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Why the Next Spike in Oil Prices Will Dwarf the Last One

madhedgefundtrader's picture




 

Ambassador Richard Jones, the Deputy Executive Director of the International Energy Agency, has some eye popping things to say about the energy space. The Paris based IEA was first set up as a counterweight to OPEC during the oil crisis in 1974, and has since evolved into a top drawer energy research organization with one of the best 30,000 foot views of the energy universe.

World GDP will grow an average 3.1%/year through 2030, driving oil demand from the current 84 million barrels/day to 103 million b/d. That means we will have to find the equivalent of six Saudi Arabia’s to fill the gap or prices are going up a lot. His ultra conservative target has crude at $190/barrel in twenty years, and his high priced scenario would send you rushing for a change of fresh underwear. 

Some 39% of that increase in demand will come from China and 15% from India. A collapse in investment caused by the financial crisis last year means that supply can’t recover in time to avoid another price spike. More than 1.5 billion people today don’t have electricity at all, but would love to have it. The best the Copenhagen climate negotiations can hope for is for CO2 to rise until 2020, and then plateau after that, because once this greenhouse gas enters the atmosphere it is very hard to get out. It would take 100 years of natural decay to get CO2 levels back to where they were just 20 years ago.

This will require a massive decarbonization effort reliant on nuclear, hydro, alternatives, and carbon capture and storage. Up to half of the needed carbon reduction can be achieved through simple efficiency measures, like ditching the incandescent light bulb, driving more hybrids, and closing dirty, old coal fired power plants. Natural gas will be a vital bridge, as it is cheap, in abundant supply, and emits only half the carbon of traditional fossil fuels.

The total 20 year bill for the rebuilding of our new energy infrastructure will exceed $10 trillion. Each year we kick the can down the road, this price tag rises by $500 billion. Now you know why I spend so much time on energy research.

Richard, who comes from a diplomatic career in Kuwait, Kazakhstan, and Israel, certainly didn’t pull any punches during my extended interview with him. I have been a huge fan of the IEA’s data base and forecasts since their inception. Better use the current weakness in oil prices to accumulate long term positions in crude through the futures (LOH10), the ETF (USO), the offshore drilling companies like Transocean (RIG), and leveraged oil and gas plays like Chesapeake Energy (CHK) and Devon Energy (DVN). When oil comes back, it will do so with a vengeance.

For more iconoclastic and out of consensus analysis, please visit me at www.madhedgefundtrader.com .

 

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Fri, 01/01/2010 - 13:06 | 179868 wang
wang's picture

MAD, thanks for the science lesson

 

`It would take 100 years of natural decay to get CO2 levels back to where they were just 20 years ago.

here`s a bit more science on that topic:

 

Is the airborne fraction of anthropogenic carbon dioxide increasing?

 

http://www.agu.org/cgi-bin/highlights/highlights.cgi?action=show&doi=10....

Fri, 01/01/2010 - 02:17 | 179710 Anonymous
Anonymous's picture

Peak oil in United States is going to play out like the
Weimar Republic after WWI. After hyperinflation, the German
people VOTED (yes VOTED) Hitler into power because he
promised them the good life.

When oil cost $10 a gallon, the good people of the United
States will VOTE for another demagogue who promises them
the good life: cheap oil to driver their cars.

And what will this demagogue do to lower oil prices? Launch
a preemptive nuclear strike against China and India that
will wipe out at least a billion people from direct impact
and another billion killed from radiation post apocalypse.

We already have permanent basis in Saudi Arabia and Iraq
and soon Iran to make sure that the oil flow our way.
Launching the nukes is taking out the competition for
that oil.

You can dismiss me as crazy. But then again, think about
how Hitler came to power. Democracy is a wonderful thing
isn't it?

Fri, 01/01/2010 - 11:09 | 179790 Anonymous
Anonymous's picture

Screwball though you may sound, without question demand destruction is a way to stretch supply. Your mechanism is a little different than the "demand destruction" discussed in 2009.

Thu, 12/31/2009 - 23:07 | 179622 Anonymous
Anonymous's picture

i think we have plenty of oil. they just make it look like we don't in order to control the price. same thing with diamonds really. diamonds are very plentiful but the supply is controlled to drive up the price. but this is not so with gold and silver.

Thu, 12/31/2009 - 22:18 | 179589 Madcow
Madcow's picture

According to the U.S. Geological Survey, there are 1.0 trillion barrels
of conventional crude oil across the globe —  primarily located in the Middle East.

There are 5.6 trillion barrels of heavy hydrocarbon resources — principally located
in North and South America.

 

Don't count out the technology companies, engineers, scientists, and industry innovators.

 

If they can bring on line the deep hard tar, oil goes back down to $40 and its back off to the races - 


Thu, 12/31/2009 - 20:57 | 179543 Missing_Link
Missing_Link's picture

If CO2 is such a huge problem, why have atmospheric carbon dioxide levels not budged in the last 160 years?

 

http://www.sciencedaily.com/releases/2009/12/091230184221.htm

Thu, 12/31/2009 - 20:36 | 179531 Anonymous
Anonymous's picture

the energy non-crisis:

http://www.reformation.org/energy-non-crisis.html

he has made some solid calls in past on price and timing....

