Counter Currents.org


The End Of Cheap Oil

By Daniel Leeming

19 December, 2005
Ontario Planning Journal
http://www.countercurrents.org/po-leeming191205.htm


The issue of energy has been looming like a storm cloud on the horizon for
over 30 years. North American society's understanding of energy supply and
demand has been distorted, because we have had a virtually uninterrupted
supply of cheap energy for several generations. Cheap energy has powered the
manufacturing, automotive, home heating, agricultural and construction
industries. In fact, North American prosperity has been fuelled by an
abundant supply of cheap energy.

The facts about oil supply, our primary energy source, have been known for
some time. The body of literature on oil supply is very compelling, but
seldom makes the bestseller list. What is really surprising is the silence
from the mainstream media and our elected officials about this enormous
issue that has been bearing down on us for decades. The amount of oil in the
earth has been estimated by international bodies to be 2 trillion barrels.
In the past 140 years since initial oil production in 1860, we have used
half of the world's supply, leaving approximately 1 trillion barrels. The
current rate of oil consumption is 27 billion barrels a year which, when you
do the calculations, leaves just 37 years of supply.

In addition to running out of our prime energy source by 2041, there are
other commonly asked questions to consider when planning for the future:

1. Isn't there still lots of oil left? The "low hanging fruit" has already
been picked: the remaining oil will be harder and more dangerous to extract.
When it costs a litre of oil to retrieve a litre of oil, the economics of
the situation will shut production down, leaving the most difficult sources
untapped. In the meantime, extraction costs will continue to drive up
prices.

2. Isn't this just another blip—remember the 1970s? The estimate of 27
billion barrels per year is based on current demand; this does not include
the rising demands of the emerging industrial giants, China and India, or
the ever-increasing demands of developed nations. Their initial demands have
already sent prices higher and they are only starting to develop. China's
oil imports doubled from 1999 to 2004 and surged a further 40 percent in
2004 alone. Both China and India already have frequent brownouts because of
short supply and priorities given to industrial use. The irony in China is
that workers can afford air-conditioners for the first time, but power is
often not available to run them.

3. Why doesn't the U.S. increase its energy production? When President Bush
says that the United States must increase its energy production, he does not
mean that more should be pumped out of U.S. soil, since this oil source has
been dwindling for years. What he means is there should be more refineries
to process oil from "Somewhere Else." Limited new oil and gas finds will
occur, but on a small scale; there has not been a major oil find since the
1960s. U.S. production peaked in 1970 and has been declining ever since. The
world has been carefully mapped and explored for fossil fuel for some time.
Canada has already passed its peak natural gas supply point, while the
United States passed its back in 1973. Supplies are being depleted and costs
are steadily rising. Under Free Trade, Canada exports two thirds of its gas
stocks to the U.S. annually. To make matters worse, 95 percent of
nitrogenous fertilizer is made from natural gas. The effects of declining
fossil fuel supplies mean that the cost of food will rise due to increased
production, transportation and plastic packaging costs.

4. Why not just increase production and open the taps? Oil pumping
facilities worldwide are already working at maximum capacity to keep up with
demand. Saudi Arabia, the world's largest producer, is working flat out to
pump as much oil out of the ground as it can in order to meet its U.S.
commitments and the increasing demands of emerging economies. In addition,
increased use of fossil fuels will generate more climate-altering carbon
dioxide. As energy scientist Dan Kammen states, "We're running out of
atmosphere faster than we're running out of fossil fuels. The more we
diversify the better" (National Geographic, August 2005, p. 19).

5. Why can't alternative energy sources replace current oil supplies? Fossil
fuels have met the growing demand for energy because they concentrate
millions of years of the sun's energy in the growing of plants that became
fossilized into a compact form. We will not find this type of source again
on this planet. The replacement of fossil fuels by alternatives such as
solar, wind, geothermal, biomass (wood, corn, alcohol), hydrogen and nuclear
fission is not yet a viable alternative. Even if we were to use all of these
sources combined, with present-day technologies they do not even come close
to providing the energy we derive from oil. To vastly expand solar, wind,
and nuclear sources, not counting planning and political delays, it would
take at least 40 years to match our present-day consumption of oil. We must
also anticipate that there are days when the sun does not shine and the wind
does not blow. And with nuclear waste already a serious storage problem,
this problem will only get worse. Estimated current supplies of uranium will
only last for another 50 years, so nuclear fission is far from renewable. It
should also be noted that free and clean energy from hydrogen is a
misconception. Hydrogen is not a source of energy; it has to be freed
through the use of electricity and at present it takes more energy than it
gives back to do this. While BMW is planning to launch a top-of-the-line 7
Series dual-fuel vehicle (gasoline/hydrogen) in 2008, hydrogen filling
stations have yet to appear. The efficient hydrogen-powered car is still to
be produced, although some fuel cell buses are running in Europe on hydrogen
from renewable sources. We must also keep in mind that the electricity to
create hydrogen must be produced by hydroelectric, coal-burning or nuclear
plants and that significant safety issues regarding the explosive nature of
hydrogen storage need to be addressed—remember the Hindenburg?

