The End of Petrotyranny

As oil prices remain high, we once again see murmurs of anticipated doom from various quarters.  Such fears are grossly miscalculated, as I have described in my 2007-08 articles about how oil at $120/barrel creates desirable chain reactions, as well as my rebuttal to the poorly considered beliefs of peak oil alarmists, who seem capable of being sold not one, but two bridges in Brooklyn.  Today, however, I am going to combine the concepts in both of those articles with some new analysis I have done to enable us to predict when oil will lose the economic power it currently holds.  You are about to see that not only are peak oil alarmists wrong, but they are just about as wrong as those predicting in 1988 that the Soviet Union would soon dominate the world, and will soon be equally worthy of ridicule.

Unenlightened Punditry and Fashionable Posturing :

As I mentioned in a previous article, many observers incessantly contradict themselves on whether they want oil to be inexpensive, or whether they want higher oil prices to spur technological innovations.  One of the most visible such pundits is Thomas Friedman, who has many interesting articles on the subject, such as his 2007 piece titled 'Fill 'Er Up With Dictators' :

But as oil has moved to $60 to $70 a barrel, it has fostered a counterwave — a wave of authoritarian leaders who are not only able to ensconce themselves in power because of huge oil profits but also to use their oil wealth to poison the global system — to get it to look the other way at genocide, or ignore an Iranian leader who says from one side of his mouth that the Holocaust is a myth and from the other that Iran would never dream of developing nuclear weapons, or to indulge a buffoon like Chávez, who uses Venezuela’s oil riches to try to sway democratic elections in Latin America and promote an economic populism that will eventually lead his country into a ditch.

But Mr. Friedman is a bit self-contradictory on which outcome he wants, as evidenced across his New York Times columns.

Over here, he says :

In short, the best tool we have for curbing Iran’s influence is not containment or engagement, but getting the price of oil down

And here, he says :

So here’s my prediction: You tell me the price of oil, and I’ll tell you what kind of Russia you’ll have. If the price stays at $60 a barrel, it’s going to be more like Venezuela, because its leaders will have plenty of money to indulge their worst instincts, with too few checks and balances. If the price falls to $30, it will be more like Norway. If the price falls to $15 a barrel, it could become more like America

Yet over here he says :

Either tax gasoline by another 50 cents to $1 a gallon at the pump, or set a $50 floor price per barrel of oil sold in America. Once energy entrepreneurs know they will never again be undercut by cheap oil, you’ll see an explosion of innovation in alternatives.

As well as over here :

And by not setting a hard floor price for oil to promote alternative energy, we are only helping to subsidize bad governance by Arab leaders toward their people and bad behavior by Americans toward the climate.

All of these articles were written within a 4-month period in early 2007.  Both philosophies are true by themselves, but they are mutually exclusive.  Mr. Friedman, what do you want?  Higher oil prices or lower oil prices?  Such confusion indicates how the debate about energy costs and technology is often high on rhetoric and low on analysis. 

Much worse, however, is the fashionable scaremongering that the financial media uses to fill up their schedule, amplified by a general public that gets suckered into groupthink.  To separate the whining from the reality, I apply the following simple test to verify whether people are actually being pinched by high oil prices or not.  If a large portion of average Americans have made arrangements to carpool to work (as was common in the 1970s), then oil prices are high.  Absent the willingness to make this adjustment, their whining about gasoline is not a reflection of actual hardship.  This enables us to declare that oil prices are not approaching crisis levels until most 10-mile-plus commuters are carpooling, that too in groups of three, rather than just two.  Coordinating of carpools is thus the minimum test of whether oil prices are actually causing any significant changes in behavior. 

Fortunately, $100 oil, a price that was considered a harbinger of doom as recently as 2007, is now not even enough to induce carpooling in 2011.  This quiet development is remarkably unnoticed, and conceals the substantial economic progress that has occurred.   

Economic Adaptations :

The following chart from Calculated Risk (click to enlarge) shows the US trade deficit split between oil and non-oil imports.  This chart is not indexed as a percentage of GDP, but if it were, we would see that oil imports at $100/barrel today are not much higher of a percentage of GDP than in 1998, when oil was just $20/barrel.  In fact, the US produces much more economic output per barrel of oil compared to 1998.  We can thus see that unlike in 1974 when the US economy has much less demand elasticity for oil, today the ability of the economy to adjust oil consumption more quickly in reaction to higher prices makes the bar to experience an 'oil shock' much harder to clear.  US oil imports will never again attain the same percentage of GDP as was briefly seen in 2008. 

Of even more importance is the amazingly consistent per capita consumption of oil since 1982, which has remained at exactly 4.6 barrels/person despite a tripling real GDP per capita during the same period (chart by Our World in Data, Creative Commons BY License).  This immediately deflates the claim that the looming economic growth of China and India will greatly increase oil consumption, since the massive growth from 1982 to 2011 did not manage to do this.  At this point, annual oil consumption, currently at around 32 billion barrels, only rises at the rate of population growth - about 1% a year. 

This leads me to make a declaration.  32 billion barrels at around $100/barrel is $3.2 Trillion in annual consumption.  This is currently less than 5% of nominal world GDP.  I hereby declare that :

Oil consumption worldwide will never exceed $4 Trillion/year, no matter how much inflation, political turmoil, or economic growth there is.  Thus, 'Peak Oil Consumption' happens long before 'Peak Oil Supply' ever could. 

This would mean that oil would gradually shrink as a percentage of world GDP, just as it has shrunk as a percentage of US GDP since 1982.  Even when world GDP is $150 Trillion, oil consumption will still be under $4 Trillion a year, and thus a very small percentage of the economy.  Mark my words, and proceed further to read about how I can predict this with confidence.   

The Carnival of Creative Destruction :

There are at least seven technologies that are advancing to reduce oil demand by varying degrees, many of which have been written about separately here at The Futurist : 

1) Natural Gas : Technologies that aid the discovery of natural gas have advanced at great speed, and supplies have skyrocketed to a level that exceeds anything humanity could consume in the next few decades.  The US alone has enough natural gas to more than offset all oil consumption, and the price of natural gas is currently on par with $50 oil. 

2) Efficiency gains : From innovations in engine design, airplane wing shape, reflective windows, and lighter nanomaterials, efficiency is advancing rapidly, to the extent that economic growth no longer increases oil consumption per capita, as described earlier.  There are many options available to consumers seeking 40 mpg or higher without sacrificing too much power or size, and I predicted back in early 2006 that in 2015, a 4-door family car with a 240 hp engine would deliver 60 mpg (or equivalent) yet still cost no more than $35,000 in 2015 dollars.  People scoffed at that prediction then, but now it seems quite safe.   

3) Cellulose Ethanol and Algae Oil : Corn ethanol was never going to be suitable in cost or scale, but the infrastructure established by the corn ethanol industry makes the transition to more sophisticated forms of ethanol production easier.  But fuels from switchgrass and algae are much more cost-effective, and will be ramping up in 2012.  Solazyme is an algae oil company that went public recently, and already has a market capitalization of $1.5 Billion. 

4) Batteries : Most of the limitations of electric and hybrid vehicles stem from shortcomings in battery technology.  However, since batteries are improving at a rate that is beginning to exceed the traditional 5-8% per year, and companies such as Tesla are able to lower the cost of their fully electric vehicles, the knee of the curve is near. 

5) Telepresence : Telepresence, while expensive today, will drop in price under the Impact of Computing and displace a substantial portion of business air travel, as described in detail here.  By 2015, geographically dispersed colleagues will seem to be closer to each other, despite meeting in person less often than they did in 2008.   

6) Wind Power : Wind Power already generates almost 3% of global electricity consumption, and is growing quickly.  When combined with battery advances that improve the range and power of electric and plug-in hybrid vehicles, we get two simultaneous disruptions - oil being displaced not just by electriciy, but by wind electricity.    

7) Solar Power : This source today generates the least power among those listed here.  But it is the fastest growing of the group with multiple technologies advancing at once, and with decades of steady price declines finally reaching competitive pricepoints.  It also has many structural advantages, most notably the fact that it be deployed to land that is currently unused and inhospitable.  Many of the countries with the fastest growth in energy consumption are also those with the greatest solar intensity. 

Plus, these are just the technologies that displace oil demand.  There are also technologies that increase oil supply, such as supercomputing-assisted oil discovery and new drilling techniques.  Supply-increasing technologies work to reduce oil prices and while they possibly slow down oil demand displacement, they too work to weaken petrotyranny. 

The problem in any discussion of these technologies is that the debate centers around an 'all or none' simplicity of whether the alternative can replace all oil demand, or none at all.  That is an unnuanced exchange that fails to comprehend that each technology only has to replace 10% of oil demand.  Natural gas can replace 10%, ethanol another 10%, efficiency gains another 10%, wind + solar another 10%, and so on.  Thus, if oil consumption as a percentage of world GDP is lower in a decade than it is today, that itself is a huge victory.  It hardly matters which technology advances faster than the others (in 2007, natural gas did not appear as though it would take the lead that it enjoys today), what matters is that all are advancing, and that many of these technologies are highly complementary to each other.     

What is also overlooked is how quickly the pressure to shift to alternatives grows as oil becomes more expensive.  If, say, cellulose ethanol is cost-effective with oil at $70, then oil at $80 causes a modest $10 dollar differential in favor of cellulose.  If oil is $120, then this differential is now $50, or five times more.  Such a delta causes much greater investment and urgency to ramp up research and production in cellulose ethanol.  Thus, each increment in oil price creates a much larger zone of profitability for any alternative. 

