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"What About Green Alternatives like
Solar, Wind, Wave, and Geothermal?"
Solar and wind power suffer from four fundamental physical shortcomings that prevent them from ever being able to replace more than a tiny fraction of the energy we get from oil: lack of energy density, inappropriateness as transportation fuels, energy intermittency, and inability to scale.
I. Lack of Energy Density:
Few people realize how much energy is concentrated in even a small amount of oil or gas. A barrel of oil contains the energy-equivalent of almost 25,000 hours of human labor. A single gallon of gasoline contains the energy-equivalent of 500 hours of human labor. Most people are stunned to find this out, even after confirming the accuracy of the numbers for themselves, but it makes sense when you think about it. It only takes one gallon of gasoline to propel a three ton SUV 10 miles in 10 minutes. How long would it take you to push a three ton SUV 10 miles?
While the energy-density of oil and gas give them rates of return comparable to a lottery ticket or marriage to a ketchup fortune heiress, the energy-density of solar and wind give them returns comparable to minimum wage jobs. For instance, it would take 4 Manhattan size city blocks of solar equipment to produce the amount of energy distributed by a single gas station in one day.
With 17,000 gas stations just in the United States, you don't need to be a mathematician to realize that solar power is incapable of meeting our urgent need for a new energy source that - like oil - is dense, affordable, and transportable.
On a similar note, It would take close to 220,000 square kilometers of solar panels to power the global economy via solar power.
Wind is better than solar, but the essential problem - a lack of energy density - is still present. To illustrate, it takes all of California's 13,000 wind turbines to generate as much electricity as a single 555-megawatt natural gas fired power plant.
II. Inappropriateness as Transportation Fuels:
Approximately 2/3 of our oil supply is used for transportation. Over ninety percent of our transportation fuel comes from petroleum fuels (gasoline, diesel, jet-fuel).
Unfortunately, solar and wind cannot be used as industrial-scale transportation fuels unless they are used to crack hydrogen from water via electrolysis. The electrolysis process is a simple one, but unfortunately it consumes 1.3 units of energy for every 1 unit of energy it produces. In other words, it results in a net loss of energy. You can't replace oil - which has a positive EROEI of about 30 - with an energy source that actually carries a negative EROEI.
III. Energy Intermittency:
In addition to suffering from poor energy-density and being largely inappropriate for transportation, solar and wind also suffer from energy intermittency. Unlike oil and gas, which can be used at anytime of the day or night, solar and wind are dependent on weather conditions. This may not be that big of a deal if you simply want to power your household appliances or a small scale, decentralized economy, but if you want to run an industrial economy that relies on airports, airplanes, 18-wheel trucks, millions of miles of highways, huge skyscrapers, 24/7 availability of fuel, etc., an intermittent source of energy will not suffice.
IV. Percentage of Total Energy Supply:
Finally, most people new to this issue drastically overestimate the amount of energy we will be able to realistically derive from these sources inside of the next 5-25 years.
In 2003, the US consumed 98 quadrillion BTU's of energy. A whopping .171 quadrillion came from solar and wind combined. Do the math (.171/98) and you will see that a total of less then one-sixth of one percent of our energy appetite was satisfied with solar and wind combined. Thus, just to derive a paltry 2-3 percent of our current energy needs from solar and wind, we would need to double the percentage of our energy supply derived from solar/wind, then double it again, then double it again, and then double it yet again.
Unfortunately, the odds of us upscaling our use of solar and wind to the point where they provide even just 2-3 percent of our total energy supply are about the same as the odds of Michael Moore and Dick Cheney teaming up to win a 5K relay race. Despite jaw-dropping levels of growth in these industries, coupled with practically miraculous drops in price per kilowatt hour (95% drop in two decades), along with increased interest from the public in alternative energies, the percentage of our total energy supply derived from solar and wind is projected to grow by only 10 percent per year.
Since we are starting with only one-sixth of one percent of our energy coming from solar and wind, a growth rate of 10 percent per year isn't going to do much to soften a national economic meltdown. Twenty-five years from now, we will be lucky if solar and wind account for one percent of our total energy supply.
While other alternative energy sources, such as wave and geothermal power, are fantastic sources of energy in and of themselves, they are incapable of replacing more than a fraction of our petroleum usage for the same reasons as solar and wind: they are nowhere near as energy dense as petroleum and they are inappropriate as transportation fuels. In addition, they are also limited by geography - wave power is only technically viable in coastal locations. Only a handful of nations, such as Iceland, have access to enough geothermal power to make up for much of their petroleum consumption.