It has been projected that if we were to implement radical change tomorrow
with energy-efficient vehicles, buildings and systems oil dependency in the
U.S. could drop to zero by 2050. The catch here is that current oil supplies
are forecast to last only 30 to 40 more years and this is at today's current
consumption rates without factoring in rapidly increasing demand from China
and India.

Do we really get it? Energy is topical now because of increased oil prices
due to hurricanes: supply-side economics has made the front pages. The cost
of oil has been news before and then gone away—remember the 1970s? Sport
utility vehicles are still a dominant factor in the automotive industry in
spite of rising costs; and the list of conveniences such as wine fridges and
power-wash systems in the weekend flyers testifies to our complete,
mistaken, belief that cheap energy will be there to run them. Let's not kid
ourselves; when Chevron, one of the world's largest oil refiners, runs a
two-page advertisement at the beginning of the September 2005 issue of
Scientific American saying. "It took us 125 years to use the first trillion
barrels of oil. We'll use the next trillion in 30 years," we know the word
is definitely out.

Why, when given all of the facts, do we react only when the problem is upon
us? One answer would be that the problem is so enormous. Without clear
solutions, there is a form of mass denial. No politician will risk being the
doomsayer. A second answer is that until people actually experience the cost
of energy increase in their wallet, they won't take it seriously. Witness
the the significant downward sales drop post-Katrina and Rita. And yet the
cost of oil was already rising steadily with these facts on the table long
before these two hurricanes struck.

While this may sound like the harbinger of a new Dark Age, there are things
we can and must do to ameliorate the coming problems. We need to understand
that the next 25 years for planning will be very different from the last.
Planners are in a unique position to help mobilize ideas and resources to
start addressing the scope of such enormous change. Planners are supposed to
see the big picture and understand ways of protecting the "public good." It
is not enough to simply defer to other specialists in the hope that they
will find the solution. No one has a solution at present. For example,
planners in the past were often focused on policy documents and the creation
of land-use diagrams to guide future development. Newly built communities
frequently fell well short of everybody's expectations. The details of built
form were left to other specialists who had other interests and lacked the
broader context of societal needs. More recently, where planners play key
roles in the design and development of new communities by direct
participation and through the organization of multidisciplinary teams which
transfer essential design ideas into enforcement policies, we have seen a
marked improvement.

As planners we have already heard about the importance and need for
designing our living areas in compact and diverse ways so that we can reduce
energy demand, support transit and provide employment opportunities close to
mixed-use communities. While much of the energy issue is tied to
international dynamics, many of the solutions lie in changing our habits at
home. Some municipalities have tentatively started to implement these ideas
while many others are still debating the very need to make changes. City
areas are going to have their share of problems, but it is lower-density,
postwar suburbs that are going to shoulder the burden of these changes. If
municipalities have not already started to address these basic steps, it
means that the chances of success are diminished and a reactive response can
only try to catch up to the problem. The implications of running out of
cheap energy, coinciding with major public health issues and an aging
population go well beyond our previous expectations of responding to
societal change and needs. Planners must start thinking and planning for new
imperatives.

The Urban Land Institute in conjunction with Pricewaterhouse Coopers has
just published its 2006 Emerging Trends in Real Estate for the U.S. market.
This annual publication is the gold standard in real estate predictions. It
is written primarily for bankers, investors and financiers as well as
developers and builders. Seven key trends for the next four years are:

Focus on Infill: sprawl and traffic reach a crisis stage; places without
mass transit struggle; transit-oriented development gains momentum to expand
light rail and reduce car dependence; boomers and echo boomers will continue
to dictate trends toward more infill.

More Suburban Mixed Use: urban town centres will be the rage; big-lot
housing becomes a thing of the past; people want to live in places where
they can shop, work and play.

Greater Energy Efficiency: an extended period of sticker shock at the pump
and jaw-dropping utility bills would change behaviours and demand for both
home and commercial owners, reinforcing move-back-in and town centre trends;
developers will need to stress more "green" development and rehab as tenants
resist higher electricity and heating tabs.

These items are all new to the top seven list.

