I agree that the market mechanism and pricing signals are usually a very good guide... and of course there will be the emergency construction of renewable energy after peak oil!
Of course there will. My argument is that we should not be blindly stumbling into this the way we are. I have re-written my piece on why government's should get involved. It's pretty long, but please let me know if anything is unclear or you have a better way of phrasing something —*even if you disagree with it! I'm after feedback on my writing style as much as the ideas in it.
Cheers
Market forces
Everyone seems to think that by just saying the magic words “market mechanism” peak oil will go away! I agree that “the invisible hand” functions fairly well within a normal modern marketplace. However, OIL IS THE FOUNDATION of our marketplace. Every wind turbine that has ever been built has been built within a cheap oil economy.
5 Reasons I do not think leaving peak oil to market signals is a wise option.
1. Currently technology has no alternative energy source that can do what oil does!
Most people think that energy is like Coke. If Coke costs more, people will simply switch to Pepsi — or even better, drink water, so what is the fuss?
Oil is a unique form of energy for it’s sheer quantity, it’s quality and energy density per unit, it’s ease of shipping, it’s energy return, and it’s current cheap price. It is the only energy that meets all these criteria.
This is why it is an emergency.. It is all there is that does that job at that price. One cliché statement that debunkers often use is “We did not leave the Stone Age for lack of stones, and we will not leave the oil age for lack of oil.” The only problem here is with prices the way they are now, where is the alternative?
It should be in our faces now, appealing to us now, cheaper than oil now! Walmart are already saying, “Stop it — it hurts!” but there is no way to stop the economic pain that is coming to mega-marts dependent on cheap transport to allow cheap overseas labour.
At least there might be more social justice and community focussed work. As far as I can tell, with our current technology, nothing can do what oil currently does to facilitate first world corporations ripping off cheap third world labour!
Every alternative energy is limited in some way. A major consideration is the EPR… the Energy Production Ratio — or the amount of energy returned from the original investment. It basically asks, can this “crop” of energy eventually grow the next crop? Can the first generation of wind turbines generate enough energy to run our civilization and have enough left over to produce the next round of wind turbines? It is an extremely difficult thing to measure, and I’m not sure that the current studies are actually including all the energy costs!
The EPR is decreasing for oil, which is one reason why it will start to climb in price soon (as well as the “bidding war” that will occur for the remaining oil as volumes decline). After the peak it takes increasing amounts of energy to
extract the remaining oil by pumping more and more water into the field to keep the pressure up. It takes increasing difficulty and energy to
process the remaining oil as the sweet oil turns sour. Sour oil takes a hydrogen cracker refinery to process it into something we can use, all of which takes more energy. So the oil cost more, it’s the end of “cheap oil”.
As I said in my website,
Quote:
Peak Oil and EPR form the crux of the energy crisis. Once you know both Peak Oil and EPR, you have the tools to begin asking the right questions instead of just trusting in the wrong answers.
Unfortunately when you put the two terms together, the future looks pretty bleak indeed. Because if Peak Oil announces the end of cheap oil, then EPR announces that it is almost impossible to replace it. (In time to prevent economic meltdown, anyway.)
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http://eclipsenow.org/facts/alternateenergy.html
I also have a “master checklist” I call the SERVICE checklist for renewable energy.
“Alternatives are not going to SERVICE our current energy needs after cheap oil.”
S.E.R.V.I.C.E.
Sustainability, Energy payback, Rare materials, Volumes, Implementing Infrastructure, Cheap, Even supply
Read more about each of these considerations below.
http://eclipsenow.org/facts/service-checklist.html
Now I love renewable energy and think it is part of the answer to this crisis, but it’s just not going to run what we are currently running! In other words, today’s alternative energy will only run a civilization with drastically reduced energy use. In the terms of our previous analogy, we will have to switch from drinking Coke only drinking water, and far less at that! This will affect everything we do.
Alternatives just will not enable us to continue living the way we have “deployed ourselves in the landscape”. (Kunstler quote). As far as I can honestly tell from the available technical information, the physical structures and paradigm of our mode of living has to change. Public transport has to be massively upgraded, the next generations will have to build homes that are closer to each other, and most importantly, food has to be grown far closer to the home city. Cuba had an oil crisis when the Soviet Union collapsed, and many of them suffered malnutrition, some even became blind. Yet Cuba had a “Special Period” emergency economy and the command structures to make things happen. Here in our democratic western countries we seem stuck on discussing tunnel building scandals and the latest Australian Idol. We need to focus on the job at hand and figure out how we are going to grow food, and how the food we do grow is going to get to us after the peak. The experts we saw on ABC’s “Catalyst” were not kidding when they described supermarket shelves emptying… food security in a time of broad societal change is the stuff of their nightmares.