The Cost of Petrotyranny :

This map of nations scaled in proportion to their petroleum reserves (click to enlarge) replaces thousands of words.  Some contend that the easy money derived from exporting oil leads to inevitable corruption and the financing of evil well beyond the borders of petro-states, while others lament the misfortune that this major energy source is concentrated in a very small area containing under 2% of the world's population.  Other sources of energy, such as natural gas, are much more evenly distributed across the planet, and this supply chain disadvantage is starting to work against oil.   

However, as we saw in the 2008 article, many of these regimes are dancing on a very narrow beam only as wide as the span between oil of $70 and $120/barrel.  While a price below $70 would be fatal to the current operations of Iran, Venezuela, and Russia, even a high price leads to a shrinkage in export revenue, as domestic consumption rises to reduce export units to a greater degree than can be offset by a price rise.  Furthermore, higher prices accelerate the advance of the previously mentioned technologies.  For the first time, we can now estimate how long oil can still hold such an exalted economic status. 

Quantifying the Remaining Petro-Yoke :

For the first time, we can make the analysis of both technological and political pressure exerted by a particular oil price more precise.   We can now quantify the rate of technological demand destruction, and predict the actual number of years before oil ceases to have any ability to cause economic recessions, and regimes like Iran, Venezuela, and Russia no longer can subsist on oil exports to the same degree.  This brings me to the second declaration of this article :

From the start of 2011, measure the dollar-years of area enclosed by a chart of the price of oil above $70.  There are only 200 such dollar-years remaining for the current world petro-order.  We can call this the 'Law of Finite Petrotyranny'. 

Allow me to elaborate. 

Through some proprietary analysis, I have calculated that the remaining lifetime of oil's economic importance as follows :

• From the start of 2011, take the average price of West Texas Intermediate (WTI), Brent, or NYMEX oil, and subtract $70 from that, each year. 
• Take the number accumulated, and designate that as 'X' dollar-years.
• As soon as X equals to 200 dollar-years, then oil will not just fall below $70, but will never again be a large enough portion of world GDP to have a significant macroeconomic impact. 
   

You can plug in your own numbers to estimate the year in which oil will cease to exert such power.  For example, if you believe that oil will average $120, which is $50 above the $70 floor, then the X points are expended at a rate of $50/year, meaning depletion at the end of 2014.  If oil instead averages just $100, then the X points are expended at $30/year, meaning it will take 6.67 years, or until late 2017, to consume them.  Points are only depleted when oil is above $70, but are not restored if oil is below $70 (as research projects may be discontinued or postponed, but work already done is not erased).  For those who (wrongly) insist that oil will soon be $170, the good news for them is that in such an event they will see the X points depleted in just two short years.  The graph provides 3 scenarios, of oil averaging $120, $110, and $100, and indicating in which year such a price trend would exhaust the 200 X points from points A, B, and C, which is the area of each of the three rectangles.  In reality, price fluctuations will cause variations in the rate of X point depletion, but you get the idea. 

Keep in mind the Law of Finite Petrotyranny, and on that basis, welcome any increase in oil prices as the hastening force of oil replacement that it is.  My personal opinion?  We average about $100/barrel, causing depletion of the X points in 2017 (scenario 'C' in green). 

Conclusion :

So what happens after the Law of Finite Petrotyranny manifests itself?  Let me pre-empt the strawmen that critics will erect, and state that oil will still be an important source of energy.  But most people will no longer care about the price of oil, much as the average person does not keep track of the price of natural gas or coal.  Oil will simply be a fuel no longer important enough to cause recessions or greatly alter consumer behavior through short-term spikes.  Many OPEC countries will see a great reduction in their power, and will no longer be able to placate their citizens through petro-handouts alone.  These countries would do well to act now and diversify their economies, phase in civil liberties while they can still do so incrementally, and prepare for a future of much lower leverage over their current customers.

So cheer oil prices higher so that the X points get frittered away quickly.  It will be fun. 

 

Related :

A Future Timeline for Energy

A Future Timeline for Automobiles 

Comments

[Peter Y]

What Friendman is saying is actually very congruent: If the price of oil drops to $20, and we tax it $30, Iran only gets $20, not $50. The point of this is twofold; to encourage the development of oil alternatives, and to prevent the OPEC monopoly from temporarily overproducing to undercut oil alternatives, and then lowering production and raising the price again once the threat has passed. Which will protect the accelerating nature of oil replacements that as you say will make oil irrelevant.

[jeffolie]

PRAISE

Your technology, economics, and political predictions in this piece deserve praise and recognition.

Alternative technologies:

Yes, one or more of today's alternative energy technologies most likely will replace or EVEN EXPAND ENERGY USE worldwide. Timing is important and difficult to predict, so your 'shotgun' approach, thinking, reasoning, logic that accumilates all alternative energy source's impact deserves praise.

OIL WEALTH and POLITICS

Wealth from oil promoted the status quo of political rulers such as Sunnis in Saudi Arabia to socialist Chavez being current President of Venezuela. Losing some of oil wealth's political and wealth influence will collapse rulers reign. Timing is important.

2015 to 2018 Prediction

Your chart predicts oil's political influence to collapse from 2015 upto 2018. Politics matter ... nuke energy is collapsing as a source of electricity in Japan, Germany, America, Italy and most likely more countries because politics have turned against nuke energy. The immediate shift away from nuke energy has increased oil prices as well as nat. gas, coal because oil, coal, nat gas are immediately available. Alternative electricity sources are not immediately available but will slowly come online... I doubt your 2015 to 2018 but praise the concept and likelihood that the rulers of oil wealthy countries will lose influence WHEN SUPPLY OF ALTERNATIVES BECOMES REAL AND IN THE ELECTRICAL GRID.

2014 and/or beyond ECONOMIC COLLAPSE

I continue to predict a Dollar currency crisis that the because average American men epicly are in trouble as Bart's 'reconstructed U7' clearly shows 20+% broad measure joblessness, plus housing has collapsed the wealth of the middle American family that has no investments ; however, the the current slow growth which I label as a 'regular depression' for 'average Americans' (not the upper 20% of income earners) most likely is just a work in progress that will get worse in 2014 and/or beyond from a currency (Dollar) crisis that will deepen and intensify the economic suffering of average Americans.

America will go down the 1937's 2nd economic collapse in the Great Depression path as now is happening in Greece's harsh 'austerity'. Taking away money from average people simply decreases consumer spending. Republicans will sweep the elections enacting in 2013 the same impact of taking away money from average people to take effect in 2014 and/or beyond (the impact of programs and budget usually are delayed until Jan 1st of the next year, that being Jan 2014 or some time in 2014 most likely).

IMPACT ON ENERGY TECHNOLOGIES

A deeper economic decline into a great depression would result in collapse of political rulers dependent on wealth/income from oil. An opportunity for the new technologies to overwhelmingly replace energy industries supported by existing political rulers would happen. see Kondratieff winter/spring theory.

[RVT]

I want to add that if oil prices rise above $100/barrel for a sustained period of time, the oil shale deposits in the United States(which contain at least 2 trillion barrels of oil) will become econonomically viable. This along with the factors you mentioned will help prevent oil prices from spiraling out of control in the way that peak oil doomsayers so eagerly fantasize.

[The Futurist]

RVT,

Yes. Supercomputing is also a tool in oil discovery, and of course supercomputing costs drop each year.

However, the bigger story is replacement of some portion of oil demand. That is why oil consumption will never, ever exceed $4 Trillion a year. No matter what.

[Geoman]

"This would mean that oil would gradually shrink as a percentage of world GDP, just as it has shrunk as a percentage of US GDP since 1982." This is a different kind of peak oil -peak oil as a percentage of the world economy.

I disagree with you on a couple of points. Ethanol is and will forever be a boondoggle. Given that plants are simply solar collectors there is too much inefficiency in the system for it to ever work out. Consider that, at best, plants convert 3% of the sunlight into biomass, and that ethanol plant convert maybe 20% of that into fuel, and engines convert just 30% of that into motion. Your overall efficiency is 0.18 %(we can debate the numbers, but no matter how you slice it, only a very small amount of the total solar energy per acre is being used to move the vehicle). As a thought problem, consider that an acre of solar cells will capture 15 to 25% of the solar energy, converting that directly into a usable fuel (electricity). With line losses of 10%, and a conversion at the electric vehicle of 80%, that gets you....maybe 15% of the sunlight converted into vehicular motion. So....will switch grass make a two order of magnitude improvement on ethanol production? That...seems unlikely. I suspect that an acre of solar cells (no water or fertilizer input required) will always provide better value than an acre of crops. In other words, if items 4 and 7 on your list are true (and I think they are), then item 2 will never happen.

Wind power is also pointless without the means to store a vast amount of energy indefinitely. That can be done, but only on a very limited basis. Consider that approximately 1/3 of the cost for electricity is fuel, the rest being interest on construction and operating costs, and that wind power requires 100% total back up, then you begin to see the financial problem. Wind just doesn't work very well, and wherever it is used in large amounts electricity prices increase. By the way, almost every article you read about wind power shamelessly lies. Generating capacity for wind is typical around 25% of the nameplate value, meaning a 10 megawatt windmill will, on average, produce just 2.5 MW, and will sometimes produce nothing. Even when wind is producing, frequently utilities "spill the wind" meaning they just dump the power without using it. Read about England's recent experience with wind power to get an idea of what will happen.

