Peak Oil: Say Hello Again to $100 Oil

True, but then its population would just migrate to some other country and keep emitting carbon there

 

Like I've always said, there's nothing wrong with the climate that killing off 5-6 billion people can't fix.

The 'tax' you can't avoid: Oil prices rising

The one thing this article gets right is the tax on consumption in the U.S. when oil prices go up. It increases our trade deficit and sucks household discretionary income away from other sectors.

As indicated in the article, quantitative easing from the Fed will probably continue to play a role in driving up oil prices. Similarly, low interest rates really do drive hedge fund managers into oil futures, and that also helps bid up the prices of oil.

Also, the early winter cold spells in the U.S. and Europe are driving up the costs of fuel oil for heating, with the same effect for consumers as higher gas prices but for a commodity with even more inelastic demand. People will forgo almost any other expense to stay warm in winter.

But the continuing real driver of increasing oil prices is China's (and to a lesser extent India's) relentless energy demand growth. That dwarfs all other factors in my view.

 

The spread between WTI and Brent, which hit unprecedented levels in the last few weeks, may start narrowing now, with WTI launching toward $100 in the face of Libyan unrest. Europe, which is much more directly impacted by Libyan oil flows, pushed Brent crude to $110 today.

To me, the spread represents the decoupling of American consumer demand as the primary driver of commodity price increases worldwide. China and India are the engine fueling fundamental commodity price increases.

The U.S. has been lucky in that Canadian oil, for now, flows in pretty much one direction only. Yet, American consumer demand remains suppressed. Pump price increases as the result of Libya will suppress it further, and if WTI lingers above $100, we will fall back into recession.

Every $10 increase in the price of oil allegedly cuts nearly half a percentage point off U.S. economic growth. A Libyan civil war lasting months will brutalize markets. The Saudis claim a spare capacity of 4 million, enough to nearly cover Iran + Libya's oil output, but as was the case in 2007 and 2008, the Saudis mostly choose to fight oil price increases with press releases rather than additional oil.

The Saudis spent tens of billions of dollars from 2004 forward to expand their oil production, yet the U.S. government suspects that most of that expense went to try to offset 8% annual decline rates in their aging oil fields and mostly brought new heavy, sour crude online. Best guess, Saudi may have 1 million in spare capacity that it could bring online for a short time, but that a higher level of production would not be sustainable.

 

If it's going to be so bad, why don't we....well, ration oil? Let the trucking companies have as much as they need so that things like groceries don't shoot up in price. Give tax incentives for carpooling to work, taking public transportation, etc etc....

 

Because that would be interfering with our Freedoms?!

 

I have a better idea.

Alternative energy?

It's a shame there was never a real push to get off of oil during the embargo; we would be in a far stronger economic position now.

Peace,

V-03

 

Reduction is key, I think. Yes, more efficient vehicles and alternative energies are great to pursue as well; but we ultimately can find the greatest benefits by coming up with permanent solutions which will last forever.

I am glad they're investing more into high-speed rail, but we ultimately have to reorganize our current urban geography trend to encourage more efficient land-use planning and increasing population densities to make public transportation feasible for everyone. I keep pushing this point, but I'm still convinced it's our only solution for a long-term energy and economic needs. And just as important is to educate the general populace of the benefits of living in apartments or condos over the single family detached home. Raising taxes on suburban development over city-dwellers is a great way to encourage a return to the central cities and out of suburbia.

I've been going over several urban geography terms which explain the force-multiplying effect of having fewer people on a smaller lot of land, which often are key to better energy use. Transportation isn't the only factor to consider in urban geo in regards to energy, but it's unfortunately one which could cause this entire state to grind to a halt. Without oil, or very expensive oil, there are almost no substitutes in place for transportation... and plug-in hybrids are only viable to a limited extent. I'm not even sure there is enough lithium available for every family to have a plug-in hybrid... let alone whether this can be done.

On top of overtaxing the US electrical grid during the day to replace current transportation demand on top of our daily needs... even if alternative energies are available for use in large-scale power plants, this gets very messy and a very complicated solution from beginning to end. Reduction is genuinely our only answer if we hope to make a smooth transition into a peak-oil world.

