Peak Oil 2

“Why isn’t media sounding the alarm about this?”

For several reasons:

A. Most journalists are simply not aware of the magnitude of the problem

Even in the financial press, most people and institutions are simply not aware of the size or imminence of the problem. Investment banker Adam Cohen explains:
. . . Wall Street and the financial media are made up of human beings that are just no more interested in the Peak Oil issue than most people that you know. In my personal experience working with energy companies on stock and bond offerings during the last three years, I never heard any energy company employee or energy investment banker use the phrase “Peak Oil.” The few times I mentioned the phrase privately to bankers, the response was “What’s that?”

. . . no major financial services company or media outlet would long tolerate any voice loudly proclaiming “Peak Oil! The economy is doomed!” because it would be pretty tough to market other investments or advertising alongside that shrill voice. Source
It’s worth noting that most of the major mainstream media outlets are owned, in whole or in part, by large energy conglomerates or real estate investors. Some examples include:

NBC, CNBC, and MSNBC are owned by General Electric. Source

CBS is owned by Westinghouse. Source

Fox News is owned in part by the Saudi Holding Company. Source

The L.A. Times is owned by billionaire real-estate mogul Sam Zell. Source

Most of the advertisements in any issue of the Wall Street Journal, New York Times or Washington Post are for large automobiles, large suburban homes, or high-priced [discretionary] consumer items. The financial interests of these companies and individuals would be severely impacted should any significant portion of the public come to understand the magnitude of the crisis at hand.

(For an in-depth explanation of how this self-censoring process happens “on the ground”, see journalist George Monbiot’s article)

B. The handfull of journalists who are aware can’t “go public” without creating a panic and/or losing their jobs:

Once the seriousness of situation is generally acknowledged, a panic will spread on the markets and bring down the entire house of cards even if production hasn’t actually peaked. For this reason, the mainstream media cannot discuss this issue without largely whitewashing the dire consequences for the average person. If they told the truth, people would panic and the markets would crash. Market analyst Steven Laguvulin explains:
Should the oil markets themselves begin to ‘connect these dots’, then all our lives are going to be impacted violently and immediately. This is why you’ll never see “Peak Oil” covered by a respected media outlet. As soon as it is recognized that for all practical purposes the situation is upon us, then a viscious “resource grab” will be initiated.

The price of oil in the markets will begin to rise dramatically. This will initiate a circular hedging/hording mentality in large end-users, governments, and multi-nationals. This will then have a myriad of devastating effects, but all average Joe Consumer is going to notice is that the price at the pump will experience a brief and dramatic blip upward, gas lines will form for a short time at the corner-stations, and then suddenly the corner gas-stations will go dry for good.

Gasoline will simply not be available to individual drivers, as precedence is given to heating oil, critical government and commercial uses, public transportation, transport of food and goods, etc. How the situation unfolds after that you can imagine just as well as I can . . .

If this scenario sounds over-dramatic, keep in mind that what I’m talking about is a dawning recognition of something that many analysts have already come to realize: that the “oil grab” is in fact already on. Source
C. The automotive and aviation industries would be destroyed by acknowledging the truth or any large scale mitigation program:

Most of the steps we need to take to deal with this, such as driving less or buying fewer consumer items, would severely hurt large sectors of the US economy. For instance, an aggressive fuel conservation program would lower the demand for new vehicles as people would be driving less, thereby increasing the life of their vehicles. This sounds like a perfectly reasonable and common sense mitigation plan until you realize that approximately one out of every 10 jobs in the US is either directly or indirectly dependent on the manufacture of new automobiles. Source Each job in the automotive industry creates between 2 and 9 jobs in other industries. Source

With automotive giants GM and Ford already on the ropes, any aggressive program of conservation would likely so blunt the demand for new cars that the two automotive giants spiraling into bankruptcy. This would produce devastating knock-off effects throughout the domestic economy and would almost certainly lead to the rise of extremists political movements not unlike those that arose in Germany during the 1920s when its economy collapsed.

A similar problem exists when it comes to the aviation industry. According to the International Air Transport Association, aviation is a $400 billion dollar industry that indirectly generates $1.3 trillion dollars in economic activity. Source Overall, it accounts for 9% of global GDP. Source Thus any plan to aggressively reduce air travel is likely to produce the same sort of unintended consequences that would be produced by an aggressive plan to reduce automobile travel: severe economic dislocations, followed by massive social unrest.

For more information, see:

The Wall Street Journal won’t dare utter the words “Peak Oil”

Jeffrey Brown: Oil, the Iron Triangle and the “Enron Effect”

What about this theory that oil is actually a renewable resource?
A handful of people believe oil is actually a renewable resource continually produced by an abiotic process deep in the Earth. As emotionally appealing as this theory may be, there is absolutely no evidence for it. The world has 40,000 producing oil fields. Not a single one shows any signs of refilling.

Moreover, the oil companies don’t give this theory the slightest bit of credence even though they are more motivated than anybody to find an unlimited source of oil as each company’s shareholder value is based largely on how much oil it holds in reserve. Any oil company who wants to make a ridiculous amount of money (which means all of them) could simply find this unlimited source of oil but refuse to bring it to the market. Their stock value would skyrocket as a result of the huge find while they could simultaneously maintain artificial scarcity by not bringing it to the market. But none of them are doing that.
Even if the theories of “unlimited oil” are true, they aren’t doing us much good out here in the real world as production is declining in pretty much every nation outside the Middle East.

