The Best of Lee: Peak Oil

You remember peak oil? Um, yeah:

Oil depletion studies commonly focus on the supply of conventional petroleum without as much attention to the other side of the equation, which is petroleum demand. In this study, we examine the trends affecting demand for conventional oil in the future to see under what conditions “peak demand” for oil might arise. We find that historical trends in oil use lead to a peak in demand for oil by well before mid-century. If concerted effort is made to shift to oil alternatives and promote efficiency, a demand decline may arise even sooner.

Note that this study isn’t talking about windmills and solar panels in particular. It is accounting for the explosion (no pun intended) of “unconventional liquids”, natural gas and biofuels. And they basically believe that conventional oil demand will peak by the 2030’s and then begin to fall off.

In short, our demand for oil is going to peak long before the supply does.

I had a whole post ready for this and then I remembered that the late great Lee wrote it for me five years ago, when he crushed the scares about Peak Oil. I’ll quote at length. Enjoy the brilliance.

In the late 1970s my cousin, who was at the time in her late teens or early 20s, came to visit my family in Australia. My father, as most of you know, was in the oil business, specifically the drilling aspect. He knew all there was to know about getting oil out of the ground. My cousin, a good soul, expressed great concern that “within ten years” the world’s supply of oil would be depleted, and regaled him with the horror stories of global doom that would accompany this eventuality. My father listened to her, then patiently explained how she had no idea what she was talking about, that her head had been filled full of mush by leftist professors, and the idea that the world would ever “run out” of oil is absurd. Remember, this was thirty years ago that we were “ten years” away from running out of oil. Oddly enough, we’re still now “ten years” away from running out of oil.

You would not believe the number of times I had this conversation with liberal coworkers in California, all of whom believed the peak oil nonsense. It’s a means by which left-leaning people scare other people into supporting environmentalist causes. We heard exactly the same thing in the 1970s about population explosion, how by the turn of the century there would be global starvation due to overpopulation. Oddly enough, not only did this never come to pass, but the exact opposite is true—in the aggregate, people the world over are better fed and living longer lives than at any time in their past.

People just think that one day there’s going to be a huge empty sucking sound coming out of the ground, like what happens when you get to the bottom of a milkshake. People who think this have no grasp of economics or a fundamental grasp of how oil markets work. This isn’t really anyone’s fault, these are specific areas of expertise, and it only makes sense that most people wouldn’t understand them. That being said, the fact that there’s a global consensus about something which most of the globe doesn’t understand thus makes the consensus argument completely worthless.

The difficult argument is to explain to people, calmly and rationally, the situation with oil. The easy thing to do is terrify people into thinking that, just like sucking on a milkshake, one day we’re just going to run out. As I’ve said before, technological advances will make oil obsolete long before we ever actually run out of it. If oil were actually in any danger of running out any time soon it would be $500,000 a barrel instead of $100. (That’s freshman economics, folks. Everyone should understand that.)

We need to develop clean technologies. We need electric cars. We need to be concerned with global warming and the environment. These are all legitimate, and you will find no bigger proponent of finding solutions to these problems than me. But what I refuse to do is buy into the Chicken Little syndrome whereby I wail and screech about how the world is going to end if I don’t support a particular political proposition. Kyoto was a stupid idea when it was first proposed during the Clinton administration, and there’s a reason it was voted down 95-0 in the Senate. (That’s right, liberals, not one member of the Democrats voted in favor of it.) But opposing bad legislation does not equal a desire to ignore the problem, it’s a disagreement about the means. And, given the total, utter, abject failure of Kyoto since its ratification the United States seems eerily prescient with its rejection.

Oil will never run out. Ever. There is too much money to be made in the technology industry for the world to keep relying solely on oil. We don’t need nightmares, we don’t need screaming histrionics, we don’t need end of the world scenarios. What we need are smart people taking the problem seriously, and finding workable, reasonable solutions to transition the world from a petroleum economy into the next generation.

In case you’re wondering, the current score is something like Lee 525, hysterical ignorant liberals 0.

Comments are closed.

  1. Seattle Outcast

    Those that believe in “peak oil” never seem to be in the oil business, or even slightly familiar with geology. I got the “run out of oil” line of crap in 1975, which coincided with “global cooling” and “run out of food”, which all culminated in the belief that by 1990 a series of nuclear wars overs all three issues would destroy all life on the planet.

