Monday, December 14, 2009

Chart of the Day

The "peak oil" thesis remains popular among greens, though vigorously disputed. I'm not sufficiently skilled in petro-geology to be certain--but believe economics sufficiently accounts for shortages via the price mechanism. So we will "gradually will shift to whatever substitutes are cheaper at the time." Thus, as MaxedOutMama says, "[t]he peak oil thing never made any sense." Regardless of the volume of oil reserves.

The flip-side of that point is reflected in how we use fossil fuels. A fall-off in oil production could be offset by increased energy efficiency. Data from the Department of Energy's Energy Information Administration provides common-sense confirmation, as econ prof Mark Perry shows at Enterprise Blog:

source: Enterprise Blog via EIA data

Perry explains:
[T]he energy consumption required (measured in thousands of Btus) to produce a real dollar of output (Gross Domestic Product) fell to an all-time record low of 8.52 in 2008 (see chart above). Compared to 1970 when it took 18 Btus to produce a real dollar of GDP, today’s economy is more than twice as energy-efficient.
Indeed, in 2008, America consumed about the same amount of energy as 2000, yet upped output by nearly $2 trillion (in 2000 dollars).

Whether or not oil supply declines in the short term, economics and technology ensure the "pie" isn't fixed.

(via Carpe Diem)


Marc said...

Check out the theory of abiogenic oil.

Freeman Dyson thinks it's probably true. He wrote the forward to Thomas Gold's book, The Deep Hot Biosphere.

The guy who wrote this book also thinks it's true.

Custom Silicone Wristbands said...

There is a wealth of untapped resources at our disposal if we would just drill now and take every pre caution to do so in an environmental clean way. I never bought in to the whole global warming nonsense, however I do believe in leaving a clean or positive footprint.

Anonymous said...

In large part, this chart is the result of the deindustrialization of the US.

Think about how many aluminum smelters and steel plants have shut down - those metals are now largely imported.

Efficiency investments have had a role in response to higher energy prices but we must remember that capital for efficiency and cost of energy are in a balance in an equilibrium economy. Current political efforts try to make uneconomic efficiency gains by hiding the true costs in subsidies and tax breaks.

OBloodyHell said...

> In large part, this chart is the result of the deindustrialization of the US.

a) Crap. The industrial processes in question are substantially more effective than they were in the past. J-I-T alone has made massive improvements in efficiency, requiring far less start-stop in the whole process chain. In other words, prove this claim. It should be easy, as you should be able to show steep drops at certain points which correlate to industry flights from the country.

b) Even IF true? So what? People are using their minds more and their bodies less. How is this relevant to the fact that we are producing far more wealth now per unit of energy?

Carl said...

I haven't looked up the numbers for steel production in the U.S. yet, but -- in general -- OBH is right. The U.S. hasn't been de-industrialized, it's just become more efficient.

Anonymous said...

For steel there has been a major move from primary blast furnance production to scrap recovery. True, that is a form of efficiency.

US aluminum production is down to a third of former levels. Recycling is also up.

Such energy-intensive primary processes have moved overseas. Steel from Korea and alumium from Brazil. With a information based economcy, we can life off the accumlated fat of the land with top-off from foreigners.

OBloodyHell said...

> Steel from Korea and alumium from Brazil.

BOTH of which produce those things substantially more efficiently than they were produced five decades ago anywhere due to "information-based work" done here in the USA.

Your point...?

P.S., they could probably produce them more efficiently still but I'd lay odds that they accept some extra expense in order to improve pollution issues, something not done fifty years ago, and thus not a part of direct comparisons unless you explicitly compensate.

Not suggesting we don't want to do that, only noting that, if it's not apples-oranges, it's at least tangerines-oranges.