On a related note, even if solar, wind, and other green alternatives could replace oil, we still wouldn't escape the evil clutches of so called "Big Oil." The biggest maker of solar panels is British Petroleum with Shell not too far behind. Similarly, the second biggest maker of wind turbines is General Electric, who obtained their wind turbine business from that stalwart of corporate social responsibility, Enron. As these examples illustrate, the notion that "Big Oil is scared of the immerging renewable energy market!" is silly. "Big Oil" already owns the renewable energy market.
"What About the Heralded Hydrogen Economy?"
Hydrogen fuels cells aren't the answer either. As of 2003, the average fuel cell costs close to $1,000,000. Unlike other alternatives, hydrogen fuel cells have shown little sign of coming down in price.
Even if the cost is lowered by 98%, placing the price at $20,000 per cell, hydrogen fuel cells will never power more than a handful of cars due to a worldwide shortage of platinum:
A single hydrogen fuel cell requires 20 grams of platinum. If the cells are mass-produced, it may be possible to get the platinum requirement down to 10 grams per cell. The world has 7.7 billion grams of proven platinum reserves. There are approximately 700 million internal combustion engines on the road. Ten grams of platinum per fuel cell x 700 million fuel cells = 7 billion
grams of platinum, or practically every gram of platinum in the earth.
Unfortunately, as a recent article in EV World points out, the average fuel cell lasts only 200 hours. Two hundred hours translates into just 12,000 miles, or about one year’s worth of driving at 60 miles per hour. This means all 700 million fuel cells (with 10 grams of platinum in each one) would have to be replaced every single year.
Thus replacing the 700 million oil-powered vehicles on the road with fuel cell-powered vehicles, for only 1 year, would require us to mine every single ounce of platinum currently in the earth and divert all of it for fuel cell construction only.
Doing so is absolutely impossible as platinum is astonishingly energy intensive (expensive) to mine, is already in short supply, and is indispensable to thousands of crucial industrial processes.
Even if this wasn't the case, the fuel cell solution would last less than one year. As with oil, platinum production would peak long before the supply is exhausted.
What will we do, when less than 6 months into the “Hydrogen Economy,” we hit Peak Platinum? Perhaps Michael Moore will produce a movie documenting the connection between the President’s family and foreign platinum companies while following the plight of a mother whose son died in the latest platinum war?
If the hydrogen economy was anything other than a total red herring, such issues would eventually arise as 80 percent of the world’s proven platinum reserves are located in that bastion of geopolitical stability, South Africa.
Even if an economically affordable and scalable alternative to platinum is immediately located and mined in absolutely massive quantities, the ability of hydrogen to replace even a small portion of our oil consumption is still handicapped by several fundamental limitations:
1. Hydrogen is the smallest element known to man. As such, it will
leak out of any container;
2. A hydrogen economy would require massive retrofitting of our entire
global transportation network. How such a capital intensive endeavor
will be accomplished in the midst of massive energy shortages is
anybody's guess;
3. As mentioned previously, solar, wind, or nuclear energy can be used to "crack" hydrogen from water via a process known as electrolysis.
The electrolysis process is a simple one, but unfortunately it consumes more energy than it produces.
"What About Nuclear Energy?"
Nuclear energy requires uranium - of which the US has enough to power existing reactors for 25-40 years. As with oil, the extraction of uranium follows a bell-curve. If a large scale nuclear program was undertaken the supply of US domestically derived uranium would likely peak in under 15 years.
Even if such a program is undertaken, there is no guarantee the energy generated from nuclear sources would be any cheaper than energy generated from fossil fuels. Attempts by China and India to scale up their use of nuclear energy, for instance, have already caused uranium prices to skyrocket.
Uranium supply issues aside, a large scale switch over to nuclear power is not really an option for an economy that requires as much energy as ours does. It would take 10,000 of the largest nuclear power plants to produce the energy we get from fossil fuels. At $3-5 billion per plant, it's not long before we're talking about "real money" - especially since the $3-5 billion doesn't even include the cost of decommissioning old reactors, converting the nuclear generated energy into a fuel source appropriate for cars, boats, trucks, airplanes, and the not-so-minor problem of handling nuclear waste.
Speaking of nuclear waste, it is a question nobody has quite answered yet. This is especially the case in countries such as China and Russia, where safety protocols are unlikely to be strictly adhered to if the surrounding economy is in the midst of a desperate energy shortage. It may also be true in the case of the US because, as James Kunstler points out in his recent book, The Long Emergency
. . . reactors may be beyond the orgnazational means of the society
we are apt to become in the future, mainly one with much weaker
central authority, less police power, and reduced financial resources . . .
. in the absence of that (cheap) oil we can't assume the complex social
organization needed to rune nuclear energy safely.
There is also the small problem of what to do if a tsunami (or other similarly destructive catastrophe) hits an area where these plants are located.
