Monday, May 11, 2015

The oil crash: something wicked this way comes

The recent oil price crash signals the impending demise of the oil and gas industry as a major world energy producer. That should be a good thing, in principle, but something wicked may still come out of the process.

With the ongoing collapse of the oil prices, we can say that it is game over for the oil and gas industry, in particular for the production of "tight" (or "shale") oil and gas. Prices may still go back to reasonably high levels, in the future, but the industry will never be able to regain the momentum that had made its US  supporters claim "energy independence" and "centuries of abundance." The bubble may not burst all of a sudden, but it surely will deflate.

So, what's going to happen, now? The situation is, to say the least, "fluid". A great rush is ongoing to convince investors to place their money where there is still some chance to make a profit. I think we can identify at least three different strategies for the future: 1) more of the same (oil and gas) 2) a push to nuclear, and 3) a push for renewables. Let's see to examine what the future may have in store for us.

1) A push for more gas and more oil. The oil&gas industry has not yet conceded defeat; on the contrary, it still dreams of centuries of abundance (see, e.g. this article on Forbes). It seems unthinkable that investors would still want to finance uncertain enterprises such as squeezing more oil from exhausted fields or, worse, from difficult and expensive technologies such as coal liquefaction. But you should never underestimate the power of business as usual. If people feel that they absolutely need liquid fuels, then they will be willing to do anything to get liquid fuels.

The main problem with this idea is not so much its technical feasibility. By throwing every resource at hand at the task (and beggaring the whole economy in the process) it would not be impossible to fool peak oil for a few more years. The problem is a different one: it is with climate change and with the fact that we are running out of time. If we keep burning hydrocarbons, we just can't make it: the industrial society cannot survive the resulting warming and the associated troubles. That is true if we keep burning at the "natural" rate, that is along the bell shaped curve. Imagine if we try to keep growing, instead (as all politicians in the world say we should).

All this is becoming well known and, as a result, a push toward further hydrocarbon production (or, God forbid, more coal) will be possible only if accompanied by a strong propaganda campaign destined to silence climate science and climate activism. Some symptoms that something like that is in the making are evident enough to be disturbing. Consider that none of the Republican candidates for the US 2016 elections supports the need for action on climate change, that in Florida government employees are not allowed to use the term "climate change" or "global warming," that NASA has been defunded on anything that has to do with climate change, and more. Then, a certain logic starts to appear: "muzzle the science and keep on burning". Something very wicked this way comes.....

2. A new push for nuclear. This option would not be so bad as the first, more hydrocarbons. At least, nuclear plants do not directly generate greenhouse gases and we know that it is a technology that can produce energy. Nevertheless, the hurdles associated with its expansion are gigantic. The first and foremost problem is that the uranium mineral production is not sufficient for ramping up nuclear energy from a few percent of the world's primary energy production to a major fraction of it - to be able to do that would require investments so large to be mind boggling. To say nothing about the need for rare minerals in nuclear plants: beryllium, niobium, hafnium, zirconium, rare earths, and more; all in short supply. Then, there are all the nightmarish problems of nuclear waste disposal, safety, and strategic control.

Nevertheless, if it were possible to convince investors to pour money into nuclear energy, then it would be possible to see an attempt to restart it, despite the various problems and disasters that have given to nuclear a bad name. An attempt to do just that seems to be in progress. President Obama is said to be considering a massive return to nuclear and investors are told to prepare for a gigantic surge in uranium prices. Will it work? Unlikely, but not impossible. Something wicked this way comes......

hafnium as a neutron absorber, beryllium as a neutron reflector, zirconium for cladding, and niobium

Read more at:

3. A big push for renewables. Surprisingly, the renewable industry may have serious chances to take over from a senescent oil industry, leaving the nuclear industry standing still and gasping at the sight. The progress in renewable technology, especially in photovoltaic cells, has been simply fantastic during the past decade (see, e.g., the recent MIT report). We have now a set of methods for producing electric power that can compete with traditional sources, watt for watt, dollar for dollar. Consider that the most efficient of these technologies do not need critically rare materials and that none brings the strategic and security problem of nuclear. Finally, consider that it has been shown (Sgouridis, Bardi, and Csala) that the present renewable technology could take over from the current sources fast enough to prevent major damage from climate change.