    Nearly 40 years later we still hear about all three (now that “global warming” is rapidly switching back to “global cooling”) and anybody with a high school eduction can still pick the scare tactics apart over breakfast without really trying. Only they pushed the date of doom back far enough you can’t just wait a decade and laugh at them while they scurry around for another set of reasons on why we’re all going to die.

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  2. AlexInCT

    I got the “run out of oil” line of crap in 1975

    The main reason for this is that the idiots always seem to restrict their oil reserve numbers to oil that is easily recoverable at that time. They never account for either technology or price incentive suddenly making more oil recoverable. That’s why the estimates of recoverable supplies keep skyrocketing and baffling them. Oil that once was considered unrecoverable, now a days is easily gotten to. Nobody ever thought we would be getting that oil out of shale back in the olden days. Too expensive and no technology to do that, so never counted. Now we are doing just that, and we have trippled the available supply by doing just the easy recovery. In another 50 years the recoverable amounts will be double what they are today, if not more. Technology is a wonderful thing.

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  3. hist_ed

    The peak oil crap started earlier than that. When the US navy was converting their ships from coal to oil a report was produced that this would increase demand on US oil production so much that the US would run out of oil before the end of the ships’ useful life. There were plans drawn up that proposed duel fuel propulsion on one class of battleships so that they could go back to using coal when the oil ran out. This would have been in the first decade of the 20th century.

    When WW1 broke out in Europe another US Navy study predicted that the increase use of oil in shipping convoys and navy operations would deplete world reserves within (wait for it) 7 to 10 years. It recommended immediate rationing of oil used in the civilian market and a study of how difficult a return to massive whaling would be so whale oil could be used as an oil substitute.

    Same type of report was produced in ’39 or ’40.

    We’re always running out of oil but somehow world reserves keep getting bigger. We just need to listen to the enviros because THIS TIME they are right (applies to any other disaster scenario-doom is always 7-10 years away).

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  4. Seattle Outcast

    Recovering oil from know reserves that are ECONOMICALLY UNFEASIBLE AT THE TIME does not mean that we don’t know how to actually get the oil, just that it isn’t worth it at the moment.

    I think the average dimwit on the street has no clue as to the seemingly science-fiction level of engineering technology that is available if someone just actually wants to go ahead and manufacture it. They are so wowed by their latest smartphone, stain-detecting washing machine, and automatic espresso machine that the existence of massive pieces of technology that exist outside the home don’t occur to them. Either that or they think that the sort of stuff being field tested at this very moment is “a century away” or relegated to movie plotlines.

    Case in point, the X-47B.

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  5. stogy

    Hidden due to low comment rating. Click here to see.

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  6. Xetrov

    Kyoto Protocol wasn’t perfect, but despite the misinformation about it in the US, it has actually done much of what it set out to achieve.

    It was designed to make China the number one carbon dioxide producer in the world? Bravo, well done.

    The US is now one of the 4 countries with more than 10 GW of solar PV installed, with a forecast growth of 80% in the next 18 months. And exponential growth after that.

    Of course it will. Because the Government is dumping Billions into it. And even then, my electric company is offering a program to go “solar”, whereby they jack up my current rates by more than 50% so that I can feel good about my carbon footprint. It is still not economically feasible, any argument otherwise is bullshit as evidenced by Solindra or any number of other Federal Green investment failures.

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  7. stogy

    Hidden due to low comment rating. Click here to see.

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  8. AlexInCT

    You guys must only know idiot liberals.

    Is this like the joke about Santa Claus, the Easter Bunny, a Smart Liberal, and a dumb liberal each being in the corner of a soccer field, and when the ref blows the whistle, which one of them gets to soccer ball in the middle and kicks it first?

    The answer is the dumb liberal, and that’s because the other three are fictitious characters. You take from that whatever you want.

    Lee was largely right at the time. It’s not just that reserves keep getting bigger, but that higher prices make harvesting of less accessible reserves more profitable. But this also means that other energy generation forms also become market efficient.

    True dat.

    And we’re now at the point where this is happening.

