Economic End Game?
June 9, 2011 7:58 PM Subscribe
Just how bad peak oil will be? Will there be an end American (and global) economic growth?
From my understanding the great economic activity over the past century has been made possible by plentiful and cheap sources of energy (oil) and low hanging fruits of technology.
Now we're running out of the cheap stuff and the orchard has been picked clean, are we due for a prolonged contraction? Are we approaching an economic end game?
Sorry if this question is quite broad, but I'm curious what people know/think about what will happen in the upcoming decade.
From my understanding the great economic activity over the past century has been made possible by plentiful and cheap sources of energy (oil) and low hanging fruits of technology.
Now we're running out of the cheap stuff and the orchard has been picked clean, are we due for a prolonged contraction? Are we approaching an economic end game?
Sorry if this question is quite broad, but I'm curious what people know/think about what will happen in the upcoming decade.
This is a very interesting (and broad) question.
On the question of stagnation, Tyler Cowen's book The Great Stagnation is a good start.
On the question of peak oil: there are a number of people convinced that solar power is rapidly becoming a viable alternative to fossil fuels, and that it will be the primary source of energy in 20 years. See. Others disagree.
posted by dfriedman at 8:09 PM on June 9, 2011 [1 favorite]
On the question of stagnation, Tyler Cowen's book The Great Stagnation is a good start.
On the question of peak oil: there are a number of people convinced that solar power is rapidly becoming a viable alternative to fossil fuels, and that it will be the primary source of energy in 20 years. See. Others disagree.
posted by dfriedman at 8:09 PM on June 9, 2011 [1 favorite]
What will happen in the forthcoming decade? Nothing. The much trumpeted concept of imminent economic collapse provoked by oil production peaking is based on misconceptions of both geology and economics. While the stated reserves of middle eastern countries are highly inflated (to a ludicrous degree in the case of Iran) because OPEC production quotas are calculated as fractions of stated reserves, the world's oil supplies remain huge. Arctic and Canadian reserves, for example, remain largely unexploited and while it's been economically or politically unattractive to develop them in the past, those reserves aren't going anywhere. The price of oil is based on a lot of things but supply and demand isn't really one of them - most of the cost of a British gallon of petrol goes straight to H.M. Treasury for example.
As current middle eastern oil supplies dwindle in the next half century then new deep water or shale reserves will be exploited and the technical difficulties encountered will be met, bringing the price down. If oil becomes scarce then the price mechanism will drive innovation to find new sources of power or new ways of doing things. For example, I don't doubt that over the next fifty years hydrogen fuel cells, or something entirely new, will power most domestic road traffic (just as planes will certainly continue to use hydrocarbons) but there will be no collapse. The quadrupling of prices by OPEC in 1973, for example, led to a short term economic hiccup, not existential decline in the west. Yes, oil fired power stations were wiped out but nations adjusted, the petrol ration cards were saved as souvenirs and somehow the world kept on turning. Fossil fuels will continue to be the backbone of energy production - and the world has hundreds of years of coal left - and the West could build any number of nuclear power stations if need be so the lights aren't going off at any point in the future.
Improvements in technology lead to economic growth, not decline or stagnation, and the gradual change to an economy which uses limited amounts of oil for plastics rather than huge amounts for power will stimulate development rather than stultify it. The world will look a very different place in a hundred years time and there will certainly be less oil being burned but we won't be living in a Mad Max like wasteland, no matter how many excitable blog posts you read. In 2140 fusion power will still be 40 years away from commercial application though, exactly the same as it was in 1950 and still is today.
posted by joannemullen at 9:17 PM on June 9, 2011 [6 favorites]
As current middle eastern oil supplies dwindle in the next half century then new deep water or shale reserves will be exploited and the technical difficulties encountered will be met, bringing the price down. If oil becomes scarce then the price mechanism will drive innovation to find new sources of power or new ways of doing things. For example, I don't doubt that over the next fifty years hydrogen fuel cells, or something entirely new, will power most domestic road traffic (just as planes will certainly continue to use hydrocarbons) but there will be no collapse. The quadrupling of prices by OPEC in 1973, for example, led to a short term economic hiccup, not existential decline in the west. Yes, oil fired power stations were wiped out but nations adjusted, the petrol ration cards were saved as souvenirs and somehow the world kept on turning. Fossil fuels will continue to be the backbone of energy production - and the world has hundreds of years of coal left - and the West could build any number of nuclear power stations if need be so the lights aren't going off at any point in the future.
