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TedN5
With oil trading for more than $55 per barrel and U.S. gasoline prices likely to average $1.25 per gallon in the near future, what is the explanation? Goldman Sachs has even suggested that oil may spike as high as $105/bbl.

In 1956 the renowned Shell geologist, M. King Hubbert, predicted that oil production would peak in the lower 48 states by 1970. His prediction was not taken seriously by the industry or the government, but it proved to be correct. Other geologists have refined and used Hubbert's methods to forecast the peak in world oil production. Their conclusions are that the peak will come from 2004 to 2010. (You can only identify a peak after it occurs). Again, they are not taken seriously by most governments nor the industry. Even if the optimistic estimates of discoverable reserves put out by the USGS and the industry prove correct, peak production will only be delayed by a decade or two. With rising demand in the industrialized countries and the addition of India and China as major oil consumers a bidding war could follow the peak with all kinds of major consequences.

For an introduction to this issue see: Association for the Study of Peak Oil and this Alarmist Article together with associated links.

QUESTIONS FOR DEBATE:
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak? What are the likely consequences of the Peak?
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TedN5
I just re-read this topic post. It is too late to edit it. The sentence in the opening reading "U.S. gasoline prices likely to average $1.25 per gallon " should read "$2.25."
TitaniumDreads
QUESTIONS FOR DEBATE:
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak?

*

[/quote]


I think the recent jump in oil prices is the result of the war. There are still jillions of gallons of oil out there and everday technology makes them easier to get. I've looked at peak oil stuff before and I don't believe in much of it because it doesn't take the advance of technology into account. However, I think it represents a useful mythology in that it (in conjunction with the impending global warming disaster) will lead to greater adoption of fuel sources that aren't dangerous by their very use.


What are the likely consequences of the Peak?

Assuming that I'm totally wrong above and peak oil does actually occur, a lot of people will starve to death. Oil allows us to artificially expand carrying capacity of area mass by transporting perishable goods great distances. People will have a proportional difficulty adjusting relative to the speed of cessation.
SWM28WDC
I think all evidence points to the fact that we've reached the peak of oil production.
The consequences should be changed behavior, which won't be that painful. The likely course, however, is that we'll refuse to change behavior, and prop up current practices with various subsidies and incentives, which means the inevitable adjustment will be quite painful.

Oil gets used for some important things, mostly transportation and agriculture.

With the exception of air travel, most surface travel can be powered by wind, solar, hydroelectric or nuclear power. This may or may not mean giving up cars, but it should definitely be a trend away from them. I know washington, DC's land surface area is approximately 50% dedicated to roads and parking, and this is pretty typical of most cities. With a fully integrated mass transit system, the city could be nearly twice as dense, which would reduce transport costs, regardless of mode. It would also mean cities grow up, more so than out, which which would reduce suburban - urban transport costs.

A more interesting development would be in agriculture. The loss of oil would mean an end to American agriculture as we know it, though it might mean a return to agriculture as we knew it. Incredibly high crop yields per labor input are made in the US, due to mechinization and oil-based chemical fertilizers. Higher crop yields per acre are available with certain methods of organic farming, however, they require much more labor input. We won't starve, but food will become more expensive.

A good solution, rather than more government spending to come up with the solution du jour (aka big contracts to favored corporations), would be to slowly introduce a Oil Tax, and rebate completely, in equal amounts, the revenue to the American people. Use more oil than the average person, pay more tax. The average person would break even. People who conserve oil would get more in a rebate than they pay. I don't imagine it would be a large tax to begin with, maybe 5c a gallon, and you'd get back $50 a year. The important thing is that it would, without any other action by government, reduce use, and make alternatives relatively more attractive. I'd prefer it to be a carbon tax, which would have broader effects, but that's not the issue here.
Artemise
I opened a Peak oil debate some time ago, it has great links and some good debate, it was very extensive:
http://www.americasdebate.com/forums/index...570&#entry94570

I thought and said 6 months ago that gas will never be cheap again. SWM, since we wrote Ive thought alot about what you said about closer communities and progressive monorails and the like, (I think it was you).

We can continue to believe our supply (of cheap oil) is everlasting but, everything dictates this is not the case. Of course , some just say, scare tactics, the oil producers dont think so. Its expected Chinas need will double in a few years. I believe we have a true energy crisis on our hands that spurred the Iraq war. Thats me. Ive been on spot so far as to energy prices, but some do not believe about Iraq since they dont really look to the future, are only seeing the present, and believe in freedom and democracy as a means to war, foolish souls. It doesnt matter, we are seeing the end of cheap oil, forever.

Watch, Peak Oil is going to be a national catchword again, but this time its pretty much for real.

From the original debate:

QUOTE
"The hard math of energy resource analysis yields an uncomfortable but unavoidable prospect: even if efforts are intensified now to switch to alternative energy sources, after the oil peak industrial nations will have less energy available to do useful work - including the manufacturing and transporting of goods, the growing of food, and the heating of homes.

