Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Charon on May 06, 2002, 08:04:30 PM
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An interesting discussion started in the US vs Iraq thread that was certainly related but starting to get a bit off topic -- our current energy policy and its impact on international relations. Since I cover this issue for a living, I though I would post a few articles I have written on the subject to provide some background. A few points to ponder:
1. As Toad pointed out, it’s our demand for oil that places us in such a tough position. While I would disagree with the viability of fuel cells in the next 20 years or so (the distribution infrastructure issues more than the engine development issues), Toad was fully correct in that a good place to start is at the automobile. Gasoline/electric hybrids (and even better, diesel/electric hybrids) are an excellent solution to get significant efficiency gains (35% or better) in a shorter timetable with comparable automotive performance. However, the consumption of oil for commercial power, petrochemicals and other non-highway uses will still be a significant factor in our dependence on foreign oil.
2. The Bush energy policy is disturbing unless you get a paycheck or dividend from big oil -- and I do mean big oil (once you get past the majors, who are into exploration and production, oil gets very small indeed even at the independent refiner level -- not to mention the marketer or retailer levels). I have read several hundred pages of actual Bush report, and the house bills etc. to base that statement on as well as interviewing various functionaries at the agency level. And for all the conservative knees that are jerking up into their computer desks, a Gore oil policy would likely be just as bad if not worse. He is big supporter of ethanol (see below). One oil policy joke is ANWAR drilling. Little real bang for the supply side (about the same for the recently shot-down higher gas mileage standards, which didn’t seem to be all that important to national security after the automotive lobbyists got their “face time”) but certainly enough bucks for the major oil companies to want the development rights.
A bigger, but sadder, joke is renewable fuels (sorry weazel). For all you rabid tax cutters losing sleep over inner city welfare moms, one of the biggest welfare nightmares involves ADM. Ethanol is not needed for clean air; has limited impact on our dependence on foreign oil; takes millions out of our highway funds in the form of a “hidden” 53-cent per gallon subsidy to support ethanol’s higher cost that comes out of those funds; and represents a distribution nightmare that promises to increase price volatility during the summer months. And, it’s not just my opinion, I know the lobbyist who started the marketing switch from “clean air” to “renewable” when since came out against the initial ethanol selling point :) ADM is incredible, and the power they have over the “ethanol” Senators of both parties in the corn belt is incredible, as is their lobbying war chest. Unfortunately, their gain is our loss in some very direct $$$ ways. They just got a 5-billion barrel a year “ethanol mandate” approved (remember the 53-cent subsidy, as well as the impact on feed crops and human consumption crops). Will the corn farmers benefit at least? Not as much as ADM, particularly if they move to local “biomass” technologies to solve ethanol’s many transportation and storage issues. Farmers may even be big losers when all is said and done because biomass is underdeveloped/researched and expensive today.
3. At some point we need to move significantly beyond petroleum, and not just on the highways. However, short term shareholder uncertainty and transitional losses in corporate profitability makes this an issue whose time will likely come way in the future, unless a very serious disruption forces the matter sooner.
Here are the articles I mentioned earlier:
Gas Prices (http://www.keithreid.com/storage/gasprices.htm)
Oil Policy (http://www.keithreid.com/storage/oilpolicy.htm)
Charon
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Seems like if oil were truly scarce, the price would go up, and there would be an economic incentive to pursue less expensive energy sources. The problem will solve itself if Big Brother just stays out of it.
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Originally posted by funkedup
The problem will solve itself if Big Brother just stays out of it.
(http://www.beemerfest.com/forums/images/smilies/thumb.gif)
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On one hand, you are correct funked, but on the other,...if we wait until we are almost out of raw crude, will we have the time to move to another alternative source?
Panic is not pretty and mass panic is down right ugly.
We have more reasons today than ever to get away from our oil dependencies. Yet,..we traditionally will wait until panic mode time to do anything about it. Our history is repleat with this type of apathy.
How many times do we wait for a major catastrophe to occur before we do anything about a problem? Almost always. We are a country that has to get kicked in the head before we do anything. That is just the way it is and I do not see that changing anytime soon.
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Do people think that without government interference, oil prices would just stay flat and then suddenly spike as we hit the limit of oil reserves? I don't see any evidence that there would be such a sudden increase. Throughout the last century we've had alarmists warning of looming crises in the supplies of oil and food and time after time they have been shown to be "full of it".
