Peak Oil isn't the issue...it's the declining ROI of its extraction
economixt.com
economixt.com
So, oil will continue to be extracted. Remember, it doesn't take oil to extract oil, it takes energy. The value of oil is more than simply for the production of energy, therefore, as long as uses for oil can be found that are more valuable to consumers than energy, it will continue to be extracted. We will use solar energy or hydro to extract the oil, then package it up into more valuable forms to sell to the public. More valuable that is, than solar power or hydro.
It is an interesting effect of the markets that the price of oil dropping makes the effective reserves smaller.
The problem with the argument here is that EROEI is proportional to the monetary cost of extraction. They largely measure the same thing. More energy means more money.
That is why solar is not worth it yet, unless it is concentrated or heat based. The cost is evidence that you shouldn't buy solar - but also evidence of the amount of energy spent on making cells.
New solar cells can sometimes take greater than the life of the product to recoup the energy spent on creating them. If you live in, say, Massachusetts, or don't clean your panels well, you'll probably never net an energy savings.
The world demands something like 85 million barrels of oil per day. There could be a trillion barrels in the ground, but if the oil industry can't get it to market fast enough, the price will become volatile.
Similarly, there could be a trillion barrels in the ground, but if it takes more than a barrel of oil equivalent to extract a barrel of oil, it's useless as an energy source (but obviously not as a feedstock for oil-based goods production).
What happens after an oil source passes its peak is that a) the rate of extraction starts to go down, and b) the EROEI starts to go down.
EROEI is proportional to the cost but they're not equivalent. As we saw over 2008, the cost is also a function of the balance between supply and demand. When demand tries to grow against a flat supply, the price goes up. If the price goes up high enough, the economy starts to go into jeopardy.
That's why the rate of extraction matters, and it's not a subject the peak oil deniers really address, except to wave their hands and claim that 'new technology' will deal with it.
So far, the experience with 'new technology' has not supported this optimism. Most new technologies either a) accelerate depletion of conventional sources without increasing total recoverable reserves; or b) enable access to non-conventional sources at a very low rate of extraction and a very low EROEI.
Peak oil theorists have been warning us about exactly the kind of oil price volatility (long run-up followed by an economic crash and a collapse in the oil price) that we're observing today. As long as our economy still runs on an ever-increasing rate of oil production, we will continue to suffer from volatility.
Remember, the market has two methods of bringing supply and demand into balance: it can spur the creation of new supply (through the price incentive to increase production), and it can spur the destruction of demand by pricing some consumers out of the market.
Given the geological constraints facing the feasible rate of oil production, we can expect that most of the balance will come from destruction on the demand side.
Oil is used for peak power generation that can quickly adapt to chaning demand, however, hydroelectric energy storage is used to do the exact same thing.
Uses also = requires in very massive quantities in order to produce and deploy whatever is going to (partially) replace it.
Do you really think wind turbines, solar panels, hydroelectric dams, and nuclear power plants don't require oil to build, construct and, to a nontrivial extent, operate?
The only real question is how fast the price of oil increases, and how long it takes to switch to other substitutes or synthesize it.
PS: Even the worst case estimates say the supply will gradually decline over decades so there is going to be a long time to find substitutes. (Less than 25% decline in supply per decade is slow.) What happens to Oil’s price is a separate issue, but that’s far less important than you might think.
But you're right that it takes a long time for price signals to drive a structural change in patterns of oil consumption. If the price of oil gets too high, many people are simply priced out of the market for oil - and in huge swaths of the USA, out of the market for jobs, homes, food, etc. as well.
Unfortunately, the sharp recession that high oil prices trigger causes a rapid (if temporary) collapse in oil prices. The result of leaving the price of oil up to the market is volatile prices and wildly fluctuating price signals that periodically sabotage the incentives for individuals to change their energy use patterns.
No, it doesn't. The world needs a certain amount of energy - any kind. They are almost totally interchangeable.
You could pump 0 barrels a day, and as long as there was a transition time (about 10-30 years) there wouldn't be any problem at all.
If coal was cheap, you can gasify it, or convert it to liquid fuel. If all you had for nuclear power, then battery powered cars would be much more used, plus you could thermalyze water (similar to electrolyze), then combine with co2 and make liquid fuel.
The ONLY thing that matters is how much does it cost. Oil is the cheapest thing right now, so that's what we use. If oil got more expensive, then no problem, we'll switch to something else. It doesn't even matter if there is plenty of oil, if it's expensive we'll do something else - that's why so many wind farms sprung up. We didn't run out of oil, it's just wind suddenly got cheaper than oil.
