Kingdoms of life

Biotic Carbon, the carbon transformed by life, should never be combusted, oxidized and destroyed. It deserves more respect, reverence even, and understanding to use it back to the soil where 2/3 of excess atmospheric carbon originally came from. Agriculture allowed our cultural accent and Agriculture will now prevent our descent.

Biochar allows the soil food web to build much more recalcitrant organic carbon, ( living biomass & Glomalins) in addition to the carbon in the biochar.

Biochar, the modern version of an ancient Amazonian agricultural practice called Terra Preta (black earth, TP), is gaining widespread credibility as a way to address world hunger, climate change, rural poverty, deforestation, and energy shortages… SIMULTANEOUSLY!
Modern Pyrolysis of biomass is a process for Carbon Negative Bio fuels, massive Carbon sequestration, 80%-90% Lower Methane & N2O soil emissions, and 2X Fertility Too.
Every 1 ton of Biomass yields 1/3 ton Charcoal for soil Sequestration (= to 1 Ton CO2e) + Bio-Gas & Bio-oil fuels = to 1MWh exported electricity, so is a totally virtuous, carbon negative energy cycle.

Biochar viewed as soil Infrastructure; The old saw;
"Feed the Soil Not the Plants" becomes;
"Feed, Cloth and House the Soil, utilities included !".
Free Carbon Condominiums with carboxyl group fats in the pantry and hydroxyl alcohol in the mini bar.
Build it and the Wee-Beasties will come.
Microbes like to sit down when they eat.
By setting this table we expand husbandry to whole new orders & Kingdoms of life.

This is what I try to get across to Farmers, as to how I feel about the act of returning carbon to the soil. An act of penitence and thankfulness for the civilization we have created. Farmers are the Soil Sink Bankers, once carbon has a price, they will be laughing all the way to it.

Unlike CCS which only reduces emissions, biochar systems draw down CO2 every energy cycle, closing a circle back to support the soil food web. The photosynthetic "capture" collectors are up and running, the "storage" sink is in operation just under our feet. Pyrolysis conversion plants are the only infrastructure we need to build out.

There are dozens soil researchers on the subject now at USDA-ARS.
and many studies at The up coming ASA-CSSA-SSSA joint meeting;
a-c-s.confex.com/crops...

Major Endorsements:

Secretary of Interior Ken Salazar & Sec of Ag Tom Vilsack
NASA's Dr. James Hansen
Dr. James Lovelock (Gaia hypothesis) says Biochar is "The only hope for mankind"
Charles Mann ("1491")
Tony Blair & Richard Branson in the UK and conservative party opposition leader John Turnbull in Oz.

Reports:
This new Congressional Research Service report (by analyst Kelsi Bracmort) is the best short summary I have seen so far - both technical and policy oriented.
assets.opencrs.com/rpt... .

This is the single most comprehensive report to date, covering more of the Asian and Australian work;
www.csiro.au/files/fil...

Biochar data base;
TP-REPP
terrapreta.bioenergyli...

Given the current "Crisis" atmosphere concerning energy, soil sustainability, food vs. Biofuels, and Climate Change what other subject addresses them all?
.
Carbon to the Soil, the only ubiquitous and economic place to put it.
Cheers,
Erich

2009 Sep 30 11:20 AM