patrick.net

"Market forces will balance out oil consumption. As supply diminishes prices will rise and creat new equilibriums. Production will increase because it is economical to use more expensive extraction methods." --Cynicalkh

What you describe is Natural Resource Economics 101, straight out of the textbook. This may indeed come to pass, as it has with oil in past energy price spikes--when recession followed, a supply glut ensued as demand was destroyed due to recession. This time, one of the main differences is China and India coming on-line to dramatically increase demand, but of course they won't be spared from an energy-induced global recession should this come to pass.

Finaly, although it may indeed become more "economical" to use more expensive extraction mehods (i.e. tar sands, deep water drilling) this does not decrease the COST to the end user. This makes energy consumption more expensive to all and could possibly result in a lower-energy future if alternatives cannot come on-line fast enough to fill the low-cost void created by the end of cheap oil.

The Toronto lurker is back! and I get to be first to post!

I started reading Kunstler last week and his stance is not surprising given his views on city planning.

We think that Peak Oil is real, and either is happening now or will in the near future (yep, could be 2007 or 2008 too) Hence our choice of a centrally-located home on the subway line that we've upgraded with high efficiency furnace and soon some extra insulation in the attic. With a new job in the downtown core of Toronto and a monthly public transit pass for me, we've started a new game in our household: how many days can we go without filling the gas tank? Last fill-up was last night and it had been 24 days since the prior fill-up. Folks in the suburbs don't really get to join me in this game since they'd have to hike 2 km to the nearest convenience store (do such things exist in the 'burbs?). (Come on, bloggers, challenge my record in the coming threads! :-) )

Too bad I can't do much about the rise in the price of other stuff (food, heavily produced with oil inputs like fertilizers and mechanization; overall base heating costs, etc.) though we'll be putting in a garden soon.

We think that the 905-area code suburban ring of real estate around Toronto will take a bigger hit than the city core when real estate corrects. That said, I did spend 3 weeks in Washington D.C. and the surrounding Virginia and Maryland suburbs (Leesburg, Arlington counties, etc.) and was astounded at how the buildings were so loosely packed. They stand a real chance of emptying out in a prolonged energy crisis coupled with a real estate bear market. Makes a Toronto suburb look like a dense city. You guys are in a pickle where city planning, gasoline use and commute times are concerned.

I'm no expert on James Kunstler, but I find his "Clusterfuck Nation" posts too gloom-and-doomish for my tastes. Though I do agree with his basic assessment of peak oil (we're near it) and American and global current oil/gas consumption trends (unsustainable), he pretty much pooh-poohs the idea that alternatives can be developed in time or that the market can adapt to post-peak oil. He also assumes that pretty much ALL of the post-peak oil adjustment will come in the form of less consumption and a tremendous drop in the Western standard of living.

These assumptions may or may not turn out to be true (who can predict decades from now with perfect accuracy?). Even so, he paints with overly broad strokes and basically declares "not gonna happen" without much data to back it up. What's also missing from his pessimistic tomes is the acknowledgment that as oil/gas prices continue to rise, alternative forms of energy become viable --politically as well as economically (tar sands, nuclear, wave, wind, solar. etc.).

I believe that the west is due for a rude awakening --if not from peak oil, then certainly global warming. Even so, I am not so presumptuous as to bet against human ingenuity or adaptability. There are any number of ways that the End of Oil may play out and Kunstler's is only one --and one of the most pessimistic.

"You guys are in a pickle where city planning, gasoline use and commute times are concerned." --TOLurker

This I agree with. I actually think that perhaps the most important point that Kunstler makes is "why has America made so little investment in rail transit, both for public transportation and goods transport?" This is a very good question because it is obvious that our current highway-based infrastructure is relatively inefficient. Well, worst case scenario as I see it is we can get construction crews out there laying down rail on existing highway lanes in a New Deal like program. If a depression got bad, that would give us jobs to do to put food on the table.

