Category Archives: Crude oil

Peak Oil: The Limiting Factor Behind Government’s Social Programs

Franklin D. Roosevelt (FDR) was one of our Countries biggest proponents of progressive politics.  Through government initiatives like The New Deal, which created Social Security, and his Second Bill of Rights, FDR made a major impact on our Country’s social landscape.  This new social landscape promised services to individuals as if they were rights.  All of these services required additional resources and energy to maintain the social landscape that was being promised by the government.  These promises were easily maintained when cheap crude oil was abundant, making continued growth seem eminent.  In order to maintain these new rights, our country will be required to have continued energy production growth from limited energy resources, but continued growth can not continue.

As the world continues its plunge towards and beyond Peak Oil, creating a society that is energy efficient is very important.  All aspects of society must be considered, even the type of government that is implemented.  In a lower energy society anything that can promote hard work, innovation, and self-reliance is very beneficial.  I believe the United States Constitution creates the best government structure possible for post-Peak Oil.  The Constitution creates a system that does not require continual energy gathering in order to maintain a fully functional, and healthy nation; this is because The Constitution does not promise services to individuals, it only promises freedoms and creates basic structure.  Any philosophy that promises services to individuals will require the government to constantly take energy (resources) from one entity to give to another entity, in order to keep the promises made to the people by that government.

In a world where energy prices are high, and conventional crude oil has peaked (according to the 2010 IEA World Energy Outlook, pg. 6) is it possible to continue the never ending resource gathering?  The short answer is NO, so how can we expect ideals like FDR’s Second Bill of Rights, and services as rights be sustainable when the only way to maintain these ideals is through continuous gathering of limited resources (i.e. oil, natural gas).

What do you think, do you believe limited resources will shape our government structure?  Comment below.

Transportation: Future Energy Source(s)

Oil is continually becoming more scarce and more expensive to acquire, because of this finding a substitute is very important.  Unfortunately, there has yet to be a feasible substitute for oil, so we are faced with a future that will probably involve several different alternative fuels.  T. Boone Pickens recently released a new video outlining his plan, and mentions that he sees a world with multiple energy types for transportation.  This made me think and as I thought about this it began to make more and more sense.

We currently have no energy source that is adequate to replace oil, so we will have to use many different energy sources for particular uses.  This means, we could end up seeing electric vehicles for in-city driving or local commuting and hydrogen, fossil fuel, and/or alternative fuel vehicles for a multitude of uses.  Each energy type will play a role in our future, depending on geological location and vehicle usage.  Vehicles that are used for heavy loads may operate on diesel or natural gas, and vehicles that are used for every-day city driving may be electric, hybrids or alternative fuel powered.  Using multiple energy sources will complicate the consumers purchasing decisions, because consumers will need to choose vehicles based on energy type and predicted usage.

Our energy future must rely on sources of energy other than oil, and because of this we will see several different energy sources emerge.  Consumers will need to have a basic understanding of energy.  Energy will play a MAJOR role in the majority of our future decisions. In addition to alternative fuels, I also believe we will see an increase of rail-based transportation being used.  Rail transportation is generally energy efficient and relatively convenient.  Using energy without thought will become a thing of the past.

Here are my thoughts, i look forward to seeing some of your thoughts/comments below.

What Is The Future Of Offshore Oil Drilling in the United States?

BP has been under a lot of criticism lately from citizens, organizations and government officials because many feel that BP is to blame for the Gulf of Mexico oil well leak.  The oil well began leaking oil into the ocean over 40 days ago.  Since that time, BP has tried several different techniques to either control or halt the flow of crude oil into the Gulf of Mexico.  With government officials making comments like, “I think we’re now beginning to understand that we cannot trust BP…BP has lost all credibility, now the decisions will have to be made by others because it’s clear that they have been hiding the actual consequences of this spill”, Congressman Ed Markey.  I’ve began to wonder what will happen to future offshore drilling endeavors.  Do you think that BP wants or likes losing all of this oil into the ocean?

