The Ascent of Middle East Food and Energy Demand
Posted by Gail the Actuary on August 17, 2010 - 10:35am
This is a guest post by Gregor MacDonald. Gregor is an oil analyst and energy sector investor, who, in his words, "also focuses on the coming transition to alternatives". This post was previously published on Gregor.us.
At the EIA’s International Energy Outlook (IEO) presentation this May the issue of future oil exports from OPEC nations came up, and in an interesting way. Readers may be familiar with the phenomenon of declining net exports, from major oil producing nations, as a result of internal demand from growing, domestic populations. The phenomenon was modelled last decade by Jeffrey Brown and Samuel Foucher. Their Export-Land Model showed that the rate of decline from oil exporters can become quite accelerated. While that may seem obvious, it was a point worth making last decade when it was widely presumed that gross production from large oil producing nations was largely available for export. The tipping, of both the UK and Indonesia, from net oil exporters to net oil importers should have put an end to such a presumption. More importantly, the rise of domestic oil consumption in Saudi Arabia was also a warning. Saudi oil exports have declined now for five years.
Given that Saudi Arabia’s exports have already been in decline for some time, it was surprising to hear EIA Deputy Administrator Howard Gruenspecht not only fail to acknowledge that fact, but forecast a rather sanguine outlook on future OPEC export supply in the IEO May press conference. It is particularly noteworthy that he gave such an empty and meaningless answer to the questioner, James Schlesinger former Energy Secretary under Carter, who made a point of probing in this exact area. | see: dialogue starting after the 37:00 minute mark of Video: International Energy Outlook 2010.
Secretary Schlesinger: …we see the growth of demand within the OPEC countries, domestic demand, and some of the projections show internal demand in Saudi Arabia rising to 8-9 million barrels a day as opposed to your top projection of 15 million barrels per day…similarly with other OPEC nations …the consequences being less oil available for export to the international market. Have you factored that into your projections, and what might the implications be?
Howard Gruenspecht: …we think that in the OPEC region, there will be an interest in substituting natural gas for the growth in domestic oil demand in the mid-east region, which does tend to free up oil for the world market.
And there you have it. An answer that only a post-war economist could give: soaring domestic demand for oil in OPEC nations, already cutting into exports, will dial back in the years ahead and convert to natural gas–in order to free up oil for exports…to us here in the West! I had to replay the exchange several times, to get the full measure of Greunspecht’s ridiculous answer. Readers are encouraged to listen to the exchange to get a full measure of the cavalier manner in which Gruensphect, who is clearly out of his depth, answered Schlesinger’s other questions.
While the EIA’s future projections remain a largely theatrical exercise, and are demonstrably unserious, there is another critical resource balance coming into play between Middle East states and the rest of the world in the area of food, and agricultural land. As you might imagine, arable land in the Middle East is not exactly found in an optimal ratio to those growing populations. And this is why Kuwait, Qatar, Bahrain, and Saudi investors have gone into Africa. Below is a very good graphic published last year by the Economist Magzine, which accompanied their article: Outsourcing’s Third Wave.
According to the Arab Organization for Agricultural Development (AOAD), the Arab nations are suffering from a persistent shortage in all types of farm products and the gap has steadily worsened over the past two decades. Food imports into the Middle East have soared to new highs, and are now running above $25 billion a year on a net basis. There is a particular need, and shortage, of cereals and grains. Is it any wonder that central and eastern Africa has become a target for Middle East nations, looking to lease easily improved farmland?
While the EIA’s IEO 2010 correctly notes the trend to further world reliance on OPEC oil as Non-OPEC oil production growth stalls out, clearly the demographic trends as expressed by food demand are another way to see how wrong the EIA’s forecast has become, about future oil available for export. Also according to the AOAD: The Arab population was estimated at nearly 351 million at the end of 2009. Since 1990, it has grown by nearly 2.34 per cent annually compared with global growth of about 1.16 per cent.
Accordingly, not only will Middle East nations need more of their own fossil fuels to fund domestic construction, but the improvement of leased, foreign farmland to match their above trend population growth will also require fossil fuels. To the declining oil export model of Brown and Foucher, it appears we will need a new model of Increasing Agricultural Imports to the Middle East. As for the EIA’s call that these nations will somehow level off their demand for oil, and switch to natural gas? That makes no sense at all. On a number of levels. The Middle East is not going to voluntarily transition away from oil, even marginally. And, the natural gas that our flaky EIA in Washington imagines will be used to “substitute for oil” will instead be used for new power generation and to make fertilizer.
-Gregor
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They'll have to crash their economy or sharply reduce consumption of oil (which will probably happen as the markets are once again showing weakness). What do they manufacture that they can export to the rest of the world? Nothing. Their main export is oil and gas. If they use it all up, according to the ELM model, how are they going to be able to import all the food and fancy gadgets, cars and widgets from the rest of the world? It's a catch 22 because they need the oil but they also need the cash earnings to procure imports to sustain themselves.
Rock, meet hard place.
I've suggested that we will probably see Phase One and Phase Two net export declines.
In Phase One, the cash flow from export sales will generally increase, even as the volume of oil exports declines, because of generally rising oil prices. Note that average annual US oil prices, at least in nominal dollar terms, have exceeded the $57 level that we saw in 2005 for four years and for 2010 to date, and the average price of oil through July, 2010 ($78) exceeds all prior annual oil prices, except for 2008, when we averaged $100.
In Phase Two, the cash flow from export sales will generally decline, as the volume of oil exports continues to decline, because generally rising oil prices can't offset the decline in the volume of net oil exports.
