Sunday, April 30, 2006

Principles for the Post-Peak Oil Job Market

Many types of jobs will cease to exist: public relations executive, marketing directors, et cetera. I think work will be very hands-on, and a lot of it will revolve around food production.
                  -- James Howard Kunstler, 2003

When I speak before college audiences about peak oil, I often ask if there are any engineers present. I suggest that they concentrate on jobs that will produce rather than consume energy, particularly energy that is renewable and doesn't create greenhouse gas emissions. While it is difficult to tell exactly what kinds of jobs will be available in the post-peak oil age, inklings of some broad principles are coming into view.

To discern those principles I propose to contrast what is valued in today's job market with what will likely be valued in a post-peak oil job market. First, let's look at what has traditionally been valued in pre-peak industrial society. William Catton, Jr. explains in his book, Overshoot, that humans engage in two strategies to enlarge the carrying capacity of their habitat: takeover and drawdown. Takeover is essentially taking over habitat from another species. That takeover might take the form of farming which essentially appropriates habitat from other animals and plants and dedicates it to crops for feeding humans or their domestic livestock.

Drawdown is the second major strategy. Drawdown is the drawing down of finite resources to provide increased carrying capacity temporarily. In this case, "temporarily" can mean more than a century. The prime example is the extraction of coal, oil and natural gas to produce the energy, fertilizers and myriad other products that allow more than 6 billion people to live on our planet.

It is easy to see that drawdown is, by far, the more highly rewarded activity in pre-peak society. (After all, how many billionaire farmers have been celebrated in the business pages?) Huge fortunes have been made in the fossil fuel and mining industries. Today, those industries are thought to be the industries of the past, the old economy. But, in truth, they continue to provide the basis for the so-called new economy. Without our colossal extractive industries to produce the essentials of modern civilization such as oil, copper, zinc, platinum, and iron, the new economy wouldn't even exist. In fact, much of the new economy consists of manipulating information to increase our drawdown and takeover activities. (Admittedly, some of that technology creates more efficient use of resources; but to date it has failed to reduce overall demand for resources. For why this is so, see Jevons Paradox.) The new 3D seismic surveys of the deep ocean done in search of oil and the elaborate computer-controlled processes which extract oil from the Canadian oil sands are two excellent examples of how technology is used to abet drawdown. Countless other industrial processes are also aided by new economy technologies. Those technologies both increase demand for the products of drawdown and help accelerate that drawdown to meet that demand.

The post-peak oil age will in all likelihood lack the essential ingredient for ever-accelerating drawdown, i.e. cheap energy. (While it is true that knowledge can also help humans increase drawdown, it is doubtful that knowledge can grow quickly enough to offset the somewhat imminent decline in the production of oil and other fossil fuels. Even if this were not the case, we would face another crisis later as other resource limits were reached.) Drawdown of oil and natural gas has enabled the creation of an industrial agriculture that erodes the soil and destroys its fertility. That agriculture then attempts to make up for the lost fertility with natural gas-derived nitrogen fertilizers and oil-based pesticides. So, the loss of cheap hydrocarbon fuels and feedstocks has large implications for agricultural productivity and for the type of agriculture we will be able to practice. The end of cheap fossil fuel also has implications for the availability of water, both for irrigation and drinking. Cheap energy has led to the drawdown of many sources of water much faster than they replenish. And, the pollution that industrial societies create has made water purification one of the largest uses of energy worldwide.

These illustrations suggest that in a post-peak oil world a premium will be placed on decreasing drawdown through increased efficiency and through the outright curtailment of certain activities such as industrial farming with its heavy reliance on petrochemicals and irrigation. Takeover may also have to be curtailed in order to preserve species, land and waters which perform essential eco-services for human populations such as pollination and water retention and purification.

