Here’s a doom-and-gloom scenario from The City in Mind, by James Howard Kunstler, chapter on Atlanta, pp. 73-75:
On the bright side – Peak Oil might save us from Global Warming! 
(My observation, not Kunstler’s.)
Well, yes, as a matter of fact . . .
Oh, wait. You said, “plow with a team of horses.”
Never mind.
This may be true, but wouldn’t you at least want to spend some brain power thinking about it? I’d assume that, because there’s no incentive, that’s why we’re still living in an oil-driven world.
Don’t forget perpetual motion.
And in contrast to Kunstler, who offers no proof of any of his assertions, we have the financial markets which set the price for oil futures. This price represents the aggregate thinking of all the people involved in the oil business, and such prices have been proven to be the best forecast we have of what prices of commodities will be in the future.
Guess what the futures price is for oil to be delivered in 2015? $68/bbl. That’s about $3/bbl more than the price of oil today. If Kunstler and the rest of the peak oil fanatics really believe what they say, why aren’t they loading up on futures contracts and driving the price up? For that matter, if their opinions are shared by leading experts in the field, why aren’t hordes of people buying up these cheap futures and driving the price up? Hell, if the Saudis know something we don’t, why aren’t THEY investing massive volumes of their own cash into oil futures they know to be grossly underpriced?
You can always find fringe authors who have a pet theory that they are pushing. The longer they push it, and the more books they write about it, the more vested they become in seeing it be true. They can’t admit an error, or their standing as a futurist and author is in jeopardy. So they soldier on, with increasingly thin excuses for why their predictions have so far not panned out, and claiming credit for any changes that even remotely resemble those predictions. It’s the same old snake oil.
In the meantime, his claim that there’s no other energy source that will take over where oil leaves off is currently true - but we don’t have one energy source. We have many. You won’t see an all-electric car fleet, or all-hydrogen, or all-bio fuel. You’re going to see a mixture of vehicles. Hybrids, plug-in hybrids, ethanol powered, LNG, regular gas-powered cars but much smaller and more efficient, all-electric vehicles, etc.
As usual, people like you and Kunstler tend to think that we need a grand plan or strategy to ‘fix’ the problem. But the market will fix it just fine - just in unpredictable ways. Which technology will win out? Maybe all of them. Maybe the new transportation infrastructure will be much more fragmented than it is now. But basically all the alternatives will duke it out in the marketplace, and the winners will emerge when consumers decide what they like. Maybe we will all be driving electric cars. Or maybe they’ll be bio-fueled. Or maybe we’ll have both, just as we currently have vehicles that run on gas and diesel.
But we know there are alternatives. We can see them just around the corner. We KNOW we can drive electric cars if we have to. No one wants them today because they have poor range and are expensive. But since we know we can build them if there is no alternative, then it’s ridiculous to posit an alternative future in which we have no way to get around and our economy collapses. Because electrics are preferable to THAT, and we know we can build them. And looking at the futures price for oil, we know that our best guess for the future is that we’ve got at least 10 years before prices start to dramatically change. That’s enough time for the auto fleet to completely flip over to something new (the average life of a car is about 10 years).
If peak oil is true, we’ll see it coming. We’ll see it in the future’s markets. We’ll see it in the investment patterns of oil companies. We’ll see it in the behaviour of governments. We’ll see it in current prices - if the futures price signals a rapid reduction in supply 10 years out, that will drive up the price of current inventories so that the net present value of the inventory matches. That gives us a nice 10 year smooth ramp of increasing prices to make changes. In 10 years, we could build a thousand nuclear plants across the world if we had to. We could replace every new car with an electric or plug-in hybrid. We could develop millions of acres of land for production of bio-fuels.
Here’s a little example of how prices stimulate demand for alternatives in ways the ‘futurists’ can’t and don’t predict: Here in Edmonton, geo-thermal energy is starting to become popular for new home construction. Homes have systems like this installed. You sink a shaft 200 ft into the ground, and circulate fluid through it and back into a heat exchanget in the house. In the summer, the ground is cooler than the home, and the circulated fluid cools the home. In the winter, the ground is warmer, and the circulated fluid warms the home. The system still uses energy to run the heat exhanger and pump the fluid, but it’s dramatically less than a typical furnace/air conditioner.
Five years ago, I’d never even heard of these systems for private homes, and I certainly didn’t consider geothermal heat as an option on the Canadian prairie. Why? Because at lower energy prices, it made no economic sense to consider such a system, which costs thousands of dollars to install and would never make its money back in energy savings over its lifespan. But now that energy prices are up, such systems become viable. If energy prices go up even more, such systems will become commonplace, dramatically lowering energy consumption across the country.
