Oil demand outweighs supply ("we've got a problem" - AG Edwards)

[cthrumatrix]

Oil demand outweighs supply
By BILL MEDLEY Courier & Press staff writer 464-7519 or [e-mail]
March 4, 2005

A decline in OPEC's production capacity and a rapid increase in demand have combined to make recent oil price increases permanent, a market expert said Thursday.

In a speech before the Illinois Oil & Gas Association's annual convention at the Executive Inn, Bill O'Grady, director of futures research at A.G. Edwards & Sons, said signs suggest current oil production can't meet expected future demand.

O'Grady presented research estimating that the world needs to find another 40 million barrels of oil a day on top of what it's currently producing to meet demand in 2010.

"That seems highly unlikely," he said. "We've got a problem on our hands."


snip

http://www.courierpress.com/ecp/ebj/article/0,2578,ECP_19916_3592489,00.html

Start reading up on Peak Oil...this is clearly why we are in Iraq...Iran coming soon.

[tanyev]

1. What happened, Bill?

Did you just pull your head out of the sand and notice this?

[cthrumatrix]

3. give the guy credit....who else in the press is writing about this?

In american newspapers?

[tanyev]

4. Sorry, I was referring to Bill O'Grady

of AG Edwards. Didn't even notice the reporter's name was also Bill.

[Tux]

2. Oil

A black substance that societies need to operate cars, planes, factories, etc. We are approaching peak oil and sooner than we thought. The best move is to hybrid cars. Then hydrogen. As for plastics and lubercants, we have to find something else to base them upon instead of oil. In a decade, we may have very little oil we can access and have to alter our technology to reflect that fact. It would be difficult but it can be done.

[Coastie for Truth]

9. Enzyme catalyzed chemical processes - the Biotech Economy

involving carbohydrates and starches. We can get (in the pilot plant) liquid motor fuels and monomers -- almost trivially.

Check out the "Peak Oil" Group - especially the "The End of Suburbia" thread -- http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=266x307

and some of my discussions with the moderator--

1. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=307&mesg_id=370
2. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=307&mesg_id=368
3. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=307&mesg_id=367
4. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=307&mesg_id=363
5. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=312&mesg_id=359
6. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=82&mesg_id=358
7. http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=266&topic_id=307&mesg_id=351

Hybrid cars buy us time.

The hydrogen economy will depend on electricity -- which as we run out of fossil fuels - will force us to wind turbines, photovoltaics, hydro, geothermal -- and figure a doubling in the price of electricity as we convert to non-fossil fuels and also as we divert about half of electricity to the electrolysis of water for the hydrogen economy.

Before Baklund's invention of Bakelite in the 1930's most plastics were made from vegetable oils -- and that technology has moved very rapidly into a biotech future.

[Strelnikov_]

10. Hydrogen Does Not Appear Viable

I suggest Hybrid->Multi-Fuel Pluggable Lightweight Hybrid(Ethanol/Biodiesel/SynPetro from Coal)

[Coastie for Truth]

11. Hydrogen is only viable with "Cheap" electric; SynPetro has problems

Hydrogen is only viable with "Cheap" electric to electrolyze the large amounts of water to get the hydrogen.

My last "salaried" job was in the "hydrogen storage" area - using NiMH battery type technology to store H2 as a hydride alloy.

In college I had a part time job working on SynPetro (at Bruceton National Lab - now at Morgantown WV) and at CMU's "Coal Research Center" -- lots of nasty environmental issues.

BTW- Ford has some interesting real time fuel sensor type technology at the Sci Center that allows for various liquid fuel blends. You don't have to hit a switch on the dash to switch between various liquid fuels -- that is detected by the sensor.

[megatherium]

15. nuclear hydrogen?

I understand that there are designs for nuclear reactors that would use heat to improve the efficiency of producing hydrogen from water.

I dunno if hydrogen is viable or not. I suspect that battery-electric vehicles might suddenly become attractive soon: no new infrastructure to build, no new distribution system. You plug your car in at night, in the morning it's fully-fueled for your commute. I hear talk of plug-in hybrids, that would be pure electric for a commute but would be capable of going to Montana. Right now, a home hobbyist can convert a subcompact to battery power for about $5000 (a vehicle with a 50 mile range that can go on the freeway).

But this won't address freight transportation (heavy trucks or rail). Nor the chemical industry, which uses one third of the oil we consume. (Please correct me if I'm wrong here.)

