Life After the Oil Crash 4
Continuing my review of lifeaftertheoilcrash.net from December 11.
Unlike the old eco schools which pushed conservation, efficiency, and/or alternative energy, Mr. Savinar manages to cast a pall of doom over every possible alternative.
Consider Canadian tar sands: he points out that the energy return on investment is a mere 1.5 to 1. That is, for every 1.5 unit of energy extracted, 1 unit is consumed. This is certainly bad for the environment, and not as good for the economy as conventional oil, but it does not spell the end of industrial civilization. (And I will discuss ways around this problem in a future entry.) He then cites forecasts of a mere 2.2 million barrels/day for 2015 or 4 million barrels/day by 2020. However, I see no indication in these forecasts that the forecasters are taking into account the dramatic drop in conventional oil that Mr. Savinar forecasts. If conventional oil drops suddenly and prices rise dramatically, there will be a black gold rush into Canada to increase oil production from tar sands.
The same holds for oil shale in the U.S. We have lots of it, but it is expensive and environmentally damaging to extract. But if the drop in conventional oil threatens civilization, the economics of oil shale will change dramatically. Just because previous attempts to make money extracting oil from shale have failed, it doesn’t mean future attempts will fail. A more relevant question is: what is the net energy gained from oil shale harvesting? If negative, then the oil shale is indeed worthless. Somehow I doubt the pessimists. Given enough incentive, someone will figure out how to get net energy from oil shale unless another energy source surfaces first.
Mr. Savinar makes several tremendous errors, all of which stem from not understanding the role of price in the economy.
First, he looks at the huge increases needed for various alternative technologies to make a dent in overall energy production. For example, he cites David Goodstein who estimates that it would take 220,000 square kilometers of solar panels to replace our current fossil fuel use. Currently, we have a mere 10 square kilometers. This is certainly a huge factor, 22,000, but so what? Today, solar cells are several times more expensive than hooking into the conventional grid. Today’s solar cells are just for hobbyists and remote locations. Should the cost of electricity from fossil fuels double or more, then the economics completely changes. We will not be looking at 10%/year growth; we will be looking at over 100%/year.
This has happened in the past. Look at car production before the Model T came out. The idea of commoners owning automobiles was science fiction. Ditto for the idea of home computers in the 1960s. And unlike the 1960s for computers, we already know how to make solar cells that aren’t that far off from being competitive. Without any true breakthroughs in technology, solar cells become competitive should fossil fuels go up enough in price. And there are some interesting new technologies still in prototype stage.
Later, he “debunks” some of the more advanced technologies, sometimes correctly. Mixed in this debunking is some of the silliest logic yet. When he looks at “thermal depolymerization,” a technology for converting organic garbage into oil, he correctly notes that we cannot run civilization off of garbage. It takes energy to create garbage in the first place. Then he gets silly. He says it costs $80 to produce a barrel of oil using this technology. Meanwhile the Saudis pump oil for $2.50/barrel and the Iraqis for $1.00/barrel. A barrel of oil would have to sell for $1,600-$4000 to have a comparable rate of return for thermal depolymerization.
SO WHAT!! So garbage men won’t be driving around in Rolls Royces like rich Arabs do today. Most businesses function quite well on much lower rates of return. Should oil stabilize at $100/barrel, then this technology becomes quite profitable. Actually, less may do the trick since disposing of garbage is also an economic benefit.
This logic applies to all alternative technologies. Once they are as cheap as fossil oil, then investment will increase suddenly. What is a hobby today becomes tomorrow’s necessity.
Finally, Mr. Savinar uses some strange reasoning to claim that conservation and efficiency will make our problem worse. He cites Jevon’s Paradox which states that energy efficiency increases energy use. This paradox is true – when energy prices are held relatively constant. When computerized fuel injection made gasoline engines more efficient, many people bought more powerful cars. Others went from cars to SUVs. When computers went from room sized energy hogs to small home appliances, total energy used for powering computers went up, because more people compute. (This example comes from the other side of the Peak Oil debate, actually, from Huber and Mills’ The Bottomless Well.)
All this is true, if energy prices are stable. If oil production drops off steeply enough, then prices will go up unless alternatives fill in the demand. In this case, price will balance efficiency making oil consumption go down, regardless of efficiency. Increased efficiency serves to allow maintaining a quality lifestyle while oil consumption goes down.
Mr. Savinar gives a particularly contradictory example of Jevon’s Paradox. He describes a business owner who saves $500/month through energy conservation and efficiency. This money goes into the bank, where it gets reinvested, thereby boosting the economy, and thus energy use. There is a false assumption here: that dollars/BTU of energy must be constant. That savings could end up being invested in alternative energy or energy conservation. Earlier on the site Mr. Savinar complains about the capital cost of switching energy technologies.
Let us even suppose that energy extraction is a fixed fraction of the economy. Even if the economy grows, energy extraction could be stable or even go down. It depends on the price of the energy. If energy doubles in price and efficiency doubles then the economy could be exactly where it was in both real and dollar terms.
OK, I am tired of beating up on this site. There are other fallacious arguments, but this is too much like shooting fish in a barrel. What I have not fully covered is where Mr. Savinar is right. There is good information mixed in with the junk. I agree with him that biodiesel from vegetable oils and ethanol from corn are questionable replacements for gasoline. I think using hydrogen as a motor fuel is ludicrous given the current state of technology. Even if a cheap fuel cell is developed, we still have serious problems in distribution and replacement of infrastructure.
Many of the proposed replacements for fossil fuels floating around are questionable. Given this, it is forgivable for those who have limited faith in the market to panic. And I want to repeat that not all peak oil manifestos are as bad as this site. Richard Heinberg’s book, The Party's Over is much better, but even he is blinded by his ideology and makes some ridiculous predictions near the end.
In future posts I will show why there is no need to panic. There are reasonable technologies already available, and simple government actions that could be used to smooth the transition.
Comments
This issue of thermal depolymerization is a very interesting one. It is either a great hoax or a great revolution akin to the other great revolutions - Industrial, information/IT/Communication, Globalization - Now it would be THE ENERGY revolution.
I was curious and tried to make some sense of the techniques said to be involved - my research lead me to supercritical water oxidation/gasification (SCWO/G). This depolymerization process seem to be a revamp of that process. Look and tell me what you all think
Posted by: D.clare![[TypeKey Profile Page]](http://www.freeliberal.com/blog/nav-commenters.gif)
|
August 4, 2006 02:02 PM