Why won't you die?

I had a discussion with a coworker the other day on the dynamics of oil price and demand response. One of the arguments that she brought up highlighted a critical point in the debate over peak oil. A common argument against the idea that the world will someday simply run out of oil, or that efforts to find alternatives now are counterproductive, is that price signals will soon do their part to "crush" demand such that existing supplies will last longer and more alternatives will be found before there is a catastrophic drop in production.

This is a possible outcome under the law of demand, which states that as the price for a good rises, the quantity demanded will drop (i.e. demand curves have a negative slope). However, it depends heavily on just how much the quantity demanded responds to changes in price. This property, measured by the price elasticity of demand, is the key to understanding the magnitude of these effects. It turns out that the price elasticity of demand for gasoline is remarkably well-studied in the empirical literature. However, even most people with a reasonable understanding of the subject may have missed out on recent work that suggests that the American predicament is more dire than in previous years.

The Efficiency Fallacy

One of the most common arguments that I hear against different types of alternative energy is that the respective technologies are inefficient. Solar and wind power are two of the most common subjects to receive this treatment. The argument implies that the low efficiency of many renewable energy processes when compared with fossil fuel processes are an indication of a correspondingly low technical maturity, or still worse, of outright impracticality.

That asinine arguments like this gain traction is a result of efficiency numbers being taken out of context and used to, in effect, compare apples to oranges in more ways than one. Efficiency measures can only be used as a basis for judging technology in the narrowest of cases. Unfortunately, I have yet to find a single case where efficiency is correctly cited in a debate about renewable energy, whether for or against.

This uniform lack of understanding and the sheer ubiquity of the efficiency fallacy makes it one of the most dangerous red herrings in arguments on renewable energy.

Gas extraction hurts

Regarding the issues and controversy surrounding hydraulic fracturing and gas extraction in the US Northeast, it often seems as if I'm looking at two different worlds. I've been trying to make sense of what the information both types of sources are telling me, and cut through the emotional controversy to figure out what, exactly, is happening.

Thought, and the lack thereof, in the dialogue

Immersion in the contentious world of energy policy and politics is, at times, profoundly depressing. When I first decided to specialize in energy and energy policy as my field of study, some 7 years ago, there were only a few grumblings in the English-speaking world that energy might be a problem at some point in the future. As I've studied and worked my way up into the field, I have been confronted with the reality that while the general level of knowledge of the population has gone up, the tone of the conversation has gone down.

The articles about Keystone XL you aren't reading

Obama's delay of Keystone XL is a move to mend bridges with his environmentalist base before the election. Well, that's transparent.

Canadian Finance minister Jim Flaherty says that the delay of Keystone XL will accelerate Canada's efforts to build a pipeline to its west coast to ship to Asia. So, um, again about how delaying the pipeline does nothing to stop extraction or stop oil from going to China.

Stephen Harper, the Canadian Prime minister, is still hopeful. Good for him. I am frankly surprised that he doesn't feel emasculated, given that American environmentalists are attempting to dictate the environmental policy of the country he nominally governs.

I know the tone of this post is more opinionated and angry than usual, but I just have trouble grappling with how the environmentalist movement has been taken over by people with no knowledge of how ineffective their goals are at accomplishing anything.

EROEI and Peak Oil

A Forbes blogger by the name of Tim Worstall wrote one of the most technically illiterate posts that I've ever seen about peak oil theory and its connection to EROEI. Even though his example - showing EROEI has no bearing on the price or quantity produced of a nonfuel, premium value product - is completely irrelevant and total "nonsense," as he put it, he does demonstrate one thing very clearly: the linkage between a declining EROEI and smaller quantities of dearer oil is not intuitive. I'm going to try and explain it.

An Update on Solar Industry Dynamics

When I wrote about what trends in the industry killed Solyndra (that is, barring outright fraud), I covered the aspects of the business that are driving lower profit margins and consolidation. In light of that, I thought I'd share two recent news items that confirm that picture of the industry.