Death by Jevons Paradox

One of the most quoted myths among doomers is that it's impossible to cut back on Energy Usage without collapsing the economy or that any attempt to cut back in one area of oil usage will ultimately lead to more consumption in another area or that substitutes are impossible.

I won't argue in this post about efficiency programs such as those proposed by the Rocky Mountain Institute, but here instead I will focus on one application of "Jevons Paradox".

Jevon was a late industrial revolution thinker who suggested that Britain would eventually collapse because of it's dependence on coal. His reckoning was that consumption would be reduced in one area of demand but would balloon in another once overall demand was reduced temporarily.
The reasoning was that coal was so useful combined with no available substitutes that no attempt could be made to reduce demand. It's a variation of a single variable commodity in a commons accessed by multiple players with no incentive to limit their consumption, known as "the tragedy of the commons". This theory along with Jevons Paradox has several flaws, not least of which is specialization of trade in secondary commodities in exchange for the commodity produced from the commons.

This is the exact same fallacy that drives dieoff theory and most of the peak oil doomer arguments. There is no substitute to oil they say and demand can not be reduced by greater efficiency and thus once oil supplies peak and start to decline, death of industrial civilization is guaranteed.

Over time, it has become apparent that this is simply not true and that not only can efficiency and demand destruction reduce overall demand, but also there are substitutes to oil.

But wait, say the doomers, there is something called the export-land model.

This theory is also deceiving. What it basically says is a continuation of the original fallacy (there is no substitute and no possible efficiency gains) but that in exporting countries, the demand will continue to rise ad-infinitum until the point at which peak production is reached.
At that point, production will be declining but demand in the exporting country will be rising along with everybody else in the importing countries. Since the exporting countries demand rise will make less available for export, the importing countries will see a greater hit than the overrall decline rate.

Although the data bears this out (especially in Saudi Arabia) to a large extent for several (though not all) conventional crude exporters, there is no 100% consensus on the data across the board.
In reality we have at least one clear example where an exporting country limits its own consumption in order to export as much as possible: Norway.
There are other outliers, though the data suggest *some* basis to the export-land model.
In particular, the export-land people point to Saudi Arabia and Iran as both increasing consumption ahead of any declines and potentially even past decline.

Now taking any desire to build Nuclear Weapons out of the picture, it could be argued that the Iranians are going counter to Export-Land by seeking to build nuclear power stations rather than continue to burn oil in their power stations. Across the globe, import-land countries have substituted out oil fired generating plants for alternatives such as natural gas fired, nuclear and renewables.

Also, according to export-land it should be impossible for heavy importers such as the United States to decrease internal demand for oil never mind start exporting oil or oil substitutes. And yet, even when the United States has to spend a proportion of it's GDP to defend oil supplies militarily AND import two thirds of its oil, it is *still* exporting oil substitutes such as liquid natural gas. It should by all rights be converting every last cubic inch of natural gas into oil according to export-land, shouldn't it?

But let's ignore that and return to the star of export-land itself: Saudi Arabia.

Just recently, Saudi Oil Minister Ali al-Naimi stated that he sees "no difference between oil reserves and alternative energy" and that Saudi Arabia is now taking steps to utilize other forms of energy such as "their massive resource of solar energy combined with nuclear energy".

He notes that current consumption of oil within the Kingdom is around 3 million barrels per day and projects that consumption could rise to 8 million barrels per day around 2030. Since the volume of exports is 8 million barrels per day, even with no peak and decline in production, by 2030 there will be no oil available for export from Saudi Arabia.

Not even considering the effect on importing nations of losing Saudi Arabia, the impact on Saudi Arabia itself would be dramatic, since the economy is so skewed towards oil production and so lacking in other areas.

al-Naimi goes on to say, "a continued rise in local consumption will ultimately limit the export capacity of the Kingdom and it's DEVELOPMENT (emphasis mine). We must therefore
transform a country dependent SOLELY on oil to one using different sources of energy - nuclear and renewables,in order to conserve oil and keep it for export."

Thus the export-land paradigm is being intentionally broken even by it's superstar Saudi Arabia.

Further, al-Naimi goes on to say, "We are consulting with everybody who has technology in these areas - Koreans, British, Americans, Japanese and French".

In other words, the one with the most to gain from an increase in oil prices recognizes the solution both to Jevon's paradox and to the tragedy of the commons: Trade and Substitution. Even as oil prices go up and up, Saudi Plans to spread the wealth and limit the damage from rising oil prices precisely to those economies who would be most impacted by oil price rises and decreasing exports (assuming no substitutes existed).

