Tag Archives: energy

More Drilling Doesn’t Make Gas Cheaper

This is something that’s been known for decades: the oil market is a global one, and its price is also global. If a barrel of oil costs 100$, that is its price in the US, in Britain, Angola, Japan, Iran, etc. And that price is determined by the market forces of supply and demand: if people want more oil than there is, the price goes up; if there’s more oil than demand, the price goes down. But really, there is much more oil in the ground than we need, so the limiting factor is production: how much of it is pumped out of the ground and turned into gasoline, kerosene and diesel.  Therefore, like that of diamonds, the supply of oil is artificially controlled and companies can ramp production up or down as they see fit, based on the market price of oil. OPEC is notorious for doing this: the 12-country cartel holds 79% of the world’s oil reserves and is responsible for 44% of world oil production. Due to their large share of the pie, they can effectively control the price of oil — and in turn, the price of gas — simply by producing more or less oil.

OPEC countries

 

American oil production, on the other hand, accounts for only about 9% of the world’s supply. Because even double the production would still be dwarfed by OPEC, the price of gas cannot be affected much by American supply. This fact is evident via statistical data that shows gas prices being unrelated to how much oil the US produces. For example, while US production increased by large amounts in the past three years, gas prices have not only not gone down, but almost doubled from 2.10$ to 3.58$. Therefore, expanded drilling — be it in the Gulf of Mexico, Alaska or North Dakota — will only result in more profits for (American) oil companies, not cheaper prices for consumers. In fact, the American drilling boom in the past several years has only happened because the (global) price of oil is now so high, that it’s worth trying to get it out of the bottom of the ocean, the tundra, or rocks.

Politicians pretend they can lower gas prices by expanding drilling: George W. Bush was for it; Sarah Palin made “drill baby drill” famous; Barrack Obama is also for it, despite the BP oil spill. The truth is, the government could easily lower the price of oil by reducing the gas tax, but that money goes to repairing the roads on which gas is consumed. Otherwise, their hands are tied. Yes, expanded drilling will increase our energy independence, but that just means we’ll still have gas if OPEC decides to stop exporting; it doesn’t mean that gas won’t cost 10$/gallon.

 

However, increasing supply isn’t the only way to reduce gas prices: reducing demand will have the same effect. The US consumes about a quarter of the world’s oil, or 20 million barrels per day. That is by far the highest rate: the next country is China, who only consumes 7 million barrels per day. This means America has a lot more influence as an oil consumer than an oil producer: while we can’t flood the market with oil to make gas cheaper, we can buy more hybrids and build more nuclear power plants, to achieve the same effect.

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From Minnesota Public Radio, via Slashdot

Americans Can Tolerate 5$ Gallons Of Gas

Given that gas prices usually spike in late spring due to refineries shutting down for maintenance and that the West is in a prolonged game of chicken with Iran, everyone’s predicting that gas prices will hit 5$/gal this summer. So Gallup asked Americans at what point the price of gas will start causing problems; the answer was 5.30$, which is a surprisingly high number. Granted, a large minority of 40+% of people surveyed said their uncomfortable price was somewhere below 5$, but the clear majority will weather that cost just fine. And 10% of the people would be fine with even 7$ gas.

 

The survey also discovered that 90% of Republicans are either stupid, hypocrites, or both: when asked if government should try to stop the increase in gas prices, they said yes. Embarrassingly so, only 81% of regulation-happy Democrats agreed. Either the Republicans surveyed have no idea that they are against government involvement in the market, or when it comes down to brass tacks, they just care more about money than values; also, cheap gas is somehow completely and totally different than cheap healthcare.

Speaking of inconsistent policies when it comes to gas, Energy Secretary Steven Chu famously said in 2008 that he wished gas prices were as high here as they were in Europe, because it would help fight global warming and save the environment. But now that his wish is coming true and Obama is taking a hit in the polls because of it, he reversed his stance, saying gas prices should go down because it would help save the economy. Maybe since Geithner isn’t coming back for Obama’s second term, Chu has his eyes on the Treasury Secretary position.

From Gallup, via Marketplace

There’s No Such Thing As Renewable Energy

Previously, we’ve seen that there’s no such thing as sustainable energy because all energy use produces heat, which at some point (around the year 2200, at current rates) will make the planet too hot for us. Along the same vein, The Bulletin of the Atomic Scientists has an article which makes the point that there’s no such thing as renewable energy either. So even if we could use all the energy we wanted — which we can’t because eventually, we’d boil — we are never going to have a source of energy that’s inexhaustible.

At this point, most people say “ok, the sun isn’t technically inexhaustible, but it’ll be around for a couple billion more years, so for all intents and purposes, it’s renewable.” And it’s true, sunlight in and of itself is virtually renewable, but the problem is that we can’t make direct use of sunlight: we need solar panels, and they’re made using non-renewable resources like neodymium. They also have a shelf-life, and need maintenance. Solar plants, like all power plants, are designed for a couple of decades of use, and require a lot of groundwater during maintenance, for cleaning and cooling; in the desert, where solar plants generally live, groundwater is not renewable.