Thu, 12/31/2009 - 20:33 | 179526 Anonymous
Anonymous's picture

If I remember correctly, when crude was $40 Williams called for it to go to $150.00 within a certain time frame due to his information. He also then stated that it would crash hard soon there after. He has more to say about the next two years according to his sources. Believe him or not is your call.

http://www.reformation.org/energy-non-crisis.html

About:

Lindsey Williams, who has been an ordained Baptist minister for 28 years, went to Alaska in 1971 as a missionary. The Trans-Alaska oil pipeline began its construction phase in 1974, and because of Mr. Williams' love for his country and concern for the spiritual welfare of the "pipeliners," he volunteered to serve as Chaplain on the pipeline, with the subsequent full support of the Alyeska Pipeline Company.
Because of the executive status accorded to him as Chaplain, he was given access to the information that is documented in this book.
After numerous public speaking engagements in the western states, certain government officials and concerned individuals urged Mr. Williams to put into print what he saw and heard, stating that they felt this information was vital to national security. Mr. Williams firmly believes that whoever controls energy controls the economy. Thus, The Energy Non-Crisis.

more:http://www.reformation.org/energy-non-crisis.html

GOOGLE: Lindsey Williams Energy Non Crisis for interviews etc.

Thu, 12/31/2009 - 20:17 | 179514 Anonymous
Anonymous's picture

"His ultra conservative target has crude at $190/barrel in twenty years..."

Well, $80/barrel today - at 3% annual inflation - would be $144/b. At 4% annual inflation, that would be $175/b. So, that $190/b "ultra-conservative prediction" would be expected if the rate of inflation over the next twenty years is 4.4%.

"we will have to find the equivalent of six Saudi Arabia’s to fill the gap..."

We've probably found at least one already: Iraq's proven reserves now stand at 115bn barrels, below Iran's 137bn and Saudi Arabia's record 264bn. But Iraq's reserves data are from the 1970s, before many recent improvements in technology. According to oil industry experts, new exploration will probably raise Iraq's reserves to 200+ billion barrels of high-grade crude, extraordinarily cheap to produce.

Now, I'm not saying that oil won't be at $190/b (or more) by 2020...it might be. And it certainly wouldn't surprise me to see it "spike" to $190/b sometime along the way (I'm long RIG, NE, APC, CHK and XOM...but not USO - that's a useless, short-term trading vehicle, imo). But there may also be changes in the utilization of alternative fuel vehicles (and electric vehicles, hybrids, etc.) that could offset the expected increase in oil demand for transportation.

Thu, 12/31/2009 - 18:43 | 179448 Anonymous
Anonymous's picture

The best solution is the simplest. ETHANOL
Not some exotic new tech like the Tesla.
Done forever Ethanol.
Brazil does it for $1.00 gal wholesale.
We could do it for .50c wholesale. Why?
Cause we grow things really well. We are blessed with tons of land.
Plus the money stays here not dumped overseas for the
the vampire sucking Saudis,Russia or Iran.
ALL POSSIBLE WITHOUT CORN Dammmm-it!
Don't buy the oil company propogands from the 80's.
FOOD or Fuel.
Read these before you post.
From a 30 year ethanol vet not your oil expert mama.
http://www.alcoholcanbeagas.com/node/1276
http://peswiki.com/index.php/Review:Alcohol_can_be_a_Gas
youtube Alcoholcanbeagas Part1

Thu, 12/31/2009 - 16:52 | 179331 Anonymous
Anonymous's picture

>>
if we reach a point where our strategies come down to making sure we're far enough away from cities to avoid hungry mobs, then civilization has essentially collapsed at that stage. That may still be coming, but I'd rather be exploring alternatives to keep an economy sustainable than giving into some kind of survivalist fantasy.
>>

Let's phrase that more accurately.

You'd rather pretend there is plenty of time to transition the entirety of society to entirely new configurations than make some plans and prepare some things to save your family.

Why in the name of God would you take that risk with your kids?

Thu, 12/31/2009 - 16:23 | 179297 DosZap
DosZap's picture

"World GDP will grow an average 3.1%/year through 2030, driving oil demand from the current 84 million barrels/day to 103 million b/d. That means we will have to find the equivalent of six Saudi Arabia’s to fill the gap or prices are going up a lot. His ultra conservative target has crude at $190/barrel in twenty years, and his high priced scenario would send you rushing for a change of fresh underwear".

Personally, you guy's n gal's are a tad too optimistic for me.I do not see us HERE, in less than 5 years.Those that are wealthy enough to bug out to friendlier climes, will do so.........the rest, will be serf's of the State, or worse.

I think the issues of the next 24-36 mos are far more important to Americans than "Pie in the Sky" prognostications................
 

Thu, 12/31/2009 - 15:58 | 179270 Anonymous
Anonymous's picture

>>
I have spent more time trading oil then 99% of the those of the chattering class above. Advice:
>>

Yeah, Mr. TraderGuy. Who says there's anything to trade when people starve? Who says this was about trading?

How does that trading work when NYC doesn't get food delivered?

