The Straight Dope weighs in on Peak Oil

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The Straight Dope weighs in on Peak Oil

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http://www.straightdope.com/columns/rea ... n-peak-oil
1. Peak oil is the point when oil production stops increasing and starts falling, with potentially dire economic consequences. That day will arrive eventually; the question is when.

2. Pessimists note oil production is tapering off or declining in many parts of the world and anticipate a peak soon — not long ago, some thought it would happen any day. However, people have been making gloomy forecasts for years, and virtually none have panned out.

3. The exception was in 1956, when geophysicist M. King Hubbert introduced the concept of peak oil in a famous paper. Drawing on analyses of U.S. petroleum reserves plus some informed conjecture, he correctly calculated domestic oil production would peak in 1970.

4. Global petroleum estimates were much fuzzier. Hubbert thought the “ultimate recoverable resource” for world oil was 1.25 trillion barrels; most reports I see now say it’s at least 2 trillion, perhaps much more. His prediction that global oil production would peak in 2000 was accordingly way off.

5. The official word is we haven’t reached peak oil yet, and probably won’t for a while. The U.S. Energy Information Administration says world oil production was about 85 million barrels per day in 2011, and predicts a steady if slowing increase to 99 million barrels per day by 2035 — as far out as the forecast goes.

6. Now for the part no one anticipated in 2006: U.S. energy production has jumped in the last few years due to improved recovery techniques such as hydraulic fracturing of shale rock, also known as fracking. EIA statistics show a 24 percent increase in U.S. production of petroleum and natural gas between 2006 and 2011. Domestic natural gas is now so abundant the EIA predicts the U.S. will be a net exporter by 2022.

7. This puts matters in a new light. Oil has been the focus till now because transportation relies heavily on liquid fuels — currently natural gas is mostly used for heating and electricity generation. However, it can also be used to power vehicles — some transit agencies use compressed natural gas to fuel buses. So we should really be talking about peak oil and gas. When might this occur?

8. My assistant Una dug through the statistics and established the following. First, as of 2005, ultimate recoverable natural gas in the world was between 8.5 and 12.5 quadrillion cubic feet. Second, between pre-fracking 2000 and frack-happy 2010, U.S. proved natural gas reserves increased 72 percent.

9. We then commenced arguing. I noted fracking was now mainly confined to the U.S., due partly to scruples about contaminated groundwater and such. Let’s suppose the world gets over all that and starts fracking as much as we do, with the result that world recoverable gas reserves jump at the same rate as U.S. proven reserves. That would give us 17 quadrillion cubic feet.

10. This was too cavalier for Una. The most she’d concede was 12.5 quadrillion feet, the equivalent of 2.3 trillion barrels of oil.

11. Fine, I said. But another fossil fuel can also be liquefied and used for transportation in a pinch, namely coal. What’s the recoverable world stash of that? One trillion tons, Una said, the equivalent of 3.3 trillion barrels of oil.

12. By now it had dawned on us the limit of importance wasn’t oil, or oil plus gas, but all fossil fuels taken together. We computed global recoverable fossil fuels as follows: 2 trillion barrels of oil + 2.3 trillion barrel-equivalents of natural gas + 3.3 barrel-equivalents of coal = 7.6 trillion barrel-equivalents total.

13. Finally we (well, I) took a stab at estimating peak fossil fuels, which I called PFF, or “piff.” Much depends on developments in the world economy, conservation, alternative fuels, and who knows what else, but I optimistically predicted PFF wouldn’t occur till 2100.

That kicks the can down the road. However, let’s remember a few things. One, if we’ve burned through half the planet’s fossil fuels by 2100, our problem won’t be global warming, it’ll be global scalding. Two, fossil fuels provide the bulk of the energy for everything — transportation, heating, electricity. Looked at in that light, 2100 isn’t that far away.

The market will remind us. Although natural gas now is cheap, long-term energy prices due to growing world demand will inexorably rise. That noise you hear? Perhaps you thought it was the ringing of the cash register. Ah, no. It’s tick tock.

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Post by K »

The article doesn't seem to understand that the biggest issue with oil is that the remaining reserves become more expensive to extract even after maximizing production. Exhausting the oil that is easy and cheap to extract is a more important issue than how much of the difficult-to-extract reserves are in the ground.

"Dire economy consequences" happen well before production shortages cause price to rise if instead the price rises because it costs more to extract.
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Re: The Straight Dope weighs in on Peak Oil

Post by Koumei »

I noted fracking was now mainly confined to the U.S., due partly to scruples about contaminated groundwater and such. Let’s suppose the world gets over all that
I lol'd.
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Post by Username17 »

Now for the part no one anticipated in 2006: U.S. energy production has jumped in the last few years due to improved recovery techniques such as hydraulic fracturing of shale rock, also known as fracking. EIA statistics show a 24 percent increase in U.S. production of petroleum and natural gas between 2006 and 2011.
Wow. That is a major lack of understanding of the issues. Peak oil is about oil. The production of oil has been pretty much flat since 2005. The whole point of peak oil is that as oil reserves become harder to extract, we need to transition to other sources of energy. The fact that we have already started doing so is not evidence that peak oil is a long way off, it's evidence that the peak oil effect already started a long time ago.

