Map of life expectancy at birth from Global Education Project.

Tuesday, April 25, 2006

Am I fiddling while Rome burns?

All of this talk about whether people do or do not take their lisinopril and have their nether regions penetrated by fiber optics is important only if one assumes that we will continue to live in a wealthy country where stuff like that determines whether we will one day make it to the shuffleboard court and the early bird special at Denny's, and we should actually care. Consider this:

This is the trend in crude oil prices through the end of last year. As you are no doubt aware, the price has continued on up and is now at about $75/bbl, more than 20% above where it was when this chart was made. The earlier historic spike represents the OPEC oil embargo followed by the political crisis in Iran, but nothing like that is happening now. The OPEC countries are pumping the stuff as fast as they possibly can. Also, as you can see, we are not experiencing a sudden, sharp spike but rather a steady, long-term upward trend in price.

Sure, much of Iraq's potential production is off-line, the Gulf of Mexico has yet to fully recover from last year's hurricanes, there is some loss of production from Nigeria due to a rag-tag insurgency, but those are pretty minor factors. Although the news readers keep telling us that high oil prices are due to "concerns" about Iran's nuclear program, don't you believe it -- this trend started a few years ago. Any specific geopolitical worries just make a little blip.

You need to read this, which is called the Hirsch Report. It's on the Project Censored website because it was done for the Department of Energy which promptly sent it down the memory hole. It's 67 pages plus appendices, but it's written in a very clear, straightforward style. A former cokeaholic fratboy and AWOL Texas Air National Guard Member through whom God speaks might not be able to understand it, but you can. Read it, because it will put important information in your head that you don't have now, even if you think you understand this. Then come back here for some commentary.

(this is to signify the passage of time)
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Okay. The Hirsch report is now more than a year old. It completely omits the not so minor issue of global climate change, and it does contain one fairly egregious error. So, taking those reservations in order:

They cite experts who say the peak happens anywhere from right exactly now, to 2016, plus some outliers who think it's farther away. However, if you read between the lines it's pretty clear that yesterday is probably the best estimate for a few reasons, and more than a year later that's even more clear. First of all, the corporations and governments that have properietary information about existing oil fields all have incentives to highball their estimates of reserves. That brings in investors, increases political clout, fends off conservation efforts, keeps the rabble happy, etc. Second, as they note on page 14, "Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing." Specifically, as shown on page 15, since 1990 that rate at which new reserves have been added has been less than the increase in consumption, at a rapidly increasing rate. And "additions to reserves" doesn't even mean new discoveries: much of it represents increases in calculations of the amount of oil that will be extracted from existing fields based on higher prices, that make more intensive recovery efforts worthwhile. The last so-called "Super Giant" reservoirs were found in the 1960s, and they are now in decline. Since then, only smaller reservoirs have been found. Finally, the price signal that the Hirsch Report says will introduce peak oil may well be here.

The major omission in the Hirsch Report -- the elephant in the bathtub -- is global climate change. Most of the mitigation efforts they discuss consist of making liquid transportation fuel from coal, oil shale, and tar sands. All of these processes pump far more CO2 into the atmosphere than does burning petroleum distillates directly. The major thrust of the report is that if we invest massively in these technologies now, today, we can ameliorate the economic consequences of an oil peak that happens 20 years from now. What they don't say is that we would thereby accelerate global warming. However, if peak oil happens now, or even ten years from now, the economic consequences will be catastrophic, and it's already too late. The technical term is, we are screwed.

They say that greater fuel efficiency can also help, of course, but it takes more than 15 years to replace the auto and truck fleet; and that still won't help all that much. You're burning less gas per mile, but you're still burning it, and of course on present trends humans are driving more and more miles all the time.

(Their egregious error, by the way, is claiming that the U.S. has the world's largest coal reserves. Actually the largest coal reserves are in China and Siberia. But that doesn't matter much.)

Finally, you may have heard that the president has a plan: hydrogen fueled cars. The Hirsch report makes it abundantly clear that hydrogen fueled cars are a) as likely to exist any time in the next 20 years as mobile biological weapons labs are to exist in Iraq right now; and b) hydrogen is not a source of energy, but a method of storing energy, which has to come from somewhere, specifically natural gas. And oh yeah -- that's also about to peak.

Pop quiz:

1) What country is currently the world's largest petroleum producer?

Wrong! It's the United States. But we also consume the most, by a huge margin, and we consume far more than we produce. Saudi Arabia's power comes producing far more than it consumes.

2) Why did the United States invade Iraq?

(Too easy for a hint.)

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