Thu, 12/31/2009 - 14:32 | 179152 Anonymous
Anonymous's picture

>>
when oil prices goes up, demand goes down (as in permanent recession or economic stagnation). Gradually, new technologies are developed. Linear extrapolation of present trends is what Karl Marx did, with well known results. His critique of capitalism is as relevant today as it was at the end of XIXth century. His solution sucked, and western societies developed alternatives which worked, at least for sometime.
>>

Gradually, my ass. If the food stops you got 2 weeks to live. Probably less, because they guys pushing water through pipes starve, too. They don't go to work because they are looking for food for their families. You die of thirst even sooner.

Prepare. Have a plan to get away from cities.

Thu, 12/31/2009 - 14:28 | 179141 Anonymous
Anonymous's picture

You're all hopeless. Literally. Or should be.

All this talk of "well, we must wean ourselves away from dependency" blah blah blah. Crapola.

Consider for a second. Suppose TOMORROW the trucks stop delivering. What kind of weaning ourselves away from dependency white papers are you gonna write? TOMORROW. What special plans are you going to have to survive if food stops delivering tomorrow? Right. None. You die.

Trucks aren't going to stop tomorrow. But why are you thinking the scheduling of the universe is such that there will be time to do all this stuff that probably won't work? Why do you think there is a law of nature that says all things are gradual enough to endure?

The slope of the right side of the production peak is MUCH steeper than the left side. A field has a zillion wells in it by then. When they all stop generating output, it's a sudden thing. The production decline is far faster than the ramp up when the wells were being drilled and brought online incrementally. They are already drilled. The pumps to push water down are already there. When they go dry they do so fast.

This casual complacency that the calendar will deal with everything is precisely 180 degrees out of phase. It is the calendar that will kill you. Prepare now.

Thu, 12/31/2009 - 14:24 | 179133 Anonymous
Anonymous's picture

You're all hopeless. Literally. Or should be.

All this talk of "well, we must wean ourselves away from dependency" blah blah blah. Crapola.

Consider for a second. Suppose TOMORROW the trucks stop delivering. What kind of weaning ourselves away from dependency white papers are you gonna write? TOMORROW. What special plans are you going to have to survive if food stops delivering tomorrow? Right. None. You die.

Trucks aren't going to stop tomorrow. But why are you thinking the scheduling of the universe is such that there will be time to do all this stuff that probably won't work? Why do you think there is a law of nature that says all things are gradual enough to endure?

The slope of the right side of the production peak is MUCH steeper than the left side. A field has a zillion wells in it by then. When they all stop generating output, it's a sudden thing. The production decline is far faster than the ramp up when the wells were being drilled and brought online incrementally. They are already drilled. The pumps to push water down are already there. When they go dry they do so fast.

This casual complacency that the calendar will deal with everything is precisely 180 degrees out of phase. It is the calendar that will kill you. Prepare now.

Thu, 12/31/2009 - 14:11 | 179111 Anonymous
Anonymous's picture

Trade the crude spreads it will be the only real way to make money in crude. Between the dollar devaluing, china imploding, iranian bombings and the coming credit collapse in the US and Europe the price of crude is an unknown.

I have spent more time trading oil then 99% of the those of the chattering class above. Advice:

For those who are peak oil theory guys get long at $79.73 today in Feb crude and roll it forward each month losing a $1.00 each time. See how you feel when demand in the spring collapses at oil is trading $63.

For those who of you who want to be short, good luck with that. Make sure you have someone overseas to wake you up at 2:00 am after the first bombing sortie over Iran is made by the Israelis. Your wife will understand why you lost the house.

For those who seem to think that solar and wind power is some type of solution to our baseload power problem just ask the Spaniards how that worked out for them.

There is no easy trade and the market will go in the direction which cause the most pain to the greatest number of people.

Thu, 12/31/2009 - 20:14 | 179510 Anonymous
Anonymous's picture

A true trader!
Best advice I have heard in years!
Will no doubt have to wait for the sun to shine
or the wind to blow before placing buy/sell orders...

Thu, 12/31/2009 - 14:05 | 179105 Anonymous
Anonymous's picture

when oil prices goes up, demand goes down (as in permanent recession or economic stagnation). Gradually, new technologies are developed. Linear extrapolation of present trends is what Karl Marx did, with well known results. His critique of capitalism is as relevant today as it was at the end of XIXth century. His solution sucked, and western societies developed alternatives which worked, at least for sometime.

Thu, 12/31/2009 - 14:44 | 179175 trav777
trav777's picture

How gradual was the move from wood to coal?  Oh, only about a thousand years long.  You feel like waiting?

Thu, 12/31/2009 - 16:16 | 179292 Whats that smell
Whats that smell's picture

I remember Ari Fliesher (gwb's press guy) saying to effect "We Americans love burning lots of oil  and we're not about to stop" About 2 years later gwb said we need to conserve, as thick headed as he was that says alot. Today the backward crowd loves Sarah Palin.  Save your breath and make some money on your Knowledge..

Thu, 12/31/2009 - 14:29 | 179145 Anonymous
Anonymous's picture

BTW sports fans, global oil consumption is up about 13% from early 2000 to now. Oil's price is up 4X over that period.

Prepare or die.

