News When will the world reach peak fossil fuel production?

[mheslep]

I do not know what methodology the architects of your graph used, because it is more certainly not the case that solar electricity production is anywhere near the level of $0.20/kWh. Current US aggregate production cost is ~$0.32/kWh. This is a customer-cost rate for residential, roof-mounted solar panels in optimal conditions. http://www.solarbuzz.com/solarindices.htm

Recheck, e.g. solarbuzz. Of course the chart from that solar PV company is using a favourable bracket, which in the US for Industrial systems in sunny climates is now $0.192 per kWh for July 2010, so the chart from 1366 Tech is accurate for that case, especially since they draw the distinction between retail (residential) and wholesale electricity (two horizontal lines). The difference between residential and industrial PV is clearly due to greater installation and distribution costs, i.e. cost of installation scale, which is irrelevant to a figure on costs of PV cell production itself over time - the point of that chart.

Because it is a customer-cost rate, it does not include subsidy-added costs, which can be upwards of 50% of net. This implies an unsubsidized rate of ~$0.48/kWh; this is many times higher than the average electricity rates paid by most American utility customers (for reference, average rate was 12 cents in 2009 in the United States, not including demand charges).

Solarbuzz prices specifically exclude:

the impact of rebate programs that are available today in some European Countries, Japan, some States of the USA and through bi-lateral aid programs.

For commercial/industrial electricity generation, costs are lower - between 15 and 30 cents/kWh. Note that this is still significantly higher than the costs of conventional and other alternative fuels.

Yes for the moment. If trends continue as shown in the PV cost chart indicating solar PV is dropping 10% per year, then in 5-10 years that will no longer be true for some cases.

Further, solar has one critical disadvantage (shared by other renewables) - geography. Unlike conventional plant technologies (nuclear, gas, coal), in order to achieve these rates the solar plants must be built in "optimal conditions". In the US, this means parts of the contiguous southwest (Arizona and Southern California).

Well replace 'must be' with 'are more cost effective when'

Efficiencies drop dramatically as one moves east and/or north (for perspective, efficiency drops by about 50% when conditions go from clear to partly cloudy in Phoenix, AZ).

Capacity factor drops (% of daily sunlight available) in less than sunny conditions and thus cost per kWh rises in the E./N. Efficiency (% of incident light converted to electricity) of the PV panels actually improves in cooler climates.

The typical response from solar-advocates is that efficiency will improve with time. Clearly, this is true.

Agreed.

But it is also true that efficiency ratings for competing technologies will also improve with time.

Er, no. The efficiency of carnot cycle boiler plants are approaching their thermodynamic limits, have been for some time. More can and is being done in traditional heat cycle plants with rejected waste heat - combined cycle plants, and more efficient turbine blades. Though these gains are significant over the total scale of the grid, the efficiency gains themselves are small - unlike those seen in PV. More importantly, the cost of fuels for these plants (nuclear aside for the moment) is only going up, even if coal and gas reserves are plentiful at the moment.

2) We are foolish to subsidize solar technology development to the extent that such subsidies disfavor other, potentially more efficient alternatives. There is no reason the promise of "improved efficiency" should be uniquely solar.

Solar subsidies may or may not be over done, but not for the reasons you suggest here. PV efficiency is not limited in the way heat engine efficiencies are (http://upload.wikimedia.org/wikipedia/commons/c/c9/PVeff%28rev100414%29.png" ), nor are there limited fuel supply issues increasing costs as in the case of fossil fuels.

Any technology, lavishly subsidized by public funds as solar has been, will improve.

Fossil and nuclear have received much, much more government subsidies in total. We see figures of dollars per Watt produced showing renewables receiving more than fossil/nuclear, but I don't find that metric, by itself, useful.

Policy makers should be asking, is the gain in efficiency/dollar equal to or greater than the gains that could be had by spending the same amount on an alternative fuel source?
These points are addressed by markets. They are not addressed by policy makers. This is why solar subsidies (like all subsidies) are generally a bad thing, from an economic perspective.

I'm generally in agreement with you here on subsidies and I favor free markets when I can find one. Here, the competition (fossil/nuclear) has been given more subsidies by orders of magnitude in total than solar/wind/etc. Take away the $billions of subsidies given to fossil/nuclear including that which it received in the past, add back in the externalities cost (pollution), then let's talk.

 

[heusdens]

Don't forget about concentrated solar power, it is more cost effective then PV, and estimates are that it can be more cost effective as electricity produced by oil before 2020. Also, it has the additional capacity to be able to desalinate water from the excess heat, so it would be a good idea to place them in desert like regions with plenty of sunshine.

