Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Oct 15, 2004 Posts: 224 Location: Illinois, USA
Posted: Sat Jan 29, 2005 3:33 am Post subject: Alternative Energy Resources
The Oil, Oil, Everywhere article on today's homepage got me thinking.
When oil becomes expensive, this will cause other energy resources to become more profitable, and will cause them to be used more often. For once, the economists got it right.
Problems is, those alternatives will still be expensive! People still die and become poor in times of shortage, and people still lose jobs. History shows this. The reason why: They can no longer afford life's necessities, because their shortage will make them expensive. Look at any shortage in history, and you will see that--even if alternatives to the shortage are available--people (the poor) still suffered (and occassionally died).
This is an important lesson for many newcomers to remember. There will be oil, electricity, heating, and food many years after peak oil. There will be hydrogen-powered vehicles, common gas-powered vehicles, jet planes, and satalite television. Problem is, most people will be unable to afford them; such people will learn how to live without oil products, or die. Even today, there is more than enough food in the world to feed everyone, but many people starve because they cannot afford it; those who refuse to prepare for peak oil will one day become one among those starving people. Therefore, prepare.
(The "Other available resources will become profitable" argument is one of the most popular, and probably the single most dangerous argument used to oppose personal- and societal-changes to prepare for peak oil. For that reason, I think that we should discuss this at length, and make it a sticky topic, possibly.)
I have always been wondering how market mechanisms would ever overcome the price problem.
I think there is just one possible effect supporting the economist's reasoning: Once big money is invested into alternative sources of energy, you get scale effects previously unachieved in this domain, that means the production cost per produced energy unit sinks. This investment of big money didn't take place earlier, because the investment in conventional resources returned profits much easier - the upfront investment for most of the technology had already been made long ago...
I guess when peak oil set in, energy prices will rise massively, sparking large-scale development of the alternatives. Once the scale effects set in with the alternatives, prices will go down again, but probably not to the same level as before, because all currently known alternatives have an intrinsically higher production cost "bottom line" or lower maximum EROEI than oil.
For example, the EROEI of oil sands must always be lower than that of crude oil, as it must be mined, it can't be pumped and it has to be separated from the sand particles.
This price curve applies only to the production cost, of course. If production cannot match or exceed demand (demand in real world terms, not in economist's terms), we will still see rising prices even if the production cost is low - just as with the oil from the easily accessible persion gulf crude oil, which is still pumped at just a few dollars (as low as 2$ per barrel?), but currently sold at about 45.
Joined: Dec 27, 2004 Posts: 13179 Location: naive idiot fantasy world
Posted: Sat Jan 29, 2005 1:23 pm Post subject:
This continues to confuse me:
Quote:
energy prices will rise massively, sparking large-scale development of the alternatives.
How, once everything has become more expensive due to expensive oil, will there be all this extra money to invest in alternatives? Who will be investing in them? The oil companies?
Joined: Dec 07, 2004 Posts: 483 Location: Cheshire, England
Posted: Sat Jan 29, 2005 2:33 pm Post subject:
Ludi wrote:
How, once everything has become more expensive due to expensive oil, will there be all this extra money to invest in alternatives?
Research and investment in alternatives doesn't depend on 'extra' money. When the price of oil is high, the alternatives will attract investment cash. We are already seeing this happening. For example if you look at the share price of companies that deal in uranium, as the price of oil has increased, so has their share value.
Ludi wrote:
Who will be investing in them? The oil companies?
Yes. They have been doing so for many years now. Oil comapnies often buy renewable energy companies;
Joined: Dec 27, 2004 Posts: 13179 Location: naive idiot fantasy world
Posted: Sat Jan 29, 2005 3:54 pm Post subject:
Quote:
When the price of oil is high, the alternatives will attract investment cash.
This confuses me. Please pardon my density. But if everything is more expensive, how will investors have money to invest? Are we talking about just the very rich? So these technologies will be at the mercy of the rich? How will others, the commoners, afford them when everything is expensive? (Food, transportation, materials, etc).
This just puzzles me. I have no training in economics.
Posted: Sat Jan 29, 2005 5:59 pm Post subject: Investments
Ludi wrote:
How, once everything has become more expensive due to expensive oil, will there be all this extra money to invest in alternatives? Who will be investing in them? The oil companies?
Many investments (perhaps most) are held by institutions: insurance companies, retirement funds, mutual funds, etc. They have more money than we can imagine. When costs go up they reduce their payouts or increase their prices. The price of food and heating isn't a direct problem for them. If employee costs get too high they merge and have lay-offs.
Joined: Aug 18, 2004 Posts: 694 Location: SF Bay Area, Calif
Posted: Sat Jan 29, 2005 6:02 pm Post subject:
Two observations to add:
1. I am less confident that renewable energy prices will go down much with economies of scale. I suspect the so-called economies of scale were largely an artifact of cheap energy. For example, a large centralized manufacturing plant relies on cheap energy to transport both raw materials and output.
In fact, higher energy prices will have an impact at every point in the manufacturing process: transport, raw materials (more expensive to mine and refine), labor (more expensive for workers to eat and get to work), etc.
Instead, local, labor-intensive technologies will tend to be more cost-effective. For example, using clotheslines rather than clothes dryers.
