Gaius Publius: The Dying Fossil Fuel Industry

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By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. GP article archive  here. Originally published at DownWithTyranny


The classic shape of an economic bubble (source). Notice “New Paradigm” at the top, the point at which market participants decide “this can go forever.” Big Oil CEOs think nothing can topple the technology that turns fossil fuel into energy — that unlike every other technology in history, their technology will never be replaced.

Whom the gods would destroy, they first make mad.

Sophocles (tr. Longfellow)
We’ve written before about the coming crisis in the fossil fuel industry, the one that extracts oil, gas and coal from deep in the earth so it can be burned as fuel. For example, this from December 13:

and this from March 16:

Despite the stranglehold Big Oil has on energy production — to enhance their wealth and for no other reason — the industry is doomed to die. There are just three questions left unanswered:

  • Will the industry die quickly or slowly?
  • Will it be brought down in an orderly way, by government intervention, or by its own self-destructive internal forces?
  • Will the industry fatally worsen climate change before it goes, or will humans escape the grip of Big Oil in time to prevent most of the preventable damage?

Because, make no mistake, Big Oil has a fatal disease, two of them in fact, and either or both are going to end its life as an industry. (The companies may survive, but not as carbon extraction companies; I have an interesting fantasy, in fact, about an event that would instantly kickstart a U.S. return to global climate change leadership, but I’ll save it for later.)

Disease One — Vulnerability to Climate Change Itself

The first of those diseases is the industry’s vulnerability to the inevitable climate crisis. There are only two ways our current, business-as-usual climate behavior — where we pump gigatons of CO2 into the atmosphere each year and watch ocean and atmospheric temperatures relentlessly rise — will end:

1. The Chaotic climate-response scenario — Humans don’t stop pumping carbon into the air until, as a species, we’re pre-industrial or worse; we live through the all the chaos that devolution implies; we lose the technology and numbers to do further damage; then we watch the result play out for centuries, if we survive that long. In other words, our response is to allow whatever happens to happen and try to live through it.

A chaotic, multi-decade transition from where we are now to that point (note: multi-decade, not multi-century) will be the stuff of dystopian nightmares. That transition will be global in scope, obvious as to its cause, and will play out monstrously in full view of anyone who lives into the 2030s. That’s not too many years away. In fact, the transition has started already in the Middle East and Europe. (For more, see “Climate Change in the Age of Trump“.)

Keep in mind, systemic collapses don’t always happen quickly, but many do.

2. The Voluntary climate-response scenario — Humans voluntarily and proactively end the extractive carbon industry because it’s an existential threat to survival. Whether humans do this in time to avoid the worst of what’s coming is another question. The point is that we play an effective proactive role, not a passive, reactive one, before the chaos mentioned in the Chaotic scenario overwhelms everyone.

Either of these outcomes spells the end of the fossil fuel industry. In the Chaotic scenario, the end comes when global chaos shrinks the industrial base of the planet, causing fuel prices to rocket upward because of supply shortages, then collapse because of shrinking demand. Societies in chaos don’t buy new Toyotas at anything like their old rate of purchase, and increasing the number of societies in chaos decreases the global market for all manufactured goods.

Bottom line: Climate change itself will end the industry if disease number two doesn’t do it first.

Disease Two — Vulnerability to Its Own Internal Instability

The second factor that could end this industry is described in the two pieces linked at the beginning of this one. Even in the absence of a climate crisis, the industry itself is a dinosaur, a thing of the past providing the energy source of the past. Its dominant market position is extremely unstable, since its profitability depends entirely on massive capital infusions via subsidies and on a compliant political atmosphere — and complicit politicians — to keep it afloat.

What’s more, the industry sits on a mountain of debt that can never be repaid, will never be repaid, and it’s poised between two bad pricing decisions — keep prices low, which will accelerate the industry bankruptcies caused by those debts (which will also bankrupt some banks); or raise prices higher, making the fossil fuel industry’s debt service more sustainable in the short term while driving an even faster transition to renewables in the long term.

Neither of those alternatives — death by low prices or death by higher prices — is a prescription for long life, or life at all. One alternative underfunds the industry, ultimate fatally. The other overprices its product in the midst of a decades-long recession. (For this will be a “decades-long recession,” see “America Cannot Recover from This Recession Until It Writes Down Debt to What Can Be Paid“.)

Bottom line: Even without a climate chaos event, Big Oil cannot survive as an industry because it’s critically hooked to a last-generation energy technology and has within it fatal financing flaws.

Big Oil’s Price Dilemma

This gloomy outlook for the industry is supported by many knowledgeable insider sources. Former Guardian writer Nafeez Ahmed, an expert on the industry, and on climate change dynamics generally, recently reported on its price and debt problems for Motherboard, supporting the points I made above. Note his reference to this industry analysis, one of several he could have chosen:

We Need to Accept That Oil Is a Dying Industry

The future is not good for oil, no matter which way you look at it.

A new OPEC deal designed to return the global oil industry to profitability will fail to prevent its ongoing march toward trillion dollar debt defaults, according to a new report [pdf] published by a Washington group of senior global banking executives.

But the report also warns that the rise of renewable energy and climate policy agreements will rapidly make oil obsolete, whatever OPEC does in efforts to prolong its market share.

About Big Oil’s pricing problem, he writes:

[A]ccording to Michael Bradshaw, Professor of Global Energy at Warwick Business School, a price hike would not solve OPEC’s deeper problems. In fact, it could speed up the transition away from oil….

As oil gets more expensive again, there is more incentive to use alternative, cheaper forms of energy—like solar photovoltaics, which can now generate more energy than oil for every unit of energy invested….

“We are not in a business as usual world,” Bradshaw said. “Higher prices for oil and gas will drive investment in efficiency and demand reduction and also substitution, so they may actually promote structural demand destruction.”

Please do note the second paragraph above. Photovoltaics can now generate more energy per unit of energy invested than oil. The technology that produced energy from fossil fuel is a dinosaur, inefficient and getting more so every day compared to what’s emerging. It’s only the political grip of the kings of that industry, the Rex Tillersons and the David Kochs, that keep it viable.

