Jennifer,
Following are two disturbing reports on “peak oil” you may not have seen.
They could have a big impact on intensive agriculture regarding costs. May be some opportunities for communities to grow and supply a lot more of their own produce, using permaculture or more sustainable/regenerative farming practices.
Certainly glad that I don’t rely on big tractors and high inputs. Also highlights the futility on the current debate over ethanol/biofuels etc. We need a better answer than that.
http://www.aph.gov.au/hansard/senate/commttee/S9515.pdf
http://www.spinninglobe.net/iraq&oil.htm”>http://www.spinninglobe.net/iraq&oil.htm”>http://www.spinninglobe.net/iraq&oil.htm
Cheers, Graham F.
And another reader, also called Graham, sent me this note:
Some important concepts in here, without endorsing all of it:
http://www.workingforchange.com/article.cfm?itemid=21263 .
And John Quiggin had something on peak oil yesterday:
http://johnquiggin.com/index.php/archives/2006/08/23/is-peak-oil-here-already/#more-3146.
Jennifer Marohasy BSc PhD is a critical thinker with expertise in the scientific method.
You get these characters grabbing bits of info on oil and Bingo! you have a case for some brand new fundamentalist philosophy.
The major cost of transport is capital depreciation, no good buying a car that might save you $15/week in fuel if loses $25K on resale.
Rog, On that basis we need an ode in praise to older vehicles that are reliable – minimum depreciation, even appreciation if you own the right one.
To quote the second link, John Sharplaz, an Americant cattle farmer:
“To a large extent the present rural landscape (disappearing population) in much of America is the result of federal policy that subsidises massive production …”. Well, Australian agriculture is very much unsubsidised. The rural population is disappearing here too. Something else is driving rural population decline. Could it be easier livings to be made elsewhere?
And from John Quiggin’s blog, one comment: Growing crops for fuel is an extraordinaryily inefficient way to produce energy for transportation. Fully agree. Takes a lot of fuel to grow a crop. Then more to process it.
Converting foodland to fuelland (no doubt with taxpayer subsidies) will reduce the supply of food, driving up the price – for the taxpayers.
I think the current price of oil has a lot to do with supply and demand, and if it doubles again, the green alternatives, certainly solar, and maybe wind, will start to look competitive without govt subsidies. That is where their future has to lie.
In one other link, the claim was made that America’s motive in invading Iraq was to grab its oil supply. Only an eco(nomic)nut could reason like that. Take a look at Australia, a land with enormous resources, in high demand. Is it cheaper for our customers to buy at market, or to invade and conquer to grab the resouces? Know what it costs to keep an occupying army in an overseas, disgruntled country? Much cheaper to trade, rather than raid.
Ian, older vehicles are inefficient therefore more costly to run. Imagine if we were still using Bedfords and Thames Traders, our economy would be on par with India.
Helen, I thought current price of fuel mostly due to perception of capacity to meet demands rather than an actual surplus or deficit of product. To date no one has actually run out or even run short of fuel.
For years the oil industry has been struggling on low prices and zero returns. With additional funds oilers are going hammer and tongs on reinvestment, despite huge increase in cashflow profits remain at 8-10%.
Cambridge Energy Research Associates added up all the current investment and predict that supply will increase by 25% by 2015.
Bloggers and conspiracy cranks believe otherwise.
Rog,
You have a point about perception of shortage influencing price. Want to see the bowsers run out? Just impose price controls and rationing, like in the 70’s, on fuel. The current method of higher prices on shortage or perception of shortage, is a pretty good self rationing tool. Like bananas. Try mandating that bananas be sold for no more than $4/kilo. Then see how the supply lasts. The market at least lets those who really want bananas have them, at a price. Last time I looked the price was $14/kilo. No conspirscy there. Just some lucky growers able to supply in a time of, er, perceived shortage.
