[QUOTE=GreasyJack]
However, I draw a different conclusion-- nothing oil does is unique, but for many things it does nothing comes even close to competing on cost.
[/QUOTE]
Well sure. Obviously, if anything could compete with the low cost of oil then they would be competing with it. That said, at some point the price of oil will cross a threshold where all those technologies Blake is talking about (plus a bunch he didn’t mention) WILL become economically viable with the then price of oil.
But the price of crude is only one factor in the equation. For instance, the price of refined fuels is about double (or more) in Europe than it is in the US…and yet they haven’t gone back to a Mad Max lifestyle, nor have they explored other alternatives in any sort of focused or concerted way.
The point though is that the price of fuel is only one part of the equation, and if the price goes up that doesn’t necessarily mean that it will have the dire effects that some of the Peak Oil crowd seem to think it will. We know that, even at today’s prices there is a lot of development going on in alternatives. Double the price in the US (to, say, the levels our European brethren and sistren are paying today) and you’ll see even more of those alternatives starting to seriously turn up in the market place here in the US.
There are plenty of resources that are as yet untapped or only just beginning to be tapped, and there are plenty of technologies it the wings simply waiting until the price of oil reaches some sustained (as opposed to spiking) level that will make the large initial capital investment feasible. During the transition period things might be a bit chaotic, and prices might go up for transportation, but eventually they will go back down simply due to scale. They might not ever be as low as they were during the period of time when oil was cheap and plentiful (our time), but so what? It won’t be the end of the world, and we’ll adjust.
While some decent-length electric railways exist, even a couple for heavy freight (at limited car length), when you’re talking about essentially electrifying 160,000 miles of track to a capacity to support multiple 110-130 car unit trains, there are…well, some difficulties. Possible, but not advantageous, and there is a huge capital cost associated. Note too there are also an incredible 24,000+ locomotives on Class 1 railroads right now, most, if not all, needing to be converted to either coal or electricity.
I’d love to see a cite for this. Maybe this would be so if you ignore the capital costs of actually building the facilities, but those costs are not insubstantial and are the big limiting factor in play. F-T plants are really expensive and if you start talking about building enough of them to take up any appreciable portion of the oil slack that’s a big chunk of change.
Yes $1000 a barrel is hyperbole, but the point is that we needn’t be out of oil for its scarcity to affect us profoundly.
Well, the obvious answer is people who are dependent on food aid which becomes far more expensive and therefore less effective when the frieght costs are more. Even beyond people who are dependent on aid, see how food prices skyrocketed right along with oil prices in 2008. There was the double-whammy then of higher freight costs and the displacement of food crops with bio-fuel production. We don’t care much about food prices in the developed world because food costs are a tiny portion of what we spend, but if you’re alread spending half your income on food, what happens when oil prices cause those to double?
Even in the US, the non-urban poor, or even the urban poor in cities without extensive public transportation infrastructure rely on cheap fuel to allow them to move around a US-style car-oriented city. The margin between 8 hours of minimum wage and a couple gallons of gas to get to work isn’t much. Okay, so in a post cheap oil world these people will probably wind up in urban ghettos and it won’t affect you much, but that will affect the fundamental character of this country. Europe doesn’t have the sprawling suburban centers and vast distances the US does, so fuel costs don’t affect the poor there like they do here.
Well, first off, I have no idea what you’re blathering on about with horse feed. Was there some great horse-feed crisis I missed out on? And, as has been pointed out, that is a quintessential renewable resource-- if the price goes up it’s quite easy to just grow more. Not like oil where there is eventually a finite amount of it.
With whale oil, nobody was inconvenienced because it wasn’t a situation of whale oil’s price rising up past petroleums as it was that the cost of petroleum plunged down past whale oil. This is because while whale oil was used mostly for illumination, petroleum was used in huge amounts for transportation. In this way, whale oil’s former uses just rode the coat tails of the birth of the commercial petroleum industry. There is no reason whatsoever to think there is any other analagous situation brewing now.
We are reliant on cheap oil. Expensive oil does not replace cheap oil. But I will grant you the point that shale oil and oil sands probably are probably still cheap enough that we could use them for a while without any drastic lifestyle changes.
