Tuesday, 9 February 2010

Electric pizza deliveries are go

While the doomers hole themselves up in their basement apartments with their canned beans, ammo and MREs awaiting the zombie hordes, I will be watching the show on my big screen TV with popcorn and pizza delivered from dominoes. As I stated elsewhere, the doomers are out to lunch when they suggest that the logistics infrastructure will collapse post peak oil.
Given that fully loaded semi trucks combined with a hub and spoke delivery system and long distance container based shipping is the most efficient use of oil we currently have, when oil prices start to rise because of peak oil, it's obvious that the dollars will go to these rather than "local" production of food. The remaining leg of the logistics infrastructure is the last mile which is currently inefficient since it's based on low mileage low efficiency gas or diesel vehicles to take the shopper to the store. In the case where the shopper sits on his/her ass watching TV and ordering by phone or online, the inefficiency of the last mile is removed. That's already true with pizza delivery to multiple stops on a single run even with conventional vehicles. But now we have all electric delivery vehicles courtesty of Ford. The all new 2010 Ford Transit Connect available at a dealership near you.

Also available: full sized electric buses from Optare and 12-15 seater minibuses from Smith Electric and electric taxis from Mercedes. Seems the shopping malls, commuting to work and having frivolous crap bought on the internet delivered to your doorstep are not dead either.

Peak Oil Dieoff? Hit the snooze button.

BMW Completes successful year long trial of Electric Mini

The results of the year long BMW lease of all electric mini's is now in.
The BMW group conducted a one year study involving 450 drivers who lease their electric Minis.
The results are the following:

• People found the range of 100 miles to be more than adequate
○ The reported range under real world conditions is between 70 to 100 miles with 45 per cent reporting a range of 100 miles.
○ Drivers typically drove 30 miles round trip on average trips.
○ The average trip of a US driver is 40 miles per day and thus the range is adequate without having to charge away from home. This was validated by the study.

• The electric cars drive as well as conventional cars
○ Drivers reported driving the Mini E as "fun" and especially enjoyed trying to extend the range by the way in which they drove as well as using a single pedal to accelerate and decelerate.
○ Once accustomed to the Brake Energy Regeneration function they enjoyed driving their conventional vehicle less.

• The limited range did not pose any problem.
○ The US recharge needs 4-5 hours and though most people didn't need to recharge once a day because they usually drove far less than the 100 miles, about half of the drivers recharged daily as a matter of routine.
○ Recharging away from home was unnecessary. This indicates that less charging stations would need to be built than initially expected to overcome range phobia of the typical conventional driver since few journeys would be over 100 miles other than long road trips.

The Financial System will collapse because of Peak Oil Part II

The collapse of the financial system post peak oil part II
In the first part I debunked the myth that the global financial system will collapse once peak oil becomes evident because allegedly "growth" is based on oil and when oil stops growing we will no longer have growth. I did this by demonstrating that we do not in fact have a growth system but instead have a cyclical system and that our system is based on risk rather than the prospect of continual growth.
I will continue this by asking the question: Can the payment of interest be continued past peak oil?

This question is a very loaded question replete with multiple assumptions (as are many of the assertions on which dieoff are based).
The answer to the question "Can the payment of interest be continue past peak oil?" is met with another question: "Can surplus be generated post peak oil in order to pay interest?"
This is turn is answered by the question: "Do we or can we do work other than that provided by oil powered machinery?" and "Will this work provide any surplus?"

If we look closely the ultimate question is this: After peak oil, will ALL work be agricultural?
If the answer is yes then clearly there will be no surplus and thus no interest.

Back in the real world however, we see that even in heavily agricultural countries cities existed prior to the use of oil. Cities clearly are not deriving their income from agriculture and THUS they must have been living off of some kind of surplus. This is simple specialization of labor. In addition, in every single human society there is a power law describing the wealth distribution of the population. The human population since the invention of agriculture has never been homogenously poor. There have always been rich people, wealthy people and those who service them living in the cities. This is not likely to disappear after peak oil. And since the definition of a wealthy person is someone who has more than they need to live, quite clearly such a person will be capable of paying interest since they will be able to accumulate savings. This is also the case for EVERY SINGLE PERSON who earns more than their daily bread.

