Christopher Steiner: $20 Per Gallon gasoline

Forbes magazine senior staff writer and Evanston resident Christopher Steiner addressed Citizens for a Greener Evanston at the Fireside Grill tonight to discuss his new book “$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better.” The main message of the talk (and, I assume, the book) was similar to that of a number of other pundits addressing the same issue: peak oil is coming, and it will change how we do everything.

His prognosis of how we’ll deal with high energy prices appears to be a bit rosier than those of some of his contemporaries (e.g. James Howard Kunstler, Matt Simmons), due to his belief that energy price increases will be gradual enough for us to respond to in an organized and constructive way. In his own words, “…many people's lives… will be improved across a panoply of facets. We will get more exercise, breathe fewer toxins, eat better food, and make a smaller impact on our earth. Giant businesses will rise as entrepreneurs' intrepid minds elegantly solve our society's mounting challenges.”

In Mr. Steiner’s view, Evanston is well positioned for these changes due to our proximity to a major economic center, a well-developed and well-used mass transit system, mixed use zoning, and the possibility of a burgeoning high-speed rail system, of which Chicago would likely be a hub. He noted the beginnings of a trend toward a devaluation of auto-dependant development (far-flung suburbs) relative to areas with human-scale transportation options (city centers and neighborhoods). This, I believe, raises concerns about displacement of low-income residents due to gentrification as cities become fashionable places to live again. He advocates the implementation of an increased federal gasoline tax, pegged, for example, to inflation, at a level high enough to affect behavioral change. The logic, he claims, is that since we will be soon enough paying high prices for gasoline from foreign shores due to market forces, we may as well do so voluntarily today and retain some of the money domestically in our government coffers. This way the money could be put to good use at home, perhaps in making infrastructure changes to anticipate the coming paradigm shift.

Among the attendees at tonight’s event was Jeff Smith, an NU alum and Evanston-area resident, who is an independent Democratic candidate for state representative from the 18th Representative District of the Illinois General Assembly (the election is next Tuesday, February 2nd). He has a strong platform related to energy and environmental issues, which may be of interest.

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Letting Nature levy taxes

This interesting idea ties the rate of carbon taxation to the temperature of the troposphere: if the Earth continues warming, the tax increases.

If global warming is not really happening, and the warming trend proves to be a temporary fluctuation unrelated to man-made carbon emissions, then the tax would decrease or disappear. This approach has appeal in that the tax is self-correcting, but there are some reasons to proceed with caution as well, not the least of which is the politicization of scientific research. Another benefit I can imagine is that we would find out rather quickly "what the market believes" is really happening, as investments should favor either companies that are planning for a low-carbon future, or companies that are betting on a fossil-based model.

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Fuel economy and coal segments

The Jim Lehrer news hour from today's broadcast has 2 fairly in-depth segments on president Obama's fuel economy announcement, including a sometimes-tense discussion with both the president of the Alliance for Automobile Manufacturers and also the founder of the Safe Climate Campaign, an environmental advocacy group. Also, the video includes a look at coal in this country taking Georgia as an example. Clean coal (sequestration) is discussed.

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Will we ever run out of oil?

What is peak energy, and does it exist? What effect does it have on the global community’s drive to develop sustainable energy technologies?

“Peak energy” is the theoretical proposition that at some point – past, current, or future – our capability to extract and process fossil fuels will reach a maximum, and then start to decrease until reserves are wholly depleted. Peak energy has become a widely discussed and disputed subject as carbon emissions and alternative energy have become ubiquitous topics in today’s society.

The idea was first introduced in the 1950s, when M. King Hubbert proposed that the production of a fuel roughly follows a bell curve, with a distinct maximum – and hence, a distinct total reserve of fuel that is known to exist and be economically feasible to extract. This idea has become widely accepted, despite that substantial historical evidence points to a more adaptive theory most notably defended by Morris Adelman at MIT. His proposal is that Hubbert’s peak energy theory posits two major flaws: (1) humans will never know, or be able to know, the entire supply of fuels that exists on earth, a value that is required or assumed in Hubbert’s model, and (2) the model neglects that development of technologies will continue to expand the reserves in a balance with demand and cost.

Proponents of both theories cite historical reserves and production data as evidence in support of their respective positions. Many Hubbert enthusiasts point to the peaking of U.S. oil production in the 1970s as proof that his peak energy theory pans out. However, those observers may neglect to consider that the U.S. is not a self-contained universe, and production has dwindled over the past few decades because cheap and abundant oil is available from the rest of the globe. Technologies have developed that make off-shore oil production possible where it wasn’t just decades ago, but government involvement undeniably plays a role in which of these types of technologies are utilized (i.e., the lack of drilling into Alaska’s massive fossil fuel reserves). In this latter case, domestic production is a choice, not a necessity.

Adelman enthusiasts point to surprising data that, on a global scale, both oil production and global fossil fuel reserves have continually increased over the past 50 years. In fact, oil reserves today are larger than they were ever known to be. This sole fact seems to support Adelman’s argument that a peak will never occur; that effectively technology will always find a means for development of fuel at a cost equal to demand, and hence fuel supplies are unlimited. The practical implication of this theory is that the peak date (the time at which the peak is achieved) is continually pushed further into the future.

In my opinion, it is more realistic that a combination of these two theories better describes the balance between supply and production ability. While technology certainly continues to expand our knowledge of (and access to) global reserves, the nature and scope of future technology is unpredictable. It is very possible that technology will not be able to balance our demand for fuel, resulting in insufficient production and higher prices. This idea produces a mix between Hubbert’s theorized symmetric bell curve and Adelman’s continually rising production curve by adding a time-dependent “technology” factor. The new curve is one in which the peak likely reaches a plateau or is muted such that there is a slow loss of production after the peak at a rate much less than the slope directly preceding it.

The debate between the Hubberts and the Adelmans is simply theoretical. Yet, its practical effect has been a very real stirring of the general public’s fears. The fear of reaching the peak fuel level causes speculators to overvalue fuel and prices to rise. While that sounds purely negative, the stirring has also resulted in another significant – and in my view, extremely positive – effect: as the public and the government grow wary of reaching the peak fuel level, they become increasingly cognizant of the need to develop alternative and sustainable energy sources.

A recent article in Nature by Kurt Kleiner addresses the impact of peak energy on the global community and the development of sustainable energy technologies. Some argue that the diminution of fossil fuels is undoubtedly a good thing in terms of the movement of energy production towards technologies with minimal carbon emission. I disagree, to the extent that diminution occurs when alternative energy and an accompanying infrastructure are still mere “goals” in society. The dwindling of fossil fuels, without alternatives in place, harms the economy. And while the necessary endgame of fossil fuel reduction is the advancement and increasing cost-efficiency of alternative energy fields, the technologies in general have less room for growth and less capital for investment when the economy is fragile. The ideal environment for sustainable energy development exists when the economy is strong and growing, driven by low fuel costs, and the public and government understand and want to switch to alternative energies.

Instead of actual diminution, the mere fear of the depletion of fuel reserves best drives sustainable energy research and development. When temporary fuel cost crises end and prices go down, as they have every time in the past, we need the global community to have internalized that fear of depletion. In this respect, then, the debate over the peak energy theories may have an important and lasting contribution to our environmental policies and economic prosperity. Hopefully, the idea of peak energy will spur change well before the theory becomes our reality.

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