The Oil Drum: Canada

The purpose of the World Energy Outlook demand forecast is to show future energy market trends assuming no new government intervention takes place. This is a useful exercise because it tells governments what they need to do now to prevent the realization of an undesired scenario presented by IEA. Such an exercise is useful only if the underlying assumptions sufficiently resemble reality. If not, politicians can be lulled into complacency and/or issue the wrong type of policy response, resulting in disastrous consequences.

In this post I review the demand model of the World Energy Model (WEM) used in IEA's World Energy Outlook (WEO) 2008. My analysis indicates that the model has major deficiencies of a number of types. These include treating economic growth as an exogenous variable, when it is really depends on other variables, including the amount of fossil fuels available; inadequate analysis of the speed and price at which low grade fuels can be produced; and inadequate review of model outcomes compared to real-world data. Because of these and other issues, in my view, the model is not serving its intended purpose.

Figure 1 - World primary energy demand by fuel in the reference scenario. Figure taken from the World Energy Outlook 2008 report page 80.

It's been a while since I did a Countdown diary - no wonder, given that oil is now below $60, ie at the same level as when I started the initial "Countdown to $100 oil" series back in 2005...

While the $200 target looks to be some ways off right now, given the expectations of a massive global downturn, the mechanism that has been pushing prices down is the same one that had been pushing prices up in the first part of the year. As I explained in this recent opus of the series: it's the marginal cost of demand destruction that matters, rather than the marginal cost of production. Demand was driving prices up when it was strong, and it is now driving prices down just as brutally by crumbling just as spectacularly (whether directly, finally, because of high prices, or indirectly via the economic crunch).

But we now, unexpectedly, have a strong "buy" signal again: an article by CERA's Daniel Yergin telling us that current prices are justified.

The long forgotten 'oil crisis' of just a few months ago has been replaced by a full blown 'credit crisis' - related events that represent the unravelling of half a century of unsustainable trends in oil consumption and debt. These two ingredients have been used in a special 'compound growth formula' to finance the construction of suburbia and fuel the (un)happy residents on their long journey to work and home again via the shopping mall, so they could spend more than their earnings on stuff to put beside the TV and inside the microwave oven.

According to the BBC, the UK government has today given the go-ahead for a major expansion at Stansted airport: "Airport owner BAA wants to increase passenger numbers from 25 million to 35 million a year and flights leaving the airport from 241,000 to 264,000 a year".

It is easy, far too easy, for the government to ignore Peak Oil, and the issue that almost everyone is familiar with, global warming / climate change, but how can it ignore the current meltdown in the financial markets and the grim forecasts for the UK economy?

How can we cut our energy use for commuting? What methods are working for you? What methods make most sense in our current credit environment? This is mostly an open thread, to give people an opportunity to talk about what is and isn't working for them. If the economy is sputtering, peak oil is around the corner, and hurricane related shortages are becoming more common, these methods are going to more and more important in the days ahead.

Some ideas that have been suggested include:

1. More work at home plans, possibly a few days a week.

I am writing this article from Atlanta, one of the places hardest hit by gasoline shortages. A person can drive for miles without finding an open gas station.

One of the major reasons for gas shortages is that fact that inventories were not very high going into the hurricanes. Then when not one, but two, hurricanes hit, inventories dropped to the level where there wasn't enough to go around. (In fact, the shortages started even before the second hurricane hit.) How could this happen? Isn't there anyone who cares about gasoline inventories?

Figure 1. US Gasoline Inventories, Based on US Energy Information Administration Data

The challenge set by Ford Global Technologies is to design a Model-T for the 21st Century - an inexpensive, innovative and sustainable car. Deakin University is the only Australian university and one of only five worldwide invited to participate in the Challenge, part of the celebrations for the 100th anniversary of the fabled Model T; the car that changed the 20th Century.

The New York Times recently had an editorial on Samsung's "Corn Phone", which is being heavily promoted as environmentally friendly as the casing is made from bioplastic. Somewhat to my surprise, they point out that it is neither - firstly because the bioplastic is made from corn (and is thus contributing to the problems that corn based ethanol is causing) and secondly because phones have become nearly throw away items that are rarely recycled.

The electronics industry has been a major polluter, from the manufacturing end to the landfill. The dizzying pace at which consumer electronics become obsolete (What, you're still using that old phone?) compounds the problem. And increasingly rich countries are offloading the disposing, and often the incinerating, of phones and computers to poorer countries.

Unfortunately Samsung's new cellphone relies on a flawed equation: corn equals green. It is really time to throw out this formula for good. Bioplastic derived from corn requires special handling in recycling, and the difficulty of those processes makes them energy inefficient. Bioplastic also creates another market for corn, a much smaller market than the ethanol market, but growing nonetheless. New industrial demands for corn are driving up world food prices and are increasing the pressure to convert more nonagricultural land to corn production.

The truly green solution for electronics makers is to close the loop between manufacturing and recycling: reusing the plastics we so quickly and happily toss away to make new cellphones.

While Samsung's phone doesn't seem to have passed the "greenwash" test, peak oil poses a problem for plastic production for which bioplastic could be one potential solution, so in this post I'll have a look at what is happening in the industry and how our desire for plastics could perhaps be satisfied in a post oil world.

One of the classic ecological modeling problems is the oscillating populations of predators and their prey in an ecosystem--as prey population rises, predator population follows suit until prey population begins to fall off, resulting in a subsequent drop in predator population (illustrated below). The same dynamic also applies, to some degree, to the relationship between oil price (prey) and marginal production/demand destruction/energy policy (predator). This post will explore that relationship and its ability to help us avoid poor energy policy choices.

Have you ever stood at the bus stop watching hundreds of cars go by and wondered just how many of those cars are headed to the same place you want to go? Wouldn't it be great if you could just stick out your thumb and get a quick ride rather than waiting 10 minutes for the old bus?