Big Oil’s Debt Dilemma

About the industry’s debt burden Ahmed writes:

It’s not just OPEC that needs to be prepared. A report [pdf] published in October by the Group of 30 (G30), a Washington DC-based financial advisory group run by executives of the world’s biggest banks, warns investors that the entire global oil industry has expanded on the basis of an unsustainable debt bubble….

The industry’s long-term debts now total over $2 trillion, the report concludes, half of which “will never be repaid because the issuing firms comprehend neither how dramatically their industry has changed nor how these changes threaten to soon engulf them.” [emphasis added]

An $2 trillion debt burden with $1 trillion doomed never to be repaid — will kill even the largest industry once investors become convinced they’ll never get their money back.

Collapses Can Come Quickly

I’ll say again, collapses often happen quickly, especially collapses of investor confidence. And when they do, they don’t give much warning. The price floor simply gives way, and look out below.

The example most familiar to Americans is the stock market crash of 1929. But it’s by no means alone. As an earlier classic example, here’s what happened to the price of tulip bulbs, which had at one time been bid up by investors in a way that resembles the recent housing market. Once investors decided they could never get back what they paid for them — because there was no more “next fool” to sell to — the price collapsed almost immediately, each panicked seller panicking the next one.

Shown alongside that chart is the fate of the South Seas Company, a less-familiar bubble-and-bust investment of the same era. Different market, same story.

And here’s the NASDAQ price chart in the lead-up to the Dot-Com crash of 2002:

Price collapses often happen this suddenly, especially in an industry as fueled by “delusions” as this one is. See the article itself for a list of those delusions.

The Question for Americans — Not When But How

The only real question for us is not when the industry collapses, but how it collapses. It can collapse later, with global society collapsing at the same time — in other words, our Chaotic scenario above. Or it can collapse in a managed way — our Voluntary scenario above. Or finally, it can collapse relatively soon, a victim of its own economics, as outlined by Ahmed in the article, prior to the fatal rise of social chaos.

A sudden collapse that happens fairly quickly would also be chaotic, but that may not be bad, all things considered. Imagine what could happen in the country and the world if oil prices fall to, say, $25 per barrel from today’s price of about $50 per barrel. Smaller fossil fuel companies would disappear as suddenly as firefly light on a hot summer evening. The industry would be in economic turmoil, desperate for funding.

You can almost hear the cries for even greater government subsidies, added to the already massive global subsidies it now receives, $1.82 trillion, or 3.8 percent of global GDP. This would amount to our next big national bailout after the Wall Street bailout of 2009, as before with taxpayer money.

Would Americans foot the bill for a second massive bailout, so soon after the first? Would they do it if Big Oil is the recipient? I think the political chaos surrounding that public discussion would be deadly to Big Oil all on its own.

A chaotic event as well, yes, but also very welcome from a climate change standpoint. One alternative to a hated, massive Big Oil bailout would be to provide the same money as a subsidy to the renewables industry, giving it a needed “putting a man on the moon” boost to replace Big Oil. If that were the outcome of a Big Oil industry collapse, I’d take it tomorrow.

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97 comments

    1. justanotherprogressive

      There were still tulips after the tulip market crash;
      There were still new dot.coms after the dot.com crash;
      There were still new mortgages after the mortgage market crash;
      There will be oil for necessary purposes after the oil market crashes…….

      1. Temporarily Sane

        Unless you are extremely wealthy or have connections to people who are, your wellbeing probably won’t be on the list of “necessary purposes” if a doomsday scenario like the one the article discusses plays out.

        After decades of bigging up consumer capitalism as the only “good life” worth living the reality of global warming now requires us to dismantle the system of gratuitous consumption if we are to avoid seriously compromising our species longevity (non-human life forms are even more threatened by extinction).

        Our collective response has been to bury our heads firmly in the sand and gamble our future on the comforting delusion that consuming our way out of the crisis is possible until some awesome technology comes online at the 11th hour to save the day.

        Part of the problem is climate change is framed as something that may happen in the future and that “innovation” and “creativity” will invent nifty new technologies that will save the day, no compromises required! (We won’t think about the “issues” that will face the global south as the atmosphere heats up.)

        Neoliberalism and its co-opting of the state, which prevents governments from passing legislation that does not benefit the capitalist class, is a massive stumbling block. The oligarchs and their enablers had no qualms throwing Greece under the bus and even less exploitng earthquake ravaged Haiti, as a well known former presidential candidate knows all about.

        Neoliberal kleptocrats teaming up with neocon Blofeldian fantasists to save the world…what could possibly go wrong?

        1. HBE

          …gamble our future on the comforting delusion that consuming our way out of the crisis is possible until some awesome technology comes online at the 11th hour to save the day.

          +10 agreed. Wunderenergie is one of the biggest collective delusions of our time.

        2. justanotherprogressive

          Lets be realistic here. You can interpret what I said any way you want, but as yet, there is no alternative to kerosene for airline travel…..so whether or not we stop using oil for other reasons, we are still going to need some for the airlines.

          Sooo…..what are your ideas for fueling air flight? Because if you want to completely stop the use of oil, you’d better have some……No, we are never going to nuclear power plants for airplanes.

          Or maybe you think we will get rid of airplanes?

          I would love it if we stopped using fossil fuels – I don’t think we can do that entirely, but we can certainly cut back on their use with other actually CLEAN energy sources…..remember as with everything it is the dose to the environment that counts…..

          1. Paul Tioxon

            https://www.scientificamerican.com/article/impossible-electric-airplane-takes-flight/

            The fully electric E-Fan aircraft, engineered by Airbus Group, made one of its first public demonstrations here last week following it’s first-ever flight in France on March 11.
            The novel two-seater aircraft was designed from the outset for electrical propulsion, from its energy management system to safety features. In developing this technology, Airbus aims to one day reduce the aerospace industry’s carbon dioxide emissions by an order of magnitude.
            “It’s a very different way of flying,” said Jean Botti, chief technical and innovation officer at Airbus Group, “absolutely no noise, no emissions.”
            A series of lithium-ion batteries fitted into the wings of the plane are the sole power source for the E-Fan’s two 30-kilowatt electric motors. A 6 kW electric motor in the main wheel provides extra power during acceleration and taxiing to reduce electrical power consumption on the ground.

