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Peak Oil & Peak Everything Lecture at Cornell

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Watch the Presentation Here: http://www.youtube.com/watch?v=0HeEHKJxSA8...

Watch the Presentation Here: http://www.youtube.com/watch?v=0HeEHKJxSA8

Will Martin gave this lecture on April 19th, 2012 to the students of Professor Bill Schulze's Sustainable Business class in Cornell University's school of Applied Economics and Management.

The lecture covers peak oil, the economics behind peak oil, the current state of our energy markets, the substitution to unconventional oil that is taking place and the future of "peak everything".

For more, visit http://www.peakoilproof.com/

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Peak Oil & Peak Everything Lecture at Cornell Peak Oil & Peak Everything Lecture at Cornell Presentation Transcript

  • Peak Oil and Peak EverythingWill  Mar(nwjm228@cornell.eduApril  17,  2012
  • Lecture Outline• About  Me• Peak  Oil  Intro  (5  slides)• Some  Economics  (4  slides)• Current  State  of  Affairs  (6  slides)• Subs(tu(on  and  the  Final  Fron(ers    (9  slides)• Peak  Everything  (10  slides)• Outcomes  (3  slides)• (~1  minute  per  slide  -­‐  so  let’s  hustle!) 2
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes The Scale of the Problem Current  Global  Oil  Mix Current  Global  Energy  Mix• 81%:  Transporta(on  fuels– 46%  for  gasoline– 9%  for  jet  fuel– 26%  for  diesel  and  other  liquid   transporta(on  fuels  • 19%:    Industrial  &  Commercial– Hea(ng  oil,  electricity  genera(on,  plas(cs,   synthe(c  rubber,  asphalt  and  tar,  wax,   lubricants,  adhesives,  solvents,  explosives,   paints,  sealants,  corrosion  inhibitors,  cosme(cs,   fragrances,  pharmaceu(cals,  fer(lizer,   pes(cides,  food  flavorings,  food  addi(ves  and   other  industrial  and  commercial  products. 3
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Addicted to Oil Current  Global  Oil  Mix• 81%:  Transporta(on  fuels – 46%  for  gasoline – 9%  for  jet  fuel – 26%  for  diesel  and  other  liquid   transporta(on  fuels  • 19%:    Industrial  &  Commercial – Hea(ng  oil,  electricity  genera(on,  plas(cs,   synthe(c  rubber,  asphalt  and  tar,  wax,   lubricants,  adhesives,  solvents,  explosives,   paints,  sealants,  corrosion  inhibitors,   cosme(cs,  fragrances,  pharmaceu(cals,   fer(lizer,  pes(cides,  food  flavorings,  food   addi(ves  and  other  industrial  and  commercial   products. 4
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Oil• Peak  oil  is  the  point  at  which  we  have  reached   a  maximum  rate  in  global  oil  produc(on. It  does  not  mean  that  oil  is  “half  gone” Peak  oil  is  about  rates  not  reserves Million  Dollar  Analogy 5
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Aggregating Oil Field PeaksAlaska  Peak  Oil United  States  Peak  Oil  in  1971 Texas  Peak  Oil 6
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesEventually The World Will Peak 7
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Supply Inelasticity Since 2005, Global Oil Supply Is Almost Totally Inelastic Since 2005, OPEC Oil Supply Is Almost Totally Inelastic$150.00 $150.00$112.50 $112.50 $75.00 $75.00 $37.50 $37.50 $0 $0 75,000 78,750 82,500 86,250 90,000 25,000 28,000 31,000 34,000 37,000 World Oil Supply Jan 2001 - Jan 2005 (Thousand Barrels per Day) OPEC Oil Supply Jan 2001 - Jan 2005 (Thousand Barrels per Day) World Oil Supply Jan 2005 - Oct 2010 (Thousand Barrels per Day) OPEC Oil Supply Jan 2005 - Oct 2010 (Thousand Barrels per Day) 8
