Via press release: a forecast study of investor patterns from UC Davis.
Stock prices suggest a 90-year gap
At the current pace of research and development, global oil will run out 90 years before replacement technologies are ready, says a new University of California, Davis, study based on stock market expectations.
The forecast was published online Monday (Nov. 8) in the journal Environmental Science & Technology. It is based on the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace.
“Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective,” said study author Debbie Niemeier, a UC Davis professor of civil and environmental engineering.
Niemeier and co-author Nataliya Malyshkina, a UC Davis postdoctoral researcher, set out to create a new tool that would help policymakers set realistic targets for environmental sustainability and evaluate the progress made toward those goals.
Two key elements of the new theory are market capitalizations (based on stock share prices) and dividends of publicly owned oil companies and alternative-energy companies. Other analysts have previously used similar equations to predict events in finance, politics and sports.
“Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities,” said Malyshkina. “As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate.”
Niemeier said the new study’s findings are a warning that current renewable-fuel targets are not ambitious enough to prevent harm to society, economic development and natural ecosystems.
“We need stronger policy impetus to push the development of these alternative replacement technologies along,” she said.
Additional information:
Full text of study, “Future Sustainability Forecasting by Exchange Markets” — http://pubs.acs.org/journal/esthag (paywall)
I’d like to see Steve McIntyre audit this study. Shouldn’t take but a few minutes.
This is wrong on so many levels. If oil was more expensive other energy technologies would be viable. The market is telling them that other technologies are not currently viable and they twist it around in knots until they can come to the conclusion that they should be wasting our money on alternative energy. When oil starts to run out, coal gas and nuclear will tend to replace them. Electric vehicles may even become cost efficient. The only special thing about oil is that it is a liquid high density energy source. The only place where that is a significant advantage is motor transport and if it runs out it will be an awful lot more cost effective to switch to natural gas or some sort of coal than windmills or solar panels for the forseeable future. The fact that the media publish this nonsense with a straight face is testament to the extent political correctness has replaced common sense.
None of this is based on what peak oil is. Peak oil is not about what’s in the ground, it’s about flow rates (CodeTech, the tar sands will be never more than a trickle), and ERoEI (again, CodeTech, the surface mining is 6:1, close to break even).
Flow rates for oil is at max now. Older fields have dropping flow rates. It is a fact that the super giant fields are in terminal decline, and dropping fast. Newer fields can’t keep up with that lost supply.
ERoEI is also key. Soon as ERoEI goes below 4:1 then the deposit is essentually spent and useless to us. Currently the average is 25:1 which projected will drop to 4:1 in 25 years or so.
Doesn’t matter how much oil is in the ground, what matters is the flow rate and ERoEI.
Do you know what happens when sea living beings die? …Yes! you got it!, they fall to the abyssal waters at the bottom of the seas and there they decompose to methane (CH4): Calthrates, HYDROCARBONS. Then FOSSIL FUELS are constantly produced at the bottom of the seas. Not only that but, Global Warmers’ blessed CO2, reacts with Calcium IN LIVING BEINGS as Oysters, You and Me, etc to form calcium carbonate CaCO3 (“lime”) which when under pressure (in those depths Al Gore likes so much for being HOT) reacts with water to form, again, HYDROCARBONS, i.e. NOT SO “FOSSIL” BUT BRAND NEW FUELS.
Then, you guys have succeeded in making fools believe oil is running dry….so, instead, OUR WALLETS are running dry, with an oil price that should be about US$10/barrel and it is artificially, at US$85/Barrel. You won babies!, be happy!
It’d be great if oil, coal and natural gas all ran out. Then we’d finally get to building the nuke plants along side synfuel plants to manufacture all the hydrocarbons we’d ever conceive of using what with the known resources of uranium and thorium and such. If we’re smart (highly unlikely) we’d build them alongside the pipelines and just valve over into the existing infrastructure.
We may get to “peak” oil via refusing to extract and refine it but we’re along way from “peak” hydrocarbons. However, we might beat the windmills and solar panels into nuke plants and start producing extraordinarily clean hydrocarbon fuels. Fat chance.
