Who believes in peak oil?
Everyone’s starting to talk about it now. Are we running out of oil, are we using it up faster than we can dig it up, it doesn’t grow on trees so what happens when it’s gone? What was seen as a crazed environmental theory a few years ago is now being seriously debated.
So, does the Finance Minister believe that peak oil has arrived, and that we need to do something about it:
Jeanette Fitzsimons: Is the Minister then ruling out the idea that this is the start of a long-term trend of continually rising oil prices because the rate at which the world’s oil wells can produce oil is going to decline from now on, regardless of the discovery of new fields, and they cannot make up for the rate at which existing fields are declining?
Hon Dr Michael Cullen: I am not sure that the last point is still accepted, at all. There is still a great deal of argument about whether new discoveries can outpace the growth in demand over, say, the coming 10 years. Taking a very long-term view, I think it is a very safe bet that the long-term trend in oil prices is upwards in real terms, but whether that is from the current very high base or from a much lower base than that, of course, remains an open question… obviously there is a finite resource. We simply do not know how much of that finite resource there is.”
(Translation? - ‘Yes, maybe at some stage in the future, but not while I’m Minister’).
Here’s what Vernon Small says in response to this in the Dom Post this morning:
We might increase our spending on broadband, pump more into rail and public transport, speed up the introduction of alternative fuels and plan for more densely developed urban areas – rather than freeing up more greenfields land for suburban sprawl – to reduce transport costs and journey lengths
Even if the economic crystal balls remain impossibly opaque, would any of that be so bad?
November 15th, 2007 at 11:40 am
“There is still a great deal of argument about whether new discoveries can outpace the growth in demand over, say, the coming 10 years.”
Once again, he better get his skates on then and find lots of oil, as history is not on his side, theres not been any really good finds for a number of years now… Oh yes, and while he’s there, has he noticed that a large number of countries are producing less oil year on year, so he needs to cover that shortfall as well.
Better get drillin’, Michael.
November 15th, 2007 at 11:52 am
Dr Cullen’s problem is that he “knows” a couple of things that just aren’t true.
These things are much more dangerous than the things you just don’t know.
I do write to his office now and again. So far the replies have been polite but when I pointed out that no country with a Cap Gains tax and no LAQC (or equivalent) had a housing bubble without debasing its currency he claimed he knew of some. I am waiting now for those to be identified, as the debasement of the currency is a key factor in most of the bubbles I’m aware of and we’re pretty unique in our lack of taxation of that particular type of income.
Anyhow, my point is that the man is not as well informed as he’d like everyone to think… and with the power he wields, that is a dangerous thing.
BJ
November 15th, 2007 at 1:31 pm
I wish YOU people were not so stupid about this stuff but i have to believe with a different monetary structure governing society the human animal will b different.
Otherwise it is as Swarznagger & the ruling globalists think:
“95 % of the pop. has to be told what to do and how to do it”.
November 15th, 2007 at 3:08 pm
Would Governor Grey have believed that peak whale oil was happening in the 1840s? More importantly, would it have made any difference if he did? Would Grey have been prescient enough to pick the right replacement industry? For both candles and lamps? Animal fat, vegetable oil, coal oil (kerosene) or rock oil (petroleum)? The first two actually did provide a smelly, smokey, cheap alternative in the 1840s. The latter two were only developed commercially in the late 1850s. Parafin wax had been providing an alternative to spermecelli for candles since the 1830s but this didn’t prevent whale oil prices from skyrocketing as the peak was reached.
In the mid 19th century lighting consumed as much of the household budget as transport does today. So the dramatic increase in whale oil prices would have had a similar impact on economies as peak oil will have. Today we know that whale peak oil stimulated the research that led to kerosene and electric lighting and hastened the introduction of piped coal gas in cities. But would any government of the day have been able to pick the right areas to invest research and development funding into?
