Three Letters Re: Some Good May Come From High Gas Prices

Again, Michael Williamson brings a bit of fresh air in his letter regarding gas prices. It’s called the free market pricing mechanism and when allowed to operate it would solve most human problems in the most efficient manner. Regards, K

Dear Jim,
There is a huge difference between reserves (total resource) and the amount of the resource that can be produced each year (production flow rate per unit of time). Both Canada and Venezuela have large reserves of tar sands. However, the annual production of tar sands is limited by production constraints and has a low (but positive) energy return on energy invested. The largest limitations are the requirements for water and natural gas – these two constraints will limit Canadian production to at most about 3 million barrels per day. The tar sands production is creating an environmental disaster in Alberta and leaves the water toxic. The following quote from a Tar Sands Watch article about a recent University of Alberta study demonstrates how unsustainable the current tar sands production demand for water actually is:

“But to produce one million barrels of oil a day, industry requires withdrawals of enough water from the Athabasca River to sustain a city of two million people every year.”

Likewise, natural gas production in North America peaked in 2002 and is in steep decline. Many natural gas analysts expect annual North American production to be roughly half that achieved at the peak as early as five years from now – despite extremely aggressive drilling of new natural gas wells. Modern drilling technology typically depletes natural gas wells after about 18 months of production. We don’t have 1,000 years worth of natural gas and may not even have enough natural gas to keep pressure in the pipes for customers at the end of the pipelines and supply chain – particularly those in New England and the North Eastern portion of the United States. Simply sustaining current production levels will require the construction of nuclear power plants (deeply unpopular with many Canadians) to provide an alternative source of process heat and eliminate the need to use rapidly depleting natural gas.

Furthermore, the tar sands capital investment and production costs per barrel have been increasing every year – last year (2006) costs were in the $23 to $26 per barrel range and this year’s costs will likely be higher.

While energy independence is desperately needed, it remains extremely difficult, there are no silver bullet solutions, none of the alternatives offer the low cost and energy concentration of cheap fossil fuels, and requires capital-intensive investments with long lead times even if one has the political will to make it happen. Unfortunately, there is no political will to make the needed investments and sacrifices at this time and today’s poor decisions will lead to a future environment (economic and social collapse) where the resources needed (people, money, materials, imported technology, manufacturing capabilities) will either be partially or completely unavailable. – Dr. Richard


Dear Jim and Family:
With rue respect to Mr. Williamson, the Tar Sands will not save us. Neither will Corn Ethanol–a scam that benefits farmers and costs the taxpayer for a slight loss in energy return on energy invested (EROEI), Cellulosic ethanol (mostly an unscalable myth since the chemistry isn’t proven or effective), cheap solar (a scam, alas), electric cars (we’re running out of nickel so there will be no [nickel-based] batteries), biodiesel (eat for a year or drive for an hour, choose), natural gas (running out in North America, out in Europe, lacks capacity or density), coal (spreads mercury and uranium and sulphur when burned, kills plants and waterways, poisons everyone downwind and downstream, causes cancer) also lacks density, and coal [liquefaction], the best and most abundant energy we’ve got in North America but won’t scale up for liquefaction fuel supply. Just enough for the elite, but not for us.

I’ve spent the last six years daily reading and studying energy depletion. The Tar Sands are an energy sink. It will take approximately 22 full sized nuclear power plants, or 48 conventional natural gas power plants to heat the tar sands after mining them like the low density garbage they are, to produce the current output of 85 million barrels [of oil] per day. And if you did that, then natural gas would stop heating homes in the United States, leaving millions to freeze to death [rant snipped.] If you just want enough for the United States and Canada and let the rest of the world rot, you still need something like 15 nuclear power plants. And those take 10 years to build [rant snipped.] Tar sands are less dense and less efficient than coal. It takes copious amounts of water to steam the oil out of the sand and the sand itself must be mined, then disposed of in a huge slurry pond. Cambridge Energy Research Associates (CERA) doesn’t tell you that part. Neither does the USGS, who has worse numbers than NASA where oil reserve totals accuracy is concerned. Counting it two and three times does not mean that total actually exists. Furthermore, the cost per barrel of oil generated from tar sands is $55, not the $15 that certain unreliable and unscrupulous organizations like to claim. They are “greenwash” organizations shilling for Big Oil and the scams that result from it. Tar Sands are a massive waste of energy and time, and a distraction from the reality of [Peak Oil economic] collapse. They’ll probably be exploited by someone who failed basic math. 1-1 does not = 2. It equals zero, and that’s what the tar sands are worth: zero.

