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Michael Klare: DoE Forecasts No Meaningful Change in Fossil Fuel Use by 2040

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Yves here. While this post focuses on a newly-released Department of Energy forecast, and forecasting is always a fraught exercise, there’s good reason to see it as realistic. It reflects the power of inertia and entrenched interests. If anything, you’d expect the DoE to present a hopeful outlook on the growth of eco-friendly power sources, given how often Obama talks about “green energy” and “green jobs,” but the authors appear to have steered clear of undue optimism.

By Michael T. Klare, professor of peace and world security studies at Hampshire College and the author of The Race for What’s Left. Originally published in TomDispatch.

What sort of fabulous new energy systems will the world possess in 2040?  Which fuels will supply the bulk of our energy needs?  And how will that change the global energy equation, international politics, and the planet’s health?  If the experts at the U.S. Department of Energy are right, the startling “new” fuels of 2040 will be oil, coal, and natural gas — and we will find ourselves on a baking, painfully uncomfortable planet.

It’s true, of course, that any predictions about the fuel situation almost three decades from now aren’t likely to be reliable.  All sorts of unexpected upheavals and disasters in the years ahead make long-range predictions inherently difficult.  This has not, however, deterred the Department of Energy from producing a comprehensive portrait of the world’s future energy system.  Known as the International Energy Outlook (IEO), the assessment incorporates detailed projections of future energy production and consumption.  Although dense with statistical data and filled with technical jargon, the 2013 report provides a unique and disturbing picture of our planetary future.

Many of us would like to believe that, by 2040, the world will be far along the path toward a green industrial future with wind, solar, and renewable fuels providing the bulk of our energy supplies.  The IEO assumes otherwise.  It anticipates a world in which coal — the most carbon-intense of all major fuels — still supplies more of our energy than renewables, nuclear, and hydropower combined.

The world it foresees is also one in which oil remains a preeminent source of energy, while hydro-fracking and other drilling techniques for extracting unconventional fossil fuels are far more widely employed than today.  Wind and solar energy will also play a bigger role in 2040, but — as the IEO sees it — will still represent only a small fraction of the global energy mix.

Admittedly, International Energy Outlook is a government product of this moment with all the limitations that implies.  It envisions the future by extrapolating from current developments.  It is not visionary.  Its authors can’t imagine energy breakthroughs that have yet to happen, or changes in world attitudes that may affect how energy is dealt with, or events like wars, environmental disasters, and global economic recessions or depressions that could alter the world’s energy situation.  Nonetheless, because it assesses current endeavors that are sure to have long-lasting repercussions, like the present massive worldwide investments in shale oil and shale gas extraction, it provides an extraordinary resource for imagining the energy crisis in our future.

Among its major findings are three fundamental developments:

* Global energy use will continue to rise rapidly, with total world consumption jumping from 524 quadrillion British thermal units (BTUs) in 2010 to an estimated 820 quadrillion in 2040, a net increase of 56%.  (A BTU is the amount of energy needed to heat one pound of water by one degree Fahrenheit.)

* An increasing share of world energy demand will be generated by developing countries, especially those in Asia.  Of the nearly 300 quadrillion BTUs in added energy needed to meet global requirements between now and 2040, some 250 quadrillion, or 85%, will be used to satisfy rising demand in the developing world.

* China, which only recently overtook the United States as the world’s leading energy consumer, will account for the largest share — 40% — of the growth in global consumption over the next 30 years.

These projections may not in themselves be surprising, but if accurate, the consequences for the global economy, world politics, and the health and well-being of the planetary environment will be staggering.  To meet constantly expanding world requirements, energy producers will be compelled to ramp up production of every kind of fossil fuel at a time of growing concern about the paramount role those fuels play in fostering runaway climate change.  Meanwhile, the shift in the center of gravity of energy consumption from the older industrial powers to the developing world will lead to intense competition for access to available supplies.

To fully appreciate the significance of the IEO’s findings, it is necessary to consider four critical trends: the surprising resilience of fossil fuels, the degree to which the world’s energy will be being provided by unconventional fossil fuels, the seemingly relentless global increase in emissions of carbon dioxide, and significant shifts in the geopolitics of energy.

The Continuing Predominance of Fossil Fuels

Anyone searching for evidence that we are transitioning to a system based on renewable sources of energy will be sorely disappointed by the projections in the 2013 International Energy Outlook.  Although the share of world energy provided by fossil fuels is expected to decline from 84% in 2010 to 78% in 2040, it will still tower over all other forms of energy.  In fact, in 2040 the projected share of global energy consumption provided by each of the fossil fuels (28% for oil, 27% for coal, and 23% for gas) will exceed that of renewables, nuclear, and hydropower combined (21%).

Oil and coal continue to dominate the fossil-fuel category despite all the talk of a massive increase in natural gas supplies — the so-called shale gas revolution — made possible by hydro-fracking.  Oil’s continued supremacy can be attributed, in part, to the endless growth in demand for cars, vans, and trucks in China, India, and other rising states in Asia.  The prominence of coal, however, is on the face of it less expectable.  Given the degree to which utilities in the United States and Western Europe are shunning coal in favor of natural gas, the prominence the IEO gives it in 2040 is startling.  But for each reduction in coal use in older industrialized nations, we are seeing a huge increase in the developing world, where the demand for affordable electricity trumps concern about greenhouse gas emissions. 

The continuing dominance of fossil fuels in the world’s energy mix will not only ensure the continued dominance of the great fossil-fuel companies — both private and state-owned — in the energy economy, but also bolster their political clout when it comes to decisions about new energy investment and climate policy.  Above all, however, soaring fossil-fuel consumption will result in a substantial boost in greenhouse gas emissions, and all the disastrous effects that come with it.

The Rise of the “Unconventionals”

At present, most of our oil, coal, and natural gas still comes from “conventional” sources — deposits close to the surface, close to shore, and within easy reach of transportation and processing facilities.  But these reservoirs are being depleted at a rapid pace and by 2040 — or so the Department of Energy’s report tells us — will be unable to supply more than a fraction of our needs.  Increasingly, fossil fuel supplies will be of an “unconventional” character — materials hard to refine and/or acquired from deposits deep underground, far from shore, or in relatively inaccessible locations.  These include Canadian tar sands, Venezuelan extra-heavy crude, shale gas, deep-offshore oil, and Arctic energy.

