Peak Oil, part 3: discussing the solutions

Summary of Part I and Part II:

1. Peak Oil is coming, very likely sometime in the next 20 years. It could happen today. This will force a major transition in the global economy; as a “crash program” for adaptation will take roughly two decades. We need to start now.
2. We need much more data and much better analysis in order to develop national policies to prepare for Peak Oil.

Note: these articles do not forecast oil prices or the date of peak oil.


Part I generated a large volume of emails, more than anything else I have written. This chapter continues with some of the most frequent comments, along with my replies.

3. We’ll run crash programs for adaptation just as we mobilized for WWII.

WWII is not a valid model for crash programs preparing America to face Peak Oil. We rapidly and easily mobilized for WWII because WWII followed the Great Depression. Very roughly, a quarter of our resources – people and manufacturing capacity – were idle. The adaptation to WWII stimulated the US economy (esp. as the bombs produced landed elsewhere).

The crash programs to prepare for Peak Oil will operate with a fully functioning economy. Allocating resources means diverting them from something else. Probably consumption – consumer spending and government services for people.

4. There is no need to collect more data and do research. The solution is simple!

It is disturbing that I received so many emails saying this. Unfortunately, preparing for Peak Oil will be extraordinarily complex. It is screwing up that will be simple.

We have many ways to prepare for peak oil: tap new oil fields (ANWR, offshore US), Alaskan natural gas, kerogen (AKA “oil shale”), converting coal to liquid fuel (CTL), biofuels (e.g., corn to ethanol), electric vehicles (e.g., hybrids or pure battery-powered cars).

Some options involve unknowns. Does converting corn to ethanol generate more energy than it uses? Can kerogen and cellulosic ethanol become commercially viable sources, and how soon? Do we have sufficient coal reserves to support a massive CTL program. How much of our coal is bituminous, how much is the BTU equivalent of kitty litter? Spending money before learning the answers, as we have done with corn to ethanol, burns time and money and do not have.

All of our options are expensive, in many dimensions

Government: Many require government involvement: funding for research, tax credits or loans for development, regulation for safety and environmental impacts. Hopefully we will avoid Canada’s mistakes exploiting its bitumen (“oil sands”), which are making sections of Alberta look like the surface of the moon.

Time: All operate over different time scales. Some are fast. Some involve new technology, which almost always requires decades to move from the laboratory to widespread commercial use (e.g., nuclear power, microwave ovens). Some use existing engineering, but require long lead times to build complex chains of resources. Crash programs can easily crash if not well planned.

  1. A rapid shift of the US vehicle fleet to hybrids requires building the ability to service them in local repair shops (training technicians, manufacturing and distributing the equipment), and recycling their carcasses (we’ll need the rare metals).
  2. Building nuclear power plants requires creating the schools to train the engineers (many shut down during the past 25 years), building recycling and storage facilities for the waste products, and a massive expansion of uranium mines – or even building breeder reactors.

Choices: The adaptation to peak oil will require public policy choices, difficult trade-offs. We do it with some combination of the following: cheaply, with high quality, rapidly, safely, low risk, low environmental impacts, and high degree of autarky (“energy independence”). We cannot have them all. With poor planning we could easily have none of them.

Look at the long series of failures that was US energy policy in the 1970’s. Rationing. Price controls. Massive CTL projects, all eventually abandoned. Decades of support for fusion, with little to show for it (a classic example of support for a premature technology, a larger scale repeat of the Pentagon’s attempt to build an atomic powered airplane).

Balancing all these factors on programs of national scale will require massive modeling and planning. The software engineering industry has lessons for us about managing large, complex projects involving new technology. Their failure rate is horrifying. Many are completed and thrown out. With some forethought the multi-decade adaptation to peak oil can avoid such a fate.

Unfortunately, now we are running the “no research, no planning, hope for the best” strategy. It might work, as some say that God helps children and fools.

Please share your comments by posting below (brief and relevant, please), or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

For more information about Peak Oil

  1. When will global oil production peak? Here is the answer! (1 November 2008)
  2. The most dangerous form of Peak Oil  (8 April 2008)
  3. The world changed last week, with no headlines to mark the news   (25 April 2008)
  4. Peak Oil Doomsters debunked, end of civilization called off  (8 May 2008)

Here is an archive of my articles about Peak Oil.

Here are other resources about Peak Oil.

