The Future of Oil, Gasoline and Natural Gas

The fact that Iran, Nigeria and a handful of other oil-producing countries are raising the price of domestic fuel (or at least trying to) should alert Americans that times are changing. Domestic gasoline prices for oil-exporting countries is still less than elsewhere but, clearly, the writing is on the wall.

No one can predict exactly where gasoline prices will go in the next three to ten years. There is still plenty of oil to produce but the world's population is growing and it's no longer certain that oil production can keep up with population nor is it certain that oil production can keep up with the economic growth of countries like India and China, let alone the continued growth, though slower, of countries like the United States.

Now we've known for over thirty years that oil is not as plentiful as we once thought it might be and we now have the additional problem that the world, because of accumulating knowledge about climate change, can hardly afford to burn oil in the quantities we have been doing so for the last fifty years. We've had thirty years to innovate our way out of a known supply problem and now we have a climate problem on top of that, and the most innovative country in the world has instead been resting on its laurels, at least in the alternative energy and transportation sector, and it's frankly no longer certain that the U.S. is committed to being the leader in innovation, not when so much of our wealth is concentrated in the hands of so few people who like the status quo just as it is.

I was glad to see the recent bill passed in Congress to raise auto mileage but it's a bill that should have passed 13 years ago and just might have if it had not been for Republicans like Newt Gingrich and right wing agitators like Rush Limbaugh. We've lost valuable time. And we may lose more time because of inattention. I was one of the first to point out a potential problem that may blind many Americans to the problems we're facing when it comes to our future. As oil gets harder to find and harder to produce, prices will spike during different periods, just as oil is spiking now (though this time largely because of problems in the Middle East and Nigeria). High oil prices are going to force poorer countries out of the energy markets. As poorer countries are forced out, prices will drop, at least temporarily and, human nature being what it is, a fair number of average Americans, business people and politicians will nurse the illusion that we don't have a problem. But, indeed, we do have a problem and it would be foolish and even heartless for the most powerful nation in the world to ignore the added time that the falling consumption of oil in poor countries gives us to find a solution, not just for the world, but for ourselves, since we are after all more dependent on energy for our way of life than any other country in the world.

The Oil Drum has a primer on Peak Oil. It's fascinating how the term "Peak Oil" is sometimes distorted in certain quarters. If oil were food, people would understand the situation more clearly. If the world's population rises, food production must also rise. Food production is not a steady thing. Food production rises and falls; a certain amount of safety can be built in by having plenty of food stored for production shortfalls. If food production begins to fall for too long a period and there isn't enough food stored after awhile to go around, bad things begin to happen. One very good thing about food is that it's renewable. Oil is not. "Peak Oil" is simply the proposition that at some point our ability to produce oil worldwide will begin to fall (that is, one year we will reach the all time peak for oil production and no year after that will match that year and on average yearly production will steadily fall at some uncertain rate) and most people in Peak Oil believe the time will approach in the next two to twenty years or that we passed the 'peak' in the last year or two. There is already strong evidence that what we call light sweet crude may indeed have already peaked, but the evidence is obscured by the other forms of fossil fuels that are produced. Because there is in particular growing concern that the Middle East may not have the oil reserves they claim to have, most responsible people who look at these things and who are concerned are trying to make the point that we need to start making adjustments now whatever the date of "Peak Oil" may be.

Here's an excert from the primer on The Oil Drum:

9. When was peak oil first predicted?

M. King Hubbert, in 1956, first predicted that US oil production for the 48 states would peak in 1970. This prediction turned out to be correct, to everyone's surprise. He also predicted a world-wide peak around 2000.

10. Will alternative energy sources be able to make up for the shortfall in petroleum production?

At this point, it seems unlikely that they will make up the shortfall.

(snip)

At this point, there does not seem to be any "silver bullet" for replacing the lost oil production. Oil is unique in its abundance, its high energy density, and its portability. There do appear to be a number of possible silver bee-bees, however. These include:

• ethanol from corn,
• ethanol from sugar (generally imported),
• biodiesel,
• cellulosic ethanol from biomass, and
• coal-to-liquid.