Until recently, unconventional oil and gas constituted only a tiny share of the world’s energy supply, but that is changing fast.  Shale gas, for example, provided a negligible share of the U.S. natural gas supply in 2000; by 2010, it had risen to 23%; in 2040, it is expected to exceed 50%.  Comparable increases are expected in Canadian tar sands, Venezuelan extra-heavy crude, and U.S. shale oil (also called “tight oil”).

By definition, unconventional fuels are harder to produce, refine, and transport than conventional ones.  In most cases, this means that more energy is consumed in their extraction than in the exploitation of conventional fuels, with more carbon dioxide being emitted per unit of energy produced.  As is especially the case with fracking, the extraction of unconventional fuels normally requires significant infusions of water, raising the possibility of competition and conflict among major water consumers over access to supplies that, by 2040, will be severely threatened by climate change.

Relentless Growth in Carbon Emissions

By 2040, humanity will be burning far more fossil fuels than today: 673 quadrillion BTUs, compared to 440 quadrillion in 2010.   The continued dominance of fossil fuels, rising coal demand, and a growing reliance on unconventional sources of supply can only have one outcome, as the IEO makes clear: a huge jump in carbon dioxide and other greenhouse gas emissions.

Carbon dioxide is the most prominent of the anthropogenic greenhouse gases being pumped into the atmosphere, and the combustion of fossil fuels is the primary source of that CO2; hence, the IEO’s projections on energy-related carbon emissions constitute an important measure of humankind’s ongoing role in heating the planet.

And here’s the bad news: as a result of the continued reliance on fossil fuels, global carbon emissions from energy are projected to increase by a stunning 46% between 2010 and 2040, jumping from 31.2 billion to 45.5 billion metric tons.  No more ominous sign could be found of the kind of runaway global warming likely to be experienced in the decades to come than this grim figure.

In the IEO projections, all fossil fuels and all of the major consuming regions contribute to this nightmarish future, but coal is the greatest culprit.  Of the extra 14.3 billion metric tons of CO2 to be added to global emissions over the next 30 years, 6.8 billion, or 48%, will be generated by the combustion of coal.  Because most of the increase in coal consumption is occurring in China and India, these two countries will have a major responsibility for accelerating the pace of global warming. China alone is expected to contribute half of the added CO2 in these decades; India, 11%.

New Geopolitical Tensions

Finally, the 2013 edition of International Energy Outlook is rife with hints of possible new geopolitical tensions generated by these developments.  Of particular interest to its authors are the international implications of humanity’s growing reliance on unconventional sources of energy.  While the know-how to extract conventional energy resources is by now widely available, the specialized technology needed to exploit shale gas, tar sands, and other such materials is far less so, giving a clear economic advantage in the IEO’s projected energy future to countries which possess these capabilities.

One consequence, already evident, is the dramatic turnaround in America’s energy status.  Just a few years ago, many analysts were bemoaning the growing reliance of the United States on energy imports from Africa and the Middle East, with an attendant vulnerability to overseas chaos and conflict.  Now, thanks to American leadership in the development of shale and other unconventional resources, the U.S. is becoming less dependent on imported energy and so finds itself in a stronger position to dominate the global energy marketplace.

In one of many celebratory passages on these developments, the IEO affirms that a key to “increasing natural gas production has been advances in the application of horizontal drilling and hydraulic fracturing technologies, which made it possible to develop the country’s vast shale gas resources and contributed to a near doubling of total U.S. technically recoverable natural gas resource estimates over the past decade.” 

At the same time, the report asserts that energy-producing countries that fail to gain mastery over these new technologies will be at a significant disadvantage in the energy marketplace of 2040. Russia is particularly vulnerable in this regard: heavily dependent on oil and gas revenues to finance government operations, it faces a significant decline in output from its conventional reserves and so must turn to unconventional supplies; its ability to acquire the needed technologies will, however, be hindered by its historically poor treatment of foreign companies.

China is also said to face significant challenges in the new energy environment.  Simply to meet the country’s growing need for energy is likely to prove an immense challenge for its leaders, given the magnitude of its requirements and the limits to China’s domestic supplies.  As the world’s fastest growing consumer of oil and gas, an increasing share of its energy supplies must be imported, posing the same sort of dependency problems that until recently plagued American leaders.  The country does possess substantial reserves of shale gas, but lacking the skills needed to exploit them, is unlikely to become a significant producer for years to come.

The IEO does not discuss the political implications of all this.  However, top U.S. leaders, from the president on down, have been asserting that America’s mastery of new energy technologies is contributing to the nation’s economic vitality, and so enhancing its overseas influence.  “America’s new energy posture allows us to engage from a position of greater strength,” said National Security Advisor Tom Donilon in an April speech at Columbia University.  “Increasing U.S. energy supplies act as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks. It also affords us a stronger hand in pursuing and implementing our international security goals.”

The Department of Energy’s report avoids such explicit language, but no one reading it could doubt that its authors are thinking along similar lines.  Indeed, the whole report can be viewed as providing ammunition for the pundits and politicians who argue that the emerging global energy equation is unusually propitious for the United States (so long, of course, as everyone ignores the effects of climate change) — an assessment that can only energize advocates of a more assertive U.S. stance abroad.

The World of 2040

The 2013 International Energy Outlook offers us a revealing peek into the thinking of U.S. government experts — and their assessment of the world of 2040 should depress us all.  But make no mistake, none of this can be said to constitute a reliable picture of what the world will actually look like at that time.

Many of the projected trends are likely to be altered, possibly unrecognizably, thanks to unforeseen developments of every sort, especially in the climate realm.  Nonetheless, the massive investments now being made in conventional and unconventional oil and gas operations will ensure that these fuels play a significant role in the energy mix for a long time to come — and this, in turn, means that international efforts to slow the pace of planetary warming are likely to be frustrated.  Similarly, Washington’s determination to maintain U.S. dominance in the exploitation of unconventional fuel resources, combined with the desires of Chinese and Russian leaders to cut into the American lead in this field, is guaranteed to provoke friction and distrust in the decades to come.

