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The Forum > Article Comments > The oil-economy connection > Comments

The oil-economy connection : Comments

By Michael Lardelli, published 25/11/2009

If our society and civilisation is to survive the challenge of declining oil we need to invest in renewable energy.

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I think Peak Oil will soon grab the public's attention more than weird weather. The connection between PO and AGW may be that shortage of liquid fuels weakens the economy to the point there is less demand for coal. Therefore PO could have a knock-on effect in reducing CO2 emissions. This point seems to have escaped all but a few commentators. No doubt Australia's greenhouse mafia will say we should make liquid fuel from coal. They should have thought of that ten years ago.

I don't believe renewable energy can make more than a slight dent in either coal or oil. I run my car on biodiesel by the way. I think transport should be electrified where possible and heavy vehicles should convert to compressed natural gas CNG. The government should review LNG exports to ensure there will be enough for domestic needs fifty years from now. They are making a serious mistake encouraging the building of new gas fired electrical generation since it will not achieve the CO2 cuts needed long term and it will divert gas from new demands such as transport. Therefor I agree that the government doesn't have a full grasp on PO or how it impinges on other priorities.
Posted by Taswegian, Wednesday, 25 November 2009 8:32:27 AM
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Unless technology changes, won't the high price of oil also inhibit our ability to manufacture cheap alternative energies? That is, the oil price also drives up the price of alternatives (which of course have high embodied oil).
Posted by Cam Murray, Wednesday, 25 November 2009 10:41:15 AM
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A persuasive argument which would be true if there were no alternative to the use of oil for the production and distribution of goods or transport of people but there is. Electricity.

A fundamental requirement for the use of electricity for transport purposes is development of an efficient, light weight, fast charging battery with much improved capacity which can be cheaply produced. If we assumed that development of a battery with these characteristics will not occur, then indeed we are faced with the prospect that declining oil and gas and increased production costs will result in economic contraction.

There is good reason to believe that such batteries will be developed and become available within the next 3-5 years and that improvements will be made in the design and performance of electric motors, permitting their wider use. In other words, the advent of the electric vehicle is not that far off and will largely negate the rising cost and growing shortage of hydrocarbons. Use of electricity as a propellant is a much cheaper alternative but its use for heavy load road haulage may not become available in time to avert inflationary effects on farm production and distribution of goods.

Mr Lardelli argues that a decline in the availability of hydrocarbons will reduce world economic activity. Again he is right but only if we assume that economic activity is dependent on the availability of energy produced from burning fossil fuels and that energy from other sources can not be produced in the quantity required to sustain, let alone expand, economic activity.

Is that the case? At present, definitely. Will it remain the case? In the short-term, yes, in the medium term, no, since technology will be (is being) developed permitting efficient use of renewable energy sources to produce electricity at a cost which undercuts production from burning fossil fuels. This will be partly because of the rising cost of curbing CO2 emissions but primarily because of improved technology and its large scale application to generate electricity from solar energy.
Posted by JonJay, Wednesday, 25 November 2009 11:37:34 AM
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Perhaps we should be building electric trains and phase out trucks for transportation.

It wont happen as the Senate voted down any idea that the government should do anything with both parties opposing.
So they are not serious about containing CO2 levels just tax us instead.

There was a report the other day suggesting that we need to double the number of trucks by 2020 and treble by 2030, now that will put a dent in oil usage and not help pollution.
Posted by PeterA, Wednesday, 25 November 2009 12:55:31 PM
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JohnJay;
Certainly the electrification of all long distance rail routes is very
urgent, but the government is blind to the need to improve the freight
needs of the country. They refused the $800 M to provide a dedicated
single track for freight between Sydney and Newcastle.

Truck should/will be banned from interstate freight.
Truck will only be used for delivery from freight terminals to local
areas.
I forsee the return of the electric parcel vans in Sydney which were
replaced by road couriers. These trains moved parcels between the
parcel offices which was part of every railway station.

There are alternatives using electricity, but rationing will be
necessary.
Posted by Bazz, Wednesday, 25 November 2009 3:57:51 PM
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Thank you Dr Lardelli for a fine concise well organized and annotated essay. I have enjoyed reading your archived articles as well. The conccept of EROEI is a familiar one well covered in theoildrum.com, ASPO and other sites but you have a gift of being able to explain in clear language what you believe to be true and why. I was a little surprised to see you using economic graphs from here in the states to prove your point. I am not sure I agree with your conclusion that there might be a practical ceiling to oil price of under $147/bbl. I look forward to reading more from this fine site and seeing your well reasoned thoughts. The Aussie economic model is getting a lot of praise over here on this side of the pond from the popular media but it's refreshing to get information from a local source. I might also note that James Michael Greer on thearchdruidreport.blogspot.com is also writing very beautifully on similar associated subjects. Thank you for your work and efforts.
Posted by hugho, Friday, 27 November 2009 3:08:54 PM
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