            1. Bob

              LOLOLOLOLOL ………………… and how do you generate the electricity to charge the batteries? How many tons of coal to enable your 15 minutes of cruising time?

              LOLOLOL

        1. heresy101

          Trucks will shortly stop running on oil! Electric trucks are not that far from production and mass usage.

          The Nikola One relies on hydrogen which is only currently available from natural gas. Its specs are impressive though. https://nikolamotor.com/one

          What is more likely to occur in trucking is battery swapping. 400-600 miles on a battery and then a 15 minute swap, which is time to pee, grab a donut, and refill the coffee.
          Panasonic and Musk are talking about 7 or 8 gigafactories in the next few years.

          But, where is all that energy going to come from? From the Duck! There is too much solar energy during the late afternoon with prices going negative. Someone is going to figure out that you can currently buy various solar companies on the cheap. That excess wholesale power can be sold to their subsidiaries (ie truck stops for battery switching). The development of this model can happen in a very short time. If robotic trucking can be made safe, then some trucking companies will supplant big oil totally and avoid the Teamsters Union.

        2. oh

          I’m looking forward to that! We don’t need the junk from China with the middle man makes a bigger profit than the manufacturer.

      2. Optimader

        Your analogies are tortured. None of tbem added real economic value. A transportable, high energy density fuel does.

    2. UserFriendly

      and eventually hydrogen or biodiesel could be substituted should we live that long.

      1. JohnnySacks

        Poor hydrogen, the (basically) universal zero CO2 element that everyone loves to lay hate and fear on in the context of energy. We can manufacture a billion tons of lithium ion batteries to support our everready energizer based future, but making use of the most prevalent element on the planet gets treated as a technical impossibility. If the Saudis have anything, it’s an enormous abundance of sunshine and wealth, both necessary to turn themselves into the largest researchers, marketers, and producers of hydrogen, but they’re just another set of greedy human idiots doomed to broil under the onslaught of their most abundant resource.

    3. PlutoniumKun

      I think the key thing to take from that article you link to is the demonstration that there has been massive investment in compact nuclear technology by the military (indeed, by several major miltaries) for nearly 70 years now. And its failed. The latest nuclear subs are still using pretty much the same basic reactor technology as the Nautilus 60 years ago, and almost all modern reactors are essentially scaled up versions of the same thing. The Soviets got closest in the 1960’s with their lead bismuth reactors for the Alfa Class subs, but they couldn’t make them reliable and cost effective.

      So remember this next time someone starts arguing that the latest thing in smart, modular nuclear power is going to save the world – it doesn’t matter whether its pebble bed reactors, thorium based fuel, sodium modulated cores, or whatever – countless billions of dollars, pounds, francs, yuen and roubles have been thrown into that technology by the military research establishments for many decades, with nothing to show for it.

      In the meanwhile, wind and solar, with, in comparison, small change invested in research, has been advancing in cost and output terms in leaps and bounds and is proven practical in almost all environments.

      1. craazyboy

        Dr Nemo agrees.

        Which reminds me. How many years until the rest of India’s 2% decide it’s time to migrate to London and the USA? Can’t be much longer.

        Also, saw a new Indie movie. The name escapes me, too lazy to look it up, so I’ll just write the mini review. It’s a real gut buster, but I think they where serious about it when they made it. But sometimes that can happen.

        It has a Hero, of course. Supernatural Powers too. He’s blessed with the usual Super Strength, but none of the rest of the cool powers that come along with it. Kinda a minority, disadvantaged, Super Person. They speak English once and a while, but mostly local whatever. The dialog seems simple enough that you don’t need to know the words, thankfully. I hate subtitles.

        Early on, our Hero discovers what appears to be a Giant Butt Plug made of granite. With Super Strength, he steals it from the bad villagers and can lift it high above his head and bellows loudly for effect, and sake of creating relevant dialog.

        I expected a short movie at that point, honestly not knowing what other purposes a Giant Butt Plug could have.

        Then the movie makers gave us a clue. A big, smelly, river!! After some deep thawt, I realized our Hero intends to stick the Butt Plug into the sewer outflow dumping into the ever smellier river!

        Had to stop watching at that point. Laughing too hard to continue. Decided to craft a NC movie review instead.

      2. PKMKII

        I see nuclear not as the solution to the problem, but a stopgap measure to bridge between the end of fossil fuel dependency, and when renewables/alternatives are developed to the point of being able to handle the bulk of the world’s energy needs.

        1. PlutoniumKun

          Why would nuclear have a role as a stop gap when in most countries solar and wind are already significantly cheaper and can be constructed on a large scale in a much shorter timescale?

          I would see it exactly the other way around. Solar and wind can be ramped up very quickly and can form the stop gap until some sort of safe, cheap solution can be found such as fusion or a better form of fusion power can be used in the next century.

          1. craazyboy

            Safe, Gen 4 Nukes are presently a sparkle in the Creator’s Eye…

            However, portable nukes are here, and only need application to the self driving rail transit market…then there be flying cars…Our “Last Mile”…hahaha.

            That gets amortized towards the end of your 30 year mortgage. That makes it GDP positive [good!]

        2. Antifa

          With Denmark already producing 100% of its energy with renewables, and Germany hitting 80% recently, nuclear is already in the rear view mirror.

          The biggest obstacle to nuclear expansion is the decade or longer it takes to build them — just to boil water into steam to turn turbines to generate electricity — when you can make electricity this afternoon with renewables.

          And no solar panel or windmill or geothermal well or tidal generator needs to be buried for 100,000 years.

          Nuclear is only kept around for producing bombs, which we never get to use. Or get to use exactly once, resulting in our extinction.

          1. Grumpy Engineer

            Germany only hit 80% briefly. In the middle of a sunny day. In pleasant spring-time weather when nobody was running either their heat pump or AC. Less than 12 hours later they ramped up their coal-fired stations to provide power in the middle of night. And back during the winter? Hoo boy. They burn a LOT of lignite during the winter:

            https://www.theguardian.com/environment/2015/jul/07/brown-coal-wins-a-reprieve-in-germanys-transition-to-a-green-future

            Denmark is absolutely dependent on interconnects with Norwegian dams. When Denmark has surplus power, they send it to Norway and let water pile up behind the dams. When Denmark runs short (which happens any time winds are calm), they release that water and re-import the energy. This only works because their wind-powered grid is significantly smaller than Norway’s hydro-powered grid.