In any case, I suspect that as time goes on we will see more of a pattern of net food exporters trading with net oil exporters, but of course Saudi Arabia has been aggressively buying up overseas farmland.
Jeffrey, Kudos to you and Sam for bringing this enlightenment forward over the past few years. I must admit, the export land model is easily forgotten when looking forward. I don't know why that is but I even do it myself. Perhaps it is just too distressing to dwell on. Interesting times between now and 2015.
I would be tempted to nominate us for an award, if such a thing existed, The Most Obvious Mathematical Observation That is Also The Most Overlooked Factor That Will Affect the World Economy in Future Years.
I am somewhat surprised that anyone wants us to discuss Net Oil Exports, because the implications are so dire. The only optimistic note I can sound is a plug for The Man With A Plan, Alan Drake. Alan has basically pointed out how we used to have mass transit, with minimal oil input, in prior decades.
But you gotta look on the bright side; it would appear that the US is well on its way toward freedom from our dependence on foreign sources of oil.
Jeff,
I agree... the issue of export decline is more obvious and more urgent than the larger (but intimately related) issue of PO.
What is equally obvious, urgent and ignored is the issue of planning for liquid fuel emergencies.
I continue to search for evidence of analysis, interest, or even awareness here in Canada (at Public Safety Canada and other ministries) and in the USA (at DHS and its training facilities, war colleges, emergency planning organizations) but continue to find almost nothing regarding planning for or administering a liquid fuel emergency.
What we do have are plans from several decades ago.
Canada's federal plan is a piece-meal affair which our lead ministry (Natural Resources Canada) itself concedes has some fundamental inadequacies.
Our feds assign the lead role during an emergency to the provinces, whose plans are minimal (the plan for Ontario is still stuck at the draft stage, is 20 pages long but 16 of them are appendices).
In the USA, you have the Standby Gasoline Rationing Plan (1981) which at least is a single integrated document.
But as the GAO repeatedly stated over two decades, the federal plan remains woefully inadequate.
I believe that the current strategy in both our countries is essentially no response at all: government will get out of the way, not interfere with pricing, and let "the marketplace" do the rationing.
Returning to the matter of food, family farmers in both our countries will be among the first casualties of such rationing-by-price.
Given what emergency prices will do to food imports, to have our own farmers doing less when they should be producing more, is a recipe for disaster on the home front.
Our agriculture departments are not looking at this issue, either, nor are our ag universities.
Interesting comments Rick M - especially given your farming livelihood, (lower thread).
Here in UK we seem entirely fixated on biomass and biofuels. This includes agri researchers and policy and farming lobbies. (Meanwhile there is much planning of private investment in infra structure to import biofuels and biomass.)
The last government did get a nasty fright not long back when a bunch of oil truckers and farmers blockaded the oil refineries. Food distribution suddenly looked like an acute emergency. An old story, but back in 1936 UK did start to prepare for a food emergency; not a moment too soon given what followed within 4 years.
Thanks for your interest, Phil
Your Soil Association is doing progressive work on PO:
http://www.soilassociation.org/Search/tabid/38/Default.aspx?cx=009018360...
Getting back to the interactions of energy & fuel, an excellent study was done a few years ago by Dr. Helen Peck at Cranfield (which is connected to Defence Academy, a research branch of your Ministry of Defence):
http://www.cranfield.ac.uk/cds/departments/dassr/pdfs/defra%20final%20re...
Her study of food supply chain vulnerabilities examined the lessons learned from the Sept 2000 experience that you referred to (p. 89-95, etc).
Other analysts have pointed out that a fuel crisis can quickly become a food crisis as well.
I am perturbed by the lack of attention that these issues have received here in North America, with our enormous distances (relative to UK and mainland Europe).
We are highly vulnerable, but seem oblivious to such possibilities.
So Canada being a net food exporter and a net oil exporter is in good shape?
I always pictured Canada's issues to be the United States and your 'long into the year' tax freedom day. Of course, those things can be positives and strength's too. Personally, I love Canada and consider them brothers. Funny thing is, I feel the same way about the Mexicans. Different issues in dealing with the people and governments of each, but NAFTA was a good idea, if not executed well. Personally, I would love to see open borders, but much would have to change first. Maybe it is inevitable, or maybe war is. Time will tell.
Canada is blessed in a number of ways; relatively small population, abundant natural resources - including oil and gas, well-educated citizens, political stability, etc. They are also likely to initially benefit from the early stages of global climate change. If I were a bit younger I would definitely consider emigrating to Canada. As a matter of fact, I almost did when offered a teaching job in Canada many years ago.
You're probably aware of this, but it bears mentioning: Canada's not (quite) utopia. Our current government seems to be taking many pages out of the neocon book. Since it's a minority government it does not always succeed, but it does try -- this means that we aren't doing many rational things to prepare for the future in much the same way that the US isn't.
In the modern high-energy-availability world, the place is very habitable. Without freely available, low cost energy, winters will be tough (not quite inhospitable, but tough). Our porous southern border is both a blessing and a curse. It gives us free access to a (so far) large and mostly-friendly market. It's also tied our economy closely to that southern neighbour.
All that said, I'd still rather be up here than south. It needs a bit of fixing up though.
Poly,
I would argue no, on both counts.
For most family farmers, net farm income is at record lows, Depression levels.
The main source of farm subsidies is farmers themselves... most farm households derive much/most of their household income from off-farm employment.
The supply-managed sectors do OK (dairy, chicken turkey & eggs).
I am typical of many Cdn farmers: pushing 60, dependent on off-farm income, with no-one in the next generation who is interested in farming.
