oil

More!

About a week ago I did a short post on Prius/oil-related matters that seemed to irritate a few folks. I hadn't noticed until today that our occasional contributor (and pundit nonpareil) Clark Williams-Derry posted a response. He seemed to be approaching the question the same way some other people did, so I thought I'd offer a reply.

To recap:

A Wall Street Journal editorial (sub.) said this:

Petroleum not consumed by Prius owners is not "saved." It does not stay in the ground. It is consumed by someone else. Greenhouse gases are still released.

Treehugger's Lloyd Alter said (I paraphrase): What a jerk.

I said (again paraphrasing): Yes, he's a jerk, but on this narrow point, he's right.

Several commenters thought I was making a point about the futility of energy conservation generally. But I wasn't -- the point is about oil in particular.

Bart, and at greater length Clark, mentioned the "rebound effect," whereby reduced demand lowers price, which subsequently raises demand. Both of them make the point that although the rebound effect is real, demand only bounces back about 30-50%. So, while using less oil may not make the total efficiency gains you'd want, it does make some efficiency gains. It does save some oil.

To which I say: For "energy" generically, yes. For electricity, yes. For something like coal, where supply is plentiful, yes. But oil?

Calming down the hybrid hype.

Treehugger mocks this, from the notoriously hack-a-rrific Wall Street Journal editorial page:

Petroleum not consumed by Prius owners is not "saved". It does not stay in the ground. It is consumed by someone else. Greenhouse gases are still released.

I'm all for mocking the WSJ editorial page, but this statement is quite true. Oil supply and demand are tightly coupled right now and are only going to get more so. Any dribble of oil you don't use will be snapped up by someone else -- perhaps one of the growing legion of Chinese drivers -- and so on and on until the remaining oil becomes prohibitively expensive and forces the market to provide alternatives.

It would be nice to think that environmental sentiment could free the world from oil, but it'll never happen.

If your goal is to save money or save oil, buying a Prius should be far down your list.

Buy a Prius, if you like, to express your values and make a statement to manufacturers that there's a market for these kinds of cars.

But let's not let the hybrid hype get out of hand.

Drilling in ANWR will hurt the environment! No it won’t! Yes it … *yawn*

A while back I filled out the little form for NRDC's letter-writing campaign to save the Arctic Refuge. It sends a message to your Congressman, urging them oppose oil and gas development in the region. It's probably the tenth one of those things I've submitted regarding the refuge. (It's so easy; just type in your email and click "send." No thought involved.) I often question the usefulness of online campaigns and the implications of such mindless "citizen participation," but that's probably a subject for another post. Point here is, today I received a response from my representative, one Mr. Don "They can kiss my ear" Young (R - Alaska). Full contents of letter below the fold.

Are gas prices and gas consumption connected?

It may come as a bit of a surprise: Despite rising gas prices over the past few years, total consumption of highway fuels in the U.S. has actually increased rather than fallen. Some have seized on this phenomenon -- prices and consumption rising in tandem -- to suggest that changes in gas prices have no discernible effect on how much gas we actually use.

The idea that gas prices have no effect on consumption doesn't square with economic theory, to put it mildly. And this Excel spreadsheet (courtesy of Charles Komanoff and the ever-informative Todd Litman) sheds some light on what's really going on. Apparently, even as U.S. gas prices have risen, so have population and GDP. And GDP growth tends to push consumption levels up -- in fact, over the short term, gas consumption seems to be far more responsive to changes in GDP than to changes in prices.

Syriana

Damn, this looks like a good movie. From IMDB:

From writer/director Stephen Gaghan, winner of the Best Screenplay Academy Award for Traffic, comes Syriana, a political thriller that unfolds against the intrigue of the global oil industry. From the players brokering back-room deals in Washington to the men toiling in the oil fields of the Persian Gulf, the film's multiple storylines weave together to illuminate the human consequences of the fierce pursuit of wealth and power. As a career CIA operative (George Clooney) begins to uncover the disturbing truth about the work he has devoted his life to, an up-and-coming oil broker (Matt Damon) faces an unimaginable family tragedy and finds redemption in his partnership with an idealistic Gulf prince (Alexander Siddig). A corporate lawyer (Jeffrey Wright) faces a moral dilemma as he finesses the questionable merger of two powerful U.S. oil companies, while across the globe, a disenfranchised Pakistani teenager (Mazhar Munir) falls prey to the recruiting efforts of a charismatic cleric. Each plays their small part in the vast and complex system that powers the industry, unaware of the explosive impact their lives will have upon the world.