 

[heusdens]

Fossil and nuclear have received much, much more government subsidies in total. We see figures of dollars per Watt produced showing renewables receiving more than fossil/nuclear, but I don't find that metric, by itself, useful.
I'm generally in agreement with you here on subsidies and I favor free markets when I can find one. Here, the competition (fossil/nuclear) has been given more subsidies by orders of magnitude in total than solar/wind/etc. Take away the $billions of subsidies given to fossil/nuclear including that which it received in the past, add back in the externalities cost (pollution), then let's talk.

Right!

Those mentioning that renewables depend on subsidies never mention those facts, and they are being dishonest about it by claiming that fossil and nuclear would not cost subsidies.

These lies we see over and over again (currently in the Netherlands the right-wing liberal and anti-islamic parties, claim in a similar fashion that windenergy only costs subsidies, while the truth is that wind power is taxed more as subsidized).

They have an agenda to keep us on fossil as long as possible (maximizing the profits of the oild- and gas companies) and hand us over into the monopoly of nuclear power.
Nuclear power will become the favourite targets of terrorists. But windmills will never be a target for terrorists.

Nuclear power will require a very centralized form of energy distribution, and that power will be in the hand of a few. But a mixture of many renewables is much more democratic as every citizin and region can provide their own energy. No centralized form of control possible in that option.

 

[mheslep]

Don't forget about concentrated solar power, it is more cost effective then PV, and estimates are that it can be more cost effective as electricity produced by oil before 2020.

Yes concentrated solar thermal is more cost effective than PV at the moment, but concentrated solar thermal also has the drawback of generally coming in one size, large, and generally requiring lots of water.

 

[mheslep]

These lies we see over and over again (currently in the Netherlands the right-wing liberal and anti-islamic parties, claim in a similar fashion that windenergy only costs subsidies, while the truth is that wind power is taxed more as subsidized).

They have an agenda to keep us on fossil as long as possible (maximizing the profits of the oild- and gas companies) and hand us over into the monopoly of nuclear power.

Do you have a source showing where these Netherlands political parties make these claims and state this agenda?

 

[talk2glenn]

Epic fail Glenn .

You somehow seem to have cited a leading peak oiler. (Remember this? http://dieoff.org/page140.pdf)

Perhaps you did not read down to the conclusion (you certainly misread the graphs)...

Their data was sound, which is what I was citing. Their conclusions were not. Did you notice that paragraph was written in 1997? For the past 13 years, proved reserves have in fact gone up (most recently by 0.7% in 2009, according to BP).

This directly contradicts the claim that production demand was greater in '97 than new discoveries. Their predictions are directly contradicted by observed evidence, as has always been the case for "peak oil" theorists.

I am reminded of a famous bet entered into by an economist and, I believe, a geologist. The names of the principals escapes me. The economist told the geologist to pick a basket of 10 commodities of his choice; the economist cared not what was chosen. The price of that basket would then be tracked over a period of ten years. If the average price of that basket was greater at the end of the bet than at the time it was placed, the economist would lose to the geologist. If the reverse was true, the geologist would lose to the economist.

Can you guess what happened? At the end of the bet term, the real price of the basket was not only lower, but the price of every commodity selected was also lower. The geologist lost absolutely.

Solarbuzz prices specifically exclude:

True, but the impact of other subsidies, which represent a significantly larger share of the net subsidy than simple customer cash rebates at time of purchase, are already built into the quoted costs used by solarbuzz.

Including rebates, retail solar subsidies approach 60% in some jurisdictions.

Er, no. The efficiency of carnot cycle boiler plants are approaching their thermodynamic limits, have been for some time. More can and is being done in traditional heat cycle plants with rejected waste heat - combined cycle plants, and more efficient turbine blades. Though these gains are significant over the total scale of the grid, the efficiency gains themselves are small - unlike those seen in PV. More importantly, the cost of fuels for these plants (nuclear aside for the moment) is only going up, even if coal and gas reserves are plentiful at the moment.

I am not an engineer, so it is difficult for me to argue with this. My concern is simply this: it is understood in economics that capital investment produces increased output, regardless of industry. A capital investment in solar will produce increased productive output. Similarly, a capital investment in coal plants will produce increased productive output.

I cannot predict and in fact do not care which investment will produce greater production gains. However, if it is the case that an investment in solar power will produce a greater return that a like kind investment in a competing technology, the public subsidy should not be necesarry. The subsidy is necesarry only to the extent that, in the absence of the public funds, there would not be an equal or greater investment of private funds. If private investors will not invest in a given business model, it is because they rationally expect to achieve a greater return through some competing, alternative investment.

