Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
And it never meant running out. It's exactly what it says on the tin: a peak and a probably very long tail of decline.
There is also "peak oil" as the prophecy of imminent collapse of industrial civilization, which was a much bigger thing a decade or so ago. It may still have some loyal believers.
I think that people unfortunately have the means to extract far more oil than we have the means to safely burn in Earth's atmosphere.
You are talking about peak oil supply. Instead, what if we run into peak oil demand.
IE, instead of running out of oil, we run out of oil demand, as everyone moves away from oil onto better technologies.
The cost of solar panels and wind has been going down dramatically over the last couple decades, and is only continuing to do so.
The percentage of electric cars is also increasing.
There is a lot of oil in the ground. It isn't going to run out in the next decade. By which time these technologies will have become even better.
In brief, the idea is that once we enter a decline phase in fossil fuel availability — first in petroleum — our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but... energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term - effectively steepening the decline - for a long-term energy plan? It’s a trap!
Yes, "we" would be willing to tolerate the use of increasingly scarce fossil energy to build non-fossil energy resources. Because the "we" investing in new non-fossil energy is largely separate from the "we" who worry about paying this month's bills if gasoline prices go up by a dollar a gallon.
Investors care about what consumers want insofar as they see a way to profit by building things that consumers will pay for. Building non-fossil energy projects in a time of high fossil energy costs counts. Depleting their investment capital to temporarily subsidize retail level prices of fossil-derived energy doesn't count. They were never going to offer to do the latter, and even populist politicians (of the American variety) rarely propose seizing wealth to directly subsidize gasoline/electricity/natural gas at the retail level. American politicians have different approaches to making energy cheaper.
There's a relatively small number of countries in the world that directly subsidize fossil fuels at the retail level for large swaths of the population. If this blog entry were written about e.g. India or Egypt I would find the political/institutional problem with higher fossil energy prices plausible as described. But it doesn't describe most of the world's democracies, nor China (for different reasons), nor most other countries.
For instance, in Europe road transportation fuels tend to be heavily taxed - so they have the option of lowering those taxes to amortize any potential oil shocks (but not too long, and at the cost of taking the budget hit - a bit like India/Egypt in the end...)
It's only people pushed toward bad decisions by short-term desperation (weak government leaders facing rioting, individuals too poor to steer market investment decisions) whose behaviors would set up this "energy trap." Market-driven investors and rational governments alike will invest resources into reducing future consumption of an increasingly expensive fuel even if it somewhat exacerbates the immediate problems caused by higher fuel prices.
[1] Building nuclear reactors as a reaction to high oil prices made more sense than may be obvious now. At the time, France actually did produce a lot of electricity by burning oil. Oil-fueled electricity became much less popular after the 1970s except in petro-states and in isolated locations. Surprisingly, Pakistan managed to make the same mistake in the 1990s of building oil-fired electricity plants, which became very expensive to operate less than a decade later.
https://mattstoller.substack.com/p/why-private-equity-should...
And Macron was really an idiot when he thought that asking the poorest people to pay the most for the ecological transition was going to fly...
But isn't this also a symptom of an energy trap - the government itself not having any slack left for long-term planning ?
http://www.lecourrierdesstrateges.fr/2018/11/04/augmentation... (fr)
(Note that, in the end, the above seems to be very similar to issues in Egypt - government balance taking a hit due to less income from fossil fuels - well except that the Egypt issues are more dramatic, being caused by the country becoming a gas importer instead of exporter...)
And I am saying that it is going to take us a much longer time to run out of oil, than it is to build all that new infrastructure. Not because building the infrastructure is easy, but because there is a whole lot of oil in the ground, and therefore we have a lot of time.
IE, people will stop using oil, because the price of solar, ect has gone down, way before we come close to actually running out of oil.
I am indeed unsure (and a bit scared) about the potential from oil sands (and maybe shale oil = kerogen).
The potential oil production capacity of the world has massively increased, because of fracking.
And if oil prices go up, a whole lot of oil in the US and Canada , become immediately profitable to extract.
I think you are severely underestimating how much non conventional oil there is, that we could start extracting, if it became profitable.