These guys never learn…
“In a televised address on April 18, 1977, president Jimmy Carter delivered a chilling prediction: “Unless profound changes are made to lower oil consumption, we now believe that early in the 1980s the world will be demanding more oil that it can produce. … Within 10 years we would not be able to import enough oil from any country, at any acceptable price.”
Instead, within 10 years the price of oil collapsed. In mid-1986, the price of a barrel of oil tumbled to US$10 a barrel. Prices struggled upward in the later 1980s, but except for a brief spurt upward during the Gulf War, oil remained cheap until the end of the century. “
If you’re into Peak Oil here are some real good peer reviewed papers:
http://www.fysast.uu.se/ges/en/publications/peer-reviewed-articles
I especially recommend this one, trashing IPCCs scenarios:
http://www.tsl.uu.se/uhdsg/Publications/IPCC_article.pdf
Milwaukee Bob says:
November 9, 2010 at 9:35 am
Love the cartoon! Apeakolypse Now
“Apocalypse (Greek: Ἀποκάλυψις Apokálypsis; “lifting of the veil” or “revelation”) is a disclosure of something hidden from the majority of mankind in an era dominated by falsehood and misconception,…
http://en.wikipedia.org/wiki/Apocalypse
Fortunately IT IS happening now, but LITERALLY…andHERE IN WUWT!!!!:
a disclosure of something hidden from the majority of mankind in an era dominated by falsehood and misconception
Ok, everyone assumes that oil and coal are not renewable resources. So I’ll throw this idea out: maybe petroleum comes from abiogenic , continuously renewing sources, i.e. not squished dinosaur meat and ferns, but very deep carbon/methane deposits that go back to the creation of this planet (and are still creating “new oil” every day)
http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin
Yes, a very controversial theory, but the skeptic in me is strongly attracted to this idea. Certainly explains why the oil never seems to run out when predicted, and also explains other curiosities, such as the presence of helium in petroleum, certainly not there for biological reasons.
And don’t show me pictures of prehistoric ferns and dinosaur bones embedded in coal deposits. As Thomas Gold pointed out, those embedded fossils actually prove petroleum could not have been biological in origin.
http://www.semp.us/publications/biot_reader.php?BiotID=182
[Yes, and I do have to admit that Tom Gold, in his younger days, did somewhat resemble Lex Luthor (with hair) :-]
They have been saying we are “running out” for as long as I can remember. We *may* be running out of CHEAP oil. There is PLENTY of more expensive, harder-to-get-to oil out there, much of it located in North America.
I do not think there is anyone alive on this planet that will still be alive the day the planet officially runs completely out of oil…
Its a lot like using insurance premiums to predict global warming or climate change.
Peak oil has to to with two very real problems. First, as oil becomes harder to extract, it eventually reaches a point where the amount of energy to extract the oil is equal to or greater than the amount of energy derived from the oil extracted. That’s called EROEI (energy return on energy investment). When the two are equal, there is no longer any point in using available energy to extract the same amount of energy, and you might as well start selling the energy you already have. Did you ever wonder why you see some oil pumps idle in a field while others are pumping? It’s about the cost of extraction versus the current value of the oil. As any oil man knows, eventually wells become too expensive to operate energy wise, and so do whole fields. This is not an economic thing, it’s an energy-in versus energy-out thing. Yes, there is still oil in the ground, but you have to calculate the amount of energy needed to get it out against the energy derived from it. New, more efficient, extraction technologies may help, but ultimately you still bump up against the same problem.
The second problem has to do with the exponential growth of world economies and their resulting use of energy. You have to think about doubling times in exponential growth. Gradually oil and coal become harder to extract, but before you ever get to the point where EROEI is equal, you have such a demand upon fossil fuel use, together with the increased costs due to the energy used in extraction, that fossil fuel becomes prohibitively expensive.
