7 ms·

Jeff Rubin: Oil and the End of Globalization

43 points by pif 14y ago

tocomment 14y ago
Isn't his argument contradicted by cheap natural gas? I would think energy is energy, why is the oil form of energy so important? I do wonder why we're not switching from oil to natural gas a lot faster though.
- VMG 14y ago
  That's what this article says: http://www.canadianbusiness.com/article/90818--jeff-rubin-gets-peak-oil-wrong http://www.canadianbusiness.com/article/90818--jeff-rubin-ge... It also says: > Two hundred and twenty five bucks. In April 2008, Jeff Rubin, chief economist at CIBC World Markets, predicted a barrel of oil would cost $225 by 2012. With oil at $118, it was a controversial call.
  - pingswept 14y ago
    For reference, oil is at $113 per barrel today (August 9, 2012).
- blindhippo 14y ago
  Trouble with natural gas... people are almost as terrified of frac'ing, and shale gas as they are of the evil "tar sands". That said, the rest of the world is investing heavily in Canadian natural gas - it's one of the primary motivators behind the current national debate (in Canada) over pipelines out of Alberta. Can a large cargo ship be run using only liquid natural gas? Can we power generators using just natural gas? I'm very curious about the limits of natural gas as a power source.
  - debacle 14y ago
    The only real limit is compression. Many public service vehicles locally are switching over to natural gas.
    - calgaryeng 14y ago
      Not just compression. NG also has a much lower energy density than oil/gasoline. Not as compact
      - blindhippo 14y ago
        Does a natural gas engine work similar to a gasoline engine?
        maxerickson 14y ago
        The internals are essentially identical. The fuel system needs to be adapted to handle the natural gas though. Looking around, it appears that there are vehicles on the road that can switch at pretty much the push of a button.
        noblethrasher 14y ago
        Yep. Where I work we have a fleet of cars that do just that.
        tocomment 14y ago
        I just found this article: http://news.ycombinator.com/item?id=4360904 http://news.ycombinator.com/item?id=4360904 It explains the process pretty well. It's really a shame it's so expensive when you really don't need that many parts or modifications.
        noonespecial 14y ago
        I converted a car I found in a junkyard to work off propane when I was a student in the 90's with nothing but hand tools.
  - grammaton 14y ago
    One limit as far as production is concerned is the availability of water. Natural gas production in the United States has declined over the last several months due to drought triggered water shortages. As it turns out showing up and proposing to dump a large amount of the local water supply down a hole in the ground in the middle of the drought is not finding many takers.
- patio11 14y ago
  I do wonder why we're not switching from oil to natural gas a lot faster though. Short version: The market works. Slightly less short version: You would switch to natural gas if natural gas achieved the same goals at oil at enough of a lower cost to make it worth the switching costs. Part of the cost of oil is based on people's projections of the price of oil in the future; if one expects oil to be much more dear in the future than it is now, one should either buy oil and consume it now or buy oil and sell it later. Buying oil today drives up the price of oiil. One plausible reason one could think that oil would be more expensive in the future is if one thinks demand will outstrip supply. If one believes the future will hold an acceptable substitute for oil, one will be less likely to believe that future demand will exceed supply, and as a result one will believe the future price for oil will decline relative to today. This causes one to sell oil, propagating the price fall in the oil-demand-has-fallen future into the oil-demand-has-not-fallen-yet today. Which, at the margin, slightly delays "the future." Or, to put it another way: the credible announcement that we're ten years away from totally solving fossil fuels would cause the present price of all of them to crater.
- grammaton 14y ago
  "why is the oil form of energy so important" Because it meets several requirements for an economy of global scale, not the least of which are extremely high energy density and ease of transport. "I do wonder why we're not switching from oil to natural gas a lot faster though." A combination of market forces and the fact that our entire infrastructure is geared towards petroleum - not the sort of thing you can replace with any ease or quickness.
euroclydon 14y ago
I don't know about his assertion that suburban sprawl will revert to farm land. That would be quite the undertaking. I've had a garden in my front yard since 2008. I've learned a lot over four years about how to grow vegetables. I would hope that we could take the common areas in these sprawling suburban neighborhoods and convert much of it into community run gardens, chicken coops and pig farms. That would make much more sense to me. Also, >What is peak oil going to do to population carrying capacity? >I've heard mass food production is very dependent on synthetic fertilizers made from natural gas. How long before peak natural gas affects food production capacity? >How big of a mess will the grid become when we have a bunch of electric cars on the roads? >Without a substitute for oil-powered automobiles, just how much higher will the unemployment rate go, and how much civil unrest will that cause?
- maxerickson 14y ago
  Given that agricultural land use in the U.S. is ~50% and urban areas are around 3% or 4%, some big disruption would probably result in far more abandonment than it would conversion.
anovikov 14y ago
Energy density per unit of weight of natural gas is in fact about 15% higher than the gasoline. The problem is compression, but not a big problem really, just about any car can be switched to use natural gas aftermarket, with some loss of engine power, but improvement in engine life span btw. Overally, i feel these concerns of 'peakers' are nonsense, the free market will help switching for other sources of energy, and science and technology already brought us to the point where it is possible, it's all about scaling now.
