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August 14, 2012

Chrystia Freeland: The Energy Revolution Approaches

One of the world’s top journalists, Chrystia Freeland, brings some powerful new evidence forward that supports Via Meadia’s view about an age of energy abundance. Reporting on a Harvard study about the implications of new sources of oil and gas across the world, Freeland writes:

Thanks in part to technologies like horizontal drilling and hydraulic fracking, we are entering a new age of abundant oil. As the energy expert Leonardo Maugeri contends in a recent report published by the Belfer Center at the John F. Kennedy School of Government at Harvard, “contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.”

Maugeri, a research fellow at the Belfer Center and a former oil industry executive, bases that assertion on a field-by-field analysis of most of the major oil exploration and development projects in the world. He concludes that “by 2020, the world’s oil production capacity could be more than 110 million barrels per day, an increase of almost 20 percent.” Four countries will lead the coming oil boom: Iraq, the United States, Canada and Brazil.

This echoes what Via Meadia has been saying in a few posts about an upcoming revolution in global energy. The geopolitical consequences of these changes will upend many conventional assumptions — about US decline, the role of energy conflict in 21st century politics and several others.

Freeland has a few words of wisdom for environmentalists:

Political progress in combating climate change has been slow, but the battle for hearts and minds, especially of the younger generation, is being won. That political capital can be lost in an instant if the environmental movement allows itself to be equated with opposition to one of the lone sources of growth – and of good blue-collar jobs – at a time of global economic stagnation.

A final conclusion to draw from the next oil revolution is a little more existential. This is yet another reminder that what both common sense and expert consensus assure us to be true very often isn’t.

In other words, environmentalists need to understand that the rising generation needs growth and good jobs, and policies that aim to block economic development will fail.

Freeland concludes, as Via Meadia often does, that the science is complex, and though at first glance more oil production from unconventional sources has troubling implications for the environment, prediction models can be turned upside down by technologies and developments we can’t foresee.

The new economics and geopolitics of energy are real; they are changing the ground under our feet. Environmentalists are not the only people who will have to adjust to a future that doesn’t match our forecasts.

Posted in Economics & Business, Energy & Environment, Politics, Quick Takes
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  • http://knownofold.blogspot.com J R Yankovic

    IMO – for whatever it’s worth – commendably balanced, fair-minded, free-breathing post (as distinct from one choking on its own agendas and vitriol).

    Ms Freeland’s remarks are especially well-quoted and to the point, in addition to being the best POLITICAL advice to environmentalists I’ve heard in quite some time. The single most damning thing about them, of course, is that they imply the necessity of a concept that’s not only hugely unpopular, but may be the single most obscene four-letter-word in our modern American political vocabulary: BOTH.

  • thibaud

    The woman who for years assured the FT’s readers that General Alexander Lebed was going to be the next prime minister of Russia is “one of the world’s top journalists”?

    Does Mead hate Harvard so much that he can’t bring himself to redirect us to the Kennedy School’s Belfer Institute author directly – instead of pretending that Freeland has contributed anything original to the discussion?

    Does she owe Mead money?

  • Kenny

    Oil might — just might — become ‘abundant’ if its price $100-plus a barrel.

    The fact is we have reached the peak of inexpensive oil.

  • vanderleun

    “The fact is we have reached the peak of inexpensive oil.”

    Absolutely NOT the fact. We are, in fact, swimming in it. It merely lies under our feet unexploited.

  • Corlyss

    Don’t worry! Rich, powerful, and well-connected greens will never allow this energy revolution to happen. Their whole world view depends on scarcity of cheap energy and forced collapse of prosperity.

  • Jacksonian Libertarian

    “Political progress in combating climate change has been slow, but the battle for hearts and minds, especially of the younger generation, is being won.”

    I have to question the assumption that the hearts and minds of the younger generation are being won. If anything this article points out that the exact opposite is occurring, with the political support of Environmentalists dropping like a stone. While I agree that the younger generation has been thoroughly indoctrinated by our education system to the Environmentalist view point, reality with its inconvenient facts can and does destroy a lifetime of indoctrination overnight.