Wind power requires wind mills which are built with steel, concrete, and rare earth metals. Same with hydropower, which needs dams and turbines. Geothermal power and biomass also need turbines and engines; and what’s more is that unlike solar, wind and hydro power, these two energy sources tend to be used at a rate faster than they can be renewed. So even though the source of the energy is renewable, it doesn’t renew quickly enough. After all, trees are biomass, and until oil became the primary energy source, deforestation was a very real concern.

The truth is, there’s no horn of plenty when it comes to energy, and at our current usage, even if the entire planet switched to 100% solar power tomorrow, we will eventually run out of energy. It might take longer and damage the environment less (except for heating up the planet), but it will happen. So ‘renewable,’ ‘sustainable,’ and ‘green’ are serious misnomers when talking about even the most politically correct of energy sources. At best, we can say that alternative energy sources are more efficient and clean — but win/win solutions, they are not.

Now, it could be that some magical new technology will be invented that’s made from abundant elements like carbon and hydrogen, doesn’t create heat as a byproduct, and uses sunlight as an energy source. But until we can plug in our iPhones into ficus trees, it’s better if we just assume that won’t happen.

From The Bulletin of Atomic Scientists, via Slashdot

Oil Production Isn’t Declining Any Time Soon

The Wall Street Journal has an article about a company called Continental Resources that found about 4 billion barrels of proven oil reserves in the mountains of North Dakota and Montana. That’s about a fifth of current proven oil reserves in the country, and is one of the reasons why America is now the 3rd oil producer in the world, behind Russia and Saudi Arabia. We produce about 5.5 million barrels of oil per day; Russia does 9.7 and Saudi Arabia, 8.9. However, the founder and CEO of Continental Resources, Harold Hamm (not related to Jon Hamm), thinks there are actually not just 4 billion barrels of oil in those mountains, but probably more like 24 billion. All this new oil is being found and extracted due to technological advances, without which the oil might as well not be there.

L.A. has a lot of well-camouflaged oil rigs like this one, right in the city

 

If the CEO is right, the 24 billion barrels in the mountains would more than double the country’s proven oil reserves, which are now at 19.1 billion barrels. In fact, if he’s right he thinks the country could achieve independence from foreign oil. Compared to the 1990s when we imported almost 70% of our oil, we now import under 50%. And about 40% of that comes from Canada and Mexico so our dependence on other, non-North American parts of the world is already pretty low — about a third. With a huge find in the country, that number could theoretically go down to zero.

But wait, what about alternative energy and global warming? The problem with alternative energy is that economics being what they are, people will always go for the cheapest thing. And right now, oil is by far the cheapest form of energy in most places. Natural gas is second. Solar power is really expensive: if you live in a sunny area and can get all of your power from solar panels on your roof, that installation will run about 30,000$; if your electric bill is the average 105$/mo, it’ll take almost 25 years to make up that installation cost, and by then you’ll need to replace your solar panels, on top of bearing the maintenance costs for 25 years. And that’s only if there’s no winter where you live. Wind is better, but it’s still more expensive than both natural gas and oil. A few years ago, when the price of oil skyrocketed for no reason, it really looked like alternative energy was going to be cheaper — but that’s not the case anymore. All alternative energy sources account for about 2.5% of American use.

There was a time when wind power was not alternative at all. Photo by Hisa Fujimoto

 

As for global warming, until it starts affecting the economics of oil production, people will only care about it in principle. Sure, everyone wants to theoretically be green, but will most people pay more for wind or solar power? Nope. And even if global warming starts affecting things like agriculture and rising sea levels, that won’t affect the price of oil, because they’re unrelated. It may make the price of wheat and land go up, but not the price of oil — not unless governments start taxing oil more to punish it for the global warming.

And global warming may not even cause the price of wheat and land to go up, because some of the largest landmasses in the world right now are frozen tundra, in Siberia and Canada. If the earth warms up a few degrees, those lands will probably become wheat fields and modestly priced real estate in temperate climates to which people will escape from the hellish heat in the Caribbean.  Also, there’s still the problem that energy use from all sources — not just fossil fuels — causes global warming, just by virtue of creating heat during the conversion process.