2. In your extrapolations, don't forget the political dimension.
arocoun wrote:
There will be oil, electricity, heating, and food many years after peak oil. ..Problem is, most people will be unable to afford them; such people will learn how to live without oil products, or die.
People who are squeezed by high energy prices will riot and topple governments. Some recent mild examples:
Quote:
Freezing weather hits Algeria amid riots over fuel price hikes
ALGIERS (AFP) Jan 27, 2005
Freezing weather across Algeria is heightening the risk of more violent unrest following a government decision to hike fuel prices that has already caused rioting in half-a-dozen towns across the country.
Terra Daily
also see Reuters article
German Truckers Fume Over Fuel Prices
BERLIN, Sept. 26, 2000
(AP) Thousands of truckers from across Germany clogged the streets around the capital's center Tuesday demanding relief from higher gas prices. And they got some when the government offered low-interest loans to some trucking companies.
The protest is the biggest so far in Germany, on the heels of demonstrations that halted traffic in France, Britain and Spain before easing in recent days. Elsewhere Tuesday, minor blockages continued in Spain, where markets ran out of fish, and Greek motorists fearing for shortages due to trucker strikes lined up for gas.
CBS News
The political landscape will look very different after Peak Oil.
Joined: Oct 15, 2004 Posts: 224 Location: Illinois, USA
Posted: Sat Jan 29, 2005 6:19 pm Post subject:
Wow. I'm happy that one of my topics is getting such a high rate of responses, and on such an important topic too!
I agree that the "economy of scale" will likely become obsolete, if there are no cheap forms of transportation. Before oil, everything had to be transported by waterways. I'm sure that, in the future, all industry will have to once again be near rivers and oceans, and maybe railroads. Because of that, economy of scale will slowly lose its effect.
Joined: Oct 12, 2004 Posts: 1647 Location: Davis, California
Posted: Sat Jan 29, 2005 11:43 pm Post subject:
One thing people forget is that as oil goes up in price, so do the alternatives. They directly depend on many levels with oil. Transport, production, and development will have significant costs with respect to oil.
Transport : Moving anything nowadays takes oil-derived products.
Production : Many machines are run on oil, use oil lubricants and are themselves made by oil powered machinery.
Development : Thousands of industrial chemicals are derived directly from oil, chemicals that will be used in every stage of research, development and deployment. _________________ Joseph Stalin "It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything. "
Joined: Jul 18, 2004 Posts: 198 Location: S. Yorkshire, UK
Posted: Sun Jan 30, 2005 4:57 pm Post subject:
Quote:
One thing people forget is that as oil goes up in price, so do the alternatives. They directly depend on many levels with oil. Transport, production, and development will have significant costs with respect to oil.
This is of course true, but the 'real' alternatives to oil, will not be so severely effected.
Electricity produced from coal, where the coal is mined using electric mining shovels and transported by electric freight train, will only be minimally effected by changes in oil price.
On the other hand, biodiesel produced from crops grown on a highly mechanised farm and then transported long distances by road to a suitable refinery will be more heavily effected.
When it comes to automotive fuel alternatives, I have a positive note (I know, this has been posted a few times before): biodiesel offers the advantage that it must be grown in tropical and semi-tropical regions, if it wants to be competitive with crude petroleum.
It sounds bizarre, but the EU is thinking of forming alliances with dead poor countries in Africa, for the mass production of biodiesel: they grow the crops and produce the oil, while the EU refines and blends it.
This new hype, called "Afrodiesel", offers the potential to lift thousands (millions) of farmers out of poverty. It sounds like a fantastic idea, since you're coupling development goals to the production of fuel alternatives.
Tropical oil crops (such as coconut and palm oil) are already competitive with crude oil at today's commodity prices.
Of course, we're talking about a few million barrels of oil per day maximum. But the mere fact that Africa has the soil, land and climate needed to cultivate crops competitively offers great potential to local Africans.
Brazil is already exporting biodiesel to Europe and Japan.
A final detail: the entire process of mechanically harvesting and transporting the oil, is done using biodiesel, so you're not dependent on expensive fuels to transport the produce to harbors, and to ship it to Europe.
Joined: Aug 18, 2004 Posts: 694 Location: SF Bay Area, Calif
Posted: Sat Feb 05, 2005 10:56 pm Post subject:
David Blume gave a very optimistic talk on fuel alcohol from crops at the Yellow Springs Ohio conference on Peak Oil last year. Blume is a great salesman and he's been working on alcohol for many years. I'm skeptical, but the piece is worth reading if you're interested in alternative fuels.
Joined: Aug 22, 2004 Posts: 91 Location: Potsdam, Germany
Posted: Sun Feb 06, 2005 1:29 pm Post subject:
I am not convinced that economies of scale won't help the alternative energy sources. Yes, today oil is almost anything, but a large part of the production cost of technology is the r&d depreciation and the labor cost to produce and to maintain it.
So rising oil prices will have an impact, but will hardly conpletely compensate for the large gains that you can make with economies of scale.
The social aspects are something completely different and very hard to predict. I gues that the longer politicians and media wait to tell people the truth, the greater the shock and awe will be...
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