It certainly isn’t doing us any good here in the United States. Our domestic oil production peaked in October 1970 at 10 million barrels per day. It has since declined a little bit each year and now stands at about 5 million barrels per day.

This is despite the fact that the US oil exploration companies have more money, more muscle, and more motivation to find oil than just about anybody. If oil is a renewable resource, why isn’t it renewing itself here in the U.S.? (See “Show Me the Oil”)

Furthermore, if oil fields really do refill themselves, why aren’t advocates of the abiotic oil theory hiring themselves out to independent oil exploration firms? They could becoming fabulously wealthy by helping these firms locate and profit from the magically refilling fields. Perhaps the reason abiotic-oil advocates aren’t hiring themselves out to oil companies is because the abiotic-oil theory is little more than clever oil company propaganda. Journalists Paula Hay explains:
If millions of people got the picture that Peak Oil is imminent, they would surely begin to take steps to protect themselves and their families — to powerdown — and decline would be slowed as a result of all those peoples’ aggregate actions. It would be a classic market response to new information.

Big Oil cannot allow this to happen if it intends to keep its profits sky-high. If people believe that oil is abundant forever; that they are being screwed by Big Oil; and that the government will step in any moment to save them, they have no incentive to powerdown.

Abiotic oil propaganda, coupled with finger-pointing at the oil industry, is a perfect ruse to ensure people don’t start powering down. Peak Oil is not the oil industry’s propaganda. Abiotic oil is the oil industry’s propaganda. Source
Interestingly enough, five of the seven policy recommendations made by outspoken abiotic oil advocate Jerome Corsi in his book “Black Gold Stranglehold” sound like taxpayer funded giveaways to Big Oil: (commentary in italics added)

#1. Promote scientific research to investigate alternative theories.

#2. Expedite leases offshore and in Alaska to encourage oil exploration. (Who benefits from this?)

#3. Provide tax credits for deep-drilling oil exploration. (Who benefits from this?)

#4. Create an oil research institute to serve as a clearinghouse of oil industry information. (Who benefits from this?)

#5. Develop a public broadcasting television series devoted to the oil industry. (Who benefits from this?)

#6. Reestablish a gold-backed international trade dollar.

#7. Establish tax incentives for opening new refineries in the U.S. (Who benefits from this?)

With the exception of numbers one & six, Corsi’s policy recommendations read as though they came from an oil-industry wishlist. That Corsi would so vigorously advocate tax breaks for the oil industry should come as little surprise: in 2004, he coauthored the “Swift Boat Veterans for Truth” attack book that many believe helped the tax cut-obsessed and oil industry-backed Bush administration stay in office.

It is worth noting that Corsi – the primary media vector for the current incarnation of the abiotic oil theory – spent the bulk of his early professional career running covert operations for USAID, the U.S. government agency tasked primarily with destabilizing foreign governments not amenable to western oil interests. Source In 2005, he was personally thanked by George W. Bush for his recent work attempting to destabilize oil-rich Iran. Source

In his book, Corsi cites the Eugene Island 330 oilfield as proof that oil fields refill themselves. Apparently he or his research staff failed to do a google images search for “Eugene Island 330.” If he had performed such a search, he would have come across the following graph which plainly shows Eugene Island 330’s oil production in decline for the past 25 years. Corsi’s primary example of a “refilling field” is only producing about 1/6 the amount of oil it produced at its peak:

As a long-time political hitman, Corsi knows the bulk of the American public is so disinformed that he can get away with this sort of blatant intellectual dishonesty. Source

For more information:

Richard Heinberg: The Abiotic Oil “Controversy”

Byron King: The “Deep Oil” Theory

Ugo Bardi: Where is the abiotic oil?

“Won’t high oil prices motivate us to look for alternatives?”

To a certain degree, yes. Unfortunately, the situation is far too complex to be solved via alternative energy “plug-and-play” as is commonly believed. First, as explained in great depth later on this page, we really don’t have any ready-to-scale alternatives that share oil’s energy density, energy portability and high energy return on energy invested (EROEI).

Second, and perhaps more importantly, even if we did have alternatives that shared the characteristics of oil, we won’t be motivated to invest in them on the massive scale necessary until it’s too late. To illustrate this point: as of October 2007 a barrel of oil costs about $75. The amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy. Thus, the market won’t signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $100-$250 range and stays there for several years.

*This does not even account for the amount of money it would take to locate and refine the raw materials necessary for a large scale conversion or the retrofitting of the world’s $50 trillion plus economy to run on these alternatives.

Once we do finally begin aggressively pursuing these alternatives, there will be a 25-to-50 year lag time between the initial heavy-duty research into these alternatives and their wide-scale industrial implementation. However, in order to finance an aggressive implementation of alternative energies, we need a tremendous amount of investment capital – in addition to affordable energy and raw materials – that we absolutely will not have once oil prices are permanently lodged in the $200-$300 per barrel neighborhood. Source

While we need 25-to-50 years to retrofit our economy to run on alternative sources of energy, we may only get 12-to-18 months once oil production peaks. Within a short time of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, traders on Wall Street will quickly bid the price up to, and possibly over, the $200 per barrel range as they realize the world is now in an era of permanent oil scarcity.

With oil at or above $200 per barrel, gasoline will reach $10 per gallon, assumming it is even available. This will cause a rapid breakdown of trucking industries and transportation networks which have all been built and financed under the assumption fuel prices would remain low. Importation and distribution of food, medicine, and consumer goods will grind to a halt as trucking and shipping companies go bankrupt en masse.