Theoretically, we can have access to infinite amounts of clean energy by fusing hydrogen nuclei... We've known that for decades, and yet, people are still worried about the supply of oil...
"False. The energy yield ratio (the ratio of energy delivered by a system over its lifetime, to the energy required to make it) of a roof-mounted, grid-connected solar system in Central Northern Europe is 4, for a system with a lifetime of 20 years (Richards and Watt, 2007); and more than 7 in a sunnier spot such as Australia. (An energy yield ratio bigger than one means that a system is A Good Thing, energy-wise.) Wind turbines with a lifetime of 20 years have an energy yield ratio of 80."
source: http://www.inference.phy.cam.ac.uk/withouthotair/c6/page_41....
(I assumed that the sun in Central Northern Europe shines with an intensity similar to the intensity in Massachusetts.)
No, it doesn't imply that - the data just imply that the energy needed to build the wind turbine is recouped after 3 months. Energy cost to build something != Cost to build something. In the case of the wind turbine, consider: R&D costs, material costs, marketing costs, etc.
Material costs: why does stuff cost? Because it takes energy to make it, and to transport it.
R&D, marketing: You have pay someone. Why does he need money? Because he spends it on things that cost energy to make.
Follow it all the way down and energy is exactly equal to cost.
(Note that energy is not equal to environmental harm, which also needs to take into account pollution, which is not reflected in the cost.)
Ok, what does that mean? In physics, if something is exactly equal to an amount of energy, it has to be measured in the same unit as energy (joule). But cost is measured in dollars (or some other currency). So the above statement makes no sense.
> why does stuff cost? Because it takes energy to make it, and to transport it.
That is a factor for cost, but not the only factor.
> R&D, marketing: You have pay someone. Why does he need money? Because he spends it on things that cost energy to make.
By this argument, a product takes more energy to produce if the workers negotiate a better wage - because after work, they spend their extra money on something that costs energy to make. I'm not convinced that this makes sense. Taken to the extreme this would mean: A product made by unpaid volunteers takes far less energy to produce than an equivalent product made by paid workers.
> That is a factor for cost, but not the only factor.
Actually, yes it is. It's the only factor. Name any other factors, and I'll show you how each one actually boils down the to the energy used for it.
> By this argument, a product takes more energy to produce if the workers negotiate a better wage - because after work, they spend their extra money on something that costs energy to make.
Correct. Real world example: Americans use a lot more energy per capita then Chinese. Americans earn a lot more per hour then Chinese. Check if you like, in every area $/h = energy/capita
> A product made by unpaid volunteers takes far less energy to produce than an equivalent product made by paid workers.
Also correct.
Think of a dorm with lots of volunteers. It costs far less energy to house and feed them than 10 separate houses.
Since they have no money, they buy nothing. Since they buy nothing, no one spends energy making things for them.
An important note: Just because it uses less energy doesn't mean it's better! A slave uses very little energy, but is obviously bad.
http://en.wikipedia.org/wiki/List_of_countries_by_energy_con... http://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_... http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomin... http://en.wikipedia.org/wiki/List_of_countries_by_GNI_(nomin...
And see how well they correlate.
Even if one does as you do (i.e., measure energy in dollars) I smell a unit mismatch:
left side of your "equation": dollars per hour
right side of your "equation": dollars per human
which would only make sense if you also show that 1 human = 1 hour... perhaps I should stop now.
But:
> Think of a dorm with lots of volunteers. It costs far less energy to house and feed them than 10 separate houses.
yeah, but consider 10 volunteers who live in their own separate houses, eat lots of high caloric food and write a free software program that I use. Cost for me to get the free software program: ca. 0$. Energy used by our 10 independently housed volunteer programmers to create it? I say: Far more than zero.
I guess we should just agree to disagree here: I think it makes sense to look at the energy used to produce a product without looking at how much the product costs - the measure "energy yield" for products like wind turbines makes sense in my understanding. Your model says that we don't need an energy yield measure for wind turbines - because energy yield is the same as return on investment.
> which would only make sense if you also show that 1 human = 1 hour... perhaps I should stop now.
Come on, I thought you would do that yourself.
Fine:
capita := person/year
person/year * 260(work days/year) * 8(hours/day) = person/hour
energy/capita = energy/person/hour
$/hour := $/person/hour
energy/person/hour = $/person/hour
energy = $
As to your second paragraph - someone is paying for those people. You are basically shifting the energy cost of your free software program onto the energy cost of whatever they are doing for money. Which is exactly right. People will do _something_ with their free time, and the energy cost of that item, should be, and is 0. Since if they did not do one thing, they would do another.
But if they got paid less, they would do less. So whoever pays them is the one responsible for their energy usage.