If the trends identified in the Department of Energy report prove enduring, then the world of 2040 will be one of ever-rising temperatures and sea levels, ever more catastrophic storms, ever fiercer wildfires, ever more devastating droughts.  Can there, in fact, be a sadder conclusion when it comes to our future than the IEO’s insistence that, among all the resource shortages humanity may face in the decades to come, fossil fuels will be spared? Thanks to the exploitation of advanced technologies to extract “tough energy” globally, they will remain relatively abundant for decades to come.

So just how reliable is the IEO assessment?  Personally, I suspect that its scenarios will prove a good deal less than accurate for an obvious enough reason.  As the severity and destructiveness of climate change becomes increasingly evident in our lives, ever more people will be pressing governments around the world to undertake radical changes in global energy behavior and rein in the power of the giant energy companies.  This, in turn, will lead to a substantially greater emphasis on investment in the development of alternative energy systems plus significantly less reliance on fossil fuels than the IEO anticipates. 

Make no mistake about it, though: the major fossil fuel producers — the world’s giant oil, gas, and coal corporations — are hardly going to acquiesce to this shift without a fight.  Given their staggering profits and their determination to perpetuate the fossil-fuel era for as a long as possible, they will employ every means at their command to postpone the age of renewables.  Eventually, however, the destructive effects of climate change will prove so severe and inescapable that the pressure to embrace changes in energy behavior will undoubtedly overpower the energy industry’s resistance.

Unfortunately, none of us can actually see into the future and so no one can know when such a shift will take place.  But here’s a simple reality: it had better happen before 2040 or, as the saying goes, our goose is cooked.

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52 comments

  1. JGordon

    “By definition, unconventional fuels are harder to produce, refine, and transport than conventional ones. In most cases, this means that more energy is consumed in their extraction than in the exploitation of conventional fuels…”

    Here is the money quote that the authors should have spent much more time reflecting upon. If the global economy is already slowly grinding down with gas prices at $3 to $4 dollars per gallon of refined hydrocarbons (and price is to a large extent a reflection of the energy invested vs. energy returned equation, since despite all of the ideological economic theories that many sadly deluded non-scientist social “scientists”, i.e. economists, make up in their heads we still live on a real planet finite and dwindling resources) let’s imagine what will happen with the energy return becomes increasingly worse and thus the price of hydrocarbons becomes increasingly more.

    Basically, the economy would start to collapse at some point around $5-6 per gallon (in America) and by the time we’re pushing 10-12 dollars the industrial experiment will pretty much be over unless we have some really cheap and easily produced/maintained alternative already in place. Which the government report commented on here is correctly not counting on. Becuase more than likely that will not happen, for various historical and technical reasons.

    To sum this up, by the time 2040 rolls around there is an extremely strong likelihood that the industrial economy will be a fading memory. And the subsequent period of intense reforestation (supposing for a moment that the various nuclear power plants around earth won’t melt down and sterilize the biosphere, which I consider at this point to be an outcome more likely than not) may in fact cause a new ice age as all the CO2 we’ve been pumping into the atmosphere is used up by the plants.

    Anyway, the point of all this is that we need to get cracking on shutting down the nuclear plants and squirreling away all that horrifyingly nasty waste deep within the earth’s mantle while we still can. That way at least we and our planet will still have something resembling a future in 2040. As opposed to having nothing.

    1. anon y'mouse

      perhaps that is the point? drive up the cost of goods so that most of us can’t afford them.

      starve away the excess population.

      if they were serious about this AND wanted to be slightly more humane, then they should start handing out free birth control and heavily subsidizing surgical sterilization techniques.

    2. Another POV

      Same old stuff. Strictly DOE governmental boilerplate, meant to “convey” meaning (wink, wink, nod, nod) indirectly. Basic message: the status quo will prevail as far as the eye can see until it can’t. Which also happens to be true.

      Indirect message: renewables don’t stand a chance in hell at sustaining our current society anyway, even at 0% growth levels, so why even consider them.

      Message for anyone who’s actually listening: Get ready for painful contraction in ALL spheres of human endeavor.

  2. Hugh

    We are already in the plateau of peak oil. Fracking may extend that plateau by a few years, but at great cost to the environment. I would think by 2020 we will likely start the descent from the plateau, not just because oil producing states may start husbanding their reserves or switches by oil consuming states to natural gas where possible, i.e. not transportation, but that there will be more failing states which will hamper both production and transportation of hydrocarbons.

    The kind of study that the DoE has done is garbage. It assumes that present conditions can be smoothly extrapolated into the future, but we have been in uncharted territory since at least 2008. Kleptocracy dominates the world’s political and economic systems and the question is how long they, the US, Europe, China, Japan, emerging markets can stumble on under its weight. What happens when peak oil, peak water, climate change, overpopulation, and kleptocracy all hit the fan? I am unsure about the world even 7 years out, and I realize it could all go south tomorrow. How much more fictionally vacuous a DoE report looking out 27 years?

    1. To better serve you, A Real Black Person Opens Up His Mouth and

      “What happens when peak oil, peak water, climate change, overpopulation, and kleptocracy all hit the fan?”
      I think we’re facing brutality and cruelty on a unprecedented scale in the near future because the sheer population numbers and the desperation that will occur as resource availability falls to zero in many areas touched by urbanization and industrialization. I suspect we understand what is coming on a subconscious level. How else can one explain the popularity of zombies in American entertainment in recent years? Zombies are simply starving people willing to eat human flesh. Human flesh will be left when our oil-based transportation system will leave urbanized populations without food.

    2. Mark P.

      ‘…oil producing states may start husbanding their reserves or switches by oil consuming states to natural gas where possible, i.e. not transportation’

      It’s perfectly possible to run transportation on liquid natural gas and ten million vehicles in the world today — mostly in places like Brazil and Pakistan — already have been converted/built to run on LNG.

      It’s not even that expensive a conversion, relatively speaking, I don’t think.

