This is the title of a recent news article in "Science", which comments on the IEA World Energy Outlook 2008. So in writing about this report, I am in good company. The tenor of the article by Science's news writer Richard Kerr is clear: Slowly the reality of limitations to the world's oil supply is sinking in. As far as I can tell, most scientists are still largely unaware that there is a huge problem approaching fast, so maybe this news piece will have some alarming effect. Of course, the experts have been playing the issue down for a long time, but recently the tone seems to be changing. Some excerpts from the article:
“It’s getting harder and harder to find an optimist” on the outlook for the world oil supply, says Beijing-based petroleum analyst Michael Rodgers of PFC Energy, a consulting company. Indeed, the IEA report as well as one coming from the U.S. Department of Energy’s Energy Information Administration (EIA, confusingly enough) see hints that the world’s oil production could plateau sometime about 2030 if the demand for oil continues to rise. Unless oil-consuming countries enact crash programs to slash demand, analysts say, 2030 could bring on a permanent global oil crunch that will make the recent squeeze look like a picnic. [...]
“Non-OPEC conventional production is definitely at a peak or plateau,” says Rodgers. “That’s starting to make people nervous. It’s not what even pessimistic people anticipated.” Three years ago, analysts in and out of the industry predicted that projects under way or planned would dramatically boost world production during the second half of the decade, sending prices back down (Science, 18 November 2005, p. 1106). Only in the 2010s would non-OPEC producers—who had boosted their output 35% in 25 years—falter and level off their production, analysts thought. That predicted plateau may be here already. “Despite all the work,” says Rodgers, “we can’t grow non-OPEC.”
So the view of the issue has changed over the past three years, and the pessimists proved to be right. The IEA's new perspective is less optimistic than before, but what if the true pessimists are still right? Then, in fact, things may be a lot worse. The old, 2005, Science article ended with the following words: "The downside of the optimists being wrong is dire". It seems this is exactly where we are heading...
The final sentence of the recent article is also interesting, where an American energy analyst is cited saying "I just hope the Obama Administration doesn’t look at the [current] price of oil and shove the problem to the back burner." Very appropriate, as I find it hard to see any sign of the crash programs to slash demand that seem to be so urgently needed (unless crashing the economy was meant to be such a program).
Oh, by the way, crash programs are also needed to curb CO2 emissions. If properly planned, one may be able to tackle two big problems at the same time (incidentally, Climate Progress just has a nice outline of how to do that). If not, the looming oil crisis will force us into using more coal, which is a sure recipe for climate disaster.
29 November 2008
15 November 2008
IEA Calls for Energy Revolution
I have unfortunately no time to comment in any depth, but I think the newly released World Energy Outlook 2008 by the International Energy Agency (IEA) is a very significant and important document. It is unfortunate that the media hardly notice the substantial recent changes in viewpoint of these official "energy watchdogs" of the world. Because what they have to say is of enourmous importance for our future. Just a few citations from the executive summary:
"The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially."
"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution."
"Oil is the world’s vital source of energy and will remain so for many years to come [...]. But the sources of oil to meet rising demand, the cost of producing it and the prices that consumers will need to pay for it are extremely uncertain, perhaps more than ever."
"Preventing catastrophic and irreversible damage to the global climate ultimately requires a major decarbonisation of the world energy sources."
"The consequences for the global climate of policy inaction are shocking."
"The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially."
"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution."
"Oil is the world’s vital source of energy and will remain so for many years to come [...]. But the sources of oil to meet rising demand, the cost of producing it and the prices that consumers will need to pay for it are extremely uncertain, perhaps more than ever."
"Preventing catastrophic and irreversible damage to the global climate ultimately requires a major decarbonisation of the world energy sources."
"The consequences for the global climate of policy inaction are shocking."
08 November 2008
No Peak of Abiogenic Oil
I have already written a bit about the peak oil issue in the context of James Kunstler's prediction of the financial crisis. And I said I will return to it.
Right now, when oil prices have plunged from record highs, peak oil may not seem to be a big issue. But the price swings may be deceptive. The present downturn is obviously not due to increased production but rather to the expectation of a global recession and hence reduced demand. If advance stories on the World Energy Outlook 2008, due to be released by the International Energy Agency next week, are correct, even the previously optimistic IEA warns of a return of high oil prices and supply problems. Ironically, the current crisis leading to low oil prices may worsen the problem in the future. A UK industry taskforce also seems to be concerned.
