The transition to post oil

Post Carbon Institute Fellow Rob Hopkins gives us the hard facts that we are running out of oil and it is taking immensely more energy to extract the oil that remains. Can technology solve the impending crisis? How shall the transition proceed? This talk parallels many of the observations of Hopkins' earlier paper, entitled "Searching for a Miracle," both of which should serve as a wake up call for massive conservation efforts. We need to be "loving and leaving all that oil has done for us," and getting ready for the transition:

The fundamental disturbing conclusion of the report is that there is little likelihood that either conventional fossil fuels or alternative energy sources can reliably be counted on to provide the amount and quality of energy that will be needed to sustain economic growth—or even current levels of economic activity—during the remainder of the current century. This preliminary conclusion in turn suggests that a sensible transition energy plan will have to emphasize energy conservation above all. It also raises questions about the sustainability of growth per se, both in terms of human population numbers and economic activity.

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Buffett’s bet on peak oil

Warren Buffett is lauded as one of the greatest investors of all time, if not the greatest. He's the second-richest person in the world, and known as the "Oracle of Omaha" for his seemingly prescient investments. For example, in the wake of the collapse of Bear Stearns and during the height of the market panic that followed it, Buffett stepped in and negotiated a deal with Goldman Sachs. He acquired $5 billion worth of preferred shares, which would pay him a 10% dividend, as well as warrants with the rights to sell those shares at any time within 5 years from the time of the transaction. As of September this year, those warrants were "in the money" to the tune of $3.1 billion, and that doesn't include the $500 million in premium payments that Goldman pays every year. Those lucrative terms (punitive for Goldman Sachs) left others wondering why the Treasury Department could only negotiate a 5% dividend, but that only added to the mystique and legend of Warren Buffett. At the time, Buffett was quoted as saying "If I didn't think the government was going to act, I would not be doing anything this week," referring to the massive bailout bill which was indeed enacted by the government. It's deals like that that enable one to become one of the richest people in the world. But it's also that background that has some on Wall Street scratching their heads at the news that he was purchasing Burlington Northern railroad. The Wall Street Journal discussed how the acquisition seemingly broke two of Buffett's cardinal rules on investments: 1) buy undervalued stocks or companies, for obvious reasons and 2) don't split your own stocks, as it dilutes the equity of the existing shareholders. Bloomberg quoted a hedge fund principal as saying, "It could be five years before the logic of [Buffett's purchase of] Burlington Northern becomes clear." Even Buffett admits that the purchase was "not cheap" and that it represents an "all-in wager"on the future of the American economy. And there can be no doubt that it is a significant investment-- he's liquidating other rail investments totaling $691.3 million while the Burlington Northern purchase will cost some $26 billion-- an increase in his railroad holdings of some 3,600%. And this bears repeating, he's splitting stock to get it done. This is the first time ever that Berkshire Hathaway (Buffett's investment company) has split shares. He's so reluctant to split shares, the class A shares regularly trade over $100,000 per share, an unheard-of valuation.

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Peak coal

For those of you who read this shocker that the worldwide oil reserves are dwindling much faster than official reports have been coyly indicating, don't get too cozy with the concept that we can always move on over to coal. At least that is the opinion of Richard Heinberg of the Post Carbon Institute. He claims that cheap coal is running out quickly too, and that we will have hit peak coal by 2025. There are a lot of good reasons for avoiding coal. It's a dirty fuel that has spawned dozens of massive ecological disasters, including this one in Tennessee. Another reason to not depend on coal is that there might not be enough of it to consider it to be a long-term solution. And please tell me: why is "conservation" still such a dirty word to so many people out there when it is the cleanest and easiest why to even out energy input and outgo?

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Radioactive coal

This just in, from Scientific American:

[T]he waste produced by coal plants is actually more radioactive than that generated by their nuclear counterparts. In fact, the fly ash emitted by a power plant—a by-product from burning coal for electricity—carries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy.

At issue is coal's content of uranium and thorium, both radioactive elements. They occur in such trace amounts in natural, or "whole," coal that they aren't a problem. But when coal is burned into fly ash, uranium and thorium are concentrated at up to 10 times their original levels. Fly ash uranium sometimes leaches into the soil and water surrounding a coal plant, affecting cropland and, in turn, food . . . [E]stimated radiation doses ingested by people living near the coal plants were equal to or higher than doses for people living around the nuclear facilities.

Not that the risk of radiation from either coal plants or nuclear power plants appears to be significant for those living nearby.

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Friedman: It’s time for a gas tax, but we don’t have the guts.

According to Thomas Friedman's recent op-ed in the NYT, given that oil prices are way down compared to last year, it's time for a gas tax, but we don't have the guts. We don't have the guts to make hard decisions like France and Denmark, which have both dramatically reduced their dependency on petroleum. Further, a gas tax would also generate much-needed revenue.

Such a tax would make our economy healthier by reducing the deficit, by stimulating the renewable energy industry, by strengthening the dollar through shrinking oil imports and by helping to shift the burden of health care away from business to government so our companies can compete better globally. Such a tax would make our population healthier by expanding health care and reducing emissions. Such a tax would make our national-security healthier by shrinking our dependence on oil from countries that have drawn a bull’s-eye on our backs and by increasing our leverage over petro-dictators, like those in Iran, Russia and Venezuela, through shrinking their oil incomes.

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