"To be sure, we should be investing in alternatives and converting our industrial infrastructure to use them. If there is any solution to industrial societies' approaching energy crises, renewables plus conservation will provide it. Yet in order to achieve a smooth transition from non-renewables to renewables, decades will be needed - and we do not have decades before the peaks in the extraction rates of oil and natural gas occur."
Professor Richard Heinberg, The Party's Over: Oil, War, and the Fate of Industrial Civilizations.


QUOTE
"The situation is so dire that even George W. Bush's Energy Adviser, Matthew Simmons, has acknowledged that "The situation is desperate. This is the world's biggest serious question." In an August 2003 interview, Mr. Simmons was asked if it was time for Peak Oil to become part of the public policy debate. He responded:

"It is past time. As I have said, the experts and politicians have no Plan B to fall back on. If energy peaks, particularly while 5 of the world’s 6.5 billion people have little or no use of modern energy, it will be a tremendous jolt to our economic well-being and to our health - greater than anyone could ever imagine."


QUOTE
"Oil is required to develop, manufacture, transport and implement oil alternatives such as solar panels, biomass, windmills, and particularly nuclear power plants, which require massive amounts of oil to construct and maintain.

There are many examples in history where a resource shortage spurned the development of alternative resources. Oil, however, is not just any resource. In our current world, it is the precondition for all other resources."

Sevac
QUOTE
SWM28WDC Posted Today, 11:22 AM
This may or may not mean giving up cars, but it should definitely be a trend away from them. I know washington, DC's land surface area is approximately 50% dedicated to roads and parking, and this is pretty typical of most cities. With a fully integrated mass transit system, the city could be nearly twice as dense, which would reduce transport costs, regardless of mode. It would also mean cities grow up, more so than out, which which would reduce suburban - urban transport costs.


This is indeed a serious problem, much oil is wasted for an unnecessary use of cars. Of course a mass transit system only works when there is enough demand for it. How to create such demand? Increase the prices for oil, put a ecological tax on it. The price for oil would increase artificially, though it would probably just represent the price of oil in two or five years.
Invest the revenue from the tax into alternative fuels, thats long-term investment.

If someone is travelling to Europe the near future, don't be surprised about our gasoline prices. Average is 1.2 EURO/Liter, about 4,5 EURO/Gallon = 6 $/Gallon. At those prices there would be a huge demand for pubic transportation in the States.
SWM28WDC
I believe economics is a powerful force only to be bucked at the greater expense of all. Einstein said "The most powerful force in the universe is compound interest."

That being said, traditional economics do not count the cost borne by others for our actions, externalities. I get the benefit of driving my car everywhere, but everyone in the world pays the price for my emissions. I get the benefit of the nice suburban yard I have, but everyone else in the wold pays the price of having less earth on which to live and grow food.

We can start to collect these externalities before thay come to haunt us, and we can use the revenue to benefit us. While I would accept the moral argument that a fee to recover such arguments should be spread to the entirety of the world, the reality is that this won't happen. But, if we collect a fee for these externalities, and spend them on ourselves, we tend to stop being a burden on others. We can ease our way out of oil dependency rather than being forced to do it later.

One of the popular arguments against Universal Health Care, one that I believe has some merit, is that if people don't have to pay for something, they'll use more of it. There are quite a few common activities that this argument applies to; many of which those making the argument use regularly. Automobile & truck use is subsidized to a larger extent than most people realize, from manufacture, to fuel, to parking, and of course roads. There are certainly large social and economic benefits to be had from a large transportation network, but when the costs of operating such a network are not paid by the direct users, who then pass on the costs to the final consumers, economic signals are lost. Without the true economic signals, our dynamic market of producers and consumers cannot and will not change their behaviors to more efficient ones.

Slow and gradual changes in the right direction today will save us much pain and anguish tomorrow.

There's nothing we can't do better without oil, than we can do today with it. It just requires a change in habits.
Just Leave me Alone!
QUOTE
QUESTIONS FOR DEBATE:
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak? What are the likely consequences of the Peak?


unsure.gif The run up in prices could very well mean that the world's annual oil production has peaked. The Iraq War and China's projected future demand could also be playing a large part though. Discovery of oil reserves is spikey and while it has declined, I think that the world has about 8 more years before we reach Peak Oil. The consequences are going to be drastic 20 years after whenever it happens(ed). We'll basically revert back to a larger portion of people farming.


SWC, you should like this. TomTolesCartoon
Arty
Discovery of reserves is spiky, but over the last few years the big oil companies have had trouble replacing all their reserves and I think that is a trend. Better technology makes more oil accessible, but we can all see that such a process can't go on forever. We may have already reached peak oil, but it isn't easy to say for sure. I think we can be reasonably sure that we are there or thereabouts. If oil reserve discoveries continue to lag behind consumption then that is a sign that we are past peak oil.


Of course, with OPEC controlling their oil production so effectively we will eventually reach a point, a few decades away, where other suppliers will have run out and OPEC can force the prices up more or less as high as it wants by restricting the supply. That is its stated strategy. Prices will be higher than the natural market rate, even more so then they are now, so the problems will begin perhaps sooner than we might think.
ralou
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak? What are the likely consequences of the Peak?

I don't think we're out of oil, it's just that the stuff that was easy to get to is rapidly being depleted. It takes energy to remove and refine sources of energy, and the more it costs to get it out of the ground (or wherever), and refined, the lower the yield.