Thu, 12/31/2009 - 14:04 | 179103 Anonymous
Anonymous's picture

If I had a bunch of money tied up in oil futures sitting in tankers burning up day rates. And the rest of my money stuck in carbon credits. I might delude my self into thinking a post like this would produce new subscribers at $500.oo a pop.

But since I have not fallen for either scam. The only value to be found in this glittering piece of colossal ignorance and stupidity is entertainment only!

Thu, 12/31/2009 - 13:57 | 179095 Rick64
Rick64's picture

Or we could cap the hot air coming out of congress. Then they would finally be productive. I know its a dream.

Thu, 12/31/2009 - 16:48 | 179327 Anonymous
Anonymous's picture

Would also bring world CO2 emissions
within compliance
Maybe everyone should just skip every other breath.

Thu, 12/31/2009 - 13:55 | 179091 callistenes
callistenes's picture

Saudi oil reserves are overstated. A cursory review of Matt Simmons book 'Twilight in the Desert' will convince most.

Let oil hit 150 and see how fast we open up the pristine wildernesses.

And there will be war for them. Venezuela anyone?

Thu, 12/31/2009 - 13:50 | 179085 Anonymous
Anonymous's picture

Forget oil. Forget nuclear. We're living on an oven.

http://en.wikipedia.org/wiki/Enhanced_geothermal_system

Thu, 12/31/2009 - 13:49 | 179084 Anonymous
Anonymous's picture

>>
There are huge quantities of hydrocarbons offshore, and not just in the Americas; if history is a guide, hundreds of times what we now estimate.
>>

Dood. Why is history a guide? If you have a glass of water and drink half of it and don't put any more in it (and you abiotic wackos just go reply elsewhere), history says you still have a full glass. Do you think you do?

Thu, 12/31/2009 - 14:25 | 179136 Anonymous
Anonymous's picture

Keep in mind that these "huge" offshore
deep water finds that our mindless media
keep harping on are minutae.
A 2 billion barrel find, which is what is typically
reported for these deep water wells,
is only a 23.5 day supply at current world consumption
levels....

Thu, 12/31/2009 - 13:44 | 179071 Anonymous
Anonymous's picture

Alright..consider both sides; demand for energy is set to rise as well as Supply of Oil to be constrained. The question is.. if anything will be done to
a) reduce dependancy and
b) how cost-efficient new power management implementations will be.

..Because this is a new market paradigm and ipso facto, goes in the face of sizeable invested interests (subsidies and tax regime notwithstanding)

Drilling down, Oil markets priced in dollars look like they're on the way out anyway. Secondly, there isn't so much the US military can do to prevent 'temporary disruptions' which is unimportant on the face, but also inherently expensive - so there's a limiting factor on how high the base price can rise (maybe).

Besides, we're only at most five years away from stunningly high efficiency in alternatives, and there are but a handful of obstacles to storage media.

Thu, 12/31/2009 - 13:37 | 179063 Anonymous
Anonymous's picture

All y'all bozos with an agenda about green this or technology that, go somewhere else.

This is not about energy. There is no energy crisis.

There is an oil crisis. 18 wheeler trucks run on oil. They don't run on electricity or natural gas or anything else AND THEY NEVER WILL. Learn physics. Learn how much power 450 horsepower engines equate to.

Those trucks bring you food. Your smart dust and green carbon blah blah crap means NOTHING if you starve to death, and that is your likely future.

You farm for a living or you die. Get it through your heads. Just make sure your farm is out of walking range of the city mobs.

Thu, 12/31/2009 - 16:25 | 179302 kurt_cagle
kurt_cagle's picture

So you replace trucks with trains, rethink your distribution systems, scale back on physical transport and move to smaller delivery trucks that do run on electricity and can be used to distribute from centralized depots. We use trucks because it is more profitable to do point to point distribution than it is to go with a hub and spoke system, not because it is more energy efficient. Eliminate eighteen wheelers and you remove smog producers, reduce the amount of wear on roads dramatically, and, because you are reducing total production and transport, eliminate the amount of plastic crap being released into the atmosphere, ground and water. If the bigger problem isn't in fact global warming (something I'm increasingly convinced is true) but soot and pollution induced global melting, then this will also reduce the disintegration of the ice caps.

Keep in mind that with a population of nearly 300 million people, farming has to be very carefully coordinated in order to achieve an optimal yield (assuming that you don't want a Malthusian die-off), and it is also currently very oil intensive, approximately 40% of the total use of oil goes into agriculture. This mean that you need that smart technology just to be able to coordinate the various farmers to insure the best yields, to insure that fields go into rotation in an effective manner, and to insure that as other resources diminish you are still able to divert petroleum production into farming as necessary.

if we reach a point where our strategies come down to making sure we're far enough away from cities to avoid hungry mobs, then civilization has essentially collapsed at that stage. That may still be coming, but I'd rather be exploring alternatives to keep an economy sustainable than giving into some kind of survivalist fantasy.

Thu, 12/31/2009 - 15:21 | 179228 Anonymous
Anonymous's picture

And there are even bigger engines in the big ships that bring across containers full of your blue jeans, Teflon skillets, and other things from far away countries. Also keep in mind that even WITH a totally new energy infrastructure (assuming it just magically popped into existence) the Ogallala Aquifer is being used at a faster pace than it can fill with new water - that's the one that feeds the Bread Basket of America....

