Election Odds

[khirkhib]

H-fuel cells will never work.  The idea is flawed.  The energy required to produce H from water requires the emmission of more exhaust than the cell would save from being emmitted by the car.

Actually it could work though I don't know if it is favourite solution.  What H-fuel cells would do would change emission from non-point to point pollution so at the plants where the Hydrogen is produced the exhaust could be scrubbed.  The question is effeciancy because you would be losing energy as heat and in a 3 step process fuel -> hydrogen -> electricity -> to motion you will be losing to entropy at every step.  However car motors are still so inefficient, century old technology with not to many improvements in efficiancy the total energy lost to entropy even using a longer process may be lower.  My major fear about oil and actually most non-renewable resources is that we won't run out in time if we run out at all by the time the market realizes larger global consiquences the changes affected on the global environment will be irriversable. That will sound strange to most everyone but it really is just economics.  Before I move to the graphs I'll tell you OPEC and the Oil Companies game plan.  They want to to sell all their supply.  That means that they have to set the price high enough so they can make a tidy profit (and they do) but low enough so that people don't have interest in alternative energy or mass transit.  Oil is a drug and when it is cheap and flowing than America will continue to have a strong demand.  What good does it do the oil companies and the OPEC oligarchy to have oil under the ground for the rest of time.  OK the graph.  I'll put that in my next post because it's going to take me about an hour to make it.

[khirkhib]

So going out of the confortable land of national politics and drifting over to resource macro-economics I present to you a modified version of the backstop technology graph in relation to non-renewable resources.  In this case Oil.  And I give credit to Ole Gunnar Austvik out in Norway for having the graph on his web-page  http://www.kaldor.no/energy/hotelling9300.htm



OK so its a busy graph and it is true that sometimes people try to say too much with one visual. I'm one of those people but bare with me.  Basically this model assumes that their is not going to be a magic bullet solution to the energy problem, like cold-fusion, cheap, clean and limitless energy.  This model is I feel a more realistic view of future events that shows a backstop technology, a renewable and hopefully clean though expensive gas alternative.  We already have an idea of what differrent backstop techonolgies might be solar!!, wind, tidal, geo-thermal, ocean current, hydrogen, bio-fuel, ethanol, hot fusion, etc etc and we should include other alternative energy technolgies that we have not yet discovered.

The x-axis is time. The y-axis is consumer price.

The first concept that you have to understand (and the most difficult - I started into it in my last post) is SCARCITY RENT.

Basically with non-rewable (scarse) resources by using my supply today I am using me supply for tomorrow.  Scarcity rent is payment to the owner of the supply for the access of what would in itself become more valuable in the future.  In essence this increases the price of fuel much over the basic costs of extraction, transportation and retail so that the resource owner will be able to make more on interest from selling his supply today than he would have if he had waited to sell a more valuable product tomorrow.  Wow.  I'm a biologist so maybe an economist could explain it better.

Now that the graph basics are established lets dig into what it means.  At the beginning the oil deposits that were used (think Texas, Wyoming, Ohio etc) were relatively big and relatively close to the surface, easy access oil.  It was such a deal for oil speculators that they drilled everywhere in search of oil.  In fact you would have discovered more oil per drilling if you had simply thrown darts at the Texas map to decide where you would drill as opposed to how they drilled everywhere.  As oil become more difficult to extract and transport deeper, smaller deposits, further away from the market the price of the resource increases.  This can be seen in shipping oil in Trans-ocean voyages, building nation spanning pipe-lines, digging for oil in the most hostile and war-torn environments in the world and beneath the seas.  That trend continues.  In fact the world oil reserve has been increasing because expensive technology has given us greater access to more and more oil deposits.  This expensive technology is easiest understood by the oil/sand extraction projects in Canada.  Their are large deposits of oil that, unlike the cheap deposits of the past, are just a slurry of oil and sand.  This oil is being mined not pumped out of the ground, whole mountains are being moved as the tar sands are shipped by the truck load to factories for seperation.  This is not cheap but the Oil companies still make a profit.  The scary thing is that new oil technology and more deposits are being continually discovered and the oil comapanies have the flexibility to lower their scarcity rent so that it is affordable to an increasing global population with more and more energy needs.  But the oil companies know that this can't and won't continue forever at some point the cost of extracting oil will be much higher than the cost of the backstop energy technology be it solar or whatever it ends up being.  The costs of backstop technology is constant because generally they cost the same today as they will tomorrow.  Energy wind mills will pump out electricity but because it is renewable it is fairly constant barring small improvements in the technology.  As the backstop develops and because more utilized the oil price will fluctuate.  Over the backstop price at first because the backstop technology will not have global distribution as then under as the oil market access the last of the deposits with the cheaper technology and in an effort to stay competive with the backstop tech.  The difference will shrink until the whole market is switched on to the backstop tech.  If a backstop tech did not exist theoretically the price could go up indefinately as the oil companies would continue to discover rediculously expensive ways to producing fuel.  This is easiest to understand with a nonrenewable resource like Gold where if the market really demanded it investors could mine asteroids or other planets for gold.  Their has been speculation that some asteroids have large gold deposits.  I don't really know what this would look like with oil but I think plenty of backdrop techs exhist so that part is just theory anyway.  Wait for Part 3 my fears.