With quotes like that made by Congressman Ed Markey, it seems like we are going to see more government intrusion into the oil industry through regulations and/or the government trying to control aspects of the oil industry.  Do the ‘evil’ bankers ring a bell?

Suddenly, because of this one offshore oil drilling disaster, talks of putting offshore drilling to a halt have risen.  We have been drilling for oil in the Gulf of Mexico for over 70 years now and on top of that there are thousands of operating oil wells that have a good track record.  I know that the BP oil leak is major, but to consider stopping offshore oil drilling would be halting an important energy source for our nation.  Per President Obama during his BP press conference, “The government is running things…”; since when has the government micromanaged anything very successfully?

The federal government can not continue to attack BP both publicly and legally by launching a criminal investigation into BP.  The plans for this, and all oil wells are presented in detail to the federal government before drilling can begin; only after the approval by the federal government can drilling start.  BP got the plans for this oil well approved so blaming BP for this disaster seems ignorant.  This type of behavior has the potential to scare away companies and to stop future oil well development.

I would love to see the adoption of more renewable energies but we simply can not change the fact that we NEED oil and that finding sources of oil will require us to go offshore.  It is naive to think that government could/can solve this problem, that we should stop our search for oil, and that we have the ability to stop using oil.  Renewable sources have a ways to go before becoming a good replacement for oil, so until then we need to work on gathering more oil and perfecting renewables at the same time.

Sources:

BP Criminal Investigation Launched By Feds – Huffington Post

Obama under pressure on oil drilling ban – The Examiner

Dems:’We cannot trust BP’ – MSNBC

Federal Gulf Distribution by Production Rate Bracket – EIA

Offshore Oil and Gas in the US Gulf of Mexico – Wikipeda

What Caused The Deepwater Horizon Disaster? – The Oil Drum

Obama Defends Response to Gulf Oil Spill, Pledge to ‘Shut This Down’ – FoxNews

What the Kuwait Oil Study Says About Peak Oil

This year Kuwait University and the Kuwait Oil Company released results of a study using a modified version of Hubbert’s curve to predict that oil will peak in 2014.  This study seems to mostly agree with a another study that was popularized by Sir Richard Bronson of Virgin Group Ltd., which predicted that oil will peak in 2015.

There are many different arguments about the time frame of peak oil, some argue that it has already occurred (Dot 2 and/or Dot 3) and others argue that peak oil won’t occur for many years (Dot 1).  I personally do not get too hung up on when peak oil will occur or whether it  has occurred.  Either way you look at it peak oil is not something that can be ignored and as you get near the top of the curve you begin feeling the effects of peak oil.  This is because more costly sources are being used and it is more difficult to increase production.  Many of the economic troubles that we are experiencing today stem from these facts.

Peak Oil Curve

One of the major reasons the Kuwaiti study is so interesting is because a major oil producer is stating that it will no longer be able to keep up with the demand of its product and that the it will be more costly to acquire.  That is like Apple telling its consumers that even though demand for its iPhone is increasing, in a few years it will no longer be able to keep up with demand and the iPhone® price will also start increasing.  No oil corporation would want to admit peak oil’s effects on their business which is why this announcement is so unbelievable.

The really unfortunate part of this whole ordeal is that while oil companies, oil producing nations and numerous other respected organizations are releasing reports that peak oil is REAL and IMMINENT, we continue down the same path.  Cities, states and governments should be having serious discussions about how to deal with peak oil and should also be considering plans to deal with these conditions.  Instead, the United States government is busy talking about things like health care, broadband expansion, cap and trade and numerous other topics that are irrelevant in a world where cheap energy is no longer abundant.  Cities continue to spend money on beautification projects and citizens are living their lives like everything is just going to go back to the way things have always been.  I realize that NO ONE wants to talk about these things because it can paint a grim future for our society, but if we continue to put our heads in the sand we will have a major problem on our hands that no one is prepared for.  If we start planning now we could have a brighter future, but planning can only begin when everyone is mentally prepared to begin serious, tough discussions.

If you are interested in some more information about peak oil, visit one of Dan’s previous articles here.