The spike isn't just about where the remainder of the oil is located, though. It's about China. And India. And the EU. And the US. But especially China. They're catching up to us on usage. And they have a billion people. So actually, I should have said it's about the US, and then it's about China. But I'm still conditioned to ignore our nation's contribution to these problems.

Anyway, China wants the American dream, and I'm not talking life, liberty and the pursuit of happiness, here. I'm talking big cars, air conditioned homes, lots of stuff to put in those homes. You know, our standard of living. Problem is, all those things are created by using petroleum and other fossil products. Not only are plastics made from petroleum, it costs fuel to get the workers to work, to run the machines, to provide the food, clothing, and shelter that keep the workers alive. So here is China, exporting these things. Well, look at China as the second largest importer of oil in the world, but with largest population, and also as the nation that exports the most oil and other energy sources, in the form of plastic toys, shoes, clothing, and other goods.

There are people going around driving their cars on used fryer oil. The technology has existed for more than 100 years. But it will take energy to make the shift, and unless we want to starve people in other countries so we can keep our land to grow gas for our cars, we'll find other sources too, and we'll use hemp (doesn't deplete the soil like food crops, grows very fast and grows between the growing seasons of other plants).

Every dime that went into invading Iraq should have gone to switching over to every alternative energy source we have and to researching and finding more. That would have been the smart move. Instead, we went after the oil. And if we don't learn fast, we're going to end up nose to nose with China. And that might result in nuclear war, but it could also result in the total disruption of our power and communications grid. A couple of EMPs would do it, just blow up some nukes in the atmosphere, and presto, no more internet, cars with computer chips won't run, no power, no phones. Nothing. It wouldn't last forever, but it would last long enough to cause the kind of chaos that might take America out of the super power category for a long time.

Rush Limbaugh's stand in today was going on about Chinese hackers having the capability to knock out our computer systems, and Rush warned that China might attack us over oil the other day. These guys have people whispering things in their ears. When they start priming their audience for something, there is a reason for it. Often they're just lying, of course, but this time, there seems to be enough tension that they might be telling the truth. Or part of it.

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TedN5
I thought I would revive this topic to bring up a government funded report that has been hidden away.

QUOTE
In February 2005 a 91-page study on Peak Oil commissioned by the U.S. Department of Energy was published that has received little attention, despite its alarming conclusions about the threat that Peak Oil poses not only to the U.S. but to industrial civilization itself.  --  On Saturday, Allen Roland posted on his blog an essay on the report by Richard Heinberg.  --  As author of The Party's Over: Oil, War, and Fate of Industrial Societies (New Society, 2003) and Powerdown: Options and Actions for a Post-Carbon World (New Society, 2004), Heinberg is one of the leading independent researchers in the area of Peak Oil.  --  Heinberg calls attention to the fact that the Hirsch report has been reposted in .pdf format by Peter Phillips of Sonoma State University on the Project Censored web site after briefling disappearing from the web.  --  In May, Hirsch attended an international conference in Lisbon and presented the conclusions of his report; his paper presenting his summary conclusions is posted below.[2]  --  In it, Hirsch et al. say that "the problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society."  --  For the United States especially, the impact will hit the transportation system most severely, since two thirds of the U.S.'s oil consumption of 20 million barrels per day is in the transportation sector (2003 figures).  --  The Hirsch report warns:  "Oil peaking will create a severe liquid fuels problem for the transportation sector, not an 'energy crisis' in the usual sense that term has been used. . . . The key to mitigation of world oil production peaking will be the construction a large number of substitute fuel production facilities, coupled to significant increases in transportation fuel efficiency."  --  Hirsch and his co-authors emphasize that actively "aggressive risk management" is required on a scale of decades in order to address the problem, but the United States has yet to even recognize its existence....
Articles on the Hirsch Report
The report itself: Hirsch Peak Oil Report
VDemosthenes
QUOTE
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak? What are the likely consequences of the Peak?


No. We'll reach the oil production peak sometime within the next 20-30 years. What with pockets of oil being looked for in Israel, real oil in Alaska and reserves in remote Russian tundra it shall be some time before we ever reach the peak.

The consequences shall be what has long been prophesied in science fiction movies for fifty years: a swift meltdown of all things electronic and sudden return to pre-industrialization. I think it likely that the principal consequence will be a nice kick in the butt to all those who are responsible for oil production and not throwing resources into something more sound- such as solar or hydro-powered plants.


Erasmussimo
Does the rapid run up in oil prices mean we have reached Peak Oil and if not, when will world production peak? What are the likely consequences of the Peak?

The primary force at work here is the dramatic increase in demand for fossil fuels, China and India being the biggest sources of new demand. That in turn drives up the price, which makes more resource available. At some point around $100/bbl, oil shale kicks in as a viable source, and Canada alone has more oil shale than Saudi Arabia has oil. So I don't think we'll see gas prices remain stable until the gas station has no more gas. The price will steadily creep up, with occasional jumps up and down as modified by geopolitical developments, and as it does, people will adjust, lower their usage, and accomodate. I'm not saying that all will be well; the high prices of gasoline will dramatically impact the American low-density lifestyle. But I don't think we need to worry about the collapse of civilization.
Vermillion
Peak Oil is a complicated process.