As a primary producer I do not like the current fuel prices at all. If they continue, then farming decisions will have to tend towards switching the less fertile soils to grazing. Solutions that require more labour are unrealistic. We are even more short of labour than fuel. If the cities do not draw our kids, the mines soak them up as soon as they learn to handle machinery. There are easier ways to earn a living.
Not so sure I agree with the proposition that American intervention in Iraq is not motivated by access to oil.
Demand for oil will increase dramatically between now and 2020 in most forecasts mostly because of demand in China and India coupled with increased demand eveywhere else.
While it is a fair enough proposition that the most effective mechanism of allocating oil resources is the market, that supposes everyone who has oil, and everyone who wants it will agree to play by the rules of the market -to buy and sell at market prices.
Have a look at which countries are the current top suppliers and one of the key features is political instability -some would say its because they are the key suppliers of oil. Saudi Arabia is the largest supplier and is increasingly polarised between a disenfranchised population, many of whom have been converted to the radical Wahabist Islam, and a decaying, corrupt monarchy -what happens if the fundamentalists take power there -which seems likely will they supply oil to the West?
Iran is in the hands of a rabid Shia clergy with pan Shia crescent aspirations -can they be relied upon to continue supplying oil to the market if they are not allowed to develop their nuclear programme?
Iraq was under the control of a former US ally -could he be relied upon to continue supplies to the West in general and the US in particular?
Here in Nigeria there is increasing unrest in the delta and oil production has suffered as a consequence and the government here seems incapable of stabilising the situation -can Nigeria be relied upon to continue its level of supply, and increase it?
Among the consumers there is already heightened cmpetition for influence in the oil producing countries.
Take Nigeria as an example again -there are literally thousands of Chinese”businessmen” coming in and out of this county on a regular basis and every couple of months new deals and partnerships are announced between the PRC and Nigeria – nearly all of these deals improve Chinese access to oil here.
Some producers are busy influencing some of the other producers -here in Nigeria the northern part of the country is muslim and used to be mildly so, if you can believe the published accounts of the end of the British adminstration. However, there are now 12 Sharia states in the north, most of them funded by money from Saudi Arabia. In Kano recently the new buses for the transport system are to be segregated into women and men only – a key demand of the Saudis who provided the money, and the Saudi foreign Minister was here recently to reinforce how pleasedthey are with progress here. This radicalisaiton can only promote further instability here.
Even countries who do not have any oil themselves have been caught up in the race for access. Take the US-Pakistan relationship for example. Musharrif is not exactly freedom loving or particularly democratic, but an important pipeline will soon traverse his country. If Pakistan decided to disrupt the pipeline for any reason, or even to charge outrageous fees, what impact would that have on the market? Does this have any influence on American foreign policy? It should.
If I was an American taxpayer living in a society so dependent on oil, I would expect my government to be keenly interested in access to oil everywhere, and at the same time keenly interested in reducing dependence on it. On both counts I thik the current US adminstration has not done very well.
rog even oil industry experts have pointed to declining reserves. Even the conservative mag the economist has pointed to deceptive reporting by oil exporting nations due to bad, non-transparent accounting and foggy self-reporting practices – those nations not long ago restructured their reserve classifying and reporting procedures to reduce transparency and make it harder for independent experts to assess reserves.
You dismiss these various informed insiders as cranks simply because their views don’t fit yours.
It’s true that there are currently structural infrastructure constraints on oil production, and a current investment drive to expand capacity. However you fail to mention that we’ll be using sources that are more difficult to access or process, hence more costly.
Helen it’s not just about oil in Iraq but securing long-term predictable access to oil from the entire region (incl supply routes). Yep, cheaper to trade than raid, but only if the trading partners want to trade with you and haven’t formed a block to hold you for ransome cos you desperately need that oil and they resent everything you stand for. Partly hence the efforts to introduce democracy and multilateral relations, so ME countries respond to international pressures and develop a thirst for western goods, private debt and imported manufacturers, ergo a desire to trade their oil and dates.