Ergo, I can simply assume that because the solar subsidies exist and are lavish, it is because solar is politically rather than economically favored.

Fossil and nuclear have received much, much more government subsidies in total. We see figures of dollars per Watt produced showing renewables receiving more than fossil/nuclear, but I don't find that metric, by itself, useful.

Are we talking over program life times? This may or may not be the case, but it is certainly the case that so-called conventional energy sources are today negatively subsidized. That is, the amount of any government assistance to these industries is less than (substantially less than) the cost of taxes, fees, fines, and royalties.

I am also skeptical of the claim that the startup of these industries required lavish government interventions. These industries are established and dominant because they are cheap and plentiful, a fact which attracted massive initial private investment. It simply was not necesarry that the government support the oil, gas, and coal industry; it has always been the most economically viable means of fixed and portable energy production.

They have an agenda to keep us on fossil as long as possible (maximizing the profits of the oild- and gas companies) and hand us over into the monopoly of nuclear power.
Nuclear power will become the favourite targets of terrorists. But windmills will never be a target for terrorists.

This is conspiratorial; who is "they", and why do they care where you get your electricity?

"You" as in the consumer might benefit from rooftop solar if you state happens to have good incentives

My point exactly. In the absence of such incentives, no rational person would install solar panels, today.

Huh? Last I checked a lot of the government money in solar is going into private industry and manufacturing. I guess I'm not understanding your point

My point is that, because government is motivated by political rather than economic ends (that is, government is not concerned with achieving the maximum possible return on its investment dollars), those subsidy dollars would achieve a greater effect if invested privately in more efficient, competing alternatives. Government investment produces jobs and production output, of course. The question you should be asking is, would an identical investment in another industry have produced more jobs than the government plan? There are always opportunity costs. Markets are assumed to produce gains of maximal possible efficiency, given current conditions. There are no such assumptions for governments.

 

[mheslep]

I am reminded of a famous bet entered into by an economist and, I believe, a geologist. The names of the principals escapes me. The economist told the geologist to pick a basket of 10 commodities of his choice; the economist cared not what was chosen. The price of that basket would then be tracked over a period of ten years. ...

You are referring to the http://en.wikipedia.org/wiki/Simon-Ehrlich_wager" wager. Both were academics; Simon was an economist-business professor, Erlich is a biologist-ecologist. Simon's point, validated in winning the wager, was not that the supply of a given commodity will simply keep increasing via exploration, but that as the price of a given commodity increases users find less expensive alternatives. Simon also bet on commodities that can never really be depleted in a conservation of mass sense - metals. That is, there is just as much Nickel on the planet today as there was 10,000 years ago. Energy is different. Once used and 'dispersed' (its entropy is said to increase) it can never be re-concentrated without using even more energy. However, for what it is worth I believe Simon's point still applies to energy sources over a longer time frame.

 

[heusdens]

Do you have a source showing where these Netherlands political parties make these claims and state this agenda?

These claims (esp. against wind-energy) were made over and over again in the past elections. View their websites (in dutch) www.vvd.nl[/url] and [url]www.pvv.nl[/URL]

That they have some agenda, is just my own political intuition.

The "geert wilders" anti-islamic party (called "PVV" party of freedom) is a racist, xenofobic and anti-islamic party (and very pro-israel), which derived as a fraction of the VVD. They offer "simple" solutions to complex issues, they want to barrier immigration (esp. from moslim countries), want to repell moslims from the Netherlands when they have comitted illegal acts, want to forbid islamic schools (we have freedom of religion in netherlands, meaning all religious groups can raise their own schools), they want ethnic registration, etc.

The VVD, PVV and CDA (christen democratic party) find each other on the issue of not-abolshing the tax reducation on interests for mortgages. Economically that isn't feasible cause this tax-reduction causes house prices to become staggering high as to be non-afforable for starting household, and which is the current cause of the stagnation of the housing market.

The housing market, with house prices raising more as five times in 30 years, is a giant bubble, which serves the capitalist economy for maximum creation of money (any debt creates new money, that comes into the economy, gets spend, etc.) but when house prices are too high, and buyers do no longer afford that high costs, this tears down the whole economy.

Almost all other parties want to get rid of this absurd tax-reduction policy for mortgages, so that house prices in the long run will be afforable again, but within a reasonable time frame.

Both the VVD and the PVV are arguing from the point of view that the whole climate debate makes no sense and esp. the PVV argues that "climate gate" proved that climate change caused (AGW) by humans is a "fraud".

