Guest post by Gail Tverberg of Our Finite World.
Republicans, Democrats, and environmentalists all have favorite
energy myths. Even Peak Oil believers have favorite energy myths. The
following are a few common mis-beliefs, coming from a variety of energy
perspectives. I will start with a recent myth, and then discuss some
Myth 1. The fact that oil producers are talking about wanting
to export crude oil means that the US has more than enough crude oil
for its own needs.
The real story is that producers want to sell their crude oil at as high a price as possible.
If they have a choice of refineries A, B, and C in this country to sell
their crude oil to, the maximum amount they can receive for their oil
is limited by the price these refineries are paying, less the cost of
shipping the oil to these refineries.
If it suddenly becomes possible to sell crude oil to refineries
elsewhere, the possibility arises that a higher price will be available
in another country. Refineries are optimized for a particular type of
crude. If, for example, refineries in Europe are short of light, sweet
crude because such oil from Libya is mostly still unavailable, a
European refinery might be willing to pay a higher price for crude oil
from the Bakken (which also produces light sweet, crude) than a refinery
in this country. Even with shipping costs, an oil producer might be
able to make a bigger profit on its oil sold outside of the US than sold
within the US.
The US consumed 18.9 million barrels a day of petroleum products
during 2013. In order to meet its oil needs, the US imported 6.2 million
barrels of oil a day in 2013 (netting exported oil products against
imported crude oil). Thus, the US is, and will likely continue to be, a
major oil crude oil importer.
If production and consumption remain at a constant level, adding
crude oil exports would require adding crude oil imports as well. These
crude oil imports might be of a different kind of oil than that that is
exported–quite possibly sour, heavy crude instead of sweet, light crude.
Or perhaps US refineries specializing in light, sweet crude will be
forced to raise their purchase prices, to match world crude oil prices
for that type of product.
The reason exports of crude oil make sense from an oil producer’s point of view is that they stand to make more money by
exporting their crude to overseas refineries that will pay more. How
this will work out in the end is unclear. If US refiners of light, sweet
crude are forced to raise the prices they pay for oil, and the selling
price of US oil products doesn’t rise to compensate, then more US
refiners of light, sweet crude will go out of business, fixing a likely
world oversupply of such refiners. Or perhaps prices of US finished
products will rise, reflecting the fact that the US has to some extent
in the past received a bargain (related to the gap between European Brent and US WTI oil prices), relative to world prices. In this case US consumers will end up paying more.
The one thing that is very clear is that the desire to ship crude oil
abroad does not reflect too much total crude oil being produced in the
United States. At most, what it means is an overabundance of refineries,
worldwide, adapted to light, sweet crude. This happens because over the
years, the world’s oil mix has been generally changing to heavier,
sourer types of oil. Perhaps if there is more oil from shale formations,
the mix will start to change back again. This is a very big “if,”
however. The media tend to overplay the possibilities of such extraction
Myth 2. The economy doesn’t really need very much energy.
We humans need food of the right type, to provide us with the energy
we need to carry out our activities. The economy is very similar: it
needs energy of the right types to carry out its activities.
One essential activity of the economy is growing and processing food.
In developing countries in warm parts of the world, food production,
storage, transport, and preparation accounts for the vast majority of
economic activity (Pimental and Pimental, 2007). In traditional societies, much of the energy comes from human and animal labor and burning biomass.
If a developing country substitutes modern fuels for traditional
energy sources in food production and preparation, the whole nature of
the economy changes. We can see this starting to happen on a world-wide
basis in the early 1800s, as energy other than biomass use ramped up.
The Industrial Revolution began in the late 1700s in Britain.
It was enabled by coal usage, which made it possible to make metals,
glass, and cement in much greater quantities than in the past. Without
coal, deforestation had become a problem, especially near cold urban
areas, such as London. With coal, it became possible to use industrial
processes that required heat without the problem of deforestation.