  3. anon y'mouse

    oddly enough, to combine the two threads of the above posts, I will give my “crazy person on the internet” prediction.

    this is the plan going forward, and they’re giving us notice. meanwhile, crank up the security and spying apparatus to deal with potential social unrest. try to keep everyone blissed out and comatose, incapable of action through work for survival, or thinking positively about the future so that they hopefully don’t start demanding things or asking too many questions.

    then, they will use this breathing space as an opportunity to roll out the nuclear that they are probably working right now to develop. TINA all the way. by the time they build it, it will be presented as having a number of obvious advantages over and solve numerous problems created by the current system, and it will be portrayed or seen as a natural evolution in human ingenuity that we’ve finally become ‘smart enough’ to have worked most of the kinks out of.

    that is, if something catastrophic does not throw everything off course, or wake everyone up to what’s happening, or simply unrest due to deteriorating social conditions in an increasingly unhospitable environment.

    1. psychohistorian

      I think that catastrophe you are wondering about is Fukushima and its failing pools of fuel rods. From what I read, its not if, it is when and that when is probably within a year.

      But for sure you will never hear anything about Fukushima from DOE because their propaganda blinders won’t allow it.

    2. Expat

      Remember that the uberclass’s reaction to the Chernobyl disaster was to shift their consumption to wines produced in the southern hemisphere, namely Chile & Australia. Pollution may be good enough for the rest of us, but for the precious pelts of the .1% it seems unlikely that they will take the nuclear route.

  4. profoundlogic

    “Many of us would like to believe that, by 2040, the world will be far along the path toward a green industrial future with wind, solar, and renewable fuels providing the bulk of our energy supplies. The IEO assumes otherwise.”

    I suppose a 2040 energy forecast will be about as useful as a 27-year extended outlook on the weather.

    Rather than proactively shifting our energy policy to something rational and sustainable, we’ll more likely be dragged kicking and screaming into the future as oblivion comes knocking on the front door.

  5. from Mexico

    Michael T. Klare is not just drunk on the shale gas Kool Aid, but on the American exceptionalism Kool Aid as well.

    First, Klare blithely and uncritically buys into all the hot air (too bad we can’t bottle that and use that to solve the enrgy crisis, since there’s such a surfeit of it) that fuels the shale gas ponzi scheme:

    As the world’s fastest growing consumer of oil and gas [China], an increasing share of its energy supplies must be imported, posing the same sort of dependency problems that until recently plagued American leaders. The country does possess substantial reserves of shale gas, but lacking the skills needed to exploit them, is unlikely to become a significant producer for years to come.

    The IEO does not discuss the political implications of all this. However, top U.S. leaders, from the president on down, have been asserting that America’s mastery of new energy technologies is contributing to the nation’s economic vitality, and so enhancing its overseas influence. “America’s new energy posture allows us to engage from a position of greater strength,” said National Security Advisor Tom Donilon in an April speech at Columbia University. “Increasing U.S. energy supplies act as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks. It also affords us a stronger hand in pursuing and implementing our international security goals.”

    Can we say Tooth Fairy?

    Then Klare just as blithely and uncritically buys into all the hype about American exceptionalism. In so doing, he shows just how completely clueless he is as to how the oil and gas industry works:

    Now, thanks to American leadership in the development of shale and other unconventional resources, the U.S. is becoming less dependent on imported energy and so finds itself in a stronger position to dominate the global energy marketplace.
    In one of many celebratory passages on these developments, the IEO affirms that a key to “increasing natural gas production has been advances in the application of horizontal drilling and hydraulic fracturing technologies, which made it possible to develop the country’s vast shale gas resources and contributed to a near doubling of total U.S. technically recoverable natural gas resource estimates over the past decade.”

    The “advances in the application of horizontal drilling” were mostly made by Saudi Aramco, not by the Americans, and the purveyors of this technology are the transnational oil service companies, who will work for anybody who has a check book. As to fracking technology, it has been in wide use in the oil field since the 1950s (http://en.wikipedia.org/wiki/Hydraulic_fracturing ). What is new are not so much “advances in hydraulic fracturing technologies,” but $100/barrel oil and $10+/MCF gas, which in some cases make going after oil and gas in tight reservoirs — using huge frac jobs — economically viable. These are projects which at lower oil and gas prices are not economically feasible, so the use of huge frac jobs is being driven not so much by “advances in hydraulic fracturing technologies” as by changes in the economic situation.

    Why does Klare mindlessly parrot some of the most prominet and perncious IOC (international oil company) talking points?

    1. Expat

      I had a little different take on Klare’s analysis, from Mexico. As he states, Klare sees the IEO report as a warning of the energy crisis of the future. To my reading, Klare is examining the report’s conclusion that the withering away of the petroleum economy is going to take much longer than a generation. Which means we have to take action to have some effect on the otherwise inevitable coming climate catastrophe. Admittedly, the IEO report provides possible roadmaps for the gas & oil industries to continue to extract profits from the ever growing planet-wide destruction they are causing, but again, I see Klare as telling us that these scenarios will play out unless and until we mobilize to stop these schemes from reaching fruition. That he is pessimistic about our ability to do so echoes through this piece.

      1. from Mexico

        But you still failed to explain why Klare religiously parrots the same lies and misinformation being evangelized by the IOCs.

        The problem is that these same lies are the ones the IOCs are using, for instance, here in Mexico in their arguments to privatize (read “steal”) PEMEX, Mexico’s state-owned oil company. They pop up, for instance, in this Washington Post editorial:

        …the company [PEMEX] hasn’t managed…to break into deep-water oil extraction or to ramp up oil and natural gas production from onshore shale rock.

        [….]

        Foreign companies might bring know-how and, critically, cash to Pemex projects in deep water or in shale-rock formations.

        http://www.washingtonpost.com/opinions/mexicos-oil-monopoly-needs-international-help/2013/08/21/c05e8544-09e7-11e3-9941-6711ed662e71_story.html

        Easy money investment scams! It’s one of the oldest frauds in history. The scam artist holds out some pie in the sky reward, and takes what assets the investor has. In Mexico’s case, what the IOCs want is Mexico’s 111 billion barrels of proved conventional reservers. In contrast, the largest of the IOCs, ExxonMobil, has only 25 billion barrels of proved reserves, whether conventional or non-conventional.