For example, there is a LOT of oil in the world that is at the moment commercially unviable. For example, some large deposits found but untouched in Isolated parts of Siberia, and the Alberta Oil sands in Canada (which is actually the second largest supply of oil in the world, after Saudi Arabia).

Right now it is simply too costly to extract these sources. However if the price of oil continues to rise, these projects will become viable, thus new resources sources of oil will be deployable.

This phenomenon will delay 'peak oil' by some years, as the irony of the scarecety of oil will increase the price which will them make it less scarce.

However the reality is that all the easily extractable oil on the Planet is pretty much gone or going. Ask any oilman how much deeper and more isolated drilling has to be nowadays as opposed to just 30 years ago. Or 80. That right there is pretty much conclusive proof that oil WILL eventually run out, and not in some fantasy distant future either.

Oil prices could double, even triple from now and it would still remain an essentially inelastic demand. Oil prices in the Uk are over twice what they are even now in the US, yet people in the UK still drive cars and consume petrolium. Worse, new upcoming demand for oil, such as in the ever growing US and the rapidly increasing China, will make competition for the diminishing oil even more fierce. What happens when nations, such as Venezuela is already considering, decide not to sell oil to the US, but go to China or the EU instead?

With China as a growing power, and an economy increasing exponentially, what happens when the Middle East realises they can start selling all their Oil to Asia, not lose a dime, and totally screw over the US?


The next big oil crisis will not be one of 'peak' or seriously diminishing oil, that crisis is probably 35 years away. The next crisis will be one of rival demand and growing competition over purchasing oil, a crisis the US has never faced. back when there were last two superpowers, the USSR was a net EXPORTER of Oil, in fact in the late 1970s and early 1980s it built its empire on the sale of oil and gold, among other commodities. Now, China will be a huge net importer of Oil, as will be the EU, and these will start to actually come into rivalry with the US for oil supplies.

That will be interesting.

TedN5
I hope everyone has had a chance to read at least a review of Mathew Simmons "Twilight in the Desert. If his analysis of the Saudi reserves is correct, we may see Peak Oil long before some of you expect it. He is positioned to perform such an analysis as well as anyone outside of Saudi Arabia. On the other hand, we have Daniel Yergin's bunch, Cambridge Energy Research Associates, saying that we won't peak for 20 or 30 years and they are certainly respected. However, their analysis assumes a large contribution from heavy oil, tar sands, oil shale, and deep ocean oil. Each of these has its own set of problems that make them all expensive and some of them are very environmentally damaging.

Erasmussimo
QUOTE
The primary force at work here is the dramatic increase in demand for fossil fuels, China and India being the biggest sources of new demand. That in turn drives up the price, which makes more resource available. At some point around $100/bbl, oil shale kicks in as a viable source, and Canada alone has more oil shale than Saudi Arabia has oil. So I don't think we'll see gas prices remain stable until the gas station has no more gas. The price will steadily creep up, with occasional jumps up and down as modified by geopolitical developments, and as it does, people will adjust, lower their usage, and accomodate. I'm not saying that all will be well; the high prices of gasoline will dramatically impact the American low-density lifestyle. But I don't think we need to worry about the collapse of civilization.


I think the Canadian resource is primarily in tar sands but it is vast. It is already economically viable if you don't consider the externalities. It requires lots of water to process and leaves lots of it polluted in holding ponds. Going to production levels beyond 2 to 3 million barrels a day would be an environmental nightmare. I'm not yet well enough acquainted with the process to know just how many units of energy you get out of tar sands for each unit of energy you put in. Nor do I understand what additional quantities of greenhouse gases are added to the fuel cycle per gallon of gasoline or diesel fuel using tar sands as the resource; however, I'm sure the global warming contribution would be significant when you consider the vast quatities of steam that have to be injected to release the oil. I'm also not really informed on the production cycle with heavy oils and deep ocean oil but again the energy in per energy out ratio is bound to be significantly greater than pumping directly out of the ground. Consequently, they too would increase the global warming problem. Here is an article that discusses some of these issues. There is also some new technology, for recovery from tar sands which is being hyped, that might have better economics and less environmental impact.

Oil shales occur in several parts of the world but the richest and most extensive are in the contiguous area of Northwestern Colorado, Eastern Utah and Southern Wyoming. I lived in Western Colorado in the late 70s and early 80s and was very active with citizen groups trying to mitigate the environmental and community impacts of the oil shale industry that was then being subsidized into existence. I am, therefore, very familiar with the technology involved. The resource is located in an arid region and requires huge quantities of water to process. It leaves a waste product that is by volume greater than the shale mined. And the volume of shale that would have to be mined is vast because the kerogen (not oil) in the shale is relatively dilute. A ton of shale contains less than 1/2 the energy as a ton of municipal waste. It was then estimate that the relatively small 400,000 barrel per day industry would have to move as much material as 1/4 of the then existing coal industry. (Think about the strip mines in West Virginia and Ohio!) For me, an even greater concern today is the impact a multi-million bbl/day industry would have on global warming. Large quantities of energy would be consumed mining the shale and transporting it to huge retorts. The shale would have to be heated to high temperatures to release the kerogen, again consuming energy and releasing GH gases. The kerogen would then have to be retorted a second time, again using energy and releasing GH gases. In 1980 it wasn't even clear that the energy produced from the oil shale was as great as the energy expended in its extraction but only that there was a net gain in liquid fuel.