As I was saying, bloggers and conspiracy cranks believe otherwise.
“And from John Quiggin’s blog, one comment: Growing crops for fuel is an extraordinaryily inefficient way to produce energy for transportation. Fully agree. Takes a lot of fuel to grow a crop. Then more to process it.”
Although I can’t for some reason access the quiggin site, and agree with some of the comments made, if we are going to tak about energy lets talk about actual estimates of energy efficiency rather that vague generalisations with no numbers. The Energy out as liquid fuel for sugar cane based ethanol in Brazil is close to 10 units out for 1 in, so factually speaking this proces is energy efficient, as the sunlight comes free.
Re bio fuels
If if we gave up growing food they can supply only about 30% of the total transport demand for liquid fuels.
Their economics appear to be marginal although this is very difficult to judge. When oil was $20/bbl they only needed a small subsidy to be economic; when oil is $70/bbl they only need a small subsidy to be economic. So who knows?
Be careful of using USA and Brazilian experience both heavily subsidise these activities in various not always obvious ways. (A similar effect is the high use of corn syrup as a sweetener rather than sugar syrup. This use is because of the corn subsidies.)
The price of sugar increased recently and one of the reasons was supposed to have been the increasing use of sugar for conversion to ethanol for use as a biofuel.
I have seen no good study of the social impact of the widespread availability of methanol and ethanol. i suspect it will make the social impact of petrol sniffing look very small.
Via Gerard Jackson;
Cambridge Energy Research Associates (CERA) recently released a report predicting that by 2015 oil and natural gas production capacity will have risen by 25 per cent. Peter Jackson, CERA’s director of oil industry activity, is quoted as saying that
“..there is not really a supply problem in our view….We see no reason why any reasonable demand level won’t be met”
Mr Leonardo Maugeri, vice president of the Italian energy company ENI. In his article Two Cheers for Expensive Oil, (Foreign Affairs, March/April 2006), he estimates current economic oil reserves at 1.1 trillion barrels, enough to satisfy the world’s oil needs for the next 38 years. In addition there are some 2 trillion barrels of recoverable reserves.
US Interior Department’s Minerals Management Service estimates that the country’s outer continental shelf contains over 419 trillion cubic feet of natural gas and 85 billion barrels of oil. The oil estimate is four time bigger than the country’s current reserves and is large enough to eliminate the demand for foreign oil for the next 20 years.
Michael Lynch of the Massachusetts Institute of Technology estimates that the world has over 6 trillion of recoverable oil.
Additionally 15 trillion barrels of what is called unconventional oil (excluding coal liquefaction) have been identified. That gives the world over 21 trillion barrels of oil that we know of.
http://bridge.berkeley.edu/PresentationArchives/2006/Panel%202/Coelho.pdf
UC Berkeley-UNIDO Bridging the Divide 2006 Conference
“Brazilian Experience on Biofuels -Perspectives for Replication in Other Developing Countries”
Suani Coelho
Deputy Secretary
São Paulo State Secretary for the Environment
Berkeley, April 8th, 2006provides EROI values (~10 for sugar) plus data on impressive
efficiency improvement in Brazil over time (years).
http://findarticles.com/p/articles/mi_m0BEK/is_7_13/ai_n14874191
Researchers at Dedini Industrias de Base, which normally builds sugar-ethanol plants and makes replacement parts for industry–for nearly two decades believed they could make much better use of bagasse by recycling it into ethanol rather than on-the-spot electricity.
Dedini, which reported $250 million in sales in 2004, began tinkering with this conversion process, which it calls Dedini Bapid Hydrolysis (DHFR), in the late 1980s. The company is now completing the engineering plans for an industrial-scale plant that will produce 50,000 liters a day of ethanol–the first of its kind anywhere–which it expects to be producing within two years. It has invested $9 million so far in getting the plant from drawing board to reality.