- chimi 14y ago
  Are the physical capacities of space and time capable of getting us to scale in these technologies? Only so much energy comes from the sun per square foot. Batteries can only store so much of that. There are only so many tons of required metals on the planet to create all the infrastructure, solar panels and electric motors we will need? I don't know yet for sure if it's possible to maintain our current quality of life given the resources we have at our earthly disposal.
  - Retric 14y ago
    The long term solution to electric cars is electrified highways not better battery's. http://en.wikipedia.org/wiki/File:Irisbus_Cristalis_ETB18_C1_Lyon_TCL_PDVM_Ibou.JPG http://en.wikipedia.org/wiki/File:Irisbus_Cristalis_ETB18_C1... Also, we use ~474 exajoules of energy per year, the sun provides ~3,850,000 exajules. http://en.wikipedia.org/wiki/Solar_energy http://en.wikipedia.org/wiki/Solar_energy Collecting 1% of that energy could easily support a western style lifestyle for 10 billion people.
    - pif 14y ago
      > Collecting 1% of that energy could easily support a western style lifestyle for 10 billion people. Yes, but how can we collect that 1%? Even considering 100% efficiency for solar panels, we'd need to cover 1% of the global Earth surface (land and oceans). Even more, we'd need at least to double it in order to have a 1% covered 24h/24. I'm afraid we don't have all the required material.
mdasen 14y ago
I think one of the issues with the thesis that oil prices will lead to a drop in globalization is that it's actually quite fuel-efficient to ship goods. Grabbing fast stats from Wikipedia (http://en.wikipedia.org/wiki/Fuel_efficiency_in_transportation http://en.wikipedia.org/wiki/Fuel_efficiency_in_transportati...), we see that it takes 246kJ to transport 1 tonne (2,204.6 pounds) 1km by freight rail in the United States. By contrast, a car carrying a single person takes 3,594kJ to transport that person 1km. Also, I think ocean-borne freight is even more favorable than rail, but I would assume that we would also have the option of creating nuclear-powered ocean-borne freight transportation given that we do this today for military vessels. Freight has the advantage that it often doesn't care if it arrives 6 hours late or has to wait around a bunch. That means that we can hit maximal loads nicely. Businesses also tend to pre-plan (at least the ones that do well) so that they can take advantages of the efficiencies offered by going slower. Passenger transportation just isn't as efficient and would seem to be under a greater squeeze. Even if you go by Amtrak's rail service, to transport a tonne of humans (assuming the average North American body weight of 80.7kg) would use 80x as much fuel as transporting a tonne of freight. Getting back to freight, a lot of the world's goods are transported by freight truck over land. Freight trucks use 2,426kJ per tonne-kilometer. So, something coming from China over water to the Western US would use considerably less fuel than something from New York trying to get to the Western US. It's under 8,000mi from China to SF and (as the crow flys) 2,500mi from New York to SF. If water-borne transit is 10x more efficient, goods from China still have a fuel advantage over freight truck. If anything, we'd see the end of freight trucks before we saw the end of globalization. Something coming from China to the Western US and then onto New York by rail would likely use less fuel than something coming from the Western US to New York by fright truck. I guess I just see freight trucking and passenger trips ending considerably sooner than the water-borne and rail transit that would enable globalization to continue.
- grammaton 14y ago
  "I think one of the issues with the thesis that oil prices will lead to a drop in globalization is that it's actually quite fuel-efficient to ship goods." Manufacturing them, on the other hand....
Roboprog 14y ago
Wow, it feels like I stumbled on James Kunstler's site today: http://www.kunstler.com/index.php http://www.kunstler.com/index.php The way I see it, we really only have two choices: nuclear (fusion) power; or "A World Made by Hand". Solar doesn't provide much energy density. (unless you can build a Dyson sphere or a "Ringworld" and convert huge amounts of solar radiation for transport) Methane has more energy per KG than oil, but much less per cubic meter. (in addition to low density, you need a strong/heavy tank to put it in). And it's a fairly finite fossil fuel. Uranium and the like are also a somewhat finite fossil fuels (even if from extinct supernovas, rather than ferns and dinosaurs). Hydrogen (fusion) on the other hand, pretty much defines the useful lifetime of the universe. That's how I define "sustainability".
- pif 14y ago
  > Hydrogen (fusion) on the other hand, pretty much defines the useful lifetime of the universe. That's how I define "sustainability". That's true! That's true and funny! Hydrogen fusion does define the "useful" lifetime of the universe (ie: the interval before the entire universe becomes mainly full of cold heavy metals), but the stars are going to be burning for a few more billion years because fusion is an "unlikely" process. Yes! The solar system is still as we know it, with the planets well separated from the Sun and not yet conglomerated into a big red giant, for the same reason for which we are struggling to get fusion in our labs: because that's difficult! You need enormous temperatures to convince hydrogen atoms to come together and mix their nuclei, and so you get a lot of problems in controlling the overall process. Sure, we can try with cold fusion, but unfortunately we have not yet got a useful result. But we can insist. Actually, I think we must insist! I can't imagine a better source of energy than cold fusion, if we ever get there. Yes, we must definitely insist!