    Erm, not really, unless we are talking about nuclear. Solar’s big problem, despite whatever nonsense they tell us, is technological. It has been the same problem since the hay days of my college years. Efficiency, transmission, location, and storage. We could pave North America with solar panels and it would go nowhere because it wouldn’t generate enough to meet demand. I would prefer not to have to live with rolling brownouts so watermelons can feel good about themselves.

    The only proposal for solar that ever passed these tests with some modicum of effectiveness, was proposed by some guy in the late 80s. It involved massive space based collectors with the energy beamed down as microwaves. In addition to the problem of beaming down massive amounts of energy as microwaves to earth, the cost was so prohibitive that it caused everybody to dismiss the proposal as unattainable. The fantasy about solar wont die down however. Ask the Germans, or the Brits for that mattter, how that’s working for them.

    Wind is a joke. The limitations there are even worse. Biofuels are a disaster. When it costs you 1.25 units of power to create 1.00 units of biofuel power, you are being idiotic. Doubly so when you use foodstuff and people have to pay more to be able to eat, or even starve. Geothermal might work, but I have a feeling it will be viewed like the watermelons view nuclear now. One catastrophe movie about Gaia running cold and the planets core going solid, and poof, people will balk against this technology. Cold fusion might make it there someday, but it’s not happening soon. That leaves nuclear. And watermelons will never go for that.

    So let me burst your bubble and tell you that the combustion engine and energy generation from fossil fuels will be around and account for the bulk of it even 30-50 years from now. Of course, politically motivated greenies might push us away from that sooner than that, driving costs up to prohibitive levels, and in the process enriching themselves and their friends. Al Gore says he wants to be a trillionair, and Gaia worship is gonna make it so.

    It is. Kyoto Protocol wasn’t perfect, but despite the misinformation about it in the US, it has actually done much of what it set out to achieve. The point was less to reduce emissions immediately, than to develop new technologies and create markets for less CO2 intensive energy sources.

    What Xetov said, but with a lot more belly laughing. Better than my joke about the first kicker.

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  9. Hal_10000 *

    Stogy, I think you do have a point about solar starting to ramp up. but I also think we are still in a regime where it’s a limited utility — you can’t run most transportation off of electric. The exponential growth is mainly because it’s such as a small market to begin with.

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  10. Xetrov

    Really? That was what it was designed to do?

    That was one of its very few “accomplishments”. It was designed to reduce Co2 emissions, which was an abject failure…Well technically it was instituted for preventing “dangerous” anthropogenic interference of the climate system which is bullshit on its face since they haven’t proven mankind introducing Co2 into the atmosphere is causing “dangerous” warming. Strangely enough, the US is one of the few countries who signed it that actually met the obligation thanks to the economic downturn.

    Cost parity for photovoltaics is expected in the US by 2015. Of course, with the real costs falling so quickly, it may happen sooner.

    Which means I was correct in saying that at the current time it is not economically feasible. Thanks.

    I think you need to look more closely at the reasons why Solindra failed.

    Not really. Unsound business model that relied completely on political pull and continued government subsidies, and a golden parachute plan for the key investors that walked away with hundreds of millions of dollars in tax breaks for their venture firms, largely thanks to the aforementioned political pull.

    And it’s a start up technology, so a little funding is hardly out of place

    A “little funding”?!? The government stands to lose about $550 million. The Fed could have given $500,000.00 to every person Solyndra hired and then fired (1,100) and lost the same amount of money.

    the massive subsidies that have gone and still go to mature technologies like fossil fuels and nuclear

    Cut them all. But also cut all of the stupid regulations that cost these industries billions every year, including the asinine ones preventing us from getting any new nuclear power plants built.

    And these mature technologies don’t pay for the social, health and environmental damage they cause. Let’s see a real cost analysis that includes all the currently hidden and uncounted costs and you’ll see a very different energy mix.

    “You stepped on a flower! That’s at least $10 in “uncounted costs”.”

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  11. Seattle Outcast

    Cost parity for photovoltaics is expected in the US by 2015. Of course, with the real costs falling so quickly, it may happen sooner.

    What is the total cost of ownership?
    How long do the solar panels last before replacement?
    How much will it cost to replace dead equipment?
    Does this cost parity include or exclude government assistance?
    What sort of technology is required for energy storage (you know, for when the sun goes down)?
    What are the hazardous material disposal costs for the solar panels and the batteries?