13 thoughts on “Peak Oil, part 3: discussing the solutions”

  1. Another factor is that adaption strategies are hard, simply because its not like electricity which gets a fairly balanced set of inputs, but transportion, which is almost entirely liquid fuels.

    Simply building 50 nuclear power plants does not solve the problem!

    To give a gut feel for the magnitude of the problem, see the graphs here

    And an attempt to play out scenarios that was focused on hydrogen powered cars, back when those were being hyped:

  2. fabiusmaximus2000

    The liquid fuels problem is, as you note, distinct from and more serious than our electrical generation needs. But the latter are not trivial. US electrical demand is rising, but we are not building sufficient plants. In fact, planned coal-fired plants are being cancelled due to climate change fears (e.g., Texas Utilities). The first new application for a nuke was recently filed, but I’ll bet that a Democratic win in 2008 will cancel the anticipated “nuke renaissance.”

    Also, thanks for the links! This supports something that I should have stated, that cannot be too often emphasized: we have great analytical resources in the Dept of Energy, esp in the National Energy Technology Laboratory and the National Renewable Energy Laboratory. They are just underfunded, underappreciated, and too often ignored.

  3. Note that, while I think “Peak Oil” has become something of an ideology, it is obvious that sooner or later and quite possibly now we will be facing this problem.

    Note also that, regardless of Peak Oil, a casual survey of our Mideast policy suggests that our failure to develop a “Plan B” regarding energy resources is insane.

    Nevertheless, this writing has been on the wall since the mid-1970’s yet has been ignored – which suggests that it will continue to be ignored.

    Therefore, it is necessary to consider not only what “we” can do in terms of national or other large scale policy but also what each and every single one of us can do alone or on a small scale. We must presume that the US public will continue to seek “fun, fun, fun, fun ’til Daddy takes the T-bird away” and yet we will be able to solve the problem anyway.

    This is no small task. I have no suggestions. But I believe I have described the problem as it actually exists.

  4. fabiusmaximus2000

    dcinder, nicely stated. I agree absolutely with all your points. There is one more I would to add to your list: lobby our elected officials to initiate research and planning for Peak Oil. No matter if it happens today or 2035, we must start preparing today. Research is the first step, as our current ignorance suggests than anything we do today has a 50-50 chance of having no positive result — or even, like many of our programs during the 1970’s — making things worse. That is the core message of this series.

  5. Electricity in the southern areas also has the question of solar power, as an known-unknown.

    Solar power is not economical right now, due to the cost of the raw silicon (it requires near-chip-grade silicon).

    But this is a technology that IF there is a change in the raw material cost, either a bulk-grade silicon process or a cheaper way of making near-chip-grade silicon (and it doesn’t take much, solar is currently 2-3x out on cost over a reasonable time horizon IIRC, and there are a lot of people working on this problem. I can probably confirm the numbers pretty quickly if you would find it useful, I have a friend who’s a commercial installer), solar power is on the “chip manufacturing” adoption rate, because it is chip-manufacturing technology.

    One thing the chip fab people know how to do is ramp up an exponential, and ramp down costs like nobody’s business.

    So in modeling the future on electricity, there is a real “known unknown”: when such a breakthough would happen. But if/when it happens, adoption will likely to be very quick (5 year time horizon), even if fossil fuel peaking is a decade+ out.

    Another interesting observation is that some companies are positioned to profit from a transition, but they are few and far between.

    EG, of the car companies, only Honda is really positioned to take advantage of rapidly rising gasoline prices, as their manufacturing facilities are so flexible the same line that produces 12 MPG pickup trucks also produces 35 MPG Civics and could easily produce 45 MPG civic hybrids if there was demand and available NiMH batteries. (Toyota has some flexibilty, but not quite as flexible as Honda. GM is screwed.)

    (Note, I am biased in any analysis of Honda, as I am a (trivially minor but still interested) stockholder)

  6. fabiusmaximus2000

    Agree about solar; great potential as costs come down. I think you’ll find of interest Hirsch’s article about renewable energy sources. It is in the blognote I just posted here.

  7. The experiences since 1970 regarding energy preparedness will make sense to those who have studied 2, 3, and 4GW. From the 1973 crisis until 1980 there were extensive government plans, projects, policies, etc. The net energy use improvement was a rather glacial 1% per year. In 1980 the policy changed. The plans, projects, etc. were all cut, basic research and education remained funded, and the public was told “You will freeze in the dark unless you personally take action. The government will not save you.” This caused immense outcry, but the effect over the next decade was quite dramatic. Individual decision makers given the motivation (“freeze in the dark” is unappealing) and information (from research) found cost effective individual solutions. There were hundreds of large and small projects with ROIs of 50-100% waiting for people to get started. The improvement rate lept to over 5% per year despite the smaller government spending.