The effects of this will be frightening. As Jan Lundberg, founder of the Lundberg Survey, aka “the bible of the oil industry” recently pointed out:

Remember, once we get the reactors built, we still have the not-so-inexpensive task of retrofitting a significant portion of the following to run on nuclear-derived electricity:

The 800 million oil-powered cars traversing the world’s roads;

The mllions of oil-powered airplanes crisscrossing the world’s skies;

Millions of oil-powered boats circumnavigating the world’s oceans.

Scientists have made some progress in regards to nuclear fusion, but the road from success in tabletop laboratory experiments to use as an industrial scale replacement for oil is an extremely long one that, even in the most favorable of circumstances, will take decades to traverse.

For more information, see:

10,000 Nuclear Breeder Reactors Needed

Uranium in Sea Water Will Never Produce Net-Energy (PDF)
“What about Ethanol?”
Ethanol, methanol etc. are great, but only in small doses. Like all other biofuels it is grown with massive fossil fuel inputs (pesticides and fertilizers) and suffer from horribly low, sometimes negative, EROEIs. The production of ethanol, for instance, requires six units of energy to produce just one. Source That means it consumes more energy than it produces and thus will only serve to compound our energy deficit.

In addition, there is the problem of where to grow the stuff, as we are rapidly running out of arable land on which to grow food, let alone fuel. Source This is no small problem as the amount of land it takes to grow even a small amount of biofuel is quite staggering. As journalist Lee Dye points out in a July 2004 article entitled “Old Policies Make Shift From Foreign Oil Tough:”

. . . relying on corn for our future energy needs would devastate
the nation’s food production. It takes 11 acres to grow enough
corn to fuel one automobile with ethanol for 10,000 miles, or
about a year’s driving, Pimentel says. That’s the amount of land
needed to feed seven persons for the same period of time. And if
we decided to power all of our automobiles with ethanol, we would
need to cover 97 percent of our land with corn, he adds. Source

According to a Fortune Magazine article entitled “Ethanol Could Leave the World Hungry”, emphasis added:

The growing myth that corn is a cure-all for our energy woes is
leading us toward a potentially dangerous global fight for food.
While crop-based ethanol -the latest craze in alternative energy –
promises a guilt-free way to keep our gas tanks full, the reality is
that overuse of our agricultural resources could have
consequences even more drastic than, say, being deprived of our
SUVs. It could leave much of the world hungry. One tankful of
[ethanol] could feed one person for a year. Source

Finally, geologist Byron King explains how small the nation’s ethanol production is when compared to its collosal petroleum consumption:

. . . the forecast annual U.S. production of 11 billion gallons of
ethanol translates into about 262 million barrels of that type of
fuel produced over the course of a year. And I am not even
adjusting for the energy density of ethanol, which is far lower,
only 59.5%, than an equivalent barrel of petroleum. . . What
appears at first to be an impressive number in terms of energy
supply (11 billion gallons per year) is actually relatively small. In
fact, it is almost in the “rounding error” of the nation’s daily liquid
fuel consumption of about 21 million barrels of oil per day. Source

For more information, see

The Cellulosic Ethanol Delusion

Vinod Khosla Debunked: Ethanol is Not the Answer

The Ethanol Scam: America’s Biggest Political Boondoggle

Love Affair with Ethanol Will Produce Massive Food Crisis

Large Scale Ethanol Production Could Create Food Crisis
What about Biodiesel?
If we wanted to replace even a small part of our oil supply with farm grown biofuels, we would need to turn most of Africa into a giant biofuel farm, an idea that is currently gaining traction in some circles. Obviously many Africans – who are already starving – would not take kindly to us appropriating the land they use to grow their food to grow our fuel. As journalist George Monbiot points out, such an endeavor would be a humanitarian disaster.

Some folks are doing research into alternatives to soybeans such as biodiesel producing pools of algae. As with every other project that promises to “replace all petroleum fuels,” this project has yet to produce a single drop of commercially available fuel. This hasn’t prevented many of its most vocal proponents from insisting that algae grown biodiesel will solve our energy problems. The same is true for other, equally ambitious plans such as using recycled farm waste, switchgrass, etc. These projects all look great on paper or in the laboratory. Some of them may even end up providing a small amount of commercially available energy at some undetermined point in the future. However, in the context of our colossal demand for petroleum and the small amount of time we have remaining before the peak, these projects can’t be expected to be more than a “drop in the bucket.”

See also: Biodiesel from Algae Not Viable Until Oil is $800/Barrel

Tragically, many well-meaing people attempting to develop solutions don’t even understand this. As Dr. Ted Trainer explains in a recent article on the thermodynamic limitations of biomass fuels:

This is why I do not believe consumer-capitalist society can save
itself. Not even its “intellectual” classes or green leadership give
any sign that this society has the wit or the will to even think
about the basic situation we are in. As the above figures make
clear, the situation cannot be solved without huge reduction in the
volume of production and consumption going on.

The current craze surrounding biodiesel is a good example of what Dr. Trainer is talking about. While folks who have converted their personal vehicles to run on vegetable oil should certainly be given credit for their noble attempts at reducing our reliance on petroleum, the long-term viability of their efforts is questionable at best. Once our system of food production collapses due to the effects of Peak Oil, vegetable oil will likely become far too precious/expensive a commodity to be burned as transportation fuel for anybody but the super-rich. As James Kunstler points out in an April 2005 update to his blog “Cluster Fuck Nation”, many biodiesel enthusiasts are dangerously clueless as to this reality:

Over in Vermont last week, I ran into a gang of biodiesel
enthusiasts. They were earnest, forward-looking guys who would
like to do some good for their country. But their expectations
struck me as fairly crazy, and in a way typical of the bad thinking
at all levels of our society these days.