[Coastie for Truth]

16. Nuclear

I worked in nuclear - and I'm out here in California - just down the road from the Calaveras-Hayward Fault system to the east and the famed San Andreas to the west -- and I worked with Assemblyman and former Asst Energy Secretary Ivan Itkin. Nuke has serious problems

Nuclear's problems in the US are PR and political.

I think we will have to see a "Peak Oil" catalyzed clone of the "Great Depression" to over come nukes PR and political problems.

We still have the waste, the terror attack, and the Rasmussen Report/Wash 740 catastrophic event problems.

[Coastie for Truth]

18. Hybrids, Fuel cells

Heating water before electrolysis to reduce the breakdown voltage is classical Physical Chem 101 thermodynamics. It works. But is it worth the cost?

How about a photothermal heat sink (integral with a photovoltaic cell). A thin film photovoltaic cell can get hot. Recapture that heat (photothermal) and use it to pre-heat the water before electrolysis --- actually, use the water as the heat transfer medium for the photothermal side -- you have heated the water for lower voltage electrolysis, and protected the photovoltaic cell from (minor) Staebler-Wronski deterioration.

That's when a photovoltaic cell gets too for too long, depending on its solid state physics, it "can" suffer a permanent degradation in output voltage. Function of the crystallography/metallography of the silicon.

As to a partial hybrid - there were urban delivery trucks that had that in the 1930's. The issue is liquid fuel cost versus electricity cost.

[Strelnikov_]

23. I Was Thinking SynPetro During The 'Oh Shit' Phase

That is, when we realize peak oil has arrived and that it will take 20 years to transform our energy infrastructure.

There may be a Hydrogen future. But considering the 'Oh Shit' phase is only a year or two off, we can probably only count on mature technologies during the transition.

Since it seems that SynPetro from coal was produced by the Nazi's in WW II. We have coal, and I assume that it is a 'mature' technology that could be ramped up to take off some of the bite.

Over the coarse of the transition, I can see us migrating to a mixed petro/biodiesel/ethanol/battery electric society for transportation fuel. Traditional ethanol production is a mature technology. With the new(?) technologies that make ethanol production from cellulose sources easier, hopefully we can use less energy intensive, non-food crops for ethanol production, and leave the corn belt for food production.

As for vehicles, the future is smaller and lighter. I still like the pluggable idea since most of our best future energy options seem to generate electricity, and if we could get pluggable up to say 30 Mi., most people could get through the day without going combustion. I recognize that people who commute longer distances would probably be better served with a small diesel.

Why not little two-seater pluggable hybrids with ethanol engines (re: hybrid Twike) for commuting? You still get from point A to B, you just don't get there in a living room. These could run off 180 proof ethanol, thus eliminating the extra step of 'drying'.

The above are just some musings from a commoner, not an industry expert.

[Coastie for Truth]

25. We have a major SynPetro research lab

in Morganown WV near the WVU campus.

Also - back when there was an iron snd steel industry - one of the byproducts of the "coking" process was "Synthetic LNG" (depends on how the coke oven was tweaked).

We actually did have some players in the field -- but the metallurgical coal for the iron and steel industry "paid the freight" and the "synthetics" were just the "squeal of the pig."

I think it is viable for the 20 year (I hope its not that long) "Oh Shit" phase -- and might bring back the Metro Pittsburgh - Morgantown WV - Cadiz OH area. ;)

===================

I can see "plugability" as an "optional at extra cost" or "after market" feature -- probably with some tweaking of the microprocessor firmware.

[Strelnikov_]

27. You Have Probably Already Seen This Report Summary

From the latest ASPO newsletter. The study cited seems to imply a 20 year transition period from their model results.

So much for the ballyhooed wisdom of the 'market'.


http://216.187.75.220/newsletter51.pdf

Peaking of World Oil Production: Impacts, Mitigation and Risk Management.
Hirsch, R.L., Bezdek, R.H, Wendling, R.M. Peaking; DOE NETL. February 2005.

. . .

To explore how these technologies might contribute, three alternative mitigation scenarios were analyzed: One where action is initiated when peaking occurs, a second where action is assumed to start 10 years before peaking, and a third where action is assumed to start 20 years before peaking.

Analysis of the simultaneous implementation of all of the options showed that an impact of roughly 25 million barrels per day might be possible 15 years after initiation.