Based on observed market behavior it seems more likely that prices will gradually escalate as more and more oil fields become depleted. Increased scarcity will cause higher prices. The higher the prices go, the more individuals and industries will be motivated to purchase alternative energy sources and products which use those sources, thereby increasing demand and price for those products and sources and spurring technological development. This development will reduce the cost of the alternative sources and related products and the market will find an equilibrium with alternative sources making up a larger part of the pie. The alternative slice of the pie will grow and grow as petroleum becomes more scarce.
However if the government forces a switch from petroleum to alternative energy sources while free-market prices do not support such a move, it will hurt the economy in the short term with questionable long term benefits.
It cracks me up how so many people are willing to accept the concept of self-organizing (and self-optimizing) systems in the context of evolutionary biology, yet those same people refuse to accept the same concepts in the context of economics. Unfortunately many of these people vote and occupy important government offices.
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It cracks me up how so many people are willing to accept the concept of self-organizing (and self-optimizing) systems in the context of evolutionary biology, yet those same people refuse to accept the same concepts in the context of economics.
To even claim economics is as succinct as evolutionary biology is absurd. :)
Economics is a man-made process that is fully understood.
Evolutionary biology is so subtle only the effects are understood to any great depth. The mechanism behind it is the subject of spiritual/metaphysical debate. Can you say the same for economics? ;)
Frankly, I'd rather trust the forces behind evolution than those Wall Street fat cats or the politician-buying heads of multinational companies.
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There are things that have nothing to do with the market. Military defence and dependency in strategic resources are among them. Even the most rabid free-marketeers (and you would be hard pressed to find more rabid one then me) would not suggest outsourcing our military needs to the lowest foreign bidder. Same with oil and food.
If the stuff hits the fan, we want our military available and food and oil too.
Forces hostile to us took power in Iran and Iraq. Who can guarantee that Saudi Arabia's oil will be available to us?
Price of the gas only includes the cost of buying, transporting and processing the oil. It does not include the cost of maintaining the military required to secure our interests, the costs of being hit by terrorists, etc.
miko
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Uhmmm. MIssed my point funked.
One day the Earth will be out of crude oil. No way mother nature can create it as fast as we can use it. SImple, logical fact. People that ignore that fact are living in a dream world.
But, putting that aside. I maintain we will not do much of anything until we are actually out of crude. History has proven that is how we are. I see nothing in the immediate future that would indicate we will act any differently.
Now, being actually out of crude may mean, we have a one year supply for the planet. That is panic mode time. We do not have the means to convert the entire planet from crude oil to other means in a year. It just cannot happen.
We do not know when Earth will stop providing crude and that is a serious problem. Without knowing when, we are going to be in a worse position as we will wait until it is gone, which will be too late.
If you have insight as to why we would actually prepare for that day, I would really like to hear it, because from where I sit, I see us doing and acting no differently than we have for many, many other situations that we could have dealt with before being in panic mode.
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Skuzzy what I am saying is that we won't just suddenly run out. Before it runs out it will become increasingly hard to find and prices will become prohibitive. The high prices will cause people to develop other energy sources. There will be plenty of time to convert to other sources. The technology for most of these sources exists. The problem is that these sources have higher economic (and in some cases environmental) costs than petroleum. When petroleum becomes more expensive than these sources then people will convert en masse.
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Not to change the subject too much, but I think you have pushed aside the possibility of Fuel Cells a little too hastily.
There is a big push on in my industry (RV's) to develop fuel cell electric generators. I think we will see the fuel cell creep into the market through these periferal uses, and become the eventual replacement for the combustion engine.
It may take 20 years, but I think it will be a steady change over those 20 years with more and more combustion engine uses being converted to fuel cell.
Then we can tell Saudi Arabia to pound sand. :D
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What kinda fuel ya usin in them cells?
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Not sure, but if your point is that its a petroleum product you may be right.
Here is the article:
Cummins Developing Fuel Cell Technology
Cummins Power Generation, manufacturer of Onan brand generators, has received a $74.2 million contract from the United States Department of Energy to develop fuel cell technology.
During the next 10 years, Cummins, along with subcontractor McDermott Technologies, will develop a compact, affordable 10-kilowatt fuel cell module. The product is expected to provide virtually silent power with significantly lower fuel consumption and exhaust emissions than from existing engine generator sets.
Paul Plahn, director of advanced product development with Cummins, said that solid oxide fuel cell technology "has tremendous potential as a clean, efficient, and silent auxiliary power source for RVs and other mobile or remote applications." He said that the goal is to reduce the manufacturing cost of these fuel cells and bring them into the same price range as current premium generator sets powered by diesel, gasoline, or LP fuel. The company also will work on making the fuel cell systems fit into the same space that current generators occupy.