Assuming we find answers to all questions regarding the cost and safety of nuclear power, we are still left with the most vexing question of all:
Where are we going to get the massive amounts of oil necessary to
build all of these reactors, especially since they take 10 or so years to
build and we won't get motivated to build them until after oil supplies
have reached a point of permanent scarcity?
Scientists have made some progress in regards to nuclear fusion, but the road from success in tabletop laboratory experiments to use as an industrial scale replacement for oil is an extremely long one that, even in the most favorable of circumstances, will take decades to traverse.
Again, as with other alternatives to petroleum, all forms of nuclear energy should certainly "be on the table." But if you're hoping that it's going to save you from the ramifications of Peak Oil, you are sorely mistaken.
"What About Biofuels Such
as Ethanol and Biodiesel?"
Biofuels such as biodiesel, ethanol, methanol etc. are great, but only in small doses. Biofuels are all grown with massive fossil fuel inputs (pesticides and fertilizers) and suffer from horribly low, sometimes negative, EROEIs. The production of ethanol, for instance, requires six units of energy to produce just one. That means it consumes more energy than it produces and thus will only serve to compound our energy deficit.
In addition, there is the problem of where to grow the stuff, as we are rapidly running out of arable land on which to grow food, let alone fuel. This is no small problem as the amount of land it takes to grow even a small amount of biofuel is quite staggering. As journalist Lee Dye points out in a July 2004 article entitled "Old Policies Make Shift From Foreign Oil Tough:"
. . . relying on corn for our future energy needs would devastate the
nation's food production. It takes 11 acres to grow enough corn to fuel
one automobile with ethanol for 10,000 miles, or about a year's driving,
Pimentel says. That's the amount of land needed to feed seven persons
for the same period of time.
And if we decided to power all of our automobiles with ethanol, we would
need to cover 97 percent of our land with corn, he adds.
Biodiesel is considerably better than ethanol, but with an EROEI of three, it still doesn't compare to oil, which has had an EROEI of about 30
Clearly, while any significant attempt to switch to biofuels will work out great for giant agribusiness companies (political campaign contributors) such as Archer Daniels Midland, ConAgra, and Monsanto, it won't do much to solve a permanent energy crisis.
The ghoulish reality is that if we wanted to replace even a small part of our oil supply with farm grown biofuels, we would need to turn most of Africa into a giant biofuel farm.
Obviously many Africans - who are already starving - would not take kindly to us appropriating the land they use to grow their food to grow our fuel. As author George Monbiot points out, such an endeavor would be a humanitarian disaster. Any attempt to turn Africa into a large-scale biofuel farm will likely result in a continental-sized insurgency.
Assuming the conversion of Africa into a large scale biofuel farm is even economically and technically viable, and putting the humanitarian concerns of such a project aside for a moment, we would simply be replacing our "dependence on foreign oil" with "dependence on foreign grown biodiesel."
Some folks are doing research into alternatives to soybeans such as biodiesel producing pools of algae. As with every other project that promises to "replace all petroleum fuels," the project has yet to produce a single drop of commercially available fuel.
The fact that so many people in the green/environmental movement refuse to acknowledge the fundamental inability of fuels like biodiesel to replace more than a tiny portion of our petroleum consumption underscores why a complete collapse of the petroleum powered world may now be unavoidable. As Dr. Ted Trainer explains in a recent article on the thermodynamic limitations of biomass fuels:
This is why I do not believe consumer-capitalist society can save itself.
Not even its "intellectual" classes or green leadership give any sign that
this society has the wit or the will to even think about the basic
situation we are in. As the above figures make clear, the situation
cannot be solved without huge reduction in the volume of production and
consumption going on.
The current craze surrounding biodiesel is a good example of what Dr. Trainer is talking about. While folks who have converted their personal vehicles to run on vegetable oil should certainly be given credit for their noble attempts at reducing our reliance on petroleum, the long-term viability of their efforts is questionable at best. Once our system of food production collapses due to the effects of Peak Oil, vegetable oil will likely become far too precious/expensive a commodity to be burned as transportation fuel for anybody but the super-rich. As James Kunstler points out in an April 2005 update to his blog "Cluster Fuck Nation", many biodiesel enthusiasts are dangerously clueless as to this reality:
Over in Vermont last week, I ran into a gang of biodiesel enthusiasts.
They were earnest, forward-looking guys who would like to do some good for their country. But their expectations struck me as fairly crazy, and in a way typical of the bad thinking at all levels of our society these days.
For instance, I asked if it had ever occurred to them that bio-diesel crops would have to compete for farmland that would be needed otherwise to grow feed crops for working animals. No, it hadn't. (And it seemed like a far-out suggestion to them.) Their expectation seemed to be that the future would run a lot like the present, that bio-diesel was
just another ingenious, innovative, high-tech module that we can "drop into" our existing system in place of the previous, obsolete module of regular oil.
