BIKE: Living in a fool's paradise

[Roger Baker]

[I don't necessarily agree with all that originated by the DOE and then 
posted in the ASPO newsletter, but I mostly agree in this case. What is 
significant is that the document apparently originated within DOE at 
all, and is like the Pope renouncing Catholicism. Something strange is 
going on.

We're certainly debating the fine points -- as compared to trying to 
accelerate the rate of road building using borrowed money as TxDOT is 
trying to do -- which amounts to the worst possible transportation 
policy, IMO.

Disclaimer; Since Jeb Boyd took some time to critique the DOE 
submission, I'll inject my own opinions -- which may be wrong. -- 
Roger]


On Mar 3, 2005, at 3:13 PM, Jeb Boyt wrote:

> ----Original Message Follows----
> From: Roger Baker <rcbaker>
> Date: Thu, 3 Mar 2005 13:08:47 -0600
>
> The Mitigation of the Peaking of World Oil Production
>
> . . .
>
> Improved fuel efficiency in the world's transportation sector will
> be a critical element in the long-term reduction of liquid fuel
> consumption, however, the scale of effort required will inherently
> take time and be very expensive. For example, the U.S. has a fleet
> of over 200 million automobiles, vans, pick-ups, and SUVs.
> Replacement of just half with higher efficiency models will require
> at least 15 years at a cost of over two trillion dollars for the
> U.S. alone.
> ---------------------------------------------------------
>
> How's that?  I do not see at all how this figure of 15 years and $2 
> trillion relates to the projected replacement rate of vehicles.  They 
> appear to assume that half the cars on the road now will still be on 
> the road in 15 years or, more likely, that it will take 15 years 
> before more than half the cars on the road are more efficient than 
> today.  The market response and move to more fuel efficient vehicles 
> as a result of the oil price increases of the 1970s occurred without 
> anything close to that level of trauma.  Just count the number of 
> pickups and SUVs that you see on the way to work in the morning, and 
> you will see that there is a large opportunity for increasing the 
> vehicle fuel efficiency.
>
> They also appear to assume that all 200 million vehicles will be 
> replaced as opposed to retired without replacement.  This summary of 
> fuel efficiency in transportation does not appear to take into account 
> the impact public transportation, let alone cycling and walking.  
> Households with transportation alternatives may only need one car.
>

[I think most people tend to underestimate the difficulty of making 
basic economic changes rapidly, and especially when TxDOT is pulling 
hard in the other direction. Probably the best guide is the rapidity of 
change in response to higher energy costs is the 1970's energy crisis, 
and I would tend to follow those numbers if I had them. Smaller 
vehicles, or bikes etc. is the easy natural response whereas hybrids 
are inherently expensive and would have to be retooled in a world in 
which energy costs raise the cost of all new manufacturing capacity. 
Don't forget that world oil will probably peak in less than five years, 
while bulldozing our oil-addictive suburbs, the slums of the future, 
will take many decades. Have you seen the video "The End of Suburbia"?]


> --------------------------------------------------------
> Similar conclusions generally apply worldwide.
> Commercial and near-commercial options for mitigating the decline of
> conventional oil production include:  1) Enhanced Oil Recovery
> (EOR), which can help moderate oil production declines from older
> conventional oil fields; 2) Heavy oil/oil sands, a large resource of
> lower grade oils, now produced primarily in Canada and Venezuela; 3)
> Coal liquefaction, an established technique for producing clean
> substitute fuels from the world's abundant coal reserves; and 4)
> Clean substitute fuels produced from remote natural gas.
> -------------------------------------------------
>
> As the price of oil increases, the cost of production from marginal 
> fields and wells (e.g. stripper wells that produce less than 10 bbl a 
> month) and from marginal technologies (e.g. oil sands, alt fuels, 
> etc.) becomes more cost effective.

[The REAL problem is that most of our oil now comes from the 
super-giant fields that were found decades ago in Texas, Saudi Arabia, 
etc. These are being slowly depleted and there is no apparent way to 
replace their vast and declining oil volume with alternatives, 
including deepwater oil. The end of the life of stripper wells is when 
it takes more diesel fuel to pump up the oil than you get in return. 
This problem is blind to the cost of fuel.]


>
> -------------------------------------------------
> Someday, electric cars may be practical, but decades will be required 
> before they achieve
> significant market penetration and impact world oil consumption.
> --------------------------------------------------
>
> <sarcasm>Yeah, the increasing numbers of hybrid electric vehicles you 
> see on the roads are a sign of limited market penetration 
> potential.</sarcasm>

[What percent of current cars are hybrids? Despite the media splash its 
probably less than one percent. Probably half the cars on the road are 
driven by those who are just barely able to afford what they have now, 
much less an inherently more expensive hybrid.]


>
> ---------------------------------------------------
> To explore how these technologies might contribute, three
> alternative mitigation scenarios were analyzed:  One where action is
> initiated when peaking occurs, a second where action is assumed to
> start 10 years before peaking, and a third where action is assumed
> to start 20 years before peaking.
> ----------------------------------------------------
>
> And, why do they think that we have 10 years, let alone 20, left 
> before peaking?

[That underlines the seriousness of the problem we face.]


>
> -----------------------------------------------------
> Without timely mitigation, world supply/demand balance will be
> achieved through massive demand destruction (shortages), accompanied
> by huge oil price increases, both of which would create a long
> period of significant economic hardship worldwide.
> --------------------------------------------------------
>
> Forgive my weakness on the economic-speak, but under the classic 
> supply and demand paradigm, as price increases, demand falls.  It is 
> not the shortage that "destroys" demand, it is the price increase 
> resulting from the shortage.
>

[The resulting addictive syndrome is the same serious problem no matter 
how you define the supply demand interactions.]


> --------------------------------------------------------
> Oil peaking discussions should focus primarily on prudent risk
> management, and secondarily on forecasting the timing of oil
> peaking, which will always be inexact.   Mitigation initiated
> earlier than required might turn out to be premature, if peaking is
> slow in coming. If peaking is imminent, failure to act aggressively
> will be extremely damaging worldwide.
> -----------------------------------------------------------
>
> Wouldn't prudent risk management involve minimizing the potential 
> future liabilities associated with drastic supply shortages and 
> dramatic price increases?  Even if mitigation today would be 
> premature, wouldn't the return in additional years before peak and 
> lessened economic impacts and disruptions following peak be worth it?
>

[We're probably in such deep trouble that the fastest shift we could 
possibly make would be seen as wise in retrospect. About 10% of world 
oil come from a few Saudi fields, and yet we do not know their peak and 
decline rate. The newsletter I linked has a piece telling that the G-& 
nations agree that they need better transparency as to how fast we're 
approaching peak, and rate of subsequent decline. Richard Heinberg's 
book "The Party's Over" gives the big picture as well as any single 
book.


> Jeb
>