"What’s also missing from his pessimistic tomes is the acknowledgment that as oil/gas prices continue to rise, alternative forms of energy become viable –politically as well as economically (tar sands, nuclear, wave, wind, solar. etc.)." -- HARM

Totally agree. And don't forget all of the efficiency gains we can make coupled with conservation. I also think he is way too much of a "Doomer," especially when he somehow connects the Peak Oil phenomenon to total financial market meltdown. He may be correct that energy shortages can/will dramatically slow economic growth AS WE KNOW IT TODAY, but he does not take into account the kind of economic growth that comes from increased efficiency and productivity gains.

Market forces will balance out oil consumption. As supply diminishes prices will rise and creat new equilibriums. Production will increase because it is economical to use more expensive extraction methods.

However governments will try to socialize the true cost in the name of a "price relief". This way, we will still have a stable disequilibrium.

Well, worst case scenario as I see it is we can get construction crews out there laying down rail on existing highway lanes in a New Deal like program. If a depression got bad, that would give us jobs to do to put food on the table.

Perhaps that is how we get a high speed rail in California.

If energy prices do go up steeply, it will make economic sense to relocate closer to work and for people with unstable or mobile jobs, they will need be able to pack up and move quickly. Will we become almost nomadic? Will people begin to pare down their material goods so make moving easier. If so, what happens to our domestic consumer economy?

This could very well be one of those winning post-peak "adaptation" strategies. Personally, I've long been a big advocate of living/travelling light. I'm the polar opposite of a "pack rat" personality, and often get into arguments with my wife about clearing out crap we never use. Several years ago I finally got her to agree to a "one in, one out" rule --whenever we buy something new, something else must go to make room. Over the years, I can't tell you how many items we've donated or sold. I have yet to regret doing so and after many years of this lifestyle, my wife has finally come around to agreeing with me.

It never ceases to amaze me how my wife and I can share a 650 sft apartment (+ another 200 sft storage/garage) and manage, while other people "need" a 3000 sft McMansion to store all the accumulated crap they never use --and then they still run out of room.

RE James Howard Kunstler

My first reaction to this piece is that I'm wondering if it is a derivative work from the series the FT ran some time ago regarding the Oil-Shock that never developed relating it to the credit-equity driven consumer purchasing demand bubble. He seems to have taken many of those arguments and wrapped them in doomier prose with little data or model-driven reasoning to back up the assertions of disaster.

I reject the "Peak Oil" arguments, for reasons already stated by others. Predicting when peak oil occurs is hazardous, and everyone who's been doing so since the 1960s has been wrong. Eventually, someone will be right, just like the guy in Times Square holding the 'End of the World' sign will be right...eventually.

I think the largest theoretical error is assuming that a transition away from fossil-fuel driven energy economy automatically indicates a decline in the standard of living (for the West). It might, it might not. Kunstler seems to assume that current productivity gains will become obsolete, and that current capital stock will be ineffective or useless in the "new world". I'm not so sure he can justify such a extraordinary claim. For example, in a electricity-as-primary fuel economy, powered primarily by nuclear sources, most of the current capital and labor productivity would be preserved; in fact it might be even more efficient, resulting in an even higher standard of living.

while other people “need” a 3000 sft McMansion to store all the accumulated crap they never use –and then they still run out of room.

All that crap breeds, growing as a geometric progression. My wife and I started in a 1100 sqft home, and before selling our last home we were up to a ~3000sqft (non McMansion, I might add, but still too big). We had so much crap we had no idea from where it came. I'm still convinced it was conceived without my knowledge.

That's the best thing about taking some time out of homeowning to rent a while. You get to unload about 1900sqft of junk. (In fairness, I ran a startup out of my home for 2 years which caused at least 500sqft of leftover "office equipment", which no one wanted once we moved the operation to an office).

@Randy H,

I agree with your points completely (see my 11:40 post), except this one:

"Predicting when peak oil occurs is hazardous, and everyone who’s been doing so since the 1960s has been wrong. Eventually, someone will be right, just like the guy in Times Square holding the ‘End of the World’ sign will be right…eventually."

Hubbert's original (1950s) predictions put peak oil around 2000, and revised estimates (taking into account reduced demand resulting from the 1970's oil shocks), place it somewhere between 2005-2010. This sounds reasonable, given that no new large oilfields have been discovered in over 20 years, and no new super-giant fields in 40. Let's not forget that hubbert was dead-on about America's own peak-oil bell curve. It's not too much of a stretch to think we're near the global peak, if not already past it.