43 points by pif 14y ago

Isn't his argument contradicted by cheap natural gas? I would think energy is energy, why is the oil form of energy so important? I do wonder why we're not switching from oil to natural gas a lot faster though.

VMG 14y ago
That's what this article says: http://www.canadianbusiness.com/article/90818--jeff-rubin-gets-peak-oil-wrong http://www.canadianbusiness.com/article/90818--jeff-rubin-ge... It also says: > Two hundred and twenty five bucks. In April 2008, Jeff Rubin, chief economist at CIBC World Markets, predicted a barrel of oil would cost $225 by 2012. With oil at $118, it was a controversial call.
- pingswept 14y ago
  For reference, oil is at $113 per barrel today (August 9, 2012).
blindhippo 14y ago
Trouble with natural gas... people are almost as terrified of frac'ing, and shale gas as they are of the evil "tar sands". That said, the rest of the world is investing heavily in Canadian natural gas - it's one of the primary motivators behind the current national debate (in Canada) over pipelines out of Alberta. Can a large cargo ship be run using only liquid natural gas? Can we power generators using just natural gas? I'm very curious about the limits of natural gas as a power source.
- debacle 14y ago
  The only real limit is compression. Many public service vehicles locally are switching over to natural gas.
  - calgaryeng 14y ago
    Not just compression. NG also has a much lower energy density than oil/gasoline. Not as compact
    - blindhippo 14y ago
      Does a natural gas engine work similar to a gasoline engine?
      - maxerickson 14y ago
        The internals are essentially identical. The fuel system needs to be adapted to handle the natural gas though. Looking around, it appears that there are vehicles on the road that can switch at pretty much the push of a button.
        noblethrasher 14y ago
        Yep. Where I work we have a fleet of cars that do just that.
      - tocomment 14y ago
        I just found this article: http://news.ycombinator.com/item?id=4360904 http://news.ycombinator.com/item?id=4360904 It explains the process pretty well. It's really a shame it's so expensive when you really don't need that many parts or modifications.
      - noonespecial 14y ago
        I converted a car I found in a junkyard to work off propane when I was a student in the 90's with nothing but hand tools.
- grammaton 14y ago
  One limit as far as production is concerned is the availability of water. Natural gas production in the United States has declined over the last several months due to drought triggered water shortages. As it turns out showing up and proposing to dump a large amount of the local water supply down a hole in the ground in the middle of the drought is not finding many takers.
patio11 14y ago
I do wonder why we're not switching from oil to natural gas a lot faster though. Short version: The market works. Slightly less short version: You would switch to natural gas if natural gas achieved the same goals at oil at enough of a lower cost to make it worth the switching costs. Part of the cost of oil is based on people's projections of the price of oil in the future; if one expects oil to be much more dear in the future than it is now, one should either buy oil and consume it now or buy oil and sell it later. Buying oil today drives up the price of oiil. One plausible reason one could think that oil would be more expensive in the future is if one thinks demand will outstrip supply. If one believes the future will hold an acceptable substitute for oil, one will be less likely to believe that future demand will exceed supply, and as a result one will believe the future price for oil will decline relative to today. This causes one to sell oil, propagating the price fall in the oil-demand-has-fallen future into the oil-demand-has-not-fallen-yet today. Which, at the margin, slightly delays "the future." Or, to put it another way: the credible announcement that we're ten years away from totally solving fossil fuels would cause the present price of all of them to crater.
grammaton 14y ago
"why is the oil form of energy so important" Because it meets several requirements for an economy of global scale, not the least of which are extremely high energy density and ease of transport. "I do wonder why we're not switching from oil to natural gas a lot faster though." A combination of market forces and the fact that our entire infrastructure is geared towards petroleum - not the sort of thing you can replace with any ease or quickness.

