Don’t Expect Miracles from Fossil Fuels (or Technology)

There seems to be a pervasive belief out there these days, largely fueled by the media, that vast new supplies of fossil fuels are being discovered and that new technology is now enabling huge quantities of non-conventional deposits like oil shale and oil sands to become economically recoverable. As a result, every year we are extending the life of our fossil fuel deposits by many more years, and if this continues, we should enjoy no fossil fuel crunch in the near future, nor maybe for centuries to come! However, this is a twisted and backwards interpretation of what’s actually happening. What’s actually happening is a direct result of high oil prices.

Ask yourself: If all these amazing new technologies are suddenly coming online now, then why aren’t gasoline prices dropping? (Actually, as of June 2012 they are indeed dropping as the next deflationary collapse seems to be upon us with the Eurozone meltdown — but they will not stay down for long after this either explodes or gets defused somehow, due to the minimum price floor for the marginal barrel of new unconventional oil that now determines price when demand increases). What’s actually happening is that, as a result of high oil prices, these alternative processes that have been known about for a long time are just now becoming economically viable. And they do indeed unlock fairly large amounts of “new” fossil fuel reserves. But there’s a catch of course — they are slow processes and they require high oil prices, and this is the critical dynamic behind the Peak Oil problem — that at some point oil production hits the maximum rate that can be sustained by the interplay of these slow and expensive alternative oil production methods, versus the ability of the greater economy to tolerate high oil prices before high oil prices kill demand.

In this post I want to refute this fossil fuel euphoria and explain where fossil fuels and technology are really headed. I’ve had conversations with people who adamantly insist that we cannot predict when oil supplies will run out, nor what possibilities future energy technology will bring. While of course no one has a crystal ball, what this assertion conveniently overlooks is that we’ve been able to pull off some amazing things using science and technology, and that knowledge enables us to make some pretty good predictions about what we can expect going forward, energy-wise. I find it a tad ironic that along with such an unwavering faith in the ability of new technology to extend the life of fossil fuel deposits for centuries to come, these same people can have so little faith in the ability of technology to help us make predictions about the future of fossil fuel reserves.

Here’s a quote from a commenter over at Do the Math that I think clearly demonstrates the misunderstanding about what technology can and cannot do for us. This is just one variation of the same argument that comes up time and time again on discussion boards whenever the issue of limits to growth is discussed:

Microsoft made it’s money on two basic things: 1) the Windows operating system and 2) MS Office.

In both cases, no one forced people under threat of arrest buy Microsoft sofware. Intel computer companies could have put another operating system onto their computers. And people could have bought another office suite (such as Correl’s Wordperfect/Quatro etc.)

When people are not forced by to buy something, they must buy it because they think they will be better off with it than without it.

In the 15 years after Microsoft went public in 1986 it probably created more wealth in a shorter period of time than any company in history up to that point. And it used very little energy to do so.

This comment leads perfectly into a discussion about the difference, and widespread confusion, between the separate issues of energy and information technology. In order to demonstrate this differencee I have a challenge for you: Pick up your iPhone and watch a video on it.

That wasn’t much of a challenge, was it? Here’s the real challenge: Heat your house with it. Fuel your car with it. Eat it for dinner.

Of course, it won’t do any of those things. Why not? Because it’s a computer, a device that first and foremost, facilitates information transformation. But what’s needed to fuel your car, heat your house and fill your belly are things that facilitate energy transfer. Those are fundamentally different functions. Computers use energy; they don’t liberate it!

And the thing about information transformation is that it doesn’t really require much energy. As the microelectronic switches that do all these computations have gotten smaller and smaller through innovation, so have their electrical energy demands. At some point we’ll reach limits as it will not be possible to vent all the heat from the entropy being generated within such small spaces, but that is still likely a ways away. So for now, every year computers get better and cheaper. But have a look at the price of the electricity needed to run your computer. Has it been going down?