It's also interesting to note that the world's largest investors (such as Warren Buffer, HSBC bank etc) are not merely investing in gold, oil and ammo but instead are investing in what they reckon will be the markets of the future (i.e. electrified transportation systems, enhanced oil extraction, shale gas, renewables and nuclear (among other things)), quite the opposite of what you would expect if they were aware (as doomers like to suggest) that the world was about to disappear up it's own butt due to the collapse of the financial system brought on by peak oil.
But then again, rich people and their advisors are clearly stupid and unqualified right? Obviously the doomers know better. Sheeesh...

Those who say peak oil will lead to the collapse of the financial system are simply ignorant of real world economics. But that's the point isn't it? The dieoff crowd says "economists are wrong" and thus the world is doomed. My five bucks says otherwise.

Will the decline of large fields lead to dieoff?

One of the often quoted "truths" spouted by the dieoff doomers is that the decline rate post peak will depend on the world's giant fields and by proxy when the world's giant fields go into decline the world has effectively hit hard depletion. This comes from Ivanhoe L.F., & Leckie G.G's piece in 1993 titled "
Global oil, gas fields, sizes tallied, analyzed" which effectively says that 94% of the world's oil and gas lies in 1500 large fields.

I question this received "wisdom".
For a start, the distribution of virtually every other size plot in the natural world shows a power law.
Take lakes for example: there are only a few dozen giant lakes in the world but there are millions of small lakes. As wikipedia states:
"Small lakes are also much more numerous than big lakes: in terms of area, one third of the world's standing water is represented by lakes and ponds of 10 hectares (25 acres) or less.[citation needed] However, large lakes contribute disproportionately to the area of standing water with 122 large lakes of 1,000 square kilometres (390 sq mi, 100,000 ha, 247,000 acres) or more representing about 29% of the total global area of standing inland water."

If wikipedia is correct about the distribution of lakes (and we have no reason to doubt it) is it possible that the distribution of oil fields is somehow different than the distribution of lakes given that both were formed by natural processes?

I doubt it. There's something clearly wrong with the analysis. I do not believe that 94% of the world's oil lies in large fields when only 29% of the world's fresh water lies in large lakes. It doesn't make sense. I also note that there has been no update to the 1993 piece and this is the crucial piece on which many of the forecasts of depletion are relying on. If there is nothing to offset the decline from large fields then world depletion EQUALS large field depletion.

One point however: it IS likely that the distribution of the EASY TO DRILL oil fields are disproportionately skewed towards large oil fields simply because of cost vs profit. Large fields are easier to find and compare favorably to the sunk costs and overheads of the majors. Majors simply cannot develop the small fields because their costs do not permit. This is true in every business: a small niche market is not worth doing for the likes of giant corporations like Coca Cola, Lever Brothers etc If this is true (and there's no reason to suspect it isn't), it suggests that small oil fields are disproproportionately likely to not have already been developed compared to the giant fields. If this is true combined with the distribution of lakes being possibly similar to that of oil fields we could deduce that we still likely have the same amount of oil as in the large fields but in smaller fields still remaining to be developed. If this is the case, it's a strong argument that the depletion rate of the large fields will be tempered by the development of the smaller fields to some extent but at much greater cost. It can be argued of course that cost is indeed the issue. It's not. The issue is not greater cost, it's continually increasing cost which cannot be adapted to in a reasonable time frame. If the next tranch of oil fields to be developed are all smaller but more or less of the same cost and similarly for the subsequent tranch there what we are likely to see is a step change in the price of oil rather than a smooth and continous price upwards till the world economy explodes. And if we see step upwards and a plateau at a particular price, the question will be asked: have we yet reached the price at which it's cheaper to move to electric power for most applications that are currently powered by oil? Time will tell.