The economic impact of peak oil on the commercial transport may be quite different from most predictions. Cars cannot be easily retrofitted with hybrid technology but trucks and buses can be. And the three biggest truck/bus transmission suppliers (Allison, Eaton & ZF) already have the technology on the market. There are already several thousand hybrid buses operating in the United States. Fedex and UPS are buying hybrid delivery vans partly because its cheaper in the long run and partly because the lower noise and air pollution are a good marketing tool.
November 15th, 2007 at 3:24 pm
Even
The drive-by is a discouraged form of post… even among trolls. You have to give flesh to the argument, put something in we can agree or disagree with.
If you are so short of time as to be unable to do this, don’t bother posting, OK?
BJ
November 15th, 2007 at 3:55 pm
I think you are being pretty harsh on Cullen. His response was effectively, yes I believe in peak oil, but its not clear when the peak will be, in particular whether it will be in the next 10 years. If anyone here thinks they can show there is a scientific consenus on this (particularly in peer-reviewed journals - no tobacco industry type denial papers, and no ‘it just is’ papers), I’d be interested in hearing about it.
November 15th, 2007 at 4:21 pm
http://www2.irna.ir/en/news/view/line-18/0711121286234535.htm
http://www.ft.com/cms/s/0/3c8940ca-8d46-11dc-a398-0000779fd2ac.html?nc lick_check=1
http://www.thisismoney.co.uk/investing-and-markets/article.html?in_art icle_id=426148&in_page_id=3
http://www.energybulletin.net/37000.html
Enough…
November 15th, 2007 at 4:22 pm
You’d be lucky to find anything on PO in peer review literature anywhere. Apparantly that leading expert HEinberg that came here recently has never done anything scientific on the issue despite being a university professor - because he was too busy. That does make you wonder how expert these experts are.
November 15th, 2007 at 4:23 pm
I don’t know of any actual science surrounding “peak oil”. It’s not a scientific phenomena… its economic.
BJ
November 15th, 2007 at 5:00 pm
BJ
1) You saying economists don;t write peer reviewed papers?
2) That’s almost heresy - most POilers say it is driven by geology
November 15th, 2007 at 5:13 pm
Insider… I don’t know a lot of Economists. I come out of JPL and work with scientists…. and the elevation of economics to the status of a science is something that I missed… if it happened at all.
Simmonds is reasonably sound reading but I don’t know where economists publish and don’t seek out their opinions on most things. Far too many of them are addicted to the idea that there IS such a thing as a free lunch, that you can afford to do anything and pay for it with inflation and that the world was created to make them richer.
respectfully
BJ
November 15th, 2007 at 7:02 pm
I found this on the Energy Bulletin
Peak Oil - Peak Economics
http://www.energybulletin.net/6244.html
November 15th, 2007 at 9:27 pm
Great going Jeanette and the Greens. This is gross incompetence - unf*cking believable. How many times do they have to get it so totally wrong before they learn from their mistakes? It is even more frustrating as the counter-arguments are so feeble.
Why this isn’t like the 1970’s:
http://www.theoildrum.com/node/2782#more
I’ve personally talked with four successive Ministers of Transport, starting with Paul Swain, on this one. I thought I was making headway with Pete Hodgson back in 2005 when he started talking peak oil here:
http://www.beehive.govt.nz/ViewDocument.aspx?DocumentID=23722
“Now onto a challenge we all face. It is peak oil. ”
I’ve always wondered if this was one of the reasons he got shifted.
Now we are at the point where production is in decline, according to reputable sources like the IEA and the EIA. But even when you can point to a decline in oil production at a time of record prices, guys like Cullen and Parker still aren’t convinced we have a serious problem. Have a look at my Oil Production Briefing Paper (check out the Tui production estimate):
http://www.getmoving.org.nz/news/91/53.htm
I based a lot of it on Rembrandt’s Oilwatch Monthly at the Oil Drum. He’s a certified genius and you can read the latest Oilwatch here:
http://www.theoildrum.com/tag/oilwatch
Finally, I feel I need to point out to a couple of the posters here that if you believe that oil is finite, then you must necessarily also believe that oil production must peak one day then decline. Peak oil is a theory like the earth is round is a theory. It’s physics and a natural consequence of exploiting a finite resource.