 

We're two years out from the 2008 oil price peak, and fleet replacement in the U.S. is well underway. People are buying on average cars with somewhat better gas mileage. In the short term, this isn't an awful thing. Mostly it's helping to suppress U.S. demand to free up more oil for China and India to burn.

Eventually, better mileage fleet replacement won't be enough to compensate for sustained higher pump prices, and the U.S. will be forced to move toward more painful conservation efforts.

 

Eventually, oil will run out completely.

Conservation is good, but giving up home ownership and moving back to the cities will present many different problems. I don't see that shift taking place this generation.

I'm still a fan of domestic production as a transition to clean energy. On levels both economic and national security, it simply makes sense to produce our own clean energy. Unfortunately, our infrastructure and political system are set up in a way which guarantees that oil will remain firmly entrenched for at least the near future.

Peace,

V-03

 

I think it's safe to say that the evolving crisis in Japan will represent another major setback to public acceptance of nuclear power and the likelihood that nuclear power will become the backbone of any attempt to mitigate the effects of declining oil supplies.

 

The sad thing is that Americans have largely no reason to fear nuclear power. There are plenty of places in the country free of fault lines where it is safe to build nuclear plants. Japan has no oil or natural gas.. its nuclear plants are built out of necessity. Someday, sooner rather than later, we will do the same.

 

Consider this: a plant built forty years ago - built before the Chernobyl Nuclear Power Plant was commissioned - survived a 8.9 earthquake in good enough condition that there wouldn't have been a problem except that the backup non-nuclear power plant also suffered from problems that shut it down, and as things stand the overall damage looks to be in the Three Mile Island range, if that, rather than in the Chernobyl range. Newer plants, constructed after Chernobyl, are considerably safer. Looking at it objectively, this is a demonstration of how SAFE nuclear power is, that it takes one of the largest earthquakes in recorded history to cause problems.

Build the plants on the Canadian Shield, on the edge of Hudson's Bay for water access, and enjoy the cheap, clean power.

 

Unfortunately even if nuclear energy actually does come to fully replace fossil fuels for our electrical demands, there's still going to be transportation to consider. With recent events in Libya causing a rise in oil prices, we're now actually seeing such a dreadful future ahead of us. Already Obama is giving reassurance that we'll tap into our reserves if the price doesn't soon level off. I've mentioned a number of times already that we've got two independent energy infrastructures in the world... infrastructure and transportation. The problem with transportation is that there are few substitutes, whereas electricity has so many alternatives. What I wouldn't give for those Mr. Fusion devices in 'Back to the Future.'

2011 will certainly be remembered like 1968 and 1937... and we're only two and a half months into this year.

 

I think that's why Ford and General Motors are starting to develop electric cars, and why the federal government wants to encourage high-speed rail.

 

It's definitely not a Chernobyl-level disaster, but the Japanese are dealing with emergencies at five reactors simultaneously, at least three of them serious enough that those reactors will never generate electricity again and will cost billions to dismantle.

Also, I'm not convinced yet of the accuracy of Japanese reports that no breaches of any of the containment reactors have occurred. We know for sure there have been explosions and partial meltdowns at 2 reactors.

Also, the reports from the Ronald Reagan:
Military Crew Said to Be Exposed to Radiation, but Officials Call Risk in U.S. Slight

the aircraft carrier Ronald Reagan, which is sailing in the Pacific, passed through a radioactive cloud from stricken nuclear reactors in Japan, causing crew members on deck to receive a month?s worth of radiation in about an hour, government officials said Sunday.

The officials added that American helicopters flying missions about 60 miles north of the damaged reactors became coated with particulate radiation that had to be washed off.

Obviously I'm no expert, but I wonder if this report is consistent with the idea that the steel reactor containers of the 2 reactors that experienced explosions are fully intact or with how much radioactive steam venting is reported to have taken place.

The good news for the people of Japan and the people nearest the reactors is apparently that the prevailing winds are blowing radiation out across the Pacific.