Human ingenuity, greed, self-preservation and the profit motive win again.

Nice try doomers, but still no cigar.

Oooops! Yet another substitute: this time Plastics.

So according to dieoff.org the main reason we are about to dieoff is that global oil production is about to go into a precipitous and imminent decline and that since there are NO viable substitutes and every single product made out of oil is necessary to our very existence we are therefore doomed to a massive population crash.

I have diligently debunked this theory by means of pointing out that not only do we have substitutes but also that some of the products currently made by oil are not even necessary.

Here's yet another one:
Scientists at the University of Massachusetts have just come up with a zeolite catalyst that can be produced cost effectively leading to a process to create plastic feedstocks (such as bezene, toluene, xylene and olefins) from renewable biomass which is on par economically with current production methods using petroleum based feedstocks.

The new catalyst is an add-on drop-in piece of technology which can be used with no change in current infrastructure.

What's interesting about this is that it increases the net worth of existing cropland since currently low-value waste products can now be converted into high value chemical feedstock with an end-value higher even than fuel.

Given that we use about a million barrels a day in North America for chemical feedstocks this is great news.

Yet more substitutes: Asphalt and Cement

Korean scientists have developed a biotech method for producing cement and an asphalt substitute.

The method works by harnessing a specialized bacteria which secretes an enzyme which rapidly turns sand into sandstone, with properties which can be tweaked to match either pavement on highways or else cement for buildings.

For our purposes this is yet another die off killer (as we all know, dieoff rests on there being no viable substitutes to oil). In this case asphalt competes directly with petroleum derived from tar-sands. i.e. with this process we won't need to use valuable oil to pave our roads. Instead we can used this bio-engineered sandstone.

Additionally, cement is very energy intensive and with this process the energy requirements will come directly from the sun without any artificial energy requirement whatsoever.

By my reckoning we use about a million barrels a day between cement and asphalt in North America alone. So given that we use about a quarter of the worlds oil on a daily basis I reckon thats 4 million barrels a day potentially could be saved.

If we calculate a decline rate of 2% a year then this alone pushes peak oil back 2 years or cuts the decline rate in half for four years (which is *plenty* of time to assist with bringing online substitutes - remember the Hirsch report says we need a crash program lasting ten years to give us breathing room).

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.

Hirsh Report Liquid Fuels Shortage Debunked

More on the "no substitutes" bit.
So let's imagine for a second that oil production starts falling off a cliff next Wednesday.
The typical gleeful response of the dieoff crowd would be: "there are no substitutes to oil" and thus the transportation network will collapse and then the lights will go off etc etc and WE WILL ALL DIE.

The Hirsch Report, which is a little more reasonable than the sackcloth and ashes crowd over at dieoff.org, says "if we do not mitigate there will be a liquid fuels shortage especially in transportation after we peak".

Unfortunately for this premise, however, is one little fact: We have an ENORMOUS GLUT of shale gas and gas is a good substitute for oil, especially in transportation.
Estimates are that shale gas reserves are up to five times the "conventional" reserve which did in fact peak and start declining in North America about 8 years ago and now Europe.

Now what about those pesky substitutes? Can we run our transportation fleet off of natural gas? Is there infrastructure in place to do so? Will all our delivery vehicles stop running because we're "out of oil" since the party is over?

Well seems to me that the local gas utility runs their maintenance fleet of vans and trucks off of Nat Gas. Also seems to me that every second gas station is ALREADY SELLING Nat Gas.

I've also seen a ton of taxi cabs running off of natural gas.

So how much does it cost, exactly, to convert your car to run on natural gas?
All of about four grand.

Now I personally like electric transportation and conservation as the long term solution to peak oil induced transportation bottlenecks, but you can hardly argue with a massive glut of natural gas and such low conversion costs.

Oh yeah. There's also gas to liquids. Such as gas to aviation fuel. I wonder if now is a good time to buy airline stocks.

Now where does that leave us?
Well if we try to peak into the crystal ball of "life after depletion" it seems that we have at least three sustitutes with which to mitigate so while the steepness of the conventional curve cannot be flattened, we can substitute out the end-uses.
Conservation "take the damn bus".
Electrification "take the damn electric bus" and "look at me go fast in my new Tesla".
Conversions to run your car on nat gas "Oh look, it's only a buck twenty for a gallon of nat gas".
Gas-To-Liquids "Kunstler says we can't run the interstate truck fleet without diesel. Maybe not, but there's no reason we can't run our interstate fleet on gasoline trucks converted to nat-gas".