One of the greatest (though highly quirky) information processors ever invented, your brain, doesn’t actually use that much energy, and most of what it does use is simply for the purpose of keeping it at body temperature. At rest your body doesn’t burn much energy. But go climb up a mountain and notice how much heat you generate. You know the old saying that if you want to lose weight, thinking about it won’t do you any good? No matter how hard you use your brain to think about running up a mountain, it just isn’t going to happen until you invest the significant energy required to actually do it. And have prices for the food energy powering your mountain climbing activities been going down? (* See note at bottom for clarification of my views on applying reductionist analysis to our bodies and brains)

That Miraculous Wealth Creation Machine Called “Microsoft”

Getting back to the topic at hand here, Microsoft, let’s take a numerical look at how the wealth of the world supposedly increased over Microsoft’s 15-year rise to dominance. (Note: I’m only going to address physical wealth here, and not some of the “softer” ways of assessing well-being like spiritual wealth, community wealth, and health. I’m not disregarding these other metrics; to the contrary, in many ways I think they are more important than physical wealth — I truly believe that we could be much happier and “wealthier” while consuming much less. But today’s monetary system and economy are built around physical wealth, and this is what your money will buy you. Furthermore, the critical challenges facing humanity going forward concern food, water, and energy, and those are physical things. If we want to address how technology is supposedly going to be solving these issues then we need to focus on physical, monetary wealth.)

If you add up all the fossil fuels in the world and divide by population, that number barely budged over Microsoft’s 15 years of glory. Per-person fossil fuel wealth remained unchanged. Of course, computer modelling software emerged which better enabled us to discover new deposits, and to more exhaustively deplete existing ones before being abandoned, but this did not increase the amounts of fossil fuels on the planet. To the contrary, it actually facilitated their reduction. Over this 15 year period, oil prices bounced around between $30 and $40, not trending in any particular direction. But inflation-adjusted wages for westerners arguably fell slightly, and average vehicle fuel economy actually went down. So on the energy front, scratch the idea that wealth was created by Microsoft; it wasn’t.

What Microsoft Word and Excel did do, however, is decrease the number of human labour hours needed to perform administrative duties and to make calculations. Similarly, Autocad did not magically provide any additional natural resources with which to build factories beyond what we had when we were still drawing blueprints by hand. What Autocad did was enable us to crank out drawings much faster than before. It still takes the same amount of raw materials to build a factory or a pipeline (actually, computer modelling ever-so-slightly allows us to engineer closer to safety boundaries, so the amount of resources needed to build something today has indeed decreased slightly thanks to computers). Old-timers at work confirm to me that it now takes 3 fold less time to design a project than it did before the computer era.

This dramatic increase in per-hour labour “productivity” (I hesitate to use that word due to its ecological synonym…) over the last 25 years has had two results: 1) It’s increased the resource-consumption power of an hour of human labour. If it used to take 10 years to design and build a coal mine whereas now with computers it takes 5, then the same number of people could now build 2 coal mines versus 1 before. 2) It therefore throws people out of work, absent economic growth, since in a competitive economy any company that still inefficiently employs the original amount of labour to design a coal mine will quickly go bankrupt.

So although the above commenter suggests that, “no one forced people under threat of arrest to buy Microsoft software”, he’s overlooking the fact that, to the contrary, any company operating in the modern world was indeed forced, under threat of bankruptcy, to buy equivalent computer software to what their competitors were using!

Between 1986 and 2001, there was no increase in per-capita wealth when it comes to the essentials of life – energy, food, materials –  if measured using the real purchasing power of hourly wages in the western world. But one could argue that the increased wealth over this period was instead enjoyed disproportionately by poor people in the developing world, as they have indeed generally seen an increase in purchasing power for these essentials, varying by country of course. And the world’s population has increased over this period as well, so in terms of absolute magnitude, the total wealth “created” by our economies has arguably increased significantly. That’s where the wealth created by Microsoft and computers went, one could argue.