If you think there is an alternative energy that can run what we run today, as cheaply as oil, then please read through the following energy analysis.
http://socialwork.arts.unsw.edu.au/t...LE-ENERGY.html
There is also a great list of alternatives and other questions addressed at
http://www.lifeaftertheoilcrash.net/SecondPage.html
Oh, and here’s a checklist for that futuristic new energy source that promises to have us living on Mars in 10 years! It’s probably a hoax.
http://www.fromthewilderness.com/fre...questions.html
The bottom line is that our current technology cannot easily replace oil. There is no “silver bullet”.
2. Energy infrastructure has long lead times and market signals will take no action until it is too late.
Our marketplace is blind to all this. If anything, every year that passes sees our modern globalized world as becoming more addicted to oil, more dependent on cheaply manufactured foreign goods, and more dependent on increasing tourism and economic growth. Study the investment in renewable energy, and you will be appalled. You could double all the wind and solar in the world, and then DOUBLE IT AGAIN and STILL not crack 1% of the world’s total energy budget! That’s how far behind we are.
The oil depletion message that a small number of geologists are proclaiming so loudly is not being heard by the big corporations of our world, simply because the consequences would be unthinkable. We need a radical restructuring of the marketplace to cope without it’s foundation, cheap oil, and that restructuring needs to begin while we still have enough cheap oil to do so! Talk about the ultimate chicken and egg dilemma!
This is why I recommend a "big government" emergency economy to rebuild our cities around energy efficient city designs like
www.ecocitybuilders.com. We only have a few years as it is, and the long lead times mean it is already too late for a smooth transition.
Several studies bear testimony to the long lead times of oil replacement and the possible consequences if we leave it too late.
Gever et al studied the difference between a marketplace “solution” and a large-scale government intervention. They saw this coming in the early 1990s. They predicted that market forces alone would allow our net energy deplete to 30% of where they are now before taking enough action. Stumbling blindly into the future relying on market signals will trigger a “slow motion” collapse… we will simply be unable to prevent energy supplies reaching drastically low figures. 30% is the kind of cuts you see in horrific wartime rationing — which is ironically what we are trying to prevent by installing a milder emergency economy early. Starting early would help rebuild mass transit infrastructure and alternative power sources before reaching the critically dangerous 30% energy mark.
http://www.dieoff.org/page143.htm
The long lead times of energy infrastructure is also a theme of Professor Kjell Aleklett, President of ASPO international.
www.peakoil.net
The US Department of Energy commissioned a report into peak oil called the “Hirsch Report”. The conclusions were stark.
Quote:
"No one knows with certainty when the world production of conventional oil will peak, but a number of experts think it will happen in the next 5-15 years. Our work illustrates that the oil peaking problem can be mitigated with available technologies, but the time required for implementation is measured on a 15-20 year time line, at best.
The character of the oil peaking problem is like none other; without timely mitigation, the impacts will be dire, worldwide, and long-lasting. Prudent risk management dictates serious attention and massive action soon, which is difficult for most people and many decision-makers, who tend to wait until a problem is obvious before taking action.
Use this as you see fit.
Bob”
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NOTE: When Robert Hirsch says “available technologies” can help alleviate peak oil, he is also largely drawing on other fossil fuel technologies like coal liquefaction and "gas to liquids" technologies. He recommends weaning from one depleting resource onto another. Why? Because the renewables can’t be scaled up in time!
You can download the Hirsch report at
http://eclipsenow.org/Facts/Whistleblowers.html
Another argument against leaving it to market signals has also been put forward by a few in the US government. This motion before the US Congress reads:
Quote:
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Now, therefore, be it Resolved, That it is the sense of the House of Representatives that-- _(1) in order to keep energy costs affordable, curb our environmental impact, and safeguard economic prosperity, including our trade deficit, the United States must move rapidly to increase the productivity with which it uses fossil fuel, and to accelerate the transition to renewable fuels and a sustainable, clean energy economy; and _(2) the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency of the `Man on the Moon' project to develop a comprehensive plan to address the challenges presented by Peak Oil.
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http://www.globalpublicmedia.com/articles/572
Needless to say, Republican Senator Roscoe Bartlett is one of my heroes for his tireless campaigning on peak oil, and gives me some degree of hope that government’s might listen.
3. Post peak building will be far harder.
Will we be able to manufacture the next generation of energy supply as we slide into the Greater Depression? Think about that. What will cost more after cheap oil? Well, let’s step back and look.
Transport.
Mining.
Food.
Plastics.
Chemicals.
In short, everything mined with, transported by, or containing oil will rise in price. If renewable energy is too expensive now, what will happen after peak oil? Every Wind Turbine has to be manufactured by mining resources, transporting resources, and feeding employees. It is going to be astronomical in cost in an economy melting down the other side of peak oil.
Remember, this is the 1970's oil crisis, HERE TO STAY. It is going to get worse, and worse, and worse. Just remember the summary Robert Hirsch sent me — "Dire, worldwide, and long lasting!"
