Lloyd's of London issued a report two weeks ago warning that businesses must take our peak oil problems seriously. The report predicts oil prices above $200 per barrel by 2013, and it warns businesses to take action now or face "expensive and potentially catastrophic consequences."
News that the world's largest insurance market sees significant risks in the problem of peak oil was reported in the UK media
, but I did not see (and have not been able to find) a single mention of it in the mainstream US media.
If the US media doesn't cover the story, does that mean the story isn't real? Even if the story comes from a reputable organization such as Lloyd's of London? What is going on here?
The problem is that "peak oil" is a very expensive story to develop and report. Our media prefer to report on "events" that they can simply "cover" and comment upon. For example, the media spent very little time or effort on the risks of offshore drilling or corrupt and ineffective government regulators before the BP Deepwater Horizon catastrophe happened. And you can bet that they will pay only passing attention to the complicated environmental consequences of that spill now that oil slicks on the surface are evaporating (no more photos of oil soaked pelicans) and the underwater video stream no longer shows oil gushing from a broken pipe.
Peak oil is not so dramatic as an oil spill, and its consequences are only felt over a period of years or decades. It is not the end of oil. It is simply the end of increasing oil reserves and the start of declining oil reserves.
As Lloyd's of London warns, however, peak oil will will be very disruptive over the coming decade or so. As reserves start decreasing instead of increasing, supplies will tighten and prices will rise. That will happen even in a weak economy. And as demand grows dramatically in developing markets, prices will rise dramatically.
It does not take an economics degree to understand that demand will grow dramatically in the coming decade. Billions of families in China, India, and other growing economies want more cars and SUVs just like the American dream. That's why, even in a Great Recession, GM is already selling more vehicles in China than it sells in the US. As the economy improves, China alone will put 2 or 3 times as many vehicles on the road as are on the road in the US today. Plus billions of people in China, India, and other developing countries would love to have lawnmowers, pickup trucks, ATVs, buses, recreational vehicles, air travel, and ocean cruises. Plus pharmaceuticals, plastics, cosmetics, and thousands of other products that contain petroleum by-products. Plus more factories and industrial plants to make all these oil-derived and oil-consuming products.
All of this dramatically increasing oil demand will occur as the accessible oil reserves start declining.
Now if only we could figure out a way to put that on streaming video.
Greece announced today that it will invest 12 billion euros ($15.6 billion) in environmental and energy projects over the next five years. This amounts to more than 10% of the 110 billion euro bailout fund it received from the EU and the IMF.
If successful, Greece will get 40% of its electricity from renewable sources within 10 years, compared to only 4% today.
Imagine what 40% renewable electricity could do for an economy and an environment. Yes, it requires a large investment up front, but within 10 years Greece could get a significant portion of its energy needs from sources such as wind and solar that have zero fuel costs. Talk about a competitive advantage. Businesses in other countries will be paying inflated prices per ton of coal or barrel of oil, while Greece will have zero fuel costs for a significant portion of its energy needs.
Considering all the ways IMF bailout funds have been used by countries in the past (where, exactly, did all that money go?), investing in infrastructure that will reduce energy costs and emissions over the long term has to be one of the better plans.
Greece hopes to leverage its investment by attracting an additional 32 billion euros of private sector funding for energy infrastructure projects such as natural gas pipelines and storage terminals. It also hopes to create almost 200,000 new jobs in the process.
This will be fascinating to watch. Getting 40% of electricity from renewable sources and creating jobs over 10 years is not a pipe dream. I wish Greece all the best on this venture….and hope they succeed as an example for the rest of us.
I am always puzzled why people can get very animated when you talk about solar panels, wind turbines, and other alternative energy sources that are not very cost effective. Puzzled because there are so many other things people can do, right now, to generate very significant savings at little or no cost.
Let's take the color of our roofs. A new study by researchers at the Lawrence Berkeley National Laboratory concludes that installing cooler roofs and pavements in cities has the potential to offset the heating effect of two years of worldwide carbon emissions. Put another way, Art Rosenfeld, a Berkeley Lab physicist, calculates that if all the flat roofs in cities in the tropical and temperate regions of the world were converted to white, the cooling effect would reduce carbon emissions by an amount equal to taking 300 million cars off the road for 20 years.
Installing a white roof instead of a darker-colored roof creates tremendous energy and environmental benefits. The white roof will keep the building cooler, meaning that its air-conditioning system will not use as much energy. That is why California requires a cool roof on any commercial buildings that have an air-conditioning units.
A white roof is also cooler for the rest of us outside the building. A dark-colored roof will absorb heat that is then carried into the air by the wind. This heat creates what is known as the urban heat island effect -- which explains in large part why cities are always hotter than the countryside.
The urban heat island heat effect takes on increased importance when we consider that more than 5 billion people, or 60% of the world's population, will live in cities by 2030. Many of these city dwellers will live in megacities
with populations in excess of 10 million people. We must plan and design these cities carefully to avoid turning urban heat islands into urban heat ovens.
Energy Secretary Steven Chu has directed that his department install light-colored roofs on any new buildings or when replacing roofs on existing buildings. He has also sent a letter to all other federal department heads urging them to adopt the same policy. "Cool roofs are one of the quickest and lowest cost ways we can reduce our global carbon emissions and begin the hard work of slowing climate change," says Secretary Chu. "By demonstrating the benefits of cool roofs on our facilities, the federal government can lead the nation toward more sustainable business practices, while reducing the federal carbon footprint and saving money for taxpayers."
Secretary Chu's cool roofs initiative is one major step federal agencies are taking to comply with President Obama's Executive Order 13514
directing that the federal government greenhouse gas emissions be reduced by 28% over the next 10 years.
For the first time in more than 100 years, the US is not the world's largest consumer of energy. That distinction now belongs to China.
China's energy use is growing at an incredible speed. Just 10 years ago China used only half as much energy as the US. Today China consumes 4% more energy than the US, and over the next 5 years China will build 1,000 gigawatts of new power plants -- equivalent to all the electricity currently generated in the US.
It appears that China's demand for energy will continue to grow over time. On a per capita basis China still uses only one-fifth as much energy as the US. As China develops a larger middle class and a domestic consumer economy, its per capita consumption and overall demand will continue to grow.
What does this rapid growth in energy consumption mean?
In the short term it means that measurements of energy intensity -- the amount of energy required to produce a unit of GDP -- will be inherently unreliable in China. Too much generation capacity is coming on line in too short a time period. It will be difficult or impossible to know whether energy intensity has changed because of changes in efficiency or because of a mis-match between demand and new supply.
In the longer term it means that we all have a huge incentive to find alternative sources of energy.
"He has plundered our seas, ravaged our coasts, ... and destroyed the lives of our people."
That is a quote from the Declaration of Independence. It is one of the grievances against the King that justified the fight for Independence.
How could the colonies pursue Independence when so many jobs, indeed much of the economy, were dependent on trade with or through Great Britain?
With leadership and will. And a realization that an Independent America would ultimately be far more powerful and prosperous than an America subservient to a tyrant.
Today as we face an oil addiction that has "plundered our seas, ravaged our coasts, ... and destroyed the lives of our people," it is fitting to ask if we have the leadership and will to pursue a Green revolution that will secure our independence from oil.
Do we realize that an America independent of oil will ultimately be more powerful and prosperous than an America subservient to the tyranny of oil?
Can we afford to wage a Green revolution to secure new clean energy jobs in the future when so many jobs and much of our economy are dependent on oil today?
Can we afford not to?
Let us remember the courageous acts of those who secured our independence in the past, and let us have the courage to secure our independence for the future.
Happy Independence Day!