Perhaps now we can say with a little more confidence what principles should animate those entering the post-peak oil job market in comparison to the pre-peak one:

General Principles
General Principles
Increase drawdownDecrease or eliminate drawdown
Increase takeoverDecrease takeover
Detailed Principles
Detailed Principles
Emphasize quantityEmphasize quality
Emphasize competitionEmphasize cooperation
Emphasize powerEmphasize efficiency
Mine soil nutrientsIncrease soil fertility
Deplete finite resourcesBuild capacity of renewable resources
Shift environmental costs to publicBear all environmental costs you can't eliminate
Design linear product cycleDesign closed product cycle (Recycling)
Build in planned obsolescenceBuild in long life for products
Ignore necessary eco-services such as water purification and pollinationSafeguard and enhance needed eco-services
Focus on financial profitabilityFocus on ecological sustainability

I don't claim this list to be exhaustive. But I believe it offers a beginning for thinking about what mindsets and attitudes we need to inculcate in those who will be faced with working in a post-peak oil world. Right now most of what people learn in preparing themselves for work has little or no relationship to our ecological destiny. That needs to change and soon.

Sunday, April 23, 2006

The Illusion of Autonomy in the Fossil Fuel Age

The slaveholder in the antebellum American South knew only too well how much his livelihood depended on his slaves. Slaves were the visible and essential workforce of the southern plantation system. They worked and lived side-by-side with the master and his family. It was the energy of slaves which tended the fields, shod the horses, cooked the meals and delivered the produce to nearby wharves. It was an uneasy symbiosis punctuated by occasional revolts and flights to freedom.

We have long since abolished slavery as an absolute moral evil. And, we have long since replaced the energy it supplied with a dependency on concentrated forms of energy mined from the ground, namely coal, oil, and natural gas. Those fuels, supplemented with some nuclear, hydroelectric and renewable energy, provide Americans with the equivalent of 147 "energy slaves." That means it would take the equivalent of 147 people working continuously 24 hours a day, 7 days a week to supply the energy currently used by each American. (Some people estimate the number is closer to 100 energy slaves; still, the point remains the same.)

But all those energy slaves are largely invisible. We flip a switch and the light goes on. We twist a key and the car starts. We turn on the stove and the flame lights. We adjust the thermostat and the heat comes on. We get what we want from our energy slaves, it seems, without having to deal with real people in any way remotely approaching the intimate way those living with or without slavery in the pre-fossil fuel age had to. Our main task is to pay the bill.

It is an illusion of autonomy. It is a libertarian fantasy seemingly come true. Cooperation and community appear optional; we can get everything we need so long as we have a little money.

Of course, in reality, the modern, energy-intensive world is a marvel of human cooperation mediated by financial and information flows of gargantuan proportion. But, that's not how it feels. The deserted, anonymous suburban streets; the impersonal big box stores; the self-service gas stations; the lonely commute; the untold hours in front of a computer--all can give us a false sense of being isolated and autonomous. At the same time these things give us unrivaled luxury in our living quarters, unparalleled selection in our consumer goods, unprecedented mobility, and unhindered access to information about nearly everything we might want to buy or wish to learn. We feel omnipotent and self-contained.

How then will we come together for the great task ahead, a transformation that must move us away from this powerful, seemingly autonomous, but ultimately unsustainable existence? Will we accept the true context in which we live, that is, a world with limits? Will we rediscover our neighbors? Will we realize our dependence on one another? Will we find the will to cooperate rather than fight?

Will we be able to give up the illusion of autonomy which the fossil fuel age has engendered in nearly every one of us? And, most important of all, will we be able to do it in time?

Sunday, April 16, 2006

The Shape of Things To Come

If you knew you were going to lose your job within the next five years, you might just go looking for another one today, not waiting to see exactly when you would be let go. But, if your job were very lucrative, and all you knew was that after five years your pay could be reduced each year, you might want to weigh that against the uncertain prospects of getting a new job that may or may not match your old one.