Because conventional oil production decline will start at the time of peaking, crash program mitigation inherently cannot avert massive shortages unless it is initiated well in advance of peaking.

Specifically,
* Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.
* Initiating a crash program 10 years before world oil peaking would help considerably but would still result in a worldwide liquid fuels shortfall, starting roughly a decade after the time that oil would have otherwise peaked.
* Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period.

Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic hardship worldwide.

[JohnyCanuck]

12. Hydrogen economy: energy and economic black hole

Hydrogen economy: energy and economic black hole

by Alice Friedemann


The energy-literate scoff at perpetual motion, free energy, and cold fusion, but what about the hydrogen economy? Before we invest trillions of dollars, let's take a hydrogen car out for a spin. You will discover that hydrogen is the least likely of all the alternative energies to solve our transportation problems. Hydrogen uses more energy than you get out of it. The only winners in the hydrogen scam are large auto companies receiving billions of dollars via the FreedomCAR Initiative to build hydrogen vehicles. And most importantly, the real problem that needs to be solved is how to build hydrogen trucks, so we can plant, harvest, and deliver food and other goods.

<snip>

Electrolysis is 70% efficient. To calculate the overall efficiency of making hydrogen from water, the standard equation is to multiply the efficiency of each step. In this case you would multiply the 30% efficient power plant times the 70% efficient electrolysis to get an overall efficiency of 20%. This means you have used four units of energy to create one unit of hydrogen energy (3).

<snip>

At some point along the chain of making, putting energy in, storing, and delivering the hydrogen, you’ve used more energy than you get back, and this doesn’t count the energy used to make fuel cells, storage tanks, delivery systems, and vehicles (17).

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.

http://www.energybulletin.net/4541.html

[Coastie for Truth]

20. The original article refers to Amory Lovins for a contrary view

Stan Ovshinsky and Amory Lovins have contrary views, as does Vittorio deNora (the "Bill Gates" of Fuel Cells). I have worked with all three of them.

By Friedmannn's methodology - gasoline is horribly inefficient because almost half of the energy in the C-C and C-H bonds goes to petroleum refining, and only 30% of the energy in the C-C and C-H bonds in the gasoline in the tank gets to the real wheels. The problem is the Second Law of thermodynamics and Carnot Efficient. Then the loss in the transmission - non-trivial.

I consider my self energy literate - I have a PhD in chem e - with a minor in EE -- dissertation research on heterogeneous catalysis (as in fuel cell electrodes) and ion exchange membranes (as in fuel cell proton exchange membranes) -- and forty years of actual ENGINEERING EXPERIENCE - including synthetic fuels from coal, nuke power, photovoltaics, high energy density EV and HEV batteries, fuel cells, co-gen systems, distributed gen systems, and class room teaching thermodynamics.

[mhr]

5. Peak Oil - Many Have Been Reporting On This For Years

Isn't it amazing that a problem is not considered real until the MSN reports the issue.

This time though, the reports are a little late - we have probably run out of time to fix the problem.

[cthrumatrix]

7. I would add "our policy" that we see unfolding is calcualted and

deliberate....that's why we are in Iraq.

Neocon...schme-ocon.....it's about the end game for oil.

[bpilgrim]

6. the certainty of peak oil explained -----------------> MP4

http://news.globalfreepress.com/movs/Al_Bartlett-PeakOil.mp4

more...
http://www.hubbertpeak.com

psst... pass the word ;->

peace

[havocmom]

8. Thanks for the links, bpilgrim.

Will definately pass them along. Can't wait for the next RW forwarded email so I can hit relpy all and give hundreds of fools indigestion all with one push on the send cue!

[hatrack]

13. Wow - the hard-bitten "realists" of the trading floor discover geology!

Good thing they could brush all of that "realism" out of their eyes for a moment and realize that if something can't go on forever, it won't. :eyes:

[JohnyCanuck]

14. Does Howard Dean know?

Willful blindness

by James Howard Kunstler

<snip>

On Sunday, the New York Times ran a roundtable discussion (in the Book Review) between three prominent young "liberal" intellectuals (Katrina vanden Heuvel, Michael Tomasky, and Peter Beinhart) about what the Democratic Left can do to reclaim its place as a credible opposition. None of these hotshots mentioned the fact that the nation faces a defining crisis over our energy supplies. I don't think the word "oil" was even mentioned by this clueless trio. They have no idea what kind of convulsion we are heading into.