Another way to say what you are saying is that the price of oil is effectively "capped" because at high enough price, alternatives/conservation will always lower demand. $200/barrel oil (2010 dollars)will never happen unless there is some sort of catatrophe. This is not unique to oil - the price of most raw materials are similarly capped.

No mention of nuclear, despite the fact that China and India alone are prepared to double the number of nuclear power plants? Yes Fukashima was bad - but I suspect people are starting to notice that after a huge earthquake and a 40 foot tidal wave, not a single person was injured or killed from the power plant meltdown. This was accomplished, by the way, with old 1950s tech, i.e. Generation II. Gen IV nuclear power plants would have gone through such an event with zero loss of coolant or release of radioactivity. Heck, new thorium salt reactors even burn up the waste.

I'd say our most likely future is seeing more and more coal plants switch to gas, and nuclear to steadily expand.

One more trend you might be missing - underground coal gasification replacing a majority of oil for transportation over the next 30 years. Firms are currently snapping up deep, wet, uneconomic coal leases worldwide in expectation of just such a development. The technology is here, now, today. If implemented on a wide scale it will change everything.

Nice to have you back!

[The Futurist]

Geoman,

Ethanol is and will forever be a boondoggle.

I think algae and switchgrass can be competitive in the free market. Algae has many advantages as it can grow in fetid ponds, and multiply quickly. Switchgrass can grow on land that is useless for edible crops.

Anyway, we only need them to replace 10% of oil.

Wind power is also pointless without...

Wind already generates 3% of world electricity, and we only need it to get up to 10-15%.

10% ethanol + 10% wind + 5% solar + 20% natgas.......that cumulative add-up is what I am getting at.

Even when wind is producing, frequently utilities "spill the wind" meaning they just dump the power without using it.

Actually, there are some good initiatives to move data centers near wind farms (and nuclear plants), since data can be transmitted with far less loss than electricity. Since wind exists in cold regions, that addresses cooling needs as well.

Another way to say what you are saying is that the price of oil is effectively "capped" because at high enough price, alternatives/conservation will always lower demand.

But this time I am actually quantifying the rate at which oil expends its special status. $200 oil (which would never happen) would in fact destroy its position of power in just 1 year.

The thing is, no other commodity, not even copper or steel, has this much sway over the economy while also being controlled by so few nations. This situation is truly an anomaly, and will prove temporary.

Nice to have you back!

Thanks. And post flyers! There is no economic recovery without a rollback of the sacred cows of feminism that are distorting more and more of the economy.

[Eric]

Welcome back!

Natural gas may not be the key to energy independence for teh US from oil tyrants that many in the media proclaim it to be.

A lot of insiders associated with the natural gas industry are voicing skepticism about the lofty forcsts of our reserves.

http://www.nytimes.com/2011/06/26/us/26gas.html?_r=1&pagewanted=all

[The Futurist]

Eric,

Remember that environmentalists oppose anything that might replace Middle Eastern Oil.

Natgas is extremely abundant, and has dropped in price by two-thirds in the last year. At a minimum, we should use it until the price rises - the current price is on par with oil of $50 or even $40...

[Geoman]

Also I would note that Krugman, the Nobel-prize winning idiot, works at the NYT, which is all you need to know. Well, that and I counted about a dozen inaccuracies and exaggerations in that NYT article.

A couple of the more egregious - "toxic waste" doesn't mean what you think it means (drums of glowing goo that burns on contact and cannot be disposed of), it means anything above cleanup levels, which are ridiculously conservative to begin with. Millions of gallons of such "toxic waste" can be cleaned with a 55-gallon drum of activated carbon.

Also, let's just say the term "dry hole" has been around long before shale gas. In fact, part of the recent surge in oil and shale gas production has been the overall reduction in the number of dry holes. Impact of computing.

Shale gas needs lots of wells for reasons other than stated in the article. Also the term "wells" is obscured - each surface location can and does drill hundreds of individual "wells", so the surface impact is not what they suggest. Think of a bycicle wheel, with spokes extending out miles.

That said - shale gas - who knows? When I was in college I was taught that there was no way, no how, you could get gas and oil out of shale, despite the huge reserves present. That was true till about six years ago. Now...frankly I'm amazed. How far can it go? Beats me, and I know a hell of a lot more about this stuff than the NYT ever will. And what about gas hydrates? Hard to say, I would have said "never" 10 years ago but now....?

History shows that at a certain price point, any resource on Earth can and will be exploited. Which I think is what The Futurist is mathmatically predicting here. Not that he shows his math...

[The Futurist]

History shows that at a certain price point, any resource on Earth can and will be exploited. Which I think is what The Futurist is mathmatically predicting here.

Sort of. More specifically, I would say that the speed at which an expensive commodity can be technologically substituted is getting faster and faster (which we know), and can even be quantified in proportion to how expensive the original commodity is.

[Tscott]

200 dollar years seems an abstract number. Is its calculation proprietary? Would you care to share the derivation of same, or did I miss that in the body of the article.

I agree with your premises and direction and think I also agree with the expected substitution scenerio.

Just curious how the number came to be 200

[The Futurist]

Tscott,

The calculation is proprietary, but in short, it is about an equation with variables such as rate of cost reduction, scale expansion, and the second derivative of both of those in relation to the price of oil above $70, in turn applied across each of cellulose, natgas, etc.

So 200 it is, with a very narrow range of +/- error.

[Jay]

Welcome back The Futurist. You're the man. One of the other comments mentioned it, but I do want to underline it. Liquid Fluoride Thorium Reactors (LFTR) promises to be extremely disruptive to existing energy technologies. All it will take is for some organization, somewhere on the planet to put together a demonstration reactor, and all sorts of fossil fuel demand will begin to go by the wayside.

[jeffolie]

Politics matter

Japan slowly ends ALL nuke energy + 4 more may follow

Japanese Prime Minister Naoto Kan calls for phase-out of nuclear power

Japanese Prime Minister Naoto Kan said in a television address to the country Wednesday that Japan should decrease and eventually eliminate its reliance on nuclear energy.

“We will aim to bring about a society that can exist without nuclear power

"....Germany

Germany announced plans in late May to close all the country's nuclear power plants by 2022 -- making it the largest industrialized nation to do so. Nuclear power supplies 23 percent of its energy grid.

Switzerland

No neutrality here -- the government announced in May it too was taking a side against nuclear technology, in response to Japan's disaster. Nuclear energy accounts for roughly 40 percent of Switzerland's energy supply. Its five nuclear reactors won't fully be phased out, experts estimate, until 2040.

Italy

Last month, Silvio Berlusconi's plans to return Italy to the nuclear club were dashed by a referendum that found 90 percent of Italians rejected the technology.

As a result the embattled prime minister said, "We shall probably have to say goodbye to nuclear [energy]." He noted that the government will instead shift its energies to developing renewable energy sources.

Mexico

Despite the fact that nuclear energy only accounts for less than 5 percent of the market in Mexico, which has only one plant, a recent worldwide survey found that Mexico was one of the most anti-nuclear countries in the world, with about 80 percent of its population opposing the power source. That doesn't bode well for future nuclear development.

France

A recent BBC survey found 57 percent of French respondents opposed the technology. France is unlikely to ditch nuclear power completely anytime soon. A longtime champion of the technology, it accounts for 75 percent of the country's energy needs. But there are indications political leaders are falling out of love

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9321#ixzz1SDZ0rj12

[jeffolie]

I installed our family's solar electric system just over 1 year ago in our City of Long Beach, California home.

======================================

France is killing solar, suspends subsidy by no longer paying exta, higher money for solar generated electricity

Spain did this when Spain could no longer afford the same type of paying exta, higher money for solar generated electricity.

Germany still does and still can afford paying exta, higher money for solar generated electricity.

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EDF Freezes Half of Planned Solar Projects, Figaro Says

Jul 11, 2011

Electricité de France SA has stopped work on about half of the new solar-energy generating projects it had planned, Le Figaro reported.

An unidentified EDF spokesman described the projects as no longer economical because the government was suspending preferential tariffs for solar-generated electricity, the newspaper said.

EDF has frozen construction of about 800 megawatts out of a planned 1,600 megawatts in solar generating capacity because the work could not be completed within 18 months, Le Figaro said..

http://www.bloomberg.com/news/2011-07-12....igaro-says.html

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9312#ixzz1SDZlPsvj

[jeffolie]

Small Solar vs Smallish Solar vs Big Solar

Big Solar's big score: Big solar got $4.5 Billion today from the federal government's loan guarantees. $4.5B is real money compared to Smallish Solar's $.28B at Google and Small Solar home systems at $.000000004 Billion each.

Big Solar dominates the electrical production in California with the CA state mandate of 33% from alternative electrical generation in the near future SIGNED INTO LAW. Monopoly by geography: Electical providers such as SCE, PGE are to sole, monopoly electricity providers to homes while the very largest buyers in industry can access other sellers. Monopoly by geography and the mandate means that SCE et al build big concentrated solar electrical generating sites...this is Big Solar.

