Guest post : Oil in 2050

November 11, 2008

I have been having an interesting debate with old chum Alan Penny about whether my blog posts on the subject of energy and oil were too alarmist. Eventually I says “How about a guest post ? Have your own say in public.” Alan has risen to the challenge … So … here we go. Ladles and Jellyspoons, I have the honour to preezent to yew, the first, the original, the very alpha of guest posts on Andy’s Blog;  I give you .. Dr  —  Alan  — Penny.


Oil in 2050

Over the next fifty or so years there will be a smooth transition away from our oil-based economy to one based on
 nuclear, coal and renewable energy sources. Or will it all go wrong? This post argues that things will go well.

As oil rose through $96/bbl, $115/bbl to $132/bbl, Andy blogged about the supply problem on Nov 11, Apr 24, and Jun 11, with phrases such as “The Oil Age: nearly
 over”, “Civilisation is about to crack”, and “We’re all going to hell in a handbasket”. Now that prices are falling 
again ($64/bbl today, Oct 29) this post explores the situation in some detail.

First of all here are some of the relevant factors to be aware of:

It’s no big deal

Oil is only a small part of the economy. In the US oil expenditure as a percentage of GDP fell from 5% in 1970 to 3% in 2000. In the UK it is an even
 smaller percentage.  Although the transformation of even 3% of an economy is a significant affair, oil is no big deal. 
Health care, for example, will be much more of a problem in the future.

Price of oil

In 2008 money, the price per barrel started out at $20 from 1880 to
1920 and then fell smoothly to $10 in 1970. It quadrupled to $40 in 1973, then doubled again to $80 in 1979, with an 
average price from 1973 to 1985 of about $60. It then fell again to $30 for 1985 to 2000, rising to $50 by 2005, and
 then surged up to $140 this July, and has now fallen to $65 in October.

World energy production and the uses of oil

World energy figures

Fuel Energy Known Years left
production (EJ/yr) reserves (ZJ)
Oil 180 8 44
Coal 120 290 263
Gas 110 6 57
Nuclear 30 1.3 44
Biomass 30
Hydro 15
Solar heat 3
Wind 2
Geothermal 1
Biofuels 1
Solar photovoltaic 0.2

(The ‘years left’ is at current consumption.)

Uses of petroleum
 products in the US, 2000

Use %
Cars 41
Trucks 13
Plastics, chemicals 10
Air passenger 7
Industrial processes 5
Heating and hot water 5
Oil refineries 3
Asphalt 3
Freight – water 3
Agriculture 2
Electricity 2
Other 6

(‘Other’ includes construction, military, rail and air freight, and recreational vehicles.)

Future supply

The ‘known reserves’ in the table are just that. New oil, coal, gas, uranium and thorium fields are being opened up, so 
the numbers for the reserves and the years left should increase.

Oil

Oil production and reserves have increased steadily over the years, but the amount of oil yet to be discovered is a
 matter of contention, with some claiming there is little left to find, and others saying there is lots more. Andy gave
 an example of this disagreement with the OECD’s International Energy Agency predicting that oil supply in 2030 will be
 up by 30% and the German Green Party pressure group Energy
Watch Group saying it will be down by
 50%.

The most recent IEA report forecasts
 oil consumption in 2030 will be 106m bbl/day compared with the present 84m bbl/day, an 
increase of 20%.

Some estimates of new oil are in the 11 ZJ range, giving 60 more years supply. Then there are some 11 ZJ in oil-shales, which would be extractable on an oil price of
$50-$100/bbl. Taking the known, future and shale figures,together there could be 180 years of future supply.

In addition to this there are the prospect of ‘oil-from-coal’. Already South
 Africa gets some 28% of its fuel needs from this
 process, which is competitive when oil is at $50-$100/bbl. The extent to which large amounts of coal could be diverted 
from energy production is uncertain. Oil could also come from ‘second generation’ biofuels, but although this would be
 a renewable source it is uncertain that sufficient agriculture land could be used without leading to food shortages.

Gas

Estimates for the amount of new gas reserves are in the 10 ZJ range which would give an in total 120 years for gas.

Coal

Proven reserves of coal increased by 20% in the last 20 
years, and the IEA suggests that “additions to proven reserves will continue to occur”.

