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 An Energy Crunch in the 2020s?

Why are Europe and Japan dramatically shifting their economies away from oil and coal into alternative energies? Do they know something we don’t?

After watching closely the historically unprecedented economic growth in China, India and several emerging nations, we at abender think that an energy crisis is unavoidable in the near future.

By year 2020 the aggregate worldwide demand for oil, coal, gas and energy may even double the 1990 level. It’s been reported that China alone is building the equivalent of 10 cities the size of Detroit every year. They are putting in service two new coal-powered thermo-electrical power plants every week and building thousands of automobiles a day as well as all kinds of new fuel-guzzling engines such as ships and heavy machinery. As the home to 40% of the planet’s industrial production facilities—and growing—their demand for industrial uses of oil (plastics, textiles, etc) is growing like no industrial boom ever came close to. And this is only China.

Meanwhile the planet’s oil and coal reserves are decreasing and even dwindling in certain regions, particularly where consumption is higher.

An ever stronger demand and an ever weaker supply can only spell out two results: scarcity and ever higher prices, as it is already starting to happen.

This is why we at Abender are committed to bring today to our clients the solutions that already exist for these coming problems.. before everyone will want them.

We think that the energy crisis of the 2020s will not necessarily mean outright scarcity, but rather ever higher gas and electric energy costs.

We believe that high gas prices will create a huge demand for electric and hybrid vehicles, which in turn may even double the demand for residential electrical energy, which in turn may precipitate a widespread energy crunch in many regions of the United States.

We fear that a sudden and huge demand for oil-independent energy solutions may bring about a seemingly “eternal” scarcity of these products and services during the crunch.

We also think that during the crunch years, an energy-sufficient home may reach higher prices than a bigger/better electric-grid-dependent home.

We also believe that those who understand the problem and act on time will spare themselves the anguish and the cost of not having been prepared. It took decades to build the power grid. It will take decades to replace it.

According to the EIA – Energy Information Administration of the U.S., the world’s total production of primary energy (in Btu’s – British thermal units) comes from the following sources:

• Oil 40%
• Natural gas 23%
• Coal 22%
• Hydroelectric 7%
• Nuclear 7%
• Other 3%

What are the implications of this?

The First implication is that we are highly dependent on oil as an energy resource. The second implication is that we use oil not only to fuel our cars and trucks, but also to produce electricity. Within these circumstances, an oil crunch will automatically become a general energy crunch as other sources of energy are called in to make up for the missing oil-generated energy.

Now, why would oil become scarce? Before becoming scarce down in the well, oil may become scarce on a month to month basis because of higher demand. This is actually happening now as the world demand is growing at unprecedented rates, and for this reason the price of oil has been steadily increasing in a significant way since 2002. See Oil Price Trend Graph.

And how much oil do we have, worldwide?

Unlike the US EIA, a dozen international organizations are saying that oil production is peaking somewhere between 2006 and 2012. See Oil World Production Graph.

This is one of numerous graphs assessing oil reserves, most of which predict a production decline in the early 2010's. The graph shows that the (US) EIA expects ever increasing production and no peaking in the coming years while the other entities and methods coincide in predicting a decline in production any time between 2006 and 2012.

The Oil Discovery Graphs though are a tell-tale all by themselves.

The left graph accounts for the number of oil-well discoveries and the right graph shows the sizes of the wells found between the 1940s and today. It is very clear from these graphs that the number of large oil-wells dramatically shrunk in five decades, ending in the 1980s. As per the now proven M. King Hubbert’s theory, on the average, oil production peaks 35 years after extraction starts. Those 35 years are due in the 2010s.

Ever smaller finds also suggest that the world’s crust has already been “examined” extensively and that the chances of finding more oil are just about dwindling by now. The following graph suggests that the British/Norwegian North Sea wells peaked between 1998 and 2000. This oil was used in the 1980s to pull down world prices when they went up too high. The North Sea Oil Production Graph seems to explain why it is not being used now.