Kunstler goes on to explain that when policies or living/working arrangements are set up around such unexamined expectations, the result is usually a dangerous deepening of our reliance on cheap energy and "easy motoring."
"What About Using Coal to Make Synthetic Oil?"
Coal can be used to make synthetic oil via a process known as gasification. Unfortunately, synthetic oil will be unable to do all that much to soften the coming energy crash for the following reasons:
I. Insufficiency of Supply/"Peak Coal":
The coal supply is not as great as many assume. According to a July 2004 article published by the American Institute of Physics:
If demand remains frozen at the current rate of consumption, the coal
reserve will indeed last roughly 250 years. That prediction assumes
equal use of all grades of coal, from anthracite to lignite. Population
growth alone reduces the calculated lifetime to some 90-120 years. Any
new uses of coal would further reduce the supply. . . .The use of coal for
conversion to other fuels would quickly reduce the lifetime of the US
coal base to less than a human lifespan.
Even a 50-75 year supply of coal is not as much as it sounds because coal production, like oil production, will peak long before the total supply is exhausted. Were we to liquefy a large portion of our coal endowment in order to produce synthetic oil, coal production would likely peak within 2 decades.
II. Falling "Energy Profit Ratio":
As John Gever explains in his book, Beyond Oil: The Threat to Food and Fuel in Coming Decades, the production of coal will be in energy-loser within a few decades:
. . . the energy profit ratio for coal slips to 20 in 1977, comparable to
that of domestic petroleum. While an energy profit ratio of 20 means
that only 5 percent of coal's gross energy is needed to obtain it, the
sharp decline since 1967 is alarming. If it continues to drop at this rate,
the energy profit ratio of coal will slide to 0.5 by 2040.
In other words, with an EPR of .5, it will take twice as much energy to produce the coal than the coal actually contains. It will thus be of no use to us as an energy source.
III. Issue of Scale and Enviromental Catastrophe:
The environmental consequences of a huge increase in coal production would be truly catastrophic. Caltech physics professor Dr. David Goodstein explains:
We use now about twice as much energy from oil as we do from coal,
so if you wanted to mine enough coal to replace the missing oil, you’d
have to mine it at a much higher rate, not only to replace the oil, but
also because the conversion process to oil is extremely inefficient.
You’d have to mine it at levels at least five times beyond those we mine
now—a coal-mining industry on an absolutely unimaginable scale.
In his book, Out of Gas:The End of the Oil Age, Dr. Goodstein tells us that a large scale switch to coal could produce such severe global warming that life on planet Earth would cease to exist.
"Can't We Use a Combination of
the Alternatives to Replace Oil?"
Absolutely. Despite their individual shortcomings, it is still possible for the world economy to run on a basket of alternative sources of energy - so long as we immediately get all of the following:
1. A few dozen technological breakthroughs;
2. Unprecedented political will and bipartisan cooperation;
3. Tremendous international collaboration;
4. Massive amounts of investment capital,
5. Fundamental reforms to the structure of the international banking
system;
6. No interference from the oil-and-gas industries;
7. About 25-50 years of general peace and prosperity to retrofit the
world's $45 trillion dollar per year economy, including
transportation and telecommunications networks, manufacturing
industries, agricultural systems, universities, hospitals, etc. , to run
on these new sources of energy.
8. A generation of engineers, scientists, and economists trained to
run a global economy powered by new sources of energy.
If we get all of the above, we might be able to get the energy equivalent of 3-5 billion barrels of oil per year from alternative sources.
That's a tremendous amount of oil - about as much as the entire world used per year during the 1950s, but it's nowhere near enough to keep our currently mammoth-sized yet highly volatile global economic system going. The world currently requires over 30 billion barrels/1.2 trillion gallons of oil per year to support economic growth. That requirement will only increase as time goes on due to population growth, debt servicing, and the industrialization of nations such as China and India.
So even if the delusionally optimistic 8-step scenario described above is somehow miraculously manifested, we're still facing a 70-90% reduction in the amount of energy available to us. A 70-90% reduction would be extremely painful, but not the "end of the world" if it wasn't for the fact that, as explained above, the monetary system will collapse in the absence of a constantly increasing energy supply. If a shortfall between demand and supply of 5% is enough to send prices up by 400%, what to you think a shortfall of 70-90% is going to do?
To make matters worse, even if the all of the above obstacles are assumed away, we are still faced with the problem of "economic doubling time." If the economy grows at a healthy clip of 3.5% per year, it doubles in size every 20 years. That growth must be fueled by an energy supply that doubles just as quickly. Thus, our total "energy debt" will have compounded itself by the time we have made any major strides in switching to alternative sources of energy.
"What About Amazing New Technologies Such As Thermal Depolymerization, Solar Nanotech, Space Based Solar Arrays, and other 'Energy-Miracles'?"