For the above reasons, I am not enthusiastic about the alternative fossil fuel sources. With every capital intensive technology that will commit us to decades of production, we have to ask the question - What is the impact on global warming? Synfuels may play a part in our energy future but I think we will need to concentrate on vastly improving energy end use efficiency and seek to satisfy the remainder of our need from renewables.
nebraska29
QUESTIONS FOR DEBATE:
QUOTE
Does the rapid run up in oil prices mean we have reached Peak Oil


While it has just recently passed on to $65.00 a barrel, I don't believe that it means that we have peaked in regards to oil production. ermm.gif The prices are due to political concerns, not necessarily anything having to do with the supply of oil itself. We apparently have enough of it, we just don't have enough stable leaders in countries who stand above that oil mad.gif

QUOTE
and if not, when will world production peak?


Pure speculation on my part, I don't believe that we'll see anything drastic in terms of oil supply until the end of this century. By then, Chinese consumption of oil should be gigantic and I doubt that our own rate of consumption will decrease any time soon.

QUOTE
What are the likely consequences of the Peak?


By the time we have peaked, I belive enough effort will be put into alternative energy power sources. Hybrid and electrical vehicles will only increase in availability in the market. Since shipping and trucking rely on it a lot, we may see a growth of local food producers and providers once again. It will require a lot of way of life changes, mostly impacting our consumption and spending of goods, but we could afford to be more frugal and not have a depression IMHO. hmmm.gif
SWM28WDC
I don't think we've reached peak oil, when all forms of oil are considered. I do think we've reached the point when a critical mass of people have begun to realize that oil is not the future of power generation.

The best outcome of this semi-crisis is the increase in oil prices. While demand is fairly inelastic in the short-term, it is elastic in the long term. While european nations still drive and use petroleum, their per-capita and per-GDP usage is much ,much less than ours. As such, they are hurt less than we are by oil price increases.

This is a good development, because, oil prices are still not terribly high, they seem just high enough to cause concern, and concern is what we need now. Likewise, with high oil prices now and in the forseeable future, alternatives become more viable - which is good for a number of reasons:

1) alternatives are typically domestically located - allowing us more energy independence, reducing the need for imperial resource grabs.
2) alternatives typically require more capital and labor than fossil fuels, which depend on natural resources. No one is employed creating oil, but plenty of people would be employed building and operating windmills, solar collectors, biofuel plants, and nuclear reactors.
3) alternatives typically pollute less: less mercury & heavy metals, less sulfur, less carbon dioxide.

Some folks support the idea of massive government spending to subsidize alternative energy research and development. I don't, with one exception. I actually favor increasing taxes on oil & fossil fuels so that conservation (which is much cheaper than increased production) becomes an issue for everyone. I also think that such revenue should be used to issue energy tax credits to every citizen, such that the poor and working poor aren't disproportionally hurt by price increases, while the middle class would then likely have a little more money to purchase energy efficiency, and the rich would likely not have their energy use offset by an equal per capita credit. As far as government subsidies, to energy producers, I only support them for the purposes of offsetting the cost of regulatory compliance.
TedN5
SWM28WDC, overall I found your post enlightened. However, it might be productive to explore a few of your statements.

QUOTE
I don't think we've reached peak oil, when all forms of oil are considered. I do think we've reached the point when a critical mass of people have begun to realize that oil is not the future of power generation.


Does this mean you dismiss the arguments of the Peak Oil geologists and that of Matthew Simons regarding the depletion of the Saudi reserves? What do you mean by "when all other forms of oil are considered?" Are you referring to the synfuels as well as heavy oil and what is your response to my statement above implying that these sources have too many problems associated with their production to collectively make much of a dent in a world daily demand of 85 million bbls. which is still increasing? Power generation is not a big factor in the use of oil. The use of oil is primarily as a liquid fuel in transportation, for home heating, and as a chemical feed stock. What are the alternatives for transportation fuel.

QUOTE
2) alternatives typically require more capital and labor than fossil fuels, which depend on natural resources. No one is employed creating oil, but plenty of people would be employed building and operating windmills, solar collectors, biofuel plants, and nuclear reactors.


The tone of your statement is that using more capital and labor is a good thing. From a full employment perspective, it might be. On the other hand, many of the peak oil alarmists point out the economic windfall we all get from cheap oil. Currently, it takes about 1 unit of energy in for each unit of energy out to recover conventional oil (much less in the Middle East). Moving to alternatives which have energy in to energy out ratios of 1 to 2 or 1 to 3 might mean more domestic employment but it would also mean an overall drop in living standards? How would we make such a transition? Do you think that enough improvement in energy efficiency is possible to mitigate this problem? (Many efficiency improvements still have negative or very low costs).