For instance, I asked if it had ever occurred to them that biodiesel
crops would have to compete for farmland that would be needed
otherwise to grow feed crops for working animals. No, it hadn’t.
(And it seemed like a far-out suggestion to them.) Their
expectation seemed to be that the future would run a lot like the
present, that bio-diesel was just another ingenious, innovative,
high-tech module that we can “drop into” our existing system in
place of the previous, obsolete module of regular oil.

Kunstler goes on to explain that when policies or living/working arrangements are set up around such unexamined expectations, the result is usually a dangerous deepening of our reliance on cheap energy and “easy motoring.”

Biodiesel advocates can get downright nasty when somebody points out any of the above described limitations of their favorite fuel. For instance, in a December 2005 article entitled, “The Most Destructive Crop on Earth No Solution to the Energy Crisis,” well known progressive journalist George Monbiot, recounted his experiences attempting to point out the limits of biodiesel:

The last time I drew attention to the hazards of making diesel fuel
from vegetable oils, I received as much abuse as I have ever been
sent for my stance on the Iraq war. The biodiesel missionaries are
as vociferous in their denial as the executives of Exxon Mobil.

If biofuels such as biodiesel and ethanol are such poor substitutes for oil, why then do you hear about them so much? The answer becomes obvious once you follow the money: the vast majority of the biofuels produced in this country are (as mentioned earlier) produced by giant agribusiness conglomerates such as Archer Daneiles Midland. Investigative reporter Mike Ruppert points out:

Archer Daniels Midland laughs all the way to the bank. With a price
to earnings (P/E) ratio of 17:1, every dollar of net profit thrown
into their coffers by politicians or investment advisors selling the
snake oil of alternative fuels generates $17 in stock value which
ADM will happily sell off before all the markets succumb to Peak
Oil. That came out of your pocket whether you invested or not.

See also:

The Inconvenient Truth About Hybrid Cars

Electric Vehicles:

Electric vehicles are incapable of replacing more than a small fraction (5 or maybe 10%) of the 700 million internal combustion engine powered cars on the road due to the limits of battery technology. Dr. Walter Youngquist explains:

Anyone tired of lousy news from the markets should talk to Douglas Lloyd, a director of Venture Business Research, which tracks trends in venture capitalism. “I expect investment activity in this sector to remain buoyant,” he said recently. Lloyd’s bouncy mood was inspired by the money that is gushing into private security and defence companies. He added: “I also see this as a more attractive sector, as many do, than clean energy.”

Got that? If you are looking for a sure bet in a new growth market, then sell solar and buy surveillance: forget wind, buy weapons. This observation – coming from an executive who is trusted by such clients as Goldman Sachs and Marsh & McLennan – deserves particular attention . . .

According to Lloyd, the really big money – despite all the government incentives – is turning away from clean-energy technologies, and is banking instead on gadgets that promise to seal wealthy countries and individuals into hi-tech fortresses. To put it simply, in the world of venture capitalism, there has been a race going on between greens on the one hand, and guns and garrisons on the other – and the guns and garrisons are winning. Source
To be perfectly clear: the investment banks are investing considerable amounts in new energy technologies. It’s just that they are investing 100 or 1,000 times as much in new weapons technologies which will be used to fight over the world’s diminishing supply of fossil fuels. The ratio between investment in the two sectors is the key point here: while the global market for renewable energy measures in the tens of billions, the (combined) global markets for oil and arms measures over $3 trillion. Furthermore, as fast as the market for new energy technologies is growing, the market for new weapons technologies is growing by several orders of magnitude faster.
Can’t the investment banks see that these strategies will plunge the world into massive oil wars and large-scale economic collapse?
Most of the investment banks’ investment strategies – including the strategy to invest more in new weapons technologies than new energy technologies – are guided/informed by extremely sophisticated computer programs which, for all intents and purposes, make the decisions for the traders. According to December 2007 article in the San Francisco Chronicle, the newest generation of super-computers used by Wall Street investment strategies will soon be “peta-scale”:
Sometime next year, developers will boot up the next generation of supercomputers, machines with vast increases in processing power . . . The first “petascale” supercomputer will be capable of 1,000 trillion calculations per second.

“The difficulty in building the machines is mind-boggling,” said Mark Seager, assistant department head for computing technology at Lawrence Livermore. “But the scientific results that we can get out of them are also mind-boggling . . .”

Petascale computers are also expected to lead to more potent models for Wall Street to calculate risk and predict the fate of financial instruments . . . Source
A June 2007 Bloomberg article entitled “The Ultmate Money Machine” confirms that the world’s most powerful investment consortiums are using the latest generation(s) of super-computers to guide their investment strategies:
For decades, investment banks and hedge fund firms have used computers to uncover relationships in the markets and exploit them. Today, computer-guided trading has reached levels undreamed of a decade ago. A third of all U.S. stock trades in 2006 were driven by automatic programs, or algorithms. By 2010, that figure will reach 50 percent. Rex Macey, director of equity management at Wilmington Trust Corp. says computers can mine data and see relationships that humans can’t. Source
Independent journalist Michael Ruppert gives a more in-depth explanation of how these modeling programs work:
. . . [this sort of software] combines datamining and artificial intelligence . . . Datamining is a technique for detecting and extracting meaningful patterns hidden within vast quantities of apparently meaningless data. Programs based on datamining are powerful analytical tools; finding meaningful patterns in an ocean of information is very useful. But when such a tool is driven by a high-caliber artificial intelligence core, its power gets spooky. The datamining capability becomes a smart search tool of the AI program, and the system begins to learn.