Small solar means residential owners put panels on their roofs and escape the geographic monopoly ... the expense ranges from $25,000 and up with a payback of 7+ years coming with a life of system return on investment of about 10% to 25% depending on the system and electrical demand by each residence... sizeable cost and long time period commitment. With houses underwater and prices continuing to decline, the CA state screwed new comers by reducing incentives thus reducing future small solar residents who might be willing to go after that 10 to 25% return on investment ... plus no rate hikes when you produce your own electricity on your roof.

Enter Google via SolarCity .... Smallish solar: $280M Google roof top panel funding

I do not like SolarCity's lease program because SolarCity takes away a lot of the 10 to 25% return on investment to the resident. Just like leasing a car... the leasing company and financing bank suck up money. Small solar that happens with the resident paying cash avoids the sucking off from the rate of return. SolarCity and Google defeat the rate of return for residents.

I installed our family's solar electric system just over 1 year ago in our City of Long Beach, California home.

$280 million in financing from Google will create lots of leases and roof top solar panel installations. The residents better look closely at the deal with SolarCity/Google...I have no information but the 'Devil is in the Details' ...

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First Solar Wins $4.5 Billion in Loan Guarantees From U.S.; Shares Climb

Jun 30, 2011

First Solar Inc. (FSLR), the world’s largest maker of thin-film solar modules, won $4.5 billion in conditional loan guarantees from the U.S. Energy Department for three projects it’s developing in California.

First Solar’s Topaz and Desert Sunlight projects, which will each have 550 megawatts of capacity, and its 230-megawatt Solar Ranch project were each offered low-cost financing needed to begin construction, the Energy Department said today in an e- mailed statement. The agency must distribute all the funds before the loan guarantee program expires at the end of September.

The Energy Department has offered conditional loans or loan guarantees to 40 clean energy projects totaling $38 billion, including $16 billion for solar energy projects. First Solar’s 290-megawatt Agua Caliente project in Arizona, which is being built for NRG Energy Inc. (NRG), in January won approval for a loan guarantee of as much as $967 million.

First Solar said construction on those approved today will add 1,400 jobs and that the more than 20 million cadmium telluride glass panels used in the projects will be manufactured at plants in Ohio and Arizona.

First Solar rose $6.83 or 5.3 percent to $136.25 at 9:30 a.m. New York time in Nasdaq Stock Market trading. Before today’s gain, the shares had risen 14 percent since Jan. 1.

http://www.bloomberg.com/news/2011-06-30....-from-u-s-.html

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9268#ixzz1SDboAay4

[Jared]

I disagree with Peter...like the technological singularity, the wheels have been set in motion...the inevitable cannot be stopped. As the author states, the best OPEC countries can hope for is diversification of their economies, and granting their citizens more freedoms and individual liberties. If they do not, and the status-qou goes on in perpetuity, you will see riots and unrest across much of the mid east. Similar to what happened this spring, but on a much larger scale. It will be very interesting 10-15 years out from now to see how things will unfold.

[Jim]

Is there any annual upper bound to how much progress per year you can make on the 200 dollar-years figure? For example, if oil suddenly went to $870/bbl and stayed there, then according to the equation, we should lick the oil problem in three months, which doesn't sound right.

If I had to guess, I'd say that the maximum annual progress is probably $30 a year or so, depending on how fast electric cars get deployed (which, admittedly, is partially a function of oil prices).

Other than that, great post. Your dollar-years theory is a simple and elegant way of accommodating an increase in progress as the price of something increases.

[The Futurist]

Jim,

Excellent question. As the equation is technically a hyperbola, the extremities become almost parallel to the axes, but never touch them. An extreme price would make the $200 dollar/year metric get distorted. As would be the case if oil averaged $71 - it would not take a full 200 years to deplete the points.

This problem is contained in a practical sense that oil can never really get above $140 for more than a few days at a time - forces to correct that come on line in a matter of days.

[Jared]

Ray Kurzweil chimes in.
http://www.pbs.org/wnet/need-to-know/environment/futurist-ray-kurzweil-isnt-worried-about-climate-change/7389/

"Lauren Feeney: You have made a prediction about the future of solar energy….

Ray Kurzweil: One of my primary theses is that information technologies grow exponentially in capability and power and bandwidth and so on. If you buy an iPhone today, it’s twice as good as two years ago for half that cost. That is happening with solar energy — it is doubling every two years. And it didn’t start two years ago, it started 20 years ago. Every two years we have twice as much solar energy in the world.

Today, solar is still more expensive than fossil fuels, and in most situations it still needs subsidies or special circumstances, but the costs are coming down rapidly — we are only a few years away from parity. And then it’s going to keep coming down, and people will be gravitating towards solar, even if they don’t care at all about the environment, because of the economics.

So right now it’s at half a percent of the world’s energy. People tend to dismiss technologies when they are half a percent of the solution. But doubling every two years means it’s only eight more doublings before it meets a hundred percent of the world’s energy needs. So that’s 16 years. We will increase our use of electricity during that period, so add another couple of doublings: In 20 years we’ll be meeting all of our energy needs with solar, based on this trend which has already been underway for 20 years.

People say we’re running out of energy. That’s only true if we stick with these old 19th century technologies. We are awash in energy from the sunlight."

and the implications of a world without energy problems

"Feeney: You have a very optimistic view of the future; eccentric, even. You believe that eventually we’ll be able to live forever, and maybe even bring people back from the dead. How would that growth in population affect the environment? A lot of people are afraid of overpopulation as one of the major factors in climate change.

Kurzweil: We will be extending the human life expectancy; in fact, we have done that already. Human life expectancy was 37 years in 1800, 48 in 1900; it’s now pushing 80. But this is going to go into high gear now that health and medicine has changed. It used to be hit or miss. We’d just find things — medicine was just a kind of an organized set of ideas that we discovered accidentally. We now have the actual means of understanding the software of life and reprogramming it; we can turn genes off without any interference, we can add new genes, whole new organs with stem cell therapy. The point is that medicine is now an information technology — it’s going to double in power every year. These technologies will be a million times more powerful for the same cost in 20 years.

However, the same technologies that are going to extend life and nudge up the biological population are also going to expand the resources. We just talked about energy, because we are running out of it, but actually we are awash in energy. We are awash in water — pun intended. Just most of it is dirty and polluted. And we know how to convert it, today, but it takes energy, which is why it’s expensive. Once energy is inexpensive, we can create water.

There is a whole set of new food technologies. We are going to go from this revolution that happened 10,000 years ago of horizontal agriculture to what’s called vertical agriculture, where we grow plants, fruits, vegetables and meat in computerized factories by artificial intelligence; hydroponic plants tended by intelligent robots to create fruits and vegetables, in-vitro cloned meats, basically just cloning the part of the animal that you want to eat, which is the muscled tissue. There is no reason to create a whole animal to get to the parts that we want to eat.

The point is that the same technologies that are going to increase human longevity are also going to expand the resources and ultimately make them very inexpensive. "

[Jared]

Just to further expand on what I just posted, Ray Kurzwiel believes that we will meet all our energy needs from solar in 20 years.

Now I am by no means a futurist, but that seems incredibly optimistic to me, and if it is true (due to accelerating law of return) we will be free from oil tyranny in 20 years...which would be amazing.

[Shashwat]

The Futurist, why do environmentalists oppose anything that might replace middle eastern oil? Regards.

[Geoman]

I am a bit more sanguine when it comes to solar. Very few things in life get cheaper as they get bigger. Providing America's energy from solar would require very big solar installations - as big as the state of Arizona. When you run the actual numbers, not the hype from the solar industry, it doesn't pencil out terribly well.

I think there is a floor to the price of solar, and we are getting quite close to it. Run a calculation of the price of solar power if the solar cells were free, but you still had to pay for installation, maintenance, land, cost of money, etc. That is you basement cost, and won't go away with improved technology. I'd argue we are very close to that cost now. Currently the illusion of decreasing price is maintained mostly via massive subsidies.

Ask yourself this - If solar is so great, so cheap, why must its use be mandated by government decree? Why are any subsidies needed at all? When solar makes sense without subsidies, tax breaks, free land, laws mandating its use, etc., I'll jump on the bandwagon happily.

I'd predict, in 20 years, solar will provide about 5% of the total energy we use. In other words, not a whole lot more than it does now.

[Geoman]

Also - regarding nuclear power, there is what people think, then there is reality. The reality is that nuclear power is the only long term (100+ years)solution to our energy needs, and can be managed safely with a few tweaks. Japan and other nations can say they want to go nuke free....and I say, good luck with that. It won't happen. It physically and economically cannot happen. Not without a massive and permanent decrease in the standard of living.

[The Futurist]

Geoman,

Providing America's energy from solar would require very big solar installations - as big as the state of Arizona.

There are companies that are using cheap reflective balloons as magnifying glasses that concentrate 400 square inches of sunlight onto 1 square inch of PV panel.

Land : The land with the highest solar intensity (in Sudan, Libya, Saudi Arabia, Northern Australia) is usually uninhabited.

But at any rate, solar is more a tropical-country solution than an OECD one, for multiple reasons.

[jeffolie]

Increased silver demand for electrical connections and solar panels looks promising as nuke power has become more unpopular.

===========================================

$10 Billion Solar Funding Tsunami

SunPower, First Solar, SolarCity, ClearPath, Soitec, Borrego, FRV, Cogentrix, Amonix and 25 solar startups raised big money in the last three months.
.

Apple has a bigger cash reserve than the U.S. Treasury. Unemployment remains stubbornly high. Venture capital confidence is low.