        Of course the Washington Post goes on to lay it on really thick:

        The best option for Mexico’s leaders is to open up the oil business, reduce the state’s dependence on petroleum revenue and privatize Pemex, forcing the company to compete against nimbler foreign companies subject to consistent rules and reasonable taxation. Productivity would shoot up, as would economic growth.

        “Nimbler foreign companies”? Phew! As a group, the IOC’s oil production is in free-fall. It has fallen by 26% in the last 9 years. Without new reserves, it’s lights out for the IOCs. Since the Iraq resource war turned sour, the IOCs had to look elsewhere for oil, and its client state Mexico looks like easy pickins.

        Here’s a report that compares the IOC’s always optimistic production forecasts with their actual historical performance. As the report concludes:

        [T]he IEA has recognized that the conventional oil production has peaked around 2006, but high hopes are now put on unconventional oil and gas.

        Most of the graphs in this paper show clearly that forecasts are almost always too optimistic, because a poor estimate of the planning of future production, ignoring the Murphy’s law and also often because a too optimistic estimate of reserves.

        Bad events are never taken into account.

        Despite their poor performance in reporting their production outlook, IOCs continue to do so.

        It is the same for official agencies like IEA or USDOE/EIA.

        The main conclusion is that those forecasts should be considered as very optimistic cases, which could happen only is everything goes well, which corresponds to a very small probability.

        IOCs, IEA and EIA forecasts may not be wrong, but it is likely that they are unlikely.

        http://aspofrance.viabloga.com/files/JL_IOCprodforecasts2013.pdf

        1. Expat

          From what I know of Klare’s work, he would agree with every point you make.

          He may even acknowledge that your critique covers his analysis and that he omitted critical considerations, but he has been interviewed numerous times over the years, both for his current book and previous works, and I submit that in the context of his other writings and his explication of those writings he has not given the slightest indication that he encourages, supports, advocates on behalf of or, heaven forfend, speaks for the oil & gas industries. The “reality” that he is addressing here is the IEO report that presumes that business-as-usual will continue and he explores the implications of that, which he calls the energy crisis of the the future. I would add that he seems to share what amounts to the pessimism of the report, since he thinks it is unlikely we humans will rise to the challenge that our oil & gas brothers & sisters have posed for our species and life on our planet.

  6. MRW

    Given the degree to which utilities in the United States and Western Europe are shunning coal in favor of natural gas, the prominence the IEO gives it in 2040 is startling.

    No, it’s not. Germany ditched its nuclear plants after Fukushima for what are called Ultra Super Critical Coal-fired plants. Germany is working at warp-speed to bring them online. China perfected this technology, as I understand it, although the USA invented the Super Critical boiler decades ago, and is doing some innovative work in USC development.

    USC output today (1000MW) is the same as nuclear plants. China is working on 1200MW and even 1350MW generators, levels not even possible with large-scale nuclear plants. Their CO2 emissions in China (Shanghai) and Germany today are 15% lower than the Kyoto Protocol target for 2020. They use less water because the water does not need to produce steam.

    ‘Natch we don’t hear about this because the US MSM is cosseted in a six-year old global warming strait jacket kept in place with velcro strips of pride.

    What’s going on in China:
    http://www.egcfe.ewg.apec.org/publications/proceedings/CFE/Austrailia_2012/4D-2_Jie.pdf

    1. anon y'mouse

      thanks, that was interesting. I guess to be “honest” about energy would require one take that energy use per capita chart and combine it with percentages laid out for food and goods, and how many of those are imported and exported.

      meaning, we in the west may be obtaining much MORE than the per capital numbers shown simply due to consumption of goods produced elsewhere. China likewise if they import much of their food.

      makes me think we should push for energy-use labels on all products, which includes the entire stream of sourcing-production-transport. so, if you pick up a bag of socks in the Walmart, you can clearly see on the label how much energy it took to get you those. energy which is only very partially being paid for in the price you pay for them.

      then again, only those who can make most purchases based upon their values will be able to take heed and alter their behavior.

    2. charles sereno

      @ from Mexico and MRW:

      “Michael T. Klare is not just drunk on the shale gas Kool Aid, but on the American exceptionalism Kool Aid as well.” (from Mexico)
      No, Klare’s not a flack for the fracking industry or Big Oil. His words, not those of the IEO, are as follows: “Now, thanks to American leadership in the development of shale and other unconventional resources, the U.S. is becoming less dependent on imported energy and so finds itself in a stronger position to dominate the global energy marketplace.” This is a factual, uncontested statement. If I used your loose logic, I could call you a flack for Saudi Arabia and Pemex but I won’t because I don’t like distorting someone’s views.

      “Their CO2 emissions in China (Shanghai) and Germany today are 15% lower than the Kyoto Protocol target for 2020.” (MRW)
      You’re talking about a slightly less dirty type of coal-fired power plant that is the leading cause of pollution. China doesn’t have a commitment target within the Kyoto protovol.

      1. MRW

        You’re talking about a slightly less dirty type of coal-fired power plant that is the leading cause of pollution. China doesn’t have a commitment target within the Kyoto protocol.

        Have you looked into the USC process?

        Calling it a “slightly less dirty type of coal-fired power plant that is the leading cause of pollution” tells me you haven’t bothered to read about it. The reduction in emissions, and the usage of resources, in USC systems is remarkable. Whether China is part of the Kyoto Protocol is neither here nor there. What is important is that the CO2 emission reduction achieved is 15% below the 2020 target set by the KP. That’s what impressed green-crazy Germany.

        Read what you don’t know:
        Higher Efficiency Power Generation Reduces Emissions
        http://mitei.mit.edu/system/files/beer-emissions.pdf

        1. charles sereno

          Meant to get back to you sooner (my computer ate it).
          Your 1st question: “Have you looked into the USC process?”
          Answer: I did read read the puff piece you recommended earlier from China. Nicely done.

          Your 2nd suggestion:”Read what you don’t know: Higher Efficiency Power Generation Reduces Emissions.”
          Answer: It seemed so long. I cheated and looked up the author. I was impressed that he received a Lifetime Achievement Award from the ‘prestigious’ Washington Coal Club, whose officers coincidentally are well-connected to the coal industry. Undaunted, I searched for other honorees. I never made it past Senator Inhofe and Glen Barton (Caterpillar). At that point, I succumbed to my guilt-by-association bias and saved myself some time.