Where the Wealth Really Came From

Keep in mind that burning in the background of the whole ascent of humanity to its current domination of the Earth, which many attribute to technological progress, has been this trend in fossil fuel use (you can play with the data too, from the BP Statistical Review):

It tripled between 1965 and 2011. Population has doubled, leading to an average 50% increase in per-capita energy use. But considering that the typical westerner uses no more fossil fuels than he did 20 years ago (it’s actually gone down a bit due to more fuel efficient cars, etc.), this implies that the developing world has enjoyed a large share of that dramatic increase in fossil fuel consumption. So I’ll clarify the obvious correlation: since 1965, the average westerner has not realized an increase in either purchasing power or per-capita fossil fuel use. Conversely, the purchasing power of a large portion of the developing world has indeed increased, and along with this so has corresponding per-capita fossil fuel use!

Here’s another chart showing the global trend in “Crop Production Intensification“, i.e., how much energy and resources are devoted to agriculture:

And look at this table (page 10):

It sums it all up in only a few numbers. Between 1945 and 2007 US corn yields rose 4 fold, and the necessary fossil fuel inputs that facilitated this rose 3 fold, resulting in a nearly unchanged energy intensity for food production. In other words, increases in farm productivity barely exceeded increases in fossil fuel inputs, meaning that if we want to quadruple food production we need to triple external energy inputs.

And finally, here’s a chart showing vehicle fleet fuel economy which I’ll argue is a good indicator of “technological innovation” for the purposes of energy use:

It’s not quite so dramatic, is it? It didn’t even double over that same period (there was little change from 1965 to 1975, which isn’t shown on that chart). Other energy conversion devices like furnaces and microwaves have seen much more modest efficiency improvements. On the other hand, other things like lights are indeed getting much more efficient, with the emergence of LED lighting. And programmable thermostats have enabled building managers to more efficiently allocate when and where heating is required. Do we have Microsoft to thank for these overall fairly modest efficiency improvements?

Considering the above, I ask: how much of the ascent of humanity has been enabled by technological innovation “doing more with less”, and how much has instead been from “doing more with more”?

It seems quite clear that modern technology has not been the enabler of humanity’s ascent, at least not directly. The vast majority of the energy we currently use (95% or so) still comes from burning biomass (plant and animal carcasses in varying states of fossilization), just as it did 200 years ago. We just burn a hell of a lot more of it now.

History provides neither the precedent nor the justification to support the belief that new technology will magically swoop in and save us all from fossil fuel decline. Because it never has. We’ve never before experienced fossil fuel decline (except for short dips in the ’82 and 2008 recessions). What’s instead happened is that larger and better sources of biomass carcasses have become available for us to harvest and burn. We moved from whale carcasses (oil) to swamp forest carcasses (coal), to algae carcasses (back to oil). Also add fossil flatulence in there too (natural gas). And much of the world’s population still relies on tree carcasses (firewood) for its energy needs, just like cavemen did (yours truly included). That is what technology’s enabled; it’s merely made us better at finding and extracting additional deposits of dead carcasses to burn.

But here’s the problem: technology, particularly computers, has gotten pretty skookum lately. I have a hard time believing that some new computer software program is going to sweep the market and somehow enable us to find vast new reserves of easy-to-extract fossil fuels in easy-to-access locations, beyond what our existing computer software can do right now. I think we’ve done a pretty good job of mapping the Earth’s crust thus far, except perhaps difficult locations like the Arctic. Any new technology that’s going to provide help along these lines will no longer be based on computers and software, but instead on innovations in process, mechanical, and electrical engineering (as an example, horizontal drilling).

And now here’s the catch: Those things (process, mechanical, and electrical engineering) bring us back into the real world of hardware – of tangible physical limits. We’ve left behind the software age, of computer animated fantasies enabling our blissful ignorance of the cold hard reality quickly bearing down upon us. Those dreamy economic bubbles are finished. We are now going to have to fess up to the laws of physics, because 30 years ago our parents chose not to despite dire warnings of the consequences. Therefore, any future technological innovations that may provide assistance in alleviating our energy woes will do one or more of the following three things:

1) Help us extract a greater proportion of the hydrocarbons in existing reservoirs, leaving behind less residual in place. Similarly, they could turn many currently uneconomical fossil fuel resources into recoverable reserves (as would rising energy prices … up to a point).