Somebody ought to bring this to the Democrat's attention. America has a problem bigger than social security, or the price of prescription drugs, or gay marriage. America is heading into a situation in which it will no longer have an economy. The Republicans at least have an excuse for their willful blindness -- they've already taken the position that the life of extreme car-dependency and everything it implies is not negotiable. They are committed to defending that position, no matter how foolish it may be.

The Republicans will certainly be disgraced by the coming vicissitudes that they allowed the nation to sleepwalk into. But the Democrats may have less credibility in the future because they were not obligated to defend a foolish status quo, and they did anyway.

I wonder if Howard Dean ever thinks about these things.

http://www.energybulletin.net/4644.html

[Coastie for Truth]

21. Don't know if Howard Dean knows

but Teresa Heinz Kerry's foundation has been funding synthetic fuel research grants and "energy economics" grants.

[robertpaulsen]

17. Good find, cthrumatrix.

"We've got a problem on our hands". Understatement of the millenium.

I guess this is as close to having MSM say the words "Peak Oil" until we have officially passed the peak. Then again, I'm sure Bush will find a convenient scapegoat to take the place of nature.

[Sgent]

19. Watch out what you wish for

with the bush administration we will get the new energy of coal.

[cthrumatrix]

22. at this point all options have to be on the table

I would start with educating americans so they push our representatives for a renewable energy plan.

[John BigBootay]

24. I am not afraid of "Peak Oil"--

And I would imagine that Bill O'Grady's definition of a "problem" is not what some of us here would consider a problem-- that being instant catastrophic societal collapse based on lack of energy.

There are still massive reserves of oil left-- discovered and undiscovered. Which is good and bad for some. Personally, I'd like to see us moving away from oil as quickly as is prudently feasible. However:

1. We WILL find more oil on this planet before we tap out-- A LOT more oil.

2. We WILL develop new tecnologies for extracting and exploiting harder-to-get-at oil.

3. As the price of oil rises based on points one and two, interest and demand for alternative energies will grow.

This process will take place at a gradual pace.

[DELUSIONAL]

26. Good discussion -- I'm enjoying reading and will re-read later tonight

Thanks for the links and resources and insights -- everyone!

[Nay]

28. First thing to do is stop selling US-drilled oil to Japan, etc.

Shouldn't this be the first step? As far as I know, oil companies still sell our oil overseas because the profits are higher. Stop that, and we buy some time at least.

[Coastie for Truth]

31. Oil is fungible

We are swapping for Indonesian crude. Once it is on a tank ship - it's fungible and changes ownership God knows how many times on the commodities market.

The real issue -- unlike in my undergrad days -- today they "design and optimize" a refinery for a particular oil from a particular field (has to do with the "Mass Spectrometer Signature" and the Sulfur content, and the viscosity and oil pressure --> how much hammer and tong stuff to get automotive gasoline out the other end of the refinery?). That limits how "fungible" oil actually is.

Our older west coast refineries are "optimized" for Indonesian crude, not Alaskan crude.

[LiberallyInclined]

29. Hemp Oil is a big part of the answer-

Just about anything that can be derived from petroleum can be synthesized from hemp* oil- and diesel engines can run on it.
It's a renewable resource that can be grown in all 50 states.
and by putting Hemp* into a crop rotation, there is less need for fertilizer and pesticides- both petroleum derivitives- as well as easier plowing, which saves on tractor fuel.

*Industrial Hemp has no psycho-active chemicals/properties; and contrary to what the rabid right-wingers might suggest- it would be pointless to try and "hide" high-grade cannabis plants in with the hemp- the cross pollination would make the marijuana plants virtually useless...In fact- growing large fields of industrial hemp would put an end to a lot of outdoor pot growing' as they'd be a lot more likely to be cross-pollinated by their inferior industrial cousins.

[canuckforpeace]

30. This is interesting...

Do you have a link or source?

[Coastie for Truth]

32. With the right bacteria -- excreting the right enzymes

just about any naturally occurring starch or carbohydrate can be converted into a motor fuel or a chemical (plastic) feed stock --- and not "just about" - but any starch or carbohydrate can be converted into methane (natural gas).

[cthrumatrix]

33. you would probably need "x number of times the land that we have" for

such production...just a guess.

[LiberallyInclined]

34. I'm not saying that it would REPLACE petroleum on it's own...

just that it's a PART of the solution.

