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Energy Myths

2 January 2013

Energy Myths

By Gwynne Dyer

Which of the following statements is true? The United States now has a 100-year supply of natural gas, thanks to the miracle of shale gas. By 2017 it will once again be the world’s biggest oil producer. By 2035 it will be entirely “energy-independent”, and free in particular from its reliance on Middle Eastern oil.

Unless you’ve been dead for the past couple of years, you’ve been hearing lots of enthusiastic forecasts like this, but not one of them is true. They are generally accompanied by sweeping predictions about geopolitics that are equally misleading, at least insofar as they depend on assumptions about cheap and plentiful supplies of shale gas and other forms of “unconventional” oil and gas.

For example, we are assured that the United States, no longer dependent on Arab oil, will break its habit of intervening militarily in the Middle East, since what happens there will no longer matter to Washington. But this new era of cheap and plentiful energy from fossil fuels will also result, alas, in sky-high greenhouse gas emissions and runaway global warming.

These statements are also untrue, at least in the formulation given above, since they are based on quite mistaken assumptions.

The original error, on which most of the others are based, is the belief that “fracking” – hydraulic fracturing of underground formations of shale rock to release the gas trapped within them – has fundamentally transformed the energy situation of the United States. Huge amounts are being invested in the newer shale plays like the Eagle Ford formation in Texas and the Marcellus in Pennsylvania, but the numbers just don’t add up.

Production of shale gas has soared in the United States (still the home to most shale plays) in the past ten years, but it is only compensating for the decline in conventional gas production in the same period. Moreover, while the operators’ calculations assume a forty-year productive lifetime for the average shale gas well, the real number is turning out to be around five to seven years.

That means that in the older shale plays they have to drill like crazy just to maintain current production – and since drilling is very expensive, they aren’t making a profit. As Exxon CEO Rex Tillerson told a private meeting four months ago: “We’re making no money. It’s all in the red.”

They are hoping to make a profit, of course, once the gas price recovers from the ridiculous level of $2 per million BTU that it fell to in 2009, when a great many people believed this really was a miracle. $4 per million BTU would do it for most operators, and even the highest-cost ones would be making a profit at $7. But it’s clear that shale gas is no miracle that will provide ultra-cheap fossil fuel for the next 100 years.

In that case, the prediction that the United States will be the world’s biggest oil producer by 2017 is nonsense. Even on an ultra-optimistic estimate of how much “unconventional oil” it can eventually get out of the shale formations, it will still be importing a large proportion of its oil in 2035.

At the peak of U.S. oil production, in 1970, it produced 10.6 million barrels per day. It currently produces 9.6 million barrels per day, and consumes 21 million bpd. It is preposterous to argue that it can close that gap by coming up with another 11 million bpd of unconventional oil at an economically viable price.

“Energy independence”, if it ever comes to the United States, is likelier to come from a combination of conservation measures (like President Obama’s regulation that will almost double the fuel efficiency of American-built cars by 2016) and an increased emphasis on renewables (wind, solar, etc.).

And the whole Middle Eastern business is a red herring, because the United States does not depend heavily on Middle Eastern oil. Most US oil imports come from the Western hemisphere (Canada, Mexico, Venezuela) or from Africa (Nigeria, Algeria, Angola). Only 15 percent of its oil comes from Saudi Arabia, Iraq and Kuwait, and virtually none from anywhere else in the Gulf. Whatever America’s various wars in the region may have been about, they were not about “security of oil supply.”

Which leaves the business about shale gas and oil pushing the world’s greenhouse gas emissions over the top. They can’t do that, because we are ALREADY over the top. We need only continue on our present course, without any growth in “unconventional” oil and gas production, and we will be irrevocably committed to 2 degrees C of warming (3.5 degrees F) within ten years. Within 25 years we will be committed to +4 degrees C (7 degrees F).

So why are we fed a daily diet of misinformation about energy in general, and shale gas in particular? Because a lot of people have something to sell.

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To shorten to 725 words, omit paragraphs 10 and 11. (“At the peak…solar, etc.”)

 

 

The Christian Threat

27 July 2011

The Christian Threat

By Gwynne Dyer

Three pieces about Muslims in the same paper on the same day (The Independent, 25 July). The first is a local colour piece about how there are a lot more Middle Eastern tourists in London this summer. Why? Because France has banned the “Islamic” veil (or the Babylonian/Roman/Byzantine/Islamic veil, if you want to be precise) that covers the face. So the high-spending female shoppers from the Gulf aren’t going to Paris any more.