 

[khirkhib]

Unfortunately I don't believe that the consumers are paying the true cost  of oil.   Future generations are subsidizing are oil use because they are the ones that will have to pay for oil clean-ups and their own economies will be negatively effected by anysort of global climatic change.  Low lying areas being being flooded by oceans, increase in weather related natural disastors, desertification of healthy lands etc.  The red line comes out of the original price line because the use of part of the oil suppy was probably mostly benign, the problem is we don't and can't know when are use of oil-supplies will start to have a real malignant costs.  It already has in some ways with air pollution negatively affecting the health of urban workers.  When you fill your tank of gas you are paying Shell and OPEC and assides from small taxes, money is not going towards the children that get ashma and the toll booth operators that get cancer.  This is a cost to society above the cost that you pay. Oil companies have an incentive to produce studies that under-estimate the  true cost of fuel because if consumers factor in the true cost - that cost would meet with the backstop prematurely and so they would miss out on a lot of profits that they could have made had the oil sources been depleted at the 'natural' rate. (Where the red line meets the dashed line)

The model could work out in different ways. If the damage is reversable, like it looks like maybe the damage we did to the ozone layer is reversable, than future society will continue to pay towards are abuse of the oil supplies but in time and with the alternatve backstop technology things will eventually even out.  However since we do not understand how powerful an effect we might cause to the global environment the damage we do may not be reversable with-in a matter of centuries.  The earth will survive, animals, plants, bacteria will continue, Darwin's rules apply, no matter how the environment changed cockroaches would still be around.  Even humans, as smart as we are, should be able to continue to survive in a world which has an environment much different on our own but civilization would not.  Cultures change and adapt to survive different environments but cities can not move themselves.  If the damage we do is not easily reversable than the price that we will pay for our oil use will be everything that we have.

So you think I'm an extremist now? These are just economic models and if you sat down and really thought about them I think that you might improve you understanding of what is really going on in the world.  

Anyway please tell me what you think of this? And if you have any questions.

[khirkhib]

khirkhib-

good analysis

I would only comment that the backstop will come about through the demand generated thorugh the increasing cost of extracting oil.  At some point it will present a viable business opportunity and someone will exploit it, resulting in the clean energy technology that Greenies are pushing arriving through the natural workings of the market.

I would agree with you.  Actually that is what the basic model shows.  I only think that the cost that we pay doesn't factor in costs that will be paid in the future which is essentially subsidizing our current use levels.  If the actual costs were factored in then backstop technology would become a viable option sooner than the current market forces would indicate.

[khirkhib]

When has it ever been in the best interest of current financial and executive officers to factor in future costs when the costs will only be truly incurred after they retire?  How can you honestly expect someone to do what they do not perceive to be in their own best interest?

Because it is in the best interest of mankind

[khirkhib]

true - pretty much strikes at the heart of it -
you think i'm wasting your money and your time
I think your wasting my children's future.

But generally with most conservatives if I discuss econmic models and theories I feel like we can reach some middle ground.  Actually I sometimes like to think of myself as a Teddy Roosevelt conservative and I know that Nixon did more for the environment than any other president in the 20th century.  And I have a bit of a libertarian streak and would be if I thought that economic models accounted for all costs (which they don't) Adam Smith's hand does not guide w/o prejudice.

Who I can't understand our the Christian Coalition.  Some of them just go by faith that God will provide so do whatever and he'll clean it up and if he doesn't and humans do create environmental disastors, if global climatic change increases the number of hurricanes annual well than it is God's will and he is bringing on the appocaplse.  Praise the lord.

The Neo-cons brought the CC into the Republican fold and I hope that real republicans take that control back.