It’s doable for some things, but not cost competitive for transportation.
Well, things like shipping, air travel and a lot of road traffic couldn’t be economically replaced by electric or direct coal burning. And any of those things being replaced by coal-based oil depends on the affordability of coal-based oil which I question.
Like I said above, I would probably still consider shale oil and tar sands cheap-ish oil. There’s a helluva lot of it in Canada and other places, but not enough to keep us going indefinitely. Like I said earlier, I’m not in the “the end is nigh” crowd, but I think the end exists.
There’s a difference between making something work and making it work economically.
Well, yeah, but if you were also considering building new steam engines, it seems like building new electrics instead wouldn’t be that much worse (not that it sounds like either would be practical).
What makes me think about it is that from 1917 through the 1970’s the Milwaukee Road used to be all-electric for about 700 miles near where I am, and they ran heavy freight and passenger alike. The economics worked for them at the time with mostly hydro power, so I wonder if coal did become significantly cheaper than diesel at some point if that would work. If you only electrified the main transcontinental routes and the big coal roads (which are right next to power plants anyways), you could run a good portion of haulage on electric without having to retrofit every little spur and siding.
I agree, if it came to that point. Electric engines would be cheaper than steam, in fact. Of course you have all that capital of the electric T&D system which would be enormous - IIRC about $200,000 to $500,000 per mile, provided there was space on the RR right-of-way. If not, then the cost goes up to about…(going from memory here) $1M to $2.5M per mile.
One note: as a fuel, coal is already about 1/3 to 1/6 the cost of diesel on a net BTU basis.
Some long distance railroads were completely electrified in the early and mid 20th century, for example the Milwaukee Road which ran through the northernmost tier of states to Seattle. At some point after WWII, however, they de-electrified it and went back to Diesel, presumably because it was so much cheaper to operate.
Individually and in our organizations we’ve been voting with our pocketbooks in this country, to the exclusion of every other consideration, for several generations. Old infrastructure that might have been useful again someday gets destroyed for the convenience of the moment, and we have now painted ourselves into one hell of a corner as a result.
I don’t want to hijack things too much, but there are some profound differences between trains of the mid-1900’s and nowadays. Unit train length has increased dramatically, as has car weight, which means a lot more power needs to be supplied to the rails. The cargo alone of a coal train in the US is upwards of 13,000 tons, and the lines are packed right now with unit trains. As I’ve been saying, it can be done, we have the technology, but it wouldn’t be simple nor cheap.
Only if you believe that the equation is suddenly and irrevocably going to change. If you think that the prices will continue to rise relatively slowly and steadily, with occasional spikes due to the natural progression of the commodities market, then it won’t be an issue. If the price of diesel continues to climb, at some point it will become economical to do something else. Electrify the system, switch to some other alternative fuel source, etc etc. It’s only if you think that next week (or next year) the price of diesel is going to suddenly spike up and stay there that it becomes a real issue.
Personally, I don’t think we’ve painted ourselves into a corner at all, and I don’t think it would have been all that wise to maintain infrastructure indefinitely that wasn’t being used on the off chance that the price of oil goes to a thousand dollars a barrel or whatever the Peak Oil folks are saying this week.
The Milwaukee Road was actually only electrified in two sections, one from eastern Montana to essentially the MT/ID state line and another from eastern WA to the western railhead in Tacoma. So while they had around 700 electrified miles, it wasn’t the whole continuous trackage. The advantage of electrification here was the ludicrously cheap hydro-power available in the northwest and the superiority of electric locomotives in cold mountainous country, which is not an advantage pure electrics have over diesel-electrics.
<Warning! Boring railroad history ahead!>
The decision to go to diesel in the mid-70’s was one of a series of disastrous decisions that lead to the whole road going out bankrupt and ceasing operations in 1980. The Milwaukee Road (CMSP&P) had been chronically short on cash for quite some time and had been deferring maintenance both on right-of-way and rolling stock and it reached a point that the board of directors decided dieselizing the route was cheaper than catching up on all the maintenance on the electric equipment.