They plea for nuclear energy, same as the VVD, and possible also the CDA, and plea against subsidies for renewables (based on false information, regarding both the subsidies issue as the climate argument - there was no scientific fraud).

As the neo-liberal agenda caused us the past and current and future crisis (the deregulation of many sectors, including the financial sectors), they have every reason to make people affraid of other threats (the Islam as the main enemy). It (this racist/xenofobic policy) serves a purpose of course, as this looks upon Muslims as being less then human-less civilized, which in turn serves the purpose of the illegal occupations of Muslims countries (Iraq, Afghanistan and the whole Israel/Palestinan issue).

[ As in previous periods for instance during the colonization of Indonesia, the Indo indigious people were treated as uncivilized and treated in a racist way, and also during the slavery periods, racism esp. had the form of anti-negro sentiments as being uncivilzed and less then human, so the racist policies always coincide with some other political/economic policy. ]

Undeniable the Iraq and Afghanistan occupation only serves the plundering of their crude resources, and no democratic or humanitarian goal. The military occupation has never pacified any of these countries, has not served their human interests and does not create a stable democracy, and also the military struggle can never be won. But as long as there is a war to fight the troops have an excuse to be there, so there isn't any intention to 'win' the war there, it just serves the political/economical goal. Iraq has been transformed into a pseudo-democracy, in which the real power is in the hand of the dominating oil-producing industries.

 

[talk2glenn]

You are referring to the http://en.wikipedia.org/wiki/Simon-Ehrlich_wager" wager. Both were academics; Simon was an economist-business professor, Erlich is a biologist-ecologist. Simon's point, validated in winning the wager, was not that the supply of a given commodity will simply keep increasing via exploration, but that as the price of a given commodity increases users find less expensive alternatives. Simon also bet on commodities that can never really be depleted in a conservation of mass sense - metals. That is, there is just as much Nickel on the planet today as there was 10,000 years ago. Energy is different. Once used and 'dispersed' (its entropy is said to increase) it can never be re-concentrated without using even more energy. However, for what it is worth I believe Simon's point still applies to energy sources over a longer time frame.

Precisely. I absolutely agree that there may be a point where competing alternatives are more cost-effective than additional conventional energy producing infrastructure. That point will be marked by an unsubsidized negative rate difference (the costs of bring an additional kWh of solar online will be less than the costs of bring an additional kWh of coal or LNG online).

When we reach that point, investors will stop building conventional plants and start building solar plants. This will have the effect of raising the cost solar energy, and lowering the cost of conventional energy, until the ratio is positive again, and investors switch back.

This means that practically, if not theoretically, our supply of any commodity which has demand market value is infinite. Price ratios, production profit incentives, and the existence of competing alternatives guarantees it to be so.

This is why economists don't lose sleep at night worry about how we will feed exponentially growing populations. The market will find a way, even if it means that the cost of food as a proportion of total household expenses must go up (an unlikely but possible outcome; more likely cost of food will go down, which is the observed outcome over time, historically).

 

[mheslep]

...Are we talking over program life times? This may or may not be the case, but it is certainly the case that so-called conventional energy sources are today negatively subsidized. That is, the amount of any government assistance to these industries is less than (substantially less than) the cost of taxes, fees, fines, and royalties.

I'll have to look at that some more, but I suspect that the same is true for solar and wind. I know for certain its true (on balance negative subsidy) in at least one well studied case of a large California 1980s-90s solar farm - the property taxes killed them.

I am also skeptical of the claim that the startup of these industries required lavish government interventions.

Probably not, but then I'm reasonably certain that when coal, gas, and oil started up they didn't have to compete with existing industries already subsidized by the government for decades.

These industries are established and dominant because they are cheap and plentiful, a fact which attracted massive initial private investment.

Agreed, but again I'm arguing for the same level playing field under which fossil energy got started. I argue that but for substantial government support of fossil/nuclear renewables such as solar would be also be more attractive.

It simply was not necessary that the government support the oil, gas, and coal industry; it has always been the most economically viable means of fixed and portable energy production.

Yes, fossil fuels have been a great energy source for the better part of a century but of course not 'always.' Before fossil oil there was http://timetoeatthedogs.files.wordpress.com/2008/09/whaling-ships.jpg" Before coal there was wood. And at least in the case of oil, government support by way of the US 7th fleet keeping the Gulf of Suez open was and is absolutely required.

 

[talk2glenn]

Before fossil oil there was http://timetoeatthedogs.files.wordpress.com/2008/09/whaling-ships.jpg" Before coal there was wood. And at least in the case of oil, government support by way of the US 7th fleet keeping the Gulf of Suez open was and is absolutely required.