            And it’s COSTLY. Denmark and Germany have the most expensive electricity on the planet:
            https://en.wikipedia.org/wiki/Electricity_pricing#/media/File:Electricity-prices-europe.jpg

            If electricity prices get too high, be prepared to see people embrace the “London solution”, regardless of the air quality concerns:
            http://www.telegraph.co.uk/science/2017/01/24/air-pollution-london-passes-levels-beijingand-wood-burners-making/

            People keep saying that wind and solar are cheap. I sure would like to see evidence of that in people’s electric bills.

            1. oh

              Solar and wind energy can never be as expensive as nuclear energy especially if you take into account all the external costs. Get real!

      3. Grumpy Engineer

        Wind and solar are proven practical in almost all environments? Hardly. They’re deeply impractical on any cold winter night with low wind. That’s the real problem with wind and solar. How do you deal with the intermittency?

        An all-renewable power grid can actually be accomplished when 70%+ of it is hydro. [Hydro actually has some controllability because you can let water pile up behind the dam for a later release.] But if hydro only provides 7% of your power needs (like it does in the US), the grid interconnection and ENERGY STORAGE requirements become deeply problematic.

        Check out the following paper: Burden of proof: A comprehensive review of the feasibility of 100% renewable-electricity systems. To quote:

        While many modeled scenarios have been published claiming to show that a 100% renewable electricity system is achievable, there is no empirical or historical evidence that demonstrates that such systems are in fact feasible… On the basis of this review, efforts to date seem to have substantially underestimated the challenge and delayed the identification and implementation of effective and comprehensive decarbonization pathways.

        When I read articles claiming that 100% renewables is feasible, the first thing I look for is a description of the energy storage requirements. Specifically, how many gigawatt-hours. If that information isn’t described, their analysis is incomplete. Do you know how many GW-hr it would take for renewables to supply all of US electricity? Do you know how large the biggest battery energy storage system is in comparison? The answers are NOT pretty.

        We turn away from nuclear at our peril. Right now, it’s the only carbon-free technology that we actually know will work.

        1. Knot Galt

          The SCALE at which we currently live is wasteful and unnecessary for survival. Our current thinking of energy needs is based on our capitalistic consumer based life style and economy. Therefore, your assumption on energy needs is based on maintaining the current economic models which we all know to be falling apart at the seams.

          It is obvious no matter how many of us dig in that this next level of change is unstoppable. What may be left will be the random outcomes that exist with survivability. Feasible will be what ever gets you to the next day?

          1. Grumpy Engineer

            The “scale” at which we live is indeed wasteful and unnecessary for survival, but people LIKE it. People don’t want to live in 250 square-foot “microhomes” and bicycle to work every day regardless of the weather. And how would we prevent people from doing otherwise? Seize and scrap their cars? Kick people out of their 3500 square-foot McMansions and tear them down? It would be the largest forced migration in human history.

            Given that people LIKE the modern lifestyle, I see that we have three choices:

            [1] Let people live their lives and watch carbon pour into the sky because we can’t get enough renewables online to make a meaningful difference. Wait to see if it all crashes.

            [2] FORCE people to embrace a leaner existence. At gunpoint if necessary.

            [3] Let people live their lives and use low-footprint, carbon-free energy technology that actually works (like nuclear) to minimize the impact on the environment.

            Population levels in developed countries are stabilizing. If we quit growing food for biofuels, we could actually let a lot of farmland revert to a natural state. I don’t think we’re doomed yet, but as of today we’re heading down path #1.

            This is why a number of environmental activists have embraced nuclear:
            http://www.motherjones.com/environment/2013/01/pro-nuclear-power-environmental-movement

            1. Vastydeep

              @Grumpy Engineer: “…we have three choices:”

              What do you mean “we” kemosabe?

              I agree that we are currently heading down path #1. The problem is, long before things get mandatory-Jimmy-Carter-cardigan-sweater unpleasant, the climate will have changed enough that crops will start failing. Maybe not huge failures, but if you’re subsisting now, you won’t be then. When masses of people start starving, #1 turns into #2 pretty quickly. The 4 Horsemen travel together…

              “Some are born lean, some achieve leanness…” We need to get serious about #2 before we have “leanness thrust upon us.”

            2. heresy101

              Nuclear is DEAD! Just as bankrupt as Toshiba and Westinghouse.

              If there is any nuclear in our electricity future, it will be from the Koreans and Chinese. They are working on Thorium reactors that work but need to become cost competitive. But, this is not the kind of nuclear that you are promoting; you are promoting the wonderful Westinghouse nuclear model.

              1. Grumpy Engineer

                You misrepresent me.

                I haven’t said anything about Westinghouse. And if you scour the comment sections of NC thoroughly enough, you’ll discover that I’ve explicitly pointed to South Korea as the example we should follow. Their nuclear reactors have been both reliable and cheap.

            3. oh

              When the 99% cannot afford this “comfortable” existence due to high energy costs, things will change and they’ll be leaner and the boys in the Nuke Industry will wail!

          2. Ancient 1

            You are correct. This Western lifestyle is not sustainable and will have to be corrected in order for our survival. Those of you who are familiar with the Great Depression and WWII recall how this country’s ordinary citizens’ lifestyle changed by force in order to survive. Will this happen again, voluntarily or by force?

      4. Thor's Hammer

        Plutonium, I think you are confusing the needs of the military/industrial system with the requirements for using nuclear reactions to produce electricity.

        Since the military has an endless wish list for technologies and insatiable desire to create profit opportunities for it’s corporate owners, of course they would like to have compact nuclear power plants so every small group of soldiers could use one to make espresso in the morning– or at least have one for the officers kitchen. The military’s sociopathic desires have little to do with citizen’s needs for safe and affordable electricity.

