Shell Predicts 20 Years Of Rising Energy Prices - Independent

Worldwide energy prices are set to rise over the next two decades as individual countries become more concerned about ensuring security of supply and governments take a more pro-active role in dictating energy policy and regulating markets, according to the latest global outlook from the oil giant Shell.

Its "global scenarios" report, the first to be produced since the twin shocks of the terror attacks of 11 September 2001 and the Enron scandal, also suggests that Shell in common with other oil majors will place more emphasis on developing renewable energy sources such as wind and solar than extracting more hydrocarbons through unconventional means.

The report outlines three potential scenarios up to 2025. Under the first, "low trust globalisation", world economic growth is assumed to be 3.1 per cent and as the process of globalisation continues, it is fettered by a much stronger regulatory role for governments and stricter curbs on cross-border movement of people, goods and knowledge. The second, "open doors", envisages stronger growth of 3.8 per cent as the markets provide solutions to the twin crises of security and trust sparked by events such as 9/11 and Enron and the only restraint on exploiting new energy sources is the investment available.

The third, "flags", depicts a world in which nation states retreat into their shells and conflicts put a brake on globalisation, resulting in annual growth of just 2.6 per cent."

EDIT

http://news.independent.co.uk/business/news/story.jsp?story=644809

:party:

When a critical resource gets scarce, the "every man for himself" mentality tends to kick in. World leader that he is, Bush has already been pursuing that strategy since he took office, with his avante garde "Fuck-You Doctrine" of foreign policy.

(edited for better link with larger table)

Most of the annual growth rate indices cited are based on access to petroleum by-products, all of which will be more expensive over the next 20 years. And 2.6% is just about the bare minimum growth that will prevent a massive depression from setting in.

I suspect that growth over that time will be more like 2.0% or less -- almost all of that growth coming simply from the effort to develop alternate energy sources. Unless the industrialized nations embark on a Manhattan Project to develop new energy and/or to reduce society's energy requirements, this will be a period of economic collapse.

By 2025, Richard Duncan forecasts that we will just be sliding down the "cliff" portion of the Olduvai downslope (see Figure 4).

A semi-controlled implosion of the world economy is the most likely scenario. With adequate planning and attention to "first things first", this need not be a destructive, trauamatic change. But it will be a big change, and many people won't like it.

For starters, the executives at Shell.

--p!

Because he doesn't seem to have any justification for it. He predicts oil consumption will follow a curve, as in Figure 1 of his article. Many people agree with this, even if they differ on the exact date of the peak, etc. But then he predicts a sudden decrease in energy production from 2012 onwards. Why? He talks about electricity blackouts, but gives no reason for thinking they'll start at that point, nor for believing that the electricity networks won't get repaired (after all, there's still primary energy available to put into it, even if the hydrocarbon part of it is gradually decreasing on the down slope of peak oil), and the demand will still be there.

So where does this cliff edge come from?

I don't know if they are his reasons, but here they are:

1) "hyper-extraction" techniques currently employed by oil exporters, like water injection. They maintain high rates of production, but when the oil runs out, it runs out fast, not gradually. This is very bad news, since it means that oil will remain relatively cheap, right up until it becomes unaffordable.
http://agonist.org/story/2005/6/3/124329/2939


2) When services degrade past a certain point, everything starts to fall apart quickly. A nonlinear threshold sort of thing. Or, on the economic level, if prices of everything rise past a certain point, people have to stop buying them. Which causes more businesses to close, which means more people have less money, etc.

Duncan's model is based on "energy consumption per capita" - whether the measure is gross oil production divided by population, joules per capita, or whatever. At it's core, this is an invalid measure.

Hypothetically, if we switched from 8 mpg Hummers to 40 mpg hybrids, and reduced our driving from 12,000 miles per year to 8,000 miles per year, we have reduced our gasoline consumption from 1500 gallons/year to 200 gallons/year, i.e., (1500-200)/1500 = 87%. By Duncan's model this is a reduction in our standard of living -- I would argue that is represents an increase in our "standard" of living. Admitted, that is a silly and extreme example.

And, the obvious, if I buy a European "clean diesel" and run it on a mix of 85% diesel fuel and 15% recycled cooking oil .......

Let's take the Duncan model out to another ad horrendum - my 1981 PC and CRT burned 450 watts - with its monochrome monitor and its 8088 processor and no hard drive, and 640K of memory (over $3000). I just bought a new laptop - 60 watts, 2 Gig processor, 1 Gig DRAM, and 80 Gig hard drive - under $1200. Much more computer power, much lower price, burns much less electricity.

I would say that the proper measure is dollars of GDP per BTU (or per barrel of oil).