However, there is still debate whether peak oil is a real threat. Somehow this reminds me of the debate about the reality of the climate change threat. I have written about some bogus arguments against climate change. Today I'd like to look at such an argument against the possibility of a peak in oil production.
The argument, which links to a previous post, is that oil in fact is not of biogenic origin and therefore severely limited, but rather of abiogenic, deep origin, and therefore present in vast quantities that we only need to tap. Does this argument stand up to a reality check?
Hardly. The foremost western proponent of the abiogenic oil theory is Jack Kenney, who indeed posts several anti-peak-oil articles on his website. I have already written about my weird experience with Kenney, based on which I certainly don't trust him. But his theory is also thoroughly refuted by many experts in the field.
Interestingly, the economic papers published on Kenney's website, which all refute the notion of limited oil supplies, mostly do not seem to refer to the abiogenic petroleum theory. They are authored by M. C. Lynch and P. Odell, which appear to be quite well-informed experts in the oil business. I wonder if these authors are aware of the fact that their articles are promoted on a rather dubious webpage. It certainly does not increase their credibility...
Right now, when oil prices have plunged from record highs, peak oil may not seem to be a big issue. But the price swings may be deceptive. The present downturn is obviously not due to increased production but rather to the expectation of a global recession and hence reduced demand. If advance stories on the World Energy Outlook 2008, due to be released by the International Energy Agency next week, are correct, even the previously optimistic IEA warns of a return of high oil prices and supply problems. Ironically, the current crisis leading to low oil prices may worsen the problem in the future. A UK industry taskforce also seems to be concerned.
However, there is still debate whether peak oil is a real threat. Somehow this reminds me of the debate about the reality of the climate change threat. I have written about some bogus arguments against climate change. Today I'd like to look at such an argument against the possibility of a peak in oil production.
The argument, which links to a previous post, is that oil in fact is not of biogenic origin and therefore severely limited, but rather of abiogenic, deep origin, and therefore present in vast quantities that we only need to tap. Does this argument stand up to a reality check?
Hardly. The foremost western proponent of the abiogenic oil theory is Jack Kenney, who indeed posts several anti-peak-oil articles on his website. I have already written about my weird experience with Kenney, based on which I certainly don't trust him. But his theory is also thoroughly refuted by many experts in the field.
Interestingly, the economic papers published on Kenney's website, which all refute the notion of limited oil supplies, mostly do not seem to refer to the abiogenic petroleum theory. They are authored by M. C. Lynch and P. Odell, which appear to be quite well-informed experts in the oil business. I wonder if these authors are aware of the fact that their articles are promoted on a rather dubious webpage. It certainly does not increase their credibility...
05 November 2008
02 November 2008
Economics Needs a Reality Check
Apart from the editorial recommending Obama for President, the last issue of Nature also featured an interesting essay entitled "Economics needs a scientific revolution" by a certain Jean-Philippe Bouchaud, apparently a physicist with close links to research in finance. Bouchaud makes some really interesting statements, at least for a physicist like me who is slightly disturbed by recent events in the world of finance. Most important is probably his critique of the fact that economists seem to belief in some assumptions without even caring about empirical verification. As I can't add anything substantial, I just present some clippings from the essay:
"Classical economics is built on very strong assumptions that quickly become axioms: the rationality of economic agents (the premise that every economic agent, be that a person or a company, acts to maximize his profits), the 'invisible hand' (that agents, in the pursuit of their own profit, are led to do what is best for society as a whole) and market efficiency (that market prices faithfully reflect all known information about assets), for example. An economist once told me, to my bewilderment: "These concepts are so strong that they supersede any empirical observation." As economist Robert Nelson argued in his book, Economics as Religion (Pennsylvania State Univ. Press, 2002), the marketplace has been deified.
[...]
The supposed omniscience and perfect efficacy of a free market stems from economic work done in the 1950s and 1960s, which with hindsight looks more like propaganda against communism than plausible science. In reality, markets are not efficient, humans tend to be over-focused in the short-term and blind in the long-term, and errors get amplified, ultimately leading to collective irrationality, panic and crashes. Free markets are wild markets.
[...]
Crucially, the mindset of those working in economics and financial engineering needs to change. Economics curricula need to include more natural science. The prerequisites for more stability in the long run are the development of a more pragmatic and realistic representation of what is going on in financial markets, and to focus on data, which should always supersede perfect equations and aesthetic axioms."
All in all, I think the scientific revolution that Bouchaud calls for is nothing else than a reality check. And I agree that economics (plus the banking and finance sector) really seems to need it!
