Situation worse than being told

Investment Analysis Clubs Macro Economic Trends and Risks
#15

Albaby:“Intellectual resources almost never get depleted - once mankind develops a new technology, new knowledge, it almost never gets lost.”

Other than wars and religious fanaticism which over the centuries have taken mankind many steps backwards. Lots of early Arabic knowledge and math - lost due to wars. the Library at Alexandria with thousands of scrolls of knowledge destroyed. Even today, less than 50 years ago, bookburning of everything including history, math, technology destroyed by Hitler in giant bonfires. Libraries stripped. Worse, ISIS looted and destroyed much of the history of Iraq and Afghanistan.

Albaby: " We know how to do so much more today with any given increment of natural resources than we did a hundred years ago…and that knowledge doesn’t ever get used up. Running out of whale oil didn’t cause our houses to go dark; running out of petroleum one day won’t, either.‘’

Running out of whale oil was a problem for the rich. Everyone else burned candles made from tallow and candle making was an industry going back thousands of years. Fortunately, fossil fuels came along - first kerosene for lamps.

Yeah, hopefully nuclear fusion power will come along and save our world. Otherwise, I doubt you can make an install enough solar panels and wind machines to power modern society. Along with depletion of much of metals and other important minerals.

We’ll never ‘run out of oil’…our ability extract enough to use to power the economy will decline over time, no matter what.

We’re equally dependent upon Natural Gas these days for power generation and industrial uses. In Texas, half the power comes from NG in the summer and winter.

The winter European experiment in shortage of NG should be telling…

t

#16

t:“Running out of whale oil was a problem for the rich. Everyone else burned candles made from tallow and candle making was an industry going back thousands of years. Fortunately, fossil fuels came along - first kerosene for lamps.”

Well, actually forgot to include home heating from coal…and lighting systems going back 200-300 years in many cities with ‘town gas’ made from half burning coal…

You did know that when coal production peaked in about 1910 in England, it could no longer provide coal to Italy. Italy turned to Germany for it’s coal, then aligning itself with Germans. Hitler came along, and Italy joined - mainly to protect it’s energy needs.

War often start over resources - whether it is oil from Russian oil fields in the Caucauses that Hitler needs, to oil fields in Romania at Ploesti, to ‘water’ and sheep growing wars in the early US west, to Colonies of Spain and Spanish Conquistors seeking gold, silver and other loot.

the future will be interesting.

#17

Yeah, hopefully nuclear fusion power will come along and save our world. Otherwise, I doubt you can make an install enough solar panels and wind machines to power modern society.

Sure you could.

Oh, it would take time, of course. It can’t be done on the timetable that Greens would like for us to avoid the likely increase in global temperatures of about 2.7 degrees. But it’s certainly technologically feasible to build an electric grid that combined dispatchable non-fossil sources (nuclear and hydro) with renewables like solar and wind to power modern society, over the next fifty to seventy years.

You’d probably need to build a lot more nuclear than we have…but notice how quickly political resistance to nuclear energy fades in the face of actual energy scarcity? Sure, fusion would be nice - as would a step-change improvement in energy storage, which could do the same thing for dispatchable power. But we don’t need any improvement in energy technology from what we have now to keep modern society humming through a transition away from fossil fuels over the very long amount of time that we have available to us to do so (if we want). Long before we start running out of oil and gas, we can have the nuclear infrastructure (plus renewables) to keep us going swimmingly. We’re not limited by natural resource scarcity - only our choices.

Albaby

13 Likes
#18

You’d probably need to build a lot more nuclear than we have…but notice how quickly political resistance to nuclear energy fades in the face of actual energy scarcity? Sure, fusion would be nice - as would a step-change improvement in energy storage, which could do the same thing for dispatchable power. But we don’t need any improvement in energy technology from what we have now to keep modern society humming through a transition away from fossil fuels over the very long amount of time that we have available to us to do so (if we want). Long before we start running out of oil and gas, we can have the nuclear infrastructure (plus renewables) to keep us going swimmingly. We’re not limited by natural resource scarcity - only our choices.