Don’t get me wrong, I’m not a warmist, and I am not a “pie-in-the-sky” person who believes we can supplant fossil fuel with windmills, solar cells and ethanol. People who follow that line of thinking are naive. We need to build nuclear plants, and we need to build them fast. We also need more hydrothermal and hydroelectric plants, and because the development of these technologies is energy intensive, we need to start now before we reach “Peak.”
Peak is going to occur, sooner or later, and when that happens, I wouldn’t want to bet on what things will be like, since our whole economy (in fact, virtually everything in modern culture) is completely dependent upon “cheap” energy. Did anyone happen to notice that the current recession was PRECEDED by a huge jump in fuel costs? I believe that was an early symptom.
Twitter predicts the stock market:
http://www.readwriteweb.com/archives/twitter_can_be_used_to_predict_stock_market_say_researchers.php
Stock market predicts 90 year energy drought and the end of life as we know it.
Therefore all you need to do is watch Twitter and it will predict the end of the world as we know it.
The other option is just to get on with life …
Not to mention coal. It has been estimated that there are over 847 billion tonnes of proven coal reserves worldwide. http://www.worldcoal.org/home/
Proven reserves are those which, like oil and gas, are economic with current technologies and prices. They are not the total of what is known, nor do they include what has not yet been been discovered. What has not yet been discovered is not because it is hard to find but because there is no need to look yet as the proven reserves are sufficient: coal for 119 years, gas 63 years, oil 43 years. There are also the reserves that are not accessable due to green policies.
90 years? They’re ridiculous. Anyone who’s seriously talking about technology and haven’t noticed the accelerating pace of the progress should be ignored. Crackpots.
What do they think will be going on during those 90 years? Reinventing wheel the first 80 and actual science the rest? Or maybe they think that the AGW movement will be succesful afterall.
In a private board room at the international Headquarters of Mobil, they told me we would run out by 1992. This was in 1981. Today I can tell you were there is an incredible amount of oil that is nearly untouched. I can also admit that even Oklahoma has not even produced 15% of their known reserves.
j.pickens says:
November 9, 2010 at 8:37 am (Edit)
Too true blue . . the problem with the greens is that their real agenda always shows through. They don’t have issues with CO2 , they have issues with industrialization and prosperity.
Nuclear power is cheap and safe and easy to manage. Hell the whole third world could be dragged out of the dark ages by ubiquitous power but those idiot greens don’t want that, they just want global poverty ( except for themselves of course).
IMHO the greens are pure fascists who harbor delusions of adequacy beyond their pay grade.
Jay Curtis
What interesting observations. Wouldn’t you agree that it isn’t really the amount of energy required for extraction, processing, and delivery, but the cost of that energy? Cost relative to price received for delivered processed product? Pumping oil with cheap hydroelectric energy is one thing, pumping it with pricey #2 is another thing altogether. Delivery by cheap electric pump – different from truck delivery.
There’s also the issue of cost of alternative energy for different purposes. Load following major generation facilities are one market, short haul delivery trucks are another. Where there is no practical alternative, and the trip is necessary, oil can cost a lot and still make sense as vehicle fuel. But maybe not in other uses.
I can see you don’t think this thing is simple either, but maybe it isn’t beyond belief that so called fossil fuels could be with us for quite a long time to come and that the constituency of the demand and its total will adjust as the stuff becomes scarcer.
WOLF!!!!!!!!!!
Last year the world bank lent South Africa a couple billion for a coal to liquids processing plant.
We have little to spend to convert vehicles to natural gas. Natural gas condensate or liquids can be used for gasoline refining. We always need to conserve. We don’t worry about waste because we will run out tomorrow.
The presenting problem is a political movement to demonize the oil industry.