2) Enable manufacturers and consumers to “do more with less” given a unit of extracted and purchased energy. We’ll waste less.

3) And of course, entirely different sources of alternative energy besides fossil fuels could be devised and developed, but that is not the focus of this post. I am specifically addressing the assertion that future technological innovations will enable us to continue our dependence on fossil fuels for a long time going forward and that because of this, Peak Oil is not a pressing concern right now, so we don’t need to be aggressively developing renewable energy strategies.

In response to points (1) and (2) above I present …… (drum roll) …… the laws of thermodynamics. In other words, there are limits to what technology can do.

Just like it will always require a certain minimum amount of energy to lift 3 kilograms of books up a flight of stairs, it will always require a certain minimum amount of energy to cook oil sand in the ground, extract it, and upgrade it into a petroleum product ready for further refining. There will always be some proportion of the hydrocarbon left in the ground after treatment. It’s not thermodynamically possible to get it all out unless you physically dig it up and cook the sand in your factory, like open pit mining does. And in that case you have to expend the energy to dig it up and cook it! So either way, most of that energy underground is not accessible. They aim for a recovery rate of about 10-20% for the Alberta oil sands deposits.

There is another process called in-situ gasification that partially burns the hydrocarbons underground in the absence of full oxygen, producing “syngas” that could be used for other processes or to make electricity. This may have applications for deep coal seams that are otherwise too difficult to access, but the catch here is that you have to partially burn the stuff first to make it work! And you get lesser quality gases as a result. And you waste a large amount of the original energy in the gasification process, simply because you have to partially burn it. Once again, either way, most of that energy underground is not available. We have left behind the era where all we had to do was poke a hole in the ground and oil automatically squirted out by itself. Now, we have to invest energy, and increasingly more, to get it out.

A zillion barrels of methane on Saturn’s moon Titan is of no use to us because there will always be a certain minimum energy expenditure required to get it back here. Star Trek greatly misled us in the ability of the Starship Enterprise to zip across galaxies and modify planets’ tectonic dynamics using its tractor beam. It’s not possible! Red Dwarf was more “realistic”, as it took years to cross galaxies and they went into stasis for the journeys. In “reality” it takes millions of light years.

Of course, technological advances will be made that trim off some of the inefficiencies in these processes, or find ways to better recycle waste streams to squeeze more useful products out of the inputs. Better ways of injecting heat into in-situ oil sands deposits are being developed, and techniques like fracking and injecting certain chemical potions will help get a greater proportion out using less external energy. But there are ultimate thermodynamic limits to extracting stuff the consistency of hockey pucks and turning it into liquid hydrocarbons, and the rate of new efficiency gains will drop off rapidly going forward (the low hanging fruit is always picked first). And most of these techniques aren’t new; they’ve been talked about for years but are now only becoming economically viable with high oil prices, as we’re runing out of easy oil.

Take for example horizontal drilling. It greatly improves the ease and efficiency with which partially depleted oil and gas reservoirs can be tapped, and enables access to expansive but thin shale oil deposits like in the Bakken. But I wonder … what other orientation could we possibly point future wells besides vertical and horizontal and everything in between? I’m kind of thinking that in this three dimensional world governed by the laws of physics, we’ve pretty much maxed out the dimensions in which we can drill through oil deposits. In Saudi Arabia, as their reservoirs run dry, they’re using lots of techniques falling under the general category of “Enhanced Oil Recovery“, such as injecting copious amounts of sea water and / or carbon dioxide to force the remaining oil out (this of course requires additional energy and capital). What they get coming out is “oil stained brine”, often with 95% water cut. They’re injecting all kinds of different chemical potions along with this to optimally adjust surface tension so as to maximize the amount of oil that comes out with the water. I ask: What’s next? How can you possibly extract significantly more oil without reverting to the Starship Enterprise’s tractor beam? If they leave the reservoirs to sit dormant for a few decades the oil will move upwards and some more could be removed at a later date. But the catch is, you have to wait a few decades!