Processes using high levels of heat also became cheaper, because it was
no longer necessary to cut down trees, make charcoal from the wood, and
transport the charcoal long distances (because nearby wood had already
The availability of coal allowed the use of new technology to be ramped up. For example, according to Wikipedia,
the first steam engine was patented in 1608, and the first commercial
steam engine was patented in 1712. In 1781, James Watt invented an
improved version of the steam engine. But to actually implement the
steam engine widely using metal trains running on metal tracks, coal was
needed to make relatively inexpensive metal in quantity.
Concrete and metal could be used to make modern hydroelectric power
plants, allowing electricity to be made in quantity. Devices such as
light bulbs (using glass and metal) could be made in quantity, as well
as wires used for transmitting electricity, allowing a longer work-day.
The use of coal also led to agriculture changes as well, cutting back on the need for farmers and ranchers. New devices such as steel plows and reapers and hay rakes were manufactured, which could be pulled by horses, transferring work from humans to animals. Barbed-wire fence allowed
the western part of the US to become cropland, instead one large
unfenced range. With fewer people needed in agriculture, more people
became available to work in cities in factories.
Our economy is now very different from what it was back about 1820,
because of increased energy use. We have large cities, with food and raw
materials transported from a distance to population centers. Water and
sewer treatments greatly reduce the risk of disease transmission of
people living in such close proximity. Vehicles powered by oil or
electricity eliminate the mess of animal-powered transport. Many more
roads can be paved.
If we were to try to leave today’s high-energy system and go back to a
system that uses biofuels (or only biofuels plus some additional
devices that can be made with biofuels), it would require huge changes.
Myth 3. We can easily transition to renewables.
On Figure 1, above, the only renewables are hydroelectric and
biofuels. While energy supply has risen rapidly, population has risen
rapidly as well.
When we look at energy use on a per capita basis, the result is as shown in Figure 3, below.
The energy consumption level in 1820 would be at a basic level–only
enough to grow and process food, heat homes, make clothing, and provide
for some very basic industries. Based on Figure 3, even this required a
little over 20 gigajoules of energy per capita. If we add together per
capita biofuels and hydroelectric on Figure 3, they would come out to
only about 11 gigajoules of energy per capita. To get to the 1820 level
of per capita energy consumption, we would either need to add something
else, such as coal, or wait a very, very long time until (perhaps)
renewables including hydroelectric could be ramped up enough.
If we want to talk about renewables that can be made without fossil fuels, the amount would be smaller yet. As
noted previously, modern hydroelectric power is enabled by coal, so we
would need to exclude this. We would also need to exclude modern
biofuels, such as ethanol made from corn and biodiesel made from rape
seed, because they are greatly enabled by today’s farming and
transportation equipment and indirectly by our ability to make metal in
I have included wind and solar in the “Biofuels” category for
convenience. They are so small in quantity that they wouldn’t be visible
as a separate categories, wind amounting to only 1.0% of world energy
supply in 2012, and solar amounting to 0.2%, according to BP data. We
would need to exclude them as well, because they too require fossil
fuels to be produced and transported.
In total, the biofuels category without all of these modern additions
might be close to the amount available in 1820. Population now is
roughly seven times as large, suggesting only one-seventh as much energy
per capita. Of course, in 1820 the amount of wood used led to
significant deforestation, so even this level of biofuel use was not
ideal. And there would be the additional detail of transporting wood to
markets. Back in 1820, we had horses for transport, but we would not
have enough horses for this purpose today.
Myth 4. Population isn’t related to energy availability.
If we compare Figures 2 and 3, we see that the surge in population
that took place immediately after World War II coincided with the period
that per-capita energy use was ramping up rapidly. The increased
affluence of the 1950s (fueled by low oil prices and increased ability
to buy goods using oil) allowed parents to have more children. Better
sanitation and innovations such as antibiotics (made possible by fossil
fuels) also allowed more of these children to live to maturity.
Furthermore, the Green Revolution which
took place during this time period is credited with saving over a
billion people from starvation. It ramped up the use of irrigation,
synthetic fertilizers and pesticides, hybrid seed, and the development
of high yield grains. All of these techniques were enabled by
availability of oil. Greater use of agricultural equipment, allowing
seeds to be sowed closer together, also helped raise production. By this
time, electricity reached farming communities, allowing use of
equipment such as milking machines.