Joke: Where's the best farmland in Canada?
Under the City of Toronto. (True, but certainly not funny).
We continue to lose much of our class 1 & 2 land....
As for oil & gas, we are post-peak in conventional sources of both.
There are major issues re tar sands: net energy profit, water (quality and supply), numerous environmental & human health concerns.
Like USA, we are banking on shale gas, but are closely watching the Marcellus water concerns.
Meanwhile, eastern Canada is still highly dependent on imports from overseas.
As export decline begins to pinch globally, there will certainly be increased pressure to supply eastern Canada from Alberta, which would put a dent in both our export capacity and US import supply.
The problem with middle east countries' arable land grab is that most countries where they are grabing land in are already heavily populated and hardly have enough arable land to support their existing population. As of now, with vast incomes and even vast wealth middle east countries can bribe politicians of poor countries that have arable land but these politicians are friends of none. They would not listen to any contract given their nature unless they are fed with fresh money. At phase 2, when incomes of middle east countries would finally decrease, the middle east countries would find it hard to keep feeding the politicans. At the same time, given general and long and deep recession / depression a revolution in those poor countries is very likely. Any new govt that come in power as result of such a revolution, be it revolutionary or counter-revolutionary is very likely to stop obeying any such contracts made by previous govts.
Whatever way its seen, middle east countries are in deep, deep trouble. With arable land there is some hope, without there is very little. The scale of problem is astronomical. Saudi arabia with 20 million residents and 15 million nationals can sustain perhaps only a 10% of that on its soil. It would not be a surprise to see vast numbers of arabs emigrating to countries like india, china, russia for labor jobs, but then these countries (with exclusion of russia) have enough of their own people and even in absence of automatic industries its hard to employ all these people (thats why a revolution is very likely).
The only chance arabs have is to get extremely friendly terms with russia. In russia only they can find a "living place".
I find it hard to believe that countries with arable land will actually honor whatever legal arrangements that have been made with middle-east countries. What will actually happen, I cannot predict. But I just have this feeling that long distance shipment of food won't be part of the future. Without oil things will become very hard.
If you think that the Russian and Ukrainians and so on are about to let millions of people from the Middle East to move there, you don't really understand their mentality. They will do everything possible, including war, to ensure that this does not happen.
If you think that the Arabs (an ambiguous word but I think you mean Saudis/Kuwaitis and so on) are about to start working on the land themselves then you don't know their mentality either. They are traders and pirates of the desert. For example, when Saddam Hussein wanted to increase agricultural production, he imported a vast number of Egyptian peasants - natural farmers.
Whichever way one looks at it, the Middle East is not the place to retire in.
I never heard about any arab pirating anytime in history upto current time and I did studied history in detail upto the events of current time.
The reason saudis and kuwaitis are weak in farming is because they live in deserts with very little (in case of kuwait none) oasis. Their traditional source of income was trading and since oil corrupted their working habits its hard to see time returning to that.
There are 20 arab countries. Syrians and egyptians are indeed good farmers, so do palestinians and iraqis.
Another consumer of natural gas in the ME oil producing countries is the growing petro chemical industry. When Saudi Arabia bought GE's plastics division (now called SABIC) their goal was to expand production by making plastics and other polymer products in new domestic plants. IIRC they have built or are building two large refineries that will use oil and natural gas for this purpose.
Saudi Arabia wants to be the worlds largest producer of oil, but also the manufacturer of end use products, many of which will go to China and other Asian countries. So as world demand for plastics and other polymers grows, it will be supplied by ME countries using more of their own fossil fuels, leaving less for export.
A Short Net Export Math Review
(1) Given a production decline in a (net) oil exporting country, the net export decline rate will tend to exceed the production decline rate (unless consumption falls at least at the same rate that production declines).
(2) The net export decline rate will tend to accelerate with time.
(3) The bulk of post-peak CNOE (Cumulative Net Oil Exports) are shipped early in the decline phase, i.e., the CNOE depletion rate tends to exceed the net export decline rate.
The three factors which determine the net export decline rate are: consumption as a percentage of production at final production peak, the rate of change in consumption and the rate of change in production.
The initial conditions for the "Export Land" decline were: Consumption = 50% production at final production peak; production rate of change of -5%/year and consumption rate of change of +2.5%/year. At the end of the third year of decline, the three year net export decline rate was 17%/year, while the post-peak CNOE decline rate was 31%/year, i.e., over the initial three year production decline, the "Net Export Fuel Tank" was depleted at the rate of 31%/year. In just three years, "Export Land" shipped 60% of all post-peak Cumulative Net Oil Exports.
When we summed the production, consumption and net export numbers for IUKE (Indonesia, UK, Egypt), which were collectively consuming around 50% of production at final peak, the net export decline rate and CNOE decline rate were similar to the ELM. In just three years, IUKE shipped 53% of all their post-peak combined Cumulative Net Oil Exports.
Sam's most optimistic outlook for the combined net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE is that their combined post-2005 "Net Export Fuel Tank" will be about 50% depleted by the end of 2013, three years from now (a post-2005 CNOE depletion rate of about 9%/year from 2005 to 2013).
Furthermore, at Chindia's current rate of increase in net oil imports, by 2020 their combined net oil imports will be equivalent to 100% of the combined projected net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE.
Thus, our forecast is that the US is well on its way to becoming free of its dependence on foreign sources of oil--just not in the way that most people anticipated.
It seems logical enough to assume that savvy businessmen such as the Saudis WOULD substitute cheap gas for expensive oil,and pocket the difference, if they COULD.
I mean, it's not as if the royal princes will have to PERSONALLY get thier hands dirty fitting pipe and drilling holes.