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Yep. :)
They are cool tech though.
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The problem with fuel cells is that you still need power to create the fuel in the fuel cell.
So you still need energy.
The upside is that you don't neccesarily need energy from oil. Nuclear, coal or other sorces can be used.
Personally, right now the only thing you could do is Nuclear power, like France (90% of France is nuclear powered).
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Originally posted by LtHans
Personally, right now the only thing you could do is Nuclear power, like France (90% of France is nuclear powered).
Actually, about 80% of the France's electricity needs are provided by nuclear power.
Fuel cells work on hydrogen and since it is not readily abailable and bulky, it is produced on the spot from natural gas or like substances (can be synthesised from oil, coal, etc).
Also natural gas requirements may probably be satisfied domestically to a greated degree then oil.
Ideally hydrogen would be produced from water using nuclear energy, bonded into some kind of hydride to inclease energy density and simplify storage/distribution.
So in the end, fuel cells are cleaner running engines, not much more efficient engines then ICM.
Fuell cells may be few more percent energy efficient, but they would require a huge infrastructure, so any gain will pay for itself only in many years.
Increasing fuel efficiency of ICE and legally limiting the maximum horsepower of the passenger cars (fuel tax, engine power tax, legal limitations, etc.) is likely to be much easier to implement technically. Politically is another matter altogether.
miko
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I agree with funked on the economic side of this. A study of economics shows that we will likely never run out of oil completely because the increasing scarcity of petroleum will cause the price to skyrocket, reducing demand and causing other technologies to come to the forefront. Once some other technology becomes cheaper than oil, or oil becomes more expensive, that technology will take the lead. There is the possibility of course that the transition time could cause a recession in the economy (due to both the outgoing fuel and incoming fuel both being expensive for a time) but it shouldnt be anything major.
For our electricity needs, we should indeed make the switch to nuclear. It is the cleanest and safest means of generating power available. This alone would be a major cause of reduced pollution and petroleum consumption.
As to our transportation needs, fuel cells and hybrids will become more popular I think, as they get better, and cars will become more efficient over time as they always do. The answer isnt for the government to force people or manufacturers by limiting horsepower or anything like that though. I am vehemently opposed to anything of the sort, even to a underhanded attempt to limit power by using taxes. Freedom includes the freedom to drive a 400+ horsepower car if I choose to and can afford it (I wish I could afford one hehe, Ill take a black BMW M5 please).
I have never seen a estimate, not even from the most pessimistic source, that claims that we will run out of petroleum within the next 20 years, even given current growth rates. Twenty years from now is a long time given the rapid technological advances that have been made within the last 20. Im not saying we will be riding around in personal hovorcraft or anything like that, but all that we really need is a breakthrough in battery technology, and electric powered cars could have greater range and performance than gas powered ones do.
The potential is there, limited only by the state of current batteries, which are heavy and have limited output before needing a recharge. Given batteries that would last a reasonable amount of time before needing a charge, and that weigh less than existing ones, cars could be made that would be much faster than current gas ones, (due to the linear power curve of electric motors and the fact that their torque peaks right away). The batteries would either need to be rapidly changable or quickly chargable, so that switching out battery packs or recharging batteries would be comparable to getting gas today. The end result of this is that the nuclear power plants would be providing for our transportation needs as well as our other electrical needs. This would be the ideal state of things in my opinion. All that is needed for this to happen is a breakthrough in batteries, and a change in the mindset of people that are irrationally afraid of nuclear power, neither of which will probably happen anytime soon unfortunately. If we could start with the nuclear power plants now though, that would help.
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I have never seen a estimate, not even from the most pessimistic source, that claims that we will run out of petroleum within the next 20 years, even given current growth rates.
People have been making claims like that for about 100 years. Same for global food shortages too. The sky is falling! ;)
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To even claim economics is as succinct as evolutionary biology is absurd. :)
To claim that economics (patterns of human behavior) are not governed by the same factors which govern evolutionary biology, now THAT is absurd. :)
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Originally posted by funkedup
People have been making claims like that for about 100 years. Same for global food shortages too. The sky is falling! ;)
Okay funked, you really do not believe our planet will never run out of oil?
We will run out, but the problem is, no one can really say for sure when it will happen. Those foolish enough to estimate when we will run out just set themselves up for a proper dose of embarassment.