It looks like we have a winner, right? Indeed, the atmosphere around renewables is one of palpable optimism. If renewable energy picks up enough momentum, there will be nothing able to stop it until it has catapulted all of us, willing or not, into a new (and cleaner) world.

There is a problem, though. The renewable industry is still tiny in comparison to the nuclear industry and especially in comparison to the oil and gas industry. And we know that might usually wins against right. The sheer financial power of the traditional energy industry may well be enough to abort the change before it becomes unstoppable. Something wicked may still come....... (*)

(*) "Something wicked this way comes" is mainly known today as the title of a 1962 novel by Ray Bradbury. Actually, it comes from Shakespeare's Macbeth..


  1. Prof Bardi:

    (I am pleased and unsurprised that you too are a Bradbury fan!)

    Fossil fuels need not be something wicked; besides, they are not this way coming, they (and the capitalists who claim them by way of something akin to the schoolboy’s King-of-the-Mountain game) are already here. With a modicum of even approximately proper vision, they can be used to build the new capital infrastructure for future energy. Hey, in the early days of the automotive industry, dray animals pulled the wagons carrying parts and machinery from shop to shop, and sailing vessels carried steam engines along coasts and across oceans.

    I am not as fearful of nuclear power as are others. (I find a fair amount of credibility in the “Brave New Climate” blog.) That said, nuclear power plants take a long time to build, and the promising new designs (Generations III & IV) take time to develop, and the truly “brittle” technologies must be implemented slowly so they can be debugged before saddling the world with massive numbers of electric generating stations of faulty design. The foals are promising but not yet ready for drayage duty.

    Indeed, I see no way around the uncomfortable reality that energy use must be sharply reduced. Such a sharp reduction need not be a fearsome Short Sharp Shock, if properly planned and even moderately well implemented. (Are you a Gilbert and Sullivan fan too?)

    The evil I dread the most is Steady-As-She-Goes.

    1. Well, this is exactly my position: fossil fuels need to be used to build the infrastructure that will replace them. The problem is that it won't take just a "modicum" - we need a substantial commitment of resources and capitals, even within the obviously necessary reduction in consumption. This is quantified in the paper I cite in the post:

    2. In that paper -- -- you write: "a successful SET requires a sustained acceleration in the rate of investment in renewable energy of more than one order of magnitude within the next three decades".

      It seems from the recent growth rate in the renewables area that that much will occur within perhaps ONE decade, depending on what you mean by "rate of investment" -- i.e. would that be closely enough related to (or same as) rate of production, rate of installation/buildout, etc.?

    3. The calculation is made in terms of energy needed and the data are for the fraction of overall primary energy production we need to allocate to building a renewable infrastructure.

  2. John Michael Greer has mentioned an image of a horse-drawn carriage carrying replacement parts for a worn out wind turbine. James Howard Kunstler has similar notions. Frankly it's a funny image but I have no idea whatsoever if it will have much to do with humanity's energy future. If renewables successfully increase in usage by a couple orders of magnitude, and if liquid fuels become too expensive to use except in emergencies, then this image of Greer's seems plausible. Given the foolishness of humanity up to this point, we should expect that Dmitry Mendeleev's fears will come true, that we will burn up as much oil as possible, leaving little left for the transition to renewables, to say nothing for crude oil's use in manufacturing pharmaceuticals and plastics.

    1. Yes. The question of transportation after the demise of oil is all open. In some conditions, electric vehicles may replace vehicles driven by thermal engines. But it may well be that animal traction will turn out to be more efficient. And note that a camel used as a pack animal is much more efficient than a horse drawn carriage, also more suitable for the future climate!