    In the present situation the key is to continue the research, try to get education that is unbiased, and emphasize ROI considerations. One example from yesterday’s newspaper is a comparison of five “green” automobiles. Rather than force the solution of “buy a hybrid”, it laid out the characteristics (performance, storage, passenger capacity, fuel economy, purchase cost, …) so the a person could decide which fit their individual need. It is quite reasonable to expect some people will go for a Prius (mid-size, 45mpg, etc) and others for a Honda Fit (small, 40 mpg, costs $8K less). This can be left to the individual decision makers. Picking the best individual ROIs will get the most improvement for the available investment, although this does mean abandoning the 2GW practice of central planning in favor of the more chaotic individual decision makers.

    The hardest step at the moment is eliminating the bias in education. Increasingly, education on this topic has focussed on presenting evidence to prove a conclusion or support a policy. Other evidence and information is actively suppressed. This competes with education sources that are interested in informing individual decision makers.

  8. This is a great discussion and there are many good minds applying themselves to it. However it seems to have as its basis that humans and Americans specifically will behave far better than any other primates in a scarcity culture in the history of the planet.

    If one assumes as this discussion seems to do that ‘we’ will pay debts, pay market prices, maintain our democracy, respect others’ sovereignty and continue so high-mindedly regardless of anything, some problems remain. Not enough water. Not enough arable land. Too many people. And beyond its role in power generation, there is the role of oil in food production… fertilizer, transportation. If aluminum is frozen electricity, that California lettuce on your salad at today’s lunch is frozen oil.

    The vocabulary and concepts of the current culture are inadequate for dealing with this type of problem on this type of scale. 45% of the American populace does not vote, does not participate in democracy at all. 25% are locked into a medieval, conservative ideology and vote that way no matter what. Another 25% are locked into an arbitrary, random, ‘modern’ liberal view and vote that way no matter what. The remaining 5% are tugged to and fro by greed, fear, and appeals to idealism, all short-lived, and decide our elections. Frankly, these dogs won’t hunt. In this scenario, we and the rest of the world as we know it, go down the tubes, albeit peacefully.

    However, there ain’t nohow no way been no primate that went peacefully into scarcity and didn’t try to do something about it, namely war. Just last night on the Discovery Channel, as part of the aptly named Planet Earth series, some chimps who didn’t have enough figs raided a nearby group of their fellows and cannibalized a young male chimp who died in the scuffle. I imagine that in that group of chimpanzees, 45% were apathetic about the war, 25% opposed it, 25% were strongly in favor, and the 5% who were swayed by the appropriate grunts from the dominant male were the deciding factor.

    It says here that we are already deep into the Cheney Plan for extending American dominance. It was no accident that looking at terrorism issues was postponed for a confidential and still secret energy plan, and that in the immediate aftermath we invaded Iraq. You can bet your sweet whatever that people in the CIA and the Administration have been running the numbers. They know about when it is going to run out, and they know how our GNP will go down, unemployment go up and other dire numbers, and they have dates next to them. That’s what all the permanent bases are about… it’s prepping for later, when the inevitable is more politically palatable. Chaos in Iraq meaning little oil gets pumped and no exploration gets done? More for later, for us.

    Reality is, we are staged for the big move when the time is right… to seize those precious resources and secure our line of supply at any price in terms of war, including nuclear. The alternative is literally freezing in the dark, and worst for Americans, being unable to drive while doing so!

    There are a some magic numbers… with apologies to The Magic Christian for the core concept… there is a cost per gallon of gas, a cost for a head of lettuce, an unemployment rate, a per capita income level… at which point, whatever that number is, 75% of the American populace will be in favor of a draft, and any number of wars with any types of weapons, and generally whatever it takes to stay on top and have relative plenty rather than high-minded scarcity. Ask yourself, whoever you are, what your magic numbers are for just occupying however much territory we need in the Mideast to feed the beast. $5 for gas, $10, $15? Fine, that doesn’t do you, you’ll walk or drive electric. How about unemployment… 10%… 15%… 20%? Gotcha.