euroclydon 14y ago

I don't know about his assertion that suburban sprawl will revert to farm land. That would be quite the undertaking. I've had a garden in my front yard since 2008. I've learned a lot over four years about how to grow vegetables. I would hope that we could take the common areas in these sprawling suburban neighborhoods and convert much of it into community run gardens, chicken coops and pig farms. That would make much more sense to me. Also, >What is peak oil going to do to population carrying capacity? >I've heard mass food production is very dependent on synthetic fertilizers made from natural gas. How long before peak natural gas affects food production capacity? >How big of a mess will the grid become when we have a bunch of electric cars on the roads? >Without a substitute for oil-powered automobiles, just how much higher will the unemployment rate go, and how much civil unrest will that cause?

maxerickson 14y ago
Given that agricultural land use in the U.S. is ~50% and urban areas are around 3% or 4%, some big disruption would probably result in far more abandonment than it would conversion.

anovikov 14y ago

Energy density per unit of weight of natural gas is in fact about 15% higher than the gasoline. The problem is compression, but not a big problem really, just about any car can be switched to use natural gas aftermarket, with some loss of engine power, but improvement in engine life span btw. Overally, i feel these concerns of 'peakers' are nonsense, the free market will help switching for other sources of energy, and science and technology already brought us to the point where it is possible, it's all about scaling now.

chimi 14y ago
Are the physical capacities of space and time capable of getting us to scale in these technologies? Only so much energy comes from the sun per square foot. Batteries can only store so much of that. There are only so many tons of required metals on the planet to create all the infrastructure, solar panels and electric motors we will need? I don't know yet for sure if it's possible to maintain our current quality of life given the resources we have at our earthly disposal.
- Retric 14y ago
  The long term solution to electric cars is electrified highways not better battery's. http://en.wikipedia.org/wiki/File:Irisbus_Cristalis_ETB18_C1_Lyon_TCL_PDVM_Ibou.JPG http://en.wikipedia.org/wiki/File:Irisbus_Cristalis_ETB18_C1... Also, we use ~474 exajoules of energy per year, the sun provides ~3,850,000 exajules. http://en.wikipedia.org/wiki/Solar_energy http://en.wikipedia.org/wiki/Solar_energy Collecting 1% of that energy could easily support a western style lifestyle for 10 billion people.
  - pif 14y ago
    > Collecting 1% of that energy could easily support a western style lifestyle for 10 billion people. Yes, but how can we collect that 1%? Even considering 100% efficiency for solar panels, we'd need to cover 1% of the global Earth surface (land and oceans). Even more, we'd need at least to double it in order to have a 1% covered 24h/24. I'm afraid we don't have all the required material.