        Civilian conventional light water reactors are not primarily intended to produce electricity inexpensively and safely. Their first purpose is to support the industry of making nuclear bombs. Their secondary purpose is to create a monopoly for the makers of zircronium solid fuel rods and a cost-plus boondoggle during construction. Its not surprising that it takes 10 years and ten billion dollars to build a new plant.

        What would a nuclear power system look like if it were intended to provide a base load power source for a modern industrial society?

        1- Totally reliable fail-safe design
        2- Standardized assembly line production
        3- Difficult or impossible to use for making weapons
        4- Automatic cold shut-down into permanent safe storage mode with no human intervention necessary
        5- Minimal volume of radioactive waste, and that with a short half life instead of 10,000 years
        6- Continuous liquid refueling
        7- Fuel supplies sufficient for thousands of years
        8- Plant cost potentially 1/10 that of current nuclear reactors

        The basic design for such a technology was developed at the Oak Ridge National Laboratory 60 years ago but was never developed beyond a successful operating prototype. There is no technological barrier to the LFTR being implemented. Its fatal flaw—- it is not good for making nuclear bombs.

        And there you have it— a perfect example of why the human race would rather march lock-step over the cliff than attain the wisdom to solve it’s dilemma.

        1. Jeremy Grimm

          After hearing about all sorts of wonderful inventions and developments that for one reason or another never found their way to realization — I am skeptical of this wonderful nuclear power design of 60 years ago. How many nuclear power plants were devoted to generating materials for nuclear bombs? How many nuclear power plants do we have scattered around the country? There must be more to this story about the clean-safe-cheap nuclear power system than “it is not good for making nuclear bombs”.

          1. Thor's Hammer

            Jeremy,
            Of course there is more to the story. Politics. Even as simple a fact as Nixon wanting to direct jobs to Lockheed in his congressional district was sufficient to sway the entire course of an industry. If you think that superior ideas,better technologies, or higher moral standards always triumph in the real world you are just being naive.

            I suggest you spend a few hours learning about the technology and history of the LFTR reactor design, then come to a engineer’s or logical layman’s conclusion on your own.

            For my part, once I understood what an engineering nightmare the standard pressure water nuclear power plant is I was shocked. And awed that anyone could locate 6 of these hypercritical design disasters behind a seawall predicted to be breached at a probability of once every century or two. And then locate the spent fuel pools directly on top of the reactor where they are bound to be blown apart in any runaway cooling scenario. And locate the emergency back up generator systems where they were bound to be flooded.

            There is no limit to human stupidity when combined with greed.

            Actually I am as skeptical as you — not about the technological superiority of the LFTR reactor, but about the capabilities of humans to manage any complex system over the long run.

  1. Andrew

    The comparison here is not apples for apples. Fossil fuels are inherently stores of energy until it’s needed.
    Comparing them against pv panels ignores the energy cost of electrical storage, eg batteries, which is probably at least as great again as the energy cost of the pvs themselves. Let’s see those energy costs before we can make a valid comparison.

    1. a different chris

      Stores of energy where? I can walk outside and get sunlight. My car has to drag around this “store” of energy, and I better see a gas station before it runs out.

  2. Disturbed Voter

    Renewalbe transportation … it is called a horse. And only the upper classes will have them. The rest of us will walk. It is important to keep the peasants distracted by Dr Who fantasies.

    1. Conrad

      I’ll see your horse and raise you a bicycle.

      No need for fodder, stabling or grooming.

      1. reslez

        Unfortunately requires exotic materials like rubber, an industrial base, and well maintained roads. Unless you were going for one of the Dr Who fantasies.

    1. a different chris

      ..and share buybacks/dividends is what you do when there isn’t anything else useful you can see to do with the money…. or at least it was until predator capitalism became the thing. But for government-owing behemoths like Exxon-Mobile that is still true.

      And actually it probably is predator capitalism because what I am talking about is a wind down of the assets existing in the firm, but as you point out they seem to be borrowing money to do this.

    1. a different chris

      Is not good enough for what? The world isn’t going to change the way it does things?

    2. tejanojim

      I happen to have the paper edition of that section of the WSJ. Four pages back, albeit in a different article, they point out that investment in exploration has collapsed, and that discoveries of oil last year were a quarter of what they were a decade ago. Peak demand indeed.

      1. Art Eclectic

        I’d like to see the comparison chart of investment in storage technologies. Ultimately, that’s going to solve part of the problem (at least for buildings). Transportation is a whole different carload of worms. The market changes that would need to take place to move the entire transportation system to something other than fossil fuels is astronomical.

        It appears from political moves being made here in the USA, the plan is to keep extraction and profits rolling for as long as possible while the squilllionares buy small islands somewhere with renewable generation and their own food/water supply. The resulting chaos when the bottom falls out will be one way to deal with this excess labor problem that is only continuing to grow. The poorest will be the first to go (or maybe not, they may be far more adaptable than working/middle class folk dependent on their SUV’s to commute to jobs that grow more shaky by the month).

        It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able to adapt to and to adjust best to the changing environment in which it finds itself….

        1. reslez

          > while the squilllionares buy small islands somewhere with renewable generation and their own food/water supply

          I suppose the idea is similar to the Roman elite who retreated to the latifundia while the core fell into chaos. Unfortunately those elites were swept away, like ours will be, by others who command the loyalty of armies, who serve alongside their men, and bloody their own hands. Hiding out on your own private island is a great way to produce illiterate, decivilized descendants who get conquered. That said, it’s not a bad life in the short term, and that’s all they care about. Just another version of the death bet.

  3. Jim Haygood

    Big Oil cannot survive as an industry because it’s critically hooked to a last-generation energy technology and has within it fatal financing flaws.

    Pure know-nothing hysteria. Makes me wanna back up the truck and shovel in oil stocks till me hands bleed.

    Check out the XLE energy sector’s performance since Feb 2016, when nearby crude oil bottomed at $26.21 on Feb 11th. It’s up about 28% since then, including divvies. Two-year chart:

    http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=xle&insttype=&freq=1&show=&time=9

    When ax grinders like Gaius are crying doom, your best policy is two-fisted buying. I’d lay in some heating fuel too, for the coming mini ice age.