We are burning a lot more natural gas, in no small part because there isn't more available oil to burn. Also we're using more solar and wind power. Adding multiple energy sources together and showing that they are rising together isn't insight into peak oil - it's either a complete failure of understanding of the process or outright deliberate deception.

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Post by Ted the Flayer »

A person in my game group insisted that there was tons of oil in "people's backyard" and the government was stopping them from drilling it, and if we let them there wouldn't be an oil shortage.

He also said that there was no such thing as marital rape, because once a woman gets married she doesn't have a right to say no, as marriage is "basically a contract to have sex with someone". I don't think I said anything because I have never heard something that stupid said in real life before...
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Post by sabs »

That guy is a serious batshit crazy republican.
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Post by Username17 »

sabs wrote:That guy is a serious batshit crazy republican.
Or a completely normal person from Saudi Arabia.

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Post by Zinegata »

I'd actually be more worried about how we'll be able to replace stuff like plastics which are currently made out of oil, because we already have energy alternatives; they just need more development.
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Post by LargePrime »

Zinegata wrote:I'd actually be more worried about how we'll be able to replace stuff like plastics which are currently made out of oil, because we already have energy alternatives; they just need more development.
most plastics can be made from standard vegetable oil today.
Oil, like light sweet and crude, are simply denser sources of what we find in most plant oils, and also can have interesting molecules we find it a bit harder to make directly.
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Post by Juton »

Zinegata wrote:I'd actually be more worried about how we'll be able to replace stuff like plastics which are currently made out of oil, because we already have energy alternatives; they just need more development.
The thing with Peak Oil is that it doesn't mean that we won't be able to get oil, just that we might not be able to afford it. If we did use mainly fossil fuels for platics still, the plastic part would just cost more. Even if the price of oil doubled I doubt most plastic products would cost more than 10-20% more at the most to make. Of course getting them to you would get more expensive.
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Post by tussock »

Energy Return On Energy Invested.

Used to take one barrel of oil to get 100 barrels of oil out of the ground. In the tar sand projects springing up all over it takes one barrel of oil to get as little as 1.5 barrels of oil out of the ground. The market has responding by tripling the price of oil. Pundits argue the market can simply continue like that for the foreseeable future.

But at some point it starts taking one barrel of oil to get one barrel of oil out of the ground. The "market" will try to solve this issue by increasing the price of oil further. That will not work.

Then "the market" will try to build solar farms and wind turbines. This requires energy. The energy currently get get from oil. Guess what happens to markets when a critical input cannot respond to price signals of infinite size.


Some governments have decided to do something about this. Germany is probably going to be on 100% renewables before the lights go out. China has some plans that it might get done in time. Most other places are fucked. Dark ages style.

I mean, you can burn coal for everything for another century, but at current populations that will literally block out the sun. Somehow I don't think the Germans will approve.
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Post by fbmf »

The Straight Dope revisits the peak oil issue with updated information:

http://www.straightdope.com/columns/rea ... n-fracking

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Post by tussock »

@Strait Dope, #3 there says alternatives don't give enough energy, but the bit it quotes leads to a 2006 paper that didn't actually calculate solar, which is the only alternative.

Yes, solar panels are quite large for how much power they make, but the cooling footprint of coal and nuclear are also quite large. Being large is a thing that power plants just are.

http://en.wikipedia.org/wiki/Solar_power
http://en.wikipedia.org/wiki/File:Solar_land_area.png

See the small black squares? That's a big old fuckton of land, and IRL they'll be far more widely dispersed than that, like ...

http://en.wikipedia.org/wiki/Desertec
http://en.wikipedia.org/wiki/File:Fullneed.jpg

which tanked as investors got shaky over political stability issues. Which is incredibly stupid and backward, in that political stability is built on long-term investment with steady rates of return. But whatever, that sort of thing remains our only future. Getting there early would be smart and easy, but people are stupid cowards.
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Post by Username17 »

Yeah, that was actually terrible. If you don't include solar, which is an essentially limitless resource, or nuclear, your assessment of how much non-carbon fuel based is available is completely meaningless. And mixing carbon fuels which are atmospheric carbon neutral (such as biofuels) with ones that are very much not (because they are dug out of the ground) is blatantly dishonest.

The entire framework of that article is insane. Of course we have a fucking choice to not use mined carbon fuels. If we wanted to, we could build vast floating solar collectors on the Pacific Ocean and ship tanks of hydrogen gas to every corner of the world for locally usable power. We're not going to do that, but we could.

The entire issue with energy production is one of cost. There's the cost to the people actually generating the energy, there's the cost to move the energy to places people actually want to use it, and there's the cost to the planet and future generations. As long as the governments of the world don't charge the energy companies for the social, environmental, and future costs of production, then we're going to have horribly distorted energy production.