Thermal depolymerization is an intriguing solution to our landfill problems, but since most of the feedstock (such as tires and turkey guts) requires high-grade oil to make in the first place, it is more "high-tech recycling" than it is a solution to a permanent oil shortage.
While the following analogy is certainly a bit disgusting, it should clearly illustrate why thermal depolymerization won't do much to soften the coming collapse:
Expecting thermal depolymerization to help solve our long-term energy
problems makes as much sense as expecting the consumption of our
own feces to help solve a long-term famine.
In both cases, the energy starved party is simply recycling a small
portion of the energy they had previously consumed.
On a less grotesque note, the technology is besieged by several fundamental shortcomings that those desperately hoping for a techno-messiah tend to overlook:
First, there is the problem of the technology's net energy - or more accurately, lack thereof. According to the company itself, the process has an efficiency of 85%. This means 100 units of energy go in, 85 come out. That's a negative EROEI of .85. You can't hope to replace or even supplement traditional oil's positive EROEI of 30 (or more) with a process that carries a negative EROEI.
Then there is the problem of production costs. According to a recent article in Fortune Magazine, a barrel of oil produced via the thermal depolymerization process costs $80 to produce as of January 2005. To put that figure in perspective, consider the fact that oil pulled out of the ground in Saudi Arabia costs less than $2.50 per barrel, while oil pulled out of the ground in Iraq costs only $1.00 per barrel.
This means that with spot oil prices in the $50/barrel range, a barrel of oil produced via thermal depolymerization in January 2005 would have to sell for between $1,600-$4,000 per barrel to have a return on investment comparable to oil produced from Saudi Arabia or Iraq.
Oil prices of $1,600-$4,000 per barrel would put gas prices at roughly $80-$200 per gallon.
If the technology was the miracle many people are desperately hoping for, the company would likely not have needed a grant from the Department of Energy to keep its head above water. Nor would it have been the subject of an April 2005 Kansas City Star article appropriately entitled, "Innovative Turkey-to-Oil Plant Eats Money, Spits Out Fowl Odor."
Low EROEI, sky-high production costs aside, and horrific odor problems aside, a look at the history of thermal depolymerization tends to show it will never amount to more than a tiny drop in the giant barrel that is our oil appetite.The technology was first developed for commercial use in 1996. Here we are, ten years later and there is only one thermal depolymerization plant online and it is producing less than 500 barrels of oil per day, despite record high oil prices. Even if oil production from thermal depolymerization is upscaled by a factor of 1,000, and the cost of production brought down by a factor of 10, it will still only be producing 500,000 barrels of oil per day. While that may make a tremendous amount of money for the company, it won't make much difference in our overall situation as the global need for oil is projected to reach 120,000,000 barrels per day by 2020.
If thermal depolymerization sounded "too good to be true" when you first heard about it, now you know why. Again, as with other alternatives, we shouldn't let these challenges discourage continued research, development, and investment into the technology. However, we have to be realistic about what the technology can and can't do. If you're a big agribusiness or energy company, you may want to look into thermal depolymerization.
If, on the other hand, you're just a regular person trying to figure out how you're going to acquire things like food, water, and shelter in a post-cheap oil world, you may as well forget about thermal depolymerization. It is never going to make a discernable contribution to your standard of living.
As disappointing as thermal depolymerization has been to those hoping for a techno-savior, at least it has produced a small amount of commercially available energy. The same cannot be said for space-based solar arrays, which according to NASA, are plagued by "major technical, regulatory and conceptual hurdles" and won't see the light of day for several decades.
Even if these major hurdles are somehow cleared inside of 5 years instead of 50 years, there is still the not-so-minor problem of rewiring all of industrial civilization - including agriculture, communications, transportation, defense, health care, education, industry, government, finance/banking, etc. . . to run on space-derived solar energy.
Of course, before the global rewiring can begin, we have to find the energy, raw materials, political willingness, financial capital, etc. to get such a project off the ground.
We also have to find a way to prevent China's million man standing army from snapping up all the raw materials necessary to make the transition.
While there are some promising technological advancements in solar-nanotechnology, even Dr. Richard Smalley, the scientist at the forefront of these technologies, admits we need a series of "miracles" to prevent a total collapse of industrial civilization.
In the February 2005 issue of Discover Magazine, Dr. Smalley gave the following prognosis:
There will be inflation as billions of people compete for insufficient
resources. There will be famine. There will be terrorism and war.
He went on to say that it will take "presidential leadership" to inspire us to pursue technologies that might alleviate this crisis.
In other words, the chances of technology saving you from the coming economic collapse are about the same as the chances of another virgin-birth taking place.