    1. a different chris

      Nice so we know at least one guy that will drive us from Bull Trap to Return to “Normal”. Thanks from us sleepy investors, it will give us a chance to cut our losses!

    2. lyman alpha blob

      Hmm – that chart looks like it could be part of the ‘Main Stages of a Bubble’ chart above, representing the denial, bull trap and return to ‘normal’ phases.

      Next comes the ‘Look on my works, ye Mighty, and despair’ phase.

      Of course that could just be wishful thinking on my part.

    3. Antifa

      The bloody number that is killing oil is energy expended to produce a barrel. It’s slowly creeping closer and closer to one for one, or worse for oil sands production.

      This produces economic costs to civilization that make fossil fuels a perfect example of burning the lumber in your house to heat it. Burn enough studs, and the roof falls in.

    4. gepay

      I agree with Jim Haywood here. That was a terrible article. Even the people who built the seed vault didn’t believe in the global warming predictions Almost nobody for that matter deals with them like they are real as they would a rattlesnake in the living room. Conventions about the need to cut man made CO2 where everybody flies to . College campuses are some of the worst energy conserving places around Environmentalists who do nothing about the Military industrial complex.Al Gore’s electric bill big enough to support several regular families. I consider it another triumph of Bernays that CO2 is now thought of as a pollutant. Not that there aren’t real problems with burning fossil fuels Or real environmental problems that need to be dealt with. The idea that man will cause catastrophic climate change by changing 0.01% of the atmosphere is absurd.That climate science is settled is another promulgated absurdity. .

      1. lyman alpha blob

        Your word salad is a little difficult to comprehend but it certainly seems like you are saying that scientists once again underestimated the effects of climate change before you conclude that climate change isn’t actually happening.

        And you are aware I assume that water is not normally considered a pollutant either and yet people can still die from consuming too much of it?

        1. gepay

          I did not say that. the climate is changing all the time (probably why the name was changed from Anthropogenic Global Warming to Climate Change). I disagree with the hypothesis that man made CO2 is the main driver of the incredibly complex and (in the scientific sense of chaos) chaotic system of the climate of the Earth. Of which the state of climate science is in its infancy and is certainly not settled. I disagree that man made CO2 is the driver of changes since 1880. The predictions of catastrophe come from computer models. Most NC readers will agree that computer models can’t successfully model the human economy – a subset that has effects on local weather like the urban heat island effect yet the climate of Earth can supposedly be modeled well enough to make predictions. Around 50% of meteorologists, very familiar with computer models used to make predictions do not believe the results of computer modeling are accurate for predicting the future as the weather models are only fairy accurate for a day or too.
          J. E. Hansen who is a renowned cheer leader and protagonist of global warming said in 1998 (Hansen, J. E., Sato, M., Lacis, A., Ruedy, R., Tegen, I., and Matthews, E.: Climate forcings in the industrial era. Proceedings of the National Academy of Sciences 95 (1998), 12753-12758:

          “The forcings that drive long-term climate change are not known with an accuracy sufficient to define future climate change … The natural forcing due to solar irradiance changes may play a larger role in long-term climate change than inferred from comparisons with general circulation models alone.”
          The models can’t even predict the past without fudging the parameters.

          1. Gaius Publius

            Sorry, gepay, but this reads like a run-of-the-mill Heartland Institute* screed. Even down to the quote from James Hansen, a name that you know carries respect, but a quote that most readers won’t spot as twenty years old because they’ll skim through the attribution.

            The “it’s just models” meme is standard fare for them (Heartland), but of course, most of climate science is not just models. It’s either foolish or disingenuous to say so.

            Hansen himself has done a ton of work on paleoclimate research — looking at data about what Earth’s climate was like during earlier inter-glacial warming periods, like the Eemian, whose temperatures we’re reaching and will surpass.

            If you want scary stuff, that’s the place to start. Check the height of the sea level during the Eemian. New York City is under water.

            Again, sorry to have to say this, gepay. I want to think your comment is more than just “agent work,” but it reads like something professionally crafted to make sense when it doesn’t. Swallowing and disseminating Heartland Institute-type material wholesale isn’t the same as thought, at least as I see it.

            *For those who don’t know, the Heartland Institute is one of the preëminent designers and purveyors of professionally crafted climate denier material. Of course it’s Koch funded, as well as by other oil giants. If the comment I’m responding to didn’t come directly from them, it came from somewhere similar.

            The tell is the Hansen quote from 1998. No one just stumbles across something as old as like that in casual reading. And no one who is actually ingenuous presents it as representing James Hansen’s current thinking. It’s there just for show, because deniers know that Hansen gets the climate-interested public’s attention.

            GP

      2. Peter VE

        0.01% change is about what I get in BAC from drinking a beer. It doesn’t cause any catastrophic change in me, in fact the opposite, but it does produce a noticeable change. There are noticeable changes to the relatively stable climate which coincided with the growth of the human population over the past 10,000 years. This is scientific experiment with no controls.

    5. oh

      Enjoy making $$$ with your oil stocks and when they pop, I’ll see you under a bridge. How come you didn’t make money when it went up 28% from the low? You mean it was hot in your boiler room?

    6. PhilM

      Saw a headline on ars technica today about bitcoin. $1000 in 2010 now worth $35 million. I wept bitter tears.

  4. HBE

    I believe the fact that the US’s status as reserve currency in large part due to oil, ensures the oil industry will not be phased out or collapse from internal pressure.

    It is too integral to the hegemon’s status to be allowed to fail, ever.

    The US is shortsighted enough that the geopolitical and economic benefits of an oil backed reserve currency, will likely outweigh the negative midterm effects of climate change and environmental instability.

    The most likely scenario is, oil isn’t going anywhere until climate change gets so bad the US (nor anyone else) can play hegemon.

    1. craazyboy

      Oh, dunno ’bout that. Has the perfect combination of re-flation and depressionary cost increase due to currency being whacked 50-75%. Neo dreamlike quality stuff. Cut 100% of the 99ers purchasing power combined with depressed economy and increased job dependence to pay off debt overhang.

      Black donut hole economics – without any human intervention necessary. The Neolibcon World runs itself – hands off! Self driving global economy. WW3 a jobs guarantee. But no one shows up because gas costs too much. Stagflation sets in. Everyone waits it out in Flyover Camp. Malls start doing well.