To that list I’d add that conventional nuclear has popular support in general and robust support in Congress. If we really needed to or wanted to build out more nuclear there are no real barriers in that regard. SMRs are probably 20 years out, but have some promise as well. Similarly, we could built renewables faster than we are currently doing if we really needed to.

Technology to find and extract gas and oil is constantly improving. And of course, efficiency is improving, and there is a lot of low hanging fruit in that area as well. I just don’t see long term constraints on energy.

1 Like
#19

Technology to find and extract gas and oil is constantly improving. And of course, efficiency is improving, and there is a lot of low hanging fruit in that area as well. I just don’t see long term constraints on energy.

There are large reserves of natural gas and oil in the U.K. and in France. (Fracking needed) These are politically stranded reserves and the technology to recover them economically is about 15 years old.

In other words, you makes your bed ya gotta lay in it.

Cheers
Qazulight

1 Like
#20

Nuclear power is supposed to “come along and save our world”?

Sheesh! It is way over priced. It wont happen.

Lets get off this ride.

Seriously the safer better is a deflationary policy. We have that now and will continue to enhance it.

As far as magic bullets? I no longer drink. But I live vicariously through those who do. The ride has that benefit if only words.

#21

Nuclear power is supposed to “come along and save our world”?

Sheesh! It is way over priced. It wont happen.

I don’t think that’s the point. If we back up, the silly article in the OP made some basic assertions:

  1. The world needs energy to function, specially oil and gas.

  2. The world is about to run out of economically extractable oil and gas.

  3. This will cause a collapse in the global economy

  4. A cabal of politicians know this, but are hiding it from us because…I didn’t quite understand their motivation for keeping it secret. But since they can’t say anything, they are trying to avert collapse under the guise of promoting renewable energy and putting sanction on Russia .

  5. is absolutely true. No question. 2) is absolutely false. There is enough extractable gas and oil to last decades at least. And that’s not counting on the fact that new technology makes identifying new sources gas and oil possible, and that energy intensity per unit of GDP has been decreasing for at least three decades. Three decades is a reasonable enough time to demonstrate a trend, in my opinion.

That said, the supply of oil and gas is finite, so it stands to reason we’ll run out eventually and what do we do then? But albaby’s point (please correct me if I’m wrong) is we have technical solutions for that problem right now.. Nuclear power being one of the solutions. IMO, we will never build another conventional reactor in this country, but we could if we needed to. In other words, if we already have a solution, we don’t really have a problem.

I want to be clear, bottlenecks in the oil and gas supply always have been and continue to be a serious economic problem and we’re facing a bottleneck right now. The Saudis don’t have a lot of extra capacity to bring on quickly, our refineries are running at full blast, Iranian sanctions probably won’t be lifted soon, domestic frackers lost more money than they made, etc. The signs point to Not Good. We should definitely be treating our dependence on oil and gas as an economic threat. Just not for the lunatic reasons in that article.

And the record, I used to subscribe to the peak oil theory so you might find some posts around here from me speaking favorably of it. The basic premise makes sense to me. But the peak oilers just never had good responses to the criticisms. Which lead me to believe the criticisms were right. And once you moved past the basic premise, most of the peak oilers were conspiracy theory believing crackpots who just wanted to believe it. We’re not facing peak oil, we’re just not.

4 Likes
#22

A few thoughts

His plan to replace oil consumption world wide

we only need to have about 310.7 billion m2 of solar panels to replace our daily oil consumption.

https://www.linkedin.com/pulse/my-17-quadrillion-plan-replac…

Only 17 quadrillion dollars, or only about $220,000 for each of the 7.53 billion human beings on earth.

I doubt anyone will attempt to build a new conventional nuclear reactor in the US in the next 20 years until hopefully fusion comes along - but that is always ‘twenty years in the future’ and has been for the last 50 years.

After the current projects…well…

worse, other states will decommission their nuke plants. Too much pressure to keep them going.