Since they haven't been making any apparent serious efforts to do so, the only likely conclusion I can come to is that the gas is not there in quantities sufficient to make the investment worth while, given the opportunity costs.
One thing that does seem worth discussion is the relative paucity of development of solar thermal and solar pv in the region;if this is economic anywhere, it would appear to be economic in saudi Arabia, given the opportunity to sell any oil saved.
So maybe the money doesn't add up;or maybe tptb are not interested in building infrastructure of this sort for now because they expect the price of the technology to come down soon;or maybe they are expecting to get the hell out of Dodge before it matters.
If any military types with recent experience in storing prepositioned diesel for long periods of time know of links detailing the way it is done, please post them, thanks in advance!
oldfarmermac -
Of the several possible reasons you offered for why the Saudis are not making significant investments in solar energy infrastructure I vote for 'they are expecting to get the hell out of Dodge before it matters'. I'm sure that the extended Saudi Royal family and their various cronies and functionaries are continuing to squirrel away many billion of dollars (or whatever currency or precious metal of their choice) into Swiss banks and various offshore dummy corporations in anticipation for when the shite really hits the fan.
The only reason they have stayed in power this long and have not been publicly beheaded is the tacit agreement with the US: you protect our collective arses, and we'll let you have favorable access to our oil. By the time the ordinary Saudi citizen is reduced to cooking with dried camel chips, these people and their families expect to be well ensconced in various well-protected villas in the better playgrounds of the world.
Come to think of it, this appears to be the general mindset of our current global oligarchy, including the people who run the show in the US: get your mega fortune, tuck it safely away, and heavily insulate yourselves so you can ride out the coming troubles and maybe step back in where you left off.
The rich, the royals, the democratic politicians cannot have separate peace while world collapse. Reasons are:
(1) The scale of problem. Its going to hit almost everywhere in world sooner or later. The only places left are such with no technology, infrastructure like deep african or amazon forests. Everywhere else there would be a collapse in economy, political revolutions, very likely civil wars. Unless they go underground and close all doors to surface with a kilometer thick layer of concrete they can't have peace.
(2) The number of humans. Its huge. Humans live at all livable place on the world. At most such places people live in such a vast number that they are near or passed long term carrying capacity. There is actually not much free, untouched place to go hide in.
(3) The integration of economies. Nothing in economy happens in isolation. Its not like a country fails and others continue to live happily. Chained together, if one fails all fails.
(4) Existing enemies. Some of them would be willing to search for them till the far end of world and dig deep to find their shelters.
In its entirety, the problem is perhaps a hundred times than the entire world war 2. Some nazi officials may be able to escape to south america and spent quiet lives there but this time, no.
I doubt the subset of the human race quoted above are (a) unaware and (b) unprepared.
Tend to agree with you, WfP.
Think 'Green Zones' and other such recent 'enclaves', (Baghdad, Kabul) as well as the old US Embassy in Saigon? Even the oligarchs in Russia might need to disguise themselves?
Mac I love your comments, but I think you can forget about Solar PV in the desert, it takes a hell of a long time to ramp it up. Take America for all of the hype that you read in the press only 0.1% of all electrical energy is generated by PV, if you double it every year you are only going to produce 1% after 4 years. America manages about 40% growth a year, looks great on paper but it is bugger all, do you think Saudi will do much better? I am certain they can if they invest vast amounts of that sovereign fund they have stashed away all over the world, but that would mean that they would not be able to support the Wahhabi cleric whom they depend on for power do you think that they would go along with, it if it meant that they could not build a triumphalist mosque at ground Zero. I am only a stupid Brit but it seem somebody has got to somebody when the top of the political feed chain supports it when the majority of the Americans obviously don't. I would also like to know where the money is going to come from to support a growing population, the demands of the Whahhbis and and transforming there economy to renewable s while rely on an economy that is based on a diminishing resource oil that is running out faster that people think.
Miner,
You make a good case;I don't think I can really tear it down , but I will throw a few rocks at it.
In the desert, the actual output of the solar pv and concentrating solar plants would be two or three times roughly what we could get on average in the states;they have the money, and can pay cash or trade oil; there will be no problems with an environmental impact statement or anything of that nature;they are already buying into or building manufacturing and processing infrastructure , at least petro infrastructure, tourist infrastructure, that sort of stuff.
So if solar has reached the point of truly being competitive in it's own right, it should be a good investment for them.Maybe it is simply still to expensive.
My personal opinion is that tptb in sand'noil country are planning on hanging on, and hoping to hang on, but with passports up to date,luggage prepositioned, and the phone numbers of thier overseas property managers and bankers on speed dial.
Maybe if the country were stable, the investment would make sense to them.
One thing I am sure of is that solar can be ramped up a hell of a lot faster than anybody except the eco/green cornucopians think it can,once it is ACTUALLY COMPETITIVE- at least in places where the necessary capital is available, where the climate is admirably suited to it, and where the decisions are made at the top with little lost motion.
Another possibility that needs consideration is that they actually believe that the oil will last "forever". That is certainly what they are saying in effect and how they are acting.
They may consider installation of solar panels in KSA and insult to that notion, effectively telling the rest of the world that even they do not trust the future of oil production (killing the golden goose)
Saudi & Kuwait are starting to heavily invest in nuclear fission power.
I have done a graph on Iran's crude production and consumption, using Dr. Bakhtiari's projections as an underlay.
