"Death Knell" For Peak Oil? Not So Fast!

It is easy to understand why some folks, including the nattering nabobs of the mainstream media, might somehow mistake the current glut of oil for evidence that Peak Oil is fiction or never existed at all. This would be a tragic error but as we see in today's Denver Post editorial ('The Death Knell for Peak Oil', p. 19A) it is definitely being made.

The Post's editor gushes that the "world is now awash in oil"- with Iran set to add its millions of barrels next, and in effect:

"It's as if the whole world were conspiring to bury the tattered remains of the 'peak oil' thesis so popular a few years ago."

Nowhere in his misplaced screed, not in one single paragraph, does this genius tie the consistently low economic growth rates in the advanced nations to the reduction of oil's efficiency. This is a result of having used up all the best quality oil and now going for the 'leftovers'.  As I pointed out to wifey this a.m.: "The moron doesn't even realize the shale oil we're pulling out of the ground is the next thing to garbage, which in fact proves the peak oil primary contention."

Yet the Post editor, blinded by BS, actually praises the fracked crap - devastating Colorado's landscape, air and water, btw -  as he merrily goes on:

"Little did the peak oil theorists - who insisted the planet was running out of oil- realize the shale oil revolution in the U.S. - already under way-was about to push domestic production to unforeseen heights"

First, peak oil "theorists" - like Richard Heinberg ('The Party's Over') never said the world was "running out of oil".  What they said is that the planet is running out of the highly efficient, high grade cheap oil (light sweet crude in particular) that is capable of driving the intense energy demands of industrial societies - from glass factories to military hardware and jet planes. Obviously, this point is too subtle for the editor at the Post to seemingly grasp. But let's try again to break it down for him - and others.

The planet was originally endowed with ~ 3,000 billion barrels of oil  – of which we’ve consumed one third and another one sixth of relatively cheap oil remains. Afterwards (say by 2030) there will reside another third of “break-even” oil (costs as much to access as it delivers), after which one -sixth of very expensive oil remains (costs much more to reach it than it delivers in energy).  At the heart of these considerations is the net energy eqn. (cf. Weisz, in Physics Today, July, 2004, p. 51)

Q (net) = Q (PR) – [Q (op)  + E/T]

In effect, for break-even oil one would find Q(net) = 0

For the last 700 billion barrels:    Q(net) = negative quantity =  - Q

Since the rate of energy production (Q (PR) must be debited by the energy consumed for its operation Q(op), and the energy E invested during its “lifetime” T. Thus its Q(PR) will be small in relation to the bracketed quantity.  In a similar vein, Richard Heinberg uses the quantity EROEI or ‘Energy returned on energy invested’ which for oil reached a high of 30 (ratio) in the 70s and is still the highest of all energy sources at around 22.   Thus, the problem in a nutshell is not “running out of oil’ per se but running out of CHEAP oil.

Right now, to fix ideas, we are very nearly at this Q(net) = 0 level with shale oil - which is why once its price falls to much lower than $50 /bl. it makes little economic sense to take it out of the ground. Compared to light sweet crude it is effectively garbage fuel. Bottom line, we need not run out of the stuff before the world economy runs into problems of untold, unspeakable proportions! We already have ample economic indicators showing the signs.

Alas, fracking shale oil - drilling into shale rock to get kerogen, or alternatively, natural gas, is in fact evidence of grabbing BREAK EVEN oil NOT high EROEI oil!  It is a sign of defeat and desperation.  not success - just like deep sea drilling for oil.

As Richard Heinberg explains (p. 110) it in his book, 'Snake Oil: How Fracking's False Promise Imperils Our Future':

"No evidence suggests that the technology of fracking has actually raised the EROEI for natural gas production. It temporarily lowered prices but only by glutting the market."

Get that? Adding it to the total world pool of higher quality oil merely "glutted the market". This is also what's dragging your 401k down right now, though yeah, you will catch kind of a break at the pump. Let's also grasp that this crap oil isn't even used here in the U.S. it's shipped off to places like China - where it fouls their skies and creates health havoc along with the CO2 and SO2 from factories and autos.

Also (ibid.) :

"A  study of the EROEI for electrical heating of methane hydrate deposits between 1000 and 1500 meters deep yielded ratios from 2:1 up to 5:1, depending on the source of the electricity"

Regarding the promises for kerogen or oil shale, he writes: 

"Kerogen is not oil. It is better thought of as an oil precursor that was insufficiently cooked by geologic processes. If we want to turn it into oil, we have to finish the process nature started: that involves heating the kerogen to a high temperature for a long time. And that in turn takes energy- lots of it, whether supplied by hydroelectricity, nuclear power plants, natural gas, or the kerogen itself. 

Therefore the EROEI in processing oil shale is bound to be pitifully low. According to the best study to date, by Cutler Cleveland and Peter O'Connor, the EROEI for oil shale production would be about 2:1. That tells us that oil from kerogen will be far more expensive than regular crude oil."

In other words, conflating oil shale (kerogen) with actual light crude oil of high EROEI is like mixing up cow turds with cow's (calves') liver.  One can be eaten, the other can't - and for the oil - one requires additional energy inputs to put to use, the other only refining.

These are crucial points to process, but the Post editor never does as he goes on to cavil about "peak oil handwringing".   The guy would be better served having studied the issue in more depth before putting out an editorial. In particular, that Heinberg's numbers and projections are reinforced by sound sources such as the London-based brokerage firm Tullet Prebon, whose Strategic Insight report declares:

"Our calculated EROEIs both for 1990 (40:1) and for 2010 (17:1) are reasonably close to the numbers cited for those years by Andrew Lees. For 2020, our projected EROEI of 11.5 to 1 is not as catastrophic as 5: 1 but would nevertheless mean that the share of GDP absorbed by energy costs would have escalated to 9.6% from about 6.7% today. Our projections further suggest energy costs would absorb as much as 15% of GDP (at an EROEI of 7.7 to 1)  by 2030."