Sources

http://www.msnbc.msn.com/id/35838273/ns/business-oil_and_energy/

http://green.autoblog.com/2010/03/18/kuwaiti-study-conventional-oil-to-peak-in-2014/2#comments

http://www.guardian.co.uk/business/2010/feb/07/branson-warns-peak-oil-close

http://www.theoildrum.com/node/5395

Global Warming, Peak Oil, and Economic Crisis

When Zach and I started this blog, we agreed that it should be in the technical domain, rather than the political one as much as possible. The hope was that with high quality information available to the political class and activists, the “solutions” would be forthcoming. As time goes on though, it seems that even as difficult as our energy challenges are, the political ones are tougher. This reality requires the Energy Strain blog to deal with issues that may be considered to be more in the political domain.

For the moment, the world seems focused on “Climate Change.” Climate change is the new term for what was originally termed “Global Warming.” It is difficult to figure out who changed “Global Warming” to “Climate Change.” I would argue that both of these names are actually very poor names for this problem. One thing that we know for sure is that the Earth’s climate has been changing for the entire time that it has existed. It seems to me that if you wanted to come up with a name to motivate people to action, you would not use a term that describes something that is “normal.”

Peak Oil is an equally poor name for the problems that people are using it to describe. Peak oil, when used in the M King Hubbert sense, is a perfectly correct term. Hopefully we all know of the work of M King Hubbert, and his curves describing how oil fields age. The problem with the way that “Peak Oil” is now used is that it now means hundreds of different things to different people. From the simplest and obviously correct meaning, that a mathematical curve can be applied to the theoretical extraction rate of an oil province, Peak Oil is now also being used as a substitute term for we’re running out of oil, Malthus was right, all problems are caused by running out of oil, and the end is coming.

Economic crisis is also a very poor name for a widely varied set of symptoms. Economists originally called it “Sub-Prime” Crisis, then “Recession,” and now their favorite seems to be “Economic Crisis.” The names are likely to change as the symptoms of the end of the Industrial Age present themselves.

After studying the end of the Industrial Age for about five years, it all seems quite simple to me. These problems are all related, and must be contemplated and solutions proposed for the actual problems, not just the symptoms, and not with solutions that “feel good,” but rather solutions that fit the physics of the problem.

The problem is simple.
Man found a substance in Earth’s “basement” that allowed him to temporarily overcome the normal limit of living on Earth, that limit being: living on the energy that comes from the Sun. Man used the energy from this substance to continuously increase the amount of energy available from this substance. He also created an economic system that automatically creates more interest debt as time passes, and thus requires economic growth in order that it remain plausible that the interest accumulation could be repaid. As he used this substance, he put the undesired components into the atmosphere, hoping that it would be OK.

Now Industrial Man finds himself in the following situation.
1. The net energy (gross energy minus the energy used in the extraction) from fossil fuel is in decline.
2. His financial system is collapsing because repayment of the interest is not plausible, and the economy cannot grow enough without more energy to make it plausible.
3. The Earths formerly sequestered carbon is now in the atmosphere, and he is not sure exactly what it means. But most agree it’s probably not good.

So Global Warming, Peak Oil, and financial collapse are the same problem.
Maybe we should name the entire situation “DADESFFC” for Dying and Dysfunctional Energy System Feeding Financial Collapse. Ok, so maybe it’s not a sexy acronym. Or maybe it’s too complicated for some to understand. But the point is that without understanding the big picture, and without looking for solutions to the actual problems, we are left in the dark shooting at the symptoms.

Lately “Climate Change” has been in the news with the negotiations in Copenhagen, Denmark. Some of the activists seem to be advocating that we solve the problems with massive redistribution of wealth. Their solutions are simple–take money from the polluters and give it to the less fortunate. Problem Solved. If only it were anywhere near this easy.

The reality is that the technologies that are available to “replace” the current fossil fuel technologies are not drop-in replacements. A society created from alternative energy technologies will be profoundly different. Here are some of the technical challenges along with the implications of a post fossil fuel economy:

1. Renewable energy sources are powered by low density energy.
Low density means that the systems will be very large, and consume huge quantities of resources and labor in order to construct. In an economic sense, this by necessity means that the systems will be expensive.