Any way you slice it, the best thing for all of humanity's issues is a smaller global population... maybe we can get Helicopter Ben to start dropping birth control across the entire global realm?

Thu, 12/31/2009 - 13:25 | 179044 Anonymous
Anonymous's picture

i think a clarification is in order:
easily retrievable oil will run out soon... how about advancing alternative technologies for oil- specifically derivation technologies from oil shale, oil sands. we supposedly (in the U.S.) have more oil trapped in oil shale than the entire Middle East countries proven reserves, combined. screw the environmentalists and their whining, its survival of the fittest and those at the top of the food chain should take presidence, our nation is at stake

Thu, 12/31/2009 - 14:42 | 179171 trav777
trav777's picture

Sigh...I think reading the freaking thread is in order.

This question has been asked and answered already 50,000 times.

Yeah, also, screw the earth, let's just pollute it to destruction so we can keep consuming like rabbits.

You have so much reading and learning that you need to do, I got no idea why you are even commenting.

Thu, 12/31/2009 - 21:20 | 179556 PierreLegrand
PierreLegrand's picture

Peak oil must mean that the amount of oil purchased with an ounce of gold is going down...right? After all if something is rarer it is more valuable. But the problem is that the amount of oil purchased with an ounce of gold is holding real steady except for shocks due to war.

The gold-oil ratio helps us to identify overbought and oversold opportunities for gold. The chart below shows solid support between 8 and 10 barrels/ounce of gold over the last 30 years, with occasional spikes carrying above 20 but seldom holding for any length of time.

http://www.incrediblecharts.com/economy/gold_oil_ratio.php

Every generation some group of jackasses comes along to warn about this or that impending crisis. We have had global cooling, global warming, oil running out, population bomb, running out of food and the beat goes on. Perhaps folks like you need a crisis to make your lives meaningful but I don't.

For a crisis that is real we need only look at a Government "protecting" us from all this crisis. The government needs this or that power to save us from this or that crisis. What bothers me the most about clowns like y'all is you HAVE to drag everyone in the hold behind you.

Thu, 12/31/2009 - 15:30 | 179237 Landrew
Landrew's picture

So I take it you don't subscribe to the Jed Clampett Theory of Oil Production ha! I sat at a table with friends who thought all you had to do to get more oil was drill deeper ha! I poured the salad oil in a glass of water and said where is the oil, end of argument!

Thu, 12/31/2009 - 13:19 | 179032 masterinchancery
masterinchancery's picture

There are huge quantities of hydrocarbons offshore, and not just in the Americas; if history is a guide, hundreds of times what we now estimate. Remember that around 1900, the USGS stated that it was unlikely that ANY oil would be found in California or Texas. So much for government estimates and "data". At some point, the braindamaged liberals in congress and their media catamites will have to allow exploration, and that will slow price increases dramatically.

Thu, 12/31/2009 - 14:05 | 179104 trav777
trav777's picture

R O T F L

So why did discoveries peak in 1964 long prior to libtards and the rest of this shit?

Thu, 12/31/2009 - 13:13 | 179022 Anonymous
Anonymous's picture

The article is crap.

Most numbers quoted are taken from sovereign government sources without substantiation. A few weeks ago the Iraqi oil minister predicted going from 2.5 million barrels per day (today) to 13 million barrels per day by 2013 (more than KSA has EVER pumped, even with 50 years of wells in place). This, he claimed, while Shell said it would take them 20 years to spend the billions they must to develop the fields in Iraq.

But you must understand what this means. This 13 mbpd number is going to find its way into all sorts of future projection numbers made by dweebs writing for deadlines with their trusty hand calculator by the keyboard. It's beyond moronic.

Now this particular article goes in a different direction, trusting IEA's projections (go back and check IEA's projections vs reality; they are worse than the typical stock market predictor).

You have to do your own numbers. And you have to challenge every input to your own spreadsheet. No writing-for-deadline journalist will do this. You should.

And then have a route planned out to farmland that is distant from cities. The mobs leaving the city when trucks stop stocking grocery store shelves can only walk so far. Be outside that range.

Thu, 12/31/2009 - 13:02 | 179009 Peterpaul
Peterpaul's picture

Don't go looking for an easy answer in a god of Technology to make the extraction of "oil" from tar sands or shale easy, cheap, or relatively pollution free.

 

It's always possible, but so is my hitting a home run in the World Series.

Thu, 12/31/2009 - 14:11 | 179006 heatbarrier
heatbarrier's picture

"The total 20 year bill for the rebuilding of our new energy infrastructure will exceed $10 trillion. Each year we kick the can down the road, this price tag rises by $500 billion. Now you know why I spend so much time on energy research."

madHFtrader, I spend most of my research energy in trying to figure out how the world will be when smart assets start showing economics curves similar to IT. This is an interesting presentation by the founder of Smart Dust, take a look at the main argument starting @5:00,

http://www.youtube.com/watch?v=PVH1K1Eocz0&feature=player_embedded

Other technologies that will integrate the physical layer to the Internet are RFID, GPS, Internet0 (zero), and others we can't even fathom.  As Kevin Kelly says:" We thought the Web was going to be like TV, only better."  This will change everything, including energy economics, and it's just around the corner.