          My suggestion to you: “Why don’t you refute my statements instead of flinging links at me.?”

          1. MRW

            Nah, I think I’ll just give you the Giordano Bruno Award for obviating facts that don’t comport with your worldview or your catholicism.

      2. from Mexico

        charles sereno says:

        [Klare's] words, not those of the IEO, are as follows: “Now, thanks to American leadership in the development of shale and other unconventional resources, the U.S. is becoming less dependent on imported energy and so finds itself in a stronger position to dominate the global energy marketplace.” This is a factual, uncontested statement.

        That is an empirical claim that is simply not true. The sure truth proselytized by you and Klare certainly is contested.

        Furthermore, the US’s “stronger position” is similar to that of a body-builder on steroids: the outward appearance is great, but the health of the internal organism is an absolute wreck.

        For a view that contests that of Klare, there’s this:

        It turns out that the entire plethora of doubts I have raised in “Shale Is A Pipedream Sold To Greater Fools” and “London Is Fracking, And I Live By The River” are now also being raised on a larger scale: the media are – belatedly as usual – waking up. But that doesn’t mean they understand what’s going on. They’re clueless.

        http://www.nakedcapitalism.com/2013/08/ilargi-the-darker-shades-of-shale.html

        Klare’s place is in the “clueless” club.

        And if Klare doesn’t want to be perceived as “a flack for the fracking industry or Big Oil,” he should stop acting like a walking and talking commercial for the fracking industry and Big Oil.

        1. charles sereno

          Klare’s words paraphrased: 1) US leads in development of shale and other unconventional resources; 2) Consequently, US is becoming less dependent on imported energy; 3) US is in stronger position to dominate global energy marketplace.
          (My comment re 1): I interpret “other” as “some other” rather than “all other.” That would be the unmarked form.)

          You do not refute ANY of these claims.

    1. Yves Smith Post author

      I don’t think you appreciate inertia and the power of installed bases and entrenched behavior (let alone interests). New technologies take much longer to get adopted than consumers realize.

      For instance, in 1993, I looked at a patented technology, a replacement for bar codes. Unquestionably superior. Much lower scanning error (as in less need for repeat swipes), and most important from a factory/warehouse perspective (bar codes are most of all uses in shipping and industrial supply chains), you could scan with a swipe from any angle.

      I nixed the investment. Why? Bar coding was still a pretty new technology, and the folks who had just invested in bar coding weren’t gonna throw it out, even though the productivity increases said it would pay off.

      And that turned out to be right. I didn’t see this technology in use until more than a decade later (it’s those mottled squares you see on UPS labels).

      If you don’t see companies acting in an economically rational manner to install new technologies which are not hard to implement and have an obvious payoff, multiply that by a factor of ten or so when it comes to something as fundamental as energy.

      1. optimader

        Success of a product is not necessarily related to superior technology execution, more to a successful and speedy roll out and market acceptance

        File under: Betamax MS vs Apple, Wang Laboratories

        The problem w/ alt. energy is the installed ~16TW energy dependence largely on fossil fuels.

        To even make a dent on this requires unprecedented investments in technologies w/ lesser energy density, storage issues as well, and more fundamentally “Peak Periodic Table” considerations: (REE, Lithium, Uranium, Thorium, Cobalt, ColTan, Chrome Nickel… etc etc..)

        1. Yves Smith Post author

          You need to review the history of the PC.

          1. The technology was around for a LONG time before it was commercialized. Xerox Parc, remember? The gap between discovery of the underlying technologies and their widespread adoption proves my point. Goldman only began buying PCs, and then only 2 for an entire 250 person corporate finance department, in 1982. Even by 1989, they were too costly for junior staff at large firms to each have one. I was still having my secretary type documents, as did nearly all the professionals I knew with a very few tech oriented exceptions.

          2. The initial promoters had its likely uses completely wrong. They were thinking home, not business uses (business already HAD big serious computers) and uses like keeping recipes. I am not making this up.

          3. What made PCs take off was Visicalc. Software, not hardware, for a specific and widespread need: spreadsheeting. Especially forecasting. OMG, it’s a horrorshow to do it manually (I’m old enough to have done it). One error and everything to the right is wrong.

          1. MRW

            But IBM had its greatest year ever in its history in 1990 as a result of its PC. Then they introduced the PS/2 and everything tanked. Nearly bankrupt by 1993.

            The PC wasn’t sold to junior staff. It was sold to CEOs and their staff. Remember those Charlie Chaplin ads that ran for six years? Meant to assuage the CEOs fear of new fangled things.

      2. psychohistorian

        I built a computerized log inventory and export system in 1980 that used Code 39 for tags that went on each log coming out of the woods. While your read of the evolution of the encoding technology is somewhat accurate I want to clarify/emphasize the foot dragging of the then existing vendors.

        The existing scanning equipment/supply vendors had investment in technology that they wanted to continue to milk so they drug their feet with rollout like in so many other areas that I have seen over the years.

        In the 50′s Firestone and Goodyear kept radial tires ( a proven technology) out of the US for 10+ years so they could milk their existing technology.

        It is a ugly feature of corporations with too much power and a government that is bought by them to “foam the runway”.

      3. MRW

        Correct, Yves.

        What everyone forgets is that fuel (oil, gas) is NOT a consumer item. No one gives a damn whether your house is warm or cold, or whether your car can run. Not in the order of priorities. US charities and environmental advocacy groups are used to sway US public opinion to aid and abet US oil companies and US fuel requirements. Otherwise, they would be crushed.

        Fuel (oil, gas) is the number one US national security item. Number one. Before anything on this planet. The reason? The US military. The US government must provision itself. Troops can’t move, eat, fly, sail, or attack without oil and gas.

  7. Sleeper

    Ahh another government forecast.

    But beware -

    Almost no one is considering the effect of lighting technology -

    Lighting accounts for about 25% of total electrical load.

    And with present technology this can be reduced by 50% that is 10% to 12% of total electical load can be eliminated.

    1. Robert Hurst

      Lighting is relatively small potatoes in the grand scheme. Due to new demands in developing countries any increase in efficiency will be blown out of the water, and electricity demand will rise.