So many of them are going to London instead that big London shops like Selfridges and Liberty are reporting a 40-45 percent in international visitors compared to last year. And since Middle Eastern shoppers spend about fifteen times as much as your average British shopper, they are more than welcome even if many of them look a little weird to the average British eye.

Two pages on, a story about how rickets, a bone disease that causes stunted growth and bow legs in children, is making a comeback in Britain. It’s caused by a deficiency of vitamin D, which is produced by sunlight acting on the skin. And it’s Muslims (British Muslims this time), who keep their women indoors or make them cover every bit of skin when they go out, who are the main victims of this disease.

The researcher didn’t actually say that, of course. She said: “You get women living in certain communities that perhaps don’t go out much because of religious, cultural traditions. They’re covered up when they do. They don’t get enough access to sunlight, so they get vitamin D deficient…So (their children will) be presenting with rickets at around 18 months.”

Fair comment, but it’s striking that nowhere in that story does the word “Muslim” appear. It didn’t appear in the first story either. Everybody knows that both stories are about Muslims, but the galumphing etiquette that governs this discourse means that you mustn’t actually say so. It’s a well-meaning but idiotic attempt to compensate for the vicious anti-Muslim rants that you’ll see every day in other parts of the Western media.

And finally, on the letters page, an angry complaint by a British Muslim about the way that Western media jumped to the instant conclusion that the hideous slaughter in Norway was the work of Muslim fanatics. “Now that the architect of the Norwegian massacre turns out to be a blue-eyed, blonde, white, Christian, right-wing fundamentalist,” inquired Dr Shazad Amin, “where have all the so-called experts on “Islamic terrorism” suddenly gone?”

“I look forward to now seeing an equally vigorous explanation of how Norway was “always a key target” for right-wing neo-Nazi groups, supported by a plethora of experts on “Christian terrorism” to explain the theological basis for these attacks.”

If you hold your breath until that happens in the mainstream Western media, you will turn an attractive shade of blue, but we could try to apply the principle here.

Just as Muslims living in northerly climes with weak sunlight suffer rickets because of their clothing preferences, for example, so “Christians” living in countries with strong sunshine suffer very high rates of skin cancer because of their custom of wearing as little clothing as possible.

That is not really accurate, of course, because a majority of the world’s Christians are not white. What’s actually being observed is that people of European descent (most of whom are at least “culturally” Christian) get skin cancer a lot if they live in countries like Australia, South Africa and Argentina.

The fully veiled women shoppers in London are not just generic “Muslims”, either. They are almost all women from the Arabic-speaking countries of the Gulf, home to only a quarter of the world’s Arabs and only about 3 percent of the world’s Muslims.

But this is really just quibbling. The real question is: what can be done about the obsession with “Islamic terrorism” in the Western media, to the virtual exclusion of other kinds of terrorism. It is so strong that even after Anders Behring Breivik claimed responsibility for the Norwegian horrors and explained his (right-wing, Christian fundamentalist) motives, internet posts continued to argue that he was just a tool in the hands of Muslim extremists.

It’s the “hidden hand” theory of politics, and its adherents generally proceed by the logical process that the lawyers refer to as “cui bono”: who benefits from this action? It’s hardly an infallible indicator of who is responsible, because you have to allow for the crazies, and also for those who are miscalculating where their interests really lie. Nevertheless, it’s the methodology that the conspiracy theorists prefer.

So, then, who benefited from Breivik’s actions? Obviously he believed that it would serve his own delusional ideology (which he elucidated in a 1,500-page internet post), but who was really behind it? I’m drifting towards paranoia, I know, but stay with me.

The week before the Norwegian tragedy saw a deluge of revelations of criminality and a firestorm of media criticism about the conduct of Rupert Murdoch’s media empire. Suddenly, all the media attention has turned to Norway and terrorism, and the Murdochs are off the agenda.

I’m not going to say anything that might get me sued, but if you like a really big conspiracy theory….

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To shorten to 725 words, omit paragraphs 4, 10 and 11. (“The researcher…months”; and “That…Muslims”)

Arab Revolutions, China and Oil

25 February 2011

Arab Revolutions, China and Oil

by Gwynne Dyer

Muammar Gaddafi’s speeches grow ever more delusional: last Thursday he accused al-Qaeda of putting hallucinogenic pills into the coffee of unsuspecting Libyan 17-year-olds in order to get them to attack the regime. But he also said something important. Defending his massacres of Libyan protesters, he pointed to the example of China, arguing that “the integrity of China was more important than [the people] on Tienanmen Square.”

