Don’t Count Oil Out
Alternative energies won’t replace oil, gas, and coal anytime soon.
The third issue—scale—is seldom discussed. And for many people, it’s likely the most difficult issue to comprehend. There’s little mystery as to why that is so. We use a googol of units to measure energy: Oil is sold in barrels, tons, gallons, and liters. Natural gas is measured and sold in cubic meters, millions of Btus, therms, dekatherms, and cubic feet. Coal comes in long tons and short tons, but its pricing depends on myriad other factors, including heat content, ash content, sulfur content, and most important: the distance between the coal mine and the power plant. Electricity is sold in kilowatt-hours but electricity terminology spans other units like volts, amperes, and ohms. Add in joules, watts, ergs, calories, and Btus, and things get even more complicated.
We need a simpler measure for global energy use, which now totals about 241 million barrels of oil equivalent per day. That sum is almost impossible to comprehend, but try thinking of it this way: It’s approximately equal to the total daily oil output of 29 Saudi Arabias. (Since 1970, Saudi Arabia’s oil production has averaged 8.2 million barrels per day.) And of those 29 Saudi Arabias, 25—about 210 million barrels of oil equivalent—come from hydrocarbons.
Furthermore, over the past decade alone, global energy consumption has increased by about 27 percent, or six Saudi Arabias. Nearly all of that new energy came from hydrocarbons.
Scientists and policymakers can claim that carbon dioxide is bad. We can talk about wind, solar, geothermal, hydrogen, and lots of other forms of energy production. But the question that too few people are willing to ask is this one: Where, how, will we find the energy equivalent of 25 Saudi Arabias and have it all be carbon-free?
The hard reality is that we won’t. The Saudis have invested hundreds of billions of dollars over the past few decades drilling wells and building their infrastructure so that they can remain the world’s most important oil exporter. And remember that all of those billions invested have given them exactly one Saudi Arabia, or about 3.4 percent of total global energy demand.
Taken together, the countries of the world have invested trillions of dollars in the energy- and power-delivery systems now in place. Smil explains this succinctly in his 2008 book, Global Catastrophes and Trends. “There is no urgency for an accelerated shift to a non-fossil fuel world: the supply of fossil fuels is adequate for generations to come; new energies are not qualitatively superior; and their production will not be substantially cheaper.”
Smil’s point about “cheaper” also affects the other issues at hand: the pace of energy transitions and scale. The biggest challenge for renewable energy in the United States is not the bad press associated with Solyndra or a lack of federal funding. Instead, it’s the continuing avalanche of cheap natural gas, the fuel that competes most directly with wind and solar energy. Thanks to the shale revolution, which has transformed the U.S. oil and gas sector over the past three years, natural gas is now selling on the spot market at Henry Hub for less than $3.50 per million Btu. In October 2005, that same quantity of natural gas on the spot market was selling for more than $13.
Indeed, the United States now sits atop galaxies of low-cost gas that can be recovered from shale. In April, the Potential Gas Committee, a nonprofit group consisting of academics as well as representatives from government and industry, estimated U.S. gas resources at about 2,170 trillion cubic feet. At current rates of consumption, the United States likely has enough natural gas to last 90 years or more.
Here’s the bottom line: Renewables will remain niche players in the global energy mix for decades to come. The past—and the foreseeable future—still belong to hydrocarbons. And we can expect natural gas, the cleanest of the hydrocarbons, to garner a bigger share of the global energy pie in the near term and in the long term.
Robert Bryce, a senior fellow at the Manhattan Institute, is the author, most recently, of Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future.