For you or any other "average" person to expect high-tech solutions to save you from the economic effects of Peak Oil is akin to a person living in sub-Saharan Africa to expect high-tech medical treatments to save their community from the effects of AIDS. These treatments are only available and affordable for super-wealthy people like Magic Johnson, not the average people in Africa.
Likewise, many of the recent technological advancements in energy production and efficiency may be available and affordable to extraordinarily wealthy people or agencies like the Department of Defense, but they aren't going to be available or affordable to you.
It may be a tough pill to swallow, but adaptation for 6-7 million super-wealthy people does not equal survival for 6-7 billion not-so-wealthy people.
"What About Hybrids and Super Fuel Efficient Cars?"
Hybrids or so called "hyper-cars" aren't the answer either because the construction of an average car consumes about 25-50 barrels of oil. Thus, a crash program to replace the 700 million internal combustion vehicles currently on the road with super fuel-efficient or alternative fuel-powered vehicles would consume approximately 18-36 billion barrels of oil, which is the amount of oil the world currently consumes in six-to-twelve months. Consequently, such a program (while well-intentioned) would actually bring the collapse upon us even sooner.
On a similar note, the construction of an average car also consumes 120,000 gallons of fresh water. Unfortunately, the world is in the midst of a severe water crisis that is only going to get worse in the years to come. Scientists are already warning us to get ready for massive "water wars."
Thus, the only way for us to replace our current fleet of gas-guzzling SUVs with fuel-efficient hybrids is to to seize control of the world's reserves of both oil and fresh water and then divert those resources away from the billions of people who rely on them.
Even if were willing to undertake such an endeavor, the problem will still not be solved due to a phenomenon known as "Jevon's Paradox," whereby increases in energy efficiency are obliterated by corresponding increase in energy consumption.
The US economy is a good example of Jevon's Paradox in action. Since 1973, we have managed to cut in half the amount of oil necessary to generate a dollar of GDP. At the same time, however, we have doubled our level of consumption. Thus, despite massive increases in the energy efficiency over the last 30 years, we are more dependent on oil than ever. This trend is unlikely to be abated in a market economy.
The widespread use of technologies such as the internal combustion engine and the air conditioner is what got us into this situation. It is thus unlikely that even more technology will get us out of it.
"What About Large-Scale Efforts at Conserving Energy or Becoming More Energy Efficient?"
Amazingly, such efforts will actually make our situation worse. This probably makes absolutely no sense unless you understand how the modern day banking and monetary system works. To illustrate, let's revisit Jevon's Paradox, explained above, with an example:
Pretend you own a computer store and that your monthly energy bill, as of December 2004, is $1,000. You then learn about the coming energy famine and decide to do your part by conserving as much as possible. You install energy efficient lighting, high quality insulation, and ask your employees to wear sweaters so as to minimize the use of your store's heating system.
After implementing these conservation measures, you manage to lower your energy bill by 50% - down to $500 per month.
While you certainly deserve a pat-on-the-back and while your business will certainly become more profitable as a result of your conservation efforts, you have in no way helped reduce our overall energy appetite. In fact, you have actually increased it.
At this point, you may be asking yourself, "How could I have possibly increased our total energy consumption when I just cut my own consumption by $500/month? That doesn't seem to make common sense . . ."
Well think about what you're going to do with that extra $500 per month you saved. If you're like most people, you're going to do one of two things:
1. You will reinvest the $500 in your business. For instance, you might
spend the $500 on more advertising. This will bring in more
customers, which will result in more computers being sold. Since, as
mentioned previously, the average desktop computer consumes 10X
it's weight in fossil-fuels just during its construction, your individual
effort at conserving energy has resulted in the consumption of more
energy.
2. You will simply deposit the $500 in your bank account where it will
accumulate interest. Since you're not using the money to buy or sell
anything, it can't possibly be used to facilitate an increase in energy
consumption, right?
Wrong. For every dollar a bank holds in deposits, it will loan out
between six and twelve dollars. These loans are then used by the
bank's customers to do everything from starting businesses to
making down payments on vehicles to purchasing computers.
Thus, your $500 deposit will allow the bank to make between
$3,000 and $6,000 in loans - most of which will be used to buy, build,
or transport things using fossil fuel energy.
Typically, Jevon's Paradox is one of the aspects of our situation that people find difficult to get their minds around. Perhaps one additional example will help clarify it:
Think of our economy as a giant petroleum powered machine that turns raw materials into consumer goods which are later turned into garbage:
The Economy
If you remove the machine's internal inefficiencies, the extra energy is simply reinvested into the petroleum supply side of the machine. By removing the machine's internal inefficiencies, you have enabled it to consume petroleum and produce garbage at an even faster rate.