The depletion of cheap energy is giving rise to ideas of how to reduce
demand, encourage alternative energy sources, rank the success of innovative
approaches and educate the public so that they can make more informed
choices and ask for appropriate action. Planners are probably aware of the
recent initiative in energy conservation through "Leadership in Energy and
Environmental Design" (LEED) as a ranking system of efficiencies for
buildings. While this is an important step, it should go beyond the building
and be applied to entire community areas. Performance is rated in terms of
smart growth, urbanism and green building. The energy savings in a
well-designed community can promote efficiencies in the following:

* Energy: reducing need and improving alternatives. Use the full range of
alternatives and reintroduce smaller power generators such as the hydro
facilities that used to operate throughout Ontario.

* Building Design: go beyond R-2000 to incorporate new efficiencies through
orientation, solar gain and landscape design.

* Water: conservation measures, greywater reuse, building and landscaping
options, including zeriscaping.

* Transportation: improve live/work relationships, reduce distance demand,
support transit, pedestrian networks, compact multi-use streets and reduce
impervious pavement areas.

* Storm Water Management: capture roof runoff, maximize on-site
infiltration, increase parkland natural elements, create storm water
corridors, preserve natural topography and integrate storm water facilities
in open space areas.

* Urban Design: build upon smart growth initiatives, integrate mixed uses
through higher density with greater urban character, better utilize natural
systems, improve live-work relationships, improve and support transit as
alternatives to auto use, increase community uses within a 5-minute walk,
provide options and packages in buildings and landscaping that promote
energy conservation and biodiversity, enhance natural traffic calming and
define neighbourhoods with clear centres and edges.

Only through a holistic approach of sustainable practices can longer-term
savings be realized while at the same time creating livable and
environmentally responsible places that are cherished and cared for by their
residents.

A community-based LEED review would be judged on four categories:

1. Location efficiency
2. Environmental preservation
3. Compact, complete and connected neighbourhoods (urban design)
4. Resource efficiency.

The broader approach of testing the efficiencies of energy-smart communities
gives planners and community builders the information they need to make wise
choices and set the new standards and policies that will become more
necessary as the increasing cost of energy continues to change the needs of
society. With education about the facts, homeowners may one day opt for the
$5,000 upgrade to install solar panels instead of granite counter tops.

Some would say that the solutions to energy shortages lie in today's proven
technologies such as "clean coal" and nuclear sources. While these
technologies may help to address the needs, significant challenges remain.

It may be that smaller steps using alternative sources such as solar, wind,
geothermal and biomass are necessary; each has significant planning impacts.
For example, passive solar collection will require specific alignment of all
new street and block configurations, as well as a return to more traditional
forms of energy saving designs. Wind generators in Europe produce 35,000
megawatts of power, but those in North America produce only 7,000 megawatts.
Locations for wind turbines are already hotly contested in Ontario, even
though it is one of the cheapest alternative energy sources. Geothermal can
add up to $10,000 per unit on a multistorey building. Biomass production,
such as wood and corn, means increasing farm production well beyond today's
current levels. It has been estimated that if ethanol from biomass were used
instead of oil to power the vehicles in the world today, it would require
doubling the amount of land for farming.

Reducing the demand for energy is one of the best means of saving fossil
fuels. It is a fact that 5 percent of electrical power is wasted just on
keeping electrical devices like computers on standby. It is also a fact that
only 10 percent of original fuel energy (coal) consumed by a power plant
reaches the end-user because of mechanical and electrical delivery loss. The
savings which could be generated by shutting off unnecessary equipment when
not in use actually means a significant reduction in fuel consumption back
at the production source.

It has taken 150 years of cheap energy to fuel the world's economy to its
present level. In that time the world's population has multiplied to 6
billion with 75 percent of its population living in urban areas. Our
dependence on cheap energy from oil is four times greater than all
alternative sources put together and we only have 30 or so years of it left.
There is no question that we need to start seeking new solutions now. There
is no silver bullet and miracles are rare. We need to accept the facts as
they are and think long and hard now about our choices in the, very near,
future.

Dan Leeming, MCIP, RPP, is a partner with the Planning Partnership. Dan is a
frequent contributor to the Ontario Planning Journal. This is the first of
three articles.


References

Congress for New Urbanism, Natural Resources Defence Council, US Green
Building Council, LEED for Neighbourhood Developments Rating System,
Preliminary Draft, September 2005.

Kunstler, James H., The Long Emergency, New York: Atlantic Monthly Press,
2005.

Lovins, Amory B. More profit with less carbon, Scientific American, Special
Issue: Crossroads for Planet Earth, September 2005, 74-83.

National Geographic, After Oil: Powering the Future, August 2005.

New Urban News, 10(5), July/August 2005.

Scientific American, Special Issue: Crossroads for Planet Earth, September
2005.

Urban Land Institute, 2006 Emerging Trends in Real Estate, Pricewaterhouse
Coopers, October 2005.