"A Man's a Man for all that!" - Rabbie Burns

"Religion? No thanks. I prefer not to outsource my brainwashing." - Bunc
Trying to get your average Joe creationist to understand the phrase scientific theory is as hard as getting a fish to enjoy mountaineering. Its an unimagined world for them - it requires a complete reversal of their normal modes of thinking and being. The fact that humans could explain the complexities of this world without a creating God is a world view they cannot grasp. It's like asking a tuna if it appreciates the view from the top of Mount Everest. Bunc

Mar 12, 2010

China oil demand rises by 28%

In an interesting pointer to the world we face in the near future the IEA ( International Energy Agency) reports that demand for oil in China leapt by an incredible 28% in January compared to a year earlier while at the same time they are predicting that demand for oil in developed countries will fall marginally.

This is yet another sign of the tremendous pace at which countries like India and China are developing and the pace at which the balance of power in the world is beginning to shift.

In the West we have been living through the end of a period in which our development was largely driven by cheap readily available oil. But this finite natural resource is now likely to be subject to increasing demand in future years while at the same time the pace of finding new oil reserves is only likely to slow.

The concept of "peak oil" defines the assumed stage at which the point of maximum oil production is reached at which point oil extraction rates go into steady decline as reserves fall. Of course the point at which maximum production is reached depends on a number of factors including price and demand.

if demand goes up then one of two things can happen either producers pump more oil in which case the point of peak oil must be reached sooner ( assuming the rate of finding new reserves doesnt otherwise change) or alternatively producers hold production steady and the price rises.

The west seems ill prepared for either of these two scenarios. We have barely started on the road of alternative energy systems and our road transport systems are built around petroleum. If oil prices rise considerably due to rising demand from these developing countries then we in the west face an even greater challenge because our deficits are largely financed these days from these developing countries who have as I understand it been giving us loans as a way of investing their surplus cash.

Now Im no economist but none of this sounds like good news for us in the West. It seems to me that on the face of it the arguments for rapidly shifting our economies towards alternative energy systems become more compelling by the day.

11 comments:

Delirious said...

Well, my thinking is that China actually has done a lot of business with Saudia Arabia and other oil producing countries. I doubt they will find themselves in short supply, even if we in the West are.

Bunc said...

I suspect that your right D and that any impact by way of shortages or rising prices will effect us more than China.

Rummuser said...

Coming from India, I am happy that we are growing. Both India and China have so far only developed around their urban areas. The rural areas which are the largest and with the highest population are just beginning to come on to the development map and this will push up demand for energy of all kinds up. Petroleum products particularly will be climbing new scales in price as demand will keep growing. Completely new ways of living is likely to be thrust on all of us in the East as well as West. Not a bad thought really!

Bunc said...

yes Rum - there is a good side potentially to all this but I think the adjustment period could be long and painful.

Looney said...

From my knowledge of the Chinese, this is not the least bit surprising. They will gladly push the West to cut their economic activity in the name of conservation, but then invest to make up the difference.

My bigger worry is that much of America's midwest economy is now based on using a gallon of oil to produce a gallon of ethanol, and this is sanctimoniously praised as "alternative energy". It will be doubly sad if peak oil results in peak alternative energy!

Rummuser said...

Looney, are you serious? Can you give me some links where I can get more information on this? Thanks.

Looney said...

Rummuser, a typical explanation of production costs is here. An overall corn market report is here.

Although ethanol comes from corn, the problem is that oil is used to run the tractors that plant and harvest the corn, while more fossil fuels are used to make the tractors in the first place, along with the fertilizer. After the corn is fermented, you need fossil fuels to distill the ethanol. Ethanol is also more corrosive and volatile than gasoline, so it takes more energy to get it to market.

Other alternative energy sources are also married to fossil fuels. Solar and wind are intermittent, so you must have a backup/primary plant - either fossil fuel, hydro-electric, or nuclear.

Bunc said...

Looney - you certainly highlight a potential problem with ethanol.

However while you rightly point out that there are fuel costs associated with producing ethanol these same costs are also of course incurred in fossil fuel production - the machines that extract oil and coal need fuel and fuel must be used to transport it.

The problem with the corn to ethanol approach it seems to me is more that the corn will be produced on land that is not marginal but would otherwise be used for fuel production. As corn is a staple for the relatively poor then any impact on corn prices will be undesireable.

There are some other systems for ethanol production but most of the effort seems to be going down the corn route which is problematic.

Wind, tidal wave and others are indeed intermittant and the main issue is energy storage I think so that production peaks and troughs can be smoothed.

There are already places which do this. There are hydro schemes where water is pumped back UP the system when energy is in excess and that provides storage for when more energy is needed.

Another way of approaching wind etc is to use that electricity to make hydrogen and then use the hydrogen again either to smooth supply or to begin to create the supplies we may need for a more hydrogen based economy.

The exact mix that we need for the future is unclear but what is clear is that it is imperative that we find a mix of energy sources that a) make us less dependant on oil and b) dont use non renewables more than necessary.

The great hope of course is for fusion but that stil seems to be going nowhere very fast.

Looney said...

Bunc, there is a big solar manufacturing plant going up near my house being built by a company named Solyndra. This might well be the least economical/sensible place in the US to place such a plant, but it goes up anyway! It is all driven by government subsidies and politics.

Bunc said...

Why do you think that your area is uneconomical for a plant like this?

Looney said...

Well ...

- California power rates are double the US average.
- The median home price in Fremont is $532,000. Manufacturing laborers can't afford to live here.
- California has high corporate tax rates.
- Our local city has high city taxes.
- California labor laws make benefit costs much, much higher than other states. Disability fraud is a huge cost to industry and runs rampant here.
- California doesn't have "right to work" laws. It is easy to organize a labor union which will cause costs to soar and kill productivity.

R&D can function here, but most manufacturing has already exited the state.

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