It will be solar panels and grid storage that gets the unitality company money. Stockholders aren’t going to go near nuclear plant fiascos.

As to Europe…well, Germany has shut down and plans to shut down the rest as soon as they can…if they survive the winter.

When you see nuclear written into ‘Green Energy’ future planning, let me know. It’s not there now and most likely won’t be.

Meanwhile, China has no problem building more nukes.

Worse, most oil companies are not interested in expanding reserves or pumping more oil. All have publicly said so. They’re barely able to maintain production other than the shale oil folks and they’re barely back to pre pandemic levels. All the focus now is on NG which is getting $10 and $20/therm …and people and power companies are paying it because they have no choice. And we allow large exports, increasing all the time of NG. If it was so easy to get, it would be selling for $3 instead of $10 or $20…and most of the world pays $20.

t.

1 Like
#23

skye notes and comments:

  1. The world needs energy to function, specially oil and gas.

  2. The world is about to run out of economically extractable oil and gas.

  3. This will cause a collapse in the global economy

  4. A cabal of politicians know this, but are hiding it from us because…I didn’t quite understand their motivation for keeping it secret. But since they can’t say anything, they are trying to avert collapse under the guise of promoting renewable energy and putting sanction on Russia .

  5. is absolutely true. No question. 2) is absolutely false. There is enough extractable gas and oil to last decades at least. And that’s not counting on the fact that new technology makes identifying new sources gas and oil possible, and that energy intensity per unit of GDP has been decreasing for at least three decades. Three decades is a reasonable enough time to demonstrate a trend, in my opinion.

If the world has oodles of oil and natural gas, it would be selling for $1 a gallon like it did in just a few years ago, and NG at $1.50/therm. Instead, gas peaked at $5/gal and is still $3/gal in TX

the article didn’t say we would ‘run out’…just that once you reach a peak - whether it be economic (people can’t afford it and cut back) or you simply cannot extract as much as before and economic prices that make business sense…

Of course, there is extractable oil and natural gas that will last decades, maybe 100 years, but if you cannot extract it at needed quantities…game over.

there is no way to plaster over the world with a tens of billion square meters of solar panels, install thousands of terrawatts of battery backup systems, in 30 years. Even if you put solar on every rooftop, cut down all the trees shading those rooftops, that would supply less than 13% of the US requirement for energy.

As the third world societies intensify their energy use…there will be more and more demand.

Natural gas production is already on a roller coaster. Gas per new well is falling as sweet spots are exhausted.

who has the large reserves of NG? Arabia…Russia…

Now maybe you can explain to me why oil is still sky high…and NG hitting the roof? Here, in good ole USA. after all, the US has oodles of oil and NG, right?

t.

1 Like
#24

I doubt anyone will attempt to build a new conventional nuclear reactor in the US in the next 20 years

I happen to agree. But that’s because fossil fuel resources are plentiful, and therefore sell at relatively cheap prices. Because natural gas is so gosh-darn cheap (present circumstances excepted), there’s very little reason to build a nuclear plant in the U.S.

However, this conversation is taking place in the context of Ms. Tverberg’s apocalyptic energy future-scape, where her theory presupposes…what if it weren’t?

If we were actually starting to reach extraction limits on natural gas and coal, and those fossil fuels actually became pretty expensive, then you can bet your sweet bippy that we (like Japan and some European nations) would suddenly start moving new conventional nuclear reactors to the front burner. Natural gas in the U.S. is plentiful and available, and there’s every reason to suspect that it will remain so (subject to whatever choices we make to keep it in the ground) over the useful life of a new nuclear reactor. You can see why that would lead us not to build new nuclear reactors. If Ms. Tverberg were right (she’s not!), and we would start reaching limits on our ability to extract sufficient natural gas to meet our dispatchable power needs (we’re not!), then we could simply pivot to building conventional nukes.