If we take a longer view of the situation, we find that a “bend” in
the world population occurred about the time of Industrial Revolution,
and the ramp up of coal use (Figure 4). Increased farming equipment made
with metals increased food output, allowing greater world population.
Furthermore, when we look at countries that have seen large drops in
energy consumption, we tend to see population declines. For example,
following the collapse of the Soviet Union, there were drops in energy
consumption in a number of countries whose energy was affected (Figure
Myth 5. It is easy to substitute one type of energy for another.
Any changeover from one type of energy to another is likely to be slow and expensive, if it can be accomplished at all.
One major issue is the fact that different types of energy have very
different uses. When oil production was ramped up, during and following
World War II, it added new capabilities, compared to coal. With only
coal (and hydroelectric, enabled by coal), we could have battery-powered
cars, with limited range. Or ethanol-powered cars, but ethanol required
a huge amount of land to grow the necessary crops. We could have
trains, but these didn’t go from door to door. With the availability of
oil, we were able to have personal transportation vehicles that went
from door to door, and trucks that delivered goods from where they were
produced to the consumer, or to any other desired location.
We were also able to build airplanes. With airplanes, we were able to
win World War II. Airplanes also made international business feasible
on much greater scale, because it became possible for managers to visit
operations abroad in a relatively short time-frame, and because it was
possible to bring workers from one country to another for training, if
needed. Without air transport, it is doubtful that the current number of
internationally integrated businesses could be maintained.
The passage of time does not change the inherent differences between
different types of fuels. Oil is still the fuel of preference for
long-distance travel, because (a) it is energy dense so it fits in a
relatively small tank, (b) it is a liquid, so it is easy to dispense at
refueling stations, and (c) we are now set up for liquid fuel use, with a
huge number of cars and trucks on the road which use oil and refueling
stations to serve these vehicles. Also, oil works much better than
electricity for air transport.
Changing to electricity for transportation is likely to be a slow and expensive process. One important point is that
the cost of electric vehicles needs to be brought down to where they
are affordable for buyers, if we do not want the changeover to have a
hugely adverse effect on the economy. This is the case because
salaries are not going to rise to pay for high-priced cars, and the
government cannot afford large subsidies for everyone. Another issue is
that the range of electric vehicles needs to be increased, if vehicle
owners are to be able to continue to use their vehicles for
No matter what type of changeover is made, the changeover needs to
implemented slowly, over a period of 25 years or more, so that buyers do
not lose the trade in value of their oil-powered vehicles. If the
changeover is done too quickly, citizens will lose their trade in value
of their oil-powered cars, and because of this, will not be able to
afford the new vehicles.
If a changeover to electric transportation vehicles is to be
made, many vehicles other than cars will need to be made electric, as
well. These would include long haul trucks, busses, airplanes,
construction equipment, and agricultural equipment, all of which would
need to be made electric. Costs would need to be brought down, and
necessary refueling equipment would need to be installed, further adding
to the slowness of the changeover process.
Another issue is that even apart from energy uses, oil is used in
many applications as a raw material. For example, it is used in making
herbicides and pesticides, asphalt roads and asphalt shingles for roofs,
medicines, cosmetics, building materials, dyes, and flavoring. There is
no possibility that electricity could be adapted to these uses. Coal
could perhaps be adapted for these uses, because it is also a fossil
Myth 6. Oil will “run out” because it is limited in supply and non-renewable.
This myth is actually closer to the truth than the other myths. The
situation is a little different from “running out,” however. The real
situation is that oil limits are likely to disrupt the economy in
various ways. This economic disruption is likely to be what
leads to an abrupt drop in oil supply. One likely possibility is that a
lack of debt availability and low wages will keep oil prices from
rising to the level that oil producers need for extraction. Under this
scenario, oil producers will see little point in investing in new
production. There is evidence that this scenario is already starting to happen.