So yet another dieoff myth debunked. Not only do we have substitutes, but they are relatively cheap compared to the other substitutes like electric vehicles which currently carry a price premium.
Doom? Maybe, but if so, not yet and not because of peak oil.

For more on the natural gas glut see http://ghawarguzzler.blogspot.com/

Batteries will save us

The premise is this: dieoff says technology is not a substitute for oil.
In this post I will argue not only that technology is in fact a substitute for oil but that we've been using technological substitutes for an age and a day.

In the middle ages, we reached "peak wood" where Europe's population had soared due to the invention of better farming methods, and correspondingly, the hugely increased demand for wood depleted Europes forest. Subsequently, there was the great plague and replacement of wood with coal, but was there anything else notable that happened?

Why yes there was. Since the population collapsed, there weren't so many laborers available to for example, mill flour. So what happened?
The response was technology. More specifically wind.

Windmills and river mills were invented and this renewable power freed up labor to do other things, like go off and invent steam engines.

Other times technology has saved us are the taming of fire (we could cook tough plants previously unable to be eaten raw), the invention of agriculture, the green revolution etc.

So I guess we could say there is precedent for us escaping from bottlenecks.

Now we are faced with a bottleneck of how to get our energy system off of oil before it begins it's precipitous decline.

Hubbert himself argued that nuclear would be the next big thing. I won't call him a liar, but I will say that nuclear though it could do so all by itself, is not our only solution.

Every day we have more wind and more sunlight coming into the Earth energy system than our entire world consumption for a year.

It's also worthwhile pointing out that while oil in in imminent danger of depletion during the next decade, this is not true of either natural gas or coal. So any transition period could be partially backed up by natural gas or coal.
Both of these are good substitutes for oil if a little expensive to get them into liquid form. But we have plenty for now.

In the meantime, the build rate of wind is scaling up at 35% increase in global installed base every five years and accelerating. Likewise solar. Nuclear is hardly budging in North America and Europe but China is growing it's installed base of nuclear at half the rate it's growing it's wind. It's also worth pointing out that we have several regions with large installed bases of Nuclear already. i.e. they don't need any more. France and Ontario are two such regions. Sweden is another.

What does electricity have to do with oil depletion?
Plenty as it happens. Up till this decade the closest substitute for oil powered transportation such as automobiles and 18 wheeler trucks was biofuel and natural gas.
Well we have a glut of natural gas right now so that's not such a problem.
Previously, though, that was it. Sure there were electric trains and electric streetcars and trolley buses etc, but in many regions the streetcars and trolley buses are now gone and replaced with interstate networks.

In a pinch we *could* rebuild the streetcar networks and in fact, many countries are in fact doing so. The notable laggards are the UK, Canada and the United States.
To be fair, though, most Canadian cities already have electric mass transit systems of some sort. Even Calgary which is the oil capital, has the electric C-Train. Toronto's mass transit system is electric and world class.

But what about systems that are not point to point, like bus based networks or the logistics networks of supermarkets?

Well as it turns out we have a model for the logistics networks from 1950s Britain.
They are called milk floats. 30 mile range, slow moving lead acid battery powered delivery vehicles. Using even this basic technology combined with electric trains, the logistics network of the 1950s could even then have been run off of electricity.
Sadly, though, this technology fell out of favor and was replaced by the more versatile diesel truck with a higher speed and a better range.
In a pinch, however, if need be, we could get by with a 1950s logistics network.
But we don't have to. Batteries have advanced so much in the last ten years that we now have 13 ton trucks with a top speed of 65mpg and a range of greater than 150 miles. Easily adequate to run a logistics fleet.

If we ignore for a minute that in the same time frame they used streetcars and trolley buses in place of the diesel powered buses we have now, what are our current options?
Well as it happens, we also have in recent times developed high speed, decent range elecetric buses such as Proterra buses which can be charged to 80% capacity in 10 minutes. With a range of 100 miles, a ten minute charge gets an additional 80 miles.
This can easily be adapted to virtually any modern bus service.

Now the question will no doubt arise from our doomer friends: where will we get all the electricity to do this if we have millions of electric trucks and electric buses?

The answer is simple: we will build more gas plants, coal plants, nuke plants and more windmills.

Production capacity to build all these electric vehicles will take some time to ramp up but in the meantime it's very straightforward to convert to natural gas. And like New Zealand did in the 1970s during the last oil crunch (where they converted up to 10% of their fleet to natural gas) we will likely do the same, all the while, gradually building up an all electric fleet.