Improvements in technology lead to economic growth, not decline or stagnation, and the gradual change to an economy which uses limited amounts of oil for plastics rather than huge amounts for power will stimulate development rather than stultify it. The world will look a very different place in a hundred years time and there will certainly be less oil being burned but we won't be living in a Mad Max like wasteland, no matter how many excitable blog posts you read. In 2140 fusion power will still be 40 years away from commercial application though, exactly the same as it was in 1950 and still is today.
posted by joannemullen at 9:17 PM on June 9, 2011 [6 favorites]
I can't give a direct answer to your question, but I do know that one of my economics professors was interested in peak oil a year or two ago. He is a bit of an odd guy to begin with, but I wouldn't discount possibility of some sort of painful economic change happening. But catastrophic? Unlikely.
posted by Homo economicus at 9:43 PM on June 9, 2011
posted by Homo economicus at 9:43 PM on June 9, 2011
Wash out, wash in. City-wide conference planners know those terms well as it happens over a relatively short amount of time, months, not decades or generations. First the wash out. What it means is that when a hot and big conference is coming into a major city such as Las Vegas or Orlando everybody wants to stay at the nice hotels close to the conference center and all the connected events. As people are "priced out" (think real estate) of the prime hotels they make their reservations at the further and cheaper hotels. As the conference start date draws closer, people who had prime reservations but won't be attending start to cancel their reservations. This causes a cascading effect of people in the outlying hotels to cancel their reservations and scoop up the better and closer rooms. That's the wash in. Just like the ocean tide.
Now translate that same human behavior to real estate and cheap oil transitioning to expensive oil. Families wash out to the suburbs where they can buy bigger houses for less. The downside is the longer commute to their jobs and the expense of maintaining these larger houses. Cheap oil and highway infrastructure makes this a tempting trade-off. Wash out. Now transition to ever increasing oil prices. Prices of everything that have to be delivered goes up. So does the cost of commuting and heating the McMansion in the outer reaches. A multi-generational trend of moving away from the city slowly and increasingly reverses. The next move-up trend is to smaller homes closer to or in the cities, displacing the poor to the suburbs. Wash in.
posted by Rafaelloello at 9:57 PM on June 9, 2011 [9 favorites]
Now translate that same human behavior to real estate and cheap oil transitioning to expensive oil. Families wash out to the suburbs where they can buy bigger houses for less. The downside is the longer commute to their jobs and the expense of maintaining these larger houses. Cheap oil and highway infrastructure makes this a tempting trade-off. Wash out. Now transition to ever increasing oil prices. Prices of everything that have to be delivered goes up. So does the cost of commuting and heating the McMansion in the outer reaches. A multi-generational trend of moving away from the city slowly and increasingly reverses. The next move-up trend is to smaller homes closer to or in the cities, displacing the poor to the suburbs. Wash in.
posted by Rafaelloello at 9:57 PM on June 9, 2011 [9 favorites]
joannemullen puts the conventional economic view, and luckily, if it is accurate, oil will never hit ridiculous highs like $100 a barrel, the market will take care of it.
Oops.
The mistake a lot of commentators make is to conflate the end of oil with the end of *cheap* oil.
Oil will never run out, there will always be some small extra amount to be found (for example, exhausted fields from last century typically still retain 40% of the original resource, it is just very costly to extract more oil).