QUOTE
Some folks support the idea of massive government spending to subsidize alternative energy research and development. I don't, with one exception. I actually favor increasing taxes on oil & fossil fuels so that conservation (which is much cheaper than increased production) becomes an issue for everyone.


I share your desire to use the markets where possible. However, you fail to address the fact that the energy market is already vastly distorted by subsidies to the fossil fuel and nuclear industries which the new energy bill increases. You say you only support subsidies that help meet regulatory compliance, what do you include in this? Also, improvements in efficiency are hindered by a lack of basic information. Do you favor government funding to disseminate such information?
SWM28WDC
[quote]Does this mean you dismiss the arguments of the Peak Oil geologists...[quote]
No, I trust the geologists who claim that we've peaked in finding economically viable oil, though I do think that less economically viable oil will continue to be found. I guess it's largely semantics and largely irrelevant: oil prices will continue to rise, and as it does, alternatives will replace it's use.

[quote]The tone of your statement is that using more capital and labor is a good thing...[/quote]
Absolutely. I particularly mean 'economic' capital which requires labor to build. As more capital and labor are used, wages and employment rise, a good thing for most people. The 'windfall' from using fossil energy is enjoyed by the limited few people who own those drilling / mining rights. Insamuch as their wealth & income may trickle down to the masses, I suppose there's a benefit; however these people tend to reinvest their income into other 'enclosures of the commons' rather than into gainful and productive investment or consumerism.

As for the drop in living standards, I could believe it the short run, but in the long run, folks will alter their lifestyles and living patterns such that they use less energy while still enjoying the fruits of modern life (varied & nutritious food, clean water, clothing, comfortable homes, entertainment, travel, healthcare, etc). I just don't see much there that necessarily requires a whole lot of energy, if conservation measures are taken.

[quote] However, you fail to address the fact that the energy market is already vastly distorted by subsidies to the fossil fuel and nuclear industries...[/quote]
True, fossil fuels are massively subsidized, as are all other forms of energy. Relative to current production, PV and wind are massively subsidized. However, nuclear power is the only form of energy that is required to maintain cradle-to-grave accountability of its fuel (not that this is a bad thing). Plutonium might have a half-life of 24,000 years - perhaps frightening, but when you care to compare it with mercury - possibly more dangerous - which has a half life of more than 999,999 years (infinite, in fact). The fact is that coal kills people every day, while nuclear power has never killed anyone in a democratic country. Of course neither has solar or wind, however neither one of these can possibly replace all of our power generation or transport needs. Really, at this point, and for the forseeable future, the only alternative to nuclear power is coal - and a vote against nukes is a vote for coal.
I'm all for developing solar and wind to produce power when and where it's feasible and economic to do so - it's just that this isn't very many places.

For transport, I think the biggest subsidy to fossil fuels is the interstaste highway system. At one point, I would have favored making these pay for themselves with tolls and other taxes, however, I now tend to favor an equal investment in a nationalized rail system.

For transport energy I support conservation - bringing producers closer to consumers, and bringing consumers closer together. I support dense, preferably car-free, urban forms coupled with public transit, preferably paid for by the increase in real estate values around the transit. I'd like to see more hybrid automobiles, specifically ones that could be plugged in to charge for short local trips. All told, grid electricity could replace much of our transport sytem (with electric railroads and short trip electric cars) with the major exception of aircraft.
However, if you'd like a glimmer of hope, the U. of NH has a report [link:www.unh.edu/p2/biodiesel/article_alge.html|here] that shows that biodiesel made from algae could be grown on less than 10% of our current agricultural land and replace all of our transport oil.
nivekelly
Oil is not done going up until we slow down our consumption of oil to a reasonable rate. The problem with oil has always been present, but only recently realized. The new energy bill will do nothing to slow the rising price of oil, as it offers incentives to big, cash rich oil companies that are producing the crude and natural gas. Nothing can break this oil as it is basing on the chart and the fundamentals behind the current price represent the demand that is present and will be present until 1) Alternative fuel sources are discovered and/or promoted by the government. 2) A gas tax implemented to promote a different natural resource/alternative fuel.

The oil market isn't based on the same premises as the stock market, and oil is currently not overpriced, although I think Goldman was a little steep on their $105 prediction. But in our current stage in drilling for oil and our president's newly implemented energy bill, there is nothing that will encourage less oil consumption, therefore oil shall go higher.
turnea
I think an important point is being missed here.

Despite the perennial worries over "peak oil" the current price hikes in oil an gas have nothing to do with a shrinking supply of oil.

QUOTE

In part, this is because the oil-price records are an illusion, brought about by inflation. While nominal prices are at record levels, in real (inflation-adjusted) terms they are still well below those seen in the wake of the 1979 Iran hostage crisis, when the cost of a barrel of oil hovered around $90 in today’s dollars (see chart). Consumers are better-off now—in 1980, the median personal income in America was $16,800 (in 2003 prices), versus $22,700 in 2003—and economies are more fuel-efficient. Both of these things should cushion the shock of higher prices.

Some economists also think that there is a big difference between the supply shocks of the 1970s and today’s demand-driven price increases. For one thing, increases caused by growing demand are not quite so sudden. For another, they are far more responsive to market conditions; as the oil price rises beyond the level economic activity can support, growth, and thus demand for oil, should slacken. In contrast, when prices fell from their post-hostage-crisis highs of the early 1980s, the Organisation of the Petroleum Exporting Countries (OPEC) tried to keep them higher than the market could comfortably bear.