“If what Dedini says is true and I can double my ethanol production using the same amount of sugar cane, how can I not such a revolutionary technology?” asked Joamir Alves, the president of sugar-ethanol mill Usinas Silo Luiz in Sao Paulo state. “And while I’ll use bagasse to make ethanol, rather than to generate electricity, I can use sugar-cane straw to thermo-generate enough electricity for the entire mill.”
Jose Oliverio, Dedini’s vice president of operations, said that the process is cost effective because its reactor will be made of stainless steel, not costlier titanium and because 10 times less acid is needed, much less time is needed, and because the raw materials needed are already produced by sugar-cane processors at the reactor site. “Simply by processing the bagasse, you can double the amount of ethanol you produce,” says Oliverio. “Or in other words, the same sugar cane acreage can produce double the amount of ethanol.”
Researchers in other countries have tried to perfect this bagasse-to-ethanol process but they have always hit a wall. Traditionally, the method involved mixing bagasse with water and sulfuric acid and heating the solution to form five- and six-carbon sugars, which would then be fermented with yeast to make ethanol. But lignin–a complex polymer in the cell walls of cane and bagasse that gives it structural rigidity–is a tough, outer shield that prevents the acid from breaking down bagasse into sugars. To work, acid concentrations and temperatures must be pushed so high that they instead destroy the sugars before they can be fermented.
In the Dedini process, a solvent is added to mix, dissolving the lignin and thus allowing the acid to attack the bagasse, breaking it down into sugars. Because it requires less acid and far less time–15 minutes rather than four to six hours–the sugar does not oxidize. Dedini’s breakthrough was adding the solvent to the mix and designing a continuous-process reactor to extract the resulting sugar-water liquor. Dedini tested 26 solvents before settling on ethanol, which had the best cost-benefit ratio. The company has patented the process in many countries around the world and is now perfecting temperature levels and acid concentrations.
Turnkey. Oliverio believes that the main buyers of Dedini’s bagasse-to-ethanol technology and plants–estimated to cost $12 million to $15 million–will be sugar ethanol producers in Latin America, India, Australia and South Africa. “Dedini has already been contacted by 40 companies in Brazil and abroad, some of whom want to license the technology and some of whom want to buy the turnkey plant,” says Oliverio.
U.S. and European countries have developed technologies to break down corn and wheat refuse using enzymes, instead of lignin solvents, but the enzyme costs are too high to make the process commercially viable, according to Regis Leal, a chemical engineer and researcher in energy planning at the Universidad Estadual de Campinas. “Dedini appears to be the only entity that has developed a commercially-viable, industrial-scale means of turning refuse from processed crops into ethanol,” Leal says.
Not long ago, lots of crop area was given over to the production of biofuels for farming, and most farms were energy self-sufficient.
It was not terribly energy-efficient.
Large areas which could have been devoted to production of crops were given over to the production of forages and cereal crops for work animals–horses and oxen.
So the notion of inefficient biofuels is not terribly new.
Thanks Shiller.
Now why didn’t I think of that? And me with an amateur interest in economic history too? Only one hundred years ago the far-sighted were worried that if something wasn’t done, cities would soon be knee-deep in horse poo. Well, in time horse power was replaced by proxy horse power (combustion engines). As the horses disappeared from the cities, so did their emissions, and the attendant swarms of flies. But proxy horses had emissions too. Easy fixed. It is a lot easier to control what comes out of the back of a proxy horse. Ah, the good old days, don’t you just pine for them?
As you have introduced the historical perspective, allow me to expand on it, and explain why I do not support transfer of foodland to fuelland.
Fifty years ago a big concern for the far-sighted was about increasing world population and impending food shortages. Catastrophic famines were predicted. Australian farmers were encouraged, as government policy, to clear land and grow more crops to help meet this challenge. Tax incentives reinforced the message.
But the catostrophic famines never came. What happened? A man called Mervin Borlaug is what happened. He started the green revolution, which has been attributed with feeding a billion people.