Now - we might choose to voluntarily restrain from exploiting our abundant NG reserves in favor of nukes in order to reduce carbon emissions. I personally think that’s doubtful - we usually don’t do the right thing unless we’ve exhausted all the alternatives, and we’re not going to exhaust our NG.

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#25

Now maybe you can explain to me why oil is still sky high…and NG hitting the roof? Here, in good ole USA. after all, the US has oodles of oil and NG, right?

Happy to. I gave several reasons in my prior post, but here’s another one and it is pretty simple: Oil and to a lesser extent gas are fungible commodities. A disruption anywhere causes prices to spike everywhere.

Putin shut off gas to Europe. That means US producers can sell domestically produced gas in Europe for high prices. Because they aren’t running charities, US producers are doing just that. That means you have to pay more to entice them to keep gas at home. The US, by the way, is the largest LNG exporter in the world.

Amid rising global energy prices and higher demand, the United States has become the world’s largest exporter of liquefied natural gas, the U.S. Energy Information Administration said Monday. Exports grew 12% in the first half of this year, compared with the latter half of 2021.

https://www.utilitydive.com/news/us-becomes-worlds-largest-l…

And the US has been a net oil exporter for two years in a row for the first time since 1949:

https://www.eia.gov/energyexplained/oil-and-petroleum-produc…

So why are the domestic prices so high? Same reason. The war caused uncertainty in the markets, and US producers are selling to the highest bidder. If you want that oil to stay at home you’ve got to pay up.

There is a neat artifact in the graph. There is a peak in consumption in 1979. Due to efficiency measures like CAFE standards that were being implemented, the US didn’t return to that peak until the late 1990s, despite the country and economy growing a lot in that time period.

there is no way to plaster over the world with a tens of billion square meters of solar panels, install thousands of terrawatts of battery backup systems, in 30 years. Even if you put solar on every rooftop, cut down all the trees shading those rooftops, that would supply less than 13% of the US requirement for energy.

What does that have to do with peak oil?

2 Likes
#26

You’d probably need to build a lot more nuclear than we have…but notice how quickly political resistance to nuclear energy fades in the face of actual energy scarcity?

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

True because of the Russian energy shortage, Germany has decided to maintain two nuclear power plants running through the winter. But we do not see a massive turn to nuclear. Instead we see a massive turn to renewables by almost all countries. The large nuclear plants take too long to build to help with Russian energy shortage, and they have been shown to be too expensive. New small modular reactors (SMR) have only started to build prototypes, but a long way form reaching commercial construction and then operation. SMRs will mot help with the Russian energy shortage.

People are also getting worried about a major nuclear disaster at one of the Ukraine nuclear power plants. Nuclear power plants have not been designed for war zones. Nuclear power plants are vulnerable to loss of power and loss of cooling situations.

Jaak

#27

Some more estimates when considering nuclear power as a primary source of electricity:

According to world-nuclear.or, nuclear power provides about 10% of the world’s electricity. Coal, gas and oil provide about 60-62%.

https://www.world-nuclear.org/information-library/current-an…

This discussion in world-nuclear.org discusses uranium reserves. They believe a conservative estimate for recoverable uranium reserves is 6.15M tonnes, enough to power existing nuclear reactors for about 90 years. They also say that technology improvements may increase that number substantially, so let’s say it’s 150-200 years.

https://world-nuclear.org/information-library/nuclear-fuel-c…

You can see if nuclear power is required to generate a greater percentage of electricity, then uranium-based power may only last another 50-100 years. If used exclusively for our electricity, they’d last 20 years max.

Here’s another article on fossil fuels by the Brookings Institute. I chose this one because it shows the close correlation between world population and fossil fuel consumption.

https://www.brookings.edu/essay/why-are-fossil-fuels-so-hard…

If we run out of crude oil, how will we manufacture nitrogen cheaply for fertilizer? And how about plastics? Diesel fuel to power locomotives over mountain passes?

Lots of optimists here. I see a lot of knotty problems on the mid-term horizon. At a minimum, a significant amount of sacrifice and cooperation which seems impossible given some widely held beliefs. A return to localized economies over the next century is a lock.