None of these appears to be very scalable, especially in a short time-frame. In addition, there are other drawbacks -- cost, environmental damage, and for coal-to-liquid, climate change issues. Indirect approaches to circumventing the shortage, like using battery operated cars, may be part of the picture as well. If these are used, they will probably need to be phased in slowly, as existing cars are retired. It is likely that conservation will need to be part of the mix.

We need major research to tackle these problems and we need to start making changes. I should note that the very first person who ever drew my attention to these problems was a Republican. He was a smart man and a former oil executive. I'm not sure he would recognize the current Republican leadership and its failure to take on the future. The Democrats are coming around on these issues but they've been slow to do so. In the next five years, we have a lot of work to do.

The Need to Fight the Horse and Buggy Mentality

I would like to believe that the United States is still the leader in innovation in the world and there's evidence to suggest we still lead in innovation in several areas. But that innovative leadership won't last if Washington, and particularly today's crop of K street Republicans continue to protect a horse and buggy mentality. The problem is even deeper than that, though. What we're really talking about is the protection of privilege.

We have heirs in the tobacco, beer, forestry, railroad, oil and auto industries who haven't worked the source of their wealth in two or three generations but they want their wealth protected at taxpayers expense and at the cost of our nation's economic future (this is a broad problem but it strikes me that Bush thinks of himself as an oil man but it's not certain that he ever learned much about the oil business).

And then there's outsourcing; some of the biggest flag wavers in our country are also the same characters who turn their backs on our history and values by looking for cheap labor and destroying American jobs by sending those job overseas; these flag wavers are also weakening our country and in some cases there are serious national defense issues involved when some critical products and parts are made exclusively overseas with no backup plan if something happens to the source of those products.

The most dangerous trend is the amount of our energy that is now outsourced and that we have to import from overseas. It's not likely that America will become energy independent any time soon, but we can clearly improve our situation. And of course, dependence on oil has the longterm economic drawback of global warming. And then there's the issue that there's only so much oil and we need to start making a transition to other forms of energy and increased efficiency for using the energy we have. The more we can produce new, non-fossil fuel, sources of energy domestically, the better off we will be.

The Energy Bulletin has a useful graph illustrating that slowing global warming doesn't necessarily have to slow the economy (hat tip to The Oil Drum):

SOME ways of cutting carbon are cheaper than others. So, at different carbon prices, different sorts of methods of abatement become worthwhile. Vattenfall, a Swedish power utility, has tried to quantify which ones would be worth undertaking at what price (see chart 3).

The chart may or may not be relevant to the longterm scenario of how carbon dioxide will be taken out of our atmosphere (at some point, in the next fifty years, it's probable that all the solutions mentioned by the chart will have to be used for one reason or another), but it's worth pointing that the most expensive methods of reducing carbon emissions seem to be getting the most attention from big business and their friends in Washington. And yet, the four most effective ways of lowering carbon emissions are in the hands of average people: better light bulbs (rather than incadescent), home insulation, fuel efficient cars and better water heaters. The problem with so many corporate answers to our problems these days is that taxpayers or consumers eventually pay for them in one form or another. When the auto industry or the oil industry get together as a group and put pressure on Washington, they're not looking for the cheapest or even the most sensible solutions, but rather the most lucrative.

I remember a story from some years back about an African nation that was having a serious water quality problem and it asked several American companies for a solution. The companies came back with several bids, the lowest being $2 billion. The African nation could not afford the price tag. But the companies were thinking in terms of big projects and big profits. Someone else came along who was more interested in helping the African nation than in making huge profits and pointed out that the water quality could be vastly improved for $2 million by digging wells and putting in numerous public faucets at different locations; it wasn't an ideal solution and it wouldn't be a vast American solution with high quality water but it would be economically feasible and therefore doable. One of the reasons reconstruction in Iraq has gone so badly is that we went in with gold-plated projects that never had much chance of succeeding but that had the benefit of large profits for the companies running these projects.

In the end, innovation should not be about what has the most bells and whistles, but what actually works. We're losing the knack we had in our first 200 years of just figuring things out. To my mind, we are beginning to face things that innovation may not be able to solve, but innovation is still our best chance of getting through the next 100 years. We have a number of corrupt and powerful people who refuse to think that far ahead.