The problem is the end of cheap oil, and I think it is now pretty generally agreed we have hit, or are close to hitting, that mark. Certainly the EIA and IEA, the more respected government agencies think so.
Expensive oil provides a constraint on economic growth, and the world's current economies depend on positive growth for business as usual, to assist the orderly operation of credit arrangements, for example (the assumption when you take a mortgage that you will in the future enjoy pay rises and house capital gains make paying interest on a loan viable).
If the constraint of more expensive energy crimps growth so you don't enjoy pay rises, or suffer pay cuts, it shifts a lot of the foundations of economies.
Similarly, in the developing economies like the BRIC countries, economic growth is very tightly tied to energy use. For $x of extra GDP, Yjoules of energy are used. The western economies tend to be more efficient users of energy, with Y joules producing $2x or $3x extra GDP.
In short, I think this means if you are a rural Chinese person hoping to ride the economy to some semblance of 1st world prosperity, I think you will need to find an alternative path, because the ship of cheap energy has sailed.
For those in the developed world, it is a different sort of problem. High energy costs will constrain growth, and it is likely I think, that a lot of people will be less prosperous than they expected to be.
This doesn't mean Mad Max territory, but I think it is likely that the days of retiring at 65 and living off investment income for another 20 years are numbered. I don't think the investment returns will be there to fund it.
Similarly, and scarily for a lot of people on this site, I think future incomes will grow much slower than historically. This is super bad if you are young and have lots of college debt.
Of course, the follow on from this slower growth rebounds through the economy, with lower tax collections and resultant cuts in the ability of the government to provide services. For countries with high public deficits, I think you will see cuts to programs like Social Security (relax, if you are lucky step one will be means testing, so cuts only affect those who can most afford it).
But it won't all be doom and gloom.
About half of the growth in the economy is in productivity gains. A lot of productivity growth comes from working smarter, and doing more with the same resources, and this growth is less effected by higher energy costs (of course, some productivity growth was replacing workers with oil powered machines, so it isn't all gravy).
And individuals will have vastly varying life experiences, as they always had. Just because on average income growth is low or negative doesn't stop you getting rich from a new invention or whatever.
To give you an idea of how you might feel in a decade, consider how you felt in 2001. If I had told you then what gas prices would be now, and what unemployment would hit, and what the deficit looked like, you might have thought it must be a terrible dystopian future.
But, of course, we have ipads, and awesome new music, and cool computer games, and beautiful sunsets, and tasty food and all the million things that make day to day life great.
Yeah, I think the future economy looks pretty shit on average, but I believe when I am living in it I'll find plenty of stuff to be happy about.
posted by bystander at 1:44 AM on June 10, 2011 [9 favorites]
Oops.
The mistake a lot of commentators make is to conflate the end of oil with the end of *cheap* oil.
Oil will never run out, there will always be some small extra amount to be found (for example, exhausted fields from last century typically still retain 40% of the original resource, it is just very costly to extract more oil).
The problem is the end of cheap oil, and I think it is now pretty generally agreed we have hit, or are close to hitting, that mark. Certainly the EIA and IEA, the more respected government agencies think so.
Expensive oil provides a constraint on economic growth, and the world's current economies depend on positive growth for business as usual, to assist the orderly operation of credit arrangements, for example (the assumption when you take a mortgage that you will in the future enjoy pay rises and house capital gains make paying interest on a loan viable).
If the constraint of more expensive energy crimps growth so you don't enjoy pay rises, or suffer pay cuts, it shifts a lot of the foundations of economies.
Similarly, in the developing economies like the BRIC countries, economic growth is very tightly tied to energy use. For $x of extra GDP, Yjoules of energy are used. The western economies tend to be more efficient users of energy, with Y joules producing $2x or $3x extra GDP.
In short, I think this means if you are a rural Chinese person hoping to ride the economy to some semblance of 1st world prosperity, I think you will need to find an alternative path, because the ship of cheap energy has sailed.
For those in the developed world, it is a different sort of problem. High energy costs will constrain growth, and it is likely I think, that a lot of people will be less prosperous than they expected to be.