The Report goes on to note that the "diminishing dismal energy returns" (and again one needs to separate Q(PR)   from Q(net))  means that "the economy we have known for two centuries will cease to become viable at some point."

We are already seeing the initial signs in the entrenched low growth (barely 2 percent)  confounding the nation's politicos and economists who - up to now - haven't tied this to the degraded oil slopping around the world..  

Stop and think - and read - before you buy into the bullshit that cheap oil prices (or an "oil glut") mean Peak Oil is or was a myth. And should you disbelieve it, then take note of this forecast from yours truly: as high quality, efficient oil becomes ever scarcer, look for returns on investments to sink ever lower and the world economy to 'bottom out' with growth barely 1 percent per year. Look also for common goods including food to become ever more expensive since oil is the fuel needed to produce it, as well as transport it. Not to mention the water resources consumed as well.

Oh, and look for your energy bill - relatively low now - to go through the freaking ceiling when shale is exposed for the snake oil it is..

Bret Stephens - As Ill-Informed On Population As He Is On Climate Change

Bret Stephens - Permanent moron on climate change and population.

Blog readers may recall just over nine months ago I skewered the WSJ toadie columnist Bret Stephens on is imbecilic takes to do with climate change while appearing on Bill Maher's Real Time, e.g.

http://brane-space.blogspot.com/2015/01/bret-stephens-conservo-climate-skeptic.html

"In the end, the fact that Stephens confuses scientists with economists in the "Copenhagen Consensus"  discloses he's not even remotely qualified to be involved in any climate change-global warming discussion. Hell, he wasn't even aware that global dimming (google!) was responsible for the aberration of cooling in the 70s and the fact that "theory" has long since bit the dust."

Now, as if to go one better - to prove he's an even bigger moron than demonstrated on 'Real Time', he unloads on the Chinese and "Malthusians" (who have predicted scarcity with increasing population) in his latest column, 'The Tyranny of a Big Idea' (Nov. 3).

He begins by castigating China for its "one child" policy which it recently revised, referring to it as "a 35 year experiment in folly and human cruelty, instituted in the name of resource conservation"  TO cap it off he ends his screed by writing this refuse:

"China's one child policy has been one of the great unrecognized tragedies of our time. It is a modern day lesson in the danger of environmental fears and the misanthropic solutions they typically inspire".

Which, to be sure, even exceeds in bollocks the assorted nonsense spouted on Maher's segment about climate change. In fact, it makes one wonder if Stephens is qualified to comment on anything environmental or to do with climate change and its prime driver, overpopulation. Indeed, it's clear this asshole doesn't even believe in overpopulation when he also writes such claptrap as:

"The idea of a population bomb was always preposterous. The world's 7.3 billion people could fit into an area the size of Texas with each person getting 1,000 square feet of personal space."

Yes, Stephens actually wrote that - perhaps in a state of drug-induced delirium given that the resource footprint of each person - to get the food, water, etc. needed would be a least 2 hectares. (The U.S. mean is 9.5 hectares per person). Next time you Google, compare the area of a hectare to Stephens' "1,000 square feet" then tell me the man isn't a moron. And now, to continue that line of thought - imagine all those people - hell, even half of them - taking a dump all at once. Where the fuck is that effluent going to go? You'd need a sewage treatment system even larger in area than that on which this bozo would place all those people! And we won't even go into the colossal traffic jams  - even if barely one tenth used cars and the rest bikes. 

And what about potable water?  Where is that going to come from to slake the thirst of all those billions in one limited area?  Would he have it pumped in from the Great Lakes? What about the energy sources? You'd need something like 6 to 7 power grids on the scale of the U.S. or European grids. Where would the grids go with people stacked cheek to jowl?  Where would the transformers, etc. go?

The point is this numbskull has no clue that supporting a massive population isn't simply based on finding the space in which to squeeze them. You also need to consider the support systems, for growing enough food to feed them all each day, as well as the water (clean water) to meet basic needs - not to mention an energy and transport infrastructure. And we aren't even going to get into the number of hospitals (or even urgent care centers) that'd be required to serve all their medical needs.

It is such limits that factor into the carrying capacity, or rather the bio-support capacity of the planet. Even now, 1 billion people live in water-stressed conditions, meaning that renewable water supplies drop below 1,700 cubic meters per capita. One notable ‘State of the World’ report (2000, pp. 46-47), warned that the ever increasing water deficits will likely spark “water wars” by 2025

Now, let's consider the implementation of China's one child policy in view of what I just noted - on the dependency of a population on accessible resources.  Nowhere in his little rant is Stephens honest enough to cite what China's fertility rate was in 1950. As per an earlier article in the WSJ (Nov. 2) it was 6.11 per woman.  (Compared to 1.55 now).

Does this bozo have any remote idea what such a birth rate would have translated into had China not acted? It would have meant a population exceeding 2.2 billion by 1990 and the Chinese never would have been able to support it, nor would the country have reached the near superpower status it has  - even being a creditor to U.S. bond debt. (Owning nearly $1.3 trillion of our bond debt). Further, China's trade capacity would never have evolved to what it become, nor would it have been able to support the military it has - now rivaling the U.S. in the Pacific.  For all intents, China would have remained little better than one of those poor, overpopulated African nations - from which hundreds of thousands are now trying to flee to get to Europe.

China chose boldly not to do that, but to contain its numbers so as to strive for higher life quality for all its people. The proof 'is in the pudding' as they say, and if anyone doubts it they merely have to look at the size of China's middle class which now is vastly greater than the U.S. And when you travel to Europe, If you do, you will see Chinese tourists all over- from Jungfraujoch in Switzerland, to Bratislava, Slovakia, to Vienna, Austria and Prague, Czech Republic. There is NO way that many well off Chinese would be turned into globe trotters had the population policy not been changed to provide more material support for Chinese citizens. So Stephens, like many other Right wing American yahoos is talking through his ass.

And let's get it straight that lower fertility rates in correlation with greater material abundance and financial status is not peculiar to China.  South Korea is also such a success story, despite the fact its fertility rate is now so low its government is worried that its population "will go extinct by 2750". More likely, however, is that humanity will go extinct well before that year due to the runaway Greenhouse effect.