I am glad you brought this up, because I was eager to enter the example of whales into the argument.

Whales were not saved from human-induced extinction by environmental laws, but rather by market laws. As the efficiently harvestable supply of whales was reduced (given the technology availabe to whale hunters at a fixed time), the cost of whale blubber as a fuel source increased. While this was happening, the efficiently harvestable supply of crude oil was increasing (given the technology available to speculators at the same, fixed time), which had the effect of lowering the cost of kerosense as a fuel source, until the ratio was negative (kerosene was cheaper than blubber).

Once negative, consumers stopped lighting their homes with blubber, and started lighting their homes with kerosene. In principal, it could one day become cheaper to light your homes with blubber again, but in practice this has not happened (oil continued to become cheaper, while our productive capacity to harvest whales for their blubber hasn't improved much).

But the de facto result was that whales were never driven to extinction by human economic activity, and never would have been. As the value of whale blubber goes up, consumers have an incentive to exploit competing alternatives, and producers have an incentive to produce more whale oil (increase the supply through exploration, farming, efficiency of blubber output per whale, or whatever).

I'll have to look at that some more, but I suspect that the same is true for solar and wind.

Solar and wind are often exempted from public startup costs (be it property tax exemptions, environmental regulation exemptions, etcetera) by local governments, and because they are usually not profitable in any near terms, they have an unintended but real income tax exemption.

Couple this with public grants and loan guarantees, and you have a positive net subsidy.

 

[mheslep]

Undeniable the Iraq and Afghanistan occupation only serves the plundering of their crude resources, and no democratic or humanitarian goal.

http://img.timeinc.net/time/daily/2010/1007/time_cover_0809.jpg" , and off topic.

 

[Office_Shredder]

Solar and wind are often exempted from public startup costs (be it property tax exemptions, environmental regulation exemptions, etcetera) by local governments, and because they are usually not profitable in any near terms, they have an unintended but real income tax exemption.

First, Walmart is often exempt from public property tax (how is a yearly payment a startup cost anyway?) along with many other big chains. Towns supporting businesses through eminent domain, tax breaks etc. in order to boost their economy is something that happens all the time, and to single out solar power for getting this benefit occasionally also is disingenuous.

You'll need to provide evidence of this common environmental regulation exemption.

Also, the income tax exemption because of lack of profit is just nonsense. Oil companies have the same opportunity (for example, Exxon-Mobil paid no income tax to the US in 2009)

 

[apeiron]

Their data was sound, which is what I was citing. Their conclusions were not. Did you notice that paragraph was written in 1997?

Yes, I noticed. Was there a reason for quoting old data rather than something current? And can you be specific about which data you are citing because it sounds like you are taking as valid exactly the trend lines the study criticises for faulty methodology.

For the past 13 years, proved reserves have in fact gone up (most recently by 0.7% in 2009, according to BP).

Now what you originally said was...

Global proved oil reserves have grown every year since they began collecting the data using current methodology at the turn of the century. This means that we are finding new, economically exploitable oil (at current price and technology levels) faster than we are drilling it up.

But you do know the difference between actually finding new reserves and simply reclassifying known unconventional reserves, right?

 

[mheslep]

Also, the income tax exemption because of lack of profit is just nonsense. Oil companies have the same opportunity (for example, Exxon-Mobil paid no income tax to the US in 2009)

No, ExxonMobil is not an example of a zero tax bill because of net losses. http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes_slide_3.html" , they just paid it elsewhere and not in the US. There may be plenty of good reasons to object to the tax laws that allow this, but these have nothing to do with this topic - tax liabilities or avoidance that may / may not apply only to renewable energy.

Edit: Forbes later updated their story to show Exxon did pay US taxes in 2009:

And for all you commenters outraged that Exxon isn't paying taxes in the U.S., don't worry, it is. Our article only focused on income taxes, but it's worth noting that the 10-k also records $7.7 billion in other taxes in the U.S. (like sales taxes)

 

[Office_Shredder]

No, that is not an example of a zero tax bill because of net losses. http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes_slide_3.html" , they just paid it elsewhere and not in the US. There may be plenty of good reasons to object to the tax laws that allow this, but these have nothing to do with this topic - tax liabilities or avoidance that may / may not apply only to renewable energy.

I think you missed my main point. talk said that the fact that income tax is only levied on net profit somehow counts as a subsidy for solar power. I was pointing out that the same income tax rules apply to everyone.

 

[mheslep]

I think you missed my main point. [...]. I was pointing out that the same income tax rules apply to everyone.