    I can keep going…..

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  12. AlexInCT

    The Koch-funded Tea Party

    Because the only decent funding comes from those with an agenda that pushes the insanity of the left…


    Why bother?

    Peak stupid, remember?

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  13. Mississippi Yankee

    And now it has actually reached the point where renewables are cheaper without subsidies than than fossil fuels in a growing number of countries (such as India, Australia, China), and the cost is falling so quickly that they they will be cheaper per MW in the US by the time that any newly constructed fossil fuel power station is constructed if ground is broken right now.

    Could you provide at least one credible link to your stated wet dream?

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  14. stogy

    We could pave North America with solar panels and it would go nowhere because it wouldn’t generate enough to meet demand. I would prefer not to have to live with rolling brownouts so watermelons can feel good about themselves.

    Who needs to cover all of the US in solar panels? The idea is to use some currently available unused space (e.g. rooftops) to bring down the amounts of fossil fuels needed. It doesn’t have to equal 100% of energy consumption, just a reduction would be good.

    My in-laws in both Australia and Japan bought small solar-top PV systems (unsubsidized), and are now paying it off by selling excess power into the grid. They buy some of that power back at night but they make a little each month – and overall, the system will pay itself off in about 7 years. In Japan, my relatives get a guaranteed per watt price for what they sell; in the Australian state where my wife’s folks live, I am pretty sure they don’t even get that (the scheme was phased out before they applied).

    And in terms of emissions (from manufacturing the system), they will be neutral in about 18 months. So in terms of storage, there really isn’t much of a problem. And they help to reduce peak loads (and therefore prices) on the system, thereby bringing down power prices for everyone. No storage issues involved here.

    I agree that storage for larger systems is a problem, but with new faster, more efficient batteries coming online, and huge private investment in other storage systems, things are going to change quickly. But smarter grids would be really helpful. What if you could drive your Volt to work, and plug it in, and the solar panels on your empty house could charge your car there? SImply by buying and selling into the grid.

    What’s not to like? More energy independence. Less pollution. Less environmental damage. The market is beginning to lead because this is where the money is going to be.

    Could you provide at least one credible link to your stated wet dream?

    Bloomberg New Energy Finance

    “The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “The fact that wind power is now cheaper than coal and gas in a country with some of the world’s best fossil fuel resources shows that clean energy is a game changer which promises to turn the economics of power systems on its head,” he said.

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  15. hist_ed

    My in-laws in both Australia and Japan bought small solar-top PV systems (unsubsidized), and are now paying it off by selling excess power into the grid.

    What is the cost of electricity on those places compared to the US?

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  16. Seattle Outcast

    Wind power – one of the bigger boondoggles/epic mistakes foisted off on the gullible. The only way wind power is reliable is to engineer your own wind.

    Two ways to do that – both are expense, one can only be done where sunshine is constant, and the other is too expensive to consider as being worth it.

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  17. hist_ed

    Regarding Kyoto, Bjorn Lomborg has done some interesting work on its effects globally. Looking at a country’s emissions from its manufacturing is the wrong way to go. Look at the emissions from its consumption to get a better picture. Lomborg looked at the UK which did reduce CO2 over the last few years. It also reduced its manufacturing. The UKs consumption of manufactured goods increased over the same time period. The difference is imports from the developing world-mostly China. China emits more CO2 and other pollution per unit of energy consumed, so Kyoto’s diversion of manufacturing from the UK to China increased global CO2 (while also increasing the UK unemployment).

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  18. stogy
    The Koch-funded Tea Party


    I thought this was a matter of public record – we know that the the Koch brothers were involved in conservative organizations such as Americans for Prosperity that have been engaged in activities that support the tea party. AFP employed activists have spoken at Tea Party events, and have posted information for tea party members on their website.

    We also know that the Koch Brothers provide significant funding to Americans for Prosperity:

    Koch Industries’ web site says simply: “Among the hundreds of organizations that have received support from Koch companies and/or the Koch foundations are Americans for Prosperity and Americans for Prosperity Foundation.”

    Public documents provide a more detailed, if still incomplete, financial picture.