The same applies to all the European nations, e.g. Germany, Denmark, Norway, etc. to which all those poor Syrians, Afghans, Iraqis, Gambians, Zambians, Ghanians etc. are fleeing. Why do you suppose so? Well, because those destination nations have the space and resources that the others lack because of lower birth rates (To be honest, they also haven't faced the brunt of climate change, which most experts believe has been responsible for displacing at least one third of the 11 million Syrians headed out.)

So here's the essential axiom: a nation cannot at once have a vast population and material wealth. If the population outstrips its available resources it is condemned to destitution. The Chinese themselves, if the earlier WSJ story ('Chinese Face Hurdles To Baby Boom After Policy Shift')  is to be believed, are in no hurry to make more babies via the revised policy either. (And if Stephens took the time to read "ambitiously" the articles in his own paper he'd see that - before writing a column full of codswallop)  As one Chinese mother, He Yanping, said when asked about having more children:

"There are so many pressure with having a baby. It's exhausting to take care of a child and also requires so much energy".

And money too!  As one Chinese official, Li Jianmen, observes in the same article:

"To raise a child is very expensive these days. To send your child to a good kindergarten could be as much as 5,000 yuan ($787) a month".

And the cost of sending the kid to a university is vastly greater.

Maybe in Bret Stephens little pie-eyed capitalist clown fantasy world population can grow unabated with material wealth per person, and a family with seven or eight kids can afford "the best'. Alas, it doesn't work like that in most of the real world, by which I mean outside the gated enclaves of the rich.

The Cornucopians like Stephens get it wrong because they don't see population growth for the toxin it is, and can't put 2 plus 2 together to see how it leads to the Malthusian nightmare (not necessarily on Paul Ehrlich's timetable).  All of this comes back to net energy which is that energy humans need to survive. If the oil taken from the ground, say by fracking, only has a ratio of 1:1 (for energy produced to energy consumed) then it is useless to extract it. The same amount of oil-energy you are using up to get it, is basically what it carries. There is no net gain.

It is the net gain that has allowed humans to reproduce and thrive in many places around the globe. It is the erosion of net gain (reflected in ever lower GDP)  that will eliminate a majority of  humans. Right now, with humans consuming nearly the equivalent of 1.6 Earths per year there is no way even a population of 7.3 billion can be sustained - far less squeezed into an area the size of Texas as the dimwit Stephens claims.

Yes - Population Growth Spurs Higher Commodity Prices

In 1980, the prescient Stanford ecology professor Paul Ehrlich (author of :"The Population Bomb") made a bet with University of Maryland economist Julian Simon related to population increase and material wealth embodied in commodity prices. The bet was for $1,000 - not a mammoth sum but not unreasonable given the implicit uncertainties. The bet was that the inflation-adjusted prices of five metals (chromium, tin, copper tungsten,  and nickel would rise by 1990 (Ehrlich) or fall (Simon.) Simon ended up winning the bet, but that may only have been because of dumb luck in timing and choosing those particular commodities.

Ehrlich was right in one way: the population continued to soar from 4.5 billion in 1980 to0 5.3 billion in 1990. More importantly, a recent paper discloses Ehrlich was only off by two decades and would have trumped Simon had the bet been extended (but then there was no assurance both would be alive toil validate it - as it is Simon died in 1998).

This new paper "Front Boom to Bust:  A Typology of Real Commodity Prices in the Long Run" - from the National Bureau for Economic Research and authored by David S, Jacks, found that over the long run "Real commodity prices of both energy and non-energy commodities have been on the rise from 1950 across all weighting schemes".   Further:

"There is a consistent pattern, in both past and present, of commodity price super cycles which entail decades long positive deviations from these long run trends with the latest set of super cycles likely at their peak. The commodity super cycles are punctuated by booms and busts which are historically pervasive and becoming more exacerbated over time."

In other words, the Jacks' paper portrayed commodity prices as a bit like the stock market: over time the Dow Jones Industrial Average has risen. However, that doesn't mean that during any given year or even decade the prices of stocks will rise. In summary, the Jacks' paper found that:"Cumulatively, the picture emerging from this exercise is a clear patter of real, rising commodity prices from at least 1950."

In effect, the Malthusians(we who believe human population growth will lead to scarcity and destitution) ought to have won the bet. Even the Economist's "free exchange" blog pointed out that while Simon may have won the specific bet, the Cornucopians haven't yet proven their position is correct. The blog points out:

"The paper does suggest that while innovation, substitution and conservation can reduce the price impact of rising demand for fundamentally scarce resources, they can't necessarily eliminate it entirely ."

Further:

"Of course, rising demand itself might come to an eventual end given new technologies - or to validate Mr. Ehrlich - the ultimate decline and stabilization of the global population. It may still be too early to tell whether humanity faces Malthusian limits or not."


In fact, it's not too early at all. We know already that Peak Oil occurred internationally in 2005, which means we are now on a downward energy spiral with net energy in the negative bracket. Thus the oil needed to run our energy intense civilization (including for food production) will be harder and harder to extract and lead to more energy consumed for extraction than the (degraded) oil can deliver. Hence, continual net energy loss.  This means economies of all scales will show continued regression (recession) as population increases. In other words, the era of unmitigated growth is over.

Readers interested in learning the details of how Peak Oil impinges our economic future and renders all market (as well as their commodities) volatile and contracting are advised to read the introductory material at :

www.dieoff.org

Hanson in his brief makes a good case for more than half the existing human population being killed off - likely by starvation, disease or violence. The starvation will come because of dwindling oil supplies available for mass food production. There are currently barely 1.2 liters per person per day available for food production, storage and transport in a world of 7.3b people. This compares to 2.2 L in the 1970s when there were 2.7- 3.0b fewer mouths to feed. From 2005 this will diminish by 2-4% per year contingent on population growth - currently at 85m a year. By the time the population reaches 9-10 billion by 2050, that production level may be barely 0.5 L per person which telegraphs mass starvation.

