For all the policy wonks: 131 years to replace gasoline?

[GliderGuider]

According to two researchers from The Department of Civil and Environmental Engineering at University of California, Davis, it will take 131 years for current market forces to complete the transition away from oil.:

Future Sustainability Forecasting by Exchange Markets: Basic Theory and an Application

Setting sustainability targets and evaluating systems progress are of great importance nowadays due to threats to the human society, to economic development and to ecosystems, posed by unsustainable human activities. This research establishes a probabilistic theoretical approach based on market expectations reflected in prices of publicly traded securities to estimate the time horizon until the appearance of new technologies related to replacement of nonrenewable resources, for example, crude oil and oil products.

To assess time T when technological innovations are likely to appear, we apply advanced pricing equations, based on a stochastic discount factor to those traded securities whose future cash flows critically depend on appearance of such innovations. In a simple approximation of the proposed approach applied to replacement of crude oil and oil products, we obtain T ≈ (P0oil/C0)·ln (Δ·P0oil/P0alt), where P0oil and P0alt are the current aggregate market capitalizations of oil and alternative-energy companies, C0 is the annual aggregate dividends that oil companies pay to their shareholders at the present, and Δ is the fraction of the oil (oil products) replaced at time T. This formula gives T ≈ 131 years for replacement of gasoline and diesel.

The proposed market-expectations approach may allow policymakers to effectively develop policies and plan for long-term changes.

of course, they're busily thinking like economists, and we should therefore understand that such conclusions have no foundation in the world of biophysical reality.

[RUMMYisFROSTED]

1. A 100 of those years will be on horseback.

[ishaneferguson]

2. Or with dead Americans shipped home from oil lands. NT

[Jackpine Radical]

3. I begin to understand the origin of the term

"pointy-headed intellectual."

[orwell]

4. Yeah...

...because we all believe in the "efficient market" hypothesis...

[kristopher]

22. It is hard to argue with a concept that has proven itself so often.

Are you sure you aren't conflating the analytic tool itself with the fact that a large part of the data that the tool deals with is manipulated and secret?

[truedelphi]

5. in the India they have the Air Car -

Costs three cents to put a full tank of compressed air into your vehicle, and you are good to go.

God! I am so pleased that we have such great laws on the books preventing us from importing these marvelous machines. They are smallish vehicles and wouldn't survive a crash with a semi trailer truck.

Never mind that they would work great for many households like ours where the most frequent car trip is to the grocery store two miles a way.

And the same great minds that point out the horrors of the lack of safety inherrent in these small vehicles, also point out that within a decade, gas and oil might not be available to most people in the USA (in terms of price.)

[NickB79]

14. Show me a link to actual production (not prototype) AirCars in India

Show me where they are ACTUALLY being sold today, because they've been hyping this for the past 8 years at least, with no saleable production so far. At this point it looks more and more like vaporware.

[4dsc]

6. There is no replacement for oil FACT!!

Nothing will ever run the world like oil. That's a fact that is not up for much rebuttal. The coming oil crunch is a liquid fuel problem and no so called alternative will will be able to replace it.

[kristopher]

7. Why not? What is so special about oil?

And why is that particular characteristic as universally indispensable as you are claiming?

Let's see if you have a grasp of what you are so adamant about, eh?

[Confusious]

8. Energy density.

Of course you should know that.

[GliderGuider]

12. And format.

It's an energy dense liquid, which gives it major advantages over electricity in terms of transport,distribution and storage infrastructure. Not to mention that oil is able to power aircraft, low-tech long-distance ships and vehicles of all sorts in remote (and even not-so-remote) locations.

[kristopher]

19. Format?

Is that *a* characteristic?
I don't think so.

What you are fumbling around trying to say though, is on target. The characteristic of petroleum that makes it so valuable is not just energy density, but the fact that this energy density can be harnessed in ways that can be easily moved - it is "portable". For comparison, nuclear has high energy density but it is not all that portable.

Both the energy density and portability are necessary to how we currently use petroleum.