Perils at the pump

This issue is rising demand, not shrinking supply and it is not permanent.
Hobbes
QUOTE(nivekelly @ Aug 9 2005, 01:15 PM)
The new energy bill will do nothing to slow the rising price of oil, as it offers incentives to big, cash rich oil companies that are producing the crude and natural gas. 


Isn't that the very place incentives would have to be directed to most quickly affect the price of oil? This strikes me as more of the usual 'big oil bad' rhetoric that usually permeates any discussion on energy. The simple fact is that we use so much oil because consumers demand it. I'm curious, for all those against big bad oil...do you drive? do you use electricity? do you ever use rubber or plastic? do you fly? do you ever wear anything with synthetic fabric in it? walk or drive on paved roads? If so, then you are the problem, not the government. Stop using oil or oil based products, and big bad oil will stop supplying it. Demand that your electricity company use alternative fuels, even though that will cost you more. Don't take any form of transportation that uses fossil fuels. Then you will have the right to criticize the government and the oil companies for supplying this resource. But not until then.

QUOTE
But in our current stage in drilling for oil and our president's newly implemented energy bill, there is nothing that will encourage less oil consumption, therefore oil shall go higher.


And as it goes higher, it creates its own incentive for alternatives. This certainly factors into governmental decisions (and also those then made by the oil companies)....increasing demand and reducing supply will naturally stimulate demand and therefore supply for alternatives. However, given the prevalence currently of demand for oil throughout our economy, policies that increase its supply benefit everyone in the meantime. Prices will naturally, and eventually, rise to the level where alternatives become preferred by the market.

We could stop using fossil fuels for power within a few years...but it would cost everyone a lot in the wallet. That's why policies favor continued use of oil...because right now the market demands it. Everyone wants to use less oil...but almost no one is willing to spend more to see that happen. So, as long as oil is the cheaper alternative, the market will continue to demand it.

Put another way...the government could incent alternative energy sources by slapping a stiff tax on the use of fossil fuels, and then using that money to fund development of alternative sources. This will simultaneously stimulate both demand for alternatives and the supply of them. But, it will drive the cost of gasoline to say, $5/gallon, and maybe double everyone's electric bill in the meantime. This would seem to answer all the concerns of those who criticize the current energy policies, yet somehow I doubt this plan would meet with much support. That's why we have the policies we currently have.
SWM28WDC
QUOTE
Put another way...the government could incent alternative energy sources by slapping a stiff tax on the use of fossil fuels, and then using that money to fund development of alternative sources. This will simultaneously stimulate both demand for alternatives and the supply of them.  But, it will drive the cost of gasoline to say, $5/gallon, and maybe double everyone's electric bill in the meantime.


I support this idea, but I think it should start small and have a clear schedule of future increases. I also think that the revenue shouldn't be used to subsidized anything but American citizens: some will conserve, some won't, some can't; but another $100 in the pocket every year will offset the increase due to the tax, for the average American. (Assuming the new tax generated $100 per capita). High priced fossil fuels will cause the market to find alternatives (and encourage conservation, by far the cheapest 'alternative'.)

QUOTE
Isn't that the very place incentives would have to be directed to most quickly affect the price of oil?
I think you answered your own question. The oil companies sell oil for what they can get it for, not what it cost them. Government money to them doesn't reduce their selling price. If incentives must be given, it should be to alternative uses: transit, rail, etc.
nivekelly
QUOTE
Isn't that the very place incentives would have to be directed to most quickly affect the price of oil? This strikes me as more of the usual 'big oil bad' rhetoric that usually permeates any discussion on energy. The simple fact is that we use so much oil because consumers demand it. I'm curious, for all those against big bad oil...do you drive? do you use electricity? do you ever use rubber or plastic? do you fly? do you ever wear anything with synthetic fabric in it? walk or drive on paved roads? If so, then you are the problem, not the government. Stop using oil or oil based products, and big bad oil will stop supplying it. Demand that your electricity company use alternative fuels, even though that will cost you more. Don't take any form of transportation that uses fossil fuels. Then you will have the right to criticize the government and the oil companies for supplying this resource. But not until then.


Did I say I was against large oil companies? No I don't think I did they have made me a ton of money this year. My point was that the energy bill did not promote alternative fuel as much as it gives tax breaks to companies that don't need the tax break.

There is nothing that will stop oil from going up and I will bet you $100 that oil sees $70 a barrel.

Hobbes
QUOTE(nivekelly @ Aug 9 2005, 04:28 PM)
Did I say I was against large oil companies?  No I don't think I did they have made me a ton of money this year.  My point was that the energy bill did not promote alternative fuel as much as it gives tax breaks to companies that don't need the tax break.

