Kristen Lagadec writes: There are no serious alternatives to jet fuel for airliners. And
even if there were, they could never be cheap in a world of expensive
energy. The problem is not that oil is scarce: the productionhas never
been this high — that’s why we call it Peak Oil. The problem
is that energy supply is not meeting global demand: until demand
abates, any type of energy will end up costing the same, be it
classical kerosene, gas-to-liquid synthetic jet fuel, or biodiesel.
Regardless of the environmental footprint. Just know that if it was
technologically feasible, filling an A380 tank with biofuel would use up 150 hectares of yearly yield,considering an optimistic figure of 2000 litres per hectare for Jatropha biodiesel. You’d need 150×2x365×150 = 16 millionhectares — the arable land in France — to power the currently ordered A380 fleet.

Meanwhile the fuel efficiency improvements do not come anywhere close
to compensating the price surge. Boeing claim that their new 787 will
burn 20% less fuel than current jets of the same category (namely the
767 or A330). 20% is how much oil prices rose between the beginning of
April and mid-May 2008: 30 years of technological improvement in aircraft and engine design will offset six weeks of price increase, and no technological Deus ex Machina will change that deal.

The obvious consequence is that cheap flights are gone for good. We are
currently witnessing a fast concentration of the market, because the
fierce competition prevents airlines from transferring the whole fuel
bill to their passengers. As the weaker players exit the arena, ticket
prices will rise until the few remaining airlines can break even
financially. We will see a trend of de-democratization of air travel,
and people will gradually change their travel habits, starting with the
poorer and newer travelers. …

In short: airlines make money in proportion to air traffic; aircraft manufacturers make money in proportion to air traffic growth.
In a world with negative air traffic growth, the former float, the
latter drown. Therefore, although we will probably not see the end of
air traffic any time soon, this extremely nasty leverage effect will
make aircraft manufacturers suffer considerably.

One might argue that in a world of expensive oil, airlines should
scrap all old, gas-guzzling planes and buy new, soberer ones instead.
That would be easy if they were making a lot of profit or could promise
a bright future. But when the industry is consistently in the red zone,
and getting redder, bankers do not follow. Few airlines have sufficient
cash to sign billion-dollar contracts without external investment.
Therefore airlines will be like people in poor countries: they will be
running old vehicles which use up tons of gas because they cannot
afford the newer models which make twice the miles per gallon.

Admittedly, a handful of airlines will be a position to buy the new
planes. When all the world’s money ends up in oil exporters’ hands,
they have to buy things from us to avoid drowning under the heap of
green bills. Aircraft are a great choice, as they are both
hard-currency-intensive and fossil-fuel intensive, which oil producers
have a lot of, as per design. Consequently, aircraft sales may in fact
undergo an increase because of high oil prices. This I call the “Aboulafia effect“. I conjecture that such an increase is inherently short-lived. (07/02/08)
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BBC Environmental Science – The US state of Georgia has blocked construction of a new coal-fired power station because of concerns over its carbon dioxide emissions. Environmentalists welcomed the news, and predict the decision will lead to reconsideration of many coal power plants under development in the US.

The judge cited a decision by the Supreme Court last year which issued a ruling recognising CO2 as a pollutant. This is the first court judgement on an industrial plant based on that ruling.

Earlier this year, Georgia’s Department of Natural Resources issued a permit allowing the Dynegy company to begin construction of its Longleaf coal plant. But Fulton County Superior Court Judge Thelma Wyatt Cummings Moore has now halted construction of the 1,200 megawatt facility, ruling that the permit should have set limits on carbon emissions. She based her decision on the 2007 federal Supreme Court judgement that ended several years of legal disgreements by ruling that carbon dioxide, the most important gas in the human-induced greenhouse effect, should be regarded as a pollutant under the US Clean Air Act.

Dynegy is the largest coal plant developer in the US, with more proposed new coal plants than any other company.

Environmentalists believe the decision will influence the building of power plants across the US. …

More coal plants are now under construction in the US than at any time in the last 20 years. The Sierra Club anticipates that the ruling will accelerate moves to produce a strong federal bill to protect the climate. (07/02/08)
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Lawrence Journal-World – Imagine the day when your vehicle’s odometer becomes a tax meter — the more you drive, the more you pay in taxes.

When you do drive, you’ll be greeted by more toll stations. And when you stop, you’ll be greeted by more parking meters. Along the way you’ll notice roofs with solar panels, yards with vegetable gardens, construction crews building bike paths instead of roads, and perhaps even large warehouses stuffed with massive amounts of food to deal with an energy emergency that hovers on the horizon.