I tend to agree that we are near, at or past peak oil myself. I just can't prove it and I've yet to be convinced others have sufficiently done so. Assuming that peak production is between 1990-2010, I have a question:

Is there still, today, a majority opposition to replacement of sources with nuclear technologies? If so, then are we near a shift in sentiment and/or what will it take to cause a sea change in voter sentiment? Note: I'm biased because I am hyper pragmatic about the economic realities surrounding more exotic alternative energy development, so I think nuclear is the only existing technology set capable of replacing fossil sources in the near term.

Is there still, today, a majority opposition to replacement of sources with nuclear technologies? If so, then are we near a shift in sentiment and/or what will it take to cause a sea change in voter sentiment?

I do not think so. Sentiment will change when we are past the point of significant pain. Socializing the true costs of oil will delay but magnify the eventual pain.

I am also a pragmatic person but I am also realitic. We are still in a state of total complacency. Only pain and fear will change that.

"If so, then are we near a shift in sentiment and/or what will it take to cause a sea change in voter sentiment?" --Randy H

Yes we are near a shift in sentiment about nuclear. Keep in mind that another big opportunity is in so-called "clean coal" or "coal gasification" whereby you can remove sulphur and CO2 from coal prior to burning it, but of course this process is quite energy intensive itself.

Anyway, regarding nukes, a lot of Politicians are jumping on the bandwagon including Blair and Bush. Also, I have read articles that there is a lot of behind-the-scenes stuff going on right now with the nuclear industry lobby pushing the Politicians hard to subsidize nuke power because the energy industry is very aware of the sea change happenning with skyrocketing hydrocarbon costs. Do a web search on nuclear power, you'll find a lot of recent articles, and I mean in the mainstream media too, not just the underground "blogosphere" stuff.

Is there still, today, a majority opposition to replacement of sources with nuclear technologies? If so, then are we near a shift in sentiment and/or what will it take to cause a sea change in voter sentiment?

I have no idea how close we actually are to a sea change in sentiment reagrding nuclear power, but if there's one thing you can count on, it's Joe McDebtor's overwhelming desire to see his suburban consumption-focused lifestyle continue unabated. If he truly sees this threatened at some point, you can count on that "sea change" in favor of any party/politician who promises to keep the party going.

The pricing mechanism of the free market will force various changes on the USA and the world, probably gradually.

Changes will happen but they will never be gradual. This is because the oil industry is still highly regulated and manipulated.

The good news is that the USA has hundreds of years of coal to strip mine and turn into gasoline or electricity, so any prediction of no oil, or $20 a gallon gasoline are probably overstated a lot.

I hope we will not be deterred by a mine accident or two. People die every day.

"I don’t think we’ll see a push for that kind of mass transit until we have no other viable options." --SQT

I think we'll see the push as auto fuel becomes increasingly more expensive and traffic on our already strained highway infrastructure because increasingly worse.

"I wish I could take TOLurker up on the challenge to go longer than 24 days on a tank of gas, but we do live in one of those areas where everything is pretty spread out." --SQT

I hate to sound like a snob from "The City" but I really see Sacramento as a disgusting cancer of urban sprawl. San Francisco is such a huge contrast to Sacramento with how compact and densely built of a city it is, whenever I go up to Sacto I am just shocked at how spread out, sprawling, and gross it is. San Francisco has such an efficient, compact, high-density grid; apparently it is still the original grid layed out in 1850 or something like that. They don't make 'em like they used to is a truism regarding San Francisco, and this is one of the areas where I believe Kunstler has it right: we'll be going BACK to more compact and efficiently designed urban grids that can comfortably accomodate a higher population density.

The world does not have even close to enough uranium to switch over to mass nuclear power for the world.

This statement is false. Please cite data sources.

From the UIC Nuclear Issues Briefing, 9/2005:

Uranium is ubiquitous on the earth. It is a metal approximately as common as tin or zinc, and it is a constituent of most rocks and even of the sea.