This doesn't mean Mad Max territory, but I think it is likely that the days of retiring at 65 and living off investment income for another 20 years are numbered. I don't think the investment returns will be there to fund it.
Similarly, and scarily for a lot of people on this site, I think future incomes will grow much slower than historically. This is super bad if you are young and have lots of college debt.
Of course, the follow on from this slower growth rebounds through the economy, with lower tax collections and resultant cuts in the ability of the government to provide services. For countries with high public deficits, I think you will see cuts to programs like Social Security (relax, if you are lucky step one will be means testing, so cuts only affect those who can most afford it).
But it won't all be doom and gloom.
About half of the growth in the economy is in productivity gains. A lot of productivity growth comes from working smarter, and doing more with the same resources, and this growth is less effected by higher energy costs (of course, some productivity growth was replacing workers with oil powered machines, so it isn't all gravy).
And individuals will have vastly varying life experiences, as they always had. Just because on average income growth is low or negative doesn't stop you getting rich from a new invention or whatever.
To give you an idea of how you might feel in a decade, consider how you felt in 2001. If I had told you then what gas prices would be now, and what unemployment would hit, and what the deficit looked like, you might have thought it must be a terrible dystopian future.
But, of course, we have ipads, and awesome new music, and cool computer games, and beautiful sunsets, and tasty food and all the million things that make day to day life great.
Yeah, I think the future economy looks pretty shit on average, but I believe when I am living in it I'll find plenty of stuff to be happy about.
posted by bystander at 1:44 AM on June 10, 2011 [9 favorites]
I don't think an economic collapse is close. We haven't nearly finished fucking over the planet yet. Expect a lot more environmental destruction and chaos, but little in the way of economic change in your lifetime.
posted by londonmark at 2:18 AM on June 10, 2011
posted by londonmark at 2:18 AM on June 10, 2011
Peak oil isn't going to happen.
There's a basically infinite amount of oil stored up in shale sand. It's already being extracted on a massive scale If you don't mind paying $5 a gallon for gas, there will be oil for hundreds of years. Paying $5 a gallon for gas would be annoying, but very far from catastrophic -- essentially every country other than the US pays that much already.
If shale oil doesn't work out, there's always coal gasification. Again, it's a bit more expensive than we're used to, but there's basically an infinite amount of coal. Once the plants are built oil can stay at a steady price forever.
The good news is that we're not going to run out of oil any time soon. The bad news is that global warming will kill us all. :)
posted by miyabo at 5:41 AM on June 10, 2011
There's a basically infinite amount of oil stored up in shale sand. It's already being extracted on a massive scale If you don't mind paying $5 a gallon for gas, there will be oil for hundreds of years. Paying $5 a gallon for gas would be annoying, but very far from catastrophic -- essentially every country other than the US pays that much already.
If shale oil doesn't work out, there's always coal gasification. Again, it's a bit more expensive than we're used to, but there's basically an infinite amount of coal. Once the plants are built oil can stay at a steady price forever.
The good news is that we're not going to run out of oil any time soon. The bad news is that global warming will kill us all. :)
posted by miyabo at 5:41 AM on June 10, 2011
I think we are seeing it right now. Where oil was still at $80 a barrel, during an extremely strong recession. As soon as the recession broke, oil skyrocketed because usage returned to the new normal, which is $4 gas in the US.
(I'm not saying production has peaked in raw numbers, but that production per-capita has.)
Cheap oil is a thing of history, barring some technological miracle. There are too many consumers of it. Any relief in price (boost in supply) will be gobbled up by another 100 million people in developing countries deciding they can afford to buy a car.
What that means is that growth is going to be slow, until (as mentioned above) the economy washes out some of the high oil consumption. People buying newer more efficient cars, getting rid of their oil burning heaters, etc.