    According to tax returns, recent contributions by the Kochs include $1 million from the David H. Koch Charitable Foundation in 2008 and $67,556 from the Charles G. Koch Charitable Foundation in 2009.

    A lesser-known Koch entity, the Knowledge and Progress Fund, could be considered an indirect supporter. The fund, chaired by Charles Koch, has given more than $3.2 million in recent years to DonorsTrust, a philanthropic group that accepts donations and then distributes grants to “liberty-minded charities.”

    DonorsTrust gave nearly $7.7 million to the Americans for Prosperity Foundation in 2010, according to its tax return.

    Lots more if you follow the link. There is nothing wrong with them doing that. They are entitled to spend their money on causes and groups that support their business and political interests.

    The hypocrisy that I am trying to point out is that the Koch investment in establishing organizations against big government is now being used by a Tea Party group in opposition to the Koch’s business interests (but completely consistent with free market principles). So looks like they don’t mind big government at all when it makes them money.

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  19. stogy

    What is the cost of electricity on those places compared to the US?

    That’s a big question. Which state (of both the US and Australia)?

    Kyoto’s diversion of manufacturing from the UK to China increased global CO2 (while also increasing the UK unemployment).

    Lomberg is a lazy researcher, and his work has been heavily criticized for misuse of citations (often showing the opposite of what he is claiming in the text).

    But my question, not having read this research, is how can you be sure that Kyoto was responsible for that? Energy is usually not the largest cost in manufacturing – and obviously wages and other costs are much higher in Britain than in China. I am sure if you looked at non-signatory countries you would also find that there was a high level of manufacturing jobs shifting to China.

    The argument at COP3 in Kyoto was that developed nations had already had the benefit of more than 100 years of carbon to develop their economies, and that for developing countries, limiting fossil fuels would have much greater adverse effects on their economies than it would for developed countries. So the idea was to introduce a small cap on emissions in Western countries to begin the process of developing the necessary technologies and retooling for a post-carbon economy. And we’re closing in on that now. I wouldn’t say that we’re quite there yet, but getting closer.

    This isn’t pie in the sky stuff any more. No one needs to go back and live in a cave. I think 50% PV generation or more for electricity by 2040 is a realistic target. And then we can see where we should go from there. And if it can be market-lead, then I’m all for it.

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  20. stogy

    So here’s a little more on the Americans for Prosperity vs. the Tea Party Patriots in Georgia:

    Georgia’s Public Service Commission will meet next week to vote on the utility’s plan for meeting Georgia’s energy needs for the next two decades. Georgia Power has already agreed to add 270 megawatts of solar energy to its system and did not propose adding more in its latest plan. Commissioner Lauren “Bubba” McDonald Jr. wants a vote on a plan requiring Georgia Power to add another 525 megawatts of solar energy.

    McDonald’s plan has support from a group of solar developers earlier spurned by Georgia Power and organizers of the Atlanta Tea Party Patriots.

    “It’s an opportunity for the consumers,” McDonald told the AP. “It’s an opportunity to utilize what God has given us, and that’s the sun.”

    The Georgia chapter of Americans For Prosperity wants McDonald’s plan rejected over concerns it will raise costs.

    Solar power has historically been pricier than traditional fossil fuel sources for around-the-clock energy, though costs have fallen and developers argue it is now more competitive. Better figures will emerge once Georgia Power signs contracts as part of earlier pushes to obtain solar power. The company expects to pay no more, if not less, for that solar power than it would pay to get it elsewhere, Georgia Power spokesman John Kraft said.

    Even if costs are higher, the total solar power that has been proposed or added to Georgia Power’s system is the equivalent of 1 percent of its current electric fleet, according to AP calculations based on the capacity of the company’s power plants and a federal study predicting how reliably different types of power plants can produce electricity. As a result, it is unlikely so small a resource could have a 40 percent impact on monthly bills.

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  21. stogy

    Now that’s precious.

    Well, Scotty, there wasn’t a link to the article provided. Surely you don’t expect me to search for it myself, do you?

    However, having quite lazily misspelled Lomborg as Lomberg, I have nothing at all to boast about.

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  22. davidst

    Eric Janszen of iTulip on this article…

    Sorry but this is shlock analysis.

