Robert Rapier, a petroleum engineer and blogger, recently posted an ‘Open Letter to Our Next President.’ He has recently been doing a good job of showing why ideas like a summer gas tax holiday or suing OPEC for the right to buy oil at the price we want are wrong-headed popularity stunts. He has also been doing a good job of highlighting the degree to which current petroleum prices are largely the product of long-term trends. If more and more people want ever-more oil, at the same time as existing fields are producing flat or declining yields and new discoveries are not keeping pace, prices are certain to keep rising.
The question is whether one of those four pillars will be eroded. It is possible we will finally get a handle on per-capita oil demand, and start along the long road to renewable energy use. It is also possible that economic conditions will reduce the growth in world demand for oil as people in India and China are forced to grow richer more slowly than at present. It is possible that new technology will significantly increase yields from existing oil fields for some period of time. Finally, it is possible that big new finds will keep the (planet destroying) party going a bit longer for everybody.
It is time to start thinking much more seriously about the possibility than none of those ‘outs’ will materialize.
U.S. Retail Gasoline Prices, 1990-2007
Average gasoline prices around the world
What’s not to like about energy independence?
In a word, everything. Despite its immense appeal, energy independence is a nonstarter—a populist charade masquerading as energy strategy that’s no more likely to succeed (and could be even more damaging) than it was when Nixon declared war on foreign oil in the 1970s. Not only have we no realistic substitute for the oceans of oil we import, but many of the crash programs being touted as a way to quickly develop oil replacements—”clean coal,” for example, or biofuels—come at a substantial environmental and political cost. And even if we had good alternatives ready to deploy—a fleet of superefficient cars, say, or refineries churning out gobs of cheap hydrogen for fuel cells—we’d need decades, and great volumes of energy, including oil, to replace all the cars, pipelines, refineries, and other bits of the old oil infrastructure—and thus decades in which we’d depend on oil from our friends in Riyadh, Moscow, and Caracas. Paradoxically, to build the energy economy that we want, we’re going to lean heavily on the energy economy that we have.
BARBARA KINGSOLVER
Forget the personality claptrap: our next president will need to know how to restructure the carbon-based economy, pronto. I assume all the candidates have read “An Inconvenient Truth,” by Al Gore, so they understand that anything they promise will have to be delivered without cheap fossil fuels. For further reading, Bill McKibben’s “Deep Economy” and Frances Moore Lappé’s “Getting a Grip” offer new definitions of progress and economy with an eye toward the human aptitudes for resourcefulness and community.
Our candidates are understandably preoccupied with the only species that votes, but I suggest some perspective on the consequences of ignoring all the others. I prescribe E. O. Wilson’s “Future of Life” and, for follow-up care, Annie Dillard’s “Pilgrim at Tinker Creek.”
They could finish with any novel by Wendell Berry. (My favorite is “Jayber Crow.”) While the farmlands and rural towns of our nation are mostly overlooked, it’s worth remembering that many people still live in them, retaining skills of self-sufficiency and neighborly cooperation that wait to be valued in the world to come.
Energy Demand Destruction & Brittle Systems
Posted by jeffvail on August 20, 2008 – 10:08am
I’ve seen a number of comments, both at TheOilDrum and elsewhere, suggesting that the US is now less susceptible to supply disruptions because we have reduced our demand for oil by several hundred thousand barrels per day over the past year. In general, I get the sense that people think we can insulate ourselves from supply disruptions, from our dependence on potentially unreliable foreign sources of oil, by improving our efficiency and eliminating “unnecessary” oil consumption. In my opinion, this is backward. In this post, I will argue that, because the demand that is destroyed first in a free market is the demand that is easiest to eliminate, the resulting consumptive system is more inelastic, more brittle, and more susceptible to systemic shock from supply disruption. I will approach this argument by outlining what makes a system either resilient or brittle and why market-driven demand destruction creates a more brittle system. I will conclude with a few thoughts on how we can increase the resiliency of our energy-driven economy in a future environment of declining energy supplies.
The high oil price was already doing its job of rationing demand. And Saudi Arabia, the only country with meaningful spare production capacity, had broken with the OPEC hawks, led by Iran, and pledged to supply additional crude to make up for the Libyan shortfall. The Saudis were told about the IEA move and may not have objections: they too feel that the oil price is too high to sustain buoyant demand. And if prices fall too far for comfort the taps will be turned off on the fresh supplies they have offered.
But the IEA’s move still sets a terrible precedent. It adds to the uncertainty and volatility in oil markets, according to Bill Farren-Price of PPI, a consultancy. Rich countries are now clearly prepared to use oil stocks because they do not like the price. The IEA has dramatically lowered the bar for when it might next intervene and has depleted its emergency stash in the event of more upheavals.