Friday, December 18, 2009
Hiina rendib Kasahstanilt miljon hektarit maad põllumajanduseks
Usutavasti polegi Hiina peamine probleem selles, et poleks põllumaad, mida harida, vaid pigem saastatus ning vähene keskkonnasäästlikkus. Ebaefektiivsed maaharimismoodused arvatavasti pealekauba. Aga kui raha ning võimalust on, siis paistab, et "fresh start" meeldib neile rohkem kui oma olukorra parandamine.
Colin Campbell comments recent article in the Guardian
Hea lühike artikkel - peak oil teemal
Thursday, December 17, 2009
Kaks numbrit, üks tõde
Selle arvamuse* järgi peab nafta hind olema odavam kui 147 dollarit barrelli kohta, et ei pidurduks uue tehnoloogia areng. Täna nafta 71,30.
CO2 peab aga jääma alla 450ppm. Täna CO2 sisaldus atmosfääris 385,99 ppm.
Let the rat race begin!
*seda arvamust tuleb täpsustada
The Magic Price Incentive Band
The Magic Price Incentive Band
In my public talks, I often hear people say that my predictions for the future are wrong because when the price of oil goes up we will move to something else. The high price will provide a greater incentive to move to alternatives. That's true — but it's not the whole story. The price of oil must meet all of these conditions:
- it must be high enough to encourage the move to alternatives
- it must be sustained, that is, not volatile, and
- it must not get too high.
If the price is too low, obviously there isn't much incentive to move to an alternative except for those who understand the damage our use of oil is causing or who understand it's not going to be abundant much longer.
If there is too much price volatility, people will be unsure it is wise to spend money on alternatives. They keep the equipment they have and wait for more certainty. That's why SUV sales have gone back up now that gas is (temporarily) lower.
If the price goes too high too quickly, like it did in 2008, economic damage occurs. Businesses shrink, lay off people and struggle to survive. Now they don't have the money to purchase the equipment that would get them off of oil. In many cases they aren't in business at all any more.
The price must stay within the Magic Price Incentive Band:
We don't know what the Magic Price Incentive Band for getting off oil is. But we're pretty sure $147 per barrel is way too high.
A sustained price of $50 for a few years, then $60 for a few more, etc. would probably have been enough of a market signal for people to clamor for alternatives like electric vehicles.
Although sustained, stable prices are required, the market place cannot guarantee that — and there was no will by the population to pay more for gasoline. Legislation to increase the price of gas often would never even get to a vote. (In some areas, we humans are just lousy at preparing for the future.)
Recessions Follow Oil Price Increases
A recession has followed every significant oil price increase. (Consider my blog entry Estimating the Economic Impacts of Peak Oil.)
Although our current economic malaise is blamed on the credit crisis, people forget what happened to the price of oil.
In 2008 the average price of oil was $99 per barrel (per the Energy Information Administration). The year before it was $72 per barrel.
| Year | Oil Price (WTI) | Total Spent on Oil |
| 2007 | $72 | $2.160 trillion |
| 2008 | $99 | $2.970 trillion |
In just one year, that price difference sucked an additional $810 billion from the world economy.
The same level of increase happened from 2006 to 2007. Simply put, we were going to have a global recession even if the credit crisis hadn't occurred. See the paper by Hamilton "Causes and Consequences of the Oil Shock of 2007-8" for more detail (http://tr.im/jHan).
By the way, did you notice that the price increase is roughly the same as the current stimulus package? Do you think any future stimulus package will have any effect when oil goes back up in price?
High Oil Prices Undermine the Move to Alternatives
We can see this mechanism most easily with the auto industry. Annual car sales went from a high of 16 million in 2007 to just over half that now, 8.8 million, on an annualized basis (April 2009) and the fleet turnover rate went from 15 years to 27 years. At this turnover rate, every vehicle in every showroom could be electric right now and we still wouldn't get them out into the populace in time. As it is, there isn't even a production quantity electric vehicle available for purchase as I write this (the Tesla Roadster doesn't count).
When you consider that long-haul trucking, mining operations and construction machinery all use oil, too, you can start to see why we started too late.
The End of the Car Age
In other words, the recent high price of oil has destroyed much of the capacity for us to move off of oil. When you pull together these items:
- the date of peak oil (most likely 2008 since so many oil projects are being canceled)
- the still-increasing fleet turnover rate
- a collapsing economy
you can see why Kunstler (and now me too) tell people that most Americans have bought their last car. I don't mean their last "gasoline powered" car, I mean any car.
Unfortunately, the same mechanism is playing out in the renewable energy sector. Investment is down by almost half.
Enlightened government could have put a floor under oil prices for the previous three decades, thus moving us completely off oil while we had the economy to do it. Now it's too late.
Period of Receding Horizons
We have entered the Period of Receding Horizons. This is when our goal of moving off fossil fuels is getting further away every moment instead of closer. Our economy has actually lost the capacity to move off of fossil fuel without massive contraction first to a fraction of its former size. This will not be a pleasant contraction at all. The millions of people now being laid off will never find jobs at the same wage again. You could call it the Death Spiral and the name, I think, is apt.