Now, there’s a bit of a conspiracy theory here. By the early-70’s, the directorate of the CMSP&P and the SOO Line which would eventually buy them out were majorly interlocked (IOW, lots of the same people served on both boards). The theory is that to hasten the CMSP&P’s demise and get a better buying price (and to convince the then all-powerful ICC to approve the merger), the board of directors intentionally started ignoring maintenance. The western divisions that had the electric trackage were of little interest to SOO Line (they’d never been big money-makers anyways since they ran almost exactly parallel to two other big transcontinental lines), so the CMSP&P people intentionally let the electrical infrastructure (which was as huge asset) fall into disrepair in favor of the diesels which could easily be shuffled back to the SOO Line’s bread and butter lines in the midwest.
So the electrics may or may not have ceased to be financially competitive in the 1970’s-- it’s hard to separate the problems of electric running and the problems of the Milwaukee Road and railroading in general during that time. There was also one of the Pennsylvania-based lines that had a lot of electric trackage in the early 20th century, but I’m not as familiar with that history.
“ROIs in excess of 10% are possible at crude oil prices greater than $37/bbl; if project developers feel that the price of crude will remain above this level for the life of the project, naphtha and diesel produced from coal would be competitive with similar streams from crude oil. For comparison purposes, two crude oil reference price scenarios were considered: a base case tied to average crude prices of $61/bbl in 2005-2006, and an alternate case tied to an average $38/bbl price in 2000-2006. A change of this magnitude in the value of crude oil could potentially change the decision of whether or not a plant is built.”
In simple terms, a Fischer-Tropsch plant is a sound investment at $38/bbl. It becomes highly attractive at $61. Note that current prices are ~$85/bbl. Note that this is a somewhat idealised plant located close to a profitable coalfield. Other studies have looked at plants using imported or lower quality coal including brown coals, but the economic oil price never rises beyond twice current prices.
That analysis takes into account *everything *from bare earth to tanker so fo oil leaving the gates. Parts, labour, legals, the lot.
You don’t seem to realise that oil rigs and oil refineries are not free to produce either. There are costs associated with any form of energy. When you take them all into account Fischer-Tropsch works out at no more than 2X current oil prices in any analysis.
No, but will you agree that we need to be at greater than $61 a barrel, given that prices have were above that mark for over 5 years leading up to the GFC and the global economy boomed during that period?
And will you agree that Fischer-Tropsch technology is economically viable at prices of $61/barrel?
I ask once again, can we have a cite for this claim? Who are these people? What is this aid program that can operate in the current world but can;t operate at a sustained oil price of $61 a barrel?
Yes, and about a zillion other factors.
If you want a fairly concise summary of some of the many causes of the food crisis you could do worse than this, although it misses many other causes.
Oil prices played their role, but nobody suggests that oil prices on their own could have had any significant impact at all on global food prices. You needed all those other factors to occur simultaneously along with a sudden, short term spike in oil prices that the investment market couldn’t react to.
Well when you give us some evidence that sustained oil prices of $61 a barrel could ever cause food prices to double, we can then discuss it.
Yes, there was. A major limitation in turn of the century cities was the ability to cope with horses, that includes feeding, stabling, removing the excrement and so forth.
So you also believe that the reason horse feed prices are so low today is because we grow more horse feed than we did in 1900?
It astonished me that so many people apparently believe this, and are unable to attribute it to the fact that *people no longer ride horses.
*
Exactly, and what caused that investment in petroleum substitutes that caused the decrease in price? That’s right, an increase in the price of whale oil.
What do you mean it " rode the coat tails of the birth of the commercial petroleum industry"? What do you think started the petroleum industry? Why do you think the first oil wells were drilled? It was to replace the increasingly expensive whale oil. Petroleum wasn’t being pumped out of the ground to d\fuel cars that weren’t invented for another 40 years. It was being pumped out of the ground to produce a cheaper alternative to whale oil.
It is a perfect analogy.
Hang on, you said that there was nothing that could replace oil. I asked you to explain that, and now you want to move the goalposts to “nothing can replace cheap oil”.
Well that’s just a tautology. It adds nothing to your position. You are just saying that something more expensive can not be less expensive than something cheaper. So what? What application does this have to the real world?
Where is your evidence that more expensive oil shale can’t replace liquid crude for 100% of all practical uses in the entire world for the next 100 years?