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesDemand Inelasticity Oil Demand Is Almost Perfectly Inelastic Brent Spot Price FOB (Dollars per Barrel) $150.00 $112.50 $75.00 $37.50 $0 0 13,250 26,500 39,750 53,000 OECD Oil Demand Jan 2001 - Oct 2010 (Thousand Barrels per Day) 9
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Supply and Demand150 US$ Inelas(c Supply Future  Price120 US$ Supply Q 90 US$ Demand Q Current  Price Demand Q’ 60 US$ 30 US$ Current  Produc(on Future  Produc(on 75 MMbpd 85 MMbpd 95 MMbpd 10
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Substitution 11
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Oil Forecasts2%  deple(on  rate  =  35  year  half  life6%  deple(on  rate  =  12  year  half  life  (the  same  level  of  oil  produc(on  as  we  had  in  1959!) 12
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesMany Countries Have Peaked Countries That Have Reached Peak Oil Country Peak Year Peak Production Rate % Below (MMbd) Peak TodayUnited States 1970 9.659 34%Iran 1974 6.022 30%Norway 2001 3.418 37%Mexico 2004 3.383 23%United Kingdom 1999 2.649 54%Indonesia 1977 1.686 41%Egypt 1993 0.893 22%Argentina 1998 0.847 27%Australia 2000 0.700 30%Syria 1995 0.623 35%Equatorial Guinea 2011 0.563 23%Brunei 1979 0.501 34%Yemen 2001 0.457 42%Vietnam 2004 0.397 14%Denmark 2004 0.389 36%Gabon 1996 0.370 33%Romania 1976 0.299 72%Trinidad & Tobago 1978 0.234 37%Peru 1985 0.190 20%Tunisia 1984 0.120 33%Italy 2006 0.119 16%Uzbekistan 1995 0.103 54% 13
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesThe World’s Megafields Have Peaked The World’s 20 Largest Oil Fields Have Already PeakedField Country Year of Year of Peak 2007 Production as % of Discovery World TotalGhawar Saudi Arabia 1948 1980 7.26%Cantarell Mexico 1977 2003 2.39%Safaniyah Saudi Arabia 1951 1998 2.01%Rumaila N & S Iraq 1953 1979 1.78%Greater Burgan Kuwait 1938 1972 1.67%Samotlor Russia 1960 1980 1.29%Ahwaz Iran 1958 1977 1.10%Zakum Abu Dhabi (UAE) 1964 1998 0.96%Azeri-Chirag- Azerbaijan 1985 2007 0.94%GuneshliPriobskoye Russia 1982 2007 0.93%Bu Hasa Abu Dhabi (UAE) 1962 1973 0.78%Marun Iran 1964 1976 0.73%Raudhatain Kuwait 1955 2007 0.71%Gachsaran Iran 1928 1974 0.71%Qatif Saudi Arabia 1945 2006 0.71%Shaybah Saudi Arabia 1968 2003 0.71%Saertu (Daqing) China 1960 1993 0.67%Samotlor (Main) Russia 1961 1980 0.66%Fedorovo-Surguts Russia 1962 1983 0.65%Zuluf Saudi Arabia 1965 1981 0.64% Total: 27.30% 14
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesGlobal Oil Discoveries Have Peaked Global Oil Discoveries Peaked in 1965 90.0 67.5 45.0 22.5 0 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Global Annual Oil Discoveries (billion barrels) 10 Year Moving Average 15
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes A Zero-Sum Game With a Shrinking Pie Global Oil Per Person Peaked in 19796.04.53.01.5 0 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Global Oil Production Per Person (Bbl/Person/Yr) 16
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes New Fields Peak Earlier & Decline Faster Newer Mega-Fields Reach Their Peak Faster Post-Peak Decline Rates Are Much Worse For Newer Fields70.0 13%52.5 10%35.0 7%17.5 3% 0 0% 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 Pre-1970 1970’s 1980’s 1990’s 2000’s Years Between Discovery and Peak Post-Peak Decline Rate by Year of First Production World Average Post-Peak Decline Rate 17