"Classical economics is built on very strong assumptions that quickly become axioms: the rationality of economic agents (the premise that every economic agent, be that a person or a company, acts to maximize his profits), the 'invisible hand' (that agents, in the pursuit of their own profit, are led to do what is best for society as a whole) and market efficiency (that market prices faithfully reflect all known information about assets), for example. An economist once told me, to my bewilderment: "These concepts are so strong that they supersede any empirical observation." As economist Robert Nelson argued in his book, Economics as Religion (Pennsylvania State Univ. Press, 2002), the marketplace has been deified.
[...]
The supposed omniscience and perfect efficacy of a free market stems from economic work done in the 1950s and 1960s, which with hindsight looks more like propaganda against communism than plausible science. In reality, markets are not efficient, humans tend to be over-focused in the short-term and blind in the long-term, and errors get amplified, ultimately leading to collective irrationality, panic and crashes. Free markets are wild markets.
[...]
Crucially, the mindset of those working in economics and financial engineering needs to change. Economics curricula need to include more natural science. The prerequisites for more stability in the long run are the development of a more pragmatic and realistic representation of what is going on in financial markets, and to focus on data, which should always supersede perfect equations and aesthetic axioms."
All in all, I think the scientific revolution that Bouchaud calls for is nothing else than a reality check. And I agree that economics (plus the banking and finance sector) really seems to need it!
01 November 2008
The World is Blue - and Nature too
With the US elections coming very close, it is time to comment on the way that we, the non-US rest of the world, view it. I remember polls conducted in European countries 4 or even 8 years ago, according to which George W. Bush would never have been elected here. Now, after 8 years of a Bush administration that had quite some (hmmm, let's say not always positive) effect on the rest of the world, how would the world decide?
Some youngsters in Iceland asked this question as well and came up with a world-wide poll on the internet. You can look up the results here. The result is overwhelming: 86.8 % for Obama! The world map that they plot is deep blue - meaning Democratic.
It is interesting to note that McCain has a chance only in some rather peculiar countries: Macedonia, Albania, Venezuela, Iraq (amazing - but with only 13 votes hardly representative), Georgia and so on. Are these people hoping that McCain could bring them freedom and democracy? Anyway, in the large western democracies, from where thousands of votes have been cast, Obama wins dramatically. For example Germany: More than 11'000 votes, 93.4 % for Obama.
So, dear Americans, be assured that the world is watching you. And it has a clear opinion. Of course it does not count, but consider this: A president Obama would have an entirely new chance to change the world's view of the US. McCain might be able to repair the worst damage that Bush has inflicted on America's reputation, but hardly more than that.
I am sure that my American colleagues, environmental scientists as they are, will just as overwhelmingly vote for Obama as the rest of the world would, if it could. But I also know that the voice of science is not always heard in America. Nevertheless, the most prestigious scientific journal, Nature, also felt obliged to give its recommendation in an editorial this week. Here is what they say (Eli has also commented on it):
"This journal does not have a vote, and does not claim any particular standing from which to instruct those who do. But if it did, it would cast its vote for Barack Obama."
Some youngsters in Iceland asked this question as well and came up with a world-wide poll on the internet. You can look up the results here. The result is overwhelming: 86.8 % for Obama! The world map that they plot is deep blue - meaning Democratic.
It is interesting to note that McCain has a chance only in some rather peculiar countries: Macedonia, Albania, Venezuela, Iraq (amazing - but with only 13 votes hardly representative), Georgia and so on. Are these people hoping that McCain could bring them freedom and democracy? Anyway, in the large western democracies, from where thousands of votes have been cast, Obama wins dramatically. For example Germany: More than 11'000 votes, 93.4 % for Obama.
So, dear Americans, be assured that the world is watching you. And it has a clear opinion. Of course it does not count, but consider this: A president Obama would have an entirely new chance to change the world's view of the US. McCain might be able to repair the worst damage that Bush has inflicted on America's reputation, but hardly more than that.
I am sure that my American colleagues, environmental scientists as they are, will just as overwhelmingly vote for Obama as the rest of the world would, if it could. But I also know that the voice of science is not always heard in America. Nevertheless, the most prestigious scientific journal, Nature, also felt obliged to give its recommendation in an editorial this week. Here is what they say (Eli has also commented on it):
"This journal does not have a vote, and does not claim any particular standing from which to instruct those who do. But if it did, it would cast its vote for Barack Obama."
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