I got your larger point and agree; I also chose not to let the flawed example stand.

 

[apeiron]

http://img.timeinc.net/time/daily/2010/1007/time_cover_0809.jpg" , and off topic.

If the topic has become about the responses to peak fossil fuels, then US military action in oil-rich areas is of course on topic. Would you want your nation to pursue simply technological solutions and ignore the geopolitical ones?

Pretty girls with their noses cut-off make good propaganda to stir a populace that is tiring of the US's longest war and wondering how the extreme cost can be justified while health and education in the homeland has to suffer. But that is an emotional argument and so not a valid one here.

Peak oil modelling has to factor in all the likely responses to arriving at a production turning point. Even oil companies like Shell are coming out with useful scramble vs blueprint analyses.

http://www-static.shell.com/static/public/downloads/brochures/corporate_pkg/scenarios/shell_energy_scenarios_2050.pdf

You only have to research the current US programme of air base building in the Middle East to get clear evidence of scramble.

We can all play the emotive picture game.
http://www.google.co.nz/imgres?imgu...casualties+us+fire&um=1&hl=en&sa=G&tbs=isch:1

But my interest lies in what is really happening in the world.

 

[mheslep]

If the topic has become about the responses to peak fossil fuels, then US military action in oil-rich areas is of course on topic. Would you want your nation to pursue simply technological solutions and ignore the geopolitical ones?...

As you well know, Afghanistan is not an oil-rich area, so please don't detour the conversation there.

 

[heusdens]

http://img.timeinc.net/time/daily/2010/1007/time_cover_0809.jpg" , and off topic.

Well you must be fundamentalistic believer in the true goodness of imperialism for bringing democracy and human rights to countries (like Afghanistan and Iraq), but for sure they come with a lot of bombs. As experienced previously Vietnam and Korea...

I stay a skeptic of such claims, since there are of course strategic raw materials that are far more important then human rights (and undeniably, the US does not have a very good record on supporting "democratic" regimes, given their support for Pinochet/Chili, Suharto/Indonesia, and many other right-wing or out-right fascist regimes).

We know we have been lied about Iraq. There was no Al Qaida connection. There were no WMD's. There were only massive deceptions.

I think this issue is "on topic" afaic.

 

[heusdens]

As you well know, Afghanistan is not an oil-rich area, so please don't detour the conversation there.

Which does not mean that:
1) They do have large deposits of valuable raw materials (like for instance Lithium).
2) You don't seem to remember the Unilocal (or whatever the oil companie's name was, Kazar was working at that firm; the Chinese wanted to buy this oil company but it was blocked by the US) issue, in which Afghanistan is a strategic region, as it is the only way to get oil out of the Kaspian/Central asian region without having to pass through Iran or Russia.

 

[heusdens]

http://img.timeinc.net/time/daily/2010/1007/time_cover_0809.jpg" , and off topic.

btw. was that damage done by the Taliban (put in power by who again? If I am correct, the US placed them in power after the Soviets retreated) or a civilian casualty of the warfare (a misdropped bomb or something)?

Them fundamentalists and righ-wing Islamist where in the Soviet epoche called "freedom fighters", since they were good for fighting the "evil" commists. Now they are the enemy.
Like Saddam was before a friend of the USA, he could kill his own people and go into war with Iran, but then all of a sudden Saddam was the main enemy.

Afghan women were basically free in Afghanistan, during the Soviet occupation, and this could have lasted if not the US were supporting the right-wing fundamentalistic Islamic groups there.

So what side is the US on anyway?
So

 

[mheslep]

I think this issue is "on topic" afaic.

Which is "Peak fossil fuels by 2017"

 

[Office_Shredder]

If this wasn't off topic before, certainly a bad attempt at criticism of US international policy over the past half century is off topic.

 

[heusdens]

If this wasn't off topic before, certainly a bad attempt at criticism of US international policy over the past half century is off topic.

I will reserve that critique for another topic. Anyway, the peak oil issue is closely related to how one handles upcoming oil scarcities, and this includes the military actions also. But if you want to treat that as a "different topic" even though it is connected to that same issue, I'll be glad to do that.

 

[apeiron]

As you well know, Afghanistan is not an oil-rich area, so please don't detour the conversation there.

It is strategic to the domination of an oil rich area. And there is also of course the direct interest in controlling future routes for natural gas pipelines.

One of the points of Mohr's study is just how important gas will be. So from a nationalistic US viewpoint, people might think it foolish if the US did not have the foresight to secure access to gas for itself and its friends.