Perhaps nearly half as may will be felled by disease, especially bacterial that we'd earlier controlled through the use of antibiotics. But by 2050 - likely much earlier - all the pathogenic bacteria will be antibiotic resistant. One simple cut - say even a paper cut - could be a death sentence.


During all this time available commodities will be plummeting, especially the metals, but also grains. Quite possibly grains to support meat production will cease being available by 2025 because the cost will be so prohibitive.

Violence is a given as populations press each other for scare resources, including critical commodities. When the old energy order finally breaks down- with power grids collapsed because of excess demand during extended global warming heat waves- it will literally be every man for himself.  In such a brutish world that beckons 'survival of the fittest'  it's difficult to imagine even the much ballyhooed brain neuroplasticity (proposed by Steven Pinker) saving the day- say encouraging the better angels of our nature.  When water and food are scarce, and energy supplies adequate to even fill a gas tank or pump water are non-existent, there is the potential for all kinds of violence.

Is there a way out? Hanson doesn't hesitate to assert there is, but it entails replacing capitalism with democracy. Capitalism is not and never has been democratic because it asymmetrically  bestows the power of resource control and ownership only on the very few. Worse, capitalism is the single worst thing for the environment because it consumes actual wealth in the form of natural resources (and energy) to convert most into useless consumer waste. In doing so it fuels a preposterous "growth" that is at the basis of making the Malthusian future a reality.

The Cornucopians get it wrong because they don't see population growth for the toxin it is, and can't put 2 plus 2 together to see how it leads to the Malthusian nightmare.  All of this comes back to net energy which is that energy humans need to survive. If the oil taken from the ground, say by fracking, only has a ratio of 1:1 (for energy produced to energy consumed) then it is useless to extract it. The same amount of oil-energy you are using up to get it, is basically what it carries. There is no net gain.

It is the net gain that has allowed humans to reproduce and cover the globe. It is the retraction of net gain that will eliminate a majority of  humans. In effect, for breakeven oil one finds Q(net) = 0.  We are fast approaching the last 700 bbl of oil - which we are fast approaching - calculations show Q(net) = - Q  so that the energy extracted - say from shale oil or tracking - will always be less that the energy that can be delivered. Worse, the difficulty of extracting this type of degraded oil-energy always comes with fearsome ecological costs - essentially destroying the future natural wealth of the planet.

Unless the human population is radically reduced  to the carrying capacity limit, there is no way we can avoid the Malthusian future to which we are headed. The math simply doesn't support it and the fact that so many economists don't see that merely confirms Jay Hanson's point that economics is no longer based on reality but on fantasy. (He notes that the very notion of "Pareto Optimality" bears this out.)

Alternative sources of energy are a possibility, but their diffuse nature again means a limited human population is presumed for them to work. You are simply not going to run glass factories and tanks or jet plane plants on solar energy - or even a combination of solar, wind and geothermal. It's just not going to happen.

Last, the capitalist's favorite barometer, the GDP, needs to be replaced by the sustainability index of Herman Daly. Only in that way will be able to see how much real wealth we have left, and how much has been consumed by a reckless, wretched system designed to pillage the planet to enrich the very few.

$44 TRILLION in Deficits by 2024? Minus 15% Growth Per Annum? The Hidden Energy Degradation Factor

In one of the more disturbing articles in The Financial Times ('West's Debt Explosion Is Real Story Behind Fed's  QE Dance' ), Gillian Tett ties the addiction to quantitative easing by the Federal Reserve to ongoing credit and debt imbalance. As she puts it:

" Faced with the choice of curbing the addiction or providing more of the QE drug the FED chose the latter..... One way to interpret this week’s dance is that policy makers are propping up a system which is at best peculiar and at worst, unstable......Western economies have become hooked on ever expanding debt."

 

 

She adds that:  “Total credit keeps rising, as the productivity of money is falling and an over-leveraged system too prone to booms and busts”.   She then cites Lord Turner who sees the same dangers, and "wants a radical overhaul of the models economists use and for policy makers to deliberately reduce credit."
 

Gillian Tett's piece is admirable, as are Lord Turner's prescriptions, but it is clear neither really grasps what is at the root of expanding debt which is projected to metastasize across the globe multifold times in the next ten years. What is the hidden basis? To sum up as succinctly as possible, it is the decreasing energy return on energy invested (EROEI) of fuel sources. In other words, our energy-dependent civilization is becoming ever more impoverished as the efficiency of the energy to run it diminishes over time.

 

 

Essentially, a civilization which had become addicted to energy delivering 20 to 30 or even 40 times as much energy as it cost to extract, now faces a future with energy return 5 to 8  times less. This spells monetary-economic disaster because at the end of the day it is energy which  determines wealth of nations- money is only a medium to represent it.

 

 

One of the most scarifying revelations I've seen in the past year was cited in Richard Heinberg's new book, Snake Oil: How Fracking's False Promise Imperils Our Future', on p.115. This is from a report issues by a London -based brokerage firm Tullett Prebon whose customers are mostly investment banks. In a Strategy Insight report, author Tom Morgan wrote:

 

 

"Our calculated EROEIs both for 1990 (40:1) and for 2010 (17:1) are reasonably close to the numbers cited for those years by Andrew Lees. For 2020, our projected EROEI of 11.5 to 1 is not as catastrophic as 5: 1 but would nevertheless mean that the share of GDP absorbed by energy costs would have escalated to 9.6% from about 6.7% today. Our projections further suggest energy costs would absorb as much as 15% of GDP (at an EROEI of 7.7 to 1)  by 2030."

 

 

Morgan's report goes on to conclude that the dismal diminishing energy returns means that the economy we "have known for more than two centuries" will "cease to become viable at some point".