Market forces are just not cut out for this. Indeed, the market is already hurting with today’s relatively cheap prices. The problem with today’s prices is not that they are too expensive, but that they are too cheap. Peak oil is upon us — and we have decades of rebuilding to do as energy itself becomes gold.
4. The marketplace is only interested in growth.
It is entirely geared up for competition, capital investment, and long term growth because it has enormous debts to pay. To keep share market investment rolling in, companies have to appear to be growing to raise the stock-market value. To appear to be growing they have to borrow money to fund capital investment. This then locks them into the growth cycle to repay the debts, and around and around you go.
The free online book “The Ecology of Money” by Richard Douthwaite is a must read for any interested in this subject. You can start with the introduction and summary to get a feel for the contents. Chapter 1 starts by explaining why our current money system creates an economy addicted to growth.
http://www.feasta.org/documents/mone...y/contents.htm
Lester Brown of "Plan B" and "Eco-economics" fame has some interesting book reviews of his latest works at...
http://www.earth-policy.org/Books/Eco/index.htm
Steady State Economics: The Center for the Advancement of the Steady State Economy (CASSE) promote alternatives to the ecological insanity of growth based economics. Have a look around, and keep an eye out for their position paper.
www.steadystate.org
5. Energy security is as much a job for government as is military security
I am not philosophically “precious” about the “freedom” of the marketplace. The marketplace is not some holy and untouchable system. It operates within certain taxation systems and laws. The individual human beings buying and selling stuff that constitutes “the marketplace” will operate within whatever systems are accessible to them at the time. Market solutions are simply the sum total of human economic transactions in the face of certain stimuli. The government can provide those stimuli… such as giving massive tax cuts to people who buy solar PV, and highly tax SUV owners. However, instead the government is funding the car and oil industry with subsidies to the tune of tens of billions of dollars a year… let alone the whole superhighway system!
Some have complained “The government should not be in the business of picking winners and losers in the marketplace!” I’m sorry, but it already has — and it picked oil, and that decision is about to jump back and bite them.
Just as a country might need military security, they also need energy security. It is a government job in my mind. Would the marketplace anticipate that the dead dirt we currently farm with agribusiness chemical fertilizers and pesticides now have to be treated kindly, and brought back to life? This process takes years… and again we face long lead times for resurrecting dead soil through bio-farming methods. (Biofarming is like permaculture but on a massive scale, using some machinery).
Do the farmers know what is coming? No… the market is running blind and people and governments are continuing “business as usual”. We need time to rebuild, time to experiment, time to adapt, time to test and time to implement but we just don’t have any time!
How are people going to eat? We currently run a one-way nutrient pathway from our soils, into our food, into our supermarkets, down our toilets and out to sea, and then top it all up with oil based fertilizers and pesticides. This has to stop just so that people can eat! Would the marketplace anticipate it might take 8 to 9 years for local garden markets to replenish their soils? Would they anticipate rebuilding our sewage systems so that we can reclaim the NPK that is normally flushed down the toilets?
Have you read "Eating Fossil Fuels"?
http://www.fromthewilderness.com/fre...ating_oil.html
Also, taken to extremes the "freedom of the marketplace" leads to the logical conclusion of a Darwinian process killing off the competition, and we end up with monopolies. Remember Rockefeller and Standard Oil, Bill Gates and Microsoft. The marketplace is flexible and ingenious and surprising… but also quite deadly when left to its own devices. It just ignores certain resource and energy constraints until it is far too late.
6. “Up Wing” and “Down Wing”.
Even though I have quoted Gever and Hirsch (and even Republican Roscoe Bartlett) on the preference for a BIG government directed “Powerdown” program, the whole debate about “Left Wing” or “Right Wing” is actually not as important as the new spectrum I have called “Up Wing” and “Down Wing”.
Up Wing: has a commitment to growing our economies, growing our populations and growing our resource consumption. It considers short-term profits and leads to unsustainable practices. UP WING increases profits, at the expense of 3rd world countries through globalisation. It grows and grows everything we do and risks suddenly breaking “Liebig's Law” and enter overshoot and dieoff.
Down Wing: considers the long-term sustainability of almost every activity within the economy. Down wing looks at slowly reducing our populations humanely through family planning to prepare for energy depletion and the inevitable crop yield reduction. Down wing looks at the 7 "rules" of living light and local.
Re-educate populations
Relocalize our cities
Re-fuel on renewables
Regulate a "stable state" economy
Replenish the soil for post oil agriculture
Restore our environment and local productivity
Reduce populations
Down wing will do what it takes so that no one starves the other side of peak oil! But our current marketplace is anything but Down Wing. The current focus is on growth, growth, growth. I cannot imagine our current governments discussion stable state economies! They all seem to want more people (except maybe China), more money, more resources, more land… when is it going to stop? Liebig’s Law. I fear peak oil may be it.
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