Because if you can’t provide that evidence you really have nothing more than an argument from assertion.
So you want to argue that we have no replacements for oil, while conceding that we have hundreds of years worth of oil replacement to hand right now?
Once again, you blatantly move the goalposts. You start out asserting that we have absolutely no technologies to replace liquid crude. Then when we pointout that such technologies have existed for over 50 years you now want to argue that they aren’t currently cost competitive.
Let’s get this straight.
**Of course the alternative technologies aren’t currently cost competitive.
**
If they were bloody well cost competitive then they would be competing. That is what cost competitive means. At the moment is oil is so cheap that almost nothing else competes. That is the very indicator that oil remains abundant and will do so for the next 30 years at least.
But that doesn’t mean the technologies to replace it don;t exist, and can’t be implemented in an instant once the market believes that long term fuel prices will remain elevated at the current level.
Myself and several other posters have stressed this point multiple times, and yet you still want to argue that because these technologies obviously aren’t cost competitive right now, that means they don’t even exist.
And? That wasn’t your assertion. Your assertion was that we have no replacements for oil for and that coal can not replace oil for most of our transportation needs. Now can you please provide a reference that coal does not and cannot provide an alternative source of oil to liquid crude?
"“Smith (1981) estimated that** the Green RiverFormation in Colorado, Utah, and Wyoming contains 1,500 billion barrels of oil, equivalent to 250 years of 1998 US consumption**. Duncan and Swanson (1965) estimated that if all oil shale in the US is considered, the size of the potential resource is 160,000 billion barrels, or 26,667 years of US consumption. ….
As production of unconventional oil resources in the form of tar sands has already begun, it becomesincreasingly difficult to define the size of the world’s oil and gas resource base. Unconventional oil resources such as tar sands and oil shales are sufficient in size to supply the world’s petroleum needs for about 100 to 1000 years….”
So can you please explain how what standard of “indefinitely” you are using that means that 100 to 100 years is not indefinite?
And as I said: Can you explain how this could possibly occur? What economic theory would possibly allow there to be an end?
You make a lot of these grave sounding, absolutist statements, but I have yet to see any supporting evidence or logical argument that would lead you to such a conclusion.
I doubt it has escaped anyone’s notice that you keep moving the goalposts. You started out with blanket assertions that we had no replacements at all for oil for many of the essential services in our society and that as a result many people would die once liquid crude became scarce. And as we have produced fact after fact you have gradually moved your position until now you are saying that we have plenty of replacements that are technologically feasible right now, but they are not yet economically competitive against oil.
Well hell, that is the point that we have all been arguing right from the get go. You are now arguing our position for us. That we have plenty pf substitutes for liquid crude that we could switch to at a moment’s notice if the price of crude even remained at its current level for a few decades.
The Hubbard curve more or less suggests that what I describe is inevitable-- that eventually demand and consumption will exceed our ability to increase production. When this occurs, the price rises until such time as whatever replaces it becomes economical. That’s pretty much common sense that production eventually will peak as a finite resource begins to be depleted. The only trouble is that the curve as a model is basically useless unless you know total pool of resources, which the cite you listed above does a very good job arguing we can’t really do, or at least haven’t done a good job of in the past (and I realize you only used it for the amount of shale oil, but the discussion below that was useful).
So the two unknowns that affect how high price can possibly go are the total resource pool and the cost of the alternatives. You’ve convinced me that the resource pool is much larger and the alternatives cheaper than I considered and that the highest possible oil price is probably going to be a fair bit lower that I thought. So I suppose I am willing to retract my suggestions of the possibility of gloom and doom. Thank you for the informative cites. I don’t think you’ve really shown that there’s some iron-clad economic law that a finite resource will always be replaced before the prices reach injurious levels, but you’ve done a good job showing that will almost certainly be the case here.
However, back to the OP instead of this huge world petroleum future tangent we’ve wound up on for reasons I’m still not clear on, per that same cite (since it’s conveniently at hand), US production numbers seem to indicate that domestic production has peaked, with the important caveat of not counting Alaska. So unless the “drill baby drill” people are talking about the government subsidizing Green River oil shale like the Canadians did the tar sands (which they don’t seem to be), they’re talking about expanding production in Alaska. I have no idea what the “DbD” people hope to accomplish by doing this nor how they intend to achieve it.
