Food and Fuel  

The West Australian has a report on the "Fuel and Food" conference in Perth - Fears petrol prices could double.

Petrol prices could double within six years as demand for oil soars but supply barely grows, warns a former chief engineer for petroleum giant BP. Speaking ahead of a conference in Perth today which will focus on the growing global food and fuel price crisis, Jeremy Gilbert said the world had almost reached peak oil production while demand was tipped to grow by 50 per cent over the next two decades.

Improved extraction techniques meant oil fields were running down faster than expected while discovery rates for new fields had declined steadily since the late 1970s. The world would go through at least one decade of “energy deficiency”, in which oil supplies diminished but renewable energy sources did not reached adequate production levels, he said.

The energy price rises as a result of the shortage would have a significant impact on living standards. “There is going to be a lot of pain, a lot more people around the world who are hungry and you will see a rise in social unrest,” Mr Gilbert said. He said Australians would need to significantly modify their lifestyles to reduce fuel and energy consumption.

Imperial College London food market researcher Professor David Hughes said that volatility in oil and food prices would be the main “disconcerting” factor. “As a consumer, you have had the best deal over the past 30 years that anybody has ever had — that is stable or declining food prices in real terms,” he said. “That is not the fiveyear picture ahead.”

Professor Hughes said WA consumers, who sourced about 70 per cent of their food from interstate or overseas, were exposed to fuel price rises through transport costs. Food processors had consolidated their production in the Eastern States, making supply distances longer.
He said WA, as a major exporter of raw food such as grain, could look to processing and value-adding locally as the international transport cost component for raw materials increased in a world short of energy.

Growth in fuel and fertiliser prices prompted warnings from WA farmers this week that they could be forced to cut back their wheat plantings next year unless global grains prices remained high. Summit Fertilisers chief executive Peter McEwen, who will also address the conference at UWA’s University Club, said increasing oil prices as well as rising prices of phosphate rock had led to higher costs for growers.

Dave Roberts at Grist has a "notable quotable" from a BP economist - Oil economist denies peak oil - who says we will never run out of oil (by "we" he apparently means people with infinite wealth).

"Therefore there will never be a moment when the world runs out of oil because there will always be a price at which the last drop of oil can clear the market. And you can turn anything into oil into if you are willing to pay the financial and environmental price."

-- Christof Rühl, chief economist at BP

JD at Peak Oil Debunked has a (often accurate) rant going about people who treat the Hirsch report like it was carved in stone tablets by some deity - Why Robert Hirsch Is Dead Wrong. The problem that JD correctly identifies is that the report takes a purely extractionist view of peak oil - it ignores energy efficiency (and grossly underestimates the potential of clean energy sources in my view).

I can't count the number of times that pessimists have told me: "It's too late to address peak oil. Read the Hirsch Report. If we wanted to mitigate peak oil, we needed to start 20 years ago."

That's the classic peak oil sound bite. You're left with the impression that "mitigating" peak oil is a horrendously complex process which will take decades upon decades and trillions of dollars. And granted, that is an accurate depiction of Hirsch's view, and explains why he thinks the problem is so ugly, and we are in such deep trouble.

On the other hand, it's always good to question authority, and we can learn an important lesson by examining exactly what Hirsch means by "mitigation".

Here's the fine print, from the Hirsch Report:

Nevertheless, this analysis clearly demonstrates that the key to mitigation of world oil production peaking will be the construction a large number of substitute fuel production facilities, coupled to significant increases in transportation fuel efficiency. The time required to mitigate world oil production peaking is measured on a decade time-scale. Related production facility size is large and capital intensive. (P. 6)

Let's break that down. Note that conservation plays no role whatsoever in Hirsch's "mitigation". None. Zero. His idea of "solving" the peak oil problem is to build horrendously expensive, highly polluting facilities for producing substitute liquid fuel (CTL, GTL, heavy oil) so that everyone can continue driving their current vehicles in a completely business-as-usual fashion.

(Incidentally, as I've noted before, 30% of Dr. Robert Hirsch Ph.D's "mitigation" plan depends on Venezuela (of all places) ramping up heavy oil production from 0.6mbd to 6.0mbd in 10 years. Which is probably the most butt-stupid peak oil plan ever put to paper. The US is not going to maintain business-as-usual by ramping up heavy oil production in Venezuela, for a whole host of reasons Hirsch is apparently too senile and poorly informed to notice.)

