Thursday, March 13, 2008

A well-done primer...

...on peak oil at The Oil Drum:

Peak Oil Overview - March 2008 (Pdf and Powerpoint available)
Posted by Gail the Actuary on March 13, 2008 - 10:57am

This presentation has several fabulous charts and graphs, and is written with the layman in mind. I have selected one to post here, which I think sums up the problem nicely:

...When OPEC agreed to raise quotas near the end of 2007, Saudi Arabia did in fact raise its production. Its highest single month of production in 2007 was 9.1 million barrels a day, in December 2007. This represented a 500,000 barrel a day increase over its earlier low production of 8.6 million barrels a day, but still left production below both the 2006 average of 9.2 million barrels a day and the 2005 average of 9.6 million barrels a day.

One question too is whether this increase will continue, or if it is just temporary. It is sometimes possible to squeeze out a little extra production for a while, but then production drops back to a more normal level. Saudi Arabia originally planned to have an upgraded field (Khursaniyah) on line by late 2007, which was expected to produce an extra 500,000 barrels a day of oil. It may have thought it could make a spurt of extra production until this field came on line. Now the Khursaniyah field upgrade has been delayed until late 2008. Will Saudi Arabia be able to continue the increase, without the assistance of the Khursaniyah field?

Another question is why OPEC refused to raise its quota further on March 5, 2008. Is Saudi Arabia now really at the peak of what it can produce? It claims to have more production available in reserve. We know that Saudi Arabia has some poor quality oil off-line because the oil requires special processing which is not yet available in any refinery. Is this the only Saudi production off-line? Are other OPEC countries also unable to produce more?...

...Somehow, US textbooks and newspapers have not figured out the problem with OPEC reserves. They continue to quote huge "proven reserves" for most of the OPEC countries. The word proven adds credibility to the numbers, suggesting that somehow, the reserves have been proven to some authority, when nothing could be further from the truth...

...Comment: The connection between oil supply and the economy is not well understood by most. A shortage of oil very quickly leads to an increase in prices, and a cutback in the demand for other goods and services. The combination of these events tends to cause a recession. Cutting back on usage tends not to be sufficient to prevent the problem, because there are so many other users around the world, including in China and the developing world. They are likely to cause an increasing demand for oil, even if we try to cut back.

...Every study that has been done recently with respect to corn ethanol seems to come out with worse indications. Corn ethanol has virtually no benefits over petroleum. It uses huge amounts of fossil fuels as inputs, so it has most of the drawbacks of fossil fuels. It also has its own drawbacks, including raising prices, damage to the environment, high water usage, and possible CO2 and other global warming gas increases because of land use changes and nitrogen fertilizer use.

At this point, there aren't good alternatives to gasoline commercially available, however. Since there is great political appeal to growing our own fuel, corn ethanol is supported by most politicians, even if any reasonable analysis would say its benefit is very limited.

Longer term cellulosic ethanol may be a better solution, but at this time it is not commercially available. Even if we use wood and switchgrass as inputs, cellulosic ethanol will be difficult to scale up to provide more than a small share of the needed fuel.

Biofuel from algae looks to some like it might work. At this point, we do not have a commercial way of doing this and the cost would be extremely high.

The ugly truth is that there is no rabbit to pull out of the hat. Biofuels is not a viable alternative to gasoline - not unless you plan to put every square inch of arable land in the nation to biofuel production and try and import 100% of all food - not hardly a good plan, to say the least.

The reality is that gasoline usage is going to have to decline dramatically by personal automobiles so that what is available is affordable to federal, state, and local governments who need it for essential services. That's an undeniable fact - anyone who claims otherwise is living in fantasy land. And since people are not going to give up their personal cars voluntarily, it's going to be an ugly clash of wills between the government and the spoiled American public who has extremely selfish and unrealistic expectations for their standard of living in the near and far future. America cannot go on using 60% of the entire world's supply of natural resources - the other 95% of the population of the world is starting to demand their fair share.

The time to change your position, location, and habits is now, while it's not terribly painful to do so. Later it will be much more difficult.


Garnel Ironheart said...

Now I agree we need to conserve. No question there, but I think it's for pollution purposes.
But your own graph shows two periods in the last 10 years where the line went flat as well. Plus the recent announcement by OPEC that they were purposefully keeping output flat to increase prices and profits for themselves.

Ahavah said...

It's true the Saudis are "refusing" to increase output - but that is because, as experts unanimously agree, they can't. From their point of view, looking recalcitrant is 1000x better than looking irrelevant. They need to conceal their impotence for as long as possible.