But over the last few months, we've reported on more than $10 billion in various forms of funding going toward solar in the United States from banks, venture capitalists, the DOE, the U.S. Treasury and firms like Google.

If one wants to call it a trend, it looks like we're seeing the onset of solar as a more mainstream investment and perhaps the return of an appetite for tax equity. VCs continue to channel money into solar startups although motivation to invest in early-stage, capital-intensive solar entrants seems to have waned. Utility-scale solar is here in a big way in the U.S. and the multi-gigawatt scale of the U.S. market is going to be as important a global market driver as the German and Italian markets.

Here's a rundown:

more... http://www.greentechmedia.com/articles/read/10-billion-Solar-Financing-Tsunami-NRG-CleanPath-DOE-Borrego/

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=gold&action=display&thread=9274#ixzz1TtAUx77y

[Geoman]

Sorry, still not convinced.

First of all the growth of soalr is not based on the fundimental economics, but on massive price support, mandated usage, no-interest loans, etc. Solar power is not being priced properly. Remove the financial props...and then we'll see. As I said, the physics of the thing bugs me...big structures cost big bucks, and utility grade solar structures promise to be the largest structures on the planet. Maybe they can be cheap, but they need to be very very very cheap.

Let's try a thought problem. The Mohave desert land trust values an acre of mojave desert at $1,400. A square foot of aluminum foil costs 1.81 cents. So, cover an acre of desert with aluminum foil would cost $2,228 dollars for land and materiels. Assuming I pay some labor to clear the land (most estimates hover around $4,000 per acre), and lay the foil (I figure a couple of guys, $8 an hour, three days to get it right, so call it $200). Total installation costs for my cheapest possible solar installation is around $8,000.

On the clearest, sunniest day, around 100 watts of sunlight energy comes in each square foot of area. Now pretend my aluminum solar array collects 10% of that energy, which would be 10 watts per square foot. But you know, it gets dark, the angle of the sun changes. So at best I might collect 40 watt hours per day. So my acre of solar cells may collect 1,742 kw hours per day. At 10 cents a KWH I would net...$174 bucks a day. So in a couple of months I might make my money back on the installation. Now that is truely your basement cost. No solar system can ever pay back in less than 2 months.

The cheapest solar panels are not 1.81 cents per foot, but $180 dollars per square foot. Take my two months, and multiply it by 100. The answer is...16 years. Add in interest on the transaction, maintence, etc....and there is no way to pay back the initial cost. Not unless energy costs soar.

And The Futurist - uninhabited land is not "free" unless by govermental decree. It may be worth less, but is not worthless... For example, what would be the value of that same land for nuclear waste storage? Would that allow the generation of more or less nuclear gigawatts than solar?

[agimarc]

Another way to parse this would be to take a look at the components of energy use: heating, electrical generation, vehicle fuels.

The impending flood of natural gas ends up working all three areas, though it is probably most efficiently used in heating and electrical generation.

I am not quite as sanguine about solar or wind for electricity based on their variability and lack of storage. Do see a growing market segment for smaller reactors in the 10-100MW class as they get smaller, more robust, and safer. India is also going all in with thorium-fueled reactors to meet their future growth. This technology will spill over to our side of the Pacific. More interesting are the Polywell experiments with the Wiffleball testbeds for self-contained fusion. The Navy keeps on funding them and they keep on making progress.

You might want to take a second look at Fischer-Tropsch synthetics from Gas to Liquid and Coal to Liquid processes. The final reaction is exothermic, which means each GTL or CTL plant also can produce a significant electrical output. We have over a century of infrastructure in place that can both handle diesel and uses it for primary fuel. And the US, particularly in NW Alaska has centuries of coal in place.

If you properly size the molecule out of the process, the product ends up being diesel, Jet-A, JP-8, kerosine and RP-1. It requires no change in existing turbines. It can be used in all existing diesels.

The largest problem with the process is that it produces massive amounts of CO2. But that can be captured and sequestered or used to enhance recovery from depleting oil reservoirs. It can also be sold as plant food.

The older I get, the more I come to think that we are going to move to synthetic diesel as our primary liquid fuel and oil ends up being feedstock for the chemicals / plastics industries.

Thanks for another great article and food for thought. I think GTLs and CTLs are in our very near future. Cheers -

[The Futurist]

Geoman,

Assuming I pay some labor to clear the land

Ah...but the greatest solar intensity (Sahara, Arabia, Indian desert, etc.) is where such labor would cost only $100/acre, and I can tell you that desert land in India is under $500/acre in the marketplace, despite India's high population density. Again, solar is more a poor country/searing tropical solution than even an AZ/NV/CA one.

Also, these ballons are a couple of feet high, which means low grass and small pebbles do not have to be cleared at all.

So to prepare and foil up an acre costs just $3000 or so, and the PV panel is covering 1/400th an acre.

And there are many other technologies, as I wrote here. The same is not nearly as true of Wind Power.

On the government subsidy point, remember that oil also has many government subsidies indirectly associated with it (the military cost of keeping the Persian Gulf safe, for one). Oil imported from the Middle East has a 'true cost' of $300/barrel by some estimates. Surely Solar can at least outcompete the fraction of oil that indirectly costs $300/barrel.

Lastly, the dropping cost of space launch will soon make it easy to eject the worst nuclear waste into space, possibly steered to collide into the Sun itself. We don't need Sahara Desert land for this purpose.
_______________________________

We'll see. Remember, the goal is for Solar to displace just 10%, not more, and perhaps even less if other technologies outperform the 10% bar. It matters little whether out of the 7 technologies listed, some do better than others. The big picture is that oil has too many forces working against it.

10% solar + 10% wind + 20% natgas + 10% algae/cellulose, or whatever other combination.......

[The Futurist]

agimarc,

I am not quite as sanguine about solar or wind for electricity based on their variability and lack of storage.

Since data can be moved more easily than power, moving gigantic datacenters to where wind power exists (Canada, Alaska, Iceland, Finland) gets around the transmission issue plus cooling costs. The biggest datacenters now consume as much power as 100,000 individuals.

Nuclear plants in frigid regions, with datacenters moved nearby, is also a model that can work.

There are relatively few reasons to have a datacenter in a location that is either warm or near a power-consuming population center. Getting personnel to move to Anchorage, Helsinki, Yakutsk, or Edmonton is achieved by paying them 30% more (a tiny fraction of the money saved in cooling costs).

[Geoman]

Aqimarc - we are in violent agreement. I think a big part of the future is synthetic fuels from coal and thorium reactors. And there is always the chance of the pie in the sky technical solution that changes everything. Fusion. Perfect batteries. Vacuum energy. Space generated beamed power. We all can see down the road, but not around the corner.

Yes, Futurist, I can see solar working, maybe, under special circumstances, in some places, and I agree entirely with your point that a dozen little solutions can and will add up to one great big solution. I'm only muttering about fractions, not the overarching concept.

[Geoman]

By the by, I think I mis-used the word "sanguine". I thought it meant "bloody minded", as in seeing red, or feeling fatalistic. Instead the more common definition is optimistic. Dictionary says both are technically correct, which is odd. I apologize for any confusion.

[agimarc]

The Futurist - I am in Anchorage and we are dabbling in wind. The problem with wind up here (and in the UK and Texas, for that matter) is that when it is the very coldest, it is the most still. I'm talking -25 degree F cold in the warm part of the state (here). The Brits suffered two of their coldest winters the last 2 years and were getting on average just over 3% rated capacity from their wind installations. Texas the week before the Super Bowl had rolling blackouts due to the wind not blowing. It was doubly bad because the front dropped a nice coating of ice on the wind farms in west Texas, further exacerbating the problem. Like all airfoils, ice and wind turbine blades don't play well together.

The technology may be great, but if the weather doesn't cooperate, things will get really, really cold in a hurry. Cheers -

[jeffolie]

"...Fewer than 2,000 homes in L.A. are solar..."

I live just south of Los Angeles in the City of Long Beach ... I installed a home solar electric system a little more than a year ago.

It takes confidence and committment to invest in a solar system that has a multiyear payback period while housing prices have fallen a greater percentage already than in the Great Depression.

"....Of nearly 8 million single-family homes statewide, 60,000 have solar panels. Fewer than 2,000 homes in L.A. are solar-powered..."

============================================

Los Angeles solar power rebates slashed 32% [corrected]

August 4, 2011 Rebates for Los Angeles solar panel installations are 32% lower [Correction: A previous version of this post said the drop was 60%] under the newly relaunched Solar Initiative Program, which will start accepting applications next month. The program was put on hold in April as the demand for incentives hovered around $112 million, far outpacing the program's $30-million budget. During the hiatus, the Department of Water and Power was able to catch up with a backlog of applications and identify alternative financing options.

more...

http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9194

[M. Simon]

jeffolie,

Nice to see California subsidizing solar. It keeps the cost of electricity high and California will go bankrupt a little sooner.

Why am I happy about that? Illinois can use all the help it can get.

[M. Simon]

Re: fusion. I have heard anecdotal reports that Polywell is coming along nicely. What ever that means.

[M. Simon]

Geoman,

18000/1.81 = aprox 10,000 X 2 months = 20,000months. Better than 1,000 years. Did I follow your math correctly?

[M. Simon]

jeffolie,

I'm a former Naval Nuke. And I must say Japan is correct. Current designs are not very good. No problem in the Navy because they have lots of manpower all of which is available on site in an emergency. Civilians who wish to make a profit couldn't afford it.