And there will be many more such savings. Factories which chose high-energy processes when lower energy processes were available but financial unsound at 20/bbl oil prices will convert to lower energy production. Low-hanging fruit will be picked, buying us even more time.
But Kunstler would have a hard time selling a book saying, “Don’t worry - we’ll have a solution, but I’m not sure what it will be.”
Well, the painfulness of the transition is influenced by the number of people directly impacted by it. Yes, life was tough for the blacksmiths and switchboard operators when their jobs became obsolete, but even back then, most people weren’t blacksmiths or switchboard operators.
Nowadays, however, most people (at least in the US) do drive cars. I don’t have the scrying chops to know whether rising oil costs will actually produce a worldwide depression, but I do feel pretty confident that they will negatively affect a much larger proportion of the population than the “blacksmith crash” or the “switchboard operator crash” did.
Let’s not forget, though, that the “panic early” strategy is one of the things that help the market react to potential crises in a timely fashion. It’s when warnings like this start blipping on the popular consciousness radar screen that markets start to become receptive to early-adopter ideas about emerging solutions, and provide them with the initial support they need to increase their competitiveness.
Let us not unduly despise even Chicken-Little-type “the sky is falling!” proclamations, for they serve as a useful counterweight to the normal human conservatism that takes the stability of the sky so much for granted that we might not notice right away if it did start to fall.
What does your acquaintance say about the Saudis’ heavy reliance on the full range of secondary recovery techniques? To a nonexpert like me, this is the most persuasive set of facts Simmons brings to the table. If the Saudis are happy to make more by pumping less, then you’d think they’d save for later the combination of low-tech (pumping in millions of gallons of seawater a day into Ghawar) and high-tech tricks that they’ve been using to keep production high. Especially during the 1986-2001 period when oil was cheap.
FWIW, I haven’t seen the movie either, and probably won’t; I’m just saying that if a lot of experts don’t think Simmons knows what he’s talking about, then there’s probably an expert rebuttal out there somewhere, and I’d really like to read it before I sink serious money into those oil futures that Sam Stone mentions.
I don’t have that confidence at all. Maybe as the rich people switch over to electric, the demand for oil, and therefore the price of it, will stay flat enough for the poor people to afford their cars. Besides, buying a 10 year old Honda Civic is not exactly an expensive proposition, and a car like that can easily get 30 mpg. In fact, it’s generally the cheapest cars that are the most economical. A small 1500 lb car with a diesel engine could get 50-60 mpg and sell for $10,000 or less. The poor in America can afford that.
The people who may be hurt are the people in developing countries now who won’t have the benefit of decades of low energy prices to help get their economies started.
Is there any evidence at all that people like Kunstler move the markets? Markets respond to prices. Alarmists have been saying that we were on our last dregs of oil since the 70’s, but that didn’t stop people from buying SUVs when oil was 20/bbl. I think you’ll find that buying behaviour in commodity markets tracks prices, and prices alone. Kunstler’s book could hit #1 on the best-seller list, and if oil drops back to $20/bbl, people will continue driving huge gas guzzling vehicles. If oil goes to 200/bbl, people will change their behaviour, and they’d do it if there were no doomsayers around.
Besides, your point assumes Kunstler is right, and that he is helping drive ‘early adopters’ into the direction we all need to go. But what if he’s wrong? What if people like Kunstler scare us into thinking there’s about to be a huge energy crisis, and we change our behaviour accordingly - and then it turns out they were wrong? That would damage us.
In the 70’s, people like Paul Erlich and the Club of Rome were the Kunstlers of the day. Back then, the problem was the ‘population bomb’. Dire scenarios were arrived at by drawing linear extrapolations from the then-steep slope of population growth. This actually did affect people. Some liberals chose not to have children, thinking they would just be contributing to the ‘problem’. Countries like China instituted population controls which had horrible unintended consequences.
Well, guess what? Today’s big population worry is that populations will collapse in the 1st world. Birthrates are below replacement in many industrial countries. Japan is facing a huge population loss, and almost half of the population will be retired within 30 years. China’s one-child policy has had the effect of skewing births towards males, which is going to have serious cultural consequences over the next two decades. The big social security and medicare crunch would have been a lot easier to deal with had population growth not declined so much in the 1970’s.
If people like Kunstler are just pulling arguments out of their ass, and they are as likely to be wrong as right, then all they are doing is injecting noise into the culture. There’s no signal there to benefit from.
