The collision of capitalism, global warming and peak oil

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The collision of capitalism, global warming and
peak oil Its time for federal action Paul
Riehemann Blog host, Solve4Biggies.com March 16,
2008
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Agenda

• Introduction
• Capitalism, global warming and peak oil
• What to do?
• Some definitions
• Options
• A federal tax shift income to energy
• Your thoughts?

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Capitalism (and the energy industry)

• You invest
• You work smart hard
• You follow the law
• Goal is to make a profit

So why are Exxon Mobil and other oil companies
the bad guys?

• Most criticism isnt justified their job is to
  make a profit.
• Securing tax breaks
• Drilling where there is oil
• Some is justified e.g., Exxon funding
  organizations that question global warming.

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Global warming

• Professor Jonathan Foley, Director, UW-Madison
  Center for
• Sustainability and the Global Environment
  (SAGE)
• Global warming - the debate is over the planet
  is warming and we're
• causing it.
• Between 1950 - 2000   - world population
  doubled   - the world economy grew
  seven-fold   - fossil fuel use increased
  four-fold
• extremely conservative estimate (actual number
  could be 10X this) 150,000 PEOPLE PER YEAR
  ARE DYING PREMATURELY AS
• A RESULT OF GLOBAL WARMING.
• CAUSES INCREASED DISEASE, DROUGHT AND
  FLOOD.
• Intergovernmental Panel on Climate Change (IPCC)
• there is sufficient agreement - other countries
  are investing heavily in
• reducing greenhouse gas emissions
• there is NOT consensus.

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Global peak oil
Oil will not just "run out" because all oil
production follows a bell curve. .. Oil is
increasingly plentiful on the upslope of the bell
curve, increasingly scarce and expensive on the
down slope. The peak of the curve coincides with
the point at which the reasonably recoverable
endowment of oil has been 50 percent
depleted. Once the peak is passed, oil production
begins to go down while cost begins to go up.
Source lifeaftertheoilcrash.net -- my addition
in brackets
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Source lifeaftertheoilcrash.net
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What has happened to world oil production in the
last 4 years? ?
Source lifeaftertheoilcrash.net
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(No Transcript)
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Source