Hirsch frankly concedes that his plan only addresses the supply-side, and intentionally ignores all demand-side conservation measures:

Our focus is on large-scale, physical mitigation, as opposed to policy actions, e.g. tax credits, rationing, automobile speed restrictions etc. (P. 25)

This oversight seriously calls into question his claim that it will take 20 years to "mitigate" peak oil. It's as though we were considering solutions for an obese person, and Hirsch is telling us it's going to take forever because we won't be considering options like dieting and exercise.

The IEA takes a more reasonable approach. It sees conservation as the backbone of any rapid response to oil shortages. In an excellent report called Saving Oil in a Hurry (pdf) they list a whole range of low-cost, quick-implementation policy options for cutting oil consumption:

Employer trip reduction
Area-wide ridesharing
Public transit improvements
HOV lanes
Park and ride lots
Bike and walk facilities
Parking pricing at work
Parking pricing: non-work
Congestion pricing
Compressed work weak
Telecommuting
Land use planning
Smog/VMT(Vehicle Miles Traveled) tax
Public appeals to reduce consumption without price effects
Public appeals to reduce consumption with price effects
Ban on motor sports events
Ban on driving by car to large scale events
Speed restrictions
Ban on driving every second Sunday
Ban on driving every second Weekend
General ban on Sunday driving
Restriction on use by administrative degree (public authorities set days on which drivers are banned)
Restriction on use by registration number (on each weekday two final registration numbers banned)
Implementation of fuel supply ordinance (rationing) (P. 27)

Hirsch completely ignores all this. He is strictly an old-school oil-luvin', business-as-usual "drill, baby, drill" extractionist. Which is not totally wrong, of course. I also support CTL, GTL, and drilling (under the right circumstances). I agree 100% with Hirsch that we must continue growth and industrial development. The difference is that I believe in conservation first, then extraction. Hirsch believes in full-bore extraction without any conservation at all.

Many people have the mistaken notion that we need to build something, or invest in something to mitigate peak oil. That's why it's "too late". We need coal liquefaction plants, and GTL, and higher mileage vehicles, and drilling in ANWR, and mass transit, and nuclear plants, and electric cars, and etc. etc. Granted, all those things are important, and will come into play as the solution evolves. But the bottom line is this: peak oil can be almost entirely mitigated without any money, time or equipment at all.

I will be taking this theme up in greater detail in future posts, but for now, I'll just sketch an outline so you can see what I'm talking about.

The IEA conservation measures are great, but they're barely scratching the surface. They mention car pooling as a very low-cost, high-impact measure, but how about extreme car pooling, a la Afghanistan?

Imagine Afghani style car-pooling during every rush-hour, in every city in the US. Pickups packed with people and their bicycles. What you would have is incredible efficiency and fuel savings, with no up front investment cost, using only existing vehicles. Note that I'm not saying that we will adopt Afghani style car-pooling (I very much doubt it will get even remotely that bad). But we certainly could make it happen if we needed to, and all-in-all it wouldn't be that big of a deal.

On page 1 of the Hirsch Report, Hirsch says "Improving fuel efficiency will take 10 years..." Which is a load of ridiculous horseshit. You can double or triple your fuel-efficiency in one day by car pooling, or sleeping at work, or riding the bus. You can increase your fuel efficiency to infinity by just getting off your butt and bicycling. Lots of US cities have bus systems, and they can be packed to the gills. If you live out in the country without bus service, make your own. Pack it to the gills. Do "shopping-pooling" where one person with a big truck or SUV buys for everybody. Set up a little private shuttle bus that gathers people for a daily ride to shopping, or into town.

The home-heating oil problem in the Northeast can be addressed with a similar strategy. Five or six seniors, who are each getting reamed to the tune of $3000-4000 a winter on their heating oil bills, get together at the senior center, and decide to move into one house for the cold season. Call it "housepooling". Now, they're all saving large sums of money, which they can invest in insulation, wood/gas heating, or (ideally) a ground source heat pump etc. Similar concepts apply to intracity travel. If you're too far away, move! There's not a law of nature which says that people are bolted down to the locations they're in, or that they have to live one to each house.

Literally, everywhere you look, the problem can be massively mitigated by some no-cost quick-fix requiring no investment, no money, no new equipment, and only minor tweaks in cultural behavior.