The good news is that there are a number of oil production technologies (and areas) that have remained unused because the cost of extraction was too high with crude prices at $80. With crude prices at $100, they become more economical. So while prices will never drop (barring some revolutionary change), they will probably remain at this plateau for a while.
posted by gjc at 5:42 AM on June 10, 2011
(I'm not saying production has peaked in raw numbers, but that production per-capita has.)
Cheap oil is a thing of history, barring some technological miracle. There are too many consumers of it. Any relief in price (boost in supply) will be gobbled up by another 100 million people in developing countries deciding they can afford to buy a car.
What that means is that growth is going to be slow, until (as mentioned above) the economy washes out some of the high oil consumption. People buying newer more efficient cars, getting rid of their oil burning heaters, etc.
The good news is that there are a number of oil production technologies (and areas) that have remained unused because the cost of extraction was too high with crude prices at $80. With crude prices at $100, they become more economical. So while prices will never drop (barring some revolutionary change), they will probably remain at this plateau for a while.
posted by gjc at 5:42 AM on June 10, 2011
Oil will never run out... it is just very costly to extract more oil
The key to understanding the recoverability of oil reserves is to look at the cost in energy instead of dollars. If theres a barrel of oil under the ocean and it will take the energy equivalent of 2 barrels of oil to extract it, then no matter how high the oil price gets it will never be worth extracting.
If we are lucky global energy resources will start to run low before we make ourselves extinct with global warming.
posted by Lanark at 6:17 AM on June 10, 2011 [5 favorites]
The key to understanding the recoverability of oil reserves is to look at the cost in energy instead of dollars. If theres a barrel of oil under the ocean and it will take the energy equivalent of 2 barrels of oil to extract it, then no matter how high the oil price gets it will never be worth extracting.
If we are lucky global energy resources will start to run low before we make ourselves extinct with global warming.
posted by Lanark at 6:17 AM on June 10, 2011 [5 favorites]
>> The key to understanding the recoverability of oil reserves is to look at the cost in energy instead of dollars. If theres a barrel of oil under the ocean and it will take the energy equivalent of 2 barrels of oil to extract it, then no matter how high the oil price gets it will never be worth extracting<>
that depends on whether you're extracting it for energy purposes.
posted by rr at 7:25 AM on June 10, 2011
that depends on whether you're extracting it for energy purposes.
posted by rr at 7:25 AM on June 10, 2011
>> The key to understanding the recoverability of oil reserves is to look at the cost in energy instead of dollars. If theres a barrel of oil under the ocean and it will take the energy equivalent of 2 barrels of oil to extract it, then no matter how high the oil price gets it will never be worth extracting<>
that depends on whether you're extracting it for energy purposes.
I'll paypal you $1 for every $2 you paypal me. Use it for whatever purposes you want.
posted by Rafaelloello at 8:42 AM on June 10, 2011 [1 favorite]
that depends on whether you're extracting it for energy purposes.
I'll paypal you $1 for every $2 you paypal me. Use it for whatever purposes you want.
posted by Rafaelloello at 8:42 AM on June 10, 2011 [1 favorite]
that depends on whether you're extracting it for energy purposes
But you still need energy to do it, no matter what you choose to use the oil for. And energy is hydrocarbons.
Price is irrelevant, like others have said "cheap" oil is about EROEI, not market price, which is subject to various other constraints. Net energy from hydrocarbon sources is declining due to physical reality; socio-political factors can only delay/accelerate the decline and make it more/less difficult to deal with, not prevent it. IOW, the global economy will start to contract, possibly within our lifetimes and almost certainly starting this century. How "bad" that will be depends mostly on societal and individual choices. Conservation and efficiency can do a lot to soften the impacts of the reduction in net energy.
posted by Bangaioh at 8:48 AM on June 10, 2011
But you still need energy to do it, no matter what you choose to use the oil for. And energy is hydrocarbons.