[cthrumatrix]

35. I agree..there would need to be a "host" of solutions to keep up

with demand, population growth and energy resource declines

[cthrumatrix]

36. Deutche Bank report of "post petroleum world"

http://www.odac-info.org/

[chrisbur]

37. E-mail I just sent to my economic wiz father re: the future

You have a lot of respect for Bill Moyers right? Ignoring the sensationalist title (although I believe "apocalypse" IS the word used in the bible for what he describes) wouldn't you say we were AT LEAST at a point in our history when there was a very strong chance that we could move in that direction. You know, over-reaching empire, post peak oil production capacity, depletion of the ozone, greenhouse gases, overpopulation, resurgence of religious fundamentalism etc? Or how about a concerted effort on the part of the Republicans to legislate a return to the "halcyon" days of the gilded age before old Teddy R. busted the trusts?
You should take a look at a book called " Tales of an Economic Hitman" that just came out. I say all this because I would like to keep one foot on the bus of "common wisdom" IE: Going all in the market to reap the glorious rewards that long term compounding interest has provided in the past. And one foot on the ground ready to run at any time IE: carry no debt, continue to build up our property's potential for self sustainability, network with our(like minded) neighbors. To be honest with you, we were really close to selling this place and building somewhere in upstate New York.
I realize the risks and you have my permission to laugh when I am sixty four and I'm hobbling out to feed my animals when I could be enjoying a yacht.
Biggest worry? McMansion market collapses while we have pushed our nest egg into a stock market that has done likewise. No jobs and an inability to make mortgage and property tax payments.
I know we are better off than most. We have been given an opportunity to "go for the gold" or "drop out". I'd like to hedge my bets and prepare for both. Make all the Unabomber jokes you want but I've developed a real distaste for this "culture" we live in. Heck, they don't even call it a culture anymore. They call it an "economy".
And remember, you hatched me. Should have kept me away from all those dangerous books.
http://www.dailykos.com/story/2005/3/7/133137/9822

PS. I'm rooting for the alternative scenario in which the reconstructionists and their Snidely Whiplash politicians are foiled and an era of peace, compassion and mutual understanding ensues. Wind farms and solar towers are soon funded with federal money shifting us slowly and painlessly away from our myopic petrol based economy thus ushering in a period of unprecedented cultural and scientific progress. I'm not seeing any signs of this. It's more likely that we draft our kids to fight with China over the dregs of the Middle East. Perhaps market forces will come to the rescue with time to spare and we will all have a good laugh.

[chrisbur]

39. His reply if anyone cares...

Yes, I do like Bill a lot. He should be on tonight with the weekend replay. Tuesday night is when I usually catch up with him. It is a great editorial, I'll have to take the whole thing.

Fixation. Hmm, let's see. You are going to die, right? I am going to die. Scary thoughts, no doubt. But you can't get up every day worrying about the impending Doom that has no escape (people do, however, they're usually locked away in a mental institution eventually). For most of us, the fear of inevitable death is controlled or totally ignored and life goes on.

Not exactly the same as your constant fears of political/ecological Doom, but close. Four or five short years ago, things were moving along quite well. I think they will again. Present day conditions aren't nearly as bad as they were in so many earlier time periods: lynchings, union and student massacres, war death counts in the millions, and totally unbridled raping of the land are all way down as measured against the past.

That's not to say there haven't been occasional major steps backward through our short U.S. history. Joe McCarthy and Richard Nixon were some nice guys. Shit Happens. And then things cycle and recycle and get better for awhile.

I don't mean to sound like the eternal optimist, I'm not at all. I wouldn't have clung to the (mind-numbing) security of a government job and pension all this time if I was. Guaranteed payments and health care coverage for life. But I'm not counting this as the Big Endtime, either. That's just too whacked out to hold sway for long. People eventually come to their senses with help from astute political activism.

Somewhere between "Going for the Gold" and "Dropping Out" is some pretty manageable ground. No debt is a good thing regardless of the tax deductibility of mortgage interest. Sound, long term, diversified Dow based (as opposed to NASDAQ based) investments have never suffered for very long over time. They finance the workings of the world.

PS. Sorry, I hit Send instead of Spell Check.

It's always been the Economy and Culture, side by side. They're different animals. And I always knew all the books were probably a bad idea.

[leesa]

38. Duh. The mental giants meet.