But you are right that the topic was about the evidence for a fast approaching peak in fossil fuel - even coal, which would be the surprise for many.

Responses to that peak would be both technological and geopolitical. And we could even use the US case as a guide to which response might dominate.

US oil production did peak. It did not build nuclear reactors or wind turbines to keep the game going. It did find ways to manage saudi arabia and the other largest overseas oil reservoirs.

In a market forces analysis, one pathway appears to have been favoured over the other.

OK, I have set that argument up in a clearly tenditious way. But if people want to debate the likely response to peak fossil fuels, then the relative costs of warfare and new technology ought to be compared.

Scramble vs blueprints as the Shell document alludes.

 

[talk2glenn]

First, Walmart is often exempt from public property tax (how is a yearly payment a startup cost anyway?) along with many other big chains. Towns supporting businesses through eminent domain, tax breaks etc. in order to boost their economy is something that happens all the time, and to single out solar power for getting this benefit occasionally also is disingenuous.

I do not deny that this is common industry practice beyond solar power, nor do I think this is a "bad thing" in and of itself. In a subsidy-free environment, temporary tax exemptions help level the playing field for business startups relative to entrenched competitors. It is a policy discretion - the local government has decided that the subsidy is a good political policy, for its own reasons. But it is a policy with economic consequences, and those economic consequences are typically, but not always or necesarrily, negative for broader economic efficiency (does Wal Mart choose to open a new store in the most economically or politically desirable location?).

The trouble is when these subsidies (which the temporary tax credits are, by definition) are in addition to an already large federal largesse. Usually local communities justify the temporary local exemption as an offset against other negative subsidy items (federal taxes, environmental regulations, licensing fees, etc). In the case of renewable energy companies, this argument fails on its face.

Also, the income tax exemption because of lack of profit is just nonsense. Oil companies have the same opportunity (for example, Exxon-Mobil paid no income tax to the US in 2009)

You have cherry picked your data. The effective tax rate for Exxon-Mobil was a staggering 47 percent of taxable revenues. Further, as has already been pointed out, there are many additional taxes on oil companies (land use taxes, royalty taxes, licenseing fees, etc) that are deducted from taxable revenue but still paid to the national government.

The oil and gas industries are probably the largest non-personal revenue sources for the worlds governments, on average.

But you do know the difference between actually finding new reserves and simply reclassifying known unconventional reserves, right?

And you understand the difference between classified proved and unproved reserves, right? Proved reserves are a regulated, fiscal classification for corporate reporting purposes, and are defined as "economically practical reserves given current price and technology levels".

Clearly, before a reserve is "proved" it starts it life as "unproved". The burden is on the reporting company to establish that it can profitably remove some sum of oil from some point in the ground given the resources it has, if it attracts some fixed investment pool from private investors. So yes, all proved oil reserves by definition started their lives in the arbitrary, nonstandard, and very loosely understood unproved pool. What does this prove?

talk said that the fact that income tax is only levied on net profit somehow counts as a subsidy for solar power. I was pointing out that the same income tax rules apply to everyone.

I never said otherwise. In fact, I specifically said the income tax exemption for lack of taxable income was an unintended subsidy of the solar industry (given that the solar industry is able to channel its operating revenues into non-taxable initiatives). That it is unintended changes not the fact that it is a de facto subsidy.

For comparison, First Solar paid $23 million dollars in tax on $195 million in income, for an effective rate of less than 12%, well below rates paid by Exxon and other oil/gas companies.

 

[brainstorm]

There is no "disaster". This is a political myth promoted by interested parties who regard petroleum and other carbon fuels as "bad", and so-called alternatves as "good". If there were any impending threat of a collapse in global oil supplies, the price of oil (which reflects both current supply/demand and anticipated future supply/demand, through the futures markets) would be significantly higher than it is currently. Even with recent inflation, which is a product of market distortion through public policy (war, energy subsidy, etcetera) and not fundamental changes in supply/demand (the increased demand from China is more than offset by increased production), refined oil remains extremely cheap, relatively speaking. This is because it is extremely plentiful.

It is so funny to me that I go from the overpopulation thread, where everyone is quite sure that global population growth is leading to inevitable disaster, to this thread where oil is only "theoretically" scarce and the idea of disaster is a fiction promoted by political proponents of alternative fuels. I don't doubt that oil reserves are still significant, although new predictions seem to emerge all the time, probably each with its own market interest attached to it. What I do doubt is that economic growth based on oil-dependency is sustainable insofar as the bigger the economy grows, the more oil-intensive it becomes. It's like trying to keep a furnace running where the house keeps getting bigger and requiring increasing amounts of fuel to maintain the desired temperature.

