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)
“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.
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.
——————————————————————————————————————-
What I can’t reconcile is why a professor of civil engineering is messing with a study of marketing. Seems like a square peg in a round hole to me.
Douglas
With the changeover to digital TV, the local broadcast stations have been creative with the new “add-on” programming they can stick on their additional channels. One has settled on RTV (Retro Television Network) which shows the “classic” TV series. It’s acceptable background noise.
There was an episode of The Rockford Files where a would-be deep sea explorer was really excited about using kelp to make replacement petroleum. (You know, back in the days of President Carter when the EVIL Arabs in OPEC were threatening our oil supply?)
Now over 30 years later, the cutting-edge research involves using algae to make replacement petroleum.
At which point will we have an oil crisis that lasts long enough for replacement petroleum to be developed and become economically viable before more subsurface petroleum is suddenly “found” and the crisis passes? Currently the crises don’t seem to last long enough to keep the research funding going long enough for significant developments. Heck, the best stuff recently done was as an offshoot of the Genetic Modification research.
As an estimate looking straight-forward at the pace of the research, with blinders on and ignoring everything else, “90 years after the oil runs out” isn’t that bad. But realistically, we’ve been less than 10 years from deploying an acceptable substitute for nearly a century. Actually that’s the “from renewables” figure, we’re making equivalent petroleum from coal right now.
Russian Abiotic Theory of Oil suggests oil is a renewable resource formed at much deeper layers in the crust and not from organic life forms.
Charles Higley mentioned this earlier and I have suggested in Tips and Notes that a post on this would be very informative for some of us who read but are essentially ignorant.
Climate Realists produced a piece on this with links on 8th Sept. 2010.
Actually, Crude oil “Peaked” in 2005, and we’ve been on a “plateau” ever since. We will, probably, “officially” fall off of it in late 2012.
Prices are one thing, but “Geology” rules.
We have another Oil will run dry article which analyzes investor actions in commodity markets to predict technology achievements 90 years hence. Do the authors of this intellectual work run in the same social circles as the people who told us that Carbon Trading Markets would become a 10 trillion dollar a year enterprise?
http://wattsupwiththat.com/2010/11/08/public-carbon-trading-dead-in-the-usa/
To get a perspective of technology advancement, consider a person who gets their first introduction to the writings of Jules Verne on an IPAD pondering technology advancement possibilities for the next 90 years. When the replacement for liquid fuels arrives, it will be well before we run out of petroleum, and in all possibilities will not even be a liquid.
Just a silly question; suppose that we stop using petroleum based fuels for transportation and energy, what are we going to do with the stuff? I mean it is not good for anything else, that is why we burn it.
This smacks of computerized climate modeling. Garbage In, Garbage Out.
It also says a lot about peer-reviewed scientific articles.
Jimmy Carter beat you by 35 years. His prediction was the world would be out of oil, the last drop by the year 2000. Gone, kaput, none left sorry. How close did he come?
Especially if we follow the Obama no drill policy.
DesertYote,
You might get a few enlightening answers to your question.☺
It’s a pity the article is behind a paywall. I would have loved to see their equations. So i don’t know how the reach their 90-year gap prediction. Nor when they expect when oil will run out.
“For more than 100 years, UC Davis has engaged in teaching, research and public service that matter to California […]” – Ah, California.
Here, found the formula and a description:
http://www.nanowerk.com/news/newsid=18911.php
“This formula gives T ≈ 131 years for replacement of gasoline and diesel. ”
So they expect oil to last for 40 years from now. That sounds like current known reserves. So they seem to assume that no new reserves at all will be found.
Quite an assumption.
The question they are playing around is what is the vehicular fuel after oil. The answer as has been suggested in other comments is synthetic diesel via CTL or GTL.
Locals up here believe they can make money on the Fischer – Tropsch process as long as the per bbl price of oil remains above $40 US. And we have enough coal and natural gas in Alaska to produce and sell it for centuries to a worldwide market. BTW – the technology is a mere 70+ years old. Properly size the molecule and your end up with the same process manufacturing diesel, kerosene, JP-8, AVGAS, Jet-A and RP-1.
The new diesels are pretty efficient and we have a century of infrastructure out there that handles gasoline and diesel for vehicular use. Much better – and more economically viable solution to the problem than CNG, biofuels, hydrogen, ethanol or anything else on the green wish list.
Easy, affordable solution and it doesn’t matter when or if oil becomes scarce – as long as we can keep from shooting ourselves in our foot via more green rules and regulations that keep it from happening.
*****
George E. Smith says:
November 9, 2010 at 9:25 am
*****
Wow, George. Looks like you did an incredible amount of research on thorium (NOT!).
Take a look at http://energyfromthorium.com/2010/05/03/new-job-with-teledyne-brown-engineering/
Oil reserves are not the problem. The reason we’re still hooked on foreign suppliers is almost entirely due to political obstructionism by eco-luddites.
