Download What is the energy

The Oil Crash:
why this crisis will
never end
Antonio Turiel
Institut de Ciències del Mar (CSIC)
&
Oil Crash Observatory
May 17, 2013
Oil Crash: Año 7
Summary
• Energy and economy
• Energy return on energy investment (EROEI)
• Peak Oil
• Status of energy sources
• The end of growth
• Conclusions
Energy and economy
What is the energy
Energy as the ability of doing work
How much energy is consumed nowadays in the world?
Some 570 Exajoules (!)
10.000
That is equivalent to an average power of 18 Tw (!)
That is, 2.500 w per person in the planet
The growth of
GDP is linked
with the growth
of energy
consumption
Energy Return on Energy Investment
(EROEI)
To obtain energy some energy needs to be invested
EROEI = Produced energy/consumed energy
If EROEI<1 we have not an energy source
If 1<EROEI<10 the energy source may be not profitable
Exemple: EROEI=2, lifespan: 30 years  return: 2,3% annual
Historical societies have average EROEIs of about 10!!
The EROEI governs production rate in oil fields
Peak oil
Mineral resources cannot be extracted at a constant rate,
but according to a production curve.
People tend to think that
extracting oil is this...
... But in fact it is
rather like that.
Hubbert’s curve
By the 50’s Marion King Hubbert modelled
with good accuracy the production curve for
the oil extracted in wells, fields, regions...
His model is based on two basic hypothesis:
1. The probability of new findings depends on the
amount of resources still to find
2. Found resources are always exploited at
maximum, constant efficiency
The result is a logistic curve:
Reserves: Q(t)=Qmax /(1+aebt)
Production: P(t)=-Q’(t)
a: Probability ratio
b: Extraction efficiency
Example: Fitting Norwegian oil
production
(Source: Energy Bulletin)
The fatal consequences of the curve cannot be avoided
(fast increase at the beginning, fast decline at the end)
If efficiency is improved, both increase and decline accelerate
If efficiency is lowered, a plateau may result but the
production is also lower
The derivation includes the resources yet to be discovered;
a change in behaviour can only happen if different resources
are included
Oil
Peak Oil (i.e, maximum extraction rate) is an
observed fact, not a “theory”
November 9, 2010: IEA recognises for the first time that Peak
Crude Oil took place on 2006
Status of all non-renewable energy sources
Peak Oil:
Peak all non-renewable energy:
2005 (crude)
2015 (total)
33,1% PE
2018
Peak Coal: before 2020
30,3% PE
Peak Gas:
Those sources represent
92%
before 2020
23,7% PE
of all primary energy
Peak uranium: before 2020
4,9% PE
Status of all renewable energy sources
• Hydraulics: Widely exploited, scarce additional
potential in Europe (6,4% PE)
• Wind: Limited maximum potential (1Tw),
dependence on oil (1% PE)
• Photovoltaic: Low energy return (TRE2), low
potential (4,5Tw), dependence on rare earths
• Concentrated Solar Power: Good theoretical
return, scarcely exploited
• Others (geothermal, tidal power, wave power,
biomass): very limited potential
The end of growth
Spain is in an energy agony
Total energy
Oil energy
Classical analysis states that consumption drop of
energy is the result of the economic crisis
But since 2005 world crude oil production has become very
inelastic
(Murray & King, Nature 48, 433-435 (2012))
As oil production becomes more and more scarce, price
becomes more and more volatile and sometimes it skyrockets
Situación
actual
Pico histórico:
Julio de 2008,
147$/barril
Source: James D. Hamilton. Causes and Consequences of the Oil Shock of
2007-08. Brookings papers on economic activity (2009))
Oil production plateau is already causing the Oil Crash in OECD
(Source: Stuart Staninford, “US Economic Recovery in the Era of Inelastic Oil”. Early
Warning, Nov. 23, 2009)
Novembre 16, 2012: IEA recognises that in fact crude oil
production is already falling
Gross
Net energy
energy
(realistic scenario)
The Oil Crash: El Ocaso del Pétróleo
(http://crashoil.blogspot.com.es/2012/11/el-ocaso-del-petroleo.html)
As a matter of fact,
everything peaks
Peak gold: 2000
Peak copper: 2018
Price evolution 1992-2012
(ref. 2005, source; FMI )
Copper, Aluminium, Iron,
Tin, Níckel, Zinc, Lead and
Uranium
Cereals, Vegetal Oil
Vegetables, Meat, Fish,
Sugar, Bananas and
Oranges
Wood, Cotton, Wool,
Rubber and Leather
Oil (Crude), Natural Gas
and Coal
The unavoidable decrease of our energy consumption push
our econony into a forced, permanent decrease.
The most serious problem is debt: without growth debt
cannot be repayed
All Western countries will fail to service their debts and
default at some moment  historical crisis.
The attempt to pay the debt may lead to a massive
liquidation of assets without improving the debt-to-GDP ratio
(catabolic collapse)
Conclusions
 Oil production is stagnant since 2005. And that is just the
herald of the peaks of natural gas, coal and uranium.
 Even worse, our oil consumption already falls at a 3%
annual rate due to the pressure by emerging economies.
 The scarcity of prime matters and of oil makes sustained
economic growth impossible.
 With our economic system, no growth implies entering in
an economic destruction spiral (catabolic collapse)
 There is no alternative to fossil fuels and uranium;
renewable sources are short of scale, materials, time and
capital.
Conclusions
 What can and shall we do about this situation?
- To decrease our individual exposure
- To reorientate, if required, our career or job, adquiring
new skills
- To help the closest people, warning them about the
problem and settling mutual support communities
- To influence the execution of sustainable policies
- To educate citizenship, especially the youngest ones