How to Read This Blog


HOW TO READ THIS BLOG:

To get the most out of this blog, I recommend beginning with the earliest post and proceeding in chronological order. For the most part this blog, like a planning document, builds on data and rationale in a linear manner. You may find value in individual posts taken in isolation, but I suspect your experience will be richer if you follow the intended progression.

Monday, May 23, 2016

WPS 2: Inventory of Existing Conditions- Population and Energy Production

The next step in our little thought experiment is where things begin to get real.  During Visioning we think mostly about hopes and dreams, but when we inventory the existing conditions of our study area we need to collect data.

The following broad categories are an attempt to lump together digestible topic areas that taken together define the state of Civilization today.


Population

The current human population of the world is about 7.4 billion people.  What's important is not so much the number- whether it's 7 billion of 20 billion- but rather the trend.  If you look at a trend line for just the past 50 years, or 100 years, you'd see what looks like the "slow steady growth" that we're so comfortable with in other areas of our lives.  The rate of increase peaked in the 1960's at about 2% and is currently 1.13%.  That doesn't sound so bad.

To really understand the impact of this exponential increase, however, we have to look at a longer time frame.  The graph below shows the trend of human population from the late stone age to the present day and paints a much different picture for us.

Picture
From this perspective, we can begin to discern a narrative about human population growth.  And of course, it's possible to extend the x-axis much further back in time without changing the picture much, whether you go back 200,000 years to the emergence of the species Homo Sapiens, or 2 million years to the first of our ancestors to bear the genus Homo.

What you'll see, even if you go back the full 2 million years to Homo Erectus, is that hominid populations remained mostly stable numbering in the tens to hundreds of thousands of individuals.  Like all animals, they were a part of the ecosystems in which they lived.  Then a mere 10,000-12,000 years ago, agriculture emerged and along with it civilization and these numbers began to expand exponentially.  As dramatic as these changes were, they pale in comparison to what has happened in the past 200 years.

We aren't yet projecting into the future- but at this point we planners should make a mental note of something to return to.  Major red flags should be going up and we aren't even past our first data point.  The shape of the curve above is troubling- very troubling.  I honestly can't imagine any piece of data that I might look at and see this shape and not be concerned.  If I didn't know what this was, and just looked at a chart showing 2 million years of low stable numbers suddenly launching vertically to many times the original size, I'd speculate that this was some type of highly invasive infection or infestation that will end badly.  So let's stick a pin in this idea for future exploration.

In attempting to explain our existing conditions, what could account for this exponential explosion in population in the past 200 years?  The answer leads us to our next data point.


Energy Production

What was the industrial revolution?  Why was it an inflection point in human population?  At it's heart the birth of industry was about the change to a new source of energy to power machinery.  It marks the transition from human and animal power to fossil fuel power.  The increase in human population matches the increase in energy consumption, and fossil fuels empowered humans to consume absolutely huge amounts of energy.


The energy embodied in fossil fuels is so massive that it not only completely replaces the need for human and animal energy, it puts an amount of energy in the hands of every human being that far exceeds anything in history or prehistory.  The energy at the disposal of every person through the gift of fossil fuels is equal to the energy produced by approximately 150 humans working 24 hours a day, 365 days per year.  It really is as if we each have 150 energy slaves at our disposal: carrying us around, cooking our food, heating and cooling our homes.

Slave driver: Energy use of a single person, at top, as represented by all the people it would take to generate it with sheer muscle power

Today, 200 years later, fossil fuels still account for the vast majority of energy production.  Less than 20% of the worlds energy comes from "renewable" sources.  Even this figure can be deceptive unless we look at what is included in the definition of renewables.  About half of this category consists of "traditional biomass," which means the burning of wood and animal feces (technically renewable resources but probably not what we think of when we consider renewable energy).  The things we think of as renewable- the basis of the "green economy" and many predictions of future independence from fossil fuels- make up a very tiny percent of energy.  Solar, wind, and geothermal make up less than 1% of total energy.  If you add hydro power, we're still short of 5%.



Another important distinction is the difference between total energy and total electricity.  Many of the renewable resources currently available to us are viable means of producing electricity, but this may not translate well into other energy applications.  Transportation and many heavy industrial processes consume a large amount of fossil fuel energy that is not so easily offset with solar panels or wind turbines.  Roughly 80-85% of the worlds primary energy supply is applied in some other form than electricity, meaning just 15-20% is used for electricity generation.  Generally, we can state that our electric production is coming from coal, while oil and natural gas are powering transportation and industry.  In this sense oil is the lifeblood of the economy, and as such deserves particular attention.

In our discussion of existing conditions, it's important to introduce the phenomenon of Peak Oil.  We'll explore this topic in more depth when projecting future conditions, but for the moment we should acknowledge the concept and illustrate the current supply and demand dynamics of oil.  Peak Oil is about a predicted peaking in the production of oil.  This does not mean that there isn't still oil under the ground.  It means that the world has reached a point where the cheap, easy to extract oil has already been tapped and that increasing amounts of oil can no longer be economically extracted, resulting in a decline in the rate of production.

What are the differences in the types of oil and the ease with which they can be extracted?  The oil we typically think of is called "conventional oil."  That's the stuff that made the Beverly Hillbillies rich.  Back when we were just starting this "industrial civilization" thing you could fire a shotgun at the ground and the black gold would just come spraying out.  But conventional oil isn't so cheap and plentiful any more.  Even the cost of production for the Organization of Petroleum Exporting Countries (OPEC) has risen.  This has led to the development of all kinds of radical new technologies to produce oil products or substitutes at higher cost.  These techniques include shale oil (requiring hydraulic fracturing, or "fracking"), the open strip mining of tar sands, and conversion of coal and natural gas into petroleum products through chemical processes.

When we hear that Peak Oil hasn't happened because oil production is still increasing, this is technically true only if we include these unconventional petroleum liquids.  Non-OPEC conventional oil production peaked in November of 2010 and total world conventional oil production peaked shortly thereafter in January 2011.  It should be noted that these are conservative estimates; some sources peg the peak of conventional oil closer to 2005.  Since that time, the increase in oil production has come entirely from more expensive unconventional sources.  Peak oil is here- and the decline side of the production curve has only been masked because of fracking, tar sands, and coal and natural gas liquid substitutions.



OPEC countries now control the bulk of this remaining cheap conventional oil, with the cheapest by far coming from Saudi Arabia.  Countries outside of OPEC, like the United States, have higher production costs.  Unconventional production like shale oil and tar sands are substantially more expensive to produce.  Both the chart above and the chart below should have our "planner senses" tingling that something important might be going on that could impact our models of the future.  At the current moment in time, there is a shifting in the source of the most important resource to our community, and this shift is from less expensive to more expensive.



So if these are the COSTS of producing the oil (Supply), how does this correlate to the PRICE of oil (demand) that we see flashing on CNBC right now?  At the time of writing, the price of oil is about $47 per barrel, but just a few months ago the price was as low as $27.

In order to understand this relationship, we'll have to delve deeper into our next topic area: Economy.

Next

In the next post we will continue our exploration of the existing conditions of Civilization by examining the economy and current geopolitics.


No comments:

Post a Comment