    2. a different chris

      >oil isn’t going anywhere

      I do agree that the US will be a big problem.. but it’s less than 5% of the world’s population. So when you say “oil isn’t going anywhere”.. that might just be exactly the problem. It won’t be going into the Chinese/Indian’s/Europeans suddenly non-existent gas tanks. It may literally not go anywhere at all… just sit in Oklahoma until our government finds a way to force feed it down our (again, 320million/7+billion) American throats.

    3. Thor's Hammer

      “US’s status as reserve currency in large part due to oil”

      Actually the US position of being able to control the world reserve currency is due to its having been able to maintain military dominance over the rest of the world.. And the primary role of the armies of the Empire has been to maintain access to the world oil supply by simply printing money and using it to keep the oil flowing into our SUV tanks.

      No amount of bloodshed can change the fact that a finite resource that is in high demand will eventually become scarce. In the case of an energy source the measure of impending scarcity is decreasing EROI. Cooking oil out of tar sands, drilling from floating platforms 10,000′ above the sea bed, squeezing oil out of shale rock, and trying to build platforms in icebound arctic seas—- could there be more graphic signs that the end is nigh?

  5. Moneta

    which can now generate more energy than oil for every unit of energy invested….
    ——
    I doubt all energy inputs were included. Our entire economic system runs on oil and the development of new technology depends on the entire system. Huge sunk costs.

    No big technological developments without transportation which is oil intensive… something tells me they are not including the energy requirements of all global infrastructure that permits the development it these new technologies.

    Also, I thought they were starting to see problems with the supply of silicon…

    1. Normal

      …problems with the supply of silicon…

      Sarcasm? I couldn’t tell from the context.

        1. UserFriendly

          There are so many rocks that are silicon, they may be running out of cheap pre pulverized rocks. But not silicon.

          1. Kurtismayfield

            This and when we get desperate we can always mine the moon.. I believe its surface is 50% silica. (SiO2)

        2. Normal

          I wouldn’t worry about the chipmakers, they will always be able to outbid the concrete industry. The cheapest grade of IC silicon goes for about $400.00/lb.

  6. Normal

    Interesting article but sourcing charts from Quora and other questionable sources compromises the credibility of the article and the author. This is not even necessary because original sources are available.

  7. PKMKII

    Assume a combination of the voluntary climate change response, and the industry collapsing under its own debt. Heavy amounts of capital put into developing sustainable, renewable energy sources. Question is, who is the leader in the new energy paradigm? I fear not the USA. Too many political and ideological influences keeping us from accepting that we’re not returning to a mid-20th century standard, that we do in fact live on a dynamic planet. Then the question becomes, just how much are the Chinese going to charge us through the nose for the technology they’ve been developing?

    1. Altandmain

      If the Chinese continue to pursue mercantilism, then perhaps less than you think.

      They desperately need those trade surpluses and will likely sell for less.

      The China price :

      – Devalued currency
      – Wages suppression at home
      – Very low margins, with sometimes goods being sold at variable cost or less

      That is to prevent a legitimacy crisis of the CPC too.

  8. JimTan

    It seems like over the past few hundred years the world economy has had a ‘super commodity’ which was valued at some disproportionate share of this planets annual GDP, and required some terrible moral corruption for its extraction or use. In the 1500’s there was Sugar and the slaves required for its cultivation, from the 1700’s through the 1800’s there was Opium and Cotton which also required slaves, and now we have Oil. Hopefully when Petroleum products are replaced, we can break this pattern of history.

  9. Rajesh

    Solar cannot form, even with wind, base power generation in most regions as of now. It can be used as an intermittent power source in the afternoons. It will take significant tech breakthroughs to be able to complete with the latest gas turbine power generators out there. What if scientists find a more effective way to transport methane?

    1. heresy101

      It is clear that Gaius Publius is the only one that lives in California and sees the changes that are rapidly occurring here. Solar, wind, geothermal, and biogas are developing rapidly, so rapidly that batteries haven’t caught up yet.

      Compete with the latest gas turbine generators!? Hah, on the CAISO grid, gas turbine generators (combined cycle) are being shutdown or retired. Calpine is shutting down four or five because it takes too long to run to be economic. One of the most efficient units (6800 heat rate) was projected in 2012 to have a capacity factor of 68% but currently runs at 17% because it doesn’t match CAISO’s needs.

      Combustion turbines can come up quickly (10 minutes) and shut down quickly but most of them are in the 10,000 heat range. SCE has one or two combustion turbines combined with batteries.

      There are a number of battery technologies besides lithium (zinc &flow batteries) that can change things drastically. After all, a 100% renewable electric grid by 2035 is not that far away!!!

  10. Mickey Hickey

    Two items have been neglected and they are the lessons of history and the need for a base supply on the longest and coldest nights of the year and the longest and warmest days of the year. We have moved from wood, peat, dried dung to coal then gas. Coal and gas allowed economical production of electricity which for the most part eliminated water mills and wind mills. Municipal lighting was gas which was produced using coal heated in a closed vessel (retort) and distributed via pipes to the gas light standards. Byproducts that drove the industrial revolution were coke, coal tar, ammonia. Further processing resulted in dyes, sulfa drugs, liquid fuels. In the 1920s boom electricity generation and distributionexpanded rapidly and by 1955 even the remotest parts of western Ireland had electricity. Thanks to Siemens and the German Gov’t. As we now know the growth of electricity generation and distribution drove progress and prosperity up to the present day. My father bought a railway maintenance building in the 1960s’ that had all tools driven by first a coal fuelled steam power plant then replaced by a diesel power plant. A rotating shaft with canvas belts and pulleys ran the length of the building and work stations could be placed anywhere along its length. Compare that to today with portable tools with on off switches and a power plant that was full on during all working hours even for a single tool.
    As wood was depleted stone (later concrete) was used in all buildings except in countries where wood was available and practical. Wood has insulating properties which makes it useful as a building material in cold climates. I saw in Germany a couple of years ago a multichambered building brick which had very good insulating properties. Everywhere one looks progress is being made in energy conservation. The major lesson of history is that we use what is acceptable, cheap,available and convenient until something that is acceptable, cheaper, readily available and more convenient comes along. PV is currently that thing and its only drawback is periods of darkness and heavy cloud cover. There is also the issue of lack of availability when and where it is needed most. That is in northerly and cold climate areas in winter. This means that 100% of the base electric generation and distribution system must be available 24 X 365. It follows that PV/Wind/Solar is a cost layered on top of existing costs minus fuel consumed. I will follow up later.

