In response to my Chicken Little post the other day, the proprieter of Swerdloff.com asks:

There are plenty of nonrenewable resources, aren't there? I don't see many dinosaurs around, for example. Isn't the point of the report that there will be serious repercussions if bees, for example, go the way of the dinosaurs? The function of living organisms as “resources” should be part of your assessment, I would think.

Well, if dinosaurs were still around, they'd certainly be a renewable resource, assuming that we decided to do dinosaur husbandry of some type, whether domesticating or ranching them (and in fact, by some theories, dinosaurs, or at least their descendants, are still around, and quite renewable, as we get millions of pounds of meat and eggs from them annually, with their numbers increasing).

But I assume what he means is that the resource in question is decomposed dinosaurs (the prevailing theory for the origin of petroleum), which is not renewable. Well, in fact, though it's not being renewed, it is renewable. From the standpoint of fungible commodities (as opposed to art, or unique species) there is no such thing as a non-renewable resource.

In fact, this question inspired my latest column at TechCentralStation, up today.

Given CO2, water, and energy, one can synthesize any component of petroleum. This is not quite economical at present as stated, but it shows that the resource is renewable in principle.

"...though it's not being renewed..."

I'd add 'on a large scale' to that sentence after reading though Thermal Depolymerization.

Turkeys are the new dinosaur. Pumping it out of the ground is still cheaper.

If we start using turkeys instead of pumping crude oil, will gas stations offer different grades -- with and without tryptophan?

Don't believe the TDP hype. Turkey guts don't have significant energy on a global scale, and even with that high-quality input (lots of fat, you know) that pilot plant in Carthage isn't producing fuel economically (a recent article in Fortune stated they were producing a #4 fuel oil for $80/barrel. Ouch.)

Biomass production of fuel is going to have to start from plant materials, not animal materials, to be useful as a large scale energy source.

Auctions indeed! Rand, if rocket scientists in general had the economics wisdom you espouse, we would be spacefaring now. I dub thee honorary auction economist.

My main point of posting that was to point out that there are pressures placing a ceiling on the price of oil.

$80/barrel is high, but it isn't insanely high. On the plant side, I expect we're going to want an efficient process to lengthen the chain from ethanol somewhat. Regardless, we don't have to until pumping it out of the ground is more expensive than making it.

Let's see....

You can make Fischer-Tropsch process Diesel from Coal.

Algae is the most potent feedstock for Biodiesel, far more so that terrestrial crops.

The trick is figuring out ways to refine heavy hydrocarbons which are plentiful and moving over to diesel from gasoling.

Some economists are predicting that oil prices will hit $100 per barrel before the long. (The news media seems to report this with glee.) Take these predictions with several grains of salt, but that $80/barrel oil from TDP becomes very economical if it does happen.

Being another rocket scientist with some understanding of economics I'm not terribly concerned about skyrocketing oil prices. We use oil because it's always been relatively cheap. Market decisions will mean more investment in alternative energy sources as prices go up, which is what we need in the long run.

$80/barrel oil from TDP is not economical, since oil will not remain at $100/barrel for long (in constant dollars). TDP can't compete with other synfuel technologies at that cost, and those other technologies would drive the price back down below $100/barrel in the long term.

I have read that if you look at the valuation of oil company stocks, they are consistent with the market believing that the price of oil will be back to $30/barrel within two years.

Heck, in the reasonable near term, none of that turkey stuff matters, since the Alberta tar sands will be economical to exploit well under $80 a barrel, will they not?

There are, what, several trillion turkeys worth of oil there, just waiting to be processed out, right?

(Now, algae-farming for mass-production of biodiesel, THAT'S interesting. That might almost make a replacement for ground-oil plausible for motive fuels.)

Right, Canada has vast resources in tar sands and the U.S. has them in oil shale. It is relatively hard to process and dirty, but if the economics are right, these resources become available.

I went through all this stuff in the early '80s, when some were taking the bad computer models in "The Limits To Growth" as fact. Among other things, they assumed essentially no technological advancement, that resources were absolutely fixed and couldn't be usefully substituted, and there would be no economic signals to adjust resource use. So, for oil, it would be effectively assumed there was a giant tank of the stuff in the ground, it would be used until it ran dry with no concern to availability, and that would be it.

Julian Simon and others took this apart, and it was incorrect in so many ways that there were several equally valid approaches.