Fri, 01/01/2010 - 01:52 | 179705 Anonymous
Anonymous's picture

What are you blathering about? SmartGrid?

The only thing "SmartGrid" can do is make it easier to safely run the huge electrical infrastructure we must build post Peak Oil.

Information does not carry meaningful energy. RFID GPS and such do absolutely nothing energy positive, they consume energy.

The US is a country of Arts majors :-(

Thu, 12/31/2009 - 13:01 | 179003 jmc8888
jmc8888's picture

Well the first thing you have to understand is that 'green' = wrong way.

I hate pollution, the scenes from china can make me sick to my stomach with people walking around a fog called pollution. 

Anyways there are some real problems, and ommission of facts, most likely due to ignorance amongst most parties, and deciet in the rest.

 

The thing is with CO2 is again, it doesn't cause global warming.  Only people that have manipulated the statistics, and interpreted them wrong (because they DON'T understand STATISTICS) - yes some of the 'best' do not understand the limitations of it.

Anyways, but lets move on from that point, since that is the main contention as seen by most, YET, is only one of the SMALLER road blocks in it's way.

One of the main things to remember is how we use energy.  At first we didn't.  Then it was fire.  Then we used animals.  Then coal/oil.  Then nuclear.

At each point we progressed up the energy flux density map(key words here) contained within it.

At first fire was enough, but then it wasn't.  So we started using animals for 'beasts of burden'.  Then that wasn't enough.  Again we needed a higher energy flux density in order to survive.

Of course these things don't come every day, so it wasn't until recently that we started burning the fossil fuels of coal and most recently oil.

Now we're at a new crossroads.  Our energy needs are exploding.  The amount of people needing energy, still exceeds those that already have it.  Meaning we need far more energy, perhaps 5x as much as we currently use, if everyone wanted to live say, to the of an average Chinese man living today.

Nulcear may or may not get us there.  It's energy flux density is much higher, yet we're too scared to use it, thanks Queen of England making us feel our scared for meltdowns and terrorists - the whole anti-nuclear power movement.

But at this point, this is are only currently viable option.  Of course many say the uranium is limited.  Which is true, however, you can build nuclear feeder plants, which actually produce more nuclear material to put into a new reactor, and thus can build an UNLIMITED amount of nuclear reactors.  Therefore, those that aren't idiots, there are ABSOLUTELY NO LIMITATIONS WHEN IT COMES TO USING NUCLEAR POWER.  It's there, it's safe, it's in infinite supply (because once you have 1 breeder plant, you could throw the rest of the uranium on the planet into the sun, and still always have enough material for nuclear reactors ad infinitum.

This can get us through the next 20-30 years, or so.  But we've already reached the point where the energy flux density of oil/coal, simply can't meet our demands. It also can't sustain itself.  Now on that.  There is plenty of oil on earth. We just can't get to it. Nor may we be able to 'get to it' for another 30-50-100 years or more. Therefore there is peak oil, only because we can't get to all the oil down on the ocean floor - which is far, far more than any on land. 

Additionally, there is no shortage because I guarantee you that there is more Oil out there than the spacial volume of our solar system.  It's out there, but yet again, we haven't developed our space program to well, bring it back.  It's out there though. But not much good to us at this point.

 

Now the thing to remember is, we need to get to a higher order of energy flux density.  That's what we've been doing since we started our first fire. 

Now we need to move on.  Figure out fusion.  Because with fusion, the energy flux density, again key words, is so much higher, that it can literally take us to basically 'Star Trek'. 

Of course we actually have to put more than a drop in the bucket to research it. This is something that should of been getting hundreds of billions of dollars a year for the past 40 years.  But we didn't.  So we need to NOW, even though we can't 'afford' it. (which is bull anyways considering under an American Credit System it can be uttered by us, and need not be borrowed from banks or private interests)

 

Now because we aren't going for nuclear and fusion, the only two ways, actually, one stop gap, and one solution (in that order), we're pretty much screwed.  Because we're going to hit up against limits that we need not be stuck at.

Green energy is a farce, mostly.  The main problem, with the FUTURE, of green energy, is that it's the SAME energy flux density, or even lower, than what we currently use in coal/oil/nuclear. (I laugh every time I hear that, because it's so bass ackwards to think that lower energy flux density ways are our future)

 

Think about that for a moment.  Our future energy needs, the powers that be say, will be solved by moving to a more PRIMITIVE form of energy.

That's why the 'green machine' will NEVER WORK, and is a WASTE OF MONEY. 

Solar, Wind, bio-diesel, name your green energy besides nuclear or fusion and I'll show you a source of energy more primitive to that we currently use.

On top of all this, is the kicker.  NET ENERGY.  Ever heard of that?

How much energy does it take to make the solar panels, the wind turbines, the electric sea wave catcher, the orbiting solar power beaming energy back via microwaves, etc, etc. 