The only way to get the machine to consume less petroleum is for whoever owns/operates the machine to press the button that says "slow-down." However, since we are all dependent on the machine for jobs, food, affordable health care, subsidies for alternative forms of energy, etc., nobody is going to lobby the owners/operators of the machine to press the "slow-down" button until it's too late.
Eventually (sooner than later) the petroleum plug will get pulled and the machine's production will sputter before grinding to a halt. At that point, those of us dependent on the machine (which means all of us) will have to fight for whatever scraps it manages to spit out.
To be clear: conservation will benefit you as an individual. If, for instance, you save $100/month on your energy bills, you can roll that money into acquiring skills or resources that will benefit you as we slide down the petroleum-production downslope. But since your $100 savings will result in a net increase in the energy consumed by society as a whole, it will actually cause us to slide down the downslope faster.
"So What's Going to Happen to the Economy?"
Even if you can currently afford the latest in alternative energy technologies, it won't help you much since the majority of the population can't. Got solar panels on your roof and a brand-new hybrid car? Great, but since most people can't afford those things, and the global industrial base hasn't been retrofitted to run on them, the economy is still going to implode.
The US economy is particularly vulnerable to the coming oil shortages. As the most indebted nation in the world, the US is completely dependent on strong economic growth just to pay the interest on its debts. This is as true for individual citizens as it is for corporations and governments. A declining oil/energy supply means the economy can't grow which means individuals, corporations, and governments can't pay off their debts, which means economic anarchy is on the way.
Furthermore, unlike nations in Europe, the US has built it's entire infrastructure and way of life under the assumption oil would always be cheap and plentiful. Since that is no longer the case, the US economy is in even more trouble than the economies of nations like the UK, Germany, Spain, and France.
So even in the best-case scenario, we're looking at an international financial meltdown and a collapse of the value of US dollar so severe that the Great Depression will look like the "good ole days."
That's if we manage to avoid the "economic Armageddon" recently predicted by the chief economist at investment banking giant Morgan Stanley.
The end of cheap oil also means the elimination of Great Depression era social programs such as Social Security and Medicare. Pensions too will soon to be a thing of the past.
On the international front, the financial dislocations wrought by the coming oil shocks will plunge the world into a series of resource wars and "currency insurgencies" unlike anything we can imagine. The international destabilization and devaluing of the US dollar will further exacerbate the economic collapse at home while impeding our physical & financial ability to pump whatever oil is left in the ground and then bring it to the market.
As the US economy begins to rapidly disintegrate, massive civil unrest may break out as the various factions of the divided American citizenry seek to blame the economic situation on whoever their favorite scapegoat is. Liberals and blue-states will blame "Bush, Big-Oil and the Neocons" while conservatives and red-staters will blame "Bin-Laden, Big-Government, and the Extreme Left."
Both groups will likely gravitate to and rally around reactionary political demagogues who promise to bring back the good days by eliminating whatever domestic or foreign group(s) they have decided are at fault for the economic and geopolitical unraveling.
Put simply, the end of oil may result in the end of America as we know it.
"How Can I Be Sure This Isn't Just
More 1970s Doom-and-Gloom?"
The oil shocks of the 1970s were created by political events. In 1973, OPEC cut its production in retaliation for US support of Israel. In 1979, Iran cut its production in hopes of crippling "the great Satan." In both cases, the US was able to turn to other oil producing nations such as Venezuela to alleviate the crisis.
Once global production peaks, there won't be anybody to turn to. The crisis will just get worse and worse with each passing year.
The evidence of an imminent peak in global oil production is now overwhelming:
1. Ninety-nine percent of the world's oil comes from 44 oil producing
nations. At least 24 of these nations are past their peak and now in
terminal decline.
2. The entire world - with the exception of the Middle East - peaked in
1997. The US peaked in 1970, Russia in 1987, the UK in 1999.
Even Saudi Arabia - the famed "producer for all seasons" may be on
the verge of seeing its production collapse.
3. Global production of conventional oil has essentially plateaued since
the year 2000.
As far as "doom-and-gloom" consider what widely respected Deutsche Bank had to say about Peak Oil in a recent report entitled, Energy Prospects After the Petroleum Age:
The end-of-the-fossil-hydrocarbons scenario is not therefore a doom
-and-gloom picture painted by pessimistic end-of-the world prophets, but
a view of scarcity in the coming years and decades that must be taken
seriously.
The Australian Financial Review echoed the sentiments of Deutsche Bank in a January 2005 article entitled, "Staring Down the Barrel of a Crisis":
The world's oil production may be about to reach its peak, forever. Such
apocalyptic prophecies often surface in the middle of the northern
hemisphere winter. What is unusual is that this time the doomsday
scenario has gained serious credibility among respected analysts and
commentators.
On a similar note, as mentioned previously, the chief economist at Morgan Stanley recently predicted that we have a 90% chance of facing "Economic Armageddon," while stating, "I fear modern day central banking is on the brink of systemic failure."