The personal transportation sector can be served by electric vehicles.
Some of the heavy transport sector can be shifted to efficiency in distribution (trains, local manufacture etc) and the rest is the target of next generation biofuels like algal oil.

Petroleum gained so much traction because of two additional characteristics - cost and high net energy.

Both of those related characteristics are at the point of falling by the wayside.

Petroleum is on its way out.

[GliderGuider]

23. Petroleum is on its way out, indeed.

But not because it's being pushed out the door by electricity.

We will see massive improvements in energy efficiency and operational efficiency in a variety of sectors over the coming decades as Peak Oil bites harder. I rather doubt that electric cars will take over in large parts of the world that have insufficient generation capacity or grid coverage. The US will do OK, but Lesotho and Pakistan perhaps less well.

Aviation remains a major stumbling block for oil replacement proposals.

[kristopher]

24. Pushed out the door by electricity?

Have you the capacity to discuss anything without resorting to junk like that strawman?

[GliderGuider]

28. The reason I used that figure of speech

One goal of shifting the world economy from liquid fuels towards electricity is to enable renewable electricity to replace fossil fuels before the FF supply is exhausted. In other words, to allow us to leave some of the available underground carbon unextracted and unburnt while we go about our monkey business. To accomplish this, electricity would need to out-compete oil in a significant segment of oil's market, on both utility and price. That's what I would call being "pushed out the door". That's not happening.

Instead, we have a situation where any reductions in FF demand are being caused not by competition from electricity but by global economic instability and oil supply restrictions. I suspect that the financial markets, the world banking systems and Peak Oil are going to reduce oil use a lot more than electricity will, at least for the foreseeable future. We would need a lot of national and international policy changes to change that situation, and I'm not seeing any of that either.

So, there are no market forces driving out FF and no policy changes moving us in that direction either. Sounds like BAU to me.

[kristopher]

31. Who set and articulated that goal?

How does "electricity" have to "out compete" fossil fuels?

Do you realize how much confusion about the nature of the problem you hae embodied in that statement?

Let's start with this: fossil fuels are used both for transportation and electricity.

Now reread your post.

The incentive for change in transportation is twofold:
1) increasing industrialization and development around the world leading to higher petroleum prices due to competition.
2) decreased investment in finding and developing new oil supply because of climate change.


Your attempt to pit "electricity" against "fossil fuels" simply doesn't work in the generalized manner you've employed.

[NNadir]

9. Well, at the risk of agreeing with someone who clearly knows nothing at all about

science or energy, oil can, in fact, be readily replaced.

Unfortunately, however, our little mindless anti-nukes are going to end up greenwashing their pals in the coal and gas industry, the route that will be tried is FT fuels. It will work to make oil of course, but at enormous environmental expense, like the rest of the anti-nuke fixations.

[GliderGuider]

13. If it can be so readily replaced

Please discuss its replacement in some of the uses I mentioned above: aircraft, low-tech long distance ships, and vehicles in remote locations.

ETA: I agree that oil can be readily replaced for local commuting vehicles in urban locations in countries with good electrical infrastructure. Oh, and for trains. The further afield you go from local, low-mass operations or fixed-route vehicles (i.e. urban cars and trains) the more problems you have replacing oil. The liquid format confers some unique benefits.

[XemaSab]

16. For specialty vehicles like planes and ships

biodiesel may work, but our global era will be over due to prohibitive costs.

[joshcryer]

17. The day the "global era" is over will be a fine day indeed.

[GliderGuider]

20. We will not be able to maintain our current level of activity

World aviation currently uses 5 million barrels of oil a day. The total world production of vegetable oil for all purposes is around 2.5 million barrels per day.

We might see military aircraft running on it, but civilian air traffic will compete on the markets for oil. Come to think of it, so will the military, and they have more money than anyone else...

So, IMO biodiesel for air travel is a non-starter.

[joshcryer]

21. Not sure where you get those stats but if they include inter-state flights...

...it could be misleading. The US has a lot of flights within its borders.

[GliderGuider]

26. According to BioJet

http://www.biojetcorp.com/

The world's total non-military consumption of aviation fuel is about 2 billion barrels a year, or about 5.5 mbpd.