The second situation is roughly analogous to what we face with the coming peak in world oil production. We know the peak will occur--some say it already has--but we don't know exactly when. We know that supplies will plateau or decline, but we can't know how long the plateau will last (if there is one), nor how steep any decline might be. Alternative fuels are now being developed and competing for a future share of the energy market, but no particular fuel has emerged as the answer to oil decline and, perhaps just as important, to global warming concerns.

With respect to oil peak, each combination of dates and decline curves suggests a different response. An imminent peak followed by a sharp decline--the worst possible combination--would demand immediate emergency conservation measures and massive investment in renewable energy research and deployment. A late peak followed by a long plateau suggests that we have more time to think through our response and gradually work toward solutions. Something in-between may call for a rapid implementation of conservation programs and a quick decision to back certain oil replacements based on the best available knowledge, but without the benefit of a long trial period in the marketplace.

All three scenarios are on offer in the peak oil literature. Energy consultant Robert Hirsch's study of decline curves from oil-producing countries around the world suggests sharply declining oil supplies after the peak. Combine that with predictions of an imminent peak, and you get the first scenario above. Daniel Yergin, the ever-optimistic president of Cambridge Energy Research Associates, predicts not a peak but an "undulating plateau" for several decades beginning sometime after 2030 or 2040.

Douglas Reynolds, a resource economist at the University of Alaska-Fairbanks, believes a peak will occur sometime before 2015, but that it will take the form of a long, gradual curve--more like the bottom of a saucer than the peak of a mountain. Reynolds believes political factors as much as geological limits will cause this type of peak.

The permutations of these scenarios are many, and the available evidence doesn't tell us definitively which one to expect. Henry Groppe, an oil forecaster with a remarkable record, believes we are at peak, but will face at least a decade-long plateau in the production of liquid hydrocarbons as growing volumes of natural gas liquids and condensates make up for declining oil production. This scenario offers some hope that an immediate peak does not spell the end of civilization as we know it, though it certainly portends much hardship, especially for the poor. On the other hand, a peak which comes 25 years hence may not seem that threatening today. But, if it is followed by a steep decline in oil supplies, it means we had better start making and implementing plans now to get ready. For why this is so, read Robert Hirsch's report on mitigating the effects of peak oil prepared for the U. S. Department of Energy. Hirsch says that in order to avoid huge economic dislocations, the world would need to begin a crash problem to identify and deploy alternative liquid fuels at least 20 years in advance of any peak.

As for Groppe, he has 90 percent of his equity assets in energy; he puts his money where his mouth is. But, such investment stances can also create reinforcing loops in the minds of those who are committed to a particular view. Naturally, investment managers invest based on their research findings. But afterwards they may look for evidence to reinforce those decisions and downplay evidence that contradicts their initial research.

Groppe may be immune to this. But, we should be careful to parse the thinking behind various ideas about the date of the peak and the shape of the decline curve. Do the predictions we cling to come from our deepest fears, our greatest hopes, our ideological predilections or possibly even our investment portfolios? Or, are we trying to see the world as it is, adjusting our thinking and actions to unfolding events rather than preconceived notions?

All of us like to see our predictions vindicated. But we should let neither a hatred of the current globalized, corporate-dominated economic system nor an unthinking devotion to the free-market creed that is its handmaiden guide us in evaluating remaining oil and other finite energy supplies. When the stakes are this high--namely, the future of human civilization--we ought to focus on careful observations, flexible thinking and, most of all, humility.

That doesn't mean we shouldn't prepare for the future based on what we know and believe. When facing great uncertainty and large possible consequences, thorough preparation is the wise course. In fact, being ready early ought to be considered a virtue rather than a failure to predict the future correctly. Under the circumstances the last thing we need is a swaggering certainty in our pronouncements. That's the one thing of which I would have thought the world had enough.

(For my recent discussions of uncertainty, risk and probability, see Can a Wall Street Maverick Tell Us Something About Our Ecological Future? and What if Daniel Yergin is Wrong?)