2. Renewable energy sources have low energy return on energy investment (EROEI). Low EROEI means that renewable energy systems will have low profitability for their investors, and will take many years to return their initial investment. It also means that there is not room for mistakes in the implementation of these systems. Small mistakes in implementation that cause increased energy consumption, will convert low EROEI energy “production” systems into energy “sinks,” i.e., they cause consumption rather than provide energy.

3. Renewable energy systems are not a drop-in for fossil fuel technologies. This means that much of the most expensive equipment in our fossil fuel powered industrial economy must be replaced. A replacement society that is powered from renewable energy sources will be less wealthy, and have less complexity than a fossil fuel powered one. This may mean that there is no excess wealth to transfer from the former “wealthy” countries to the “developing” countries.

Simply transferring wealth from the “wealthy” fossil fuel consumers to the “developing” countries is very likely to aggravate the problems. It could leave the “wealthy” countries without enough surplus capital to develop renewable technologies, and it could just cause increased energy consumption in the “developing” countries.

Converting to a post fossil fuel era will not be easy. Resources will be scarce and financial systems very unstable. This means that in order to successfully accomplish it, we will have to understand what we are really up against, not choose one symptom and propose a “solution” for it that aggravates the real problem.

If we cannot solve the technical problems of operating a modern society from renewable energy, the only “deal” that we may be able to make is to lower our standard of living to their standard of living, if they agree not to try to raise theirs.

It goes without saying that this will be a difficult political sell, and I fear that those who are pushing these large redistributions aren’t as concerned about the environment as they claim, meaning that this would not be an acceptable solution, even though it may be the only one that is technically feasible with our current technology.

Living in a “GREEN” world

This whole notion of being “green” seems to be sweeping through every product line in the nation.  Seeing a “green” product at any store is pretty common but, just a few years ago you had to search for “green” products.  The fact that so many organizations are jumping onto the “green” bandwagon is both promising and troubling.

I like to see that companies are trying to improve things like, operating efficiencies of their products, reduce their company’s overall energy consumption, reduce materials used while packaging, among many other things.  In addition to all of the positive environmental impacts, this is good and beneficial to everyone because, it costs the end user less to operate and it can cost less for the manufacture to produce/ship.  Why suddenly are we seeing so many “green” products, well there are several reasons for this but the main reason is that consumers are demanding them.  Energy costs have risen and because of this, consumers want devices that use less energy. For the very same reason companies are trying to reduce their energy consumptions.

The downside to seeing so many “green” products is being able to sort out the beneficial and non-beneficial products.  It is becoming increasingly difficult to find products that actually have a positive affect both environmentally and in reducing energy.  It seems the term “green” is being so over used that marketing departments are throwing the “green” label on anything they possibly can, in hopes of appealing to consumers.  Whether the product is actually all that “green” or not is besides the question.  Since “green” is the new favorite phrase of marketers, it is very important to be conscious of these tactics and to do some research for yourself. Don’t  buy something just because it says that is “green.”  Next time when you see a “green” product ask yourself some of the following questions:

What makes this product green?

How does this product compare to other products?

Does this green labeling have any actual positive affect on the environment or in reducing energy?

The United States Government is also getting on the “green” bandwagon.  Some of the things the government is doing are good and some of the things it is doing aren’t so good.  For example, the United States Government is planning on improving federal and state building efficiencies.  This is a good thing and it will not only save the government (and taxpayers) money but it will also use less energy.  Also, in order to reduce energy and environmental impact the government passed a bill that will end up phasing out incandescent light bulbs.  This bill requires that light bulbs be 70% more efficient by 2020.  As energy costs have gone up, people have been buying energy efficient products like compact fluorescent light bulbs (instead of incandescent light bulbs) without the government dictating anything.  We are seeing similar behavior with the Cap and Trade bill.  The Cap and Trade bill is going to try and force you to live a “greener” life by raising the costs of energy.  The hope is that doing this will reduce energy usage and benefit the environment.  Again, we are seeing an actual “green” change occur in all aspects of society already but, these changes are occurring because the market is adapting to higher energy prices.