Farfetched, you say.

Well, evidently you aren’t in Portland, Ore., nor have you bought into the concept of Peak Oil — a supposed economic disaster-in-waiting that will make $4 a gallon gasoline look like the deal of the century.

“I think gasoline probably will hit $5 a gallon over the next year, and I’ve heard credible reports that it will hit $10 a gallon over the next four years,” said Tim Hjersted, a Lawrence resident who has formed a local group urging city leaders to begin preparing for the day that petroleum becomes a scarce resource.

Some cities already are preparing for the day. All the above examples — taxes on individuals driving, more road tolls, additional parking meters and emergency food warehouses — are included in an approved plan by the Portland City Council to deal with what it believes is an inevitable shortage of oil.

In its simplest form, that’s the easiest way to think of Peak Oil. It is a significant, worldwide shortage of oil. For the more precise types, it is the day when world oil producers aren’t able to produce as much as they did the day before. In other words, it is when world oil production begins its descent.

Hjersted’s group — the Lawrence Peak Oil Action Committee — wants Lawrence leaders to adopt their own Peak Oil response plan. City commissioners tentatively have agreed to receive a presentation from the group later this summer. Hjersted says if Lawrence does nothing — the preferred response of most communities — it is setting itself up for a colossal economic meltdown that could occur in as few as two to three years.

“This is really important for Lawrence to do because Lawrence is definitely a commuter-heavy city,” said Hjersted, a local activist who operates an independent film Web site. …

Perceived inaction on the federal level is one reason groups like Hjersted’s are urging action on the local level. And in some cases — such as in Portland — they are urging not just action but dramatic lifestyle changes.

The cornerstone of Portland’s response plan is a goal for every current resident to cut his or her gasoline and natural gas usage by nearly 70 percent in the next 25 years.

Some ways Portland is proposing to do so already are being discussed in Lawrence. Shifting future neighborhood design to a more pedestrian-friendly scheme is a large part of the effort. In Lawrence, city commissioners already have been making changes to city regulations that give developers the option of building neighborhoods with small corner stores and offices that allow people to stay in their neighborhoods for services.

If Portland’s plan is any indication, a Peak Oil world also would add fuel to several other frequent arguments in Lawrence. Portland’s plan discourages expansion of the city’s growth area because sprawl will become even more costly. That means developments on the edge of town likely would face even more opposition.

The same would hold true for development on agricultural ground. Portland’s plan says protecting farmland is critical because in a Peak Oil world it will be less feasible to ship in food from thousands of miles away.

And then there are the battles over roads. For those who think completing the South Lawrence Trafficway is difficult now, it may become doubly so if the city adopts a Peak Oil mentality. In the Portland plan, it recommends any road expansion should receive extra scrutiny because of higher fuel prices.

Some Lawrence residents already are advocating for that type of thinking. Michael Almon, a Brook Creek neighborhood advocate who frequently urges the city to adopt more progressive policies, recently used the threat of Peak Oil to lobby for major changes to the city’s long-range transportation plan, which is called Transportation 2030.

“It is imperative to plan for transportation options that will minimize our use of oil, and even minimize our reliance on transportation itself,” Almon wrote in a letter to the Lawrence-Douglas County Planning Commission. “A better title for this plan would be Transportation Contraction 2030.” (07/02/08)
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Financial Times — The oil market will remain tight during the next five years as production from non-Opec countries stalls and demand growth remains relatively strong, the western countries’ energy watchdog warned on Tuesday.

The International Energy Agency’s warning is the starkest sign yet that even record oil prices above $140 a barrel have not yet not done enough to balance demand growth from countries such as China with sluggish supply increases.

The IEA said that annual non-Opec growth would slow to 0.5 per cent between 2008 and 2013, against demand growth of 1.6 per cent per year. The mismatch means the world economy would be more reliant on Opec, the oil cartel, and oil prices are likely to remain at record levels, analysts said.

“Structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium-term,” the IEA said in its Medium-Term Oil Market Report, released on Tuesday in Madrid.

“Poor supply-side performance since 2004, in the face of strong demand pressures from developing countries, has forced oil prices up sharply to curb demand,” the watchdog added.

Crude oil prices surged on Wednesday more than $2.50 to $142.73 a barrel, but still below Monday’s record high of $143.67 a barrel. The report also said that current oil prices were “justified by fundamentals.”

The IEA said that despite billions of dollars of investment, the challenge of pumping ever more oil out of their aging fields is proving so great that non-Opec countries will in the next five years have to rely on biofuels, such as corn-based ethanol, for 50 per cent of their growth in overall fuels. (07/02/08)
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