High grade ore, which is economically viable, (2% U), is concentrated typically at 20,000ppm. Its availability is far greater than commonly thought, or reported by (often biased) media interests. Moreso, discoveries of new Uranium concentrations are found every year, and increasing in frequency. If anything, we are in the early stages of the Uranium "bell curve".

"I guess that’s why I think mass transit would be really hard, at least in area’s like this. Because I don’t live in SF or a high density area, it seems like such an overwhelming problem." --SQT

Aha, now that I think about it from the perspective of the times I've been driving in my car up in Sacto and gagging at the sprawl, I see exactly what you're talking about.

Down here in SF we've already got BART and a very good bus network within SF to build on, not to mention CalTrain. The Bay Are has very good prospects to remain a strong economy even with a lot of the looming problems America faces in the future that we discuss on this Blog.

Kunstler has it right: we’ll be going BACK to more compact and efficiently designed urban grids that can comfortably accomodate a higher population density.

Unfortunately, the data don't bear this conclusion out:

Consumption in the US of energy is
33% Industrial
28% Transportation
21% Residential
18% Commercial

Early-industrial urban center living will only solve a portion of the 28% that is transportation. It will do *nothing* to solve Industrial or Commercial uses, and will only affect Residential uses by a factor. Not that I don't prefer Chicago to Sacramento, but the costs of dislocating a huge portion of the economy would be greater than the energy efficiency gained, even over the long-term.

Randy, that 28% is probably the most difficult part to go nuclear.

"but the costs of dislocating a huge portion of the economy would be greater than the energy efficiency gained, even over the long-term." --Randy H

How is that Randy? I know you are data-driven in your analyses (which I certainly agree with), but I don't see how the data backs up your above statement at all.

Default notices creeping up in Sac:

http://www.sacbee.com/content/homes/re_news/story/14158367p-14986377c.html

Desperate homedebtors seek divine intervention to sell overpriced home.

Coal gasification looks very promising and we have a vast quanitity of coal.

How is that Randy? I know you are data-driven in your analyses (which I certainly agree with), but I don’t see how the data backs up your above statement at all.

The infrastructure captial costs associated with relocating the largest portion of our society (suburban) to urban grids, expanding existing urban centers in super-urban centers, and building/expanding transit would itself be massive. Larger costs would come from disruption of the existing economic status quo. I'm not saying this won't happen, or that it shouldn't happen, but for it to happen these costs will need to be less than the costs of developing efficient long-range electricity transmission and mobile energy storage enabling next generation personal transportation (ala electric cars).

The infrastructure captial costs associated with relocating the largest portion of our society (suburban) to urban grids, expanding existing urban centers in super-urban centers, and building/expanding transit would itself be massive.

My vision is to build new mega-cities from scratch. If we have 100-story apartment buildings that can house 50 families on each floor (i.e. 5000 families per building), we do not need too many to accommodate a large city (200 can house 3-4M people). Residents will be able to take elevators directly down to subway stations. Surface traffic will be limited to service and emergency only.

This is OT, but does anyone out there have a good link for California Mello-Roos CFD maps (areas required to pay Mello-Roos taxes)?

Nuclear energy will, thank God, remain impractical because it only works now because it’s held up by cheap oil - what do you think powers all the trucks etc used to mine the fuel, transport it, etc.?

Nuclear energy will still be economical even if oil goes to $100. The energy output is much greater than the input required to mine/transport uranium. Do not forget than we can also have nuclear transport ships.

I dunno, I think there’s a lot of hidden/not-thought-about oil energy going into nuclear energy as it’s done now. kinda like how it’s not PC to think about how much oil goes into farming.

Perhaps, but a lot can be replaced by electricity, which can in turn be supplied by nuclear energy. For example, we can have hydrogen trucks/equipments mining and transporting uranium. Hydrogen can in turn be produced by nuclear/electricity.

I am not saying that not much oil goes to nuclear energy NOW. I am saying that it should not be too difficult to reduce oil-dependency in the nuclear energy.

Wind is also promising in many places. We just need to ignore "bird-lovers". :)

We should expect opposition whatever we do. Silencing/ignoring oppositions for the greater good will be the key in the future.