Great strides have been made by the mutually fertile disciplines of mathematics, computer science, and neuroscience. With neural networking, software has become much smarter than it had been. Now it can perform multiple, related operations at the same time through parallel processing; now it can learn from setbacks, and use genetic algorithms to evolve its way out of limitations.

This kind of computational power supports an inference engine that can digest the mined data into results that are predictive for imminent and, to some degree, even middle -term outcomes. It extrapolates from current trends in a more than quantitative way.

Conventional electronic surveillance finds patterns in the data of other instruments; [this software] can exploit patterns it detects and extrapolate future probabilities . . . Source
According to a 2007 UK Register article, the Pentagon and Homeland Security now possess computer programs capable of modeling the decision making processes of financial institutions, media outlets, even the entire human population (all 6.6 billion) right down to individuals:
. . . the US Department of Defense may already be creating a copy of you in an alternate reality to see how long you can go without food or water, or how you will respond to televised propaganda.

Called the Sentient World Simulation (SWS), the program replicates financial institutions, utilities, media outlets, and street corner shops. By applying theories of economics and human psychology, its developers believe they can predict how individuals and mobs will respond to various stressors.

Yank a country’s water supply. Stage a military coup. SWS will tell you what happens next. Homeland Security is already using SWS to simulate crises on the US mainland. Source
If government bureaucracies such as DHS are modeling financial institutions by using computer programs as sophisticated as SWS, it stands to reason the world’s largest and most powerful private investment banks have similar, if not far more sophisticated, tools at their disposal.

The point of all this is that the top investment banks’ strategies to disproportionately invest in weapons technologies over new energy technologies has not been made “willy-nilly.” Quite the contrary, these strategies have been informed by computer programs of almost unimaginable power.

The implications of this go far beyond just Wall Street as the companies using these super-computer programs are the same companies that, for all intents and purposes, determine who can afford to make serious runs for office at the state and national level.

On a related note, even if solar, wind, and other green alternatives could replace oil, we still wouldn’t escape the evil clutches of so called “Big Oil.” The biggest maker of solar panels is British Petroleum with Shell not too far behind. Similarly, the second biggest maker of wind turbines is General Electric, who obtained their wind turbine business from that stalwart of corporate social responsibility, Enron. Source As these examples illustrate, the notion that “Big Oil is scared of the immerging renewable energy market!” is silly. “Big Oil” already owns the renewable energy market. Source

Relevant background reading:

NY Times: A Smarter Computer to Pick Stocks

NY Times: Automated Software Enabled the Subprime Boom, Bust
“What About the Hydrogen Economy?”
As of 2003, the average hydrogen fuel cell costs close to $1,000,000. Unlike other alternatives, hydrogen fuel cells have shown little sign of coming down in price. Source Unfortunately, hydrogen and/or hydrogen fuel cells will never power more than a handful of cars due to the following reasons:

Astronomical Cost of Fuel Cells

With fuel cell powered cars themselves costing $1,000,000 a piece, replacing just 210 million cars -or less than 1/4 of the world’s automotive fleet -with fuel cell powered cars would cost $210,000,000,000,000. (That’s two-hundred and ten trillion dollars.) Source

Furthermore, as a recent article in EV World points out, the average fuel cell lasts only 200 hours. Source Two hundred hours translates into just 12,000 miles, or about one year’s worth of driving at 60 miles per hour. That’s not much of a deal for a car with a million-dollar price tag.

That doesn’t even begin to address the cost of replacing a significant portion of the millions upon millions of oil-powered airplanes, boats, trucks, tractors, trailers, etc., with fuel cells nor the construction of a worldwide system to maintain all of these new technologies.

Platinum Supply and Cost

A single hydrogen fuel cell requires approximately 20-50 grams of platinum. Source Let’s say we want to replace 1/4 of the world’s petroleum powered cars with hydrogen fuel cell powered cars. Twenty-to-fifty grams of platinum per fuel cell x 210 million fuel cells equals between 4.2 billion and 10.5 billion grams of platinum required for the conversion. Unfortunately, world platinum production is currently at only about 240 million grams per year, most of which is already earmarked for thousands of indispensable industrial processes.

If the hydrogen economy was anything other than a total red herring, such issues would eventually arise as 80 percent of the world’s proven platinum reserves are located in that bastion of geopolitical stability, South Africa. Source

Even if an economically affordable and scalable alternative to platinum is immediately located and mined in absolutely massive quantities, the ability of hydrogen to replace even a small portion of our oil consumption is still handicapped by several fundamental limitations, some of which are detailed below. NASA, which fuels the space shuttle with hydrogen, may be able to afford to get around the following challenges, but there is a big difference between launching a single space shuttle and running a $50 trillion global economy with a voracious and constantly growing appetite for energy.

Inability to Store Massive Quantities at Low Cost:

Hydrogen is the smallest element known to man. This makes it virtually impossible to store in the massive quantities and to transport across the incredibly long distances at the low costs required by our vast global transportation networks. In her February 2005 article entitled “Hydrogen Economy: Energy and Economic Blackhole,” Alice Friedemann writes:

Hydrogen is the Houdini of elements. As soon as you’ve gotten it
into a container, it wants to get out, and since it’s the lightest of
all gases, it takes a lot of effort to keep it from escaping. Storage
devices need a complex set of seals, gaskets, and valves. Liquid
hydrogen tanks for vehicles boil off at 3-4% per day. Source

While some research into hydrogen storage technologies looks promising, it is still in the experimental stages and decades (at the earliest) from being ready to scale on an industrial level. Source

Massive Cost of Hydrogen Infrastructure:

A hydrogen economy would require massive retrofitting of our entire global transportation and fuel distribution networks. At a million dollars per car, it would cost $350,000,000,000,000 to replace half of our current automotive fleet (700 million cars world wide) with hydrogen fuel cell powered cars.