Please let me make this perfectly clear to all your readers: there is no alternative to [traditionally pumped] oil. None. There are energy losers, there are projects that won’t scale up beyond the elite, like biofuels. There are expensive toys like electric cars and hydrogen cars and fuel cells which require exotic components in very limited supply so also end up for the elite. There are no solutions. We are doomed.

Regarding TPD:
Some years ago (2003), Discover magazine ran a Gee Whiz article about turning Anything Into Oil using basic chemistry and steam and acids to break down complex proteins into hydrocarbons, basically refining plastics and turkey guts and old tires etc into oil. It sounded like a great idea. Alas, [we later read that] it was a scam.

The main problem is that they were trying to use a limited resource, other people’s garbage, as a fuel source for a process which doesn’t scale up, and isn’t efficient to start with, and treated it like a perpetual motion machine. Whether intentionally or not, it was obvious from the outset that there were some real concerns about the chemistry, and whether the energy output was higher than the energy input. It wasn’t efficient, so they tried scaling it up, using more money and trust from investors. If its not efficient at small scale, it sure as heck won’t be at large scale either. The model collapsed under a lesser well known law called The Law of Receding Horizons, stated as “the less efficient the process the higher inputs required, the less efficient the process, repeat.” Thermal Depolymerization (TPD) fell into this category and died a quiet death when the cost of turkey guts rose after becoming valuable to a competitor as compost or somesuch. The moral of the story is: if it sounds too good to be true, it probably is.

Buy ammo, build up your soil, stock up food for the coming famine. We’ve got at least 20 years of misery to suffer through, best case. If you live near a railroad line, you might even make it, if the train stops in your town. Trains offer cheap transit, so will have goods exchanged. If you’re in the remote boonies you get to juggle isolation from the Horde with isolation that can be exploited by organized bandits. Make sure you’ve got plenty of ammunition reloading supplies and keep your powder dry. Best, – InyoKern

JWR Replies: I agree with some of your assertions, but not all of them. For example you suggest that we are running out of natural gas. Some petroleum industry analysts estimate that North America has a 800 year supply, given aggressive exploration. Even if we were to squander most of that for creating oil from coal or tar sands, or for generating ethanol, we will still have a very long term supply. I agree that the age of cheap liquid fuels is coming to an end, and we should make arrangements to live without them. My greatest fear is not energy source depletion per se, but rather the draconian measures that governments will take if they perceive that fuels are getting short supply. One lesson that can be learned from the two world wars in the last century is: when a government feels threatened, watch out!

You also describe cheap solar energy as “a scam.” Perhaps you are right, since the cost per watt is not falling rapidly. (Too bad that it isn’t analogous to the falling cost of computers.) But for middle class consumers, even currently expensive solar panels will mean the difference between a troglodyte existence and a relatively modern life with pumped water, radios, and electric lights. If you are the one that can recharge your neighbor’s batteries, then you will be the indispensable neighbor. I strongly encourage SurvivalBlog readers to equip their retreats with at least a modest-size photovoltaic (PV) power system. The folks at Ready Made Resources can help you size your system, and source the components. It isn’t rocket science. Lastly, if there is even the chance of an economic depression and concomitant social disruption, then it is wise to strategically relocate. My book Rawles on Retreats and Relocation gives some concrete advice on the safe places to live.that are well-removed from urban population centers, and how to best stock a retreat to be ready for a long term collapse.