Alternatives to the Car
As we get poorer (which is happening very quickly), we are going to become a nation of bicycle and scooter riders. There are several good electric scooters and electric motorcycles on the market, which are the products to buy if you want to avoid lining up for your gas ration.
Of course, a few of us will be driving electric cars by 2012 and by all means buy one if you can get your hands on one. However, there won't be more than a few hundred thousand highway-capable electric cars on the road before we are too poor to buy them. If we're really lucky then it might be a few million.
But a whole electric fleet? Never going to happen. We are entering Energy Descent largely with the fleet we have.
Estimating the Economic Impacts of Peak Oil
March 7, 2008
How fast does the economy decline as oil production declines? In his latest report, drawing on various sources, Robert Hirsch reasons that the correlation is 1:1. A 2.5% annual decline rate will shrink the global economy by 25% in 10 years. Other reports substantiate that ratio.
Introduction
I've been doing research to bracket the economic effects of a power down/energy descent scenario and these papers give me what I'm looking for. In all cases, see the papers for the complete discussion but I've summarized what I'm interested in below. I recommend reading all four reports but in a pinch you could skip the Sill and Ayres ones.
Hirsch
Hirsch uses at 1:1 correspondence between oil decline and GDP decline by using Deutsche Bank's high number (2.5) and the ratios of the impact to the GDP to oil decline from the oil shocks of the 70's on the low end (0.7 and 0.6). He reasons that unity (i.e. a 1 to 1 correlation) is the correct order of magnitude to use in estimates. He also discusses various shortage scenarios and projected peak and plateau fall-off dates.
Ayres and Warr
They demonstrate what classical economics fails to do because it does not include an energy input. Classical economics addresses capital, labor and resource inputs but does not have a factor for energy. Ayers and Warr calculate a perfectly intuitive 0.7 for elasticity of demand (see Figure 10) using curve fitting when they introduce energy converted to useful work, and the correlation is excellent. This is in line with Hirsch's ratios. Apparently there has been no significant push back from economists even though their paper essentially jettisons the prevailing economic theory. (It appears that people knew the current theory was broken it just took a while to figure out how to fix it.)
Sill
Sill surveys previous oil shocks and comes up with a loss to the GDP of up to 1.4% over four quarters given a 10% price increase or a 10% production shortfall. Note that this is quite a bit different than the Ayers and Warr number but shocks are transient events, not sustained declines. Therefore in my thinking I treat Sill's numbers as applicable only during very sudden oil contraction.
Rubin
There are three major points from his January 08 report. First, many major oil megaprojects are delayed, which means oil will not be entering the market as quickly as the oil megaprojects database first indicated (http://en.wikipedia.org/wiki/Oil_megaprojects). In fact, I've been watching the 2008 projection and it has been slowly but steadily moving down as projects get delayed (retrieved March 6, 2008). 2008: 6842 2009: 7089 2010: 3785 2011: 4258 2012: 5124 2013: 282 2014: 430 2015: 592 Incidentally, the value for 2013 -- well within our average horizon of six years -- still has not moved appreciably up. Second, Rubin uses an annual global decline rate from existing fields of almost 4 mb/d. Third, the smaller amount of new production that will be entering the market will mostly be used domestically by the oil producing countries. Given all the above, see Table 1 on page 4 for the new production projected to be available to OECD countries. Not much. The projected result? $150/barrel in 08 but we aren't going to fall off the plateau just yet.
Conclusions
The literature points to an economic impact in the order of magnitude of unity. The good news is that it isn't a 10 to 1 ratio. The bad news is that it is clear that beyond the first year where some efficiency and voluntary curtailment might buffer the situation, our GDP will decline at approximately the rate oil declines. In reality, easy initial efficiency measures and curtailment will already have occurred due to the high prices leading up to the decline i.e. they are occurring now. See Rubin's report for more on that. Thus I think it would be unwise to expect any future buffer from efficiency or voluntary curtailment like how California managed to shave 11% off its electricity use voluntarily during the blackouts. In other words, I'm confident in the math to publicly say that a 1% decline in oil consumption will equal approximately a 1% decline in GDP once we fall off the oil production plateau we're on. Naturally this will not continue to zero and I do not have any research yet that can give us a feel of how long that relationship will hold (until we reach 25% from peak? 50% from peak?). My operating assumption is that the relationship will hold long enough to cause a major economic discontinuity. With the annual oil decline rate expected to range between 2% and 5% (see Hirsch, 2008) and the Oakland Peak Oil report using 2.6%, we will have a massive unemployment and homelessness problem on our hands. It also seems reasonable to expect that a great deal of wealth will be destroyed during the decline, as is happening now in the current credit crunch but on a larger scale.
- Mitigation of Maximum World Oil Production:Shortage Scenarios, Hirsch, 2008
- Delays Will Tighten Global Oil Markets (PDF), CIBC World Markets, Rubin, 2008
- The Macroeconomics of Oil Shocks (PDF), Philadelphia Fed, Sill, 2007
- Accounting For Growth: The Role Of Physical Work (PDF), INSEAD, Ayres and Warr, 2004