[kristopher]

25. Why is "biodiesel for air travel a non-starter"?

Also wanted to add another sector I forgot above - agriculture will also move to biofuels.

Do you know what the energy content of a pound of algae is?

[GliderGuider]

27. It won't scale sufficiently.

A square kilometer of sunshine also contains a lot of energy. Unfortunately, the devil is hiding in the details involved with getting that energy into a form and location where it's useful.

Current vegetable oil production is insufficient to meet any significant proportion of aviation needs, due to competing uses like human food. Algae is of course the great hope, but it's still very early days on the algae research labs. They are running into lots of problems with contamination (in open systems), CO2 supply (in closed systems), startup costs and scalability. High-lipid strains of algae apparently grow relatively slowly.

There is also a need to have a stream of sterile CO2 ad feedstock. That requirement means that algae is a fossil fuel extender rather than a replacement. Not that there's anything wrong with that, but if carbon is the problem, a fossil-fuel replacement that requires us to burn fossil fuels int he first place seems like a bad idea.

I don't think algal biodiesel is going to be commercialized to any significant extent within the next 20 years.

[kristopher]

29. Dude, that is a jumbled mishmash of bull.

It won't scale sufficiently
A square kilometer of sunshine also contains a lot of energy. Unfortunately, the devil is hiding in the details involved with getting that energy into a form and location where it's useful.

Current vegetable oil production is insufficient to meet any significant proportion of aviation needs, due to competing uses like human food. Algae is of course the great hope, but it's still very early days on the algae research labs. They are running into lots of problems with contamination (in open systems), CO2 supply (in closed systems), startup costs and scalability. High-lipid strains of algae apparently grow relatively slowly.

There is also a need to have a stream of sterile CO2 ad feedstock. That requirement means that algae is a fossil fuel extender rather than a replacement. Not that there's anything wrong with that, but if carbon is the problem, a fossil-fuel replacement that requires us to burn fossil fuels int he first place seems like a bad idea.

I don't think algal biodiesel is going to be commercialized to any significant extent within the next 20 years.

"It won't scale sufficiently"

-False. Removing personal transport from the picture makes the task very realistic.

"Current vegetable oil production is insufficient to meet any significant proportion of aviation needs, due to competing uses like human food."

-True but irrelevant since we are talking about what is possible, not what is extant.

"Algae is of course the great hope, but it's still very early days on the algae research labs. They are running into lots of problems with contamination (in open systems), CO2 supply (in closed systems), startup costs and scalability. High-lipid strains of algae apparently grow relatively slowly."

-These observations simply do not support your assertion. Again, we are not talking about what is here now, we are talking about what is feasible. None of these obstacles are anything more than economic bumps in the road that disappear as the economic situation evolves.


"There is also a need to have a stream of sterile CO2 ad feedstock. That requirement means that algae is a fossil fuel extender rather than a replacement. Not that there's anything wrong with that, but if carbon is the problem, a fossil-fuel replacement that requires us to burn fossil fuels int he first place seems like a bad idea."

-A concentrated (not "sterile") stream of CO2 is a requirement, yes. However the premise that it must come from fossil fuels is false. There are a large number of biologic waste streams that can be harnessed very effectively to provide the CO2 feedstock for algae.

In other words, you have not supported you assertion. Care to try again or would you rather alter your position to conform to reality?

[GliderGuider]

30. Hmmm.

"None of these obstacles are anything more than economic bumps in the road that disappear as the economic situation evolves."
"Removing personal transport from the picture makes the task very realistic."

And I'm supposed to be the bullshit artist. Riiight.

The problem is all your arguments contain the magic process box titled "Economics" containing the words "Here a Miracle Occurs". I don't believe in miracles, especially not when they're promised by economists.

Algae may very well turn out to be a playa, but it's not dancing yet - and the road from here to there is paved with faith.