Real innovation may require changing how we think about the world and what our obligations are not just to our own children but coming generations as a whole. It wasn't all that long ago that innovators, particularly those in medicine, donated their ideas to the world without regard to the fat profits they might earn. I have nothing against profits but sometimes we end up encouraging too much of a good thing and it begins to stifle real innovation, the kind of innovation that is critical for surviving the 21st century.

Republican Fiasco Only Deepens

It's been stated before but let's state it again: today's Republican Party is controlled by right wing conservatives who are bereft of ideas; the radical agenda of Newt Gingrich, Bill Frist, Bill Kristol, Richard Perle, Tom DeLay, Dick Cheney and George W. Bush is a disaster for the overwhelming majority of Americans. Unless you're an oil executive or someone in the defense industry or sitting on a huge family fortune, Bush and his friends have done nothing for most Americans in the last six years.

In the spring of 2004, when our finances were in better shape, my wife and I donated $50 to the Kerry campaign. Since then, we've been flooded with mailers from various Democratic groups. I have friends who get uptight when they get such mailers but I consider the mailers a minor price of democracy and don't mind all that much, except on one point. We've gotten so many mailers that the cost of sending those mailers probably now exceeds what we sent in the first place. Still, I read about half the mailers to see how well people are making their sales pitch. I got a mailer yesterday from the Bill Richardson campaign and I admit I very much like the ad on the outside of the envelope:

The war in Iraq is not the disease.
Iraq is a symptom.

The disease is arrogance.

That puts it about as accurately as anything I've seen.

These are bad times and it's worth taking care of ourselves now and then. I'm grateful that most of the time about all I need to do on some days is go out and look at the moon hanging over the hills or over the valley depending on the time of night and the phase of the moon. After a few minutes, it clears my head. Sometimes, needing more, I just need to listen to some music for a half hour or read a book about as far away from these times as possible. All of us need to renew ourselves from time to time. This is going to be a long fight and there will be harder days ahead as we attempt to repair our democracy.

I've noticed a problem on progressive blogs over the last few weeks but I'm not sure what to do about it since my own feelings aren't much different. The disgust with both Washington politicians and the inability of the media to understand what a disaster we're in on a wide range of issues is taking a toll on all of us. Here's Juan Cole of Informed Comment; I simply can't fault what he says though it's harsher than what he would have said two years ago:

The Karl Rove doctrine that when you dig yourself into a ditch, the best strategy is to dig deeper, has finally met the test of reality-based politics. It isn't going to be pretty.

These guys got away with these hawkish fantasies because they bamboozled the poor evangelicals into believing they would support public morality, and bamboozled poor conservatives into thinking they would uphold small government. Instead, they are hitching their wagons to a multi-trillion dollar quagmire abroad and don't give a rat's ass about evangelical values.

I've been reading about the Republican presidential candidates and it's hard not to cringe. They're not any better than Bush and they can't make up their minds whether to defend Bush or distance themselves from him. McCain, of course, is impossible to take seriously anymore and his poll numbers make that clear. But the other frontrunners, Romney and Giuliani, aren't any better.

Romney, of course, has been all over the map and doesn't seem to be trying at all to be reasonably honest. Kevin Drum of the Washington Monthly takes issues with Romney fictional version of the months leading up to Bush's war in Iraq where Romney seems to say that the UN inspectors did not go to Iraq when in fact they did just that and didn't find anything:

WTF? Does this kind of stuff run in the family? (Yes, I know I've already made that joke once before.)

Question: does Romney genuinely not know that both the IAEA and Hans Blix's team had hundreds of inspectors in Iraq prior to the war? And that those inspectors found nothing?

Or does he know it perfectly well and has simply calculated that no one in the media cares enough about this stuff to make a big deal out of a howler like this? In any sane world, this kind of thing would be enough to disqualify a candidate from running for dogcatcher, let alone president of the United States.

And on and on it goes.

One of the first victims of a failing democracy is the truth. Juan Cole and Kevin Drum speak the truth but, like the rest of us, their disgust is growing over what they see. If we are to preserve our democracy, progressive bloggers and others are going to have to continue holding their noses and keep pushing for that truth. The reality of those who control the Republican Party is that they care far more about power than they do about their fellow Americans. They know they can't win on the issues that concern most Americans and everything we see follows from that simply observation. A political operative like Karl Rove knows this and it explains his many methods and his complete lack of conscience.