      To truly reduce consumption of fossil fuels, don’t drive nearly as much, don’t fly at the drop of a hat, and don’t heat up nearly as much water, that is, don’t take frequent, lengthy showers.

      Some of this is already being forced on the western world as we are outbid by developing nations for a dwindling supply of available exports of fossil fuels. Might as well get ahead of the game, as individuals.

      1. anon y'mouse

        and, don’t buy products that had to be shipped, ultimately around the world multiple times to be produced and then land on your doorstep.

        perhaps I really MUST move to the tropics, if drinking orange juice and my coffee habit are that important to me.

  8. Moneta

    Energy is a country’s most important asset. I doubt many countries would willingly cut their energy consumption if it means letting other countries consume more of it to gain a competitive advantage.

    Thanks to sunk costs and current infra requirements, it is hard to see many countries gain competitive advantages by cutting total energy consumption.

    Countries will cut total energy consumption only if they are forced to.

  9. The Dork of Cork.

    There will be ( indeed is now to a small extent) a massive collapse in the use of transport fuels (oil) in the European entrepot.

    This will not be achieved via technology (but I am a fan of modern trams) but mainly through a decline in the stock of cars and vans on the road.
    The eurofarce will have to rebalance again towards the production of primary products…there is simply no way around this.
    What we have seen so far is the sustaining of rental yields towards the financial capitals via the destruction of the remaining primary output capacity of the western world….this is a mirror image of the capital destruction through inflation …now through deflation

    It will not last I tell you

    Ireland is a classic (extreme example)
    A victim of wage deflationary forces in the core which was sent outwards into the monetary ether.

    IEA
    Consumption of oil in transport (1,000 tons)
    Ireland
    1960 : 393
    1971 : 959
    1973 : 1,123
    1980 : 1,517
    1990 : 1,623 ( start of final inflationary phase)
    2000 : 3,350
    2010 : 3,740 (peak around 2008~)
    2011 : 3,428 (start of contraction towards 1971 ? 1960 ? 1914?)

  10. DanB

    I think we need to locate Michael Klare in the social system. He’s an academic; and by that standard his work is “out there.” You could count on one hand the number of academics who go further than Klare. Also, I’ve found him at times insightful and highly informative in data presentation, but always pulling his punches in laying out the big picture. That said, to my knowledge he has never discussed the geopolitics of peak oil or the end of growth -but that’s his real subject matter. These are not -a la Foucaclut, Bourdieu and others- approved of topics of academic inquiry. In this regard, Gail Tverberg has a post on the oil and gas crisis underlying the civil war in Syria. http://ourfiniteworld.com/2013/09/09/oil-and-gas-limits-underly-syrias-conflict/.

    1. from Mexico

      As Tverberg explains, Syria has exploding population, depleting energy, sinking aquifer levels and cronic drought due to global warming, which has caused shortages in both food and energy. Both are destabilizing, politically speaking.

      Here’s more on the drought situation:

      “Long drought that helped to spark an uprising in Syria”

      Read more: http://www.thenational.ae/business/industry-insights/energy/long-drought-that-helped-to-spark-an-uprising-in-syria#ixzz2ed2owYVQ

      The same phenomenon is occurring in Mexico with energy, and also I believe with Mexico’s aquifers, although it is not as of yet as acute as it is in Syria and Egypt:

      http://www.eia.gov/countries/analysisbriefs/Mexico/images/oil_production_consumption.png

  11. TC

    Wind, solar, and renewable fuels are born losers. This is as intended by a deviously misguided consensus representing the diseased “mind” of a Venetian-modelled oligarchy possessing top-down control over scientific pursuits, which state of affairs whose continuing, pervasive influence otherwise permeates every strata of Western culture, and imposes an extraordinarily counterproductive albatross upon our necks to be sure. These so called alternative energy sources have no shot whatsoever of expanding energy flux densities as are necessary to, first, overcome the superficial constraint of natural resource entropy (“superficial” on account of mankind’s cognitive advances bringing less imperfect understanding of the physical reality in which we are situated, and so greater command–power–over finite resources), and second, provide the means by which all life forms increase their energy consumption in order to survive what at this point must be called a natural tendency toward extinction, as it is a fact that, over 95% of all known life forms ever to have been present on earth over the past 500 million years have become extinct, and this on account of processes unrelated to the actions of mankind. It is becoming clear to some observers that, survival largely depends on developed capacities whose effect is increasing energy consumption in order to sustain life itself.

    Although I will not claim to have an unchallenged grasp on suitable alternatives to the fossil fuel driven economy, the work of Nikola Tesla and his modern-day advocates present at this still very early stage of understanding a potential energy alternative several orders of magnitude greater in its promise of energy densities available to be harnessed, and this even in comparison to such yet untapped potentials as nuclear fusion. They call it “free energy” and I’ll just leave it at that here, adding only that our better understanding of plasma physics likely presents a gateway to harnessing this so-called “free energy,” which task today’s so-called “alternatives” by no means offer capacity for readily achieving.

    The fact of the matter is the Space Age already has brought such a wealth of understanding of the physical reality in which mankind is situated to suggest that, both the Law of Energy Conservation and the Second Law of Thermodynamics are frauds. What we might do to confirm this presents a tangible, do-or-die issue potentially determining whether homo sapien thrives or dooms itself to extinction. The unscientific distraction centering on limiting technologies, such as so-called “green alternatives” represent, is better challenged no matter how few will summons the courage and intellectual rigor to break from commonly accepted norms. Having reached a point where we can more readily look back and scoff at commonly accepted norms of old–doing this among and within a wider audience than ever before has had such power of engagement as we collectively enjoy today (this, I would argue, is a fruit of the victory of the United States in its Revolution)–it sometimes is disheartening, nevertheless, to see firsthand how the wisdom of King Solomon given in Ecclesiastes remains as relevant now as some 3000 years ago when it first gained expression.