The Chinese regime will not be grateful to him for making that comparison, but it is quite accurate. Gaddafi, like the Chinese Communist Party, claims that there are only two choices: his own absolute power, or chaos, civil war, and national disintegration. The “integrity of Libya” is allegedly at stake. Also like the Chinese ruling party, he is willing to kill hundreds or even thousands of his own fellow-citizens in order to maintain his rule.

Ruthlessness will not save Gaddafi now: he has already lost control of more than half the country, and the oil revenues that enable him to reward his allies and pay mercenaries will soon dry up. But ruthlessness certainly did save the Chinese Communist regime in 1989, when the army slaughtered between 300 and 3,000 young pro-democracy protesters in Beijing’s central square. Might it need to deploy such violence again in order to survive?

So far the current wave of revolutions has been an entirely Arab phenomenon, apart from some faint echoes in Iran, but the example of successful non-violent revolution can cross national and even cultural frontiers. It won’t matter that it’s a very long way from the Arab world to China if large numbers of young Chinese conclude that the same techniques could also work against their own local autocracy.

It is very unlikely that that sort of thing is brewing in China now. There were online calls for a “jasmine revolution” last week, but few people actually went out onto the streets of Chinese cities to protest, and those who did were swiftly overwhelmed by swarms of police. Even the word “jasmine” is now blocked in internet searches in China, and tranquillity has been restored.

The reality is that few Chinese under the age of 30 know much about the savage repression of 1989. Moreover, despite a thousand petty grievances against the arbitrariness and sheer lawlessness of state power in China, they are just not in a revolutionary mood – and they will not be so long as the goose keeps laying the golden eggs.

But what if the Chinese economic miracle stalled? Then the situation could change very fast, for the regime is not loved; it is merely tolerated so long as living standards go on rising quickly. And what could cause it to stall? Well, the economic side-effects of the current wave of revolutions in the Middle East might do the trick.

Sometimes, it really is all about oil. The last two times the world economy really took a nosedive, way beyond the normal, cyclical recessions, were both oil-related. In 1973, after the Arab-Israeli war of that year and the subsequent embargo on Arab oil exports, the oil price quadrupled. In 1979, when the Iranian revolution cut that country’s oil exports, the impact was almost as severe. So could it happen again?

Non-violent revolutions should not affect oil exports at all. Heavy fighting of the sort we are now seeing in Libya can damage oil-producing facilities and drive out foreign workers who are needed to run those facilities, but Libya is not a big enough producer to affect the global supply situation much by itself.

What drove the oil price up to $120 a barrel at one point last week (it later fell back to $110) was not the loss of Libyan production, but the fear that, as the contagion of revolution spreads, one or more of the major Middle Eastern oil exporters may fall into the same chaos. Then, the oil pundits predict, the price could hit $180 or even $220.

Never mind the direct impact of such an astronomical price on the Chinese economy (although China imports a lot of oil). Far worse for China would be the fact that the whole global economy would go into a period of hyper-inflation and steeply falling consumption, for China is now integrated into that economy.

So the Chinese goose stops laying its golden eggs, and young Chinese start looking around for someone to blame. They would, of course, blame the regime – and at that point, the Middle Eastern example of successful non-violent revolution becomes highly relevant.

Which is not to say that non-violent revolution is really possible in China. The Party has always been willing to kill its opponents, and there is no proof that it has changed, even though another generation has passed since 1989 and none of the original killers is still in office.

But the current generation of Chinese young people barely remember 1989. They would not be deterred by the memory of what happened to their predecessors.

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To shorten to 725 words, omit paragraphs 6, 13 and 14. (“The reality…eggs”; and “Which…predecessors”)

Gwynne Dyer’s latest book, “Climate Wars”, is distributed in most of the world by Oneworld.

Oil, CO2 and Undershirts

4 February 2011

Oil, CO2 and Undershirts

By Gwynne Dyer

There is an extraordinary disconnect between what the experts write about oil prices, and what is likely to happen out in the real world. The pundits inhabit an economist’s perfect dream-world, where oil prices respond to changes in supply and demand that are driven mainly by production costs and economic conditions. In the real world, it’s a lot more complex.