We need reactor designs that can survive for a week or more with a total loss of electrical power. Until we get those I think that phasing out current nukes is a good idea.

[M. Simon]

Yes Fukashima was bad - but I suspect people are starting to notice that after a huge earthquake and a 40 foot tidal wave, not a single person was injured or killed from the power plant meltdown.

If you don't count the few deaths that occurred. Not significant to be sure. But you have a very large area that is uninhabitable. And you will have a slight increase in mortality from the spread of radiation. Probably not measurable in aggregate in a nation of about 100 million. Some individual case may be attributable though. Esp. plant clean up operators. It will take 10 or 20 years before we can get good numbers on mortality.

I have seen the anti-nuke sentiment rise and it is not political in the sense you are using it. Example: why are airplanes 10X safer than cars? Because that is what it takes to get a large swath of the population to consider flying. Why isn't it rational (on the airplane basis) for people to demand more safety from nukes? An explosion from a coal plant does not make a rather large area uninhabitable for 50 or 200 years.

People are not entirely rational. That needs to be accounted for in any plan.

[jeffolie]

M. Simon wrote in part: "...People are not entirely rational..."

Politics matter.

Emotional voting is common and Japan's sudden political swing reminds me of my State of California where Conservative leaders, Governors such as Ronald Reagan, and Liberal leaders, such as father and son Browns, have been elected.

Japan and Germany both emotionally voted to eliminate nuke energy.

Regarding the damage in Japan's nuke energy, most of the damage is emotional while some is territorial as happened in Russia's Chernobyl. Yes, some territory should be condemned for radioactive reasons. Yes, some food such as beef, tea, rice have some levels of radioactivity. Most of the economic damage is emotional decisions in Asia not to buy Japan's agricultural products such as India's ban. The economic damage is real, the limited territorial damage is real, the political damage is real.

[Geoman]

M. Simon,

No deaths occurred because of Fukashima melt down. None, Zip, Zero, Nada. Its is not a matter of ignoring the small number of deaths, but acknowledging there were no deaths at all due to the melt down. Two men did die - but during the earthquake from galling equipment. Two men were injured by radiation - but appear to be recovering.

There isn't a large uninhabitable area. There is a small uninhabitable area. What little land that is uninhabitable will remain so for only 10 to 20 years. Coincidentally about the same amount of time the cleanup will take.

It is very hard to pick out reality from the news. Intentionally I believe.

[Snake Oil Baron]

I believe that ethanol and some other chemicals from biomass--either grown for the biomass, like algae or grasses, or byproducts like forest waste and sewerage--will be used to replace petroleum as a source of chemicals since that will be much more profitable and save more petroleum than making fuel would do. Until/unless the chemical industry gets to the point where nuclear power can be used to create the basic feedstock chemicals from air molecules cost effectively, ethanol, methanol, butanol, and even carbon monoxide plus hydrogen from pyrolysis of biomass, will be used to produce chemicals far from current petroleum refineries. Some amazing developments in catalysts and production techniques are occurring in this area.

Wind has some important technological and economical problems (so too, to a lesser extent, does solar) and these problems should not be whitewashed with subsidies and PR. This, in my view, slows down the solar industry to the amount of subsidies available. A smaller field of solar and wind power producers growing under free market conditions would be far better for the future of these power sources. Same with the ethanol industry. Subsidies hobble what the try to support. (cont.)

[Snake Oil Baron]

(Cont.)
Technology for storing energy from unreliable sources still has far to go but a lot of progress has been made on this front. Even nuclear and hydropower may, in future, store some energy in distributed sulfur batteries and molten salt energy storage sites. As distributed sources of power they could help keep areas that have lost connection to the regional grid powered. The rest of the time they could bank solar and wind power and help meet fluctuating demand. Organisms store energy in various substrates; some are rapidly available but are less efficient or have lower energy density while some are better for long term storage. Civilization will also likely start to store energy in different forms.

All of these challenges to petroleum alternative, including natgas and nuclear will progress faster with higher oil prices, as this post explains, assuming there is enough of an economy left to need energy when the fallout of current contraction finally plays out. China, Russia and Western states still have many under appreciated problems that have yet to hit the fan.

[jeffolie]

Wind power inconveniently not peaking when demand highest

Storaging winding off peak electrical production would go a long way to making wind power more practical.

Storage to take advantage of inconvenient, 'off peak' electricity is expensive but on a large scale, Los Angeles City of the Department of Water and Power (LADWP) built a dam which is devoted to storage. Castaic Dam built and owned by LADWP flows water throught its turbine electrical generation system during the day and just the opposite, pumps the same water back up into behind the dam at night. Electricity used at night is purchased at lower priced 'off peak' prices resulting in avoiding some expensive 'peak' daytime electricity prices. Hydro storage is common in the hydro, dam rich North West to generate electricity sales to California and Nevada.

Small scale electricity storage research continues but I know of none that are commercially feasible.

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9461#ixzz1V1G1NIA3

[michael]

The Futurist - great blog, first time I visit and I'm really impressed.

You're right about petroleum prices and the world economy. I think all the analysts out there underestimate human curiosity and ingenuity. And the power of capitalism.

The shale gas revolution is really picking up steam. The US supplies a huge portion of its gas from shale reserves when it imported a bulk even as recently as 10 years ago.
Even in petrol rich Canada where I live, shale has been discovered, likewise in Europe, where this represents a chance to get off the Russian energy threat.

The Futurist-What's your take on hydrogen cars? China and Israel have been working on them recently. The USA as well.

http://www.israel21c.org/environment/israeli-invention-could-pave-way-for-hydrogen-cars

Also do you think, if and this is an if, Chinese growth collapses due to the housing bubble bursting over there, this could prolong price levels to be under $70 and extend the reign of petrotyranny?

Anyway to add your blog to email to get new notifications?

[Savethemalesfuturist]

"India is also going all in with thorium-fueled reactors to meet their future growth. This technology will spill over to our side of the Pacific."

+1 agree with you there. Thorium may account for the highest percentage of alternate energy. Still, it may take 20 years to become mainstream. Hopefully other alt. energies are enough to tide over for thorium.

Futurist, nice article and nice to know that the oil bubble will burst along with the misandry bubble. I look forward to seeing your next article about the government debt and how this horseman factors into the decline of feminism. On the Spearhead, we are getting excited as we are seeing cracks/leaks in the misandry bubble.

[jeffolie]

Feed in Tariffs, FIT, guarantee a profit for solar panel use by the government setting a price above the cost of solar panel produced electricity net of government subsidies to buy and install the solar panels.

Average consumers pay higher electricity rates to promote solar electricity ... there is no free lunch.

Spain created a monster sized FIT profit and industry then reneged, backed out of paying the FIT resulting in monster sized bankruptcies all over Spain.

China and Germany remain open to FIT programs. Japan is firting with a small FIT program. No American FIT programs exist that I am aware of, but significant income tax credits still exist to purchase and install with some states adding more subsidities such as California.

The UK ended its FIT program with a deadline resulting in a final burst of creating FIT profitable solar panel production. The below piece details the huge 10 fold expansion of those beating the end of the FIT.

==================

Countryside transformed by the solar panel rush as developers race to beat government deadline

26th August 2011

Hundreds of acres of countryside have been carpeted in solar panels after companies from across the globe flocked to Britain to benefit from a lucrative policy on solar power.

The Feed In Tariff (FIT), launched in April last year. promised those who built solar 'farms' an inflated minimum price for the power generated which is fixed for the next 25 years.
In a rush to beat the deadline which expired earlier this month, a sudden flurry of development has seen around 20 farms spring up, covering at least 200 acres across the country.

Gold mine: Solar panel farms are springing up all over the country to take advantage of government legislation

After the cut-off, the value of solar energy sold back to the national grid falls by three quarters.

The speed of the construction, with some 30 acre sites springing up just weeks after planning permission was granted, has left residents stunned.

Homeowners also claim the developments are inefficient, with some of the bigger schemes only developing enough power for 1,000 homes.

More...Why are we not getting paid my £400 for our solar panel energy?

Robin Smith's beautiful view of the Somerset Levels has been blighted by 20,000 solar panels which stretch for over a mile near Puriton.

He said: 'It is blanket desecration of the countryside. I feel very sad that it is just for people lining their coffers.'

The solar industry has exploded at an alarming rate in Britain.

In 2010, there were just five solar farms, generating just 60 megawatts of electricity.

There are now thought to be around 20 generating 300 megawatts.

More than 200 companies from around the world including China, Germany and America are now operating in the UK and there are more than 2,500 certified installers.

Natural beauty: Residents say the solar farms are blocking their view of the Somerset Levels

The Government introduced the FIT in April last year in a bid to encourage the use of solar power.

But foreign investors spotted an opportunity, with returns of 16 per cent on the cost of building solar farms.

For example, a five megawatt farm would earn up to 29.3p per watt under the FIT which would normally by worth just 8.5p.

Ministers spotted the gold rush and closed the tariff scheme as of August 1 however, developments simply had to be connected to the national grid - not completed - by this date.
Many developments were hastily established and plugged in, with completion over the next few months.

Farms have sprung up across the country, including Devon, Cornwall, Derbyshire, Somerset, Lincolnshire and areas of Wales.

Reza Shaybani, chairman of the British Photovoltaic Association, said: 'All of the investors rushed into the UK hoping for solar power to be a new pot of gold, so to speak.