You have to use oil, and/or fossil fuel energy in order to PRODUCE these things. Not like the energy needed to build 1 drill, that's a low energy cost. 

 

If we built a green economy, we would kill ourselves, because we'd have to use all of our corn, oil, coal, not to mention valuable metals, to produce these clean energy devices, that produce energy at the same or less energy flux density (key word) as that we currently have.  So look at it like an equation, x+y=z

X=cost of oil/coal

Y=cost of producing clean energy devices

Z= total cost

Well naturally when one drives they buy gas so X=Z

When one turns on their air conditioner, odds are it's fossil fuel energy, so x=z

 

Now what happens when you have to use a bunch of energy to produce say a hybrid car.

You'll have X+Y=Z

Or

Solar Panels

X+Y=Z  because you had to use a bunch of energy and to build these things.

It is, in many ways, more damaging to the environment to build 'green devices' than it is to use the good ol dirty fossil fuel things.  Because the dirty little secret is how much fossil fuels are need to 'create' these devices.

If you look at net energy, as defined by Chris Martenson, what was once 100:1 ration of energy in-energy out.  Is now down to around 3:1. 

 

Guess where all the green technologies lie?  Under 1:1, meaning even if used for 15 years perhaps even 30, it took more energy to produce the solar panel, than you got out of it.

 

Meaning green technologies are a net energy LOSS, and that burden will fall upon our fossil fuels to provide the energy to make these things.

 

In other words, you'll be using up all the rest of our oil, to make these things and in the end you'll get less energy back.

 

Again, we do all of this,. for the same or less energy flux density? When it's clear we need to progress to a higher form of energy flux density. Especially if we want to live in the 'future', or even continuing using our PC's.

 

Why mortage our house for a Pinto called Green Energy.  We need a big tractor trailer named fusion.  That's the only way out of our energy mess.  Again a 30 year or so stop gap measure until we develop fusion, would be nuclear power plant. There is no other way. None.  Or do you want to use all of our oil in something stupid like we currently use 1/2 of our Corn in biodiesel.  What do they say, 100 percent of the corn crop still wouldn't equal 1/2 of our car energy needs. Ethanol and the like are helping create this problem, not solve it.  Because it takes tons of energy to create this stuff, and then it's just as good or a little worse than what we currently have.

Green is the way for suckers, and suckers we'll have, all the way to the poorhouse.

So to recap. Our species needs to move to a higher energy flux density, yet we've stated our best shot is to take our current energy and waste it on stuff that has an equal or lesser energy flux density.  To put all our research and efforts, the brain power of a nation into these fruitless endevaours. 

But then again, the same people telling you that, are the same people telling you copenhagen must pass (yeah if your genocidal), the bailouts must be made (London/Wall Street), and that the healthcare cost curve must bend (T-4 hitler program).

So yeah, keep listening to the crazy ideas from the people that brought you every other disaster in front of your eyes.  I'm sure it'll end just as nicely.

The reason it's beeing used so much? Who here has 100 percent green everything? Exactly.  Selling opportunity to resell everything we've just recently bought, because it's 'green'. Idiots.  Not to mention by sucking up the energy, they are creating the world situation that helps them with their goals.  How much energy will be wasted buying green things with 5 percent energy improvements.  Jesus.  Meaning all the energy used to produce the earlier good (that still works fine) will be wasted. Or actually that's backwards, it's the energy used to produce the 'green product' that is actually wasted.

 

C'mon people.  Do you want to move forward into the past? Let's party like its 1883.  Then 1383, finally 10,000 B.C.

That's where we're headed if we use up our finite resources without finding the only truly green and renewable energy source there is.  Fusion. There is no substitute.

 

So why waste time on all this bull? Because the same people that want the wars in Afghan, Iraq, and others, because the ones that control the derivatives, and the stock market, the bailouts, and our green ideology, our healthcare plans, etc, etc....are all the same.  They're wrong about it ALL.

 

We can reach a point where it's too late, and that time is rapidly approaching.  Why? Because we quit our REAL research and development after the Apollo missions.  We've been sliding back for 40 years.  Cutting funding to the schools, universities.  Not taking on fusion projects, or the like - Large Hadron Colliders, and such which may help us provide the math to make fusion work. 

 

We said gov't shouldn't spend on such stuff, that my money is mine, (and like JG Wentworth-you need it like a whiny baby..NNNOOOOWWWW!!)

 

The fact remains, we need a massive space/fusion research scientific program that would make the Manhattan project and the Apollo project look like a hobby.

 

We neec to put the money and energy into these things, for perhaps decades, to achieve fusion.  Becuase that's our only answer.

With fusion you get unlimited energy.  With fusion you can produce any of natures elements on their base level.  Meaning no scarcity in any metal, or anything on the periodic table.

Or we can use all our energy, brainpower, and time twiddling our thumbs and pretending we're solving things by 'going green'.

 

I love the environment, and grew up in a TCE superfund site.  I'm not pro-pollution.  I'm pro reality.  The whole green movement sounds like a 12 year old's crazy idea that when you flesh out, shows it's idiocy in a self evident nature.

 

So I'll end where the author of the post did.  Every year it costs an additional 500 billion to go green.  I'll say every year you go green, our species loses 5-20 percent of our chance to survive without basically armageddon. 