Price is irrelevant, like others have said "cheap" oil is about EROEI, not market price, which is subject to various other constraints. Net energy from hydrocarbon sources is declining due to physical reality; socio-political factors can only delay/accelerate the decline and make it more/less difficult to deal with, not prevent it. IOW, the global economy will start to contract, possibly within our lifetimes and almost certainly starting this century. How "bad" that will be depends mostly on societal and individual choices. Conservation and efficiency can do a lot to soften the impacts of the reduction in net energy.
posted by Bangaioh at 8:48 AM on June 10, 2011
>I'll paypal you $1 for every $2 you paypal me. Use it for whatever purposes you want<>
Oil is not the only source of energy.
posted by rr at 10:24 AM on June 10, 2011
Oil is not the only source of energy.
posted by rr at 10:24 AM on June 10, 2011
I'll paypal you $1 for every $2 you paypal me. Use it for whatever purposes you want.
I think what rr is getting at is if oil turns out to cure cancer (or to be the only suitable material to make a competition frisbee) and you use the energy equivalent in solar of two frisbee's worth of oil to extract enough to construct one frisbee it might still make economic sense assuming competitive frisbee pays well enough.
Frisbees are probably not so relevant to the OP's question however.
Another way it might make sense to spend two barrel's equivalent in solar to extract one barrel of oil would be if we still don't have a good means of storing solar energy for when the sun goes down. your oil rig could supply solar electricity directly to the grid and use any excess to extract oil to be burnt at night. It would probably be cheaper and easier to just make hydrogen, though.
posted by rocketpup at 10:43 AM on June 10, 2011
I think what rr is getting at is if oil turns out to cure cancer (or to be the only suitable material to make a competition frisbee) and you use the energy equivalent in solar of two frisbee's worth of oil to extract enough to construct one frisbee it might still make economic sense assuming competitive frisbee pays well enough.
Frisbees are probably not so relevant to the OP's question however.
Another way it might make sense to spend two barrel's equivalent in solar to extract one barrel of oil would be if we still don't have a good means of storing solar energy for when the sun goes down. your oil rig could supply solar electricity directly to the grid and use any excess to extract oil to be burnt at night. It would probably be cheaper and easier to just make hydrogen, though.
posted by rocketpup at 10:43 AM on June 10, 2011
This is futurism and isn't really answerable. Still, speculation is fun.
The most immediate dire effect I see is food production in the advanced countries will plumet and/or escalate in cost. Oil is massively involved in modern agriculture. Global famine would hit pretty quickly since we can't exactly store food for 7 billion people. There are lots of other possible scenarios but I think rising food costs and eventual global famine would probably strike long before most other problems.
posted by chairface at 1:17 PM on June 10, 2011
The most immediate dire effect I see is food production in the advanced countries will plumet and/or escalate in cost. Oil is massively involved in modern agriculture. Global famine would hit pretty quickly since we can't exactly store food for 7 billion people. There are lots of other possible scenarios but I think rising food costs and eventual global famine would probably strike long before most other problems.
posted by chairface at 1:17 PM on June 10, 2011
I'm curious what people know/think about what will happen in the upcoming decade.
Other than gas prices continuing to rise? Not much. Oil isn't going to disappear overnight.
Nuclear power is continuing to grow (Russians continue to churn out plants despite Chernobyl, and concentration in Japan is on making the plants safer, not getting rid of them) and as oil becomes too expensive as a power source you'll see a lot more plants going up.
Solar power has slowly become more interesting over the last 20 years. One of the things holding it back has been that the consumer market is so small -- look for that to change.
In the long term our power needs may outstrip our ability to economically produce it, but don't hold your breath. Certainly it's not going to happen in the next 10 years.
posted by Tell Me No Lies at 4:35 PM on June 10, 2011
Other than gas prices continuing to rise? Not much. Oil isn't going to disappear overnight.
Nuclear power is continuing to grow (Russians continue to churn out plants despite Chernobyl, and concentration in Japan is on making the plants safer, not getting rid of them) and as oil becomes too expensive as a power source you'll see a lot more plants going up.