      I am serious about this: camels are a renewable technology, sturdy, inexpensive, resilient, efficient. I see very much their return in a non remote future. We can even have photovoltaic camels: look at

  3. Prof. Bardi,

    Incresing the use of renewables would also also demand a huge increase in the utilization of other resources, some of them also scarce. An obvious example is silver and solar, but the problem goes much deeper.

    There is no solution without a radical change in our lifestyles.

    1. I am just reviewing a paper on the substitution of silver for PV cells. It can be replaced at a marginal efficient cost. So, you see? If you look for problems, you'll find solutions. If you focus on change, you'll find adaptation. If you take both into account, there is nothing to fear from the future.

  4. It is a common mental model in daily life, "either or" decisions, which closes the foresight for managers, politicians, decision makers and the general public for a complementary "either and".

    Using most effectively what we have in terms of resources (this accounts for the organization or even the personal level) in order to create the foundations that lead the way to the next "paradigm" is a much more fulfilling way.

    However where there is a disparity in information amongst the various stakeholders and constituencies some paths (tracking, coal for energy use through burning) are taken that are not favorable in the future.

    What to do?

    As Jay W. Forrester says over and over again, it needs the told stories of the past, and you have to tell them often until the get a big enough audience to catch the idea behind it, the dynamics and feedback loops almost none of use normally is exposed to in whatever media you'd name.

    Thanks a lot Ugo for keeping up the great work in bringing the understanding of the dynamic forces to a broader understanding.

    1. Thanks to you, Ralf. Things keep moving, faster and faster. We watch in amazement.

  5. All the things in our world have an industrial history. Behind the computer, the T-shirt, the vacuum cleaner is an industrial infrastructure fired by energy (fossil fuels mainly). Each component of our car or refrigerator has an industrial history. Mainly unseen and out of mind, this global industrial infrastructure touches every aspect of our lives. It pervades our daily living from the articles it produces, to its effect on the economy and employment, as well as its effects on the environment.
    Solar energy collecting devices and their auxiliary equipment also have an industrial history. It is important to understand the industrial infrastructure and the environmental results for the components of the solar energy collecting devices so we don’t designate them with false labels such as green, renewable or sustainable.
    This is a challenge to ‘business as usual’. If we teach people that these solar devices are the future of energy without teaching the whole system, we mislead, misinform and create false hopes and beliefs. They are not made with magic wands.
    These videos and charts are provided by the various industries themselves. I have posted both charts and videos for the solar cells, modules, aluminum from ore, aluminum from recycling, aluminum extrusion, inverters, batteries and copper.
    Please note each piece of machinery you see in each of the videos has its own industrial interconnection and history.

  6. As I write, the Brent index is at 67 $/b; back in January it close below 50 $/b during a few sessions, a rise of more than 30% in 5 months. Most analysis on petroleum prices assume some sort of stability will set around a certain price range. What we observed the past decade or so is precisely the opposite: volatility.

    There is little reason to expect this volatility to recede, since it is a reflex of the declining EROEI. And it is this volatility that will eventually "sink" petroleum companies, any investment becomes too uncertain for comfort.

  7. You are correct that these are very fair discussion points, Ugo .

    Judging by what has happened since year 2000, we depend on the path that will be taken by China, India and perhaps Russia. So far in many respect the earlier European / American expansion has been adopted as techno / business model in these countries, although not entirely so.

    Arguably, the 'American actuality' that has accompanied a century or more of expansion has reached the end of its road (sic!). Most fossil fuel world production now comes from nationally owned business, not from the Euro/American 'big companies', despite the US tight oil boom.

    My guess is that we will see a contraction in 'wealth' and 'extravagant living' in our previous areas of expansion, and that the last 7 years has seen the first instalment of an ongoing decline in the richer countries. ('Negative growth' anyone?) I very much doubt whether the countries that I mentioned, particularly China and India, will approach anything like Western European models as 'per capita resource hogs' with typical middle-class prosperities that we became used to here in Britain, let alone those seen in the USA.