'It was a very lucrative deal. The UK feeding tariff was set extremely generously, giving return on investment in some cases of 12 to 16 per cent.

'This was obviously not sustainable and it would have emptied the pot very quickly.'

Figures from Ofgem show a staggering leap in solar schemes - including domestic - registered to FIT.

In April to June last year just 2,700 were registered but that jumped to 11,383 from January to March this year.

And since the FIT scheme was launched, the taxpayer has paid out £4.4 million for the electricity generated..

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9345#ixzz1WM7dR65a

[Buzz]

There is a sad fallacy in your "Economic Adaptations".
Manufacturing which creates the vast majority of measurable production has dropped dramatically in the US resulting in a deminishing use of energy. Service industries are a pitiful negative substitute for productive jobs in manufacturing, which are dynamic in that they create more productive manufacturing and jobs in the chain of supply. your whole thesis falls apart. Sorry.

[The Futurist]

Buzz,

Your comment is not logical.

To get hysterical about manufacturing being the only economic value-add is absurd. US manufacturing output is much more than 30 years ago. Productivity gains have led to fewer jobs, but output is actually more.

And this has nothing to do with the main topic, about oil demand destruction WORLDWIDE. Again, WORLDWIDE, so your US-centric comment is useless and devoid of logic.

[jeffolie]

SolarCity : 160k rooftop solar installations on top of privately run military housing complexes at 124 military bases across 34 states ... could double the number of rooftop solar power installed in the United States

For SolarCity, which recently received major financial backing from Google (GOOG, Fortune 500), the deal is a windfall.

1,600,000 ounces of silver will be consumed

My math is conservative: 10 panels for each of the 160,000 solar rooftop installations with 1 ounces of silver consumed in each panel. Using 10 panels per roof top is conservative because I had 30 solar panels installed in my home solar electric system installation just 1 year ago.

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9578#ixzz1XOhM6dyH

[from Wikipedia http://en.wikipedia.org/wiki/SolarCity ]: "... SolarCity installs panel technologies ranging in high efficiency from Sanyo to lower efficiency, cost-efficient thin-film solar modules from First Solar as well as string ribbon from Evergreen Solar [US, bankrupt see below], Sharp, Yingli [Chinese], Kyocera and Suntech Power [Chinese], among othersIt appears that none of the solar panels SolarCity installs most likely will be made in America. Most likely the solar panels will be made in China [see below suppliers to SolarCity].

Read more: http://unlawflcombatnt.proboards.com/index.cgi?board=oil&action=display&thread=9578#ixzz1XOh5gJZl

Evergreen Solar[US, bankrupt]: On August 15, 2011, the company filed for Chapter 11 reorganization. Under the reorganization, the company plans to sell its assets, including its technology String Ribbon. http://en.wikipedia.org/wiki/Evergreen_Solar

Yingli Solar, is a [Chinese] solar energy company and one of the largest vertically integrated manufacturers of photovoltaic solar modules. The company has more than 6000 employees and 10 sales offices worldwide, and plans to open a new manufacturing facility in either Phoenix or Austin http://en.wikipedia.org/wiki/Yingli

Suntech Power Holdings Co., Ltd. (Chinese) (NYSE: STP) is the world's largest producer of solar panels, with 1,800MW of annual production capacity by the end of 2010. http://en.wikipedia.org/wiki/Suntech_Power

=========================================

New SolarCity deal will double U.S. rooftop solar power

September 7, 2011: 5:12 PM ET

A new federal loan guarantee will put 160,000 new solar installations on top of military housing in 34 states.

http://money.cnn.com/2011/09/07/technology/solar_city_military/

[samseau]

Nice post.

[TheAbstractor]

I'd preface your $4 Trillion cap with the caveat of never going above $4 Trilion at least gauged in 2011 dollars. Given the complete irresponsiblity of fiscal policy by our inept political class, an high-inflation, if not a hyperinflation event may likely be in the works.

While I'm skeptical that we'll ever reach peak oil, I think we are running headlong into reaching peak fiat currency.

[The Futurist]

The Abstractor,

I'd preface your $4 Trillion cap with the caveat of never going above $4 Trilion at least gauged in 2011 dollars.

Note that I have accounted for that in the blue text. Even high inflation will not cause oil demand to exceed $4T in *current* dollars. A rising nominal price accelerates oil demand destruction, which means that inflation also speeds up demand destruction.

Hyperinflation = No chance. Read my other article, The TechnoSponge.

[DoesNotMatter]

you are a brilliant writer. Thoughtful, incisive, rational, entertaining. You give us a good name, friend. Keep up the good job and carry on writing. Ever considered that you could make this a career. You would clean up the floor with competition like Tom Friedman. But then again, your message is unpopular among the masses. You are a good counterweight to some other American-Indian bloggers, who frankly speaking, suck. Won't name them here as it just gives them more publicity

[jeffolie]

Politics matter

Obama kills: SolarCity: 160k solars on private mil. roofs=1.6m silver ozs

"... The US DOE has come under the political spotlight since the collapse of CIGS thin film producer, Solyndra, and a loan of over US$500 million offered to the now-bankrupt company ... "

===============================================

SolarCity US DOE loan approval fails

According to news reports, US-based solar installation firm, SolarCity will not be able to complete and comply with documentation deadlines of September 30 to be considered for a US Department of Energy loan guarantee, previously announced.

Earlier this month, the DOE had made a conditional commitment for a partial loan guarantee to SolarCity for PV system installations on residential and other buildings at US military bases. The US$344 million loan would go towards 371MW of new solar power generation capacity.

The project, code named SolarStrong, will be led by SolarCity, with USRG Renewable Finance acting as lead lender in partnership with Bank of America Merrill Lynch.

Only last week, First Solar fell foul of the same deadline due to its inability to meet documentation deadlines.

The US DOE has come under the political spotlight since the collapse of CIGS thin film producer, Solyndra, and a loan of over US$500 million offered to the now-bankrupt company

http://www.pv-tech.org/news/solarcity_us_doe_loan_approval_fails

[Geoman]

Just a quick poke at solar power - solar panels degrade. Too many hot and cold cycles. The minimum degradation rate is 0.05% per year, and after 30 year they will produce only 85% of their origional power. At a 1.5% annual degradation rate they make only 65% after 30 years. A classic wasting asset.

Some crappy Chinese panels have been measured with 4.5% degradation rates.

Solyndra technology was pretty amazing - but it cost about 3 times more per watt than they could sell it for.

[jeffolie]

Geoman is correct.

The State of California mandated that solar panels that were qualified to be used in California's rebate program must have no less than 80% of their original power at the end of 25 years. Not all panel producers qualified their panels for this program. And, just try to sue for not adequately performing panels if the panel producer no longer is in business or has a California 'presence'. Another significant item is the expensive 'inverter' which usually lasts 10 to 15 years while currently these inverters that are qualified for the California program typical accounted for about $4000 of the systems expense. Normally, these inverters will need to be replaced when they fail.

[The Futurist]

I think the degradation aspect is present with many technologies. Wind turbines also probably warp over time. Oil rigs certainly degrade over time (Iran's rigs are 30+ years old).

A 30-year life is fine, though. Remember, Solar is mostly a impoverished-tropical-country solution, as it should be.

The bigger pressure, much more than degradation, is the fact that solar panel efficiency rises 5% a year or so. So the pressure to 'upgrade' after 7-10 years would be present. This changes the capex equation and makes it similar to a computer-equipment upgrade conundrum.

[jeffolie]

The Futurist correctly wrote "... the fact that solar panel efficiency rises 5% a year or so. So the pressure to 'upgrade' after 7-10 years would be present. This changes the capex equation and makes it similar to a computer-equipment upgrade conundrum. ..." for ongoing or expanding electrical demand.

Wrong for me. Currently my demand most likely has peaked and will decline as my 4 adult children leave our home and/or hopefully electrical appliance become less demand intensive from upgraded home appliances such as computers (we have 6 computers now which will decline as the adult kids leave) and TV.

[RVT]

The discovery of oil in more democratic nations(such as Canada) also weakens petrotyranny.

[Phil]

Many of the things here I really don’t believe. Why are we even talking about it? Because it’s right in front of us at the pump. It’s totally self-evident that something is wrong with energy. If there wasn’t we wouldn’t be talking about shale, tar sands, and algae. We wouldn’t be talking about subbing Natural Gas, Hydro, Solar, Wind and Nuclear. But we are and it’s because we know major changes are on the way. The Peak is coming way too fast to sensibly switch to another alternative. It’s a serious problem because we won’t be able to scale up to another energy source in time to save the economy. We will suffer terrible economic and personal hardships. This is not alarmist or doomer thinking, the facts are there but it takes a lot to get our heads around it. Why? Because we suffer from a type hereditary bias. We think “Our world has always been this way, so it always will be this way.”

We pump 31.3 billions barrels a year. Pumping energy has always been easier then growing grass/corn or mining coal and tar sands. In fact, the aggregate of all methods: Hydro, Wind, Solar, Nuclear, and Tidal energy will not delay Peak Oil much more than a couple weeks to a year at best. The reason why is because everything uses oil, even the Hydro, Wind, Solar and Tidal Energy. They are all made using oil.

When news groups talk of an off-shore Brazilian oil field with 15 billion barrels of oil it becomes even more obvious that we are just clutching at straws. 15 billion would only last a half a year, and that’s if we could pump that much which we can’t. Even Saudi Arabia can only pump 10 MILLION a day and that’s on dry land.