As I like to say, “There’s an ocean of water out there for the taking, but if you’re stranded out in a life raft somewhere you can’t drink a drop of it because it’s not in a usable form”. Of course, we can indeed turn some of that sea water into a usable form that we can drink, but this requires additional external energy inputs, just like with poor quality fossil fuel deposits. If those necessary external energy inputs overwhelm the energy outputs, it’s pointless! This is the EROEI dynamic at the heart of the Peak Oil problem.

As a final retort to the assertion that technology will enable us to continue extracting oil to our hearts’ content, I offer the following charts as evidence that apparently Norway didn’t get the memo:

Nor did the US, Indonesia, and the UK:

You know all the media hype about how the US is becoming independent in oil again as a result of shale oil and the like? It represents that little tick up at the end!

Now, there are lots of other countries that haven’t seen these declines. But they will eventually. The point I am making is that there are limits, and these are stable countries that have devoted major economic resources to their oil industries, yet even with modern technology and sky high oil prices, their production rates have declined dramatically.

Similarly, on the consumption side, modern technology will achieve gains that enable us to do more with less but it will always take a certain minimum amount of energy to move 2000 lb of metal and rubber down the road. Ultimately, if we don’t provide that minimum amount of energy required to move the car, then we just won’t be able move the car. And the thing is, the Toyota Prius is darn close to those limits for a multi-purpose, practical, gasoline-powered vehicle. And in terms of electricity generation from coal and natural gas, we are basically at the thermodynamic efficiency limits imposed by Carnot’s Theorem right now.

Even electric cars that arguably get over 100 mpg equivalent mileage are nearing their efficiency limits. They just use a different form of energy that wastes a lot less heat than does an internal combustion engine. Surprise, surprise: the “heat engine” model of an internal combustion engine for a car is around 20% efficient. This divides into 80% (the efficiency of an electric car) four fold. Now multiply the typical car’s fuel economy of 25 mpg by 4 and voila, you get 100 mpg — the equivalent mileage of an electric car!

Furnaces to heat your house are around 95% efficient these days, and you can’t achieve more than 100% efficiency, so there is basically no room left there to squeeze more energy out. Heat pumps can get up to 400% “efficiency”, but if the electricity powering them comes from burning fossil fuels at 40% efficiency, then we’ve only got a maximum of about 200% compared to 95% if we were to burn the fuel directly in a furnace. On the other hand, if the heat pump was powered using wind, solar, or nuclear derived electricity, then yes that would represent a significant advance. But again, that takes us away from fossil fuels. If you want to argue that there’s still lots of opportunity for a future based on fossil fuels, then unfortunately the physics gets in the way; we are quite close to the limits now.

It all basically comes down to this: You either understand and accept the laws of physics, or you don’t. If you do, then you must appreciate the urgent need to be devoting resources to aggressively develop alternative energy strategies to help make up the difference for when fossil fuels begin running out in the near future. On the other hand, if you don’t accept the laws of physics, then you can continue making glorious predictions about how future technology will solve all problems relating to peaking fossil fuel extraction simply in response to supply / demand dynamics creating the need. Along with this, I suggest that you throw away your car, furnace, fridge, and anything electrical you own because the functioning of all of those devices is critically dependent on an application of the laws of physics, and if you reject these limits then you are essentially arguing that all of the technology you own doesn’t actually work. Furthermore, don’t eat food anymore, as in the US it requires 7 Calories of fossil fuel inputs to provide 1 Calorie of food.

So getting back to the original point made by the commenter on Do the Math – that Microsoft’s emergence created a lot of wealth for a lot of people. As I’ve explained here, computers did not, in any significant and lasting way, increase the amounts of critical natural resources available on Planet Earth necessary to support people. In fact, they did the opposite. But Microsoft did indeed make some people very wealthy. What did that wealth represent? Where did it come from?