 

 

Cease to become viable? Energy costs absorbing as much as 15% of GDP by 2030? What does this mean? It means our present energy-intensive civilization with its HDTVs, Nooks, Ipads, Smart phones, F35 bombers, Dreamliner jets,  drones and SUVs will cease to function. To try an analogy, think of a gluttonous guy of 300 lbs, suddenly dropped on to 'Survivor Island' and forced to eat rice, a few crabs and coconuts for the rest of his life as opposed to just 39 days. Think he'd have the energy to do anything?  Think he'd survive? Guess again. His body - starving of protein  (the equivalent of high EROEI energy)-  would begin to consume itself.  This gluttonous guy is our current energy gluttonous civilization which foolishly believes it has so much energy on hand it can afford to waste major portions on unprovoked wars of choice, and stupid energy investments - such as the F35 bomber which tab is now up to nearly $500m each (and the U.S. plans to build 2, 400 of them)

 

 

Nor is the oil shale -fracking option the way out. As Heinberg observes, while it may cost less to extract a cubic foot of natural gas or a gallon of oil shale today, it will cost much more in just five years and even more in ten - such that one would have to spend as much or more to get the energy as the benefit it delivers. Heinberg summons a point that most of the snake oil salesman humping fracking won't tell you, that it costs energy to get energy. And if you are a nation that resorts to employing 15 to 1 EROEI energy to extract  5 to 1 EROEI  oil shale energy.....well, can we say 'stupid'?

As Heinberg puts it (p. 116):

"No evidence suggests that the technology of fracking has actually raised the EROEI for natural gas production. It temporarily lowered prices but only by glutting the market."


Heinberg's book is essentially a tour-de-force exposing the false promise of fracking with hard statistics and basic energy principles. Readers who wish to see the detailed arguments and facts would be well served by reading it. Especially the chapter in which he notes that while the EROEI of oil and gas are declining, the EROEI for wind and solar photovoltaic are increasing. For this reason, Heinberg advocates much more investment attention to the latter, and not pinning our future energy hopes to the myth of "100 years of natural gas".


He observes, for example(p. 110), that "a study of the EROEI for electrical heating of methane hydrate deposits between 1000 and 1500 meters deep yielded ratios from 2:1 up to 5:1, depending on the source of the electricity"


Regarding the much ballyhooed "oil shale" or kerogen, Heinberg is blunt (ibid.):

"Kerogen is not oil. It is better thought of as an oil precursor that was insufficiently cooked by geologic processes. If we want to turn it into oil, we have to finish the process nature started: that involves heating the kerogen to a high temperature for a long time. And that in turn takes energy- lots of it, whether supplied by hydroelectricity, nuclear power plants, natural gas, or the kerogen itself. Therefore the EROEI in processing oil shale is bound to be pitifully low. According to the best study to date, by Cutler Cleveland and Peter O'Connor, the EROEI for oil shale production would be about 2:1. That tells us that oil from kerogen will be far more expensive than regular crude oil."

We now examine the issue in more detail.

At the heart of the preceding considerations is the net energy eqn. (cf. Physics Today, Weisz, July 2004, p. 51): 

Q (net) = Q (PR) – [Q (op) + E/T]

 In effect, for break-even oil one would find Q(net) = 0    This is the phase at which it costs as much energy to extract the oil (or natural gas) as the energy extracted provides. Thus, there is no net gain in energy given the quantity that must be used to obtain it. For the last 700 billion barrels, of hard to obtain oil (such as oil shale, or tar sands, or deep sea sources):

Q(net) = negative quantity = -Q. 

Since the rate of energy production, Q (PR),  must be debited by the energy consumed for its operation Q(op), and the energy E invested during its “lifetime” T.  Thus its Q(PR) will be small in relation to the bracketed quantity. Thus, the problem in a nutshell is not “running out of oil’ but running out of cheap, accessible oil.  Bottom line, we need not run out of the stuff before the world economy runs into problems of untold, unspeakable proportions.

Heinberg forecasts we will see the initial effects in terms of "an ongoing maintenance crisis" in which we will enter a race to keep basic services  (water, electricity) available  "as energy and capital contract in a self -reinforcing loop". So look for power blackouts, and not just in the summers, as well as water shutoffs, not to mention ever more frequent water mains bursting, bridges collapsing and highways crumbling - even if massive storms (such as struck Colorado) don't strike each year. (But with ramping up climate change we know they likely will)

Obviously, each such feedback cycle will create and reinforce more debt, even if we are bright enough not to engage in stupid wars - wasting more high EROEI energy - or debt ceiling face offs.

For people that have a hard time fathoming a $44 trillion deficit in 11 years, let's put it in temporal perspective.  In the last 13 years the deficit has essentially doubled from $8.3 trillion to $16.7 trillion and this was in an environment with (still) high EROEI energy sources - which we largely wasted on unprovoked wars, and building new weapons such as drones and now F 35s. Thus, it is a no brainer that the deficit can easily double in another 13 years. Now add to that the Tullet Prebon Strategy Insight  report  of an approximately 30%  projected increase in energy costs (as proportion of GDP)  and you easily reach $44 trillion in just 11 years, and that's assuming no more stupid wars or massive storms wreaking havoc on our already crumbling infrastructure.

Here's the connection: lowered EROEI translates to increased debt - nationwide as well as for (most) individuals, since it will cost more and more to obtain the same services, products one currently depends on, in the future. Raise the per barrel oil prices by even 15%  - say from $100 to $115, and watch the impact on food prices, not to mention gas, or electricity. Eventually, as Strategy Insight   notes, the economics becomes "non-viable" and that means the only way people can access the food or services is to go into debt, i.e. using credit cards or other means. This is what Gillian Tett was getting at but she didn't interject the energy factor, which is the hidden,  dirty little secret behind the Fed's quantitative easing.  Sure, there's a credit problem, and certainly millions are attempting to compensate by leveraging debt and expanded credit. But at root it's an energy degradation problem: as the energy to run our society becomes ever more expensive, so do all the devices and services that energy helps produce. Lower the EROEI of that energy to a threshold far below that to which the production process (and society at large) has become accustomed, and you toss a major spanner into the works. A "spanner" treacherous enough to take the society down, or at least degrade to the point it can't provide the basic necessities of life and services for most of its citizens.