[kristopher]

32. Then explain how any of those obstacles cannot be solved by more money?

[Confusious]

33. Then explain how the obstacles with nuclear cannot be solved with more money?

[joshcryer]

34. You don't get it silly person, renewables require less more money.

50 WWII's or 600 Apollo's less more money, but still less more money.

[Confusious]

37. It was a retorical question, sort of

I'm sure the answer would have been or will be:

Millions for renewables, not one penny for nuclear.

extra points if you know what time period that was paraphrased from, and what famous ship was built because of it.

[kristopher]

36. Nuke problems of costs, safety, wastes, and proliferation won't go away as gas prices increase.

Let's looks at safety and the human element for an example. You can't eliminate humans from a system designed, built and operated by humans no matter how much money you throw at it.

Nuclear issues:
Costs
Safety
Wastes
Proliferation

None are even remotely similar to the minor technical problems being discussed re biofuels.

[Confusious]

38. Of course, here is the answer I expected

In the manner I expected, without any imagination.

I can think of multiple ways, if you throw enough money at it.

But that's really not the point is it?

The double standard is.

[Confusious]

35. Co2

-A concentrated (not "sterile") stream of CO2 is a requirement, yes. However the premise that it must come from fossil fuels is false. There are a large number of biologic waste streams that can be harnessed very effectively to provide the CO2 feedstock for algae.

Where from? not accusing, just asking.

Burning plant matter is a start.

[kristopher]

39. ex: Burning methane from composted human and animal wastes.

Or cleaning CO2 and nitrogen rich water from a fish farm by cycling it though an algae pond.

[Confusious]

40. Why burn methane to feed algae. Seems like a waste.

Why not just store and use it for something else?

Fish farms usually have a big algae problem. They're in with the fish. At least they were when I ate that algae tasting catfish. blech!

[kristopher]

41. The methane fires an electrical generator.

Fish in one tank, algae in another. You grow the fish, harvest them, rotate the water to the algae tanks, grow the algae while cleaning and replenishing oxygen, harvest the algae and rotate the water back to the fish.

[Confusious]

42. Not to crap on your plan

But have you figured:

A. You need an Sea world size tank and the amount of power required to pump the water from one tank to the other? an Olympic size pool is small for a lot of full grown fish. Or the amount of water required?
B. most fish farms are located near streams and lakes, I checked on it once, wondering why it was illegal to have fish farm in Alaska.
C. I had a pool go bad, PH was all off, and a shit load of algae grew.... hmmm new plan. It was a bitch to clean out.

[Name removed]

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[Confusious]

56. I guess I a point you didn't think about

Otherwise, why the nastiness?

[GliderGuider]

44. Scale fail

Actually it's a fail on a number of levels.

Technically, it's too energy-intensive. You might be able to run the whole system off some proportion of the biodiesel that is produced, but that all depends on the raw EROI of the system being significant - like maybe 3:1 or better. Given the EROI history of ethanol, I have serious reservations on this question.

Then there's the contamination issue, which is the reason I mentioned needing a sterile stream of CO2 before. Mono-culture algal systems are very sensitive to contamination, and having other biological elements in the loop (like fish) is a recipe for sludge rather than go-juice.

From the Wikipedia article on algae fuel:

A possible nutrient source is waste water from the treatment of sewage, agricultural, or flood plain run-off, all currently major pollutants and health risks. However, this waste water cannot feed algae directly and must first be processed by bacteria, through anaerobic digestion. If waste water is not processed before it reaches the algae, it will contaminate the algae in the reactor, and at the very least, kill much of the desired algae strain. In biogas facilities, organic waste is often converted to a mixture of carbon dioxide, methane, and organic fertilizer. Organic fertilizer that comes out of the digester is liquid, and nearly suitable for algae growth, but it must first be cleaned and sterilized.

The utilization of wastewater and ocean water instead of freshwater is strongly advocated due to the continuing depletion of freshwater resources. However, heavy metals, trace metals, and other contaminants in wastewater can decrease the ability of cells to produce lipids biosynthetically and also impact various other workings in the machinery of cells. The same is true for ocean water, but the contaminants are found in different concentrations. Thus, agricultural-grade fertilizer is the preferred source of nutrients, but heavy metals are again a problem, especially for strains of algae that are susceptible to these metals. In open pond systems the use of strains of algae that can deal with high concentrations of heavy metals could prevent other organisms from infesting these systems (Schenk et al. 2008). In some instances it has even been shown that strains of algae can remove over 90% of nickel and zinc from industrial wastewater in relatively short periods of time (Chong, Wong et al. 1998).