And they are running out of diesel in North Dakota:
http://www.kfyrtv.com/News_Stories.asp?news=13016
And Saudi Aramco will cut its diesel exports by 1.4m tonnes next year, as domestic demand grows:
http://archive.gulfnews.com/articles/07/11/14/10167372.html
If anyone can tell me why we shouldn’t be seriously worried about this, I’d like to know why. It’s hard not to sound like a ranting lunatic on this subject - but in the end I guess you can lead a Ministerial horse to water but you can’t make him drink.
November 15th, 2007 at 9:37 pm
Cullen is as humourously evasive as ever. I always feel just a little sickened that such important concepts don’t seem to be taken as seriously as they should by those in power.
Of course, they stay in power by only focussing on those things that appeal to the shortsighted self-serving interests of the electorate.
I wish our governments had the courage to give fiscal impetus to the discovery, development and adoption of any and all alternativs that might isolate NZ from the likely damage expected from the increasing costs of oil.
Peak oil? It is probably just an artificial concept that can’t really pinned down to a particular year, decade or century, but in the long term oil IS a finite resource, and the increasing demand for oil by countries such as India and China should drive us to build an economy that can withstand the elevation of oil and it’s byproducts to the status of an endangered species.
The whole ‘peak oil’ concept should encourage us to foster creativity and innovation amongst our technology industries.
Of course the ‘economies of scale’ that assist international markets make it difficult for us to compete, but that should simply make us more determined to use homegrown technology to insulate ourselves from an oil-dependent future.
We should speedily move toward a future that reserves our (and the world’s) remaining hydrocarbon resources for commercial and industrial needs. Domestic energy needs (transport, heating, light etc etc) must progressively be met from renewable energy resources.
Michael Cullen et al need to have a little more electoral fortitude and use the ’surplus’ to foster business and energy technology development programmes.
Energy availability is now at the heart of the continued sustainability of our economy. Adapt or die. If NZ is to avoid becoming a distant tourist destination with nothing more than a subsistence ‘Pacific island’ style economy, then we need to get smart and get cracking.
We need to adopt an energy policy NOW that progressively releases us from dependency on oil.
November 16th, 2007 at 3:58 am
Peak oil acceptance is lagging global warming acceptance by a couple of years, but the process is similar. Big Oil has already, by and large, accepted the truth of it (recently two CEOs of oil majors, Total and Conoco, have separately admitted that they don’t think world oil production will ever be greater than 100 million barrels a day). The major international observers (IEA, etc) are busy revising their predictions downwards. The smarter world leaders (Russian and Chinese, for example) are on to it. Public acceptance will come gradually over the next couple of years.
Then the pollies will perhaps get around to posturing about it… while avoiding doing anything substantial, because it’s pretty much impossible to show any substantial progress on such a big issue in the space of a single electoral cycle.
November 17th, 2007 at 1:50 am
alistair, your comments are spot on. But there is one thing that gaurantees that any response will be the most expensive option rather than the most cost effect. The option that provides the most ribbon cutting photo ops will always be given priority. So we’ll end up with huge amounts of money being thrown at busways and lightrail with little spent on cycleways or bus fleet modernisation. And we have already seen Wellington’s commuter unit and trolleybus upgrades subsidised at 90% while ordinary bus upgrades only received half that rate of subsidy. You can quadruple the number of buses for half what it costs to build light rail meeting the needs of the same number of passengers.
November 18th, 2007 at 8:57 pm
My (limited) experience of those involved with futures is that most of them are looking at the market prices and attempting to predict where the market is going from where it has been. They are ignoring the forces that are driving the market, believing that the market prices will reveal the effects of these forces. (Not that I’m saying all of them are like this…) Therefore relying on a futures market to predict the effects of forces that are yet to really impact on the market is not something I’l like to bet my last dollar (or barrel) on.