3 Likes
#28

To that list I’d add that conventional nuclear has popular support in general and robust support in Congress. If we really needed to or wanted to build out more nuclear there are no real barriers in that regard.

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

You are ignoring the high cost of construction and the long time needed to complete them. We have seen shortages of labor in all areas. Nuclear power requires highly skilled and qualified structural iron and steelworkers, welders, boiler makers, pipe fitters, electricians, and other trades. These people are hard to find and train with no new nuclear projects and nuclear grade equipment manufacturers getting out of the nuclear work business because of lack of orders.

Jaak

1 Like
#29

You can see if nuclear power is required to generate a greater percentage of electricity, then uranium-based power may only last another 50-100 years.

That’s fine! We’re many decades away from any appreciable scarcity for coal and natural gas - especially the latter. So that’s more than enough to get us into the 2100’s before we start facing actual natural resources restraints on power generation. And that’s more than enough time to get solar and wind (and storage for same) up to scale. Combine that with a skosh more efficiency, take into account that global population is going to peak well before we get to 2100, and there’s no reason at all to think we can’t power the modern society at current levels forever. Or rather, no reason to think that natural resources will limit our ability to do that.

If we run out of crude oil, how will we manufacture nitrogen cheaply for fertilizer? And how about plastics? Diesel fuel to power locomotives over mountain passes?

We’ve got plenty of crude oil - and even more natural gas. NG is actually the feedstock from which we derive nitrogen based fertilizer and plastics, for the most part.

In fact, we have too much of this stuff. Greens were kind of hoping, back in the day, that Peak Oil was true - that we might actually get forced by resource limits to start implementing the carbon-reducing policies that we were failing to adopt by choice. Turns out humans are very clever at figuring out ways to do things that are bad for ourselves - and fracking basically blew the doors off previous estimates of what our recoverable reserves were for oil and gas. That’s even before we get to the next possibilities for harvesting fossil fuels - things that are really out there right now, like permafrost methane or frozen methane hydrates.

We’ve got vastly more fossil fuel and nuclear fuel than we could ever need to get us through the next century…which, again, is more than enough time to slowly transition to fully renewable power. Not enough time to avoid more than 2C of warming…but plenty of time to avoid lack of power to download our cat videos.

Albaby

5 Likes
#30

You’re right about the natural gas as the feed stock for nitrogen and plastics. Sorry about that.

This is an endless subject. We’ll reconvene next time.

#31

albaby:"However, this conversation is taking place in the context of Ms. Tverberg’s apocalyptic energy future-scape, where her theory presupposes…what if it weren’t?

If we were actually starting to reach extraction limits on natural gas and coal, and those fossil fuels actually became pretty expensive, then you can bet your sweet bippy that we (like Japan and some European nations) would suddenly start moving new conventional nuclear reactors to the front burner. "

I doubt that. By the time the normal person realizes it, it’s way too late. It takes 10 years to permit and build a nuclear plant…that’s if the Sierra Club and Greenies don’t file lawsuit after lawsuit.

Most EU nations turning off nukes. Only 1 or 2 countries (Finland?) building one or two nukes. Certainly not enough. In the USA - gimme a break. There won’t be a new nuke even if people in New England freeze during the winter.

from McKinsey: at https://www.mckinsey.com/industries/oil-and-gas/our-insights…

“Gas will be the strongest-growing fossil fuel and will increase by 0.9 percent from 2020 to 2035. It is the only fossil fuel expected to grow beyond 2030, peaking in 2037. From 2035 to 2050, gas demand will decline by 0.4 percent. This relatively moderate decline is due to hard-to-replace gas use in the chemical and industrial sectors, which limits the impact of an accelerating decline in gas used for power.”

Of course, that assumes there are places to extract it from, and no idea of what the price will be.

As to solar power growth:

"The U.S. solar industry will grow 25% less than previously forecast during 2022 thanks to supply chain constraints and rising raw material costs, according to a report released Tuesday by the Solar Energy Industries Association and Wood Mackenzie.