Therefore, while the US EIA thinks that oil production will last for an apparently indefinite time, under ever increasing extraction, Europe, Japan and other nations are actually shifting their economies away from oil, coal and nuclear to sustainable energies. Let’s see:

• Europe has been busy building the wind-power infrastructure that will produce 16% of all their electricity by 2020, and they are not stopping there.
• Spain had 118 MW of solar power in 2006. Last year they installed a whopping 640 MW and became the 4th solar-power giant in the planet. And their plans are big both in solar as in wind power. Iberdrola, a Spanish company, is already the world’s number 1 wind-power generator, with 38,000 MW out of the existing 74,000 MW installed worldwide.
• Sweden has been working to become an oil-free economy by 2020, and they are making it happen. They just closed 2 nuclear reactors.
• Netherlands has been using wind mills since the 1180s. Today the country is an important wind power user and producer. Holland, as the other nations mentioned here, is also installing very significant amounts of solar power. Amersfoort is one example, where a development was built with 1.3 MW of solar power on their roofs.
• Denmark already generates 19% of its electricity from wind. They are on a solid path toward generating 40% or 50% of their electricity from wind and solar by 2020.
• Luxemburg has the highest rate of installed solar wattage per capita.
• Germany is already generating 50% of all the solar power on the planet as well as the highest amount of wind power. They plan to get 40% of their electricity from renewables by 2020. They are also recycling 100% since the turn of the century.
• Japan is one of the big players in both solar and wind power, with huge installations as well as several of the strongest manufacturers worldwide. Though their plans were slowed down by typhoons last year, they are coming back stronger than ever with a new and stricter building code.
• India is already another one of the fastest growing solar and wind power markets in the world, with already significant installations.
• China is new in the renewable energy market, but they are building more solar power factories than any other nation in the world (one in Miami), and they will be the largest wind turbine manufacturer in the planet by next year.
• Brazil fuels 40% of their cars from sugar cane ethanol, which is not to be confused with corn ethanol. Sugar cane produces 7 times more ethanol than corn. While sugar cane ethanol yields much more energy than it takes, according to some experts, corn ethanol takes more than it yields.

The fact that the vast majority of solar panels are installed in northern Europe and Japan, where sun energy is scarce and clouds are common, tells us that they are convinced that an energy crisis is on the way and that they are actually bracing for it.

Question # 1: Why are we not doing it?

Question # 2: WHAT CAN BE DONE?

Question # 3: WHAT CAN I DO AS A CITIZEN?

As a citizen I can do much more than I ever dreamed because for the first time in modern history, the technology and the means are within my reach.

In an existing house in South Florida:

• I can improve the insulation on my attic, windows and doors
• I can change my A/C unit to 23 SEER
• I can change my appliances to Energy Star
• I can change my lights to CFLs and LEDs
• I can install sky lights
• I can install attic self-propelled fans to cool my roof, or better,
• I can install a solar thermal panel and/or
• I can install a 5 KW solar electric generator that will give me silent, safe, fuel-less electricity and also shade and cool my roof

This is the 21st Century’s Cry of Independence (as well as lifeline).

In a house to be built:

• The sky is the limit. . .as long as my sky is not limited by my level of information

Question # 4: What else can I do as a citizen?

I can lobby.

SOURCES

• EIA – US Government
• GWEC
• AWEA
• Business Week
• Ecobusinesslinks
• Ecofuzz
• The Oil Drum
• Solarbuzz
• Wikipedia
• Boston.com
• Climateer Investing
• USGBC

A CASE FOR SOLAR

WHY SHOULD I INSTALL SOLAR?

• It has no moving parts
• I can do it as an individual
• Solar energy is by far the most vast source of energy
• It will be there for me as long as our sun keeps shining
• It will be there for me at today’s fixed price
• This is my opportunity to fix the price myself

WHY ELSE?

• Because the U.S. power grid is old and already in trouble
• Because I also pay for the 30% power that gets lost in transmission lines
• And, of course, for security, independence and peace of mind.
 
       
     
 
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