Look, coal is more expensive than solar right now, but because the governments of the world seem perfectly happy to subsidize coal by footing the bill for the increased healthcare costs, and don't seem to feel the need to similarly subsidize the production of solar panels - we still have a bunch of functioning coal plants all over the world. It's not because we "don't have any choice," it's because we have a very counter productive incentive structure for energy production.

We aren't frakking because we have to. We're frakking because we can't seem to convince the government to weigh in on negative externalities caused by the hydrocarbon companies.

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Post by Blade »

A big issue many countries have with solar power is also that they don't make as many local jobs as traditional energies do.

Investing in solar power would mean sending a big part of the energy investment to China, while mining for and building and maintaining coal power plants (or nuclear here in France) means that most of the money stays in the country.
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Post by tussock »

@Blade, should governments be facing issues of underemployment while carrying out massive investment programs, there is nothing that would possibly make them buy Chinese-made things rather than building it with local labour and parts.

Like the Desertec thing, would have been money from Europe with labour from Europe and parts from Europe and ... when China does big jobs in Africa it's Chinese labour and Chinese parts, because that's how that works.
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Post by fbmf »

The Straight Dope on the Petrodollar. I'd never heard of Petrodollars.

http://www.straightdope.com/columns/rea ... he-economy

How legit is this?

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Post by DSMatticus »

Ehh... Oil-exporting countries are also often exporters of demand for financial assets both routine and arcane, public and private. They have more money than there are places to keep it. On the one hand, the collapse of that monopoly means less of your money is being extorted from you through the power of we-have-no-fucking-competition-deal-with-it-bitch. On the other hand, it means less demand for the aforementioned financial assets. But honestly? That doesn't mean a lot. Banks are feeling squeezed, but they're feeling squeezed by pervasive global economic weakness. The fact that no economies are actually growing has pushed interest rates across the globe down to somewhere between almost zero and below zero, which has made it nigh impossible for banks to profit on deposits, which has made being a bank fucking suck. That is a concern a hundred times larger than Saudi Arabia keeping their money at home for a rainy day. That is shaping up to be the next financial crisis. And nothing Saudi Arabia does will be more than a drop in that particular bucket.

Oil is very, very big, but it is not so big that where it goes the entire world economy follows.
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Post by Username17 »

fbmf wrote:The Straight Dope on the Petrodollar. I'd never heard of Petrodollars.

http://www.straightdope.com/columns/rea ... he-economy

How legit is this?

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The international oil market is handled in dollars, has been since the seventies. The effects on the world economy of the various changes in capital flows from falling demand and prices for Middle Eastern oil are going to be complicated, just as the rise of OPEC was complicated in the first place.

But basically that Straight Dope article is pretty much accurate. The collapse of the petrodollar investment channels are going to cause and alleviate a lot of economic problems all over the world. But there's no reason to believe that the world economy is going to collapse over it. As regions turn to solar and natural gas for more of their energy needs, they will be investing more money into local systems and sending less money overseas to corrupt principalities that then ship the money right back to invest in football clubs and London penthouses. But the amount of money in the global system doesn't change, nor does the total global demand for energy.

So various businesses will rise and fall. Lots of people will be gainfully employed and lots of other people will lose their jobs. But here the Straight Dope basically has it right - there's no particular reason to be worried about the Petrodollar Collapse.

Remember also that right now the Dollar is strong because all the other developed economies are doing shitty. So if a bunch of countries decided that their dollar denominated international oil purchases were going to be less and decided to spend their dollar reserves on other things - that would be mostly good for the US economy. If people don't want to hoard their dollars to have virtual oil, then they have to buy goods and services denominated in dollars - which means creating jobs in the United States almost by definition.

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Post by hyzmarca »

fbmf wrote:The Straight Dope on the Petrodollar. I'd never heard of Petrodollars.

http://www.straightdope.com/columns/rea ... he-economy

How legit is this?

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Petrodollar is a stupid term, but it's easier to say than "money earned by exporting oil," which is exactly what the term means.

The issue is that, yes, major OPEC countries tend to have more money than they can actually spend.

But the fact that most oil transactions are done in dollars has more to do with the fact that the USD is the defacto global reserve currency, rather than any sort of conspiracy.

The switch to Euroes is generally a political issue, rather than an economic one. Iran wants to use Euroes because the United States can't fuck them over as badly if they use Euroes. Notably, very few countries are taking them up on this, most want to buy in dollars.

A switch to the Euro as the standard global reserve currency would harm the American economy. Which would, in turn, harm the global economy. However, that currently isn't happening. What's actually happening is that countries that have hostile relationships with America and trying to avoid using financial services that America controls. Which is a sound decision, considering that America can and has unilaterally frozen international bank accounts.

This, for example.
http://www.wsj.com/articles/SB117627790709466173

Basically, dealing with banks that have a lot of dollar transactions means that the United States can shut down their accounts pretty much at will.

Dealing with banks that don't do dollar transactions is the better choice for Iran, for this reason. The Euro is a good choice because it's a strong currency that's backed by a fairly stable organization. And, more to the point, European countries have enough clout to tell America to fuck off if it tries to pressure them into imposing sanctions.
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