Fed QE or not,  unless we either downscale our societies in the West - to match the forthcoming drop in EROEI for our energy sources- or find new high EROEI sources, we are going to be screwed-  of that there is no doubt. That means whopping deficits in our future  that will make today's pols' heads explode. It also means cumulative negative growth, since there simply won't be the capital to drive it - it will all have to go into energy development, extraction, searches and trying to keep the crumbling water mains, bridges and highways from total  inaccessibility.

More Evidence We're Past Peak Oil: The Desperation of Energy Pursuit

Most astute energy observers, see e.g. http://www.dieoff.org/  and Matt Savinar in his 'Life After the Oil Crash'

have indicated Peak Oil occurred in 2005, or seven years ago. This despite a certain hardcore enclave of disputers who assert there is no such thing, nor ever will be. We "have more than enough energy sources" - thank you very much, "and we only need to have the will to develop them".  Well what would you expect these elitist interests, many in the corporate media, to say?

Let's be clear that a large component of what I call "implicit governance" occurs via the shaping of public opinion and mass mind manipulation via PR. The classic examples of this were described at length in the book, 'Toxic Sludge is Good For You'. wherein the PR (public relations) industry actually attempted to promote a nasty, crap-laden toxic sludge as being beneficial for agriculture.  The reason? To provide an additional profit outlet for chemical manufacturers, so they didn't have to worry about locating a place to dump their pesticide-laden toxic sludge - they could get stupid farmers or government to subsidize its use for crops!

This is how PR works: either (a) getting people to ignore a significant threat to their economic or political well being , or (b) getting them to believe a publicized threat (say by environmentalists) is merely a bunch of "Cassandras" subjecting citizens to idle "doomsaying".  In either case, the dual modus operandi fulfills the basic reason for PR as first enunciated by Edward Bernays, its founder:

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government, which is the true ruling power of our country."


And here we see for the first time the term 'invisible government'. This is key because it is the invisibility that confers power! Don't let citizens see what's really going on behind the curtain! Deny any evidence for Peak Oil, shut up or dismiss all claims for such. Deny that environmental toxins are the true cause of mounting cancers in our midst, and keep pumping dietary choice as the primo source - to put the blame on individuals instead of chemical corporations.Deny that there are any political ramifications from the (1963) Kennedy assassination. Keep citizens in the dark on how the most liberal administration in a half century was overthrown from within, and blame it all on a lone nut. Reinforce this myth by concealing all the most relevant files until most people living at the time are dead or dying so no one else is interested. THEN release them!
 
Deny over and over that GMOs (genetically modified organisms) used to engineer GMO-foods have any ill effects on human health. Further, deprive people -citizens of the choice to purchase them or not by refusing to label GMO foods. No wonder then that the market for these aberrations is 70% of all consumer food purchases in the U.S. vs. only 10% in Europe (where strict GMO labelling applies).
 
Lastly, keep quiet that the worst effects of climate change are barely a decade away. Keep muddling press-media pieces going that "there is still time" so as not to alarm the ordinary citizen. Tell those in Duluth who've just seen their town flooded out that it's merely a "meteorological cycle" - nothing more. Keep on moving, nothing to see here - at least nothing out of the normal. The coming 100 -day heat wave that will likely knock down all our power grids....let's not go there.
 
Meanwhile, the elites themselves are high -tailing it to their own personal redoubts to fortify them and protect themselves when all hell breaks loose. Fuck the ordinary people! Keep them in the dark, so we can establish our special preserves without them knowing or interfering. The longer they're kept guessing the better for us!
 
And so it goes.
 
But I want to confine attention in this blog to the energy issue, that of Peak Oil certainly having passed in 2005, and the further evidence being what I call energy pursuit desperation. Evidence? Since 2005, 680,000 waste and injection wells have been drilled, of which nearly 150,000 have injected millions of liters of toxic industrial fluids below the surface to "frack" natural gas. None of this polluted water can then be incorporated back into the hydrological cycle because of the 190 -odd contaminants (most carcinogenic) that the fracked water contains.
 
“In 10 to 100 years we are going to find out that most of our groundwater is polluted,” according to Mario Salazar, an engineer who worked for 25 years as a technical expert with the EPA’s underground injection program in Washington. “A lot of people are going to get sick, and a lot of people may die.”
 
Another aspect to what I call "energy desperation", in the sense of being willing (now) to put aside concerns for life quality to obtain energy: The 2005 Federal Energy Appropriations Bill which exempts the gas industry from compliance with:
 
- The Clean Water Act
 
- The Safe Drinking Water Act
 
- The Clean Air Act
 
- The Superfund (CERCLA) Act
 
The last implying they can dump as much toxic crap as they want and there'll be no "toxic release inventory'" to assay it, and hence, no need to ever clean it up. If this isn't desperation, what is? The willingness to put our future health as a nation in dire risk to satisfy immediate energy demands - mainly to dredge whatever low EROEI (energy returned on energy invested) sources from the ground since the high EROEI oil has peaked.
 
More signs of desperation in the western states, such as Colorado: According to a Denver Post report on the results of an analysis by the Western Resource Associates (WRA), "Colorado's oil and gas drilling consumes enough water to sustain 79,000 households for a year- enough for a medium sized city."
 
This despite the fact the state has been in the throes of drought for years (though the severity has waxed and waned) and now is as bad as it was in 2002, with wildfires occupying more land than the whole Florida panhandle. But how is our water being used? On oil drilling and fracking!
 
According to WRA, between 22,100 and 39,500 acre-feet are pumped into the ground each year for drilling wells and hydraulic fracturing to coax out oil and gas. Tens of thousands of wells now dot the Colorado countryside. Meanwhile, farmers in the state barely have sufficient water to bring one crop to market far less all of them.. (As much as 5 million gallons of water can be injected into a single fracking well, of which 200,000 is laden with carcinogenic toxins such as benzene, so the water can't be re-used.)
 