We have no choice but to push on.

This Is a Long Battle, Folks

One of themes I've been pushing on Donkey Path is that we're in a generational battle to reform Washington and to undo the increasingly reactionary politics in America that have been taking place over the last thirty years. We need reform and we need a government ready to take on the problems of the 21st century. Most Republicans in Washington and a small number of Democrats have been hiding from those problems. Even a majority of Democrats are only now catching up on a number of issues; and yet, across the spectrum, the Democrats are generally far more informed these days that their opposites across the aisle—that's important to remember.

I have no illusions about the Democratic election last November. It was great victory but a victory mitigated by the damage of the last thirty years and by the fact that the Democratic majority is rather slim in the House and almost nonexistent in the Senate and exists there because of two independents, one of them Joe Lieberman. The good news is that a number of strong moderates and progressives were elected last November but over the last thirty years, even the Democrats saw their party tilting more rightward than usual. Not all Democrats are ready to take on the 21st century. But there's a good chance that Democrats may be able to increase their majority in 2008 with good people and there's a good chance that those Republicans who embrace their radical right wing agenda may find their numbers diminishing as Americans recognize the damage many of them are doing to our nation and our future.

I'm not happy about some of the compromises Democrats have made recently and I worry that there isn't as much progress as I hoped there would be by now, but there is progress and I expect more to come. So, on the one hand, I understand some of the grousing I'm reading on different blogs but a lot of it simply isn't realistic. As I said, this is a long battle, and a handful of votes in Congress doesn't mean much. I'm committed to building on the progress that's been made and I know too much about what coming down the road to waste much time on cynicism and despairing rhetoric.

Here's a very fine post from Mahablog with a useful take on all this, including the different votes that were taken as the Democratic leadership looked for a majority:

The Feingold and McGovern amendments both provided that a troop redeployment out of Iraq begin within a set number of days after the passage of the bill. These were tougher than the timetable bill, in other words. In the Senate, 29 out of 51 Democratic senators voted yes. In the House, 169 out of 233 Democrats voted yes. A glorious total of two Republicans in the entire Congress voted yes.

Yet some twit commenting on Think Progress wrote We can’t even get Democrats to vote for timetables. Unfortunately, I think this notion is common among a large lump of people who passionately hate the war but aren’t paying close attention to what’s actually happening in Washington to end it.

Further, the concept of overriding a veto seems to elude some people. Bush has just said he wants a South Korea style presence - superbases and fifty years. What makes anyone think he’ll listen to 25 Republicans? If 25 Senate Republicans voted with the Dems, that would be more than enough to override Bush’s veto in the Senate. By law, Bush would have to comply if Congress overrode a veto. If he didn’t — well, that’s never happened before. It could get interesting.

I agree there’s plenty of reason to criticize the Dems, but it worries me when large numbers of “progressives” develop knee-jerk antipathy toward the Dems. This is not helpful.

There’s a middle way between mindless boosterism and mindlessly assuming the worst. This middle way has two steps: First, be informed. Second, think. [See the original.]

Readers may have noticed a number of blogs that talk about being members of the 'reality-based community.' There's a reason for it and even a number of progressives could do a better job of being reality-based. The stakes are high as we approach the second decade of the 21st century with little progress in Washington. But there is movement. And I believe reform is coming. And there are many, many people with their eyes open.



***Personal Note*** I'm determined to keep Donkey Path going and I will post as often as I can. I'm sure regular readers have noticed fewer posts lately. That's life. I have bills to pay, a body that doesn't always cooperate, and not many working years left. It's too bad blogs provide income for only a few. But I deeply appreciate the readers who keep dropping by from Swisher, Iowa to Orange County to the area around Rome, Georgia, to several readers in Ohio and to a frequent reader from Ludington, Michigan (or thereabouts) and to many other readers elsewhere I recognize. At least ten percent of my readers come from other countries and that's been an eye opener for me. Blogs truly are an international affair and it's important for bloggers, readers and commenters to keep that in mind. The world is watching all of us and wondering how things will turn out. I hope for the best.