Of course, to some people, ‘peak oil’ scares are a good idea because they want people to behave as if we’re running out of oil, whether we are or not. That helps them pass funding bills for mass transit, scare people away from bigger cars, and in general have their political philosophy reinforced. But that doesn’t make Kunstler right. It makes him the equivalent of a doctor who writes a report saying that homosexual behaviour is dangerous. To a fundamentalist, it doesn’t matter if the report is true or not. It’s just another weapon in the arsenal.
I never have understood these peak oil hair tearing arguments to be honest. There is more oil locked up in shale and tar sands (or methane hydrates for that matter) than there ever was in the biggest reserves in the ME…and yet folks are always frantic that we are somehow running out of oil and that our civilization is on the cusp of complete collapse. Hogwash.
I’ve noticed that the people generally leaning toward the whole peak oil thingy (I haven’t seen the movie in the OP either btw, but I assume its the standard sky is falling arguments) are the same ones who are generally either opposed market based solutions or don’t understand how markets actually work (or in some cases both). To me, the irony is we are seeing alternative technologies emerging ALREADY…and they really have nothing to do with our running out of oil. They are starting to be driven more by concern with CO2 and GW than any non-sense about the oil running out.
-XT
What sources don’t warrant careful skepticism?
It isn’t an issue of running out of all oil. It’s about running out of cheap oil. There’ll still be lots of oil it’ll just be too expensive to use the way we use it now. And economics tell us it’s real issue.
First off, there’s the argument that as our current oil production methods become less economical, we’ll keep developing new methods. Maybe that’s true but it doesn’t make any difference to the bottom line - which is that oil is a finite resource. If we develop cheaper ways to produce oil we’re just speeding up the rate that the total supply is decreasing and making the overall situation worse.
Secondly, there’s the alternative argument - that there are alternatives to oil that will work just as economically as oil. My rebuttal is where are they now? Let’s imagine what we want this hypothetical oil substitute to be - let’s call it “x-fuel”. We want x-fuel to be a product that you can operate a variety of small engines on; we want it to be relatively easy to produce and transport; and we want it to cost around a dollar a gallon (about the price that gas was ten years ago).
So where’s our x-fuel? The stuff costs a third of what gas costs and we could tell the Saudis to kiss out ass. If I’m the guy that invents x-fuel I’ll be so rich I’d have Bill Gates programming my VCR for me while Jessica Alba nibbles on my ear. The market for this stuff is here and has been for years.
But the reality is that x-fuel doesn’t exist and never will. The reason that gas is still be used is because even after it’s tripled in price it’s still cheaper than the alternatives. Maybe when gas gets up to five or ten or twenty dollars a gallon, there will be cheaper alternatives. But they’ll be cheaper than twenty dollars a gallon not cheaper than three dollars a gallon. If they were that cheap, we’d have already made the switch over to them.
Why do you posit that oil will become ‘too expensive to use the way we use it now’? What do you base that on? Afaik, many of the vast reserves of, say, tar sands and shale oil become economically viable somewhere in the range of $70-100/barrel. This won’t exactly mean the EOTWAWKI or the destruction of our civilization, etc etc. What it MIGHT mean is that transportation costs for goods and products may rise…or they might not as fleets become more efficient due to economic pressures. In fact, this seems to be happening already as companies attempt to make their logistics fleets more fuel efficient while keeping their bottom lines as low as possible.
Even if the price of goods and services dependent on transport DO rise, its not likely to force a major disruption in the system, or make things ‘too expensive’.
Sure…oil is a finite resource, no doubt. The question is when oil will become economically unviable as a major transport power and fuel source, and what will eventually replace it. Even if the price of oil doubles or triples it will STILL be a viable fuel source…and at those prices there are vast untapped reserves. My thought is that we probably will never use them…not because of economic reasons but become of social pressure to stop the use of hydrocarbons due CO2 emissions forcing alternatives due to market pressure.
This is just silly. Where are they now? They are in development, some are out there now they are just not economically viable with the current price of oil. Raise that price (or see more social pressure on the market) and you will see several alternatives including biofuels, hydrogen, pure electric, etc.
Not much of a rebuttal when you are well aware that there are viable alternatives out there today that are simply not in wide spread use due to the fact that oil is still cheaper…and the social pressures are only starting to roll wrt GW and CO2 emissions.
This is like saying that the price of whale oil is rising…where is our x-fuel for our lamps and such? Until the price reaches a certain event horizon there is no NEED for the market to produce an alternative. When it DOES reach that point however…well, interestingly enough there were alternatives. Today there are several possible ‘x-fuel’ contenders. Which one will be THE alternative of choice? No idea (I wish I knew…I’d be rich in a few years :))…the price of oil hasn’t yet driven the market to SEEK a real, wide scale alternative.