Solar power has slowly become more interesting over the last 20 years. One of the things holding it back has been that the consumer market is so small -- look for that to change.
In the long term our power needs may outstrip our ability to economically produce it, but don't hold your breath. Certainly it's not going to happen in the next 10 years.
posted by Tell Me No Lies at 4:35 PM on June 10, 2011
By the way, I think you need to check your sources if you think that oil is a major player in cheap energy. Petroleum fired plants produce less than 1% of the power used in the U.S.
Look out for peak Coal though.
http://www.eia.gov/cneaf/electricity/epm/epm_sum.html
posted by Tell Me No Lies at 4:40 PM on June 10, 2011
Look out for peak Coal though.
http://www.eia.gov/cneaf/electricity/epm/epm_sum.html
posted by Tell Me No Lies at 4:40 PM on June 10, 2011
Electricity is only about 1/6 of total global energy consumption. Petroleum is king.
For the USA specifically, electricity generation is about 40% of total energy consumption; petroleum is the biggest energy source, representing more than a third of primary energy consumption.
posted by Bangaioh at 5:53 PM on June 10, 2011
For the USA specifically, electricity generation is about 40% of total energy consumption; petroleum is the biggest energy source, representing more than a third of primary energy consumption.
posted by Bangaioh at 5:53 PM on June 10, 2011
Interesting. I stand corrected.
posted by Tell Me No Lies at 10:56 PM on June 10, 2011
posted by Tell Me No Lies at 10:56 PM on June 10, 2011
There is lots of half thought out ignorance in this thread.
Currently, oil delivers a huge amount of the energy the world uses, then coal does about the same as gas, hydro and then everything else makes up a few percents (nukes, solar, wind are all currently shit in the global mix of energy in use).
Critically, for the way we have set up the world's global economy, oil does nearly all the transport energy.
Yes, you can use coal for electricity, and everyone does, and yes, you can use electricity for cars if you have lots of capital (but who does these days).
Yes, in theory we could make gasoline out of coal - it worked great for the Nazis (not, it is massively costly and polluting).
yes, we can build out nuclear to take up the slack, except nukes currently supply under 6% of global energy flows, and they would need to hit 30% to replace oil at today's rate - where are you going to build 5 times as many reactors, where will the fuel come from, and who is going to look after the waste?
I actually think solar could have a crack at oil (and fossils) replacement - there are millions of roof tops to cover with panels, but it is costly.
If you had to pay for solar panels to produce your power in the near future, you would definitely find it a big crimp in your cash flow. The current reality is solar is much more costly than coal and oil - if you think there are cost effective alternatives to oil, by all means go wild and install solar panels.
The reason why you don't see solar panels on every roof is not because they aren't a good financial deal - over the 20+ year life of the panels they will pay you back. The drama is they cost a lot up front. The same with all these other alternatives to oil. Yeah, we could gasify coal, at a reasonable cost ongoing if somebody paid the billions to set up the plant.
Thermal solar can produce electricity at a reasonable rate if somebody pays the money to set it up. Nukes can produce power at a reasonable cost if somebody else pays to build them, insure them and clean them up.
The trouble is, oil will be costly after peak, so we don't have any cheap energy on hand to build these alternatives (and they all have pollution or other issues).
All the "don't worry" comments above suggest there is no down side if energy costs in the economy increase substantially. Yes, if cost is no object there are all sorts of energy sources (space solar!).
Unfortunately, higher energy costs as a result of declining oil supply will hurt the economy pretty bad.
Good luck.
posted by bystander at 5:44 AM on June 11, 2011 [1 favorite]
Currently, oil delivers a huge amount of the energy the world uses, then coal does about the same as gas, hydro and then everything else makes up a few percents (nukes, solar, wind are all currently shit in the global mix of energy in use).
Critically, for the way we have set up the world's global economy, oil does nearly all the transport energy.
Yes, you can use coal for electricity, and everyone does, and yes, you can use electricity for cars if you have lots of capital (but who does these days).