From 1950 to 1992 the world’s grain output grew from 692 million tons produced on 1.70 billion acres of cropland to 1.9 billion tons produced on 1.73 billion acres of cropland.
That is a 170% increase on only 1.5% more land. Stunning. My source is a book review in the New York Post (www.nypost.com) titled “Mr Smith Feeds the World”. Sorry, I do not know how to post links. The green revolution also saved hundreds of millions of acres of the world’s biodiversity from the plough.
Populations are still rising, predicted to peak about 2050, then slowly decline. The far-sighted are still worried, and rightly so. Farmers are being told they need to double food production in the next 25 years or so – without clearing more land. The tool kit to achieve this has to be what we already know; high-tech, high production agriculture, genetic science included.
Those serious about preserving the world’s remaining biodiversty really have little option but to back the agriculture solution, and farmers. We cannot depend upon something, or someone unforseen, to get us out of the sh*t again.
Transfer of foodland to fuelland is an indulgence we cannot afford. So goverments should not subsidise it.
Well said Helen. There more discussion along these line at this link.
Alsp Australia LLoyd Evans book Feeding the Ten Billion is very good too,
http://www.plantphysiol.org/cgi/content/full/125/1/174
Plant Physiol, January 2001, Vol. 125, pp. 174-179
The Population/Biodiversity Paradox. Agricultural Efficiency to Save Wilderness
Anthony J. Trewavas
Fellow of the Royal Society
…Human Population Increase
The United Nations’ median population assessments are for 8 billion human beings by the year 2020 (United Nations, 1998; Pinstrup-Andersen et al., 1999); these figures are considered the most likely population scenario. The increase in the population in the next 20 years is expected to be 2 billion (35× the population of the UK; 8× the population of U.S.; 1.3% per year) and common humanity requires us to ensure adequate nutrition for these extra people where this is politically feasible. The largest absolute population increase is estimated to be 1.1 billion in Asia, but the highest percentage increase is expected in sub-Saharan Africa (80%). By 2020 more than 50% of the developing world’s population will be living in urban areas instead of the 30% at present. Enormous problems in the production, distribution, and stability of food products will be generated and some of these problems require inputs from scientists (Pinstrup-Andersen et al., 1999). India is a prime example of these likely problems: 70% to 80% of the population currently farm traditionally and simply eat all that they grow. By 2025, India will be the most densely populated country in the world with 1.5 billion people and grossly swollen cities. Radical changes in Indian agriculture, transport, and food preservation would seem to be essential to avoid serious nutritional catastrophe.
An annual increase of 1.3% in food production is necessary at the present time to feed the burgeoning human population, assuming present diets remain invariant. However, richer populations eat more meat and a doubling of cereal yields may instead be necessary (Smil, 2000). Annual increases in cereal production, currently slightly below 1.3%, are predicted to continue to decline with the most serious food shortages in sub-Saharan Africa and the Middle East (Dyson, 2000). Most developing countries will have to lean heavily on imported food as they do now. Approximately 120 out of 160 countries are net importers of food grain (Goklany, 1999). In turn, a critical requirement is a genuine free trade in food, a situation that has still not been achieved.
Cropland and population are not uniformly distributed (for example, China has 7% of the world’s arable land and 20%-25% of the world’s population), which will exacerbate future problems. However, predicted rises in crop yields will not come about without policies that attach high priority to agricultural research (Alexandratos, 2000; Johnson, 2000), particularly as many developing countries desire self-sufficiency in food production. Worldwide funding for agricultural research has declined substantially in the last 20 years. These problems are exacerbated by diminishing cropland area due to erosion (for alternative view, see Johnson, 2000); fewer renewable resources, such as potassium and phosphate; less of, and consequently more expensive, water (by 2050, it is estimated that one-half the current worldwide rainfall on land will be used for industry and agriculture); and a reduced population working the land (Kishore and Shewmaker, 2000)…more at link pdf also availle through google