BTW, you are quite wrong…there really hasn’t been much of a market for an alternative fuel or power source. Look at the rather lethargic market for hybrids in the US until fairly recently. Then look at the much brisker sales of hybrids in Europe. Why do you suppose it happens that way…or that there is more interest in the US in hybrids recently? The price of oil in the US, adjusted for inflation, is basically dirt cheap…and so there was nearly zero interest by the wider public in any kind of alternative (or even in more efficient cars and trucks) here. Even today I’d say the interest is being driven more by people starting to become concerned by GW and CO2 emissions than it is by any real hardship or impact based on the price at the pump. Oh, we complain about it a lot, to be sure, but its not a major factor even now.
:dubious:
Exactly…and thats why the statement above this makes no sense. Several alternative ‘x-fuel’ contenders DO exist…and they will become economically viable once the price of oil reaches a certain level. Also, oil may become economically unviable not due to price but do to social pressure…also making some ‘x-fuel’ alternative more attractive even if oil is cheaper.
Certainly…though I doubt that the price at the pump would need to get that high before some alternative becomes attractive. In fact, IMHO it will be social pressure, not some fantasy of the oil running out, that will finally force a switch to some alternative (or combination of alternatives) some time in the next decade or so. As with there still being plenty of rocks when the stone age came to an end, I think there will be plenty of oil when we move on to something else…
-XT
The ones that support what you desperately want to believe, of course.
For example, the Manhattan Institure is greeted with instant skepticism, but Kunstler, who is a fringe figure with an agenda at best and totally out of step with conventional wisdom among oil experts, is to be quoted at length and used to ‘refute’ what the other side says.
:dubious: “Oil experts” includes the Association for the Study of Peak Oil & Gas (founded by petroleum-industry scientists, and often quoted by Kunstler).
But it doesn’t warrant automatic rejection, either. There appears to be a wide array of contributors to that “conservative think tank” organization. While they may not err on the liberal side of the spectrum, a conservative point of view is hardly in the conspiracy camp.
Read the book, then tell us what you think. I think Huber has some good points – one of which is while we may run out of a particular source of energy, we will never run out of ALL sources of energy. And while the cost to obtain a specific kind of fuel may rise, this will only spur development of currently available but costly sources.
I might. At any rate I read the Amazon customer reviews, which are generally, though not consistently, negative:
From Scot Shatwell “Earth Saver Scott”:
From H. Mccartor:
From Dean Smith:
From The Dilettante:
Both true – but a fuel shortage can still wreck our economy, if development of the costlier alternatives 1) does not happen fast enough, 2) does not lower the cost enough, or 3) is successful, but still proves inapplicable to the problem of powering personal transportation vehicles.
I think you missed my point.
A statement is either true, or it is false, or if it makes more than one point can be a combination of the two. A argument is either sound or it is not. A smart person is carefully skeptical of ALL claims and arguments, not just the ones that espouse views different from their own.
I was responding to Sam, not you.
Of course not, why would they when gas is dirt cheap?
I think before civilization collapses in the US there will be a reasonably long period when people find that you can disperse adequately in a 900cc 900kg econobox with no air conditioning and manual everything, it’s just quite uncomfortable. You should be able to buy one brand new for $4,000 or less by then, or a few months gas bill.
Shame they won’t be able to afford to pay for it though.
So I will have to do my meetings by phone, email my letters and wait an extra few days for crap to make its way to me from the warehouse. Or pay a few dollars more for things made locally.
Not all plastics are made from oil. Some are made from potatoes
Well, it wouldn’t have been a very entertaining film otherwise, would it? “We may be screwed, or we may not, we’ll have to wait and see, but in the meantime hows about trying to stop squandering resources and energy like fat greedy kids in a sweet factory?” doesn’t have the same oomph as “We’re all DOOMED. DOOMED I tell you”
So, the same person who is instantly skeptical about the Manhattan Institute because they might have an agenda sees no problem in buttressing his arguments with a quote from an unknown internet user named “Earth Saver Scott”, and to critique a book by quoting from reviews of it by random Amazon.com users.
Kind of makes my point about how we select our sources, doesn’t it?
BTW, reading those reviews, I didn’t see a substantive refutation of anything at all. Did I miss something? What was the point of posting all those, when all they really said was variations on, “The authors say it’s not a problem. I disagree!”
And BTW, whether or not a book gets mostly negative or positive reviews on Amazon often has little to do with the quality of the book - especially when the book discusses political hot-button topics. The partisans hear about the book, swarm to Amazon and in lock-step post negative or positive reviews - often without having read the book. You see it on both the right and left. Amazon’s reviews are almost worthless when it comes to evaluating politically charged books.