A lot of the economic arguments are predicated on knowing when we will run out of oil. The argument being, when oil becomes harder to come by, the price will rise and force us to alternative methods of fuel.
This may work, but this will only work if we assume oil will gradually become less available.
Anyone ever worked on an oil rig? For the most part, when it goes dry, it just stops producing. There really is no warning, it just stops. It might burble or burp for a few days before stopping, but not much in the way of a warning is issued before it stops.
Oil resevoirs are much like underground lakes. When you get to the bottom, it is done. We can squeeze more out of it, by using steam scouring and some other chemical methods, but not much more can be gotten out of a dry well.
Note also, most of the resevoirs are large pools and not disjointed bubbles in the ground. Many oil rigs are used to tap the pools to get as much as they can out of the lake as fast as they can. So when one rig goes dry, then many more will go dry very soon afterwards.
About the only thing that would cause us to ntice we may be running out would start when the first major field goes dry. Even then we may just sit back and say, well,..there are more fields. It may take a few major fields going dry before someone starts getting concerned.
It's all a timing issue. If oil goes away over a 1 month period of time, we are in serious trouble. If it goes away over a period of years, then we may not be in nearly as much trouble.
But therein lies the basic problem. We are gambling that when oil starts to dry up, we will have time to react to it. I do not know about you, but I call that a bad gamble.
And it boils down to us not really knowing when oil will go away. Sounds like everyone is ready to gamble that oil will go away very slowly. I hope you are right, but I would rather hedge my bets.
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If oil goes away over a 1 month period of time, we are in serious trouble. If it goes away over a period of years, then we may not be in nearly as much trouble.
I think something like 10 years seems more likely. Oil comes from many sources and there are many methods of exploiting less-than-ideal oil sources which are not currently used because it is more cost-effective to just drill somewhere else.
If things start drying up these methods will become more attractive and previously unavailable supplies will become available. But at much greater cost.
The higher cost of exploiting these sources would also spur exploration efforts and technology. A lot of the exploration and exploitation technology being deployed today could not have been dreamed of 50 years ago. What makes you think that 50 years from now they won't have exploration and exploitation technology that we couldn't dream of today?
But no matter what happens with technology, at some point the price will go up drastically as supplies get really thin. This is a fundamental economic truth - increased scarcity means increased competition for resources means higher prices. Barring government interference, the increased cost will provide economic motivation to use non-petroleum energy sources.
Necessity is the mother of invention. There are plenty of alternative energy technologies ready to be developed. All the economy is waiting for is an increase in petroleum prices to make it cost-effective to develop these technologies.
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Something that will help you understand what I am talking about: http://www.fe.doe.gov/education/oil_history.html
It's not like sucking the last drops of a soda through a straw, or running your car out of gas. It's more like trying to squeeze all the soap out of one of those big car-washing sponges.
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Yes funked, I am aware of how oil is formed and so on,..my poor choice of an analogy about the lake. The supply of oil is limited, no matter how we look at it.
It still does not answer the "when" question, which is one that may never be answered. The fact we are having to squeeze out what is left is good indication we are starting to get to the end of the barrel. The estimates are a best guess, as much as anyone guessing when we will run out is.
No one knows how or when it will happen, but it will happen. We will run out of oil one day. Maybe not in my lifetime or yours, but we will run out.
I just do not like the fact we are somewhat waiting for that day to come. I think it is a bad gamble.
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Durr: Freedom includes the freedom to drive a 400+ horsepower car if I choose to and can afford it
It's a bit more complex then that. The price of gas you buy does not include military and other costs of securing the oil supplies - including opposing the authoritarian regimes and terrorists that your money ends up suporting. It does not include (huge) monetary cost of me being drafted and possible killed to defend your driving habits.
So untill you monetize every aspect and risk of your gas purchasing properly and pay for it completely, your statement would not be correct.
Our freedom to interfere in foreigh affairs (that can have negative implications on US) and to support regimes/groups hostile to US is limited. I think driving 400+ horsepower car is one of those cases.
Once you start supporting your habits entirely out of your pocket (rather then tax-payers) and carry all the risks, then the subject really becomes one of your freedom.
Until then - you may try to use your vote to get some of my money and my blood to subcidise your toys and I will use my vote to oppose you.
On oil shortage:
The issue is no that Saudi Arabia will run out of oil in 20 years - it will not. In fact in 20 years SA's share of production will probably increase from 25% to 40%. The problem is that they may easily become a hostile power with undue influence on our life.