But, "Ultimate Resource" or not, bad models or not, there are limits to how many people can reasonably be supported, based on the available technology at the time, the economy and political organization of the nation they are living in, and the ultimate, theoretical limits to available physical resources. It is true that population growth isn't inherently a "bad thing" but it is something that we should think about carefully. Simon took his idea a little too far in this arena.

As I recall, didn't those computer models also ignore the effects of space industry? Ie, the Earth remains a closed system.

Limits to Growth -- new edition. 30 years later, same song.

Oil well products (not the same as gas wells) mostly go into motor vehicles, but the current "renewable" power production markets that supply the grid are growing rapidly. The global wind power industry added 8000 MW last year:

http://www.awea.org/news/03-04-o5-GlobalWindEnergyMarkets.pdf

Supposedly, wind power has developed to the level that it doesn't need much subsidy to be price competitive. The terrestrial photovoltaic industry topped 1000 MW of solar cell production last year.

http://www.solarbuzz.com/Marketbuzz2005-intro.htm

I think this is good news.

Yes, space resources were not included in their model, but that was pretty far down on the list of issues they ignored. Ultimately, of course, if population is assumed to grow without any economic or other "real world" concerns at an ever increasing rate, it will absorb all finite resources. That was their assumption, so in the end it didn't matter how many resources were available to their basic conclusion. The key point though, is that they thought the limit was SO low that we would be past the "carrying capacity" by about 1990.

I'm curious if anyone has any links to critical reviews of the latest "Limits To Growth" update? Have they responded to any of the criticisms or are they simply ignoring them?

Malthusian economics all over again. Pah.

There is a big energy ball over there in the sky, all we need is to use it. Even before that, there is plenty of oil, tar sands, shale and other non-conventional or more expensive oil.

It has been over 20 years since I read the "Limits" book, so I may get details wrong, but as I remember:

Solar was noted and dismissed. I think the argument was something like "Too little, too late." By their model, we are already past the "carrying limit" and heading for collapse by the time solar could take up much slack. Further, solar wouldn't affect many other limits in their model.

Pollution was classified generically and counted as a single number. It was one of the key items that would put downward pressure on population. Nuclear power plants were assumed to be highly polluting and their pollution was added to the pollution caused by coal, etc. So increased reliance on nuclear power or coal caused so much generic pollution as to kill more people than it helped.

Improvements in technology or shifting priorities due to conditions were almost completely ignored. So they might model what would happen if pollution could be reduced by a fixed value of 3/4, but not continual improvement in pollution control.

Resource availability was based on proven reserves. Their idea of "optimistic" was to multiply the proven reserves by a factor of 5. So they seriously discuss a shortage of aluminum, even though it is the third most abundant element in the Earth's crust.

There was plenty more. It was a perfect example of GIGO - and if you picked different garbage you got different garbage out.

I did a social science paper in college on Limits to Growth. Their basic premise is that population -- and thus our problems -- is growing exponentially but our ability to deal with our problems is growing linearly. Thus, no matter how steep the slope of the ability curve, our problems will eventually overwhelm our ability.

Once you see that both our economy and our technology are growing exponentially, not linearly, you realize this race between problems and ability comes down to which one has the shorter time constant, and the trends of the last 60 years are easily explained.

Mike

Good article Rand,

I also found this one persuasive...

http://www.city-journal.org/html/15_1_nuclear_power.html

I would just like to point out that the notion that fossil fuels are the remains of decomposed dinosaurs is *not* the prevailing theory and never has been. Fossil fuels were produced by decomposing plant life, which plants did live at about the same time as the dinosaurs, and that has always been understood. I don't know how the idea that petrolium or coal came from dinosaurs got into the popular culture but let's try not to perpetuate the error, please.

Posted your Tech Central article over here too:

http://enviroguy.blogspot.com/2005/04/green-going-mainstream.html

The green movement is shifting, if slowly, away from ecolibs, and toward more practical approaches. Part of this may be something envirocons have known for years - that environmentalism involves good economics, and conservation of resources can be cost effective if done by the free market.

Cheers,
db

Thanks for pointing that out Michael. I assumed everyone here was already aware of that.

The cost comparison of a refined, useable oil product to crude oil is not valid.

Only a percentage of a $50 barrel of crude is converted to fuel, whereas an $80 barrel of synthetic Diesel is ready to use.