“forecasts of future events, representing consensus predictions of a large number of
climate scientistsinvestors, tend to be relatively accurate.”Lol
@Dale Rainwater Watkins
> Russian Abiotic Theory of Oil suggests oil is a renewable resource
> formed at much deeper layers in the crust …
That Climate Realist link is here:
http://climaterealists.com/index.php?id=6261
But it overlooks the work of Thomas Gold (who may have been inspired by earlier Russian work), one of the great scientists of the 20th century
One of the objections to the abiogenic theories was the presence of microbes in the petroleum. But it was Gold who pointed out the “deep hot biosphere”,including microbial life deep in the Earth that does not depend on solar insolation for energy.
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC49434/pdf/pnas01087-0355.pdf
@Kum Dollison
> Actually, Crude oil “Peaked” in 2005, and
> we’ve been on a “plateau” ever since.
Are we on a “plateau” because the oil is diminishing? or because we’re not drilling as much as we would like to?
I give the abiotic oil formation theory a good chance of being accurate. That is also why the big oil companies may be the big money behind AGW. If oil was in nearly unlimited supply what would happen to their profits? The companies may be ones who want out of the business before that loss happens, IMO. (Al Gore is Occidental Oil and who funds the Sierra Club,etc? Foundations run by money from big oil. And why have they closed so many refineries and capped so many wells? Also aren’t there just too many news stories out recently that try to infer that oil and gas are so dangerous?) Looking for the ruse in the ruse in the ruse, usually ends up making more sense than what is taught to us by the medias — books, textbooks, newspapers, TV or radio. Please don’t misunderstand as I am against AGW but it is a manipulated theory from both sides — and it is just one of many.
[The bourse? Robt]
French word for stock exchange.
DirkH says:
November 9, 2010 at 11:28 am
“Here, found the formula and a description:
http://www.nanowerk.com/news/newsid=18911.php
“This formula gives T ≈ 131 years for replacement of gasoline and diesel. ””
I have the feeling that they used a formula – that might even be right – that says we’ll probably be replacing oil in 131 years. But their assumption that petroleum will run out in 40 years does not come from that formula, but they just use the currently known reserves for that. We all know that that is wrong – new reserves will be found (if your opinion is different, wanna bet?).
So, assuming the formula does really give us a peek into the future, what it says is only that it will take 131 years to replace petroleum – from which i would deduce that the market seems to say: Don’t worry about petroleum for the next 131 years.
And that’s how i read the market as well, so the formula might even be useful.
“Peak Oil panic: Oil will run dry before substitutes roll out”???
Don’t you mean
“Peak Oil panic: Oil will run dry before subsidies roll out”
Otherwise, why would the green energy people be worried, running out of oil would be nirvana, not panic.
Having to wait for 2000 years before getting another green energy subsidy, now that would be a reason to panic.
This is nonsense. We already have replacements — they just aren’t cost competitive. For example, compressed natural gas is already used on many vehicles, and there are no indications that we’re at Peak Natural Gas. Combine that with biofuels, and there you go. Fuel problem solved until an even better breakthrough technology comes online.
I see a lot of people dismissing this article as ridiculous, but they are mistaken. Unlike global warming, peak oil is a legitimate problem. It’s not really the supply of oil in the earth’s crust that forms the limiting constraint, it’s the geopolitical and financial situation.
Look: Modern oil extraction is an immensely complex affair. The amount of infrastructure, investment capital, engineering expertise, and labor required to keep the oil flowing is simply staggering. Any minor interruption in the flow of oil is immediately felt around the world. We have an unstable Middle East, a demographic timebomb ticking away in the West, a global financial system teetering on the verge of collapse, and a well-documented dearth of qualified petroleum engineers. Given these data, it is only reasonable to expect that oil supplies will not flow smoothly in the future. This will result in economic hardships and wars which will knock the standard of living down even further, making it that much more difficult to assemble the capital and talent required to go after what remains of the world’s oil (or to discover and implement an effective substitute).
Sure, Western Civilization could solve the technical problems it faces, provided it was virile and healthy and willing to sacrifice; but it is none of those things. The rot has already set in, and once our material supports are kicked out from under us we will tumble like a house of cards. The end of cheap oil will mean the end of our way of life regardless of whether or not the supply has literally “peaked.” Oceans of oil located deep within the earth do us no good unless we can get it, refine it, transport it, and use it efficiently. This is the real threat implied by peak oil concerns, and there is no way to avoid it.
tj says:
November 9, 2010 at 11:43 am”
“[…]If oil was in nearly unlimited supply what would happen to their profits? The companies may be ones who want out of the business before that loss happens, IMO.”
Very good – but they would not want out of the business. By artificially creating scarcity, they could keep the price higher, and vastly increase their margins. This explains why the CRU is partially oil-funded.
Another interesting Thomas Gold link:
http://www.scribd.com/doc/5811705/Thomas-Gold-Professional-papers
I remember being told in the ’70s that we’d be out of oil by 2010 and coal by 2050. And we still don’t have those flying cars yet, though the Dick Tracey watch phone did pretty much come true (cell phones).