The question of price is back on the table, because oil just broke through the $100-per-barrel level for the second time in history. (The first time was July, 2008, when it briefly reached $147 per barrel before falling back to a low of $33 the following December.) But the experts have concluded that this time, cheap oil is never coming back.

A typical offering was a document published by the oil industry giant BP a couple of weeks ago. “BP Energy Outlook 2030″ forecast that fossil fuels – oil, gas and coal – will still account for 80 percent of primary energy worldwide in 2030.

Moreover, total world energy consumption will grow very fast. Demand in the developed countries will not grow by much, if at all, in the next twenty years, but it will rise by almost two-thirds in the larger economies of the developing world, notably China’s and India’s.

If 80 percent of the energy mix is still fossil fuels in twenty years’ time, then the amount that the world burns will have to rise, too. Oil currently accounts for 35 percent of primary energy in the world, and if that ratio persists then the we’re going to need a lot more of the stuff. That means the price will go up and stay up.

Finding new oil will get more expensive, for the cheap, “sweet” oil in easy-to-reach places was developed first. Most of the new oil will be found under the sea, or in the Arctic, or trapped in tar sands in Canada and Venezuela, or it will be “sour” oil with a high sulphur content. The price per barrel has to be high to make it worthwhile to develop those resources – but it WILL stay high, because the demand for oil is going to rise so steeply.

Or so it says in “BP Energy Outlook 2030.” Well, you didn’t expect an oil company to publish a report saying that demand for its product is going to dwindle and prices are going to fall, did you? But BP’s analysis leaves out politics, technology and even fashion.

The politics first. One major implication of a rising demand for oil is that the importance of Middle Eastern oil will grow, for this is the one place where relatively modest investments can increase production rapidly. However, the Middle East is unpredictable politically, and getting more so by the moment. The consumers hate uncertainty, and this gives them a strong incentive to move to alternative sources of energy.

Concerns about global warming are pushing them in the same direction. The key to stopping the warming is to cut the amount of fossil fuels we are burning, and ultimately to stop using them entirely.

Government programmes to do that already exist in most countries, and even in the United States, where Congress blocks direct action, the Obama administration has used the Environmental Protection Agency to raise the fuel efficiency standard for American-built vehicles to 35.5 miles per gallon by 2016. (The current average is 25 mpg.) That alone will result in a 29 percent cut in American oil usage.

Now the technology. The hunt for a substitute fuel for vehicles is already underway. ExxonMobil, for example, is investing $600 million in research into producing a cost-effective alternative from biomass – specifically, from algae that require no agricultural land and use only waste or salt water.

A rival process would combine hydrogen with carbon dioxide drawn directly from the air (by “artificial trees,” a technology that is developing very fast), to create an octane-type fuel for cars. Like its algae-based rival, this fuel would be carbon-neutral, and could be delivered through existing distribution systems and used in current vehicle engines. Either solution would be a real challenger to $100-per-barrel oil.

And finally, fashion. In the 1934 movie “It Happened One Night,” Clark Gable, the leading male movie idol of the day, undressed to get into bed with Claudette Colbert (they were married, of course), and under his shirt was…a bare chest! He wasn’t wearing an undershirt! Shock, horror – and then the treacherous thought: why ARE we all wearing undershirts? In less than a year, the market for undershirts collapsed.

So here we have a world where almost all the cars are oil-fuelled or at best “hybrid,” although electric-powered alternatives are beginning to appear on the market. The electrics are still not satisfactory for long-distance driving, but mass-produced cars burning carbon-neutral oil substitutes in internal combustion engines are probably only five to ten years away.

And in ten or fifteen years’ time, after we have had a couple of really big environmental disasters or a new oil embargo by Middle Eastern oil producers, might the motorised masses ask themselves: why ARE we all driving petroleum-fuelled cars? And act on their conclusions.

The BP study is a soothing bedtime story for worried oil industry execs. In the real world, the long-term future of oil prices may be down, not up.

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To shorten to 725 words, omit paragraphs 6 and 12. (“Finding…steeply”; and “A rival…oil”)

Gwynne Dyer’s latest book, “Climate Wars”, is distributed in most of the world by Oneworld.

NOTE: 25 mpg is 9.41 litres per 100 km (European) and 10.63 km/litre (Japan). 35.5 mpg is 6.63 litres per 100 km (European) and 15.1 km/litre (Japan).