Now one point that's not been adequately covered is the rate of advance we've seen in the last ten years and then a comparison of where we are now and where we will be ten years from now.
When I originally freaked out after reading dieoff.org all those years ago, battery tech had hardly advanced since the 1950s. Sure there were NiCad and Nickel Metal Hydride, but the energy density and the range was only 2-3 times that of lead acid batteries. That meant you had literally tons of weight for a range of, say 50-70 miles which took 10 hours to charge.
Compared with a standard automobile or truck which could be recharged at a gas station in ten minutes by filling up and then drive for hundreds of miles, clearly the existing technology at the time was a poor substitute. I've already argued that it was a "good enough" substitute to keep the lights on and food in the supermarkets, but certainly not good enough to have all electric hummers.

Are we there yet?
i.e. can we have all electric hummers with a 200 mile range?
Unfortunately with the current best-of-breed batteries (Lithium Ion) we cannot.
We have 13 ton trucks with a 150 mile range than take ten hours to charge or can charge to 100 mile range in half an hour.
Likewise we have smaller personal automobiles like the Th!nk city with a range of about 100 miles which take 4 hours to recharge or else a range of 80 miles after a fast charge of 30 minutes. The Tesla Sportscar is similar. 200 mile range in ten hours or 150 mile range with an hour fast charge.

Clearly these are adequate to keep more or less the current paradigm running. They are not, however, a complete replacement.
Is a complete replacement even possible with batteries? Well with current generations of batteries no.

But there are several breakthroughs on the horizon it has to be pointed out.

There's this:
"Air fueled battery has 10 times the energy density of current lithium ion batteries"
So we could have a small car with a range of 1000 miles. Surely acceptable.
Do you think we could maybe have a Hummer with a 150 mile range?

There's this:
"New Lithium Battery can store three times the energy of conventional lithium batteries"
http://www.sciencedaily.com/releases/2009/05/090518111731.htm
So a 450 mile range on a small cheap car or else a hummer with a 75 mile range?
Acceptable to anybody? I'd say yes.

And there's this:
"MIT Lithium Battery could recharge in seconds rather than hours"
Hmmm. If we combine a 450 mile range battery with recharging in seconds, can we say that's a perfect replacement for what we have now?

And last but not least there's this:
"Project Better Place will provide a network of battery swap stations that will allow owners of electric cars to have a depleted battery swapped for a fully charged one in a drive through station like a car-wash, all in less time than it takes to fill the gas tank of a conventional car"
http://www.betterplace.com/solution/charging/

So unlike the opinion of the dieoff crowd that technology won't save us. I'd have to disagree. Not only will technology save us, but it will be a pre-existing old technology that will save us: the humble battery.

For those with more interest in this topic,
please also visit peakoildebunked and ghawareguzzler as well as sciencedaily, newscientist and greencarcongress.

No Substitutes to Oil?

Over at dieoff.org, which is the scariest peak oil site bar none out there, one of the main tenets is that there are "no substitutes" and that renewables contribute only a little and will never contribute more than a little.

In fact, there are many substitutes and they are contributing all over the world and in many industries.

The main area where peak oil is likely to be a problem is transportation.
Do we have a substitute for oil in transportation?
Well yes we do.
Batteries and electrified transit systems.

There are at least five examples of huge electrified systems that I can think of off the top of my head (and several lesser ones). They are: The New York Subway, The Paris Metro, The London Underground , The Tokyo Subway and the Mexico City Underground. Smaller systems include the Dublin Bart, The Glasgow Underground, the Portland Light Rail system, the BART system, The Toronto Underground and Streetcar system and The Calgary C-Train among others. I'm sure others could list several more electrified systems.

Now, that's all well and good, but the electricity to power these systems has to come from somewhere.
Dieoff.org posits that when oil peaks, the lights will go out and then we will end up a few years later back at "olduvai gorge" levels of technology.

In fact, electricity doesn't come from oil in the majority of cases.
There are five main sources worldwide: coal, natural gas, hydro-electric, wind and nuclear. Others such as solar are neglible but fast growing.

The dieoff crowd, however, would try to backpedal the argument "but electricity doesn't use oil in most cases" by saying, "yes, but trucks use oil and the electric grid needs trucks to service the infrastructure. When enough parts wear out and there are no trucks to take the maintenance crews out there, the grid will eventualy fail".

Perhaps if there really were no alternatives to petroleum powered trucks. And right now, they are indeed mostly petroleum (gasoline or diesel) powered.

Currently.