So, Am I against going “green?”  No.  Am I against forcing people to go “green?” Yes.

I am fully in favor of trying to minimize the amount of natural resources we use and to use the resources we do use efficiently.  Also, I am in favor of using products that are more efficient and in favor of replacing incandescent light bulbs with more efficient bulbs.  I am not however, in favor of having someone else dictate to me what I have to do.  If someone does not want to stop using incandescent bulbs then they should not be forced to.  Instead of having big brother breath down our necks let the people and the market make the decisions.  That is how things are supposed to work, after all aren’t we suppose to have freedom and be a capitalist society?

Tell me your thoughts; I would be very interested to discuss some of these topics further.

PickensPlan Reports on United States Monthly Oil Imports

It is that time again folks, T.Boone Pickens is reporting the statistics on U.S. oil imports.  Here are the numbers:

Barrels of Oil Imported by the U.S.: 386 million

% Imported from Foreign Countries: 65%

Money Sent Overseas: 18 billion

Some key points here is that we imported roughly 14% more oil this month that we did last month (339 million).  Of the oil that we consumed during the month of March, 65% of it was imported from foreign countries.  The represents a 3% increase over the total amount of oil imported when compared to February.  Now here is a big number, 18 billion.  This is the amount of oil that other countries received from the U.S. buying foreign oil.  All of these numbers can decrease if, we begin to place a large emphasis on energy conservation.  The more we conserve, the more we money we save, and the less dependent we are on oil imports.

Conservation is the key folks, we can not expect to drill enough oil to feed our habit.  I am glad to see that T.Boone Pickens continues to post this information, it is very good for people to see these numbers.  As always, feel free to check out the Monthy Oil Imports page on the PickenPlan website.

Monthly PickensPlan.com Oil Import Data

As I mentioned several posts ago, T.Boone Pickens, each month, reports on three oil statistics, which include:  Barrels of Oil Imported by the U.S. , Money Sent Overseas and % Imported from Foreign Countries.

There is some good news this month, the amount if oil that we imported (339 million barrels) is down from last month (408.7 million barrels). Also, during February the US imported 62% of its oil versus 67.4 percent in January.

It is good to see less oil being used.  The down side to seeing these drops in oil usage is this: the US hasn’t put any dramatic oil conservation measures into place so, this decrease in oil usage is due to the US economy worsening.

When the oil import data for March is available I will let you know (a month from now, of course).

T.Boone Pickens Reports on Oil Imports

I am on the Pickens Plan mailing list, so periodically I receive emails containing various types of energy information. Today I received an email from Pickens Plan giving the amount of oil imported, during the month of January.

Sadly, January saw a 7% increase in oil imports over December, totaling 408.7 million barrels of oil. Ideally the amount of imported oil should go down or at minimum stay relatively close to the same.

Every month the Pickens Plan website will post how many barrels of oil were imported, along with the costs associated with those imports. Feel free to check out their web page, Monthly Oil Imports.

Oil, So Much More Than Fuel For Your Cars

With job losses, inflation, energy price fluctuations and the stock market fluctuating, who isn’t aware of the troubles our economy is going through.  With this post I hope to give a basic overview on how intertwined our economy is with oil and how it is causing turmoil in our society today…

Since the industrial revolution, oil has increasingly become the lifeline of our economy. Now over 150 years later we have become fully dependent on oil in ever aspect of our lives.  It is completely crucial to think about oil as more than just gasoline for your cars.  Oil is transportation fuel, but oil is also plastic, electricity and a key component of pharmaceuticals.  Once you start thinking about everything that oil is used for and what aspects of your life it plays an important role in, you see that we have become completely and totally dependent on oil in everything we do in our modern lives.  I have just briefly listed a very minute list of how we rely on oil but lets get into how our society needs oil to survive.