I personally don’t see that having any kind of energy crisis will affect most folks opinions on the risks associated with nuclear energy.

What risk? How many percent of population served by nuclear energy was ever killed in nuclear accidents? How many percent of population was ever killed in traffic accidents?

@Street Smarts,

Thanks for the flylady link --first time I've heard of it. Loved the Declutter page.

oh god infomercials on blogs how obnoxious.

@Richard Shmend, PhD,

As near as I could tell (in 5 minutes of browsing), the site was mostly free advice, but you may be right --maybe I haven't gotten to the "10 easy payments" part yet ;-).

RE: Nuclear cost effectiveness,

The arguments that the energy inputs override outputs is not supportable by the data. Even assuming that all inputs require oil (which isn't true), you are still talking about aggregate demand that comes no where close to even 1% of total energy demand. Agriculture is another story, but the energy input costs are still small in context.

The arguments about economic viability are more serious. Nuclear is weighted with regulations that make it more expensive than oil, gas or coal (but cheaper than solar, wind or exotic). I think many of the regulations are good, but you can't make the comparison between fossil and nuclear on these grounds because equivalent regulations are *not* applied to the fossil industry. I believe that if comparable safety regulations (implying comparable safety outcomes) were applied to coal (current generation), then coal would be some 3X as expensive per kW as nuclear. The sad fact is that the coal and crude lobbies are just more powerful and effective at keeping regs out of their industry, thus taxing nuclear and subsidizing fossil.

I have more faith in zero point energy.

You are assuming the Uranium resource curve is the same as the fossil resource curve. This is a false assumption. Uranium concentration discoveries are (a) still increasing and (b) dissimilar to fossil reserves. There is a finite amount of Uranium on Earth, but the economic supply formulae are different, and more favorable than fossil reserves (Uranium supply has a longer tail).

not really, you can make hydrogen from any power source…

Bio-diesel + cheap, simple, durable, *mechanical* engines.

It's so crazy that it just might work.

That is all,
prat

Like oil, there’s been a lot of uranium, it’s even found in sea water. The other similarity is that like oil, only a portion is easy to get at. Peak Uranium is likely to come much sooner than Peak Oil relatively speaking but new discoveries may prolong that. Current sources of uranium are already being stressed and should the US, China and India along with others decide that nuclear is acceptable, then for all practical purposes, Peak Uranium will negate it as a realistic substitute for oil.

Datapoints please. Uranium can be extracted for under USD130 per kg, with over 4.4M metric tons of such concentrations currently in producing mines. The amount of actual Uranium extractable at this economy is more likely 2x-3x that amount due to the fact over half the world's productive mines have been closed over the past 30 years due to low Uranium prices on the world market. If reopened, and examined with current technology and technique, these mines would certainly be productive. Further, very little new prospecting has occurred in decades for new Uranium deposits. Quite bluntly, the Uranium supply arguments are void. If people have a political or ideological opposition to Nuclear power fine, but don't try to justify it with selective data. By the way, assuming a conversion to Nuclear electricity generation over a period of 100 years achieving 50% of global electricity production (this is overly conservative because it is too aggresive), known Uranium reserves would fuel 350-500 years of production. This is with current technology (which is really 25+ years old), excluding the more efficient French breeder designs which would stretch supply further.

By the way, assuming a conversion to Nuclear electricity generation over a period of 100 years achieving 50% of global electricity production (this is overly conservative because it is too aggresive), known Uranium reserves would fuel 350-500 years of production.

Good. I bet we will have zero point energy long before Peak Uranium in 500 years. :)

One other point on the "50 years left" of Uranium argument. This is most likely a carefully selected snip from the Wiki on Nuclear power. The entire section reads:

At the present rate of use, there are 50 years left of low-cost known uranium reserves - however, given that the cost of fuel is a minor cost factor for fission power, more expensive lower-grade sources of uranium could be used in the future [16] [17]. Other ideas include extraction from seawater and granite[...]

Current light water reactors make relatively inefficient use of nuclear fuel, leading to energy waste. More efficient reactor designs or nuclear reprocessing [22] would reduce the amount of waste material generated and allow better use of the available resources.