Yes, in theory we could make gasoline out of coal - it worked great for the Nazis (not, it is massively costly and polluting).
yes, we can build out nuclear to take up the slack, except nukes currently supply under 6% of global energy flows, and they would need to hit 30% to replace oil at today's rate - where are you going to build 5 times as many reactors, where will the fuel come from, and who is going to look after the waste?
I actually think solar could have a crack at oil (and fossils) replacement - there are millions of roof tops to cover with panels, but it is costly.
If you had to pay for solar panels to produce your power in the near future, you would definitely find it a big crimp in your cash flow. The current reality is solar is much more costly than coal and oil - if you think there are cost effective alternatives to oil, by all means go wild and install solar panels.
The reason why you don't see solar panels on every roof is not because they aren't a good financial deal - over the 20+ year life of the panels they will pay you back. The drama is they cost a lot up front. The same with all these other alternatives to oil. Yeah, we could gasify coal, at a reasonable cost ongoing if somebody paid the billions to set up the plant.
Thermal solar can produce electricity at a reasonable rate if somebody pays the money to set it up. Nukes can produce power at a reasonable cost if somebody else pays to build them, insure them and clean them up.
The trouble is, oil will be costly after peak, so we don't have any cheap energy on hand to build these alternatives (and they all have pollution or other issues).
All the "don't worry" comments above suggest there is no down side if energy costs in the economy increase substantially. Yes, if cost is no object there are all sorts of energy sources (space solar!).
Unfortunately, higher energy costs as a result of declining oil supply will hurt the economy pretty bad.
Good luck.
posted by bystander at 5:44 AM on June 11, 2011 [1 favorite]
One thing commonly overlooked in energy discussions is energy quality:
Actually, not even all oil is created equal, as light crude from Saudi Arabia has much higher EROEI than synthetic crude from Canadian oilsands. So what really matters is peak net energy, if world oil "production" is 100M barrels of crude but 20M of that are used in the energy production process itself, you are worse off than a total production of 80M of which only 4M are needed to obtain that figure.
posted by Bangaioh at 7:40 AM on June 11, 2011
Energy quality refers to differences in the ability of a unit of energy to produce goods and services for people. The usefulness of an energy system is determined by a complex combination of physical, technical, economic, and social attributes. These include gravimetric and volumetric energy density, power density, emissions, cost and efficiency of conversion, financial risk, amenability to storage, risk to human health, and ease of transport. No single metric of an energy system captures all such attributes.Which is why one can't take energy figures at face value, and make up for the decline in oil with a similar increase in coal.
The most common way to measure energy is by heat content because all forms of energy can be completely converted to heat (Btus, joules, calories, kilowatt-hours).
Despite its widespread use, aggregating different energy types by their heat units embodies a serious flaw: it implicitly assumes that "all joules are equal," i.e., that people value a heat unit of electricity the same as a heat unit of coal. Of course, this is not the case. Electricity performs important tasks that coal cannot, or it performs them more effectively. People are willing to pay 15 times more for a heat unit of electricity (in the U.S.) because of these differences. If all joules were equal, we wouldn't generate electricity from gas or coal in the first place given that two-thirds of the joules in the fuel input are lost as waste heat.
Actually, not even all oil is created equal, as light crude from Saudi Arabia has much higher EROEI than synthetic crude from Canadian oilsands. So what really matters is peak net energy, if world oil "production" is 100M barrels of crude but 20M of that are used in the energy production process itself, you are worse off than a total production of 80M of which only 4M are needed to obtain that figure.
posted by Bangaioh at 7:40 AM on June 11, 2011
Heh, I'd do well to re-check my numbers before posting: replace 20M by 35M and that makes a bit more sense.
posted by Bangaioh at 7:43 AM on June 11, 2011
posted by Bangaioh at 7:43 AM on June 11, 2011
This thread is closed to new comments.
posted by pakoothefakoo at 8:00 PM on June 9, 2011