That doesn’t even account for replacing a significant fraction of our oil-powered airplanes or boats with fuel cells.

The numbers don’t get any prettier if we scrap the fuel cells and go with straight hydrogen. According to a recent article in Nature, entitled “Hydrogen Economy Looks Out of Reach:”

Converting every vehicle in the United States to hydrogen-power
would demand so much electricity that the country would need
enough wind turbines to cover half of California or 1,000 extra
nuclear power stations. Source

Unfortunately, even if we managed to get this ridiculously high number of wind turbines or nuclear power plants built, we would still need to build the hydrogen powered cars, in addition to a hydrogen distribution network that would be mind-boggingly expensive. The construction of a hydrogen pipeline network comparable to our current natural gas pipeline network, for instance, would cost 200 trillion dollars. That’s about fifteen times the size of the US GDP in the year 2006.

How such capital intensive endeavors will be completed in the midst of massive energy shortages is anybody’s guess.

Hydrogen’s “Energy Sink” Factor:

As mentioned previously, solar, wind, or nuclear energy can be used to “crack” hydrogen from water via a process known as electrolysis. The electrolysis process is a simple one, but unfortunately it consumes more energy than it produces. Source This has nothing to do with the financial costs. Again, Alice Friedemann explains:

The laws of physics mean the hydrogen economy will always be an
energy sink. Hydrogen’s properties require you to spend more
energy to do the following than you get out of it later: overcome
waters’ hydrogen-oxygen bond, to move heavy cars, to prevent
leaks and brittle metals, to transport hydrogen to the destination.
It doesn’t matter if all of the problems are solved, or how much
money is spent. You will use more energy to create, store, and
transport hydrogen than you will ever get out of it.

Even if these problems are ignored or assumed away, you are still faced with jaw-dropping costs of a renewable derived hydrogen economy. In addition to the 200 trillion dollar pipeline network that would be necessary to move the hydrogen around, we would need to deploy about 40 trillion dollars of solar panels. If the hydrogen was derived from wind (which is usually more efficient than solar) the cost might be lowered considerably, but that’s not saying much when you are dealing with numbers as large as $40 trillion.

As far as how much you as the consumer would pay for hydrogen fuel derived from renewable resources, Joseph Romm, author of The Hype About Hydrogen, estimates you will have to pay $10-$20 per gallon of gasoline equivalent, assuming you can even find a renewable-hydrogen filling station. Source

For more information, see:

The Hydrogen Economy is a Red Herring
“What About Nuclear Energy?”
Nuclear energy requires uranium, which is problematic because as David Petch explains in his article “Peak Oil and You”, even in the most optimistic scenarios, uranium will soon be in short supply:
Here is the real kicker: due to their prodigious size, these shadow stations cannot just be turned on and off at will. In order to be ready to produce electricity when the wind is not blowing or the sun is not shining, they must be fed a constant supply of natural gas or coal.

In other words, as counter-intuitive as it may sound at first, installing renewable energy at the industrial or utility level does not mean conventional power sources can simply be shut down or turned off. If anything, more coal fired or natural gas fired power plants have to brought on line to prevent blackouts from occurring when the wind is not blowing or the sun not shining.

Inappropriateness as Transportation Fuels:

Approximately 2/3 of our oil supply is used for transportation. Over ninety percent of our transportation fuel comes from petroleum fuels (gasoline, diesel, jet-fuel). Thus, even if you ignore the challenges catalogued above, there is still the problem of how to use the electricity generated by the solar cells or wind turbines to run fleets of food delivery trucks, oceanliners, airplanes, etc.

Unfortunately, solar and wind cannot be used as industrial-scale transportation fuels unless they are used to crack hydrogen from water via electrolysis. Hydrogen produced via electrolysis is great for small scale, village level, and/or experimental projects. In order to power a significant portion of the global industrial economy on it, however we would need the following:

Need #1: Hundreds of trillions of dollars to construct fleets of hydrogen powered cars, trucks, boats, and airplanes.

Need #2: Hundreds, if not thousands, of oil-powered factories to accomplish number one.

Need #3: The construction of a ridiculously expensive global refueling and maintenance network for number one.

Need #4: Mind-boggingly huge amounts of platinum, silver, and copper, and other raw materials that have already entered permanent states of scarcity.

Extremely Low Starting Point:

Finally, most people new to this issue drastically overestimate the amount of energy we will be able to realistically derive from these sources inside of the next 5-25 years. If the previous examples didn’t convince you that solar and wind are incapable of replacing oil and gas on more than a small scale/supplemental level, consider the following, easily verifiable facts:

In 2003, the US consumed 98 quadrillion BTU’s of energy. Source A whopping .171 quadrillion came from solar and wind combined. Source Do the math (.171/98) and you will see that a total of less then one-sixth of one percent of our energy appetite was satisfied with solar and wind combined. Thus, just to derive a paltry 2-3 percent of our current energy needs from solar and wind, we would need to double the percentage of our energy supply derived from solar and wind, then double it again, then double it again, and then double it yet again.