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Fungibility of SubstitutesElectricity  ≠  Liquid  Transporta(on  Fuels 18
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Limits to Speed of Electrification• In  the  United  States,   the  average  age  of   0.1% vehicles  on  the  road  is   Percent of Chinas 18.5 million new cars each 10  years year that are electric – Ten  years  ago,  the   average  vehicle  age   was  8.8  years• At  the  current  5%   scrappage  rate,  it   would  take  20  years  to   turn  over  the  US  fleet   of  cars 19
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Grasping at the Final Frontiers of Oil What’s Left? Limits to Scale-Up of Remaining Oil Substitutes• Ultra-­‐Deepwater  Offshore• Arc(c  Oil • Engineering  Problems – Engineering  Complexity• Poli(cally  Difficult  Onshore   Oil  -­‐  (Iraq,  Central  Africa,  etc.) – Environmental  Shortages• Heavy  Oil  (Canadian  Tar   • Social  Problems Sands,  Venezuelan  Heavy  Oil,   – Environmental  Pollu(on Rocky  Mountain  Oil  Shale) – Poli(cal  Issues• Biofuels • Limits  From  “Peak  • Gas-­‐to-­‐Liquids Everything” – Feedback  Loops• Coal-­‐to-­‐Liquids – Resource  Shortages 20
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Engineering Limits to Substitutes• Ultra-­‐Deepwater  Offshore – Immense  Complexity  and  Cost• Arc(c  Oil – Immense  Complexity  and  Cost – Ability  to  Control  Blowouts  in  the  Middle  of   Winter• Heavy  Oil  (Canadian  Tar  Sands,  Venezuelan   Heavy  Oil,  Rocky  Mountain  Oil  Shale) – Scale  Limited  by  Water  &  Natural  Gas   Availability – Refining  Capability  and  Cost• Biofuels – Scale  Limited  By  Available  Land  &  Water 21
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Cost of SubstitutesSource:  A  E  Farrell  &  A  R  Brandt,  University  of  California,  Berkeley 22
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Environmental Effects of Substitutes• Ultra-­‐Deepwater  Offshore – Risk  of  Oil  Spills  and  Blowouts• Arc(c  Oil – Blowouts  in  Winter:  Impossible  to  Contain• Poli(cally  Shaky  Land  Oil  -­‐  (Iraq,  Central   Africa,  etc.) – Lack  of  Environmental  Laws• Heavy  Oil  (Canadian  Tar  Sands,  Venezuelan   Heavy  Oil,  Rocky  Mountain  Oil  Shale) – Massive  Water  Pollu(on • Athabasca  Tailing  Ponds  Can  Be  Seen  From   Space! – Much  Higher  Greenhouse  Gas  Emissions• Biofuels• Gas-­‐to-­‐Liquids• Coal-­‐to-­‐Liquids 23
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesEnvironmental Effects of Substitutes 24
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesLimits to Scale of Electrical Substitutes• NIMBY Current  Global  Energy  Mix – Nuclear – Wind – Gas  Fracking – Coal  Mountaintop   Removal• Variability  and   Intermipency – Solar – Wind• Loca(on  Availability – Hydro – Wind 25
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Limits From “Peak Everything” • Feedback   Loops • Resource   Shortages Receding Horizons • Net  Energy:Source:  Prof  Charles  Hall,  Syracuse  University 26
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Everything• Peak  Fossil  Fuels – Peak  Oil,  Peak  Natural  Gas,  Peak  Coal• Peak  Minerals – Peak  Uranium,  Peak  Metals• Peak  Food – Peak  Fish,  Peak  Soil,  Peak  Water,  Peak  Fer(lizer   (peak  gas,  peak  phosphate  rock,  peak  potash) 27