If conservation practices were resulting in a steady decrease in per-capita oil usage globally, I would say that no abrupt crisis is likely at any point in the future. As long as per-capita oil usage is remaining the same or going up, though, there has to come some point in the future where scarcity will become immanent and conservation driven by necessity is never as pleasant as voluntary measures. Of course, alternative fuel sources and transit may evolve to the point where energy demand can remain high but transition smoothly from oil to others as it becomes necessary to do so. However, that will only be smooth transition if those industries are established, tried and true when they're needed. Otherwise it will be like trying to change a flat tire when you're already late, except you have to invent the spare tire before you can change the flat.

To exercise this point, consider the recent cash for clunkers program. The program subsidized the purchase of cars in the short term, but everyone acknowledge that this would mean a later-term decline in car sales, once the subsidies were eliminated (in effect, people who would have otherwise purchased their vehicle in a month purchased it today; net sales were unaffected, just the rate of sales). Subsidy advocates argue that, due to unforeseen market conditions, it is worth moving future demand to present demand, for political reasons.

I think it would have been more conducive to alternative-transit cultural growth and development if cash4clunkers and the auto industry bailout had not occurred. Getting a bunch of new cars on the road has a trickle-down effect of causing people to see hope of getting a new car, or a relatively new used one sooner than later. As long as people are having to maintain their clunkers, there is a certain realism about the amount of economic energy (labor and parts) that goes into maintaining these big, heavy vehicles. Compared to a clunker, walking/biking or buses are less of a pain. Compared to a new car with perfect climate control, sound-proofing, and a state-of-the-art sound system and all the creature comforts, buses/walking/biking seem like a pain. So cash4clunkers was more than an economic move, it was a cultural stimulus package.

 

[apeiron]

And you understand the difference between classified proved and unproved reserves, right? Proved reserves are a regulated, fiscal classification for corporate reporting purposes, and are defined as "economically practical reserves given current price and technology levels".

You are evading the point - which was about conventional vs unconventional. And about discovery vs reclassified.

What you said was that new discoveries outstripped consumption, not reclassified unconventional outstripped consumption.

So yes, now you may want to correct yourself.

But you have done such an awful job providing citations to back up your claims that I would discount anything you might say on the subject.

 

[talk2glenn]

As long as per-capita oil usage is remaining the same or going up, though, there has to come some point in the future where scarcity will become immanent

I think the problem is in the presumption that this point is a "black day", and the notion that there will be some dramatic change in oil consumption/production patterns overnight, with catastrophic social consequences.

Markets do not work this way. Investors are very cognizant of changing demand trends, and this weighs heavily in their invesmtnet decisions (you don't buy a 10 year bond in a company without considering its ability to repay that debt 10 years from now, regardless of present financial circumstances).

As oil usage goes up, all other things being equal, this puts inflationary pressures on oil prices. This in turn encourages consumers and producers to do two very different things, both of which put negative price pressure on the commodity:

1) Consumers are incentivized to use less oil, either by purchasing cheaper alternatives or reducing overall energy demand.

2) Producers are incentivized to produce more oil, either by exploring for new fields or more efficiently exploiting existing operations.

If at some theoretical point in time, producers are no longer able to keep up with demand price pressures, consumers will pick up the slack, so to speak. In this manner, an long term equilibrium is maintained that practically insures no valuable, marketable commodity is "used up", and that changes in consumption patterns are gradual and relatively non-consequential (there was no social upheaval as economies transitioned from dependency on water-power to electric-power for industrial output, for example).

Humans have been cutting down trees since the beginning of time, yet there is no concern of "peak wood" or an imminent drying up of global wood supply. Granted, there are some very clear differences in the wood market relative to the petroleum products market (particularly in the time scales needed to replace lost supply), but the principal is the same. Market forces naturally insure that wood will not be exhausted, even if such an exhaustion is theoretically possible given a fixed supply of trees at any fixed point in time.

What you said was that new discoveries outstripped consumption, not reclassified unconventional outstripped consumption.

Re-read what I wrote and what was quoted. I said new economically exploitable discoveries outstripped consumption. Nobody knows how much oil is in unproven fields, beyond educated guesses, because the surveying process is very expensive and time consuming. There is no incentive for oil companies to bother figuring out how much oil is in actually in Utah shale, because they don't anticipate it being economically reachable today.

Since talk of "discoveries" that does not specifically exclude the unproved and intentionally include only changes in reported, proved reserves is arbitrary, subjective and theoretical, I do not engage in it.