Unfortunately, the odds of us upscaling our use of solar and wind to the point where they provide even just 2-3 percent of our total energy supply are about the same as the odds of Michael Moore and Dick Cheney teaming up to win a 5K relay race. Despite tremendous levels of growth in these industries, coupled with practically miraculous drops in price per kilowatt hour (95% drop in two decades), along with increased interest from the public in alternative energies, the percentage of our total energy supply derived from solar and wind is projected to grow by only 10 percent per year. Source Since we are starting with only one-sixth of one percent of our energy coming from these sources, a growth rate of 10 percent per year isn’t going to do much to soften a national economic meltdown. Twenty-five years from now, we will be lucky if solar and wind account for one percent of our total energy supply. Source

Other green alternative energy sources, such as wave and geothermal power are incapable of replacing more than a fraction of our petroleum usage for similar: they are nowhere near as energy dense as petroleum and they are inappropriate as transportation fuels. In addition, they are also limited by geography. Wave power is only technically viable in coastal locations while only a handful of nations, such as Iceland, have access to enough geothermal power to make up for much of their petroleum consumption.

This is by no means reason not to invest in or purssue these alternatives. We simply have to be realistic about what they can and can’t do. While they are certainly worthy investments, it is simply unrealistic to expect they are going to power more than a small fraction of our forty-five trillion dollar per year (and growing) global industrial economy.
“But aren’t the big investment banks investing heavily in renewable energy?”.
The large investment banks have concluded that renewable energy will never comprise more than a very small fraction of the world’s total energy profile. They have also realized the world is plunging into an era of massive energy wars. They are thus disproportionately moving their money into new weapons technologies over new energy technologies. Journalist Naomi Klein explains:
The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in “advanced” societies.

The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno -toys and goods from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. Source
Although mentioned on the previous page, Oxford trained geologist Jeremy Leggett’s analysis of the consequences of Peak Oil bares repeating:
. . . when the truth can no longer be obscured, the price will spike, the economy nosedive, and the underpinnings of our civilization will start tumbling like dominos. “The price of house will collapse. Stock markets will crash. Within a short period, human wealth — little more than a pile of paper at the best of times, even with the confidence about the future high among traders — will shrivel.

There will be emergency summits, diplomatic initiatives, urgent exploration efforts, but the turmoil will not subside. Thousands of companies will go bankrupt, and millions will be unemployed. “Once affluent cities with street cafés will have queues at soup kitchens and armies of beggars. Crime will soar. The earth has always been a dangerous place, but now it will become a tinderbox . . . Source
Under these sort of conditions, financing a large scale switchover to alternative energies will be, for all intents and purposes, impossible.

“What about all the various alternatives to Oil? Certainly there are replacements we can turn to?”

People tend to think of “alternatives to oil” as somehow independent from oil. In reality, the alternatives to oil are more accurately described as “derivatives of oil.” It takes massive amounts of oil and other scarce resources to locate and mine the raw materials (silver, copper, platinum, uranium, etc.) necessary to build solar panels, windmills, and nuclear power plants. It takes more oil to construct these alternatives and even more oil to distribute them, maintain them, and adapt current infrastructure to run on them.

Each of the alternatives is besieged by numerous fundamental physical shortcomings that have, thus far, received little attention. These are discussed one-by-one in the questions that follow.

For more information, see:

U.S. energy independence: the ever-receding mirage

Physical contraints on renewable energy technologies

Nine critical questions to ask about alternative energy

The hydrogen economy and other high-tech myths

It’s time to face some hard truths about our energy problems

“What about green alternatives like solar, wind, wave, and geothermal?”

Few people realize how much energy is concentrated in even a small amount of oil or gas. A barrel of oil contains the energy-equivalent of almost 25,000 hours of human labor. Source A single gallon of gasoline contains the energy-equivalent of 200-to-500 hours of human labor. Source

Most people are stunned to find this out, even after confirming the accuracy of the numbers for themselves, but it makes sense when you think about it a bit: it only takes one ($3) gallon of gasoline to propel a three ton SUV 10 miles in 10 minutes when traveling 60 mph. How long would it take you to push a three ton SUV 10 miles?

While people tend to drastically underestimate the energy density of oil and gas, they drastically overestimate the energy density (and thus scalability) of renewables. Some examples should help illustrate this point:

Example #1: Wind compared to Natural Gas

It would take every single one of California’s 13,000 wind turbines operating at 100% capacity (they usually operate at about 30%) all at the same time to generate as much electricity as a a single 555-megawatt natural gas fired power plant. Source

Example #2: Wind compared to Coal

As of 2004, the United States has 6,361 megawatts of installed wind energy. This means that if every wind turbine in the United States was spinning at peak capacity, all at the exact same time, their combined electrical output would equal that of six coal fired power plants. Since, as mentioned previously, wind turbines typically operate at about 30% of their rated capacity, the combined output of every wind turbine in the US is actually equal to less than two coal fired power plants. Source

Example #3: Solar compared to Coal

The numbers for solar are ever poorer. For instance, on page 191 of his 2004 book “The End of Oil: On the Edge of a Perilous New World”, author Paul Roberts writes:
. . . if you add up all the solar photovoltaic cells now running worldwide the combined output – about 2,000 megawatts – barely rivals the output of two coal-fired power plants.
Robert’s calculation assumes the solar cells are operating at 100% of their rated capacity. In the real world, the average solar cell operates at about 20% of its maximum capacity as the sun is not always shining. This means the combined output of all the solar cells in the world at the end of 2004 was equal to less than 40% of the output of a single coal fired power plant. Source

By 2008, there was just over 5,000 megawatts of solar pv cells installed worldwide. Operating at average efficiency of 20%, the combined output of all the pv cells in the world is now equal to the output of a single coal fired power-planet.