There is nothing that will stop oil from going up and I will bet you $100 that oil sees $70 a barrel.
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Nive, wasn't trying to single you out...just making a generic point. Also, I was trying to demonstrate that the energy bill does indeed promote alternative fuels...as you indicate yourself here. The higher oil prices go, the more incentive there will be in the market for alternatives. Anyone that wants us to develop alternative energies should want
oil to hit $70 a bbl, or $100, or even $200. Imagine the alternatives that will be available then. All these 'alternatives' are available now...they just are economically competetive. So, the higher oil goes, the more they will be adopted. By doing nothing, the energy bill is already promoting them. The other point that I was trying to make is that oil is pervasive in our economy...I don't know if you can buy a single product anywhere that doesn't have an oil component in its manufacture and/or distribution. Think about that...not...one...single....product. Therefore, it is in everyone's interest that oil is around as long as possible, and that the 'peak oil' scenario is put off as long as possible. How to do that? Give incentives to the oil producers and refiners, to ensure that additional oil is made economically viable, and that it is worthwhile to find new stores of oil. So, the energy bill is simulataneously helping the current situation by incenting oil companies to increase supply while also allowing alternative sources to become economically feasible by allowing the price to rise. Isn't this what everyone is after? Minimal pain while still making alternatives marketable?

QUOTE
I think you answered your own question. The oil companies sell oil for what they can get it for, not what it cost them. Government money to them doesn't reduce their selling price. If incentives must be given, it should be to alternative uses: transit, rail, etc.


I probably did, but not the answer you're thinking of. You're right in that the government incentives don't reduce the selling price...but that was not the goal intended. Consider the problem being discussed...lack of supply. The best way to increase supply is to increase the cost of oil, not reduce it. If the price stays high, and oil companies are incented to discover more oil, or make more existing oil economically viable, they will. It's a matter of economics. What does more good for more people...$1 given to oil companies to increase supply, or $1 given to alternative energy sources. Oil wins that hands down. First, it is already the most economic energy source, that's why it's so prevalent. So, you get more for your $1. Second, it's used in literally everything. Anyone thing we're anywhere close to converting solar energy into asphalt or synthetics or rubber or aviation fuel? $1 spen t there isn't going to get anybody anything. So, much as people decry the current situation, it's in everybody's interest (not just the oil companies) that peak oil is put off as long as possible. That's why the energy policies are what they are...because it really is the most economic solution.

There is another aspect of our oil independence that doesn't seem to get any attention. Everyone wants us to eliminate our dependence on foreign oil. But, what happens when the Middle East money spigot stops generating revenue in that area? They're already in economic distress. So, one of the outcomes of reduced oil dependence is likely to be increase distress in the Middle East, and associated increase in terrorism...particularly if the perception is that our reduction of need for Middle East oil is what led to their economic collaps (which the governments there would probably only be too happy to have take the blame, rather than their failure to capitalize properly on their oil revenues). Again...is this what everyone wants? I doubt it.
Bill55AZ
QUOTE(Sevac @ Apr 3 2005, 12:41 PM)

If someone is travelling to Europe the near future, don't be surprised about our gasoline prices. Average is 1.2 EURO/Liter, about 4,5 EURO/Gallon = 6 $/Gallon. At those prices there would be a huge demand for pubic transportation in the States.
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There are major differences between Europe and the USA. We have a LOT of empty land between our cities, especially in the western states. Our population density is a lot lower. I think more mass transit would work very well where it is already working, in the super high density areas of the east and northeast, and parts of California.
TedN5
I think there is a lot of wishful thinking being expressed on this thread. I've explored this subject enough to be seriously concerned that peak oil is occurring now or in the near future. If not, it is certain to happen within 10 to 20 years.

I tend to agree with turnea that the run up in oil prices so far has thus far been created by tight market conditions created by rising demand and under capitalization of some oil facilities. (However, I fail to understand why how lack of refining capacity in the U.S impacts the world spot market price of oil - gasoline prices, yes; oil prices,no).

If you believe Matthew Simmons, the run up in oil prices will be by a factor of 5 or 10 times current levels when it is obvious that we've peaked. I still recommend reading his book, Twilight in the Desert. You can start by reading this interview.
Matthew Simmons Interview

After reading Simmons you might want to think about Plan B. Here is a short article on what could be done with a little leadership and effort. Lovins Article

If you want to dig a little deeper into Lovins approach, see Winning the Oil End Game.
Hobbes
QUOTE(TedN5 @ Aug 10 2005, 11:43 PM)
I think there is a lot of wishful thinking being expressed on this thread.  I've explored this subject enough to be seriously concerned that peak oil is occurring now or in the near future.  If not, it is certain to happen within 10 to 20 years.

I tend to agree with turnea that the run up in oil prices so far has thus far been created by tight market conditions created by rising demand and under capitalization of some oil facilities.  (However, I fail to understand why how lack of refining capacity in the U.S impacts the world spot market price of oil - gasoline prices, yes; oil prices,no).

If you believe Matthew Simmons, the run up in oil prices will be by a factor of 5 or 10 times current levels when it is obvious that we've peaked.  I still recommend reading his book, Twilight in the Desert.  You can start  by reading this interview. 
Matthew Simmons Interview

After reading Simmons you might want to think about Plan B.  Here is a short article on what could be done with a little leadership and effort.  Lovins Article

If you want to dig a little deeper into Lovins approach, see Winning the Oil End Game.
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