2010 International Energy Agency prediction of future oil

 

But oil is a finite resource, and sooner or later it will start to run out, so alternative energy will become more cost effective as the price of oil goes up due to the diminishing supply, right? The related peak oil theory says at some point, discovery of oil will hit a maximum and will start declining after that, which will cause the price of oil to go up. The theory dates back to 1956, and accurately predicted the peak of US oil production in the 1960s. However, it predicted global oil production to peak in 1995, and it still hasn’t; that estimate keeps moving forward, and as of now it’s sometime in the 2020s. There are two reasons why global production hasn’t peaked:

  • Oil consumption actually declined in the 1980s because of more fuel efficient cars that came about in the aftermath of the oil crisis in the 1970s
  • It looks like conventional oil production actually did peak in 2006, but we now have technologies that get oil from unconventional sources, like the mountains in Montana and North Dakota

So we’ve been using less oil and finding more of it, which means we’re still nowhere close to running out of oil. How not close? At current production rates, we’re good for about 64 years. A handful of countries (Canada, Iraq, Iran, Kuwait, Venezuela, UAE) could produce oil at their current rates for well over 100 years. Compared to our 19 billion barrels of proven oil reserves (possibly 45 billion if the above-mentioned CEO is right), Saudi Arabia has 264 billion; Canada, 175; the lowest of the 100-year countries are Venezuela and UAE, with 97 billion; Russia has 74 billion; Libya, 47. But populations will increase, as will standards of living in Asia and Africa, which will cause them to consume even more oil. But then again… if recent history’s any indicator, technology will do a lot to mitigate that fact, by creating machines that use oil more efficiently and by finding more usable oil than we have now.

The bottom line is that unless something catastrophic happens, oil will still be the main energy source for most of this century, and maybe even longer. We may slowly be switching to electric cars, but when we plug them in to our homes, that electricity is likely to come from an oil-powered power plant.

From The Wall Street Journal

All Energy Sources Are Unsustainable

Physics professor Tom Murphy from UC San Diego has a very interesting blog post in which he debunks the idea that as long as we have energy sources, we can keep consuming more and more energy, ad infinitum. For the past 400 years or so, our energy use has grown at about 3% per year. If that continues, we will tap out the entire energy of the sun in the year 3200 and the total energy of all the stars in the galaxy in the year 4500. That might seem ridiculously far off, because it’s a whole 2500 years in the future — until you realize that 2500 years in the past, the Greeks were at the height of their civilization.

But as grim as that seems, there’s an even worse problem: a long time before we even get to consuming the entire energy of the sun, the Earth’s surface will get way too hot to sustain life simply due to the heat that energy use gives off as a by-product. At 3% yearly growth in energy consumption, we only have about 200-300 years until that happens — so hopefully the global population will stop growing and our energy demands will taper off long before then. (There’s also the unlikely scenario that someone will invent a way to convert energy without producing heat.)

Al Gore and his carbon/temperature graph in An Inconvenient Truth

 

A very intriguing idea in his post, however, is that energy use causes global warming, simply due to the laws of thermodynamics. Coincidentally, energy consumption has been increasing steadily over the past 60 years, along with, as Al Gore showed in An Inconvenient Truth, carbon and global temperature levels. However, he correlated the temperature increase only with carbon in the atmosphere and concluded that carbon was the cause and global warming was the effect, because the increase in carbon preceded the increase in temperature. But correlation is not causation. For instance, since virtually all energy consumption (e.g., burning oil or coal) creates both atmospheric carbon and heat, what if the real cause of global warming is actually energy consumption, not carbon? In other words, it could be that energy use makes both the extra carbon and the extra heat: that the problem is thermodynamic, not chemical.

This makes a lot of sense, logically speaking: for decades, our various machines (cars, computers, air conditioners, heaters, etc) have been generating a LOT of heat: where is it all going? Couldn’t all that extra heat be responsible for the increase in global temperatures? It would certainly be nice to see a graph showing energy consumption rates along with atmospheric carbon and temperature. If this is true, then the kicker is that even if we switch to alternative energy sources like solar, and the carbon in the atmosphere goes back down to normal levels, global warming will continue simply because we’re still using as much energy as we were before.

From Do The Math, via Slashdot

Let There Be Incandescent Light

There’s been a rumor going around that the incandescent light bulb is going to be next on list of things the government’s been banning recently (clove cigarettes, caffeinated alcoholic beverages, trans fats, synthetic marijuana, etc) — all of course for our own good; we all know that we can make the right choices, but those other idiots need to have boundaries set by the nanny state, or else all hell will break loose. And so was the story of the regular light bulb, that it’s too inefficient and Uncle Sam is worried that we’re spending too much of our paychecks on electricity instead of something worthwhile, like stuff at Wal-Mart for example, so he’s not going to let us do that anymore.

The compact fluorescent (CFL) bulb Uncle Sam wants you! to use. Photo by Jose Ibarra

 

That part is actually true. The part that’s not true is that the incandescent bulbs are getting banned. What’s actually happening is that next year, new efficiency standards go into effect which current incandescents don’t meet. But, through the power of innovation, the corporations are going to make incandescent light bulbs that do meet those standards and supposedly look and feel the same as the ones we’ve had for 100 years. Still, people don’t buy that, so there’s a bill in the House called the Better Use of Light Bulbs Act of 2011  (BULB Act — I wonder if there’s a guy in Congress whose job it is to come up with clever acronyms) that repeals the offensive parts of the Energy Independence and Security Act of 2007 (PDF) and lets us again have the option to spend our money on huge electric bills. But fear not law mongers, the BULB Act is not expected to pass.

Via NPR