May 232008
 

Some people (like the US House) seem to not understand how oil prices are calculated. Luckily, Marketplace has a great introduction to the subject called “Who’s getting fat on higher oil prices?

Economist Philip Verleger watches the oil industry. He says the ultimate price is decided by traders in New York, London and other global markets. There are no wellheads that read out in dollar signs. Instead, producers write contracts based the prevailing price at a future date — when a Saudi shipment arrives in Houston, for example. The producer gets almost everything.

It’s the sweeter variety that’s in high demand right now, because it makes more of the more profitable diesel fuel. Verleger argues that $133-a-barrel oil won’t sell if there’s no buyer.

It has nothing to do with speculators. It has everything to do with the inability to make enough diesel fuel to meet the European, Chinese, Asian and U.S. demand.

Oil is was the lifeblood of the 20th century, and continues to be lifeblood in the 21st century. The market place is a whole lot more crowded though.

Oil is not cheap.

Oil is not expensive.

Oil is worth exactly what someone will pay for it.

Apr 212008
 

I’ve been working my way though the many wonderful talks at TED and was happy to see a new one pop up with Gore showing his new slide show: New thinking on the climate crisis. Do yourself a favor, and watch it. He is a great speaker, and the topic is extremely important. Gore is right, the scale of change requires law and politics.

As fantastic as the talk was, I have a nitpick. I wish he spoke more about the huge car dependence we have in the USA. It is sort of the elephant lurking in the room. Any changes to our impact on the environment will have to start there. There are solutions, there just needs to be the will to change business as usual – More rail for cargo and transport, better mass transit, conversion to electric, and making cities walk-able through approaches like new urbanism.

The fundamental issue, as Michael Pollan says, is cheap energy. Without putting a price on carbon, there won’t be enough change. Of course, cheap energy was a temporary state, and now as crops are turned into ethanol, the decision seems to be fuel or food in many respects. How the rich starved the world is an interesting read.

This seems somewhat appropriate: Thousands of people saw varying shades of green at EarthFair yesterday at Balboa Park – and it seemed like all of them came in their cars.

Oct 302007
 

Jim Kunstler’s latest post is typically inflammatory, but definitely makes for some good reading:

The price of oil is up 53 percent over a year ago, creeping up now toward the mid-$90-range. The news media is still AWOL on the subject. (The New York Times has nothing about it on today’s front page.) The dollar is losing a penny a week against the Euro. In essence, the American standard of living is dropping like a sash weight. So far, a stunned public is stumbling into impoverishment drunk on Britney Spears video clips.

Though I would argue that a significant chunk of the price rise is based on the thrashing of the US dollar, it certainly does and will have plenty of other pressures.

The political assumptions one hears are the most astoundingly naïve and ridiculous, especially the ones that involve other countries and our relations with them. NY Times followers no doubt believe, along with Tom Friedman, that the global economy is now a permanent fixture of the human condition, and that soon it will transform itself into a colossal engine of “green” (i.e. benign) commerce. Friedman and his followers tend to forget the second law of thermodynamics when spinning their fantasies of a world that can harmlessly manufacture and market an endless number of plastic salad shooters from one side of the planet to the other without incurring any losses to the health of said planet.

Very true, a flat world depends on cheap oil to remove the impact of market distances, and place the focus on labor costs instead. Such a low cost of transport has negative effects.

My own assumptions are somewhat different. I think we’re likely to see a lot of nations scrambling for survival, initially manifesting in a contest for the world’s dwindling supply of oil (and oil-like substances). For instance, when viewing the globe, few people consider that Japan currently imports 95 percent of its fossil fuel. Japan has been a “good boy” among nations since its episode of “acting out” in the mid-20th century and has enjoyed a long industrial prosperity since then. But what happens when there is not enough oil in the world to be allocated rationally by markets among the powerful nations?

The severity of the response of course depends on the speed and impact once demand passes supply. But even best case scenarios, where prices gradually keep rising, will have some major consequences for the world stage. There is no deus ex machina in the real world to change our dependencies and assumptions over night.

Aug 032007
 

RollingStone has a great article called Ethanol Scam: Ethanol Hurts the Environment And Is One of America’s Biggest Political Boondoggles. If you aren’t familiar with the subject, this article is a great introduction.

This is not just hype — it’s dangerous, delusional bullshit. Ethanol doesn’t burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption — yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World….

…Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 — twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon — about half of ethanol’s wholesale market price….

…ethanol made from sugar cane has an energy balance of 8-to-1 — that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That’s a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 – making it practically worthless as an energy source.”

Bonus link: CBC On the Map Ethanol: Green Hope?

May 312006
 

The USA is facing higher bills, and potential shortfalls for our energy use. Bush has committed a lot of our tax dollars towards ‘alternative’ energy sources – mostly coal [stop-gap and dirty], hydrogen [not really a source], and nuclear [expensive]. But there are two things that can have a huge impact on energy prices. These only require a tiny amount of funding compared to the other projects, and the results can bring returns much faster. I’m speaking about conservation and efficiency.