If we go down the green road, all our corn, all our fossil fuels, will be used to produce these things, making energy consumption far higher than need to be, meaning far more fossil fuels are burned at any given time, meaning far higher prices for energy, because of scarcity far less energy used by the average person, until everything collapses, because we never moved past the oil/coal energy flux density.  We just subsituted it.

 

It's a little like wasting all your freshwater to make gas, and then dying of thirst.  Something to that effect.

 

Wake up people, this is a control issue as well.  The same people, as the other things, are controlling this one, for once again, their advantage, not yours. 

 

If we can't get beyond this, then our species will die. Your choice.  Like Pepsi, it's the choice of a new generation.  How will it choose? Hopefully not the wrong way seeing the debacles of every other pet project of the oligarch is in full view of the curernt generation.  They ain't liking the other ways, I doubt they'll like this way - once they figure it out.  Problem is, everything thinks 'green energy' is the 'figure out'.  It's not. It's the scapegoat.  One you follow at your own peril.

Thu, 12/31/2009 - 22:26 | 179597 Anonymous
Anonymous's picture

Seldom poster Frank: very good post 8888!!! Not exactly, but a friend in the industry claims there is about 230 tons of steel needed to build a large windmill, wowzers!! The three we just installed were absolutely maxed out at 3 megawatts each. If you include the mining ,shipping and everything else to put one in place, the net loss is amazing,well over 20 years to break even!!Have you looked at the mini-nooks from hyperian energy?? What a great little, encapsulated, safe reliable power plant. Electric cars work, they were also made by chrysler in [1906?] I believe Ahmadinejad doesn't want to waste precious resources to make electricity, so many lies, so little time!

Thu, 12/31/2009 - 21:53 | 179569 Anonymous
Anonymous's picture

Want to agree with your arguments but don't want to read "War and Peace" to get to them. A shorter response next time may attract a wider audience.

Thu, 12/31/2009 - 14:01 | 179100 trav777
trav777's picture

Good lord, this stuff is frighteningly bad.

Breeder reactors transmute non-fissile isotopes of uranium into fissile materials.  They do not CREATE fissile materials from nothingness.

IOW, there is a still a peak condition in Uranium and plutonium.  Supply is not and never will be infinite.  Once all of the U238 is transmuted to a fissile isotope, the breeder reactor has no future purpose.  There are obviously now thorium and actinide-cycle reactors, but, again, the supply of thorium, while 3x that of Uranium, is still finite and subject to peak supply conditions.

You cannot put the fission byproducts back together either, the ultimate Law, that of energy conservation, prevents that.

Also, the Nuke cornucopians are ignorant; they may want to take a look at the heat wave that killed 3000 in France a few years ago and figure out why there were brownouts in a nation with 85% nuclear production.

I can answer for you:  they had to shut DOWN reactor capacity because it was overheating the rivers, causing massive dieoffs in aquatic life.

Consequently, there is a maximum saturation level to nuclear at which you CANNOT build more plants!  GDit, man, there is NO FREE LUNCH.  Growth CANNOT continue forever!

The finite world places overhead constraints upon growth.  This is the way of things.  It's best we accept it.  We had a great growth run on high EROI oil and high energy density...but it's time for us to collectively stop trying to run faster on the hamster wheel because the wheel won't go faster and we're going to run ourselves to death.

Obviously, fusion is "the answer," but is currently insoluble.  And has remained so for the past 30 years, always 10 years away.  It's the brass ring.  Perhaps it will emerge from the ashes as coal brought us out of the wood era (yes, Rome actually did suffer from Peak Wood lol)

Thu, 12/31/2009 - 15:23 | 179232 Landrew
Landrew's picture

As I said low energy output Thorium which is common in earth crust makes a very good fissile material and the great thing is it's non weapons production reactor with little waste generation. We have a proposal before DOE now to build a small test reactor. I agree that trying to count on fusion without orders of magnitude leap in material science is a pipe dream that is why fission is really our only hope to provide energy near term. Thorium fission is the best bet for extending fission production beyond ten years. Total u-235 world capacity equals ten years of world energy needs. I think that says it all.

Thu, 12/31/2009 - 15:59 | 179273 kurt_cagle
kurt_cagle's picture

Landrew,

I'm watching what's happening with the Fusion reactor pilots that will be coming online in Europe in 2015 and 2024 respectively. I wouldn't count hot fusion out completely - we're getting a better handle on plasma fluid dynamics and bottle containment, largely because with increased computing power it makes these easier to model, and the primary question is whether you can exceed the break even point before the containment decays. So far evidence suggests that it is possible. It's still not a perfect solution - tritium isolation is a comparatively expensive process, and you're still talking about radiactive containment vessels at the end of the process, but at least supply is for the most part unlimited.

Regardless, this still only works if you have an electrical transportation grid - and it may very well take us 20-25 years to full transition to such a grid. The times in between will likely be lean, however.

Thu, 12/31/2009 - 13:21 | 179035 Clinteastwood
Clinteastwood's picture

Fusion may be the way to go, maybe. Have you studied the recent research on cold fusion using Palladium?  It's kinda interesting.

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