But at any rate, that there appears to be less recoverable oil than at first thought in the area of Alaska that was the likely next target for expanding drilling is a setback to that effort, such as it is. This was the entire point I was trying to make way back at the beginning of the thread, not that this somehow spells doom for the oil economy as we know it or whatever it is you read into it. Do you disagree with this particular statement?
Is it physically possible to make an electric rail engine? One that carries the batteries with it? I keep hearing these adverts that say ‘one gallon of gas moves a ton of freight 400 miles’, and, while I’m sure it’s misleading, I’m just wondering if electrification of rail needs to be done on the rails and not at the engine.
Let me expand: Is it possible to make an electric rail engine, that carries its own batteries, and has the ability to run for the same duration, with the same load, as a diesel engine?
So the theory that you used to conclude that there would be an end too cheap oil in fact predicts that there will never be an end to cheap oil crude because replacements will take over before prices become excessive?
Care to explain this to us?
I especially look forward to you explaining how this is any different the case that we have been putting forward, the case that y you have been vehemently arguing against for 3 pages and 5 days.
That’s fantastic, and I really mean that. It’s so rare that anybody, even here, actually changes their views in response to evidence.
I never suggested such a law exists. I have only ever said that in the case of liquid crude such alternatives exist right now. It’s easy to say that a replacement for liquid crude will be found before it causes problems because have alreayd found them.
In other words all I’m doing is confidently predicting the past. That doesn’t take much skill.
Firstly, US production has peaked, in large part, for the same reasons that proven reserves peaked at 20 years supply almost 100 years ago. Once again, this has nothing to do with the physical limitations of the system and a lot to do with economics. Producing anything in the US is relatively expensive compared to developing nations. While it is a good investment when oil is scarce, there rapidly comes a point when producing more US oil ceases to be attractive. The US certainly could economically produce a lot more oil, but there are diminishing returns after a certain level.
They hope to produce oil, make money and create jobs. I didn’t think that was any secret.
They intend to achieve it by drilling oil wells and pumping the oil out.
Well first off I didn’t read anything into it. You started arguing that because US reserves were only about 20 years it was risky to increase the scope of those reserves by exploiting new Alaskan fields. That wasn’t a something I read into it, that was something you said: “Clearly our current proven reserves won’t last particularly long given our consumption, so the “DBD” argument almost by definition relies on unproved resources.”
And if your point is simply that the Alaskan fields are smaller than predicted, well, see the thread title. There’s no contention there.
The contentious point has been your position that because the Alaskan fields are so small and short term., it;s not worth the risk and effort to exploit them.
No. We can’t make a tiny care that runs on batteries and has the ability to run for the same duration, with the same load, as a diesel car. For a train that needs to travel hundreds of miles non-stop and haul loads of a hundred thousand tonnes up hills it’s totally impossible. The weight of the batteries needed would be more than the energy generated by those batteries could move.
But yeah, electric rail is certainly an option. Australia has several thousand kilometres of electric rail servicing the major northern coal fields, and the country is making a fort8ne out of coal production. So there is obviously no economic or engineering reason why electric locos can’t pull massive loads over long distances.
Perhaps the US has some special problems that make electric rail impractical, but the fact that it can be done and has been done elsewhere tells me that that the barriers are far from insurmountable.
The odd thing is that so much Australian coal production is electric, everything from the ports to the draglines and longwallers to the trains. I suspect that if all oil magically vanished tomorrow coal production would be running at current levels again within a month.
If I’m not mistaken, the French TGV (=high speed train) is powered by an electric motor without any battery or on-board energy source. The electricity to run it is delivered from power lines hanging above the tracks, and ultimately from nuclear power stations.
I don’t think it would be practical or even possible to make a self-contained, fast and long-distance electric train though. Least not without its own on-board power station to fill up the batteries from time to time, sort of like diesel-electric submarines. Not the most energy efficient system in the world.
My understanding is that most diesel locomotives in use in the world today are exactly that, diesel-electrics.. So they are presumably the most energy efficient system for locomotives.