There is another version of this myth that is even more incorrect.
According to this myth, the situation with oil supply (and other types
of fossil fuel supply) is as follows:
Myth 7. Oil supply (and the supply of other fossil fuels)
will start depleting when the supply is 50% exhausted. We can therefore
expect a long, slow decline in fossil fuel use.
This myth is a favorite of peak oil believers. Indirectly, similar
beliefs underly climate change models as well. It is based on what I
believe is an incorrect reading of the writings of M. King Hubbert.
Hubbert is a geologist and physicist who foretold a decline of US oil
production, and eventually world production, in various documents,
including Nuclear Energy and the Fossil Fuels,
published in 1956. Hubbert observed that under certain circumstances,
the production of various fossil fuels tends to follow a rather
A major reason that this type of forecast is wrong is because it is
based on a scenario in which some other type of energy supply was able
to be ramped up, before oil supply started to decline.
With this ramp up in energy supply, the economy can continue as in
the past without a major financial problem arising relating to the
reduced oil supply. Without a ramp up in energy supply of some other
type, there would be a problem with too high a population in
relationship to the declining energy supply. Per-capita energy supply
would drop rapidly, making it increasingly difficult to produce enough
goods and services. In particular, maintaining government services is
likely to become a problem. Needed taxes are likely to rise too high
relative to what citizens can afford, leading to major problems, even
collapse, based on the research of Turchin and Nefedov (2009).
Myth 8. Renewable energy is available in essentially unlimited supply.
The issue with all types of energy supply, from fossil fuels, to
nuclear (based on uranium), to geothermal, to hydroelectric, to wind and
solar, is diminishing returns. At some point, the cost of
producing energy becomes less efficient, and because of this, the cost
of production begins to rise. It is the fact wages do not rise to
compensate for these higher costs and that cheaper substitutes do not
become available that causes financial problems for the economic system.
In the case of oil, rising cost of extraction comes because the
cheap-to-extract oil is extracted first, leaving only the
expensive-to-extract oil. This is the problem we recently have been
experiencing. Similar problems arise with natural gas and coal, but the
sharp upturn in costs may come later because they are available in
somewhat greater supply relative to demand.
Uranium and other metals experience the same problem with diminishing
returns, as the cheapest to extract portions of these minerals is
extracted first, and we must eventually move on to lower-grade ores.
Part of the problem with so-called renewables is that they are made
of minerals, and these minerals are subject to the same depletion issues
as other minerals. This may not be a problem if the minerals are very
abundant, such as iron or aluminum. But if minerals are lesser supply,
such as rare earth minerals and lithium, depletion may lead to rising
costs of extraction, and ultimately higher costs of devices using the
Another issue is choice of sites. When hydroelectric plants are
installed, the best locations tend to be chosen first. Gradually, less
desirable locations are added. The same holds for wind turbines.
Offshore wind turbines tend to be more expensive than onshore turbines.
If abundant onshore locations, close to population centers, had been
available for recent European construction, it seems likely that these
would have been used instead of offshore turbines.
When it comes to wood, overuse and deforestation has been a constant
problem throughout the ages. As population rises, and other energy
resources become less available, the situation is likely to become even
Finally, renewables, even if they use less oil, still tend to be dependent on oil.
Oil is important for operating mining equipment and for transporting
devices from the location where they are made to the location where they
are to be put in service. Helicopters (requiring oil) are used in
maintenance of wind turbines, especially off shore, and in maintenance
of electric transmission lines. Even if repairs can be made with trucks,
operation of these trucks still generally requires oil. Maintenance of
roads also requires oil. Even transporting wood to market requires oil.
If there is a true shortage of oil, there will be a huge drop-off in
the production of renewables, and maintenance of existing renewables
will become more difficult. Solar panels that are used apart from the
electric grid may be long-lasting, but batteries, inverters, long
distance electric transmission lines, and many other things we now take
for granted are likely to disappear.
Thus, renewables are not available in unlimited supply. If oil supply
is severely constrained, we may even discover that many existing
renewables are not even very long lasting.