Our oil explorations are taking us eight miles in the ocean, five miles down, millions of dollars spent to bring us oil in development time of three to five years at best. Each of these explorations s is the cost of a moon expedition.

Also, many oil explorations are taking us to the most dangerous countries in the world. We’re expending more and more military measures to secure the status quo.

Here is an historic graph of oil discoveries:

http://www.aspousa.org/index.php/peak-oil-reference/peak-oil-data/oil-discovery/

Another thing to understand is Jevons’s paradox: essentially that more efficiency actually brings more consumption elsewhere.

http://en.wikipedia.org/wiki/Jevons_paradox

Peak has already happened in many countries.

http://www.aspousa.org/index.php/peak-oil-reference/peak-oil-data/production-and-peak-dates-by-country/

As we go along with these discussions the Peak Oil theory(…..reality) is gaining more and more recognition and awareness. Why? Because it can’t be ignored. It’s self-evident.

[Joe]

It'd be nice if more economic articles and futurist stock picks..

Thanks

[Clay]

Interesting stuff, that's for sure. Although I'm not a physicist or scientist, I have read at least thirty books regarding new technologies, physics, nano-tech, future of computers...ECT. It seems almost impossible that we won't see a huge transformation in technologies in transportation, energy, and health care. Some scientists are talking about how nano-tech will allow us to create solar panels that are more cost effective and will allow us to build more solar powered plants at a small portion to the costs that are used today.

Sky cars are talked about.

Computers thousands of times smarter than Einstein.

Manipulation of DNA for life extension.

Even brain transplants.

AI.

I believe we are on the cusp of a great revolution in technology. What this will look like is hard to tell? I don't think anyone could accurately predict what the internet would look like back in 1985, and yet it has totally transformed the way we live and do things. Even something as simple as running a credit card through a website and having the purchased item delivered to your door two days later would've seemed impossible thirty years ago.
The question that I ponder on is will future technologies hurt or enhance tyranny. I guess that's a question that a lot of people are asking. Will we be looking at a Brave New World, or will we be sipping pina colada's on the beach while our robots clean and make our beds? Will solar, wind, and electric energy be so cheap that we'll only need to work ten hours a week, or will cartels control all of that and still charge us? It is not clear, at least in my knowledge, what exactly will happen, but it is exciting.
If we can hold tyranny at bay, it will be an exciting time. As someone who is a workaholic anyway, I would not be too disappointed if we all worked hard and built a whole new world. And if life expectancies are increased at the rate that many scientists think, I hope to ride that technology to a long, long life.

[jimmeh]

There's no question that human civilization dodged a bullet with this one. We are quite likely to discover in the next several years that global warming has disrupted the arctic much more than we suspected; and in my opinion it's not out of the question that we'll see a substantial release of methane clathrite that could send global temperatures soaring by as much as half a degree in addition to the warming all ready baked into the atmosphere.

But we've reached a turning point with respect to fossil fuels that will be as dramatic as the introduction transistor and equally, if not more far reaching. With solar costs now achieving parity with fossil fuels on a per Watt basis, across much of the US, including nearly the entire state of California, we've now definitively seen the high point in US carbon emissions, and will see them fall to a tiny fraction of that high-water mark reached in 2008. China has a political dynamic that makes coal generated electricity particularly attractive and cheap. But the beginning of the end is approaching for the fossil fuel industry there too. In a handful of years, electricity costs will be no more of a concern for average Americans than are the cents/CPU cycle expended to open their email.

Which is not to say that the world will suddenly become a panacea, for those whose psychology depends on some existential threat, you won't have settle for chem trails, HARP, or morgellen's disease, as events in the Middle East and the Ebola outbreak demonstrate. But we'll be able to say good riddance to one especially pathological industry, and take a degree of pleasure in the fact that on account of being poisoned by their own venom they missed out out the greatest business opportunity of their generation, the remaking of the world power grid, in the pursuit of their own warped ideology.

[idiocraties]

I recently reads Tony Seba's latest book about clean Disruption, and to be honest I think The Futurist probably nailed it a few years ahead of him.

http://www.amazon.com/Clean-Disruption-Energy-Transportation-Conventional/dp/0692210539/ref=la_B004MIX95O_1_1/189-9413437-3968068?s=books&ie=UTF8&qid=1415551395&sr=1-1

In any case, he predicts that by 2030, the combining disruptions of autonomous electric cars and decreasing solar costs will combine to make oil "obsolete" Now I dont agree oil will ever be obsolete, as it will always be needed for plastics and air transport, but what is shocking is that he maintains that this green transition will be complete by 2030, citing the rate of cellphone advancement as how rapid disruptions can be.

this video contains most of what he says in his book anyway, would be interesting to see what the minds here think of it. If he is right, and the worlds demand for oil drops off a cliff, there will be much weeping and gnashing of teeth in the petro states.

http://tonyseba.com/keynote-at-altcar-expo-100-electric-transportation-100-solar-by-2030/

[The Futurist]

idiocraties,

Thanks for recognizing the timeliness of my prediction.

Oil will never become obsolete, but will drift down to about $70 by the end of this decade and stay there. By then, people will no more monitor the price of oil than they monitor the price of natgas or coal (quite a few cars will be electric or plug-in hybrid as well).

[idiocraties]

The Futurist,

This blog has been one of the major influences on my life on how to view the world (kinda relates to your recent education article too, about how cheap a good education can be - in this case for it was free!).

Coming from a background in geology, your Petrotryanny article made me reconsider staying in that field. Low prices and the growth of non fossil energies will not make it a future friendly to geologists, not helped by the increased rate of oil geologists graduating from Universities in Europe. So I retrained in the green economy instead, and now life is good. I have your forward thinking to thank for that somewhat.

So, thanks, and keep up the insight. The world needs it.

[The Futurist]

idiocraties,

Wow - I had no idea. Did you comment under another handle before?

I guess I can't stop blogging after all, then :).

I believe that the primary purpose of one's life is to make a tangible and substantial improvement on at least 100 other lives (preferably many more than that, but 100 is the minimum). That ultimately is what counts in the end. If someone can't find the time to do that much over the course of their entire life, then they are a taker, not a giver..

WTI Oil will jostle around $80 for a couple of years now, but will eventually rest at $70. The next recession (~2017) will see a brief dip to $40 or so.

[idiocraties]

I never commented as any other handle, in any case i am far more a lurker than poster. This blog, as well as other red-pill tinged sites has changed my world view and surely shifted me politically rightwards. Ultimately they are all linked, red pillery (game, PUA etc), the rise of the distributed green economy, the rise of direct democratic movements in Europe and a new sense of masculine, personal responsibility in the West. I am not sure how they are linked exactly, but they strangely seem to fit together well and they are combining for a right firework show by 2020/2025

Looking forward to your monster article,I hope you post it on this blog. Dont forget, you're doing God's work with your noble truth.

[The Futurist]

idiocrates,

Thanks. While this 2011 article was the culmination of many thoughts, there were a couple of articles as far back as 2007 that addressed the same points (which you must have seen) :

http://www.singularity2050.com/2007/10/why-i-want-oil-.html

http://www.singularity2050.com/2008/03/rebuttal-to-a-f.html

All those 'peak oil' blogs have since shut down.

**Any** commodity will see its supply increase, or the supply of substitutes increase, via technological progress, if the price becomes too high. The same is currently happening for Gold, where drones that send electrical pulses into the ground can detect gold in a far more efficient way than traditional prospecting (enabling vast parts of Alaska and the Yukon to be examined much more efficiently).

In 15-20 years, asteroid mining will also create a major supply increase of all types of metals, both non-precious (iron and aluminum) and precious (gold and platinum).

[idiocraties]

Can we expect a half decade post on the misandry bubble?

[Zyndryl]

And...it is happening to Putin's Russia right now:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/15/russias-economy-is-doomed-its-that-simple/

Of course, the writer of that piece as well as the the folks running the Russian central bank both appear ot be clueless in how to properly manage the ruble supply in these circumstances (use unsterilized interventions like they did in the previous decade that killed the collapse of the ruble real quick).

[Zyndryl]

To read more on how Russia dealt with a collapsing ruble before (back in 2009):

http://www.forbes.com/sites/nathanlewis/2014/10/16/russias-currency-crisis-this-is-so-2008/

[Geoman]

Nice to look back and see how right The Futurist and the rest of us were in 2011.

Of course the cause was mostly only one of the many items The Futurist noted - once shale became a viable (at $70+ per barrel) resource, our supply of avalible hydrocarbons has effectively become very, very large. Most people don't realize it, but we effectively have hundreds of years of reserves. And think about this - shale deposits exist all over the world, but right now only America is frakking heavily. What can be done here can be replicated elsewhere. Everywhere. The only limits are social and leagl, not technological.

[The Futurist]

Geoman,

There are some technological hurdles, since each method of fracking has to be custom to the particular geology of the formation. This is why the rest of the world is 5-15 years behind America in fracking.

But Canada alone surely has at least as much as the US.

And even more than oil, US fracking has destroyed the price of natural gas by over 75%. This is a huge economic stimulus.

[stephen murray]

And , right as predicted, Saudi begins massive reforms, including women drivers and cinemas.

http://www.telegraph.co.uk/news/2017/12/11/saudi-arabia-allow-cinemas-kingdom-35-year-ban/