Assuming a production decline of 700 Kb/d by 2015 (IEA Medium Term Oil Market Report)and continuing growth in consumption, oil exports from Iran will be half by 2015. As 50% of the budget depends on revenue from oil exports and current budget papers are based on $65 oil, Iran needs an oil price of $130 a barrel to balance their budget. More details are here:
3/7/2010
IEA: Iran's crude oil production to decline by 700 Kb/d by 2015
http://www.crudeoilpeak.com/?p=1669
I also repeat my link on Saudi Aramco's export peak in 2005:
31/7/2010
Saudi Aramco's crude oil exports peaked in 2005
http://www.crudeoilpeak.com/?p=1738
Food imports/exports
"In 2007-08, Australia exported $23 billion worth of food compared to food imports in that same year of $9 billion, despite the effects of drought. A substantial proportion of these food imports comprised beverages, including specialty branded spirits, and some highly processed foods that are not produced in Australia."
http://www.daff.gov.au/agriculture-food/food
That is also an area to be watched. I wonder how we can afford moving food around the world when oil production declines.
We can expect that food exporters will be able to make "food for oil" barter deals with ME countries. For example 1 ship load of wheat against 1 tanker load of oil. With global warming threatening wheat crops like this year in Russia it will be interesting to see how this pans out.
There is also a problem with food supplies in other Muslim countries outside the ME. I expect that these countries will get preferential oil supplies to maintain their food production. One example are tens of thousands of irrigation pumps in Bangladesh running on diesel.
Och that was nasty but very logical, now what happens when we come off the oil plateau which we seem to be bobbing along on, and supply cannot even satisfy the demand of the depressed economies?
HH The Emir Sheikh Rashid bin Saeed Al Maktoum ruled U.A.E. for 32 years
until his death (1912 - October 7, 1990).
Might give some indication.
Actually, Sheikh Rashid bin Saeed Al Maktoum was Vice-President of the UAE. He ruled Dubai and the President was Sheikh Zayed bin Sultan Al Nahyan who ruled Abu Dhabi - the much richer emirate.
When I was in the Emirates around 1976, I heard a good one about Sheikh Zaid. Apparently, some year earlier, when he had just hit the jackpot, he showed up at this bank, Barclays, and demanded to see his money. The British bank manager tried to explain how the banking system worked and Sheikh Zaid ordered that this man be publicly flogged for not being able to show him his money.
Obviously, the kids of Sheikh Zaid know more about finance than all of us put together.
It is not just Middle Eastern nations expecting to import food and energy vast quantities. I had a very odd feeling at a conference on climate change in the state capital of California, Sacramento.
CA currently has about 35-40 million citizens. It exports a lot of food, but don't expect it to do so going forward. You see, economists at the conference assured us the population would swell to perhaps 60-90 million by the end of the century (2100), while hydrologists told us very little water would be available for irrigation...or hydroelectric generation. Meanwhile, state fossil fuel reserves are in decline so we'll just have to keep importing more energy (please, oh please more hydro from Washington and Oregon) and food!
That's right. Don't expect CA to ship food around the world anymore. Like I said, not enough water AND where do you think all those new people will live? Right on top of the former farmland.
Here's the kicker...the public health impacts of 10s of millions of people living in the Central Valley as the temperatures rise are pretty dire (this was all discussed at the conference). So what do we do about it? MORE air conditioning.
In fact, if you do the math, CA would need as much electricity just for air conditioning in 2100 as it uses currently for EVERYTHING ELSE.
This is all on public record.
When I asked if it made more sense to treat population and consumption as a dependent variable rather than as a given in the models I got blank stares or brushed off as naive. As one UC Berkeley economist told us as he introduced his state econometric model--face it, we are going to grow the economy and population, so let's figure out how to do that with as little difficulty as possible.
One doesn't have to look far to see insanity. Your local planning commission is probably as nuts as the EIA.
California's population growth comes almost entirely from immigration. In some recent years, there has actually been a net decline in native-born population. Immigration could be controlled if we had the political will to do so.
As a part time planner at a local planning organization, I have to disagree with you, however anecdotal the examples may be.
Only two weeks ago, I had a fairly long conversation with my supervisor here about the 'Limits to Growth' concept. We both agree that, in all likelihood, the world's population is at or approaching overshoot. He even mentioned PO specifically as one limit on human population. I bring this up because my current assignment involves population projections for the area out to 2040. I don't see the area's population in 2040 being more than it is now (156k people), but that's not the answer the overseers want.
The (other) MPO in northern Delaware is very aware of the PO issue as well.
The state DOT planning office contains people who are very PO aware.
But as has been discussed many times on TOD, no on wants to talk about it.
I think the problem is not only don't they want to talk about Peak Oil, they don't want to do anything about it. And it becomes very difficult to find things to do about it, short of fewer people, and fewer farm animals and getting along with less and maybe growing food locally, with simple methods. We don't have good easy solutions. That is part of the problem.
People can't consider going back to technology we had 200 years ago. That might be a possibility--solutions before the age of fossil fuels might still work. Instead, we are focused on ever-increasing complexity.
Gail, you finished the second part of my post! I decided to cut it out because i thought my response was getting a bit long-winded.
A few thoughts to add (again, all anecdotal):
1 - About ever increasing complexity: the head of the DOT's planning department told me he thinks electric cars will 'solve the problem' of energy scarcity (which was how i posed the question). Not coincidentally, he has a background in economics, an MBA and is a political appointee. The folks in the planning department that are PO aware are not in chage...
2 - Not wanting to do anything about it: The few friends of mine that are actually aware of 'limits to growth' issues and I cannot even agree on solutions, and we agree that there IS a problem. When I suggest growing their own food and electrified (rail) systems, the response is often; we buy from the CSA and farmer's markets and light rail is too expensive.