Unfortunately, someone has really messed up priorities: The Department of Energy’s proposed 2007 budget will cut $152 million from this year’s budget for energy-efficiency programs. Arrgg! This money is a drop in the bucket compared to what could be saved through efficiency. What’s so bad about doing more with less?

Feb 012006
 

So Bush has finally admitted the US is addicted to cheap oil. He made some statements in his address to the nation:

– Coal. $281 million to develop clean coal technologies “to generate electricity while meeting environmental regulations at low cost.” And $54 million for a “FutureGen” project with the private sector to seek “an emissions-free coal plant that captures the carbon dioxide it produces and stores it in deep geologic formations.”
– Solar power. $148 million, more than double what was sought in 2006, “to accelerate the development of semiconductor materials that convert sunlight directly to electricity.”
– Wind power. $44 million for wind energy research — a $5 million increase over Bush’s 2006 request.
– Ethanol. $150 million, a $59 million increase over 2006, to find a more efficient way to make ethanol, the gasoline alternative now made primarily from corn in the United States. The focus is to use plant fiber from farms that is currently discarded as waste. “Research scientists say that accelerating research into “cellulosic ethanol” can make it cost-competitive by 2012, offering the potential to displace up to 30 percent of the nation’s current fuel use,” the White House said.
– Plug-in hybrids. $30 million, a $7 million increase over 2006, to develop higher capacity batteries for hybrids as well as “plug-in” hybrids that would allow drivers to charge vehicles and run on electric power only. “These vehicles will enable drivers to meet most of their urban commuting needs with virtually no gasoline use,” the White House said.
– Hydrogen. $289 million, a $53 million increase over 2006, to develop fuel cell vehicles that run on hydrogen “with no pollution or greenhouse gases.” Bush in 2003 launched a $1.2 billion hydrogen initiative and the White House said that “through the president’s program, the cost of a hydrogen fuel cell has been cut by more than 50 percent in just four years.”

From The Oil Drum

I found it interesting that the cheapest, and easiest method to reduce our dependence on oil was not even mentioned. Efficiency. We should be pushing for much higher efficiency standards for cars, appliances, and buildings. But of the points he mentions, I’m seeing some problems:

1) Clean burning coal would be nice, but ultimately we are still looking at a finite resource, with a cost peak (2nd half of the production curve becomes dramatically more expensive). This is just a stop-gap.

2 & 3) The increase in funding for wind and solar is a good start, but a drop in the bucket for what it should be. Bush’s Mars Plans are hundreds of billions of dollars, yet we are spending less than a billion on working to change our country’s energy source? Does that make sense? It remains to be seen if we can actually produce these technologies en mass (solar in particular) with out using the cheap energy and resources of oil.

4) Ethanol has some issues for mass use, without cheap oil. At least Bush seems to be pushing biomass vs. the dubious energy return of just corn. But on a whole, commercial farming requires massive amounts of oil for fertilizer and equipment. I’m wondering how long fields will remain productive if you remove all the plant material each harvest. My guess, not very long without fertilizer.

5 & 6) Plug-in hybrids and hydrogen don’t do anything to change our needs for cheap energy. These are just delivery methods for energy.

Why the sudden interest in alternative energy? It just might be that Bush actually read a report. Authored by Robert Hirsch, Roger Bezdek and Robert Wendling and titled The Peaking of World Oil production: Impacts, Mitigation, & Risk Management, the report is an assessment requested by the US Department of Energy (DoE), National Energy Technology Laboratory. A bit technical for the average reader, but it is still worth looking at (PDF, HTML). Bonus: Audio interview with Robert Hirsch

Wondering what the hell Peak Oil is? Energy Bulletin has a great primer. You will just ride your bike? Well, it is a bigger issue than just your car. Oil is more energy dense than its competitors, and that is without counting its other uses.

Bonus links:

– Ready for $262/barrel oil? Soros and other investors say oil will be in short supply in the coming months.

Carlsbad based start-up says it is planning for a 330 MPG hybrid for under $20,000. It sounds like the supercar from Amory Lovins.

Sep 132005
 

– This really sucks – Million Solar Roofs Bill Dies in California Assembly – This bill had bi-partisan support until Assembly Democrats added union-sponsored amendments, including a provision that requires the payment of “prevailing wage” — in effect, union scale — on commercial and industrial solar installations. In essence, the democrats poison-pilled the bill to prevent Schwarzenegger from being successful on a popular environmental issue. I can not express how disappointing this is, and how lame the democrats look because of it. Prevailing wage is fine and dandy, but it should not be tackled in an environmental bill. More info here (note National Council for Solar Growth has moved to https://evergreensolar.com).