Pair this with the earlier use of corn (a food crop) for ethanol, and you have the makings of an energy desperation syndrome of epic proportions. But hardly anyone really learns of the extent of it or the harm done. All of which tells me the energy forecasters were correct, and Peak Oil has already occurred, likely in 2005  - the same year the natural gas industry was freed from compliance with basic environmental regs.
 
But even before these desperate energy pursuit manifestations, those in the know or who followed the critical press issues, weren't fooled. For instance, as early as 2009, T. Boone Pickens, quoted in The Financial Times May 21, (‘Oil Futures Near $140 Amid fears of Shortage’) page 1A, asserted we’re "now at the point where demand for oil is 87 billion barrels a day, while only 85 billion can be produced". This is acknowledging Peak Oil by any other name. Meanwhile, in The Wall Street Journal of May 22, there appeared the article ‘Energy Watchdog Warns of Oil-Production Crunch’ (p. A1)

The piece noted that the world’s “premier energy monitor” was preparing a sharp downward revision of its oil supply forecasts. The full formal report was to be ready by November, but already word was afoot that it will point to global oil supplies plateauing even as demand continues.

The article also noted (p. A12):

“A growing number of people in the industry are endorsing a version of the ‘peak oil’ theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output.”

The ironic tragedy in all this: Peak Oil actually likely transpired four years earlier, in 2005. “Peak Oil’  nevertheless, is a somewhat misleading a term, since it suggests a specific date of peak production.  In more practical terms, what it means is that if 2005 was the year of peak oil production then the worldwide oil production in 2025 will be the SAME as in 1985, demanding that Q(net) > 0. (Where Q(net) is the net energy or the rate of energy production minus the rate of energy consumed for its operation and the energy invested for future production and operation. If Q(net) = 0 we only have break even oil, or energy. This is about where we're at with the energy desperation measures of fracking, deep sea drilling.

The problem in a nutshell is not “running out of oil’ but running out of CHEAP oil.  As the years indexed past Peak Oil increase, it means therefore that oil as a commodity will become much much more expensive, irrespective of oil speculators' manipulations but definitely as cheap, high EROEI supplies dwindle and more energy intense user States (like China and India) develop.

Most of us still expect the first signs of admission and media recognition to hit when the price of gas in the U.S. hits $7 a gallon.

Meanwhile, the rest of us know it's already here!

Why Michio Kaku's Future Predictions Are Likely Wrong

Michio Kaku is a physicist who by now has made a number of notable claims to fame, based on popularizations such as his book 'Hyperspace', as well as appearing on assorted network interviews the past few years in association with events such as the BP oil disaster, and the Japanese tsunami and its impact on Fukuyama nuclear plants.

Anyway, in a weekend Wall Street Journal interview (p. A11, March 10-11) Kaku delivers a number of stirring prophecies - for lack of a better term- that boggle the mind. One such prediction: we will have computer chips in everything, from clothing, to furniture, to cars to most appliances .....even pets. The word "computer" will actually become defunct because so much stuff will have computer chips it will no longer be necessary to discriminate one unique object that computes from all else. (Even "DNA chips" will be inside our toilet which can instantly analyze stools and urine to let us know if cancer is lurking.)

The technological power moreover will be so vast by the year 2100, that our grand kids will seem to us like "Greek gods". Almost everyone will also have hand held devices that can translate any language in seconds. One imagines Kaku also foresees stupendous advances in physics, biology, chemistry etc. but he doesn't specify many beyond perhaps discovering the Higgs boson using the current large hadron collider. Perhaps the years of budget cuts have tempered his expectations in the pure science sphere.

(My own take is that if there's one defined advance that we need to achieve, it's being able to knock out or divert a large planet-killing asteroid from impacting the Earth - such as the one that wiped out the dinosaurs 65 million years ago. I don't necessarily expect colonies on Mars, but I do expect this - if we plan to remain on this world, and not spread ourselves outward.)

Anyway, how realistic are Kaku's ideas? That depends on what you know (or don't know) and how well you understand the extent to which abundant, cheap and useful energy underlies the sort of advances he prognosticates. What we know is that large quantities of energy (and water) are required to manufacture computer chips to an acceptable level of quality - and we are rapidly running short of both cheap, useful energy and water.

Let's take water first. In ‘The State of the World’ report (2000, pp. 46-47), it is noted that the ever increasing water deficits will likely spark “water wars” by 2025. As they note (p. 47):

"When a country’s renewable water supplies drop below 1,700 cubic meters per capita (what some analysts call the water stress level) it becomes difficult for the country to mobilize enough water to satisfy all the food, household, and industrial needs of its population.”

As it is, most nations in the 3rd world are now in this predicament or soon will be by the year 2020. It's particularly bad in the most rapidly growing nations of sub-Sahara Africa. Climate change -global warming has definitely played a role ...as it continues to do so in the U.S. (Mainly in the West and Southwest).

The same State of the World’ report notes at present rates of decline and even without factoring in the worst global warming influences – the number of people living in water-stressed countries will rise from 470 million to 3 billion by 2025. More than a sixfold increase. Add in projected new climate change data and likely effects and the stressed populations increase nine or tenfold.

In terms of energy, and what exactly the source is that provides for the manufacture of all our computer chips now - that's easy! It's OIL! The planet was endowed originally with ~ 3,000 billion barrels of oil – of which we’ve consumed one third and another one sixth of relatively cheap oil remains after Peak Oil - which occurred in 2005. It is true that there's about another third of “break-even” oil (costs as much to access as it delivers), after which one -sixth of very expensive oil remains (costs much more to reach it than it deliver in energy - say like deep sea deposits which will effectively take 3 gals consumed for each gallon produced).

At the heart of these considerations is the net energy (cf. Weisz, in Physics Today, July, 2004, p. 51)


Q (net) = Q (PR) – [Q (op) + E/T]

In effect, for break-even oil one would find Q(net) = 0

Thus, there is no net gain in energy given the quantity that must be used to obtain it.

For the last 700 billion barrels,

Q(net) = negative quantity = -Q

since the rate of energy production (Q (PR)) must be debited by the energy consumed for its operation Q(op), and the energy E invested during its “lifetime” T.