Nuclear

Nuclear becomes competitive for the generation of electricity at oil price levels in the $50-$100/bbl range. A discussion of nuclear fuel
 resources states that future discoveries will be about the same as proven ones. To this are to be added the use of
 thorium, and even the extraction of uranium from phospates and from sea water. Further advances in nuclear plant
 technology such as reprocessing and fast reactor would stretch reserves to thousands of years.

Renewables

This month, Greenpeace and the European renewable industry pressure group the European Renewable Energy Council claimed that
 with substantial investment in hydro, biomass, solar and other renewables could increase ninefold by 2050 to 270
EJ/year, eliminating two-thirds of the need for oil, coal and gas at current consumption rates.

Future Oil Demand

Oil consumption has grown by 40% 
over the last 25 years. At this rate of increase oil demand would double by 2050. However although world population is 
expected to level off by 2050 at about 30% above present
 value the rate of increase of oil demand may well rise with the rapid industrialisation in China and India. China’s GDP
 is currently doubling every ten years, and such a rate if translated to oil demand would lead to an approximately 
fifteen-fold increase in oil demand by 2050.

However, as part of the response to higher oil prices and the problem of global warming, what Greenpeace describe as
”far reaching energy efficiency measures” could reduce demand considerably. An example of this is the current trend 
away from SUVs to more energy efficient cars, in response to the increase in the price of oil over the last 5 years.
With the current aims of an 80% reduction in greenhouse gases by 2050, there must be a substantial fall in oil demand relative to GDP growth.

Residual oil demand

20% of current oil production is used for chemical manufacturing and air and sea transport, where other energy sources
 cannot be a substitute. With economic growth one could expect these as for total oil demand to double by 2050 to a 
level near present day total demand. The larger increase in GDP discussed above would lead to an even greater 
demand.

Discussion

With proven oil reserves at 44 years, and if consumption doubles, one might think we will be in trouble within the
 next 20-30 years. But positing a price of $50-$100/bbl, then new discoveries, shale oil, and oil-from-coal could result 
in perhaps a hundred years of total reserves, taking into account demand growth.  And oil at $50-$100/bbl is not a major
 economic drag, as we have already learnt over the last twenty years.  There is no immediate problem. Far reaching
 changes in lifestyles will not be needed to deal with oil depletion.

But a major problem could occur if, as seems likely, the GDP growth in developing nations such as China and India leads
 to a much larger oil demand.

But here global warming comes to the rescue. Oil demand should in fact decrease because of  the efforts to deal
 with global warming giving a growth in nuclear and renewables together with fuel efficiencies. Substantial investments 
in nuclear, clean coal, renewables and efficiencies are on their way. The UK government is slowly moving in the correct
 direction, and in the US Obama has the beginnings of the correct policies, although he does appear to be ambivalent about the nuclear component.
 It is possible that in 2050 oil will only be needed for the 20% of demand that cannot be substituted. This critical
 scenario will not depend solely on actions by Europe and the US, but mainly on actions by China, India and other
 developing nations.

By 2050 we should, if developing nations act sensibly, all be wealthier and healthier, following the course of the last 
three hundred years. However much we would like to return to the pre-1973 years of $10/bbl, we do not need to.

An aside on global warming

I am sceptical about the renewable energy lobby’s claim that increasing renewables with efficiency savings could meet
 the needs of that tripled or even fifteen-fold GDP together with the almost complete phasing out of oil, gas and coal
 use. There is a cute BBC calculator which shows how the UK
 could replace fossil fuels for electricity generation in 25 years with nuclear, yet using renewables would lead to much 
higher electricity prices. World-wide, it seems to me that only nuclear could be increased sufficiently to reach this 
goal and also to replace oil as the major source of energy for land transportation. A 20 to 100-fold increase in 
nuclear over the next forty years together with more realistic efficiency savings would suffice. And nuclear fuel 
reserves are good for some hundreds of years. The problem of nuclear waste disposal is not a problem. All we have to do
 is store it for a readily achievable two hundred years, when our descendants can with their advanced technology solve 
the problem. Our descendants will not thank us for wrecking the world economy by ignoring nuclear in order to solve the 
minor, for them, problem of nuclear waste storage. Perhaps an inclusive approach — nuclear, clean-coal, renewables and
 efficiencies will emerge as the optimum approach.

Sources

In addition to the links given in the text, these Wikipedia entries are informative:

Peak Gas, Natural_gas_proven_reserves,
Coal, Energy
consumption, Energy reserves, World_energy_resources_and_consumption,
Peak uranium, Sources of electricity in the
 USA

Alan Penny – 2008 October 29