How do these simpletons get into positions where they can publish garbage like this? There is never any peak oil and it never runs out just gets less affordable. There are 3 laws that govern things if the dead hand of the state stays out of things. The first is that oil will get more expensive as supply decreases; secondly oil will be replaced when the cost of replacement becomes less than the cost of oil; thirdly supply and demand will always be balanced by price and it will be a case of people buying what they can afford. As cost increases, manufacturers will make ever more efficient vehicles something that they don’t need to do yet but will do when required. Supplies of oil will be extended by drilling in ever more hostile environments and shale oil won’t be sneered at. We have doubled reserves twice since 1970 and we will do it again but with ever increasing difficulty and reflected costs. The market is perfect and will handle energy transition perfectly as it always will as long as it is left to it without distortion by subsidy. Eventually in 2-300 years we may go back to 1950’s living when most didn’t have cars, there will be less people on the planet and maybe life will be better but make no mistake we have and will see more of the most incredible period of human ingenuity and generation of prosperity ever seen or imagined. Incredible times indeed, ever cleaner and ever more sustainable and I am massively cup half full not only on now but the ever forseeable future. The only impediment I see is the mindleless destructiveness of the green fly in the ointment. I believe though that they themselves are now self destructing.
We do have environmental problems such as deforestation and we need to solve them but not on the extreme green agenda, we need to divert the AGW billions into stopping poverty and child deaths from hunger and bad water, we need to bring Africa and Asia up to our levels of prosperity and to do that we need an optimised energy philosophy and a realistic one free of green shackles.
Actually, I think the conclusion of this study (90 year gap between peak oil and replacement of oil by “renewables”) is a serious underestimate. IMHO the “gap” will be made pretty much infinite by nuclear/thermonuclear technology.
Ah, the heartbreak of proctocraniosis.
Ho hum. I was working on Das Island in the Persian Gulf in the late 1960s and was reliably informed, many times, that oil would run out in 25 years.
I also believe in abiogenic oil.
Jay Curtis says:
November 9, 2010 at 10:08 am
It’s about the cost of extraction versus the current value of the oil. As any oil man knows, eventually wells become too expensive to operate energy wise, and so do whole fields.
Very true, but as energy costs go up, that makes more fields open up, which supplies the demand. If oil prices raise enough, the EROEI doesn’t mean as much since eventually it could even be worse then 1:1 and you could still make a profit since other energy sources will not go up as much in your scenario. Even if oil costs more energy to extract then it supplies, you can still make a profit if the market will bear it. Son in the end, if we never change, we could end up draining every oil field basically dry.
To put it into perspective: more demand will cause prices to rise, but it will be across the board, and we will continue to grab every bit of oil until it really is dry. Ecomically today its not feasible to pump the well dry, but let the field rest, and come back in 10 years when prices rise….And this process continues pretty much until the well is dry. Or other options open up that are cheaper.
The second problem has to do with the exponential growth of world economies and their resulting use of energy. You have to think about doubling times in exponential growth.
Energy costs are an issue for growth ecomically speaking. I would agree with that, however, you are assuming first that demand for oil will keep being exponential, which is a very big assumption because as oil gradually rises in price, this leads to other sources such as biofuels to become effective, and their costs go down versus oil. So oil usage drops *if we do reach the peak oil stage. The question is, does the demand continue being exponential at that point? I very much doubt it personally. We might see demand or consumption continue to rise, but it will slow down and perhaps become linear at some point. Who knows? Forcasting the future is difficult to say the least.
On the other hand, I think its very possible that we have already reached that point (peak oil) a few times, but as history shows, we adjusted our habbits and moved on. Yes, the economy hurts everytime energy costs go up, but this is the nature of the beast…the economy can not always be great. There will always be something that causes the economy to go from boom times to recession. Energy can be a cause, but other factors will play into this as well.
Did anyone happen to notice that the current recession was PRECEDED by a huge jump in fuel costs? I believe that was an early symptom.
Yes, and I do agree this was probably one of many causes of the recession. What really caused the issue was that gas prices went up high enough to cause people to change their habbits. People started selling their homes to move closer to the city to save money on commutes and other driving. As the home market started to get hurt, the economy started feeling the pain as well. We all know how that went from there. With less people buying gas, cars, houses, those sectors of the economy each took a hit which became even larger as the recession did arrive…but I digress.
The point is that we can guess at what the future holds, but economics in general tells us that even when we reach the point of peak oil, other options open up and society continues its course. Some things change, but this is the nature of life in general. You can’t expect society to be the same in 40 years as it is today.