Then there's the efficiency loss. If you're burning methane to make CO2 and energy for the system there are more efficient ways of harvesting and using the energy directly.

And there's the scale issue. Could you propose a plan for scaling this up to around 5 mbpd world-wide? Should be a cinch for an economist...

What you have described resembles a boutique WVO-to-biodiesel operation. It might work on a local level, but if you want to scale it into anything beyond an experimental or hobby facility you are going to need massive quantities of concentrated, sterile carbon. That's why bioreactor installations tend to be co-located with coal or natural gas generation facilities. Doing that gives you at least partial re-use of the carbon that originally came out of the ground.

These systems are really only solar energy accumulators that are based on organic reactions instead of photoelectric effects. As a result they depend on sunshine in much the same way as solar cells do (though with greater hysteresis to smooth out the diurnal cycle) and have an additional a dependency on carbon. The output is small amounts of expensive liquid fuel instead of small amounts of expensive electricity.

While this interesting, the processes need a lot more research to determine if the idea is energetically viable once all the details have been looked at. At least it doesn't use food...

[Name removed]

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[GliderGuider]

48. What are you pissing in my Wheaties for?

I just addressed an idea that you brought up. I wasn't addressing the totality of the problem, just showing that there are more issues with algal biodiesel than your off-the-cuff hand-waving suggested.

You were talking specifically about algal biodiesel, not biomass energy storage. Don't get a hernia moving those goalposts, my friend.

[kristopher]

51. You are the one "moving the goalposts" (again)

The conversation started when you wrote, "So, IMO biodiesel for air travel is a non-starter."

It isn't and I've shown your statement to be nonsense.

BioFUELS are how we WILL meet the needs in our heavy lift sector.

[Kennah]

15. I agree ...

... and we're going to see, as the price of oil rises, our civilization evolve.

The big question is whether the evolution of our civilization will be an efficient, predictable, and affirmative event or a dramatic, unexpected, and even cataclysmic event as we will against the end of the Age of Oil.

The former will be nice. The latter will not be nice.

[KossackRealityCheck]

52. FACT!!! We will ALWAYS light our lamps with WHALE OIL !!!

Nothing will ever run the world like whale oil!!! That's a fact that is not up for much rebuttal. The coming whale oil crunch is a liquid fuel problem and no so called alternative will will be able to replace it!!!

-- anonymous blogger circa 1987

[Kennah]

53. Whoa!

Where was that guy? Up on the North Slope?

[kristopher]

10. Additional comments by authors

"We acknowledge that some of the difference between the estimates for the time until oil replacement and the time until oil depletion could be reduced in response to changes over time. That is, as fossil fuel resources diminish, we would expect both market and individual behavior to change. We would expect that new reserves of conventional and unconventional oil may become available for exploration due to geological exploration and advances in oil extraction techniques or that extraction from less feasible oil fields becomes more economically attractive. We would also expect that oil consumption would decrease due to energy-saving measures and/or due to responsiveness of demand to higher oil prices. All of these factors would change our predicted outcome.

—Malyshkina and Niemeier


I didn't look at the paper, but there doesn't seem to be anything new here except the model. The example they've presented is a basic linear description of the situation as it currently exists with no assumptions about price increases etc factored in. The model is apparently able to allow policymakers to test the various options to determine the effect more accurately and easily than is currently possible. For example if the price of petroleum were to rise to $200/barrel by 2013 the output of the model would be dramatically different.
I'd like to know how accurately it predicts anticipatory behavior by investors. - K

[GliderGuider]

11. As I said

Their conclusions have no basis in biophysical reality. As soon as anyone introduces mathematical notation into a discussion of economics you can be pretty sure they're selling something they don't own.

[kristopher]

18. We know you prefer the truthiness-in-a-fact-free-zone method of policy planning.

You've made it clear before.