Get the official synopsis here.

Visitors to the official movie site are also encouraged to participate in "Oil Change," a campaign to reduce our dependence on oil.

And as TH reported this summer, Syriana, which opens nationwide on December 9th, may also help promote TerraPass.

WSJ: China’s oil-demand surge slackens

Peak-oil enthusiasts and skeptics alike will find much to chew on in this page-one piece from today's Wall Street Journal.

By all accounts, China's explosive energy-demand growth over the past several years has strained the ability of OPEC and other oil producers to keep up. Now, the Journal claims, that pressure shows signs of easing:

This year, China is on track to account for about 16% of the world's new oil consumption, little more than half last year's share. The Centre for Global Energy Studies estimates that Chinese demand will rise by about 230,000 barrels of oil a day this year -- a large increase, but a far cry from the 860,000-barrel-a-day jump of 2004 and a much more manageable pace for global suppliers.

The article also features the spectacle of a big-time oil exec engaging in a bit of what's known on Wall Street as "jawboning" -- trying to influence the market (in this case talking it down) with mere words. The Journal reports:

Though most market watchers were caught off guard by last year's steep run-up in China's oil demand, [Exxon Mobil CEO Lee] Raymond said that its consumption growth has been generally in line with industry expectations. "Speculation" accounts for about $20 of the current per-barrel price of oil, Mr. Raymond estimated. "The fundamentals" of supply and demand, he said, "support something like $35 or $40." The Exxon chief said that, in about a decade, it will be likelier that oil prices will be below $35 than they will be to stay at today's level of about $60 a barrel. [Emphasis added.]

Might outrage over last quarter's startling profits, as well as the Congressional price-gouging hearings, have influenced Raymond's desire to describe a frothy, puffed-up oil market?

Umbra on diesel vs. standard gasoline cars

Dear Umbra, I’ve always heard bad things about diesel fuel. However, I know someone who has a diesel VW that gets 50 miles to the gallon. I’m wondering if you could do a cost-benefit analysis for me. I know I can’t afford a hybrid anytime soon, and was wondering if it would be better to […]

Senate’s stab at energy legislation may be more moderate than House bill

A refinery at Anacortes, Wash. “Shame, shame, shame, shame!” That’s the furious chant that erupted from the Democratic section of the House of Representatives last Friday after Rep. Joe Barton (R-Texas) managed to eke out a victory for his Gasoline for America’s Security (GAS) Act, which would loosen environmental laws and boost industry incentives to […]

The dirty truth about Canada’s famed oil sands.

[W]hen Canada announced in 2004 that it has more recoverable oil from tar sands than there is oil in Saudi Arabia, the world yawned. There is estimated to be about as much oil recoverable from the shale rocks in Colorado and other western states as in all the oil fields of OPEC nations. Yes, the cost of getting that oil is still prohibitively expensive, but the combination of today's high fuel prices and improved extraction techniques means that the break-even point for exploiting it is getting ever closer.
--From "The Oil Bubble," Wall Street Journal editorial, Oct. 8, 2005

Actually, with oil prices nestled comfortably above $60 per barrel, the oil giants are tapping Canada's famed tar sands, as this interesting NYT piece by Clifford Krauss shows.

"Deep craters wider than football fields are being dug out of the pine and spruce forests and muskeg swamps by many of the largest multinational oil companies," Krauss reports. "Huge refineries that burn natural gas to refine the excavated gooey sands into synthetic oil are spreading where wolves and coyotes once roamed."

Note well: They're burning natural gas to get at this stuff.

Krauss adds:

About 82,000 acres of forest and wetlands have been cleared or otherwise disturbed since development of oil sands began in earnest here in the late 1960's, and that is just the start. It is estimated that the current daily production of just over one million barrels of oil--the equivalent of Texas' daily production, and 5 percent of the United States' daily consumption - will triple by 2015 and sextuple by 2030. The pockets of oil sands in northern Alberta--which all together equal the size of Florida - are only beginning to be developed.

Be sure and click on the article's multi-media link comparing the environmental depredations of producing a barrel of artificial oil from sands with those of conventional crude production.

The only way this process can make economic sense for the oil giants is if they succeed in externalizing these costs -- i.e., shuffling them off of their balance sheets.