    Many likely will scoff at the thought of the cost of pursuing what otherwise could be widely called a canard in this matter of “energy policy.” Yet the first question these must answer is whether theirs is understanding of what distinguishes an investment from a gamble, and what separates life, liberty and happiness from a death cult’s distractions. Per the latter, that’s precisely what these so-called “green alternatives” are. As for costs pursuing those former values, well, Alexander Hamilton understood how these easily could be met, and were he living today he likely would advise Congress seize the Fed, and put its power to issue credit to productive use, rather than reserve it solely as a backstop to insolvent gamblers whose fortune is doom, for themselves and all who either willfully or complicity prop them up, be it directly or indirectly, promoting schemes by no means with power to forever forestall either the collapse of life-threatening ruses dominating contemporary, Western society or the pursuit of life-giving promises that, today, as ever, are woefully obscured by a handful of villians floating upon an ocean of fools whose most vexing curse simply is cowardice, the likes of which subdues their intelligent challenge of so-called authority dedicated to promoting time machines that only travel backward.

    1. Another POV

      A reminder: ALL energy is local. ALL talk of “potential energy” is less than meaningless without first considering its use. Getting a fully loaded jet aircraft off the ground is NOTHING like heating and providing general electric needs to even massive building complex.

      Energy concentration is a BITCH!

  12. kevinearick

    Disciplined Investment

    Empires have life cycles, like everything else. And, like everything else, they collapse when taken for granted. The last thing you want to take for granted is your motor. Innovation is the motor that drives economies. How’s that Apple, replacing labor with credit consumption, in China working for you?

    All the jobs created since the 70s to provide a place for women in the workforce have been lost, net, and Family Law has swapped the male producers out. At this point, the bankers normally swap Family Law polarity to favor men, but that isn’t going to work this time around because those men have been busy producing, beyond the imploding empire.

    This empire has brazenly taken six of my children with no cause shown, and I am not alone. We would just as soon let the old middle class die off naturally, but if its participants want to accelerate the process with world war, the necessary capital will be provided. It’s not a negotiation.

    So, I’m watching a female city manager bring in $10 labor from across the country to add another infrastructure patch, pay the hotel tax and employ the ‘savings’ to keep the real estate ponzi going for her landlords, Oprah et al. Their protégé just bought a ½ cup of coffee and filled the cup with almond milk from the counter, taxing herself from the future. And they ‘think’ they are more intelligent than their predecessors, because they have money.

    From the perspective of labor, new family formation, there is not one iota of difference among the nation states. They are just the common, separated by relativity. The police state exists to protect real estate price inflation, willful ignorance, without which legacy capital cannot exist. The markets simply extend feudalism with ‘innovative’ misdirection. Ultimately, all currencies collapse and war bonds are issued, serving patriotism as the last refuge of tyranny.

    If you were expecting those bred on divide and conquer politics to change their behavior based upon reason, you were expecting something that has never, and will never, happen. Look no further than Fannie and Freddie. The path to the future is always children reared by those capable of ignoring the empire, which is the point of mannered discipline.

    Employ a discounting positive feedback loop as the negative feedback loop to the empire’s inflationary positive feedback loop. If you boil water, each molecule does not heat uniformly, which is the problem with all of the digital control devices. A chain is only as strong as its weakest link, which is the fuse.

    Just because a majority chooses to imprison itself in a collapsing empire does not mean that you have to follow. Move forward, have your children, and prosper. You are the next motor. Appreciate your self, by learning to adapt, as an example to your children. We will settle up with the other boomers in good time. Stupid hunts me down wherever I go, with my own technology, which I replaced long ago.

    Faking it ‘til you make it doesn’t work. Go where you have to go to build your skill set, and leave war behind, for stupid. History repeats because the middle class cannot adapt; it must be told what to do, with money, and the bankers are clueless because they assume that observation is as good as doing. Go out and do, as you see fit, to pull out the foundation, at will. Quality at the best price works.

    Your children will be having children long after all these arses have returned to the churn pool, and that is the basis of wealth, confidence in the future. Ping the empire with manners, set your distance accordingly, and adjust for privacy. “Don’t praise yourself; let others do it,” after you are gone.

    1. F. Beard

      “Don’t praise yourself; let others do it,” after you are gone. kevinearick

      More accurately:

      Let another praise you, and not your own mouth; a stranger, and not your own lips. Proverbs 27:2

      1. Another POV

        Or another: state your own truth and leave it at that. Books – especially “holy” ones – are more often than not just fools’ guides to wisdom.

    2. Another POV

      Faking it ‘til you make it doesn’t work. Go where you have to go to build your skill set, and leave war behind, for stupid. History repeats because the middle class cannot adapt; it must be told what to do, with money, and the bankers are clueless because they assume that observation is as good as doing. Go out and do, as you see fit, to pull out the foundation, at will. Quality at the best price works.

      True enough. But for many/most now the “middle class” is but a rapidly receding memory and “going out and doing as they see fit” is as well.

      Just because a majority chooses to imprison itself in a collapsing empire does not mean that you have to follow. Move forward, have your children, and prosper. You are the next motor. Appreciate your self, by learning to adapt, as an example to your children. We will settle up with the other boomers in good time. Stupid hunts me down wherever I go, with my own technology, which I replaced long ago.

      I’m not so optimistic, especially with the “move forward, have your children” part. Maybe “hunker down and care for the ones you’ve got” maybe?

  13. Gerald Muller

    As one once remarked, “predictions are difficult, especially concerning the future”.
    It seems that this applies to this as to other topics. It seems that only once thing has a high probability: energy will be more expensive. However, we may learn to use less of it, for what final balance? Nobody knows.
    Nuclear may make a come back.
    Temperatures may be much lower than now, if the sun wants to play jokes on climate change buffs.
    Only one certainty: most of those of us over sixty will be dead.

  14. Adam P.

    The best book about peak oil has been recently published by Springer. The author, professor Kjell Aleklett, is the ASPO president and the leader of the Global Energy Systems Programme at Uppsala University, Sweden. This is the definitive book on the argument and a must read for everyone. Peek a copy and start reading:

    http://www.springer.com/environment/environmental+management/book/978-1-4614-3423-8

    A more technicall paper has been published by Jean Laherrere who was the chief of exploration of the french oil giant Total before retiring. You can download from the internet.

    http://tribune-pic-petrolier.org/wp-content/uploads/2013/05/Texte-JL-16Mai2013.pdf

    Another very intersting paper has been published by the german think tank Energy Watch Group. Search for it on the web, it’s free.

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