When somebody like the chief economist at one of the world's biggest banks makes a statement like that, it's not a surprise somebody like investment banker and Bush-consultant Matt Simmons has stated "the only solution is to pray."
In April 2005, investment bank Goldman Sachs recently released a report predicting a global oil price "superspike" that would (conservatively) send prices to $105/barrel, while French investment bank Ixis-CIB has warned, "crude oil prices could touch $380 a barrel by 2015."
While not specifically mentioning Peak Oil, Warren Buffet has warned of impending financial chaos. Similarly, Forbes Magazine recently ran an article explaining that the "world is on the brink of financial ruin."
Given the credentials of those sounding the alarm the loudest, it is extremely unwise for you to causally dismiss this as just more "1970s doom-and gloom."
"Do World Governments Have
Plans to Deal With This?"
Absolutely.
The US government has been aware of Peak Oil since at least 1977 and has been actively planning for this crisis for over 30 years.
Three decades of careful, plotting analysis has yielded a comprehensive, sophisticated, and multi-faceted plan in which military force will be used to secure and control the globe's energy resources. This plan is simplistically, but not altogether inaccurately - known as "Go to War to Get Oil."
This strategy was publicly announced in April 2001, when a report commissioned by Dick Cheney was released. According to the report, entitled Strategic Energy Policy Challenges For The 21st Century, the US is facing the biggest energy crisis in history and that the crisis requires "a reassessment of the role of energy in American foreign policy."
That's a diplomatic way of saying we are going to be fighting oil wars for a very long time.
James Woolsey, the former Director of the CIA, practically admitted as much at a recent conference on renewable energy:
I fear we're going to be at war for decades, not years . . . Ultimately we
will win it, but one major component of that war is oil.
The war in Iraq, which has been 23 years in the making, is just the beginning of a worldwide war that "will not end in our lifetime." The reason our leaders are telling us the "war on terror will last 50 years" and that the US engagement in the Middle East is now a "generational commitment" is two-fold:
1. All the countries accused of harboring terrorists - Iraq, Iran, Syria,
West Africa, Saudi Arabia - also happen to harbor large oil reserves.
2. Within 40-50 years, even these countries will see their oil reserves
almost entirely depleted. At that point, the "war on terror" will come
to an end.
While the Middle East countries find themselves targets in the "war on terror", China, Russia, and Latin America find themselves targets in the recently declared and much more expansive "war on tyranny."
Whereas the "war on terror" is really a war for control of the world's oil reserves, this newly declared "war on tyranny" is really a war for control of the world's oil distribution and transportation chokepoints.
China and Russia have taken notice of these declarations and seem to be making preparations to defend themselves.
China has also strengthened it's ties to oil-rich Venezuela while engaging in an undeclared oil-war with long time rival and US ally Japan.
This type of large-scale, long-term warfare will likely require a massive expansion of the military draft. It's probably not a coincidence that the director of the Selective Service recently gave a presentation to Congress in which he recommended the military draft be extended to both genders, ages 18-35.
The strategy - as distasteful as it may be - is characterized by a Machiavellian logic. Given the thermodynamic deficiencies of the alternatives to oil, the complexity of a large scale switch to these new sources of energy, and the wrenching economic and social effects of a declining energy supply, you can see why our leaders view force as the only viable way to deal with the coming crisis.
Of course, the US is not the only nation that needs affordable oil. Not by a long shot. France, Germany, Russia, and China all need it also. While these countries may not be able or willing to directly confront the US on the battlefield, they are more than willing to attack the US financially. The US may have the world's most deadly cluster bombs, but the EU has the world's most valuable currency, and intends to wield it as a strategic economic weapon to offset US firepower.
"Is There Any Reason to
Remain Optimistic/Hopeful?"
If what you really mean is, "Is there any way technology or the market or brilliant scientists or comprehensive government programs are going to hold things together or solve this for me or allow for business to continue as usual?", the answer is no.
On the other hand, if what you really mean, "Is there any way I can still have a happy, fulfilling life in spite of some clearly grim facts?", the answer is yes, but it's going to require a lot of work, a lot of adjustments, and probably a bit of good fortune on your part.
"What Can I do to Prepare?"
Two things:
1. Inform others;
2. Get as self-sufficient as possible as soon as possible. See the
prepare section for more information.
Good luck,
Matt Savinar
Last Revised: 4/19/2005
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"For my part, whatever anguish of the spirit it may cost, I am willing to know the whole truth; to know the worst; and to provide for it."
-Patrick Henry, 1776
"The real man smiles in trouble, gathers strength from distress, and grows brave by reflection."
-Thomas Paine, 1776
We'll leave the lights on for you.
Rat, '05
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