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Gas Countries That Have Reached Peak Gas US Gas Peaked in 1974 but Decline Has Been Halted by Fracking Country Peak Peak % off from23 Year Production Peak (Bcf/D) United Kingdom 2000 10.45684986 47.15%17 Ukraine 1985 3.75452235 52.19% Romania 1982 3.57715492 70.43% Germany 1979 1.96117317 47.57%12 Italy 1994 1.77870648 58.60% Denmark 2005 1.0107839 21.77% Poland 1978 0.64114656 38.04% 6 The  Fracking  Treadmill 0 1930 1939 1948 1957 1966 1975 1984 1993 2002 “regardless  of  their  produc(vity,   [shale  gas  wells]  exhibit  an  early  peak   US Natural Gas Production (Tcf) Fracking of  produc(on  and  then  a  rapid   decline” -­‐Interna(onal  Energy  Agency 28
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Coal Coal Quality Has Been Declining Since the 1960’s Coal Extraction Productivity Peaked in 200026.00 7.0023.25 5.2520.50 3.5017.75 1.7515.00 0 1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 US Coal Quality (Million Btu per Short Ton) US Mining Productivity (Short Tons Per Employee Hour) 29
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Coal Countries That Have Reached Peak Coal Appalachian Coal Production Peaked in 1997 Country Peak Year Peak Production % off from Peak700 (Tonnes) Germany 1985 521.6 65.05% Poland 1988 266.51 50.01% Ukraine 1986 193.1 62.04%600 Kazakhstan 1988 143.1 22.57% United Kingdom 1981 127.47 85.75% Czech Republic 1984 124.93 59.47%500 Romania 1989 61.34 49.74% Spain 1983 39.95 81.91% Bulgaria 1987 36.82 21.61% Hungary 1982 26.08 65.20%400 South Korea 1988 24.3 91.42% Thailand 1997 23.39 23.56% France 1981 22.73 99.56%300 Japan 1981 17.69 94.82% 1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 Mexico 2007 12.5145 25.33% Venezuela 2004 8.107304 50.93% Brazil 1985 7.71 28.99% US Coal Production East of the Mississippi (Million Short Tons) Zimbabwe 1991 5.62 70.33% 30
  • Intro Economics Current  State Subs(tu(on Peak  Everything OutcomesPeak Coal is Leading to Desperation Mountaintop  Removal 31
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Metals Gold Production Has Plateaued Since the 1990’s Platinum Group Metals Production Peaked In 2007 3,000 600 2,250 450 1,500 300 750 150 0 0 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 1945 1952 1959 1966 1973 1980 1987 1994 2001 2008 World production (Metric Tons) World production (Metric Tons) Rare Earth Metal Production Has Leveled Off Is Copper Production Reaching a Plateau?140,000 17,000,000105,000 12,750,000 70,000 8,500,000 35,000 4,250,000 0 0 1990 1993 1996 1999 2002 2005 2008 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 World production (Metric Tons) World production (Metric Tons) 32
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Food All Meat is Net-Energy Negative We Burn 10 Calories of Production system (locale) Edible-protein energy return on Hydrocarbon Fuel For Every investment (EROI)Calorie of Food We Eat in the US Carp — extensive pond culture (various) 1-1.1:1 Chicken (US) .25:1 Tilapia — extensive pond culture (Indonesia) .13:1 Mussel — longline culture (Scandinavia) .1-.5:1 Turkey (US) .1:1 Carp — unspecified culture system (Israel) .084:1 Global fisheries .08:1 Milk (US) .071:1 Swine (US) .071:1 Tilapia — unspecific culture system (Israel) .066:1 Tilapia — pond culture (Zimbabwe) .060:1 Beef — pasture-based (US) .050:1 Catfish — intensive pond culture (US) .040:1 Eggs (US) .025:1 Beef — feedlot (US) .025:1 Tilapia — intensive cage culture (Zimbabwe) .025:1It takes 6 barrels of oil to raise one Atlantic salmon — intensive cage culture (Canada) .025:1 steer Shrimp — semi-intensive culture (Ecuador) Chinook salmon – intensive cage culture (Canada) .025:1 .020:1 Atlantic salmon – intensive cage culture (Sweden) .020:1 Lamb (US) .018:1 Sea bass – intensive culture (Thailand) .015:1 Shrimp – intensive culture (Thailand) .014:1 33