In the early 1900′s mass production of the automobile was introduced by Ransom E. Olds and further perfected by Henry Ford.  This opened the door for a completely new way of transportation for the common person.  This increased the demand for oil in the transportation sector not only because of the gasoline that was used, but now the demand for nice smooth roadways existed.  Construction and upkeep of our transportation system demands large amounts of energy to produce road materials like concrete and asphalt.  As vehicles became larger and more accessible, this required the transportation infrastructure to also become larger.  With the improvement of the transportation infrastructure people began living farther away from cities, which increased distances normal people had to travel on a day-to-day basis.  All of this added to an increased demand in oil.

This is only the beginning of our dependence.  As oil became more available, it was given more uses because it was relatively inexpensive.  Oil was used to power our developing cities in several ways; it could be burned in order to generate electricity and was also used by the coal mining equipment.  Coal is the largest source of electricity generation; unfortunately a large amount of diesel fuel, which is derived from oil, is used during the coal mining process.  As the demand for more and more consumer merchandise rose, so did the need for electricity generation.  Unfortunately electricity is not the only use of oil that rose as consumer goods began to be mass-produced.

Mass production requires that oil be used in several different stages of the production process of consumer goods.  Some of these consumer goods and services are: plastic products, aluminum, steel, fabrics, medicines, household cleaning products, package delivery (like UPS or FedEx), vehicles, makeup and food.  For a more detailed example let us look at a simple loaf of bread and see how something that is so common consumes oil in the production and delivery process.

Bread’s common ingredients are water, flour, oils like soybean oil and extract from corn and barley, which are just a few ingredients from whole wheat Wonder Bread.  Now look just at the main ingredient listed above, flour, which is produced from grains. Grains are grown in fields using large farm equipment like tractors.  In order to ensure that the farmer gets a larger plentiful crop, petroleum based chemicals are used to kill off foreign plants using pesticides.  Then these grains are harvested, with a combine, and then trucked to a grain elevator where the crop is stored and eventually sold.  While at the grain elevator the crop may need to be dried, so large dryers that run on an oil supported energy source dry the crop.  When the crops are sold, the grains are then shipped, either via rail or truck, to a manufacturing plant to be made into flour.  These modern flourmills require an oil supported power source in order to operate.  After the grain is ran through the mill and turned into flour, the flour is then packed (probably some petroleum based packaging used here) and delivered to the bread company.  Again this flour is delivered by either truck or rail.  Once the bread company gets the flour it then processes it in a manufacturing plant that is powered by some sort of oil based power source.  The bread has to be baked in hot ovens (more oil usage).  When baking and quality control is done the bread will end up in a plastic bag (plastic is made from oil in a manufacturing plant powered by oil, supplied by semi-trucks and/or trains with necessary materials to make plastic).  Now the bread will be shipped to different distributors, restaurants and shopping centers.  Now I know that this is a rather long drawn out paragraph that doesn’t have an overly exciting topic, flour, but I hope it helps you see how even with something as simple as a loaf of bread, oil is needed every step of the way.

I didn’t get into as much detail as I could have when talking about the flour to bread example.  Pick something, anything, and think about how the object you choose used oil in some form in order for it to be what it is. I think it could be shocking and possibly even scary to see that we have allowed ourselves to become totally and completely dependent on a finite source.

So are we in trouble if we continue our ways?  It is fairly safe to say that oil production has peaked (based on Dan’s previous blog post) and as the production of oil continues to drop there will be less available energy for the world to use. If the economies of the world are healthy, lowered oil production will mean higher energy prices but if the economies of the world are not healthy then we could experience lower energy prices.  If there is less energy for the world to use then how is an economy based on consumerism going to fair?  Consumerism is based on the consumption of goods which dictionary.com defines as “the using up of goods and services having an exchangeable value.”  Our economy has been weakening and in return oil demand also has been shrinking, this is why we experiencing these low oil prices.  The economy isn’t the problem; the total reliance on oil and fossil fuel based energy is the problem.  We cannot expect to improve the economy if we continue to be completely reliant on oil and until that begins to change, we will continue to experience an unpredictable volatile market and economy.