    Passive tense shlock analysis flag phrase: “If concerted effort is made to shift to oil alternatives and promote efficiency, a demand decline may arise even sooner.” Concerted effort made by whom? Governments? Consumers? Auto manufacturers? Shlock analysis never bothers to define the process: who does what to whom over time and why.

    Peak Cheap Oil is my process theory of increasing oil scarcity that takes into account that oil has been and always will be produced in order of best and cheapest to worst and most expensive, and at a certain point the rate of improvement in oil production technology will fall behind the rate of decline in oil field quality and accessibility; producers will be unable to compensate and will cope with ever-rising costs which they then pass on to consumers.

    PCO occurred around the year 2000. Since then rising oil prices have and will continue to rise to throttle demand.

    In other words… yes demand will fall, but only because oil will become more scarce and that will drive prices up. Lee was right about that. But looking at the rise in the cost of oil since the year 2000, it’s obvious that technology has *not* kept up with the declining quality of recoverable oil reserves. That was an article of faith on Lee’s part and he was wrong. If he had been right, the price would be well under 50 not closer to 100. Yes there will always be oil, but what good does it do anybody at unreachable prices?

    Hubbert’s original peak was correct. it was a peak in the production of the lower 48 states. It happened right on schedule. Catastrophe didn’t happen because the USG took steps to ensure that we get more than our fair share from the rest of the world. Now worldwide cheap oil peaked a decade ago and all oil will peak sooner than anyone would like. Not that it matters because the economic calamity (a process not an event) caused by this has been with us the whole time.. most people just don’t recognize the actual cause. The average joe won’t hear anything about a peak, they’ll just see prices at the pump rise and rise and prices in stores rise as well (since oil is a significant input cost to almost everything if not directly then by proxy).

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  23. Retluocc1

    @davidst –

    One issue with your assessment of oil prices. That is: oil priced in gold – not USD – is flat.

    The value of oil – with some admittedly large fluctuations – has been consistently around 2-2.5 grams of gold per barrel of oil since at least 1950. What is notably absent is any long term trend in this ratio.

    Oil is currently at or above $100/bbl because of the quantitative easing policy of the Fed for the last 10 years, not because of any kind of actual scarcity.

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  24. davidst

    That is an interesting observation… if you assume the value of gold is flat then this does indeed tell you that the cost of oil has also been flat in real terms. However, the value of gold is not flat. Gold is an alternate reserve currency and its value increases when the primary reserve currency (US Dollars) becomes more risky. The value of gold has risen faster than all the other inflated assets indicating that more is happening to it than QE. Additionally, if you simply look at the complexity and inefficiency of modern oil recovery techniques how can you deny that they cost more? How could oil sands be economically feasible if the real cost of oil hasn’t changed much? It’s not a new technology, the rising cost has simply made it economically viable. We use cheap oil first, then more expensive oil as the price rises.

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  25. John Binder

    Renewable energy is a strange term. What does it really mean to be renewable when even that giant nuclear reactor is the sky will burn itself out eventually? Looking at a dictionary we get this.

    “Any naturally occurring, theoretically inexhaustible source of energy, as biomass, solar, wind, tidal, wave, and hydroelectric power, that is not derived from fossil or nuclear fuel.”

    So renewable energy has to not be derived from fossil or nuclear fuel. The sun uses nuclear fuel, and fossil fuel is derived from sunlight so if we were to take this literally then tidal and geothermal energy are the only true types of renewable energy (Both of which are derived from gravitational forces although there are some who believe that geothermal heat has a nuclear element).

    Personally I think that “renewable” is just a rhetorical device used to try to make certain types of energy seem better than fossil fuel and nuclear energy, but my purpose here isn’t just to criticize people’s terminology. Really when people are talking about switching to renewable energy they are talking about wind turbines and solar pv. These are the two ‘white knights’ that people think are going to save us all from the evil nuclear and fossil fuel industry, so these are the two energy sources I’m going to talk about.

    The cost of wind, and solar can be placed in two categories. One category includes things like the cost of things like wind turbines, solar panels and grid tied inverters. There are plenty of sources that talk about this kind of stuff (including this one). So I’m not going to go into that. Instead I’m going to talk about the second category which is the hidden costs of wind and solar pv.