But given the multiple reactor emergencies, Japan is dealing with a crisis that falls somewhere in between TMI and a Chernobylesque flaming reactor core exposed to atmosphere, hopefully closer to TMI than not.

 

Even if this killed hundreds of people, nuclear would have a far better safety record than coal or oil. There are sensible concerns that should be addressed in a calm and rational manner. Instead, various hysterical idiots are freaking out.

 

I agree, MSNBC is already in anti-nuclear mode.

What's happening in Japan is terrible, but the nuclear reactors haven't caused a disaster yet, and it takes the 5th largest earthquake in 100 years to cause worry. I'm sure every country will be looking at the safety of their own nuclear plants after this.

But I still believe that nuclear power is the best medium-term solution to our energy crisis. It's really the only option, until renewable energy technologies catch up or we discover how to harness Fusion Power. The only thing that's certain is our dependence on fossil fuels must end.

 

At any rate the Japanese are probably the last people who will reject nuclear power as the result of this incident. They don't have any alternative to nuclear power, which will remain as ideal a source of base load electricity for them as they are likely to find. Solar and wind power can't do what nuclear does

 

Japan Faces Prospect of Nuclear Catastrophe as Workers Leave Plant

Japan faced the likelihood of a catastrophic nuclear accident Tuesday morning, as an explosion at the most crippled of three reactors at the Fukushima Daiichi Nuclear Power Station damaged its crucial steel containment structure, emergency workers were withdrawn from the plant, and much larger emissions of radioactive materials appeared immiment, according to official statements and industry executives informed about the developments.

Not good.

 

I hate to say this, but even with Libya bringing up gas prices again, I don't think energy reform is possible before the election anymore.

The BP Oil Spill has ruled out a new bill that has any focus on expanding offshore drilling.

This disaster in Japan will turn people off nuclear power again for a few years.

The Republican House won''t want to pass anything that encourages Wind/Solar without also investing further in fossil fuels and nuclear.

Clean Coal and Ethanol/Biofuel are dead on their own.

People will complain about higher gas prices, but there's no alternative in this political situation.

I really don't want to admit this, but I think any bill addressing Energy Independence is dead for the next two years.

 

And now Fukushima Daiichi 4 is on fire.

I know people who are optimistic that the "nuclear renaissance" can recover from this. My hope is dwindling. At the very least it will come out of this with a very tough design basis accident. All the talk the last 6 months has been about affordable (albeit less profitable) modular reactors. I'm guessing Gen-IV will come back into vogue.

 

Can alternative energy sources really take over from oil? We pump....how many thousands of barrels out of the earth each day? Even if biofuels prove to be viable and we scale up that industry a hundred-fold, I have a hard time seeing how it can satisfy the huge demand if we keep driving like we do now.

 

Wind and solar just can't provide base load power for a heavily industrialized society. Now that the "nuclear renaissance" has been effectively shut down everywhere but China, where the government can be relied on to press ahead with building dozens of new reactors, that leaves us with only one real option: burn more coal.

I'm with Ghost on this one. Our population is headed toward 400 million, nuclear power expansion has probably been killed off for another generation, yet we have no national strategic energy plan. Environmental groups oppose the siting of any new coal-fired plants, community groups fight unsightly offshore wind farms.

Ocean oil spills bring offshore drilling to a standstill, more and more environmental concerns are being raised about the emerging big fracking mess of natural gas production. We are going to have to phase out our aging nuclear power plants, without real hope at present of them being replaced by a new generation of American civilian nuclear technology. Then what?

We have to recognize our problems are not caused by coal or nuclear power or hydraulic fracturing or deepwater drilling or mountaintop removal. Our problems are caused by wanting to provide too many people with access to modern energy.

 

Obama has been a proponent of nuclear energy.

Lamar Alexander has come out in support of it, even in light of Fukushi Dai Ichi.

Perhaps the GOP and Obama have found somewhere where their interests align? The GOP has given him some political cover on Afghanistan and START, they could do the same thing here.