At the risk of being too hard on those friends, I don't grow my own food, nor do i live independent of the oil-fueled system. The best I've managed so far is a veggie garden and living within walking distance of work and services. All of which are in some way depend on oil.
I have met plenty of aware folks like you working in the decision making system. However, you are a diamond in the rough. And if your beliefs aren't the majority all your decent planning work will just get buried and ignored.
Perhaps work on a "WTSHTF" planning document. Don't promote it much, but keep it on the shelf and update it every year. Won't need many updates till it may be very useful!
delaware:
It seems you are still in the "How can I make a difference?" stage.
Let me know when it passes, and we can discuss gold and strategic relocation.
Don't worry, I'm right there with you. I was (partly) joking with some folks about moving to north Ontario a few weeks ago...
My fiance has taken the bar in PA, and I'm trying to steer her towards working in the rural, north central area. With lots of valleys and plentiful rainfall, it should look like western NC in a few decades. Many of my friends (who thought I was joking about northern Canada) think I'm paranoid. I'm pretty sure I'm being prudent.
Why not they have an engineer in the planning department? A MBA getting optimistic about anything electrical without consulting an electrical engineer is like trying to be more royal than king, more wet than water, more dense than black-hole, more hard than diamond. Funny.
The MBA runs the planning department, the folks that take peak oil seriously are the engineers, though the two I am thinking of are a traffic engineer and a traffic software programmer. So the DelDOT planning department problem exemplifies the overall problem; the rank and file can see the problem coming, but the leadership dismisses it.
For americas there is something that can be done about the peak energy. America has very low population density, about 40 per sq km, with a very fertile land. Even traditional farming can support perhaps 600 million people in america. Same is the case in other americas with canada being the best place to live land availability wise.
For rest of the world, excluding ofcourse australia, russia and some parts of africa, there is nothing that can be done. Countries like india, china, pakistan, bangladesh, entire middle east, north africa, far east, japan, europe are like 10 to 20 times over populated as compared to long term capacity of land. Even things like enforcing one-child policy would take like 30 to 40 years before showing any results. The bad effects of peak energy are going to be as visible as sun at noon in 5 to 10 years from now. Planning about standard of living is an activity of past, today the planning must be done about food security.
We in Pakistan are not facing visible effects of peak energy. We are facing very visible effects of global warming and habitat destruction. We got unexpected once-in-a-century level of rains and since forests of mountains of north are already cut and sold such rains quickly becomes floods after causing a lots of land slides. The floods are so devastating that even in provincial capital peshawar people have to stay at tops of 12 ft roofs. In that province there was a rain of 1 m in just a few weeks. Altogether only a 8 to 10 percent of population is effected but the problem is that even they can't be settled. System is already working at full capacity and little is left to spare. Its hard to imagine that even in 21st century with satellites, jets and internet right here and now we have so little power to help any significant number of people.
Our grandfathers and great-grandfathers, that is 2, 3 generations up were indeed fooled by unsustainable abundance. They lived happy lives, gave birth to half a dozen kids each and by our time it was already a tight living with little flexibility.
I recommend anybody that think he / she has a solution to first understand the types of nutrients, how much (in grams, milli grams) needed per person per day, how much can be grown traditionally, modernly to see the scale of problem. Pharoahs' time egypt never had a population of more than 6 million and at problem times it reduce to 3 million, now its 60 million and growing. Indian subcontinent, a combination of today's india, pakistan, bangladesh, afghanistan, nepal, burma, never had a population of more than 100 million even in peak abundance time before 1800 A.D. Now its one and a half billion. Most of the forests are gone. Most of the wild life is gone. There is no free land available. Unlike pre 1800 A.D. era, we have to deal with climate change and bad effects of chemicals in soil.
A revolution and before that a major war is very likely.
Wisdom from Pakistan indeed...
DD
You mention "traditional farming" elsewhere as relying on rain rather than irrigation; in the US west of the Appalachians rain is either absent or too unreliable during the growing season for practical farming. Basically, everything is irrigation. And that also sets water as the basic limiting factor...without decreasing population greatly to free up more water for agriculture, we are pretty much maxed out on water use. Add to that climate change and the inevitable decline of the Oglalla reservoir (used for irrigation in the great plains), and long-term a population decline would be much easier to manage than an increase.
We'll need to return the Great Plains to the bison.
I though animal protein was a loser in the coming 'Road Warrior' world?
Like many others, I am saddened by events in Pakistan.
What you wrote about Egypt is perfectly correct. The population was 4 million until 1900. Cholera ensured that the survivors had a good standard of living in the 19th century.
The truly dreadful think about deforestation in hilly regions is that the rains remove the topsoil and wash it away with devastating consequences for agriculture. If you look at the history of much of the Mediterranean, that cycle occurred several times and each time the population was wiped out and after a century or so the forests returned only to be cut down once more.
See Cedars of Lebanon
I would suggest there's probably a psychological term for what you are referring to above. That once confronted with an overwhelmingly negative alternative, the lizard brain i.e. instinct to survive just simply decides that of the two scenarios, the better of the two must be true, and the other must be incorrect for some reason, even if that reason is difficult to put into logical terms.
Globalization koolaid= third world standard of living before too long for many tens of millions more people .
What can the English expect to manufacture cheaper than the Koreans?
What are the millions of people in the US who used to manufacture clothing and furniture supposed to do when the local fast food and convenience store industries collapse?
Unless there is a techno miracle of the extremely lucky sort,the larger part of the population in sandn'oil country is going to starve within fifty years or so-no country will allow tens of millions of immigrants into thier already overstressed territory, with the possible exception of the US, and I expect the immigration issue here to be one of the few which the right wingers will win hands down before too much longer.