    The two biggest sources for the hidden costs of wind and solar are their low power density, and the intermittency of those sources.

    Power density is the power per unit of area. It’s an important consideration because it describes how much space you need to fill your energy requirements. The power density of wind and solar are low, which means that to supply most of our power from such sources would require a lot of land. To give you an idea of how much consider this. One estimate of the power density of solar pv was 10 w/m^2, and in 2011 the U.S. Generated 4,100,656 Gwh. These two facts taken together tell us that if we generating all of our electricity with solar pv in 2011 then it would have taken 46,811 square kilometers ( or 18,074 square miles). That’s roughly the area of all the roads in the US. Those roads weren’t easy or cheep to build or maintain; can you imagine how much harder such a massive solar project would be? Of course this is all academic. You can’t really power the whole country with solar pv because solar pv doesn’t work at night.

    (see page 41 for power density of solar. Note: it’s worth reading this whole pdf if you interested in this subject.)

    Estimates for the power density of wind have been around 2 to 7 w/m^2, but new research suggests that the power density of large wind farms may actually be as low as .5 to 1 w/m^2 (Imagine wind turbines covering 10 to 20 times the area of all the roads in the US).

    Power density is important(especially for wind) which is why people try to situate wind and solar in places where the power density is highest. This means a lot of transmission lines are needed to get the power to where it’s used and those transmission lines have a cost that needs to be accounted for. Also, some people might argue that there are aesthetic costs to having wind turbines, solar panels and transmission lines all over the place.

    “For now, engineers in the grid redesign project have determined that conducting business as usual between 2010 and 2030 would require $18.5 billion in new transmission lines in the United States, while a system designed to integrate renewables like wind energy on a large scale would cost $115.2 billion.”
    “Energy from coal can also be made almost anywhere. But to make electricity from wind, the generator has to be where the resource is, and for wind, that means places with few major power lines. “

    I’m going to take a break at this point. I’ll post about the costs of intermittency latter. In the meantime this link does a good job of describing and quantifying some of the hidden costs of wind and solar.

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  26. stogy

    John, I don’t completely disagree with the points you’ve made here, but it’s unfair to look at the hidden costs of just renewables – all energy generation forms have hidden costs (a point made in your OECD link) and understanding them is important in deciding on any energy policy. Costs should also include such things as decommissioning nuclear plants (as well as insurance for surrounding communities), and for mercury, CO2 and emissions, as well as restoring environments damaged by mining.

    The point about renewables as part of the energy mix is less about the energy density and costs, which are improving all the time (your data is already well out of date). Small-scale solar is a good way to reduce energy dependence, it’s cost effective, and brings down CO2 consumption while allowing for the technology to mature further (such as nanowire collectors for solar power), which will greatly enhance energy density. The important thing is that small-scale solar can generate power at peak times and rates, bringing down costs and actually reducing the burden on grid infrastructure.

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  27. John Binder

    Part Two: The hidden costs of intermittency.

    Wind and solar are intermittent (i.e. The wind isn’t always blowing and the sun isn’t always shining). Everyone of course knows this which is why it is brought up in these types of discussions over and over again. Most proponents of wind and solar don’t feel that this is a real problem because of a variety of solutions they propose (for example smart grids, energy storage etc.), but all of these things have costs and other issues that need to be accounted for.

    Lets start with a little talked about issue with wind and solar pv. Solar pv and wind have power quality issues. If you have enough of them installed things like shifting winds and cloud can cause serious problems. Germany is already having problems even with it’s level of penetration.

    Manufacturing requires good power quality which solar/wind have trouble supplying. This is especially true for manufacturing high tech things like solar panels. In order to cope with these problem manufactures need to spend money on special systems (for example system that use battery backup), but such things have a cost that should be included in the price of wind and solar.
    For example, Beacon Power was created to help deal with this problem, but they went out of business. Ahead of their time maybe?

    Other issues with intermittency are much more difficult to deal with.

    It’s important to remember that with electric grids the amount of electric power produced always needs to equal the amount used. Really small difference are power quality issues and larger difference are Power outages.

    Matching production and use with intermittent sources like wind and solar can be tricky. Things like clouds and changes in wind speed can cause problems. One way of dealing with this is by trying to make things more predictable by averaging it out over a large area.