    As the ratios of resources to prosperity change, my guess is that there will be an overall decline in the world economic activity, and that remaining activity will be insufficient for a 'self-stoking' growth in solar-based industry (including wind and etc) to sustain a truly global industrial civilisation. My guess is that some of these techno abilities, however, will survive within the ancient (ecological) constraints that have always imposed themselves on human expansion.

    We will get a resulting climate depending how the big numbers fall out over the next 50 to 100 years. I suspect that there will be a greater than 2 deg C rise globally and that gradually there will be a lot of coastal flooding and huge loss of important 'ecological services', to use a quaint term.


  8. Another major challenge with renewable energy, like wind and solar, is the fact that the energy sometimes is produced when not needed and vice versa. There is still the need for some base energyproduction from carbohydrates, nuclear, hydro or biomass. And then we perhaps need economic incentives for people to primarily use energy when it is abundant would help the transition happening.

    Lars Knudsen

  9. How does solar and wind help us grow food? Can these technologies exist outside an industrial framework (transportation, mining, manufacturing)? Can they replace the variety of uses and sheer concentrations of energy oil, gas and coal provide? The onus is on proponents to show how these supposed 'green' technologies are anything other than a pit stop on the way down the long descent.

    Moreover, the implicit assumption is we need electrical generation to live. I think it's more plausible that future generations will live without what is really a luxury of a privileged class. There are billions of people even now without recourse to running water or electricity, and for most of our 100 to 200 thousand years on this planet, our species survived just fine. Even supposed free thinkers like this can't escape the damned logic of the industrial model.

  10. Double, double toil and trouble;
    Fire burn, and cauldron bubble.

    A push for more gas and more oil.
    A new push for nuclear.
    A big push for renewables.

    The powers that be will usurp control over these resourses. No attempt will be made to control them for sustainable purposes. They will be controlled for profit and personal gain. Air conditioned comfort behind walled compounds while your children bake. The best food the world has to offer behind those walls all for the those who take the profit. In a world that will have no place in any history they will never be condemmed.

    Double, double toil and trouble;
    Fire burn, and cauldron bubble.

    Solidarity can prevent it.

  11. Humor from the vale: Standing before the Department of Energy and Climate Change, Amber Rudd, leader of that department, vowed to accomplish both of its tasks, saying that fracking will progress well now there's a conservative government in charge.

  12. Hi Ugo

    I read with interest the paper you referred to. I think you are asking the right question, and find an interestin way towards a solution. I wonder whether you might devoted a blog post to it, and perhaps teasing out a few of the details?. For instance what mix of renewables is implied. Also I wonder whether you considered the question of the carbon implication of various build out rates?. See e.g.

  13. Yes, right now we are working at publishing the paper in a peer reviewed journal, then I'll see to discuss it more in detail in the blog. The article you cite is interesting and it deals with the point we make in our paper. Its shortcoming is typical of many studies on this subject: they do not use EROEI in in their analysis. Without this crucial parameter (that we use in our paper) there is no physical consistency in whatever projection for the future one makes. So, people can arrive to negative or positive evaluations of PV, according to whim or ideological prejudices. We need to stick to physics and to the real world. If we do that, we see that PV can do a lot, although not everything. And we can adapt to what PV can do for us.

  14. Thanks!. I wish you luck on the publishing process. Meanwhile, I hope its ok to refer to it in my blog?. I was able to find a pdf version. I don't want to step on any toes.

    1. Yes, sure. It is on ArXiv, open access, and it can be cited and discussed!

  15. Ugo, you write: "The renewable industry is still tiny in comparison to the nuclear industry and especially in comparison to the oil and gas industry. And we know that might usually wins against right. The sheer financial power of the traditional energy industry may well be enough to abort the change before it becomes unstoppable."

    I suspect that the sheer financial power of the superior economics of renewables -- FFs and nuclear continually getting more expensive, renewables continually getting cheaper -- will be enough to float the boat and make it unstoppable, if it is not already so.



Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014)