mdasen 14y ago

I think one of the issues with the thesis that oil prices will lead to a drop in globalization is that it's actually quite fuel-efficient to ship goods. Grabbing fast stats from Wikipedia (http://en.wikipedia.org/wiki/Fuel_efficiency_in_transportation http://en.wikipedia.org/wiki/Fuel_efficiency_in_transportati...), we see that it takes 246kJ to transport 1 tonne (2,204.6 pounds) 1km by freight rail in the United States. By contrast, a car carrying a single person takes 3,594kJ to transport that person 1km. Also, I think ocean-borne freight is even more favorable than rail, but I would assume that we would also have the option of creating nuclear-powered ocean-borne freight transportation given that we do this today for military vessels. Freight has the advantage that it often doesn't care if it arrives 6 hours late or has to wait around a bunch. That means that we can hit maximal loads nicely. Businesses also tend to pre-plan (at least the ones that do well) so that they can take advantages of the efficiencies offered by going slower. Passenger transportation just isn't as efficient and would seem to be under a greater squeeze. Even if you go by Amtrak's rail service, to transport a tonne of humans (assuming the average North American body weight of 80.7kg) would use 80x as much fuel as transporting a tonne of freight. Getting back to freight, a lot of the world's goods are transported by freight truck over land. Freight trucks use 2,426kJ per tonne-kilometer. So, something coming from China over water to the Western US would use considerably less fuel than something from New York trying to get to the Western US. It's under 8,000mi from China to SF and (as the crow flys) 2,500mi from New York to SF. If water-borne transit is 10x more efficient, goods from China still have a fuel advantage over freight truck. If anything, we'd see the end of freight trucks before we saw the end of globalization. Something coming from China to the Western US and then onto New York by rail would likely use less fuel than something coming from the Western US to New York by fright truck. I guess I just see freight trucking and passenger trips ending considerably sooner than the water-borne and rail transit that would enable globalization to continue.

grammaton 14y ago
"I think one of the issues with the thesis that oil prices will lead to a drop in globalization is that it's actually quite fuel-efficient to ship goods." Manufacturing them, on the other hand....

Roboprog 14y ago

Wow, it feels like I stumbled on James Kunstler's site today: http://www.kunstler.com/index.php http://www.kunstler.com/index.php The way I see it, we really only have two choices: nuclear (fusion) power; or "A World Made by Hand". Solar doesn't provide much energy density. (unless you can build a Dyson sphere or a "Ringworld" and convert huge amounts of solar radiation for transport) Methane has more energy per KG than oil, but much less per cubic meter. (in addition to low density, you need a strong/heavy tank to put it in). And it's a fairly finite fossil fuel. Uranium and the like are also a somewhat finite fossil fuels (even if from extinct supernovas, rather than ferns and dinosaurs). Hydrogen (fusion) on the other hand, pretty much defines the useful lifetime of the universe. That's how I define "sustainability".

pif 14y ago
> Hydrogen (fusion) on the other hand, pretty much defines the useful lifetime of the universe. That's how I define "sustainability". That's true! That's true and funny! Hydrogen fusion does define the "useful" lifetime of the universe (ie: the interval before the entire universe becomes mainly full of cold heavy metals), but the stars are going to be burning for a few more billion years because fusion is an "unlikely" process. Yes! The solar system is still as we know it, with the planets well separated from the Sun and not yet conglomerated into a big red giant, for the same reason for which we are struggling to get fusion in our labs: because that's difficult! You need enormous temperatures to convince hydrogen atoms to come together and mix their nuclei, and so you get a lot of problems in controlling the overall process. Sure, we can try with cold fusion, but unfortunately we have not yet got a useful result. But we can insist. Actually, I think we must insist! I can't imagine a better source of energy than cold fusion, if we ever get there. Yes, we must definitely insist!