No, it's not.
> All resources on Earth are finite. What’s special about oil?
Nothing; it would be special if it was an extractable resource and didn't have a peak where utility vs. cost of extraction meant that extraction declined from the peak.
> Why not peak aluminum or peak concrete or peak cobalt?
Aluminum and Cobalt, as extractable resources, will probably also have extraction peaks.
https://en.m.wikipedia.org/wiki/Predicting_the_timing_of_pea...
Now there are multiple schools of thought, but one of them holds that when reality diverges so much from theory as in this plot, it’s time to question the theory.
For example, Mad Max in 1979 comes from that sentiment.
These were real problems people faced, although it wasn't exactly a full panic.
Oil "scares" on the other hand were threats that raised eyebrows, and caused dramatic price fluctuations in anticipation potential problems. Each "scare" really only hit the wallet and bank account, without altering real behavior.
In that sense, yes, there were a few other "scares" between Jimmy Carter and present day. Each grouping came periodically, maybe every ten years. Almost all of them were tied to Iraq.
The first was the invasion of Kuwait in 1991. I think gas prices blew past $2/gallon for the first time.
The second was 9/11, and $4/gallon gas starting late 2001. This one was rough. Pretty much everyone I knew was groaning about gas prices, and with Iraq invasion rumors people started thinking $5 would break them.
The 2003 Iraq invasion actually resulted in a downward trend (due to international theft or spoils), but it's ever been below $2 again, and it's been back up to $4 at the pump, here and there, depending on geographic region and state taxes, here and there.
With the 2008 meltdown, oil prices weren't displaying any gouging, and there wasn't much of a scare at the 2001 decade mark, because as others have mentioned, fracking has buoyed domestic production.
We're going to have to do this the hard way, as the other poster mentioned. Decide to keep it in the ground.
Additionally, tar sands are very marginal economically. Arguably not profitable right now. Fracking tight oil is cheaper, and even that is not being pursued as vigorously as it was when oil prices were higher.
And there are environmental regulations that get in the way of oil shale/kerogen extraction. And for good reason.
Which encourages renewable development. Renewables would not be as successful today with oil at $20/bbl.
https://investors-corner.bnpparibas-am.com/investment-themes...
Solar can be cheaper for daytime generation before it's cheaper for nighttime generation (when you need to tack on the cost of storage). Electric cars may already have a lower TCO, but if you already have an ICE car, it may not be worth the transaction costs of immediately selling it and buying an electric car instead of waiting until you would have bought a new car anyway, whereas it could be if gas prices were higher. The TCO is also affected by how much you drive, so the gas price that justifies replacing your car depends on how much you drive it.
There isn't a price level where $0.01 below it no one can justify buying an electric car and $0.01 above it everyone can. The higher oil prices get, the more people end up on the other side of the line.
The real question is, as the old cars become unreliable and age out of service, how does the TCO compare as between the new cars that will replace them?
I fully expect that electric cars will have a reasonable TCO in the future.
For traders, at exactly which point matters a lot.
> Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet.
Yes, it's probably a good estimate: It doesn't mean that we won't achieve the "peak" in some decades, eventually even "more expensive" options will be used up, just that that won't prevent having much more CO2 than now.
https://aspofrance.files.wordpress.com/2018/08/35cooilforeca...
"The main conclusion of this study is this from 2018:
-only 6 countries have not yet reached peak: Brazil, Canada oilsands, Kazakhstan, Iraq, UAE, Venezuela Orinoco
-19 countries (out of 35) have or will have a decline rate of 5 %/a
It means that, excluding the 6 countries before peak, the best and the simplest way to forecast future production is to decrease present production by 5 % per year"
"6 countries have not yet reached peak" and "excluding the 6 countries" surely doesn't sound like "peak" everywhere.
So yes, it seems that, at longest, in "some" decades the global peak will do happen. Laherrere also documents why the exact predictions are hard (see all the graphs there).
My point is more, whoever thinks that "scientists will always find something" surely thinks in short enough frames. There is a finite amount of fossil fuel material on Earth.