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Food Global food production and global energy consumption have a correlation of 0.99 Food and Fuel Prices Rise Together Food is Energy $150.00 300110.0 12000 $112.50 225 82.5 9000 $75.00 150 55.0 6000 $37.50 75 27.5 3000 $0 0 Jan-90 Jan-97 Jan-04 Jan-11 0 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 Brent Crude Price Oil Price Trendline Food Price Index Food Price TrendlineNet Global Food Production Index Number (2004-2006 = 100)Total World Primary Energy Consumption (million tons of oil equivalent) 34
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Food - Peak Fish Chilean Seabass Capture Has Collapsed Atlantic Cod Capture Has Collapsed 50,0003,000,0002,250,000 37,5001,500,000 25,000 750,000 12,500 0 0 1950 1959 1968 1977 1986 1995 2004 1975 1980 1985 1990 1995 2000 2005 2010 Atlantic Cod Capture (t) Chilean Seabass (Patagonian Toothfish) Capture (t) King Crab Capture Has Collapsed Global Shrimp & Prawn Capture Peaked in 2003 150,000 4,000,000 112,500 3,000,000 75,000 2,000,000 37,500 1,000,000 0 0 1950 1959 1968 1977 1986 1995 2004 1950 1959 1968 1977 1986 1995 2004 King Crab Capture (t) Global Shrimp & Prawn Capture (t) 35
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Peak Food Increasing&World& Popula7on&&&Increasing& Peak  Soil Increasing& PerECapital&Resource& Water& Consump7on Demand Peak&Oil• It  takes  between   Aquifer& Deple7on 200  and  1000  years   Higher&Electricity& Demand Higher&Fuel& Prices Peak&Gas Peak&Coal Climate& Change or  more  to  create   Increasing& More& Glaciers&and& Biofuel& More& just  1  inch  of   Produc7on& (Food&v&Fuel) Severe& Weather Snowcaps& Mel7ng Draughts topsoil Higher&Plas7cs& Prices Higher&Electricity& More& Floods&in& Some& Increasing&Water& Scarcity&In&Some& Soil& Prices Deple7on Regions Regions• Worldwide,  soil  is   Higher&Pes7cides& Prices being  eroded  away   Higher&Fertalizer& Prices More&Crop&Losses 10  to  40  (mes   Higher&Food& Lower&Food& Higher&Produc7on&&& faster  than  it  is   Demand Supply Transporta7on&Costs being  replenished Higher&Food& Prices 36
  • Intro Economics Current  State Subs(tu(on Peak  Everything Outcomes Mad Max or The Jetsons?• Renewable  Energy  Tehno-­‐Utopia – Electric  Cars – High  Speed  Trains – Wind  &  Solar• Collapse  Dystopia – Food  Shortages – Economic  Depression – Resource  Wars 37
  • Introduc(on Economics Subs(tutes Effects Outcomes Or somewhere in the middle...• “In  our  view  global  oil  demand  peaks  in  2016,  with  oil  prices,   before  a  long,  tandem,  decline.” – Deutsche  Bank• Peak  Demand  &  Painful  Transi(on – Oil  Spikes  and  Recessions – Basic  Materials  Get  More  Expensive – Efficiency  Improvements – Electrifica(on  of  Transporta(on 38
  • Introduc(on Economics Subs(tutes Effects Outcomes What You Can Do• Home – Living  in  a  walkable  neighborhood• Transporta(on – Enjoy  cheap  interna(onal  travel  while  it  lasts – Buy  a  fuel-­‐efficient  car• Community – Join  a  local  sustainability  group• Poli(cs – Vote  for  people  who  understand  the  issue  and  are  proposing  sustainable   solu(ons• Career – Work  in  an  industry  that  will  benefit  from  peak  everything  (not  an  airline!)• Personal  Finance – Invest  for  Peak  Oil  (Buy  My  Book!!)  (wjm228@cornell.edu) 39