  • Kevin

    JL – I wish you were right, but beliefs of my unemployed Environmental Studies cousin argue otherwise. I am quite sure many unemployed environmentalist youths will continue to blame capitalism for their jobless state.

  • John Haskell

    Chrystia Freeland added approximately zero to humankind’s stock of knowledge with her article, which tells you all you need to know about whether or not she is in fact one of the world’s finest journalists. FT Alphaville gave Maugeri’s egregious “analysis” a well deserved evisceration two full weeks before Freeland’s waste of pixels was published. Executive summary: Maugeri thinks that Iraq’s production will increase by 10 million barrels a day – which increase is Russia’s current production. doesn’t even pass the laugh test.

    http://ftalphaville.ft.com/blog/2012/07/24/1094111/is-peak-oil-dead/

  • Yahzooman

    To quote an energy expert:

    “Drill, baby, drill!”

    America is back, baby (starting in January, 2013 anyway.)

  • Keith

    A generation not far away will never settle for a diminished lifestyle simply to placate the greying greens. The oil is there, and the future will DEMAND we use it.

  • Blacque Jacques Shellacque

    The new economics and geopolitics of energy are real; they are changing the ground under our feet.

    Not if the politicians manage to destroy our country first.

  • Gringo

    Kenny:
    “The fact is we have reached the peak of inexpensive oil.”

    vanderleun in reply to Kenny:
    Absolutely NOT the fact. We are, in fact, swimming in it. It merely lies under our feet unexploited.

    Please inform me where there are elephant-sized unexploited deposits of OIL in the US that can be sold @ $50/bbl. Inquiring minds want to know.

  • Old School Conservative

    Somebody in the world will be the beneficiary of a new wealth of natural gas and oil. The Us can be that benficiary, or we can follow the dumbass enviro-whacko movement into oblivion.

  • http://planetpeschel.com/wp/ Bill Peschel

    Do. The. Math.

    Ignored in the cheerleading are these facts:

    1. Oil is a limited resource. Period.

    2. It costs more to recover a barrel of oil today than it has in the past, and it will cost more in the future.

    3. Technological advances will retard this trend, but not reverse it. Once the oil’s gone, it is gone.

    4. Cheaper oil, cheaper energy, encourages waste. Next time you’re out and about, look at the cars in the parking lot, with the people inside them letting the engine run (for the AC). Look at the lights left on outside houses.

    5. Energy consumption rises with global population growth.

    McClatchy published an article which summarizes the state of current energy production. Here’s a few paragraphs with the takeaway:

    The Energy Information Administration’s 2011 outlook says that at current production rates, the world has 126 years of coal reserves and 60 years of natural gas. Using the same “reserves-to-production ratio,” the 1.47 trillion barrels of global conventional oil reserves, as estimated by Oil & Gas Journal in 2011, would last for 46 years.

    But this yardstick fails to factor in annual growth in energy consumption – neither the agency’s conservative, 1.6 percent projected rate until 2035 nor the 2.2 percent rate of past decades.

    To get a truer picture of the world’s supposedly guaranteed fuel supply, McClatchy compiled the raw energy content, in British thermal units, of the estimated proved reserves of oil, natural gas, coal and uranium.

    Subtracting from that figure the total BTUs that the Energy Information Administration projects will be consumed each year from those four energy sources, and factoring in yearly consumption growth, shows how long the fuel might last.

    Using the EIA’s modest 1.6 percent growth rate, all proved reserves of oil, natural gas, coal and uranium would be gone in 56 years.

    And no shouting of “drill, baby, drill” is going to change this.

    Do. The. Math.

  • https://www.facebook.com/ritchietheriveter Ritchie The Riveter

    I am quite sure many unemployed environmentalist youths will continue to blame capitalism for their jobless state.

    For many of them, environmentalism is just another front to continue their rebellion against that capitalist state … they see it as exposing the evil effects that stem from the capitalist paradigm. Their actual concern for the environment is secondary to its use as a political prybar.

