Sunday, October 12, 2008

Technosanity #12: Peak Oil and the Media (from Radio Ecoshock)

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Republished from -- a panel discussion about Peak Oil and its coverage in the Media. What we can do. presents a panel of 5 journalists: Rex Weyler, Barbara Jaffe, Charlie Smith, Sara Robinson and Alex Smith. How to organize, use media, bypass the mainstream.

It is production that has peaked. It doesn't matter if there are trillions of barrels of oil left, what matters is to get that oil and bring it to market. There are only a couple rigs capable of drilling oil in the Arctic and it costs $1billion apiece to build new oil rigs. Somehow tapping Arctic oil would require building new rigs, new oil pipelines, etc, and is there money to do all the required investment? Or even is new oil something we want to invest in, given the negative environmental impact.

Energy Return on Investment (EROI) is another factor.. The peak net EROI occurred 30 years ago. Deposits like the tar sands have an EROI of 1:1 meaning you extract the same energy from the tar sands that you put in. It's not profitable by any measure yet they're committing ecological catastrophes in the name of mining it. And it requires government subsidy to even get what little profit there is.

Price isn't determined, any more, by the old style price/demand equations. Price isn't being set by the world market. Instead it is access. The Iraq war is being fought to establish access. The term is "off-take deals" referring to special deals like "We'll give you $n billion and take everything in sight". The Chinese especially are doing this, rather than doing war. Resources controlled by off-take deals never get to market and the price is not the market price but whatever was negotiated in the deal.

The strength of empires has been determined repeatedly by the energy resources. The most recent was England whose strength came from their coal deposits. When their coal became eclipsed by American coal, they were eclipsed, and again when Americans discovered oil, that doubly eclipsed the British Empire.

We're talking about a finite resource and the math isn't very simple. A great analogy was made to what happens if you repeatedly take food out of a refrigerator. Eventually you run out and go to the store to buy more. In this case the refrigerator is the oil deposits, but there is no store to go to.

Technosanity #12: Peak Oil and the Media (from Radio Ecoshock)

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