US lost billions in the oil crises and terrorist attacks, maintaining bases, etc. A fraction of that would have paid for a lot of development of advance energy concepts and stimulated ecoomy in the process.
miko
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Some interesting discussions :)
A few points I might add:
Total oil reserves are a big question mark. As any two "experts" and you'll get three different answers. I've heard estimates of 40 years, 20 years and even one "theory" that there is an unexhaustable supply of oil that constantly replinishes itself. I would agree with those who say that 20-60 years from now, even with new scientific advances in drilling and extraction, we will begin to see some significant price increases as all of the easy oil is used up. Then, we'll see motivation for a change in fuel sources at least in the transportation sector. Hopefully, as Skuzzy noted, there will be time for a more orderly transition to the next phase.
I have to agree with Funked and Rip's sentiments about government involvement/management/regulation -- but, there are some interesting factors to consider in the current unregulated market.
We currently have a refinery capacity deficiency, which is why we have such a degree of price volitility today. In the summer time our domestic refineries are running at about 98 percent to meet demand, so any disruption at a refinery or pipeline means potential regional shortages which lead to wholesale price adjustments like you would see in any commidities market (the last thing a retailer wants is dry tanks, and the supply chain adjusts price accordingly when fuel is scare or buyers scared :)). Price can and will jump 25-cents per gallon because suddenly that is what the retailer finds his/her supply going for that morning.
Now, refining is not big oil. In fact, the majors are anxious to sell of their refining operations to independent operators when they can because it is a more risky and less profitable area of their operations.
We had refining overcapacity more than a decade ago, which was less profitable (but enjoyable to motorists) and the industry adjusted this in some very free-market ways. There is no incentive for the industry to promote overcapacity (they will blame it on environmental/construction issues which is only half the story) since they make less money with overcapacity and make more money with the market as it exists today. Similarly, from the production end, oil companies shut down viable wells each year that cannot be restarted, because the oil is unecomonical on the market at today's prices.
The Bush oil policy has a lot of corporate welfare for oil companies aimed at making refining more profitable and keeping non-viable oil wells in production. Although I hate corporate welfare (see it as far more of an issue than the "traditional" welfare people get riled up about), I'm hard pressed to see an incentive for the oil companies to take care of this problem on their own without this welfare incentive or some form of regulation. Given the role oil plays as a non-optional commodity in our way of life, regulation is probably more justified than it might be normally (and I dislike ham-fisted regulation about as much as I dislike corporate welfare). Perhaps the answer is the threat of regulation with a few incentives to help them look past the shareholders a bit and concentrate more on our needs as drivers.
As for fuel cells, the problem lies with the infrastructure and where you put the hydrogen reactor. In the car you have weight cost and complexity, but you can use the existing gasoline infrastructure pretty well. If you site the reactors at a traditional gas stations or local/regional hubs, my understanding is that you need some combination (depending upon approach) of compressed liquid hydrogen pipelines, high-pressure underground/above ground storage tanks, tanker trucks and fuel tanks in cars which is even a bit more disturbing than driving around with a tank of gasoline in the back. This has been done with LNG, etc. but I don't beleive on anywhere the scale or with complexity of distribution channel required for transportaion use. All these issues can be overcome, but not easily or economically in the near future.
The hybrid vehicles I mentioned earlier are a good approach that is/can be fielded today, but would likely take some regulation to be appealing to both consumers (with our cheap gas) and automakers (with consumers liking to use small trucks to carry a single passenger on a 70-mile daily commute). I think we've already proven a willingness in the USA to pay for gas up to and beyond $2.00 a gallon and I've head it would need to reach $4.00 or so before people really began to change their driving and purchasing patterns in a significant way.
Charon
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I have my order in for a "Mr. Fusion":cool:
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One more thought on this. Why wait until we have to convert to another type of resource? Why not do it before we get into an economic crunch?
Seems it would make much more sense and would keep the economy from doing a yo-yo.
I know,..it is a silly idea. What! You mean be pro-active as opposed to reactionary! BLASPHEMER! :)
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Because the other sources cost more Skuzzy. As a business owner you should know better. Go stand in the corner!!! :)
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My bad :D
I was just thinking that the costs today would be lower than the costs tomorrow.....
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Originally posted by Skuzzy
I was just thinking that the costs today would be lower than the costs tomorrow.....
Or the major upheaval caused by oil shortage may cause a famine, strife and significant drop in US population.
Then we would only have to build nuclear and wind powerplants to supply, say, 100 million people instead of 300 millions.
miko