As I’ve explained previously, all money (and profit) is a claim on ecological productivity. And as I pointed out here, the amount of ecological productivity occurring on the planet has actually gone down slightly, despite all of our modern technology. So if no new wealth was created over that period, but some people were getting very wealthy, then those profits inevitably represented a transfer of wealth from other people and animals in the world to those people that were part of Microsoft’s profit boom. The average person did not benefit from this, beyond what some short term tech bubbles may have enabled.

Where specifically did that wealth come from that made Microsoft investors so rich? Well, Microsoft’s revenues came primarily from businesses who were forced, by threat of bankruptcy, to upgrade to computer systems. Those businesses had to take a portion of their operating budgets and give it to Microsoft in return for software (or another company’s equivalent software, of which there was and is little choice), as well as to buy additional hardware like computers, printers, etc. That necessary expenditure was offset in two ways: 1) by the number of employees those businesses could then fire in order to perform the equivalent number of tasks as before. Alternatively, 2) that expenditure could have been offset by the increased amount of business those companies could then perform, using the same amount of labour as previously.

Since economists do everything they can to keep unemployment low, then by and large, the world has opted for Option #2 — doing more with the same amount of labour. This means we have opted for economic growth. And as I hope my whole efficiency limits explanation above has shown, economic growth directly correlates with gobbling up additional natural resources. So what actually funded Microsoft’s profit boom was natural resources, not technology. That wealth was taken from future generations. So once again, as always, we are brought back to the same inevitable lowest common denominator — the trophic pyramid, and the undeniable fact that we are animals still critically dependent on burning biomass energy sequestered through ecological productivity for 95% of our needs, just like any other animal is. Modern technology has not changed that in any way. Remember the above charts and understand where our production gains are actually coming from.

* Note from above: I want to clarify that I don’t consider our brains to be machines like computers are, a bunch of transistors making highly complex and accurate computations about the “real world” around us. That is not how we work; we are much more nuanced than that and our brains function by creating our own reality, by writing stories that make sense of the barrage of sensory data we are bombarded with that would otherwise be overwhelming. Despite what Richard Dawkins preaches, we are not machines. Except, of course, when it comes to energy transformation, in which case our bodies can be very accurately analyzed as being machines that convert chemical energy into motion and heat.

2 responses

  1. John Doyle

    Well argued blog! Thanks.
    Which scenario is going to be the trigger setting off the decline of our civilization?
    Will it be the end of cheap oil? Will it be climate change? Will it be the debt mountain?
    IMO the debt mountain will bite first, because our economy is paying for it’s excesses by robbing from the future, still promoting Growth as the way forward, avoiding the maths, and with nearly $300 Trillion in unfunded and partly funded liabilities [US figures].
    Perhaps as our consumption continues to rise, because poorer countries want to enjoy western amenities and lifestyles, we may co-incidentally arrive at two triggers simultaneously. Climate change, now forecasting 6degrees of warming by 2100, may just come in time to mop up what’s left?
    Care to comment?

    May 30, 2014 at 6:44 am

    • Hi John, thanks. I think the financial ponzi scheme will crash first. I think that will happen when the world runs out of gold… (or silver might run out first). The western central banks have been suppressing gold and silver prices for decades to hide their dollar printing schemes and the eastern central banks know this and have been gobbling up the gold that belongs to the American people that the central banks have stolen and offered up to the world at cheap prices. Who knows exactly what kind of deals have been made but we’ll find out one day when it runs out. Alasdair Macleod and Koos Jansen have done some good analysis of the numbers. I think that one day we’ll wake up and the markets will be closed and everything will get reset. Who knows when, but it seems the banks are desperate to supply the physical metal so we must be getting low.

      Then confidence will be lost in the financial system and the whole con game will end. From then on interest rates will be high and this will stifle economic activity and halt economic growth, I think it will substantially contract. Unemployment will skyrocket and no politician has a clue how to deal with this (building new houses and freeways has always been their “solution” to unemployment). Then social unrest will increase, the political system will collapse, and basically the whole system will start falling apart.

      May 30, 2014 at 5:35 pm

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