Spot on, you can only afford to be magnanimous when you have a surplus, of wealth. When a county has enough food to feel 350 million and there are only 300 million then it is not a problem when you have a population of 300 million and food enough and 50 million want to get in forget it.
I just got the DVD of Dr Albert Bartlett's talk on "Arithmetic, Population and Energy" and doing a quick calculation, the 2.34 percent growth would make the Arab population double to over 700 million in only 30 years or by the year 2040. Not that far away and it goes up incrementally every year, not all at once - which will make matters worse sooner rather than later.
They may be "buying up" farm land in Africa, but don't be surprised if you hear of riots and other problems when they try to ship the food out of Africa (which already has significant starvation) to the Middle East. It only takes the signature of the Dictator to "Nationalize" anything of great value. Certainly the rulers in the Middle East who "Nationalized" the oil fields will "understand" when the African Nations "Nationalize" the "food fields"?
Talk about the chickens coming home to roost?
Oh no, that won't happen just like that. Remember those dictators are starving their populace already. As long as they are getting money into their Swiss bank accounts they will keep providing the slaves to grow the food and load the ships.
NAOM
Be careful of extrapolating too far into the future. I expect that major changes will occur before that 700 million number is reached.
As far as the foreign farm land is concerned; you simply can't get starving people to do much work. If there isn't enough food to feed the locals doing the work, no food will be shipped anywhere.
Ah, but that is part of the control. Those who do the dictator's work are looked after to a greater or lesser extent depending on importance and risk. It is those who do not are left to starve.
NAOM
Back of the envelope calculations. Factoring in population growth and previous oil production, it looks as if "reserves per Arab" have dropped in half since 1990, from nearly 3,000 bbl per Arab to about 1,400 bbl per Arab. I make this calculation because (1) the article speaks in terms of Arab nations and (2) it is entirely possible for there to be an Arab Economic Area, much like what we have in North America, and even more so in Europe.
The value of those 1400 bbl per Arab is about $110,000, or less than the cost of a typical private college education in the United States, and certainly less than the value of the typical home in the U.S.
Thanks for the comments so far. I have a particular interest in the methods by which governments obscure and blur information. As I watched the May EIA news conference the recent analysis of Jay Rosen, Professor of Journalism at NYU, came to mind. In a speech to the World Bank this Spring, Rosen laid out the various methods institutions and governments have learned to develop, over time, to mitigate their obligation to communicate with the public. You can see that talk here:
http://jayrosen.tumblr.com/post/625126828/this-is-my-speech-to-communica...
G
A quote from the web site linked by Gregor:
Think about Alan Greenspan, and his comments.
not all exporters will see domestic consumption rise. I don't think we will see that happen in Canada, or Norway.
Norway is in decline, but they are also ramping up their recovery rates from around 40% to 50%. There is still some juice to squeeze.
Canada has lots of room to expand its exports. some estimate 2.5t barrels locked away, recoverable, in the tar sands.
http://www.eia.doe.gov/cabs/Norway/Oil.html
http://www.canadainternational.gc.ca/washington/bilat_can/energy-energie...
Norway's consumption as a percentage of production at their oil production peak in 2001 was only 7% (and it has stayed basically flat since 2001), but they did not cut their consumption at the same rate that their production fell from 2001 to 2009 (4.7%), so their net export decline rate (5.0%/year) exceeded their production decline rate (EIA).
Here is Sam Foucher's 2007 projection for net oil exports from Norway (actual data through 2006 are shown; the EIA shows net oil exports of 2.1 mbpd in 2009, which was pretty much Sam's middle case):
Sam projects that Norway will approach zero net oil exports around 2026. The projected 2005 to 2015 net export decline rate is shown.
Note that the UK also had basically flat consumption over the decline period, but because their consumption was so high, their overall net export decline rate from peak to final year of net oil exports was about 56%/year.
The basic ELM (5%/year production decline rate, 2.5%/year rate of increase in consumption, consumption = 50% of production at peak) shows net exports going to zero in 9 years. If we assume no increase in consumption, net exports go to zero in 14 years.
WT,
Congratulations for finally having your work recognized. I suspect it is bitter/sweet.
IMO opinion your ELM is "THE" most important work done in the last 2 decades. It should be understood and used as the basis of all policy globally. Unfortunately, that will not happen proactively.
Much will be done to reduce our oil dependency in the coming years like you say. Funny, Carter is looking like the only president I'm ever likely to brag about voting for, however "sacrifice" no matter how needed is political suicide.
I personally have a very hard time wrapping my head around the changes that are coming, and how that will be different than what I do today. I know what must happen (roughly) yet I'm resistant to let go of my current lifestyle. I question how much of ones preparedness you want to let on to anyone. I find myself thinking it's a catch 22.
Tar Sands & Heavy Oil (Canada & Venezuela) to the rescue.
Chavez has not, shall we say, had a positive impact on production in Venezuela, but I believe that Venezuelan production started declining prior to his rise to power. In any case, combined net oil exports from Canada + Venezuela (C+V) were 3.7 mbpd in 1997. Rising net exports from Canada have only served to slow the combined (C+V) net export decline. They went from a combined (C+V) 3.7 mbpd in net exports in 1997 to 2.8 mbpd in 2009 (EIA).