This is why oil shale and natural gas drilling, fracking are wastes of time and energy - because they do not deliver NET energy value, they deliver lost energy quotas that multiply over time. Think about it: If it takes 1.01 gallons of cheap, high EROEI (energy returned on energy invested) oil to produce 1.0 gallon of low EROEI shale oil, then you are sacrificing your most useful energy for less useful. You are, as we would say in Barbados, "batting on a losing wicket". The reason the oil shale humpers and their ilk can make their bald claims is that no one ever calls them out on the TOTAL energy costs used for extraction (including the energy costs to make the equipment that extracts), including transport!

Moreover, this is a game that can go on only so long, before the losses exceed the benefits and drive producers away! This is exactly what's occurred already in many oil shale drilling and gas fracking states as the market costs of those commodities have plunged in relation to the costs of their production. Well, why is this? It's because the REAL market costs are too low because they're put in competition with the remaining stores of high EROEI oil rather than the actual energy costs to produce them! If the latter were used, the oil from shale would be 2-3x the regular oil costs.

“Peak Oil’ is somewhat misleading a term, since it suggests a specific date of peak production (e.g. 2005). In more practical terms – what it means is that if 2005 was the year of global peak oil production then the worldwide oil production in 2025 will be the SAME as in 1980 demanding that Q(net) > 0. Also, it means that 2040 will be the same as 1965, and 2060 will be the same as 1945, and 2100 will be the same as 1905! All this while the population is expected to reach 9 billion or more in the SAME PERIOD!

In effect, the total available and accessible energy density (marked by the source with the biggest 'bang for the buck', e.g. oil) is continually decreasing. Thus, Kaku's projections of the "Greek god" status for kids living in 2100 are predicated on energy stores barely equal to the oil we had available in 1905 and could actually get out of the ground then. Precisely for this reason, one will really have a vast energy-unsupportable population, that may well add up to 10 billion or more!

That is, nearly 10-11 billion people exist as net energy sinks not sources, and based on this no civilization can survive. What one gets then is not some utopia like Michio Kaku envisages, but the nightmare world of "Panem" the horrific nation depicted in the 'Hunger Games' in which the population must be endlessly culled by bloodsport games and people exist perpetually on the margins of hunger and disease. How can it be otherwise? The reason the utopians' nonsense usually prevails is first, most Americans are diehard, unchecked optimists at heart, and second, most of the utopians (or unabashed optimists) have never processed fully the concept of net energy! Which is why I always suggest blog readers avail themselves of the site:

http://www.dieoff.org/

and pay attention to the links at the right, going through them in the order shown.

What about developing solar, geothermal, wind or all together to replace fossil-fuel based energy and allow us to make our endless computer chips? Valiant thought, but it crashes and burns. The fact is neither solar, wind, geothermal, hydrogen, methyl hydrates or anything else can save us (since they lack the requisite energy density) unless we ALSO cut global population down to 2 billion or less. We cannot keep gobbling finite energy stores at the rate we are (increasing the "gobble rate" by 1-2% per year) as we increase the number of "gobblers" too!

A reality check appears in The Physicist's Desk Reference, in the section on 'Energy Supply', there is a table (C., p. 187) for future projections of energy supply. The information is divided into categories of energy for categories of energy demand (I, II, III, IV) where I is 'very aggressive', II is 'aggressive, III is 'moderate', IV is 'unchanged' . The only double-digit exajoule energy source contributors for IV are: oil, coal, natural gas and nuclear. Oil shale is at 1/10 of nuclear and, solar is at 2/3 of oil shale .

In terms of Kaku's world in 2100, the reality of the U.S. of A. will actually be more in tune with the "Panem" depicted in Suzanne Collins' dystopic tale, than any kind of utopian, fairy vision with every citizen instantly blinking eyes to compute on a global network and living endlessly via "synthetic organs".

What about technology itself, might that not usher in Kaku's glorious world and spare us from a 2100 version of "Panem"? After all, maybe technology or some hitherto unthought of device or series of them will make energy access more efficient or abundant?

According to energy specialist Matt Savinar (Life after the Oil Crash, p. 33):

"The idea that technologically derived increases in energy efficiency will solve this for us is fundamentally flawed: technology uses energy; it doesn’t produce it. Here in the 21st century, we have a shortage of energy, not technology. The shortage of energy was caused primarily by the introduction of new technologies such as the internal combustion engine. The shortage is therefore unlikely to be solved by the introduction of even more technology.

More technology will simply allow us to use more energy, which will make us more dependent on technology, which will make us more dependent on energy. As the supply of energy dwindles, the technology on which we have become dependent will no longer function To illustrate: what do you think would happen if the average fuel efficiency of every vehicle on the road today was magically raised to 200 miles per gallon?

It doesn’t take a psychic to accurately predict how we would react to this “miracle.” We would continue to build our homes farther and farther away from our jobs and grow our food farther and farther away from our stores. In other words, we would increase our dependency on cheap energy. This would temporarily delay the crisis while reinforcing the underlying problem, which is a dual dependence on cheap energy and high technology. The more dependent we are on cheap energy when the day of reckoning arrives, the more painful it is going to be, the more people are going to die, and the longer it will take us to recover from the aftermath.

Consequently, increases in fuel efficiency and technology are more likely to make our situation worse, not better."

The bottom line here is that in all Kaku's marvelous visions, the one down factor he didn't correct for is the increasing global population, which is not only an endless drain on finite resources but an incessant source of global pollution. This increasing population consumes billions of hectares of potable water each year even as it pollutes an equal amount in its industrial processes. It also gobbles up non-renewable sources of cheaper and efficient modes of energy such as oil, even as it increases demand on the same stores by never-ending increase in human numbers.

This is a math game that simply can't work, and if Kaku really wants to see the world he envisions, he needs to show us how to pare human numbers down to no more than two billion - without invoking any horrific scenarios like novel viruses for which there is no immunity or antibiotics ceasing effectiveness.