Example #4: Solar and Wind compared to Petroleum

In order to offset a 10% reduction in U.S. petroleum consumption, the amount of installed solar and wind energy would have to be increased by 2,200%. Source

Example #5: Solar compared to Gasoline

The amount of energy distributed by a single gas station in a single day equivalent to the amount of energy that would produced by four Manhattan sized city blocks of solar equipment. (There are over 170,000 gas stations in the U.S. alone.) Source The reason for this differences is because, as explained above, oil is an incredibly dense sources of energy while solar is extremely diffuse

Example # 6: Low starting point for industrial solar

It would take close to 220,000 square kilometers of solar panels to power the global economy via solar power. This may sound like a marginally manageable number until you realize that the total acreage covered by solar panels in the entire world right now is a paltry 10 square kilometers. Source

Example #7: Diminutive contribution of residential solar:

According a recent MSNBC article entitled, “Solar Power City Offers 20 Years of Lessons:”
By industry estimates, up to 20,000 solar electric units and 100,000 heaters have been installed in the United States, diminutive numbers compared to the country’s 70 million single-family houses. Source
This means that even if the number of American households equipped with solar electricity is increased by a factor of 100, less than two million American households will be equipped with solar electric systems. Assuming we are even capable of scaling the use of household solar electric systems by that amount, two questions remain:

#1. What do the other 68 million households do? What about the millions of companies, nations, and industries around the world of which the industrialized world are dependent?

#2. Since oil, not electricity, is our primary transportation fuel (providing the base for over 95% of all transportation fuel) what good wih this do us when it comes to keeping our global network of cars, trucks, airplanes, and boats going?
Example #8: Electric Car Batteries Versus Gasoline Engines

Dr. Walter Youngquist explains:
. . . a gallon of gasoline weighing about 8 pounds has the same energy as one ton of conventional lead-acid storage batteries. Fifteen gallons of gasoline in a car’s tank are the energy equal of 15 tons [3,000 pounds] of storage batteries. Source
Some will say that the problems associated with lead-acid batteries as pointed out by Dr. Youngquist can be resolved by moving to lithium-ion batteries. Unfortunatley, lithium is in such short supply globally that electric car manufacturers are already anticipating problems sourcing it even though only a tiny fraction of westerners currently drive electric cars:
Europe is light-years ahead of America in wind energy, and Germany leads the world. The German numbers are painting a dismal picture for wind’s capacity. E.ON Netz – one of th eworld’s largest private energy providers – owns over 40% of Germany’s wind generating capacity. They released a report titled “WIND REPORT 2004” stating that wind energy require “shadow stations” of traditional energy on back-up reserve in case the wind forecast is wrong. They state that reserve capacity needs to be 60% to 80% of the total win capacity! So as mo wind comes on line, it is all but certain that more hydrocarbon reserve capacity will be required, further demonstrating how renewable energy is used to supplement over-consumption. Source
Figure 2 illustrates the different projections of uranium depletion, pending an increase in annual consumption rates of 3%, 5% or 8%. Currently, uranium production falls incredibly short of the demand. As oil resources become scarce, uranium will have more pressure put upon it as a resource. All three different scenarios have a similar course until around 2013, where they part trails. By 2020, there is a serious uranium shortage.
Let’s assume a Pollyanna position and assume that uranium deposits can be doubled up in the coming decade. Figure 3 illustrates the 3 different scenarios, depending on the net increase in consumption per year. Rather than 2013 being a focal year, it is stretched out by 3 years to 2016.
Uranium supply issues aside, nuclear energy (like solar and wind) is not an economically or energetically feasible transportation fuel. Put simply, you can’t power your car with a nuclear reactor in the trunk.

Even if these problems are assumed away, a large scale switch over to nuclear power is still not going to do all that much to solve our problems due to the cost and time frames involved in the construction of nuclear power plants. It would take 10,000 of the largest nuclear power plants to produce the energy we get from fossil fuels. Source At $3-5 billion per plant, it’s not long before we’re talking about “real money” – especially since the $3-5 billion doesn’t even include the cost of decommissioning old reactors, converting the nuclear generated energy into a fuel source appropriate for cars, boats, trucks, airplanes, and the not-so-minor problem of handling nuclear waste.

Speaking of nuclear waste, it is a question nobody has quite answered yet. This is especially the case in countries such as China and Russia, where safety protocols are unlikely to be strictly adhered to if the surrounding economy is in the midst of a desperate energy shortage. It may also be true in the case of the US because, as James Kunstler points out in his recent book, The Long Emergency:
. . . reactors may be beyond the organizational means of the society we are apt to become in the future, mainly one with much weaker central authority, less police power, and reduced financial resources . . . in the absence of that (cheap) oil we can’t assume the complex social organization needed to run nuclear energy safely will even exist. Source
Assuming we find answers to all questions regarding the cost and safety of nuclear power, we are still left with the most vexing question of all:
Where are we going to get the massive amounts of oil and money necessary to build hundreds, if not thousands, of these reactors, especially since they take 10 or so years to build and we won’t get motivated to build them until after oil supplies have reached a point of permanent scarcity?

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Some promising research into new battery technlogies using lithium is being performed, but even the scientists at the forefront of this research admit that we are at least a generation away from these technologies being ready for the mass market.

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