Environment & Economics: Energy Limits

From 9/28

I was watching a video from a couple years ago and was reminded that we are currently experiencing (and benefiting from) low fuel prices due to oil-producing nations like Saudi Arabia dropping the price per barrel to a level that will bankrupt the Western (USA) fracking operations whom begin to lose money if they cannot sell a barrel of oil for more than $50, and of course to tank Russia's economy. This is not hurting them one bit. Recently President Obama sanctioned the sale of billions of dollars' worth in military equipment to the Saudi's. The Saudi's are not stupid. They are still going to make bundles off their oil and they will likely hold onto a certain amount (never to sell) to fuel their military infrastructure.

The oil in the earth that we extract for fuel is the result of over 300 million years of photosynthesis, we are on a trajectory to exhaust in the not too distant future and are on the down-slope of the oil-plenty peak. Which brings me back to prices. Once the fracking folks go bankrupt, the price of oil will again head north to $100/barrel or more. We will quickly return to ~$4/gallon of gasoline or more. From there it will only get worse. There are no other alternatives. Certainly there have been advances in renewables and bio-fuels but nothing close to the productive capabilities of the oil industry, it cannot replace the demand of oil. At least not at current consumption levels. One might think that we could resume fracking when we get to a point where the conventional wells dry up. I think the political pressures of Environmental Activism will have something to say about that. We cannot rely on fracking, it too is limited, not to mention that the environmentalists might be right about fracking.

John Michael Greer asserts that there is no other plentiful and easily accessed energy source as fossil fuels. He is right I think. Nuclear energy might be clean in the generation process but the waste is something that generations for the next 250 thousand years will have to deal with. How is that responsible? We fall into the myth that 'they' will think of something, that our technology will save us (there are also those that think God will save us or perhaps an advanced civilization of aliens). Think about that for a second and factor in that fossil fuels depend on something we often overlook, fossils. Earth is the only place we are ever going to find such fuels, even if we did find fossil fuels on some other world the net energy required to extract would be quite negative. So we need to put that option right out, and recognize that the sources are quite limited. Fossil fuels are finite, very finite cosmically.

As fuel reserves dwindle the price for them will increase. Governments will, in the interest of National Security, stockpile enough to wage a dozen wars for many years making such reserves unavailable to the general public. Most of us figure that when the going gets tough, some well-to-do politician will lead the charge to release some or all of it to the public. If we take a moment to consider that assumption I think we will unanimously arrive at "Why would they?". The sad irony of our current reality is that nearly all wars are waged due to oil, the wars themselves burn through insane amounts of the stuff, inferring that we (human beings) will burn through all our oil in the fight to control it.

We need to start imagining a different way of doing things. Fuels will only cost more and more until they are generally unavailable, first a potential quick increase post-fracking, then a more linear increase as the resource dwindles.

If your answer is to replace your gas-guzzling SUV with a battery-powered one you may not have factored into this equation the fossil-fuel cost of producing such a vehicle (and the energy to charge it).

If we shift the conversation to the sources of our electricity we might imagine a world containing solar-electric farms and giant wind turbines, but there we have a similar problem.

One might get a good 30-40 years out of a solar panel but the amount of energy (regardless of source) that is required in their production makes them a relatively low net-gain power source. Specifically the number of solar panels one would need to power a solar panel plant is almost unfathomable. A US gallon of gasoline contains the equivalent energy of approximately 33.3kW (33,300 Watts), or 133 250W solar panels. Got room on your roof for 133 solar panels? I hope not. Now do a search on how much electrical energy is required to generate one 250W solar panel. My quick search put the low estimate at 5MW (5 Million Watts) or the equivalent of 150 Gallons of gasoline one day's generation of 6,700 250W solar panels. The silicon that goes into them requires a production facility that consumes vast amounts of electricity(clean rooms etc.) as well as a buffet of toxic chemicals. Sure if used in sunny climates (say 300 days of sunshine or more) a 250W panel can produce over 100MW or more in its lifetime. Still, even with these rough numbers, not so green are they?

Wind-power is great on a small-scale. The electric generators are little more than copper wire and magnets and can last for many years. On a large scale you have a bird-killing death-machine that does more harm than good and are effectively a monument to our feeling of self-righteous progressiveness. Again with the behemoth turbines there is a significant up front energy investment, which is quickly recuperated so long as it's windy.

Hydro-electric is a pretty good source. It too has a significant initial energy cost as well as a short-lived ecological impact, but for the long term a very reliable source of energy only prone to being impacted by drought.

Most likely we can combine wind, solar, and hydro to maintain the some semblance of the electric world we live in, but it is doubtful that we will be able to sustain a society that zooms around in fast, large, and luxurious automobiles (self-driving or otherwise). Even in this reality we will need to conserve electricity in order to not overload the supply. The timing of this is uncertain, but the eventuality of it is not.

Let me take a stab at fortune telling here and try to come up with a fuel cost prediction:

In 2-4 years fracking will fail, Gas prices will pass the $5/gallon mark shortly thereafter.

Gas prices will then increase at an average rate of 6-9% year over year until we see $10/gallon here in the US. All based on the current global value of the dollar. What if that changes?

Meanwhile other nations such as Russia, China, Iran, and maybe Turkey, Syria and other near-east/North African Nations will transition to a different currency to barter barrels of oil with, likely something with a gold standard. In case you missed it the primary contributor that the value of our dollar is that most oil is globally traded on the dollar. Since we went off the gold standard in the early 1970's we have unofficially been on the "Oil Standard", hence the phrase "petrol-dollar". So when these other nations transition away from our dollar, the dollar itself will decline in value. I would guess similar timelines, meaning in the next 2-4 years China and Russia will officially establish this currency and begin trading oil with it, Iran and Turkey will transition very shortly after.

The resulting inflation will well outpace wage increases domestically, but particularly the cost of fuel will be exacerbated by this more pessimistically than my guesstimates above. We may very well see $6/gallon by 2021, and $10/gallon by 2025.

Other products will go up to, think of all those products made in China, they have to be shipped a long way on fossil fuel. Consider all the things that rely of fossil fuel for transport. We may just witness a resurgence in domestic manufacturing, even textiles. Such impacts may be more evident well beyond 2025.

So between the inevitable decline of the dollar as well as the rapid exhaustion of fossil fuels I expect to see a significant rise in the cost of such fuels and an issue with responsibly replacing them.

What do we do about it? What is my point? I guess I'm encouraging anyone who reads this, and perhaps convincing myself, that some lifestyle changes now might soften the blow later. The analogy John Michael uses is imagine being in a plane at 10,000ft and being pushed out of it. The problem is not exiting the plane, it is the rate of fall and the sudden stop. Instead of imagining a parachute what we are currently doing in this analogy is trying to figure out a way to stay on the plane and keep the plane in the air at 10,000ft! Making some up front changes now might be analogous to stitching up a parachute, and being proactive might allow us to make changes more gradually and comfortably. I suppose we have to work up the nerve to jump out of the plane and trust in whatever parachute we've constructed.