    And you can bet that the next President (and the one after that, and the one after that as needed), when inaugurated, or shortly before, is going to be sat down and shown the numbers, and offered a choice… continue the policy, or be the one who high-mindedly lets us sink into poverty and scarcity by paying debts and market prices and respecting other people’s sovereignty. If the latter choice is made, and it says here it won’t be, that will be the first and only time in planetary history that a dominant primate chose scarcity over beating the crap out of the neighbors and taking their stuff. Risking, by the way, revolution, a military coup, etc. Is THAT probable?

  9. Gpanfile, smash and grab its called. Expensive and, going by Iraq, almost certainly a failure. Be tough to beat the Canadians.

    The alternative is cheaper. Take Japan, the highest level of GDP per energy used. After the 70’s oil shocks they really moved to improve their energy efficiency. Saved them squillions in oil imports over the years.

    Energy efficiency simply makes good economic sense. How hard would it be for the US to get to, say, the levels that most European countries are currently at?

    The US is well placed to benefit greatly (and reduce its CO2 production) quite quickly, as it is currently so energy inefficient and fossil fuel dependent. So there is a lot of low hanging fruit out there.

    Lots of this is quite low tech, cheap and very simple. E.G Better building standards and upgrade existing ones, get long and medium distance goods transport onto trains, more efficient electrical, gas and oil using appliances. Good recycling systems (amazing how much power just recycling aluminium saves). Etc, etc.

    You could improve efficiency in the US by 10%-20% in 10 (or less) years quite easily. Hitting Japan’s level would maybe take another 10 years. Add in (say) increases in solar (see below), wind, nuclear, etc, power and 30% in lower per capita fossil fuel usage in 20 years is quite feasible and probably economically beneficial as well (at least neutral). Add in, heavier taxes on cars and fuel and a major expansion of public transport (again economcially neutral) and you can probably throw in another 5%-10%.

    All this reduces CO2 production as well, so its a win-win situation. Join Koyoto 2 and solve the US trade deficit by the carbon credits it will receive ;)

    Re solar power, the cheapest and most effective at the moment is solar thermal. Solar hot water and space heating (back to building standards again), solar thermal for electricity generation, etc, etc. All basic tech. The US has large areas that can be used for solar thermal electricity generation and a grid to supply to other areas. Yes, no power at night, but the majority of power is used during the day anyway, use your nuke plants for baseload and night power. 10%-15% there, add 10% for wind (about the max a grid can handle at the moment, though this may change in the future), another 10% for additional nuclear plants (realistically about the best achievable over the next 20 years) and soon you’re talking about some real money.

    Hmm, maybe a 30% per capita reduction (from both efficiency gains and alternative electricity generation) is a bit conservative, 40% looks pretty achievable to me in 20 years.

    It’s not an economic issue, as you are just moving money from one area to another (improves the trade deficit though), nor a technological issue, most of that is off the shelf. Not even a standard of living issue, that stays the same or even improves. Just a matter of political will.

    Paradoxically its the currently efficient and high alternative energy generating countries that face the greatest challenges in the future.

    Oh and the US DOD uses as much oil as Switzerland. Got to be some scope for improvement there (hint: try not to build a tank that uses more fuel per passenger mile than a 737).

  10. fabiusmaximus2000

    Lots of negativeism here, which I do not share. Our species evolved with no handbook, survived ice ages and erruptions of super-volcanos. We climbed up from nothing and have learned a lot. Let’s give ourselves a break and look hopefully into the future.

  11. Agree Fabius.

    As I said, 30-40% fossil fuel replacement in 20 years in the US does not seem to be a big ask or particularly difficult. Change a few tax laws, put some car fuel consumption standards out, put a few dollars into rail and public transport, change building regulations and throw a few dollars into changing existing buildings, set targets and tax deductions for renewable energy, some more dollars into nuclear power, subsidise students at university studying physics and nuclear engineering (and wind/geothermal/tidal/etc research), sign Kyoto and get the carbon tax thing going, etc, etc. Tax energy inefficiency highly (e.g. cars, transport, etc) And then you are pretty much there, as the market will work out the best outcomes within the tax/grant framework.

    All for a fraction of the (approx including 2007/08 projected spending) $750 billion directly spent on Iraq and Afghanistan, let alone the $2 trillion in total (lifetime) costs.

    Plus the US is in the position to do it more easily than many other countries, because it is so energy inefficient! The currently efficient countries have a lot more work to do to go further. Though France, at 75% nuclear power, is sitting pretty at the moment.

  12. Pingback: A Look at Forecasts for Peak Oil – and the End of Civilization « Föhrenbergkreis Finanzwirtschaft

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