Sunday, April 09, 2006

Should we use net energy to measure global energy reserves?

Net energy is a simple concept really. Once you understand that it takes energy to get energy, the basic math is clear. To calculate the net energy available from an energy resource, you add up the energy used to find, extract, process and deliver that resource and then subtract that amount from the amount of energy the resource contains. But global reserves for finite energy resources such as coal, oil, natural gas and uranium are estimated using measures such as tons, barrels, cubic feet and pounds. These measures tell us little about the ultimate usable energy content of each type of resource.

Nor is it of much use to compare the relative gross energy values of these resources, though such comparisons are readily available. To see some examples, check out this one showing the oil equivalence of nuclear fuel, this one for oil and natural gas, and this table containing a variety of equivalences including two comparing coal and oil. Even conversions into British Thermal Units, or BTUs, don't really help us.

As the world moves ever closer to the time when vital, finite energy resources begin to decline, we need to know not how much oil, natural gas, coal or uranium is left; rather, we need to know how much usable energy is left in these resources. A recent illustration of the problem we face in understanding usable energy supplies came in the form of a 60 Minutes story on the Canadian oil sands. The program reported that "the reserves are so vast in the province of Alberta that they will help solve America’s energy needs for the next century."

Nowhere does the reporter explain how much energy it takes to mine and refine the bitumen--it's not actually oil. In fact, it takes two barrels of oil equivalent to obtain three barrels of usable oil from the oil sands. (This is a far lower return than we get from conventional oil which can provide 20 times the energy consumed for older oil discoveries and eight times the energy consumed for newer oil discoveries.) By this standard we should reduce the generally accepted 180 billion barrels of reserves in the Canadian oil sands by 40 percent. Now, not all of the energy used to mine and process the oil sands comes from petroleum. Of course, the huge mining trucks and other equipment run on diesel fuel. But, the processing plants are heavy users of natural gas, both to heat water for the separation process and to provide a source of hydrogen to transform the bitumen into a flowing, light oil.

But, this shows why we need to know about the total universe of finite fuels since each one increasingly interacts with the others during processing, and one fuel may be called upon to substitute for the another as each resource peaks and then declines in availability. Some say that peak oil production is already upon us. The rate of production for conventional natural gas, which many experts tout as a substitute for declining oil supplies, may peak by mid-century. And, while there are claims that the world has enough coal for 300 years, it is important to note that such figures are always followed by the phrase "at current rates of consumption." Naturally, if we had to rely more and more on coal, not only for electricity, but also for heat and liquid fuels, its rate of consumption would rise dramatically. Even more worrisome, the net energy of coal is declining. Richard Heinberg reports in his book The Party's Over that on the current trajectory the net energy from coal could go negative by mid-century as coal grades continue to decline. As for uranium, information on its future supply is sketchy at best.

Oil is facing its own foreshortened depletion trajectory with peak production predictions ranging from last year all the way to 2037 (a date which seems far too optimistic). Increasingly large amounts of energy are needed to find new oil. This is only logical since 1) the easiest oil to find, extract and process has been used first, 2) the new finds tend to be in more remote places such as the Arctic and 3) the new finds tend to be in smaller reservoirs. In addition, new oil is also often more energy intensive to refine because it tends to be of a lower quality. The oil sands are a prime example.

To get the total picture of our finite energy reserves, we need to know at least four important things beyond the raw amounts left: 1) the net energy available from each resource given today's technology and given projected improvements in that technology over time, 2) the rate at which each resource is likely to be extracted over time, again adjusting for improvements in technology--even a very dense energy resource is of little use if it can only be extracted at a trickle--3) the current and projected interchangibility of finite fuels and their renewable replacements and 4) the time it would take to move toward a new energy infrastructure to accommodate such substitutions. For instance, if coal liquids are going to be substituted for declining supplies of refined oil products, the equation for our energy resources will change dramatically. And, the time it would take to ramp up such production will be an important consideration in its feasibility. (This example does not attempt to address the implications for global warming which need somehow to be considered.)