    If they were truly concerned about the environment, they would not insist upon policies that inhibit the economic prosperity that gives developed nations the “luxury” of actually taking the time and expense to protect our environment over and above the bare minimum needed to avoid grossly fouling our nest.

    As I often say, they need to remember that when people are wondering where their next meal is coming from, they are more likely to fillet Willy than free him.

  • Brian72

    “4. Cheaper oil, cheaper energy, encourages waste. Next time you’re out and about, look at the cars in the parking lot, with the people inside them letting the engine run (for the AC). Look at the lights left on outside houses.”

    This is another major problem with the environmental movement, and the politicians who pander to it. They are against cheap energy. It is really that simple. Cheap energy encourages all sorts of wonderful things instead of waste, such as more disposable income, more personal mobility, cheaper manufacturing costs, cheaper food production, cheaper transportation of goods and many more.

    But, to “save the planet”, we must be forced to pay more so we have no choice but to use less. In short, We the People have no business making decisions about how to manage our own lives, we need to be managed by a few brilliant masterminds from some office building in a far away Capitol.

    No thanks, I can handle it myself.

  • Brian72

    Another point:

    If I am sitting in a parking lot, waiting on someone shopping and I want to run my car’s engine so I can listen to the radio and keep the air conditioning on, it is really none of your business.

    I paid for the car, the insurance, the maintenance, and the gas in the tank.
    I will use it how I see fit, and the busy bodies trying to pry into my life and tell me what to do with my own property can pound sand.
    It is summer time, it is hot, and I want A/C in my car.
    You can sweat all you want, leave me alone.

  • DH

    After the death and destruction that environmentalists have caused (e.g., by banning DDT) and wish to cause (e.g., by opposing all practical technologies for large-scale energy production), they *deserve* to lose their “political capital” and to be exposed for the misanthropes they are.

  • @ Bill Peschel

    Bill – you guys on the left need to stop lying to everyone and playing ‘hide the ball’. I mean, I know you do it from a good place because, of course, you know what’s good for us, so you’re misleading us for our own good…

    Since you feel so knowledgeable so as to lecture the rest of us, presumably you realize that ‘Proven Reserves’ is a specific political term and has NO BEARING on how much oil we actually know is out there that we can drill. The term notably EXCLUDES oil that we know about, but Obama won’t let us drill for… which VASTLY outnumbers the ‘proven’ figures.

    Either your guys KNOW you are being misleading by throwing that term around, or you are ignorant of your subject. Either way – its one more reason we on the right feel like it has become impossible to have a real, substantive, truthful conversation about important issues with you folks on the left – you’ve so skewed reality to make your worldview work, that we can’t even agree on the basic ground rules of discussion.

  • Pettifogger

    Much of the enviro-Left sees reduction in carbon emissions merely as a means to the end of reducing or eliminating the aesthetically displeasing affluence of the American middle class. Thus, they will be deaf to the caution against actions reducing jobs.

  • RS

    The oil we USED to pump was just the oil that was floating free at the top of the real shale reservoirs that sourced the oil.

    Now we are tapping the real deal. Expect huge gains globally.

    Malthus loses… again.

  • http://chicagoboyz.net/ Jay Manifold

    In the event that Bill Peschel isn’t just doing a drive-by: quoting from http://nuclearinfo.net/Nuclearpower/WebHomeAvailabilityOfUsableUranium
    Reasonable Assured Reserves recoverable at less than $US300/kg = 6.3 million tU
    85 years supply at the current level of consumption
    There are around 4000 million tU in sea water

    I get 54,000 years at current rates of consumption.

    If it increases to supply a population of 10 billion at the American rate of electricity consumption, which is to say about 160x, that’s 340 years.

    Yeah, Bill. Do the math.

  • Jim.

    Bill also left out Plutonium breeder reactors… which turn non-fuel U-238 (which is ten or twenty times more abundant than the U-235 we use as fuel) into Plutonium-239, which is… fuel-grade Plutonium.

    Hey, I’m not saying Solar is bad. I firmly believe that eventually most of the 10 billion people on Earth, not to mention across the solar system, will get at least half their power from space-based Solar. However, in the near term, we’re going to happily consume all the petroleum we can find.