Oil Peak, Facts and PoliciesEnergy Policy

Gary Flomenhoft, Fellow Gund InstituteLecturer, Community and Intl. Developmenthttp://www.uvm.edu/giee

0%

20%

40%

60%

80%

100%

1850 1870 1890 1910 1930 1950

Fuel

DomesticatedAnimals

Labor

Work Done in the U.S. Economy, 1850-1970

0

25

50

75

100

1800 1825 1850 1875 1900 1925 1950 1975 2000

Composition of U.S. Energy UseComposition of U.S. Energy Use

wood

animal feed

coal

oil

gas

electricity

Per

cen

t o

f to

tal

ener

gy

use

Energy Densities of Fuels

Fuel Energy Density (Mj/kg)

Peats, green wood, grasses 5.0-10.0Crop residues, air-dried wood 12.0-15.0Bituminous coals 18.0-25.0Charcoal, anthracite coals 18.0-32.0Crude oils 40.0-44.0

WORLD

ENERGY

2004

Net Energy

Hubbert Oil Cycle

Marion King (MK)Hubbert

The Epoch of Fossil Fuel Exploitation(after Hubbert, 1969)

0-5 -4 -3 -2 -1 +1 +2 +3 +4 +5

Iron inMiddleEast

StonehengeBuilt

Parthenoncompleted

Pyramidsconstructed

Mayanculture

Inquisition

BlackDeath

Magellan'sCircumnavigation

Steam Engine

100

200

300

Tri

llio

n k

wh

per

yea

r

US Oil Extraction

World Oil Extraction

Oil Reserves

US Oil Extraction

World Oil Extraction

World Oil Extraction

Source: Boyle, et al, Oxford Press

Oil consumption by area

OIL AND GAS LIQUIDS ASPO Scenario

Net Energy from Oil and Gas Liquids

World Oil Extraction

World Oil Flows

Oil Producers: 98 countries

www.lastoilshock.com

Oil Producers: 64 from 98 in decline, 60 terminally

www.lastoilshock.com

http://www.theoildrum.com/node/3087

Oil Watch Monthly: October 2007

Business As Usual-EIA

Business As Usual-EIA

1960-1980 Predictions

1975-1983

Predictions

Real Price of Oil 1869-2007

$145

$56.34

May 18, 09

Dubai Oil Prices and US Oil Consumption

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

196519671969197119731975197719791981198319851987198919911993199519971999200120032005

0

5000

10000

15000

20000

25000

Thousands BBL/day

Dubai nominal $ Dubai 2006$ US oil consumption

Dubai Oil Prices and US GDP

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

196519671969197119731975197719791981198319851987198919911993199519971999200120032005

$0.00

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

$14,000.00

Dubai oil Price 2006 $ US GDP billions chained 2006 $

Dubai Oil Prices and US OIL/GDP ratio

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

196519671969197119731975197719791981198319851987198919911993199519971999200120032005

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

Dubai oil Price 2006 $ oil consumption/GDP 2006 $

World Oil Extraction

Dumped Gas Hogs

1974 Lincoln~8mpg

1974 Corolla~30mpg

Jet Industries:

Citi-Car(Beaumont)

Electricar Lectra

1980’s 2nd Wave of EVs

“Better batteries 10 years away”

WORLD ENERGY

2001 Vermont Own Load Electric Energy Supply

Nuclear

36.3%

Renewable

4.9%Hydro

6.9%

Hydro Quebec

34.9%

System

14.4%

Oil

1.6%

Gas

1.0%Coal

0.0%

(61% FF=8.8%FF)

8.8+1.6+1= 11.4% Fossil Fuels

How VT Heats

86% Fossil Fuels

Fuel oil, kerosene

60%Bottled gas, LP

14%

Utility gas (nat gas)

12%

other fuel

wood9%

Coal or coke0%

electric5%

solar energy

no fuel

86% Fossil Fuels

How People Move-USEIA

Hummer H1Sticker price $106,185

Current lawEquipment deduction $25,000Total tax deduction* $60,722

Bush economic planEquipment deduction $75,000Total tax deduction* $88,722

* Includes bonus tax write-off enacted by Congress in March 2002 and a deduction for normal depreciation.

Sources: Detroit News research, IRS, Taxpayers for Common Sense

Gas Hog Tax Credit

Source: EPA

Policy Recommendations: Guidelines

1. Eliminate perverse incentives-make money!

2. Provide positive incentives-account for externalities. ie: putting a price on carbon-make money or revenue neutral.

3. Regulate (higher mpg)

3. Spend money

The playing field is NOT level. Fossil Fuels have 100 years of subsidies,ignoring external costs, and a huge lobby in DC. Don’t expect the “free market” to take care of it.

WHAT TO DO? Reactive or Pro-active?

WHAT DON’T WE HAVE?•Oil-zero•Coal-zero•Nat Gas-not much (landfills)

Why promote consumption of something we don’t have?

* Conduct an audit of perverse incentives promoting FF use. Eliminate perverse incentives.

WHAT TO DO?

DEALING WITH PEAK OIL IS GOOD FOR

•Climate Change

•Vermont Economy

•Should do it anyway

WHAT TO DO? Provide incentives Ex: Germany

Policies, Market-based Instruments:

1. 1999 Tax & Rebate on Fuel (tax cut): Diesel/gasoline $1.79-2.48/gallon Funds rebated to payroll taxes-89%, efficiency, and RE

2. 2005 Cap/trade for CO2-powerplants and industrial heat

3. 1991 Feed-in Tariffs: Wind=$.1149, PV=$.6385, hydro=$.1055, biogas=$.1551

• No costs to government

Results:

1. PV Industry: 2715 MW installed, 52% of world total, 40,000 employed(US has 360 MW installed or 13% of Germany)

2. Wind Industry: 22,247MW, 28% of world total, 82,000 employed (United States 16,818MW)

3. Biomass sector 95,400 employed

Total: 217,000 employees in RE

~107,000 FF & nuclear

WHAT TO DO? Reactive or Pro-active?

WHAT DO WE HAVE TO WORK WITH?•Trees•Farms•Cows•Land•Wind•Sun•Big and Small Hydro•Smart People•Indigenous Energy Industry•Entrepreneurs

WHAT TO DO? Electricity

•VT Yankee = 550MW CT River Dams-567MW.

•Dams = $160 Million/year revenue.

•Buy the dams. Use eminent domain if necessary

•Fast-track small hydro-up to 400MW

•Approve more wind farms

•More Wood chip plants

•Etc.

WHAT TO DO? Heat

• All-fuels efficiency/ weatherization

• District heating and co-generation

• Biodiesel heating fuel

• Wood and wood chip/pellet heating

• Building codes requiring passive solar, thermal mass, window

insulation, Solar hot water

• Wood stoves

• High Performance Schools Energy Program

• Cap/dividend on carbon-heating fuel

WHAT TO DO? Transportation

•Hybrids

•Plug-in hybrids

•Electric vehicles

•Alternative fuels, ethanol, methanol (flex-fuel), biodiesel

•Trains

•Public transit-Jitneys

•Bike/pedestrian paths

•Tax/rebate on fuels

•Cap/dividend on carbon-vehicles

WHAT TO DO? Agriculture

•Don’t turn food into fuel

•Biodiesel: waste oil, algae, non-food crops

Methane digesters: “Cow-power”

Crisis or Opportunity

We will shift from Fossil Fuels.

Will we be Pro-active or reactive?

It’s up to you.