It doesn't work.

[muriel_volestrangler]

43. They seem to be working backwards

They take the stock market valuations of oil and alternative energy companies, the dividends the oil companies pay out, and say "well, that must mean the markets think the oil companies will remain viable for X years".

There are so many problems with this, it's hardly worth bothering with. It's just about possible they address them all in the full article (which needs a subscription), but amongst their many diverse problems are:

assuming the stock market has perfect information
assuming the stock market is trying to put a 'true' value on oil stock based on future dividends, rather than just make as much short term profit based on the likely behaviour of other investors
assuming dividends are an adequate reflection of the value put on oil and its uses, rather than being affected by global politics, chance discoveries and disasters, oil market speculation, and many other things
assuming that oil companies are just in the oil business
assuming that all alternative energy developments will come from existing stock exchange quoted alternative energy companies

If someone did a proper calculation on how long oil might last, and then worked out what that ought to mean oil company shares should be worth, then that might at least tell them that shares are overpriced or underpriced. But even then, that's just one more bit of information for a stock market speculator to use - it's mainly people betting about what other people are about to bet.

Any government using this figure for any future planning should be sacked.

[kristopher]

47. I think it is sort of like what Franklin said about democracy being a terrible form of government...

...except for all of the others.

I think they have a good approach. Stock markets do a good job of separating the wheat from the chaff and the objections you've raised, while valid, do not mean that the predictive value of their approach is not better than other means of trying to peer into the future.

Presenting conclusions about the method is silly when we haven't examined it.

I do agree that any government that used their demonstration figure (the one in the OP) should be "sacked" (if only we had that luxury in the US).

Where are you that you think in terms of parliamentary systems?

[muriel_volestrangler]

49. I'm in the UK

Have you access to the full article? It seems to me the authors are assuming that stock traders have access to the full, reliable data about the prospects for oil, but that such information is hidden from energy economists, and they're then saying "we mere humans have to assume the traders have set the right price for long term prospects". Even if traders have (illegal) inside information, then it's not reasonable to assume they have all the inside information.

Maybe I shouldn't 'present conclusions', but I think I'm more pointing out the massive obstacles to the article's hypothesis being remotely trustworthy. We need the answers to how they overcame the obstacles before it's worth listening to.

[kristopher]

50. I don't think your assumption about their assumption is accurate.

"It seems to me the authors are assuming that stock traders have access to the full, reliable data about the prospects for oil, but that such information is hidden from energy economists, and they're then saying "we mere humans have to assume the traders have set the right price for long term prospects"."

I think the idea is similar to what we see when there is election polling fever and people turn to sports betting as another indicator of what is going on. Remember that economics deals with people making decisions, and the stock market is a place where literally millions of decisions are reflected in price movements.

They are just tapping into that. It is also important, I think, to recognize that their model is designed to predict responses to potential policy initiatives. I don't really get a sense that you have internalized their goal.

[muriel_volestrangler]

54. There's a difference between us casually looking at betting markets

which are specifically asking "who's going to win" or "by how much", when we're chewing the fat on who's going to win in a month's time, and a pair of environmental engineering researchers basing predictions for resources for over a century from now on the current stock market prices.

"The stock market is a place where literally millions of decisions are reflected in price movements" - yes, and only a few of those decisions are based on "how long will oil last?". Most are "where will the price of this stock go next?".

Their model is not "designed to predict responses to potential policy initiatives"; it is designed "to estimate the time horizon until the appearance of new technologies related to replacement of nonrenewable resources, for example, crude oil and oil products."

They then say it "may allow policymakers to effectively develop policies and plan for long-term changes". Far from predicting responses to policy initiatives, they're suggesting it should be used to produce policy initiatives.

[kristopher]

55. I think you're right.

My takeaway from the additional comments I posted above looks to be incorrect, which leads me to agree with all you've said. That in turn makes me ask what the heck is the point of their exercise?

What first comes to mind is that they decided to simply quantify for the climate nonchalant the energy security argument in a way that is most meaningful to them.

Next time I go in to the campus I'll try and remember to pull up the paper.