The quarterly update showed that prices continue to rise as the industry grapples with the same cost pressures impacting every corner of the economy. Additionally, trade uncertainty has also weighed on the solar industry."

https://www.cnbc.com/2021/12/14/us-solar-industry-will-grow-…

While greenies have visions of solar replacing all the NG, yet only half of NEW ADDITIONS in the past few years were solar. Essentially, solar power hasn’t replaced ANY existing power generation full time. Just daytime which makes building nukes a losing game since they can’t run full time and sell power - the only way they’ll break even and pay off the plant.

I’m still waiting to see where all the Lithium is going to come from…

t.

#32

If we run out of crude oil, how will we manufacture nitrogen cheaply for fertilizer? And how about plastics? Diesel fuel to power locomotives over mountain passes?

Lots of optimists here. I see a lot of knotty problems on the mid-term horizon. At a minimum, a significant amount of sacrifice and cooperation which seems impossible given some widely held beliefs. A return to localized economies over the next century is a lock.

When do we run out of crude oil? Serious question. Most reliable sources seem to think that day is decades away. But just for the sake of argument, let’s say it is sooner than we think. Good news is we don’t have to pick just one replacement source. We have a basket of solutions we can choose.

Currently about 15% of domestic electricity is non-hydro renewables. The trends show that it will be more like 30-50% by 2030, and the current policy is 80% non-carbon by 2030 and 100% non-carbon by 2035. Those policy targets might not be achievable, but just the current trend alone will remove demand for a huge amount of natural gas.

Most petroleum is used for transportation in the US. We all know where that is headed: EVs. If we started running out of oil and gas got expensive, you can bet everyone will want one. As it is, there should be double digit fleet penetration by 2030, so again, just right there will see a large drop in oil demand if nothing but the current trends continue. Other countries, notably China, are moving even faster towards renewables and EVs.

Niche uses cases for petroleum like plastics and such really aren’t very big compared transportation. Reduce the transportation component and there is plenty of petroleum for other uses as far as the eye can see.

1 Like
#33

I doubt that. By the time the normal person realizes it, it’s way too late. It takes 10 years to permit and build a nuclear plant

Who cares whether a “normal person” realizes it? I only care whether the very knowledgeable people who run energy companies realize it. If, as, and when natural gas resources start to face a bit of scarcity - increasing the marginal cost of extraction - those nice energy executives will begin to raise their prices in response. Which sends a very nice, clear pricing signal to utility executives that we’re reaching the point in the cost curve that they should start moving those nuclear plants into earlier phases of construction.

After all, if the bright young people at McKinsey Consulting are capable of making forecasts about future NG supply and production that a “normal person” probably can’t, I’m sure that energy executives can do the same - or just hire McKinsey.

5 Likes
#34

If we were actually starting to reach extraction limits on natural gas and coal…

If oil were scarce and the price stayed above, say, $150/bbl then CTL (coal to liquids) would become economical. It is estimated that there are some 10^12 tonnes of coal, with about half being bituminous or anthracite. This is about 24,000 quads of energy.
https://energyeducation.ca/encyclopedia/Coal_reserve#:~:text…

What is a quad? It is one quadrillion BTUs.

https://3000quads.com/2012/01/13/quads-an-introduction/
Picture a train car, filled with anthracite coal. Let’s be picturesque and go back to the 1970s, when smaller and weaker train cars held about 100 tons of coal. Back then, they typically formed trainsets of 100 cars, each holding 100 tons of coal, for 10,000 tons in total…

Now, picture a longer train. Imagine the longest train ever conceived of—one with 378,000 cars loaded with anthracite coal. Although coal cars vary in length, you can often estimate about 100 cars to a mile. So picture a train 3,780 miles long…

If you burn all the coal in that train—each of the 100 tons in each of the 378,000 cars—you will have consumed 1 quadrillion BTUs.

DB2

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