Modeling these four new pieces of information together with estimates of raw reserves may seem daunting. But, it is actually considerably less daunting than the problems already tackled by those who sought to model future economic constraints in Limits to Growth, the excellent study of resource and pollution constraints on industrial expansion.

Given the gravity of the energy challenges we face, can we afford not to try?

Monday, April 03, 2006

James Woolsey, Hemp Advocate

Industrial hemp has an unlikely new champion: former CIA director James Woolsey. Woolsey sees a link between the need to end America's oil addiction and hemp's potential as a source of renewable energy. He said so when he visited my hometown of Kalamazoo, Michigan last weekend as part the 2006 Powershift National Tour. According to its website the tour is "a public education effort designed to engage decision-makers, youth, farmers, media and the general public on energy security."

During a question and answer session one audience member broached the subject of hemp. Embarrassed conference organizers tried to move on to another question, but Woolsey insisted on responding. To their surprise he offered a lengthy disquisition on the merits of cellulosic ethanol as an alternative fuel, the myths about industrial hemp and the potential advantages to American farmers. And, he announced that he is a board member of the North American Industrial Hemp Council.

"If you wanted to hide marijuana in a field of industrial hemp, you'd have to be very high," Woolsey said. He explained that industrial hemp has a very low THC level compared to marijuana for recreational and medical use. (THC is the psychoactive component of marijuana.) So low is that level that placing the two plants together causes the recreational marijuana to lose its potency because of cross-pollination with the industrial version.

"There is no bigger enemy of marijuana than industrial hemp," he added. "But, the United States in its wisdom has banned all hemp--I suppose to enhance the production of marijuana," he joked.

(For some basic information on the uses of industrial hemp, try this article which states that "trying to get high from industrial grade hemp would be like trying to get drunk off vinegar.")

Woolsey's credentials on energy issues stem from his work on the National Commission on Energy Policy, an independent commission formed by several foundations and designed to break the policy logjam on energy issues. Woolsey has become an advocate for quick changes that involve "inexpensive processes and relatively little change to the infrastructure."

Hence, he is a fervent advocate of biofuels of all kinds which can be dispensed at existing filling stations. He's also an advocate for hybrid-electric vehicles and is particularly keen on the development of plug-in hybrids since they can "fill up" on cheap electricity at night.

Because of his focus, he sees hydrogen as impractical. "Under current technology you'd have to completely replace the energy infrastructure of the country," Woolsey said during his keynote luncheon speech. "Well, who goes first? The energy infrastructure or Detroit." The country could end up with cars without fuel or fuel without cars, he explained. Neither the oil industry nor the car industry wants to risk such a situation.

His main focus these days is supply disruption, the consequences of which he helped demonstrate during a slickly produced simulation called "Oil Shockwave." The simulation shows how severe even a modest disruption could be and how little the United States could do to mitigate the effects of such a disruption. (The results of a simulation done last year with a group of high-ranking former government officials in Washington, D. C. are available here in PDF form.)

"A cutoff of oil, even a relatively brief one, sends huge shocks through our economy," he said during his speech. "Very substantial changes in price occur with small changes in supply."

At the root of the problem is dependence on oil from the Middle East. Referring to the Bush administration's so-called "War on Terror," Woolsey said, "This is the first war in which we are paying for both sides." He explained that a portion of the money paid to Middle Eastern countries for America's imported oil ends up in the hands of terrorists and others who preach hatred of the United States. "This is not a good plan," he said.

Concerning the idea that oil supplies worldwide may soon peak and then decline, Woolsey said, "I think there are good arguments for peak oil." In the question and answer session, he said he had no clear understanding of the possible timing for such an event, but added that he is currently reading energy investment banker Matthew Simmons' book Twilight in the Desert which makes a case for a near-term peak for Saudi Arabia and by implication for the world.