    In order to understand how this works try picturing the electric grid as a bucket. Some people are taking cups of water (electric power) and pouring them into the bucket while others are taking cups of water out of the bucket. If the bucket become empty it’s bad because people can’t get their water, and it’s also bad if the bucket gets too much water and starts overflowing. The water in the bucket isn’t very deep (just enough for someone to get a cup full) so the rate of the water going into the bucket has to precisely match the rate of the water coming out of the bucket. If there is only one person drawing water from the bucket this can be difficult to do. One person is fairly unpredictable. What if he all the sudden decides he wants a lot of water, or what if he all the sudden decides he doesn’t need any for a while. Lucky the actions of a lot of people average out into something much either to predict. So in order to deal with the problem they make the buck wider (but still just as deep) so many people can draw out their cups of water at once.

    This worked well enough, everyone was happy, and life went on. Then one day some new people decided that they wanted to put their cups of water into the bucket as well, but other people didn’t want them to because they couldn’t always predict when they would be putting water into the bucket, and because they couldn’t match the rate they put water into the bucket with the rate people were taking it out. The new people said it would be fine, and that just like with people taking water out of the bucket things would become more predictable if they just made the buck wider so more people could put their cups of water into the bucket at once. Then once things became predictable the people that could control the rate they put water into the bucket would help match everything up.

    So how well does this new way work? You guess is as good as mine. Personally I’ve always been skeptical that adding different types of unpredictability together will somehow make things more manageable. One thing’s for certain, the electric grid is not really a bucket. It is an expensive complex machine, and making it do what the renewable energy advocates want makes it even more complex and expensive. That’s why they are always saying things like “we need to upgrade our arctic electric grid” or “we need a smart grid”. Sure the electric grid (just like roads) needs maintenance, occasion expansions and even upgrades; but the real reason they are pushing so hards is because they want the money needed to integrate more solar pv and wind without having to included that money in the costs of those technologies.

    One way of looking at the costs of intermittency is as the cost of underutilized capital (or in some cases the cost of systems made to utilize capital more effectively). A good example of underutilized capital would be a power plant that only runs a few month out of the year when its too cloudy for solar pv, or a transmission line going to a wind farm that has to be build to handle that wind farm’s maximum capacity even though on average the wind farm only delivers 30 percent of that. These things all add up. A lot of people seem to think that some costs don’t count. For example if a fossil fuel plant is losing money they think good riddance, but they forget that they still need that plant even if for only a few month out of the year. The electric power industry is a business. They are in the business of providing people with electricity when they want it. If that means keeping a power plant operational so it can be operated a few month out of the year then that’s what they’ll do, but don’t think they won’t pass the costs along onto the consumers. In conclusion there are reasons why electric prices are higher in places that embrace solar and wind.

    I’m going to stop for now. Eventually I plan to cover a number of subjects, but it’s going to take me a while since I’m not the fastest writer in the world. Next time I’ll talk about different proposed solutions like smart grids (in more detail), energy storage and demand side management. After that I’ll probably talk about external costs, subsidies and the benefits of distributed power

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  28. John Binder

    Stogy, My links are dated? Does that mean that the sun now shines brighter and the wind blows harder? Or maybe you’re are saying that now instead of 10 percent solar panels covering a very large area maybe we can cover slightly less large areas in 15 percent or maybe 20 percent panels. If the former then I really doubt it, and if the latter I’m still skeptical but you’re welcome to try and change my mind.

    You say it isn’t fair to talk about the hidden costs of renwables without also talking about the hidden costs of nuclear or fossil fuels. Do renewable energy advocates ever talk about the hidden costs of renewable energy when they criticize nuclear? I’ve never seen it happen. If people don’t talk about these things then how will other people know? I think people have the right to know.

    Lastly, I don’t think we are going to agree about the true cost of nuclear. The biggest cost of nuclear is the cost of fear and misinformation. The price of thousands of people not being able to return to their homes even though every day people are being exposed to comparable level of “natural” radiation without things like media coverage and protests. Every time I hear an anti nuclear person talk about costs of nuclear I get a vision of someone kicking a man in a balls then complaining about his poor posture.

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