> I think it makes sense to look at the energy used to produce a product without looking at how much the product costs"
Except that they are the same thing. Let me shift a question to you: Which energy costs of manufacturing will you include, and which will you exclude? On a previous post you excluded materials and wages. I can sort of understand wages, but why exclude energy cost of materials?
> Your model says that we don't need an energy yield measure for wind turbines - because energy yield is the same as return on investment.
Correct. You keep coming up with these points that are totally correct. So I think you understand me very well (despite the silly thing about capita and $/hour).
> But if they got paid less, they would do less. So whoever pays them is the one responsible for their energy usage.
Production (and thus energy usage) is not independent of cost (in this you are right), but not identical / interchangable in the sense that if cost goes to zero, nothing is produced and no energy is used. People produced things before there was money - as do animals. You can't seriously say that a pre-money society didn't use energy (or a bird that builds a nest doesn't use energy because no one pays for the bird).
> On a previous post you excluded materials and wages. I can sort of understand wages, but why exclude energy cost of materials?
ok, that was inprecise. Energy cost of materials should be included, but the rest of the material cost excluded (I know, you say, all cost of materials is energy...).
> Let me shift a question to you: Which energy costs of manufacturing will you include, and which will you exclude?
All measurable energy to produce something is included - except that I measure the energy in Joule which is more practical to analyze a wind turbine in terms of energy yield.
Why do I think it is more practical? Let me also rephrase my questions to you.
1. Let's look at two identical wind turbines T1 and T2, identical environment conditions over 20 years (wind, ...). Over the 20 year span, they produce the same amount of energy. Do you agree?
2. Let's say wind turbine T1 is built in a world where average energy prices remain more or less equal over the 20 years. Wind turbine T2 is built in a world where the energy price is the same at first, but doubles one month after installation for some reason (invent your own) and stays the same afterwards. Now return on investment of T2 is nearly twice as high as the ROI of T1. Do you agree?
But in your model (ROI = energy yield) you would say that T2 produces twice as much energy. Do you understand why I think this doesn't make much sense?
I mean, I understand you, yes, but in your model you cannot predict the energy yield of a wind turbine without assuming a certain future price for energy - which makes this model impractical. It's good to be able to say "this wind turbine will have an expected energy output of x joules - independent of future energy cost fluctuations".
People are willing to pay $10000 for a flock of Britney Spears's hair. You don't seriously believe that that 10k represents the amount of energy required to make the hair, right?
Sorry, I don't understand what you mean. I said energy not time. Perhaps you could clarify.
> People are willing to pay $10000 for a flock of Britney Spears's hair. You don't seriously believe that that 10k represents the amount of energy required to make the hair, right?
How much energy does Britney Spears use compared to an average person? So yes, that hair cost a lot of energy to make.
And if someone stole that hair, then they earned a profit of $10,000, which they will then spend, and consume products/energy equal to $10,000 (which they would not have done if they didn't have that money).
Price = cost + profit.
Cost is easy to correlate to energy usage.
Profit goes in someones pocket, and works just like wages. The more you have, the more you spend, and therefor the more energy you use.
Energy is correlated to time. Powering a computer for 2 hours requires more energy than powering a computer for 1 hour. Ditto for humans.
A good programmer can finish the job in 1 week and eat just as much food as the bad programmer in the same amount of time. The programmer needs 2 weeks to get the job done. Therefore, in the time needed for to finish the job, the bad programmer has eaten twice as much food as the good programmer, and has powered on his work station for twice the amount of time. Therefore a good programmer should be twice as cheap as a bad programmer, according to your reasoning.
I can guarantee you, good programmers are usually twice as expensive as bad programmers.
> How much energy does Britney Spears use compared to an > average person? So yes, that hair cost a lot of energy to > make.
Since an average human's hair costs practically nothing, Britney Spears's hair is infinitely more expensive. Therefore, Britney Spears has used infinite more energy to generate her hair. Since human energy comes from food, Britney Spears has eaten an infinite amount of food.
Riiiight.
The cost of energy costs are important when considering the economics of energy sources, but they are not the only costs to consider, if only because it is not yet practical to simply substitute more energy for another input.
Regarding assumption #2, there is no way to predict how fast production will drop, if it does continue to drop, but it seems there are enough reserves to cushion against a preciptous drop especially if prices remain high.
Regarding assumption #1, any technologist can tell you the cost of reducing consumption is quite low. As for the ultimate potential savings, imagine insulating all of the houses in the US, adding efficient windows, putting in a combined heat/power co-generation system, adding some solar heat collectors on the roof, and switching the fleet to the natural gas saved by eliminating home furnaces. No imported oil needed. Or course, it would be a lot of work.