  11. Thuto

    Maybe big oil companies should follow Clayton Christensen’s advice from his classic book “The Innovator’s Dilemma” and invest in emerging renewable energy companies to hedge against this impending collapse. I don’t see this happening though as it would take truly visionary oil company executives to execute such a strategy…

  12. Loblolly

    PeAk OiL Everybody ! ! !

    Every twenty years it rears it’s ugly head and it’s right on time!

    I too used to be a true believer in lofty sounding sciency things that justified austerity policies.

    Then I got tired of watching those that pushed these campaigns enjoy the high life while my standard of living dropped.

    Get stuffed.

    1. jrs

      I believed in it until I realized there is likely enough fossil fuel for mass extinction of life on earth due to climate change driven heat death of the planet before we run out of the damned stuff. So running out of oil at that point would just be bitterly ironic. It’s certainly nothing to be worth focusing on it seems to me.

    2. Vastydeep

      Maybe, but perhaps things keep looking GREAT because we’ve now run ZIRP for 8 full years, and quantitative easing has provided a torrent of funds for even the most cash-flow-negative of ventures. Fracking is a great jobs program, and all that cheap gas keeps goosing the economy up to those lofty not-quite-3%-EVER reaches of all-of-the-above president Obama!

      Rates stay low because they have to. If the money-spigot turns off, it’ll be COLD that winter…

  13. Mickey Hickey

    Human behaviour is the major determinant of how life on this planet progresses in the short term. In the long term if human beings spoil their nest the planet will shrug them off in the same way hundreds of species have been eliminated. So we should not worry about the planet we should certainly worry about our personal and collective behaviour. Yes Sheila life can and will go on without us. I saw Halibut at $65 a pound in Costco a few weeks ago and I thought at that price the incentive to fish to extinction is strong. And as they would say in Ireland God help the Halibut because man certainly will not. Fuel will go up in price and that will reduce consumption. Fracking is a flash in the pan and while lucrative now as a result of previous investments in oil exploration its lifespan will be measure in decades not centuries as in oil and coal. In Ontario Canada where I live the Provincial Gov’t starting about five years ago invested heavily in a pilot project that subsidised Photovoltaic solar panels for residences and businesses. They guaranteed that excess PV generated electricity could be sold at CAD$0.42 per Kwh to the Electric Public Utilities which in Ontario are largely Gov’t owned. Electricity (legacy) prices generally run CAD$0.03 to CAD$0.15 and varies by time of day, day of year and weather conditions. The public utilities blend the PV pricing into the legacy pricing which results in higher costs for all consumers. The blowback politically was enormous, to the point where the Gov’t has reduced prices this year due to an election coming up next year. This means load up more debt in the short term and pay more in the long run. In any case the voters see PV as an anchor on their wallets.
    In the 1960s’ I worked for a company that designed and manufactured process control systems for paper mills. They now had a contract to provide process control systems for Chalk River Nuclear Research Facility and I was hired to work on that. What I learned there is that nuclear facilities should not be owned or operated by the private sector. The opportunities for cost reduction and adding risk are myriad and will be availed of by any right thinking bisinessman. The standards were exacting and cost or time delays were no excuse for cutting corners. I went from there to Air Traffic Control communication and navigational aid sytems. Over the years I have been saddened by the public opposition to nuclear generating plants. The well publicised fiascos at Three Mile Island, Japan, Sellafield and Chernobyl are indeed cause for concern but also events that can stand as examples of what to avoid. One of my brothers worked on a contract at Sellafield, he is a welding and high pressure vessel specialist and he told me that standards are high at Sellafield from his perspective. Hanford near Seattle is now a good example of how the US Gov’t saves money on nuclear storage and disposal of nuclear waste. No shortage of funds to drone the Middle East into the dark ages with negative returns on the investment. I have daughter in law who is on a Canadian Gov’t panel charged with overseeing selection, design and management of nuclear waste sites in Canada. She tells me that her brief was risk reduction over centuries with no direction in any way. shape or form to underestimate risk or reduce costs. Life will go on, hopefully the majority of good people will win.

  14. Jeremy Grimm

    I think we’re definitely on-track for the Chaotic climate-response scenario.

    It’s kinda hard to replace several million years of solar energy stored as oil, coal, and natural gas. Solar cells, windmills are definitely cool but they just don’t make up the difference. The nicest thing I can say about nuclear power is that it’s “problematic”. The new nuclear toys are cute but I’ll take a closer look at them after the old reactors are shutdown and cleaned-up — but so far it seems like the shutdowns and cleanups are temporary at best. They keep collapsing or leaking into the groundwater and air. Unless kindly aliens land and give us some amazing new energy technology I’m afraid we’re stuck.

    As for dealing with the problems coming up as oil, coal and natural gas start their decline — or crash — or who knows what — we can’t even manage to fill the potholes in our roads let alone repair the crumbling bridges. We aren’t maintaining what we have let alone planning for future problems. Mass transit is a bad joke. Try getting cross-country by bus and train. What about our just-in-time inventories of food and on-line shopping all reliant on truck transportation. What about our deconstructed industrial base scattered around the world? How will that work without running diesel powered ships and trucks? We’re headed further and faster down the wrong paths.

    Global Warming sets new records for exceeding the worst case predictions of our climate scientists who are either ridiculed or ignored by the public and pilloried by our governments of the Corporations by the Corporations and for the Corporations. Cut carbon dioxide emissions? Leave the oil in the ground? Get real! There’s no sign of that happening.

    I’m growing skeptical that a climate crisis would trigger action to address climate change. I think the most immediate impact would be further bolstering of our militarized police force and de facto nullification of the Posse Comitatus Act restrictions on the use of the U.S. military for controlling the U.S. populations.

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