Canadian net oil exports (EIA):
http://tonto.eia.doe.gov/country/img/charts_png/CA_petnet_img.png
And for Venezuela:
http://tonto.eia.doe.gov/country/img/charts_png/VE_petnet_img.png
And let's not forget Mexico:
http://tonto.eia.doe.gov/country/img/charts_png/MX_petnet_img.png
Africa was once the breadbasket of Britain with most of the profits going to the British. Is Africa becoming the breadbasket of the Arabs with most of the profits going to Arab royalty?
The Ascent of Middle East Food and Energy Demand
You got me Gail. I read the article and the comments, but I was drawn to the post with thoughts about 'The demands for foods of the Middle East' as opposed to 'demand for food in the Middle East'. I had thoughts of Shish Kabob and I love Tahini (sesame paste). Hummus and couscous are also favorites of mine. There is a point to all this.
Which brings me to my point. I hope the food demands and supply are not met by the 'Western' or perhaps maybe I should say 'Western low-cost' diet which I associate with fast foods and fat. It would seem that there is some historical basis to those fears.
Tobacco and caffeine are already persuasive throughout the region and alcohol is not generally tolerated by religious forces. Drugs have been around the region a long time. The Western cultural influences are highly tempered in the region, so that leaves giving the area our crummy diet. I hope things turn out better than when we gave them our 'civilization' and our money.
so that leaves giving the area our crummy diet.
but that'll reduce he surplus population
http://www.naturalnews.com/029382_junk_food_rats.html
So they bring in $500 million+ a day in oil sales? Something crazy like that. So less then a month of oil sales pays for a year of food... Not bad.
But what 'kind' of food? See my post above.
The first country to explode in the Middle East will be Egypt. With a population of 80m, massive wheat imports and subsidised bread. They will soon move from being an oil exporter to being an oil importer and the cash to import food will run out!
I posted about this remark at some length in DB a few days back; according to IEA data using a twh-bbls conversion 22% of 2006 KSA consumption was for power, so switching NG for oil would amount to increasing oil export capacity.
In those comments I mentioned wanting to double check this against EIA numbers, and have just finished doing so. According to EIA 13.77% of KSA consumption in 2006 was resid, after subtracting that part used for bunkering. These are about the only two applications for resid. I'm not sure what else they're burning in their power plants, but they resort to burning raw crude during peak summer months, so it wouldn't be surprising to see a lot of product burnt up along the way that would amount to ca. 20%.
I have one for all. It concerns my energy usage and a strive to always reduce. I live alone and my refrigerator (comes with the lease) is usually mostly empty. Would placing blocks of foam or water in the refrigerator reduce the energy used in some significant way? The foam would reduce internally cooled area and the water can store the 'cold' inside the unit for when I open the door. I am very curious what the answers are on this one.
Just a guess (by a retired engineer) but if you don't open the door very often it probably won't matter at all what, if anything, is in there. If you open the door a lot the wafting of air in-and-out will cause the compressor to start up to cool the air. In that case it would probably be worthwhile to put something in there with some heat capacity to stabilize the temperature when the door is opened and closed. The foam blocks may help keep the air from moving in and out.
Most heat is lost due to opening the door for access to the food. Each time the door is opened almost all the cold air inside pours out onto the floor and is quickly replaced by ambient room air. Seconds after this initial rush the flow slows because the new warm air is not rapidly cooled by being in contact with the cold food inside.
If you are really thrifty, you should think ahead before you open the door and have what you want to get clearly in mind and don't daydream with the door open. But do take the time to get everything you need with one door opening.
Blocks of water don't do much good because the heat capacity of the warm air is what limits the heat leak into the water.
Blocks of foam reduce the volume of air that is swapped out so should do some good. But if you use too many,they can limit the air circulation in the closed box and allow the food to become somewhat warmer than the evaporator coil that is generally somewhat separate from the shelves where the food is stored.
Of course shut the door correctly every time you open it (duh!).
Today's refrigerators are pretty well engineered to save energy. Before the Carter Admin., things were really bad. The insulation was so thin that frost would build up on the exterior of the box. House wives complained and electric heaters were installed on the exterior to evaporate the frost!
Water is the correct answer:)
I have the same situation as you, tinfoilhatguy.
My mom passed away a number of years ago and left me her house. One of the things that came with it was a nice BIG refrigerator. Bigger than what I really need being a bachelor. I use the space to store extra spring water. The extra water might come in handy in the event that there are ever issues with purity (or availability) of the municipal water supply. Also, the water retains the coolness the refrigerator imparts to the contents of the refrigerator.
Thermal inertia is the operative concept here. Don't worry about the "cold air getting dumped out of the refrigerator onto the floor when the door is opened". It doesn't really work that way. It's the thermal inertia of all the mass within the refrigerator which retains the cold, not the air itself; unless the fridge is empty.
As I have said before, it is essential that the world as a whole invest heavily in unconventional oil to keep the world export market in affordable oil from collapsing in 10 years. This would not be for domestic consumption but to go directly onto the world market.
There is at least 500 Gb of oil shale and 500 Gb of bitumen, which is at least as much as OPEC conventional reserves, most of which exists in the USA, Canada and Venezuela. A cushion of 20 mbpd I would guess would stabilize the situation, with the balances to be made up by biofuels and efficiency. At $100000 per daily barrel. that's 2 trillion dollars. If the investment is paid back over 10 years that's an additional $30 tax onto a barrel of oil.
Food is easier to handle as the world probably trades under 250 million tons of grains(wheat,corn,rice) versus 1000 million tons of exported oil. Right now the US, Canada and Australia
produce ~60% of world wheat exports, ~65 million tons.
The world export rice market is small with Thailand, Vietnam and China exporting about ~14 million tons.
The US exports 50% of the 100 million tons of corn export market.