There are alternatives, however, especially electric trucks.
Although there are not huge volumes of them in operation or in production, they could be produced in large volumes and they certainly do work as an acceptable substitute, especially examples from outfits like Smith Electric Vehicles with 13.5 ton trucks which have a top speed of 65mph and a range of 150 miles. Not too shabby. This is admittedly a new technology and to be fair to dieoff.org it wasn't available at the time the original site was put up, but the technology works for sure.

That said, we have had functional electric trucks for decades. This is not a new and untested technology. In the UK, milk was commonly delivered by electric trucks called "milk floats" from the end of the second world war up until the early 80s. Hardly a novel technology that "does not work". Sure they are based on decades old lead-acid batteries, but it would be a stopgap for transporting parts from a warehouse to any sub-stations on the grid.

As for energy sources for the grid, as said we have coal, natural gas, hydro-electric, wind and nuclear.
Of coal, we have pessimistically another fifty years worth at current rates of consumption and optimistically a hundred years worth. Of natural gas, there have recently been new technology breakthroughs that permit far better utilization of stranded natural gas than was possible before. This is especially the case with shale gas. Natural gas will of course peak, but there is sufficient for at least the next decade if not globally then certainly in North America and other areas with abundant shale formations. Nuclear is a good case in point too and was actually the solution posited by Hubbert himself to the then impending global peak in oil production that he foresaw. Hydro-electric is old technology like lead-acid batteries, and significant resource is already in place and going nowhere when oil peaks. Large scale examples of this are Ontario Hydro and Quebec Hydro as well as the Hoover Dam. China is building massive new hydro resource as we speak. Wind and Solar are interesting and ultimately we must depend on them.

According to dieoff, renewables such as wind will never make much of a difference. I beg to differ.
In a handful of regions, 20% of the electric power is supplied by wind and there's no real reason it couldn't go higher. Right now wind power is on parity with new coal and new nat gas plant on a lifecycle basis which makes it both a technical substitute and a price based substitute.

The big argument against wind is that due to it's intermittency it cannot ever get higher than a 20% penetration.

In fact, this is not the case. Even though it's true that a single geographic windfarm could conceivably be without wind, this is very unlikely to be the case with many geographically dispersed windfarms. The solution to the problem is more grid connections to make sure power can move from where the wind is blowing to the centers of consumption. Recent studies by a scientist named Gregor Czisch have shown that not only can this be done, but the cost is favorable. To quote an article in new scientist magazine "The wind is always blowing somewhere, just as the sun is always shining on half the globe. So with a large enough grid, variations in generation should even out, giving a reliable supply.
The project would cost more than €1.5 trillion, of which €128 billion would go on the lines and equipment for the supergrid itself, and around €1.4 trillion on renewable-generating capacity. To put this in context, the International Energy Agency forecasts that the global power industry will have to invest $13.6 trillion on fossil-fuel-based power generation by 2030."

So sure, we are currently not in the position where we have a continental or even a global super grid capable of taking renewable power from where it's generated to where it's needed, but it roundly debunks the point that it will never be done because it cannot be done.

So the remaining argument is this: What resilience is left in the system to get substitutes online quickly if depletion sets in starting tomorrow?

Well to answer that we need to ask the following question:
Are there any regions of the world that are currently significantly supplied with either nuclear or renewable electricity that also have a reasonable manufacturing base or at least the capability to ramp up quickly.

As it happens there are.
Ontario is mostly hydro and nuclear as is Quebec. Both are heavy manufacturing regions.
France sources most of it's electricity from nuclear. Switzerland sources most of it's electricity from hydro. Germany is in a relatively weaker position, but it is the largest user in the world of both solar and wind and is also a heavy manufacturing superpower. Japan, though it has no fossil fuels of it's own, supplies most of it's electricity from nuclear and tokyo which is a huge manufacturing region, just happens to have a world class metro system. Norway, which has abundant hydro power, also has one of the world's most electrified mass transit systems in the form of a high speed electric rail network, electric streetcars in oslo and an electric metro system. It is also home to the manufacturing facilities of Th!nk Electric, one of the two well known brands of electric cars with reasonable price and performance (the other is Tesla of California).

So it seems that even if depletion comes calling and it is severe, there are at least a handful of regions that have the ability to substitute. I'd wager that in such a scenario, rather than a global collapse back to the stone age and mass dieoff we'd really be facing what would amount to a transfer of manufacturing to these regions that are powered by renewables and nuclear. From there a bright renewable future would eventually emerge. And that's the WORST scenario.

Olduvai gorge?
Whatever.