– For energy-hungry Asian governments, renewable energy such as solar, wind and geothermal power is gaining ever greater credence as a way to curb the region’s appetite for oil and cut runaway import bills.

– With gasoline prices topping $3 a gallon and consumers searching for relief, what’s the smartest thing the government could do? Make sure the prices stay at least that high, say some economists. High prices could boost conservation and diminish the country’s oil thirst. Why now? The economy still is expanding, and consumers already have confronted the shock of $3-a-gallon gasoline. Unfortunately, high gas prices hit the poor the hardest. But I still think we need to tackle our addiction head-on, and give alternatives a fighting chance in the market. We need better public transit, to eat local, and to be more efficient in our use of oil.

– The always provocative Kunstler ties in his (often worst case) theories on sprawl and US energy use with the rebuilding of New Orleans.

“…The dirty secret of the American economy for at least a decade now is that it has come to be based on the creation of suburban sprawl and the activities associated with it — the building of cul-de-sac McMansions, highway retail pods, car sales, real estate sales, the creation of false liquidity in the form of easy mortgages and the deployment of that debt into tradable instruments. The sprawl-building industry comprises over 40 percent of what we do in this country. If you subtract it from the U.S. economy, there isn’t much left besides hair cutting and open heart surgery… Of course, any rebuilding would depend on a major engineering effort to raise the ground level in these neighborhoods. That, in turn, depends on whether whole neighborhoods are deemed to be “scrape offs,” since such a project could not be done in piecemeal fashion. Finally, we would be faced with the economic paradox that new construction tends not to fall into the “affordable housing” category, and those displaced might not be able to acquire new houses to replace the ones they lost in the places where they stood. It’s too early to tell what will become of New Orleans’ downtown core of skyscrapers and megastructures…”

Jun 192005
 

Most of these are older links, but I just haven’t had the time to post them.

In case you missed it: A White House official who once led the oil industry’s fight against limits on greenhouse gases has repeatedly edited government climate reports in ways that play down links between such emissions and global warming. Oh, right after this came out he took at job at ExxonMobil. Classy.

“An accelerating Arctic warming trend over the past quarter of a century has dramatically dried up more than a thousand large lakes in Siberia, probably because the permafrost beneath them has begun to thaw, according to a paper to be published today in the journal Science”. Most people don’t know this, but permafrost is very important in the north. Without it, a lot of the land would be bogs, and the buildings would sink.

The CS Monitor takes a look at hybrids & demand.

A wind map of the world. It is interesting to note that the US looks pretty good for wind potential.

Unlimited energy. Fast-growing fruit. Free air-conditioning. John Pi�a Craven says we can have it all by tapping the icy waters of the deep.

Biomass vs. Corn – Producing ethanol from corn grain generates about 1.4 times as much energy as the process consumes, when pesticides and fossil fuels are factored in, she said. “The energy yield from cellulosic materials is like 10-to-1.” enzymes to break down the cellulose found in the leaves, stalks and walls of plants into simple sugars that are then converted into ethanol. Can’t help but think this will be a fight in the midwest, even though they could benifit.

Wired takes a look at peak oil – Petroleum Joyride Almost Over.

Want more Peak Oil? The Oil Drum – “We are in the process of putting together a community of bloggers to facilitate frank discussions on ideas related to Hubbert’s Peak/Peak Oil, sustainable development and growth, etc., as well as the implications of these ideas on politics, economics, and our daily lives”

An interesting read from Robert Bryce on Salon:

America is such a major energy user and the energy market is so complex that we can never be independent. America simply sucks up too much oil (25 percent of world production), too much natural gas, and too much coal to ever cut itself off from the global market. The price for these commodities is set by global market forces like booming economies in China and India, and by the ever-increasing energy needs of citizens everywhere to power their cars, fax machines, computers and air conditioners. In short, there’s no silver bullet when it comes to energy. Pretending that there is only obscures the magnitude of the problem.

Salon interviews James Howard Kunstler on his new book, The Long Emergency. As you can read bellow, he is pretty drastic in his conclusions, but still interesting.

“Suburbs will collapse into slums. Farmhand will be a more viable career choice than public relations executive. And avoiding starvation will replace avoiding boredom as the national pastime… In Kunstler’s world, a teenager will be better off learning how to yoke up a horse-drawn buggy than how to change the oil in a car. Woodshop will be more important than computer literacy… The South will devolve into agricultural feudalism and the Pacific Northwest will be beset by a plague of pirates from Asia. Forget about sleek hydrogen-powered cars coming to the rescue. For that matter, quit tilting your hopes toward wind power.”

Some more good stuff from Salon – Email exchange between James Howard Kunster, doomsayer of the oil age and alternative energy guru Amory Lovins, CEO of the Rocky Mountain Institute. JHK had sassed Lovins for promoting the Institute’s ultralight Hypercar as a panacea for the coming oil crunch.