As far as Peak Oil not being scientifically reviewed - the science says the oil being mined is a fossil fuel and therefore finite. That science was reviewed decades or centuries ago. If it is finite, it will run out and therefore there will be a decine in production eventually to zero and therefore there will be a peak in production. That is simple maths.
Trevor.
November 19th, 2007 at 12:40 am
“plan for more densely developed urban areas – rather than freeing up more greenfields land for suburban sprawl – to reduce transport costs and journey lengths”
A good idea, with a bit of tweaking.
Several of our major metro areas are too spread out as they are - Auckland, Wellington, Dunedin and now Tauranga are cities built around harbours on stringy bits of land. Auckland is a world leader in spread. Stopping spread now is too late, as sites for green cities these have limited potential. If we stop all greenfield we lock these in as some of our main centres by default and they are bad.
The tweak is encourage expansion of industry and jobs in places that have a flatter terrain so more circular compact development is possible. Move infrastructure capital to Invercargill, Christchurch, Palmerston North, Hamilton. Promote greenfield expansion here in preference to the harbour cities.
November 19th, 2007 at 9:42 pm
unaha-closp Says:
November 19th, 2007 at 12:40 am
>Several of our major metro areas are too spread out as they are - Auckland, Wellington, Dunedin and now Tauranga are cities built around harbours on stringy bits of land. Auckland is a world leader in spread. Stopping spread now is too late, as sites for green cities these have limited potential. If we stop all greenfield we lock these in as some of our main centres by default and they are bad.
Auckland and Tauranga are actually ideal, in that you could provide lots of transport between different parts of them by boat, which is the most energy-efficient mode of transport there is (Wellington harbour is probably too windy for that, and unfortunately Dunedin is not really built around a harbour so much as built at one end of a harbour).
November 19th, 2007 at 9:46 pm
And anyway, why would you want to extend Invercargill into greenfields sites? It’s already so spread out it covers as much land as Dunedin, despite having only half the population. That’s really inefficient, because the people of Invercargill are driving four times as far as they need to to get to work.
November 20th, 2007 at 4:51 am
unaha-closp, there is one major problem with your argument. The actual population per square km are:
Auckland 1927, Wellington 2008, Christchurch 1704.
Compared with:
Las Vegas 1774, Los Angeles 2351, Manchester 3309, Melbourne 1493, Miami 1702, Montreal 1851, New York 2050, Portland 1298, San Francisco 2045, Sydney 1683, Vancouver 1636.
Some of the world’s ugliest and most overcrowded cities include:
Amsterdam 5550, Copenhagen 3478, London 4540, Milan 5068, Naples 4214, Paris 3545, Tokyo-Yokohama 5934, Vienna 6834.
As you can see, some of the most densely populated cities in America are harbourside cities. Same for many of Europes most densely populated cities. In fact harbours tend to encourage high density ribbon development rather than never ending radial sprawl.
A study published by the Ministry of Energy in 1979 compared per capita petrol consumption for Auckland, Hamilton, Wellington and Christchurch. Wellington & Christchurch used approx 550 litres per person, Auckland and Hamilton used 650. The reason Hamilton matched Auckland was because the average trip length in Auckland was 9 km, long enough to discourage popping home at lunch time or popping down to the shops. Hamilton’s average trip was just 4km, but Hamiltonians made twice as many trips and they were short enough to never get their car engines properly warmed up. Hence, there’s more to sprawl than meets the eyes.
Source: http://www.demographia.com/db-intlua-data.htm
November 20th, 2007 at 9:41 am
Cheers
November 20th, 2007 at 12:30 pm
Kevyn
I don’t know how they are determining density and area for LA vs NYC, but I can tell you that anything less that 2x is almost certainly an error. I’ve lived in both places and I know damned well that if LA is 2k per kilometer squared then NYC has to be 4K or more. There’s some monkeys and moonshine in those numbers. Must’ve added in part of the Catskills, and left out Newark… or made some OTHER strange mistake.
LA is so sprawled out that some people commute 90 MILES to get to work… and that’s a one-way trip. A lot of people are doing 100K each way. In NYC the longer commutes are about half to 2/3 of that.
I will take a look at the source when I get a moment.
Also… anyone who calls Vienna an ugly city… or indeed many of the others in your list, Milan was NICE and Amsterdam was better… and even Naples was not bad…. I think there is a bias operating here. They are not ugly.
They are OLDER and they are more experienced at being cities, but ugliness is not in them any more than in any other city, and they work.
You can use their public transit systems. You can walk their streets. You can get from one place to another without a car.
Gotta find out how they bollixed the NYC/LA numbers so well though. Weird. To someone who has actually lived in both places for a long time, just very very weird.
respectfully
BJ
November 20th, 2007 at 1:29 pm
intriguing - that source just seems to be a simple population divided by land area calculation so I doubt that it is comparing like with like.
It completely depends on how much rural area is contained within the city boundaries. Some cities are urban right up to the city boundaries and some cities contain large areas of rural land within their city boundaries. It doesn’t necessarily mean that the density of the urban part of one is more dense than the urban part of another.
November 20th, 2007 at 1:36 pm
P.S. here’s a cool website to measure the walkability of a suburb:
http://www.walkscore.com/index.shtml
“Placing your business or home in a location that does not depend 100% on the automobile is a good idea for many reasons and [Walk Score] makes that decision deliciously visible.”
Unfortunately it doesn’t work for NZ because Google Local Business Listings are not available in NZ yet.
November 20th, 2007 at 2:27 pm
Just quickly, it could also depend somewhat on the number and size of enclosed parkland, and whether that is counted or not.
Also must question which part of the greater LA Area it is counting.
As may be. It is perversely misleading.
BJ
November 20th, 2007 at 8:38 pm
Oil will never “run out”, at worst it will become so hienously expensive that alternatives will be economically competitive. Claims it is “running out” are simply childishness. Of course the price of oil is predominantly driven by the OPEC cartel milking demand for all it can get for it, it’s not a reason to do anything. If the price of alternative fuels makes them a viable alternative then they will be used. Wood was replaced by coal which was replaced by oil in the past - this all happened without politicians and other petty planners/do-gooders thinking they know what is best for businesses and individuals.
In other words, different users of oil will adapt and change their behaviour according to the price, convenience and quality of alternatives. We already saw this years ago when oil fired electricity generation became unviable in the 1970s. If there is an evolution away from oil, it wont see a shift from the private car - the trend towards private mobility has been continuous for over 70 years.
November 20th, 2007 at 9:10 pm
Scott, your way over their heads. They dont understand how the free market works.
November 20th, 2007 at 9:37 pm
Libertyscott…you say that oil will never run out, but that is not the discussion. The “Peak oil” concept is about reaching the point at which it progressively becomes fiscally necessary to develop alternatives.
The question is how close are we getting to the point at which “peak oil” starts to negatively impact our economy?
I predict that it will hit sooner than expected, and harder than expected.
I, for one, have solar panels sufficient to keep me in electricity enough for my home needs, but not yet enough for my transport needs.
Given NZs remoteness, we should be investing in technology and roading infrastructure that makes non-oil-based transport a priority.
Any other option just harnesses us to a fast train to oblivion in 15 years time.
Peak oil means our lives are about to start changing more than most people are ready for.
November 20th, 2007 at 11:52 pm
Peak Oil will affect more than just transport, although transport will be where the impact is hardest. Our vehicle fleet averages something like 10 years old. That means a lot of vehicles are up to 20 years old, so our turn-over is around 5% per year. Even if we could buy decent electric vehicles now, it would take 20 years to replace most of our fleet with them. We would also have to retrain the mechanics and it doesn’t end there.
In the mean time, we should take basic steps to allow us to use our existing fleet a little longer. Conversion to CNG is practical for some vehicles - so why are we wasting CNG on water heating? Even today, new homes are being build and sold with gas-only water heating! The craziest part is that the cost of gas heating is higher than for night-rate electric heating, except possibly for the builder. We still have generation companies wanting to install more gas-fired generation rather than renewable.
Trevor.
November 21st, 2007 at 4:21 am
Nick: “They dont understand how the free market works.”
What an empty-headed comment. Pure ideology, no content.
In fact, ScottFree has demonstrated that he’s the one who doesn’t understand markets. They are driven by two things called “supply” and “demand”. Nick and Scott believe (and it’s pure, irrational, religious belief) that when demand increases, supply magically follows. But supply is rarely infinite. Physical realities trump ideology and religion.
When he says “Of course the price of oil is predominantly driven by the OPEC cartel milking demand for all it can get for it”, he’s simply out of date… supply is limited, OPEC can’t do anything about it, price rises because people compete for a limited resource.
The know-nothing empty-headed ideological parrots of the left say “The price is high because the oil companies are profiteering, let’s tax them”. The know-nothing empty-headed ideological parrots of the right say “The price is high because the Arabs are profiteering, let’s invade them”. The Greens understand that the price is high because the Invisible Hand is pinching us on the bum. That’s known as a “price signal”. It means : get up and find an alternative.
November 21st, 2007 at 4:57 am
BJ, I was just being provocative, opponents of urban intensification seem to confuse high density with ugly/overcrowded.
I tracked down the census bureau website.
http://factfinder.census.gov/servlet/GCTGeoSearchByListServlet?_lang=e n&_ts=213617749757
It gives population and residences per square mile (land area) for each county.
LA County density is 2344,
Orange County 3605
San Francisco County 16634
New York County 66940
Bronx County 31709
Queens County 20409
Nassau County 4655
Niagara County 420
I don’t think there is a single standard way of defining an urban area. It looks like the figures provided by demographia are for “greater” NY, LA, London and Manchester. In the case of NY and London that seems to encompass the entire commuter catchment. LA seems to be just the basin, the valleys the freeways connect with seem to have been excluded.
Some time ago I read a paper that used digital photo interpretaion to calculate urbanised areas to calculate population densities of US cities. It concluded that population density was closely correlated with heating degree days.
While my comparison of the population densities of Auckland, Wellington and Christchurch may be irrelevant the comparison of per capita petrol consumption is important. It shows that sprawl and fuel use aren’t intimately related. Long travel distances discourage impulse journeys. This negates much of the impact of ribbon sprawl versus radial sprawl. Ie Auckalnd’s fuel use per capita was only 20% worse than Chistchurch and Wellington and no worse than Hamilton.
November 21st, 2007 at 5:15 am
alistair, well said. I would like to add that free market theory says nothing about market forces producing lower prices. The market is working when the economies needs are being met at the lowest cost. For instance the electricity reforms have succeeded in reducing the costs of saving electricity to less than the cost of generating electricity. The electicity saved by energy saving lights costs less than 2c/kw compared with 4c from existing power stations and 6c-8c from new hydro or wind power.
The perfect free market requires perfect information, perfectly rational people and perfect competition. Perfect central planning requires the first two conditions. Since these prerequisites don’t occur in abundance in the real world no economic system is going to be perfect and therefore laissez fare and communism are equally incompetent. It can be argued that the Japanese or German impementations of democratic socialism may have struck the right balance to minimise the need for perfection, up to a point.
November 22nd, 2007 at 12:40 am
I suppose the obvious question that we should be trying to answer is “what should Dr Cullen be spending our money on?”
I’d suggest low interest loans to schools, universities, hospital boards, local councils, the Police etc for energy saving investments such as double glazing, energy efficient lighting, heat pumps, solar water heating, etc. These organisations could repay the loans from the cost savings achieved, and the government could keep the carbon credits to kick start that off. The key IMHO is to target organisations that will continue to own the buildings and/or infrastructure for the long term.
I’d also suggest some investment - perhaps by way of the Electricity Commission - in electricity storage systems, preferably North of the Waikato-Auckland transmission bottleneck. A prototype vanadium flow battery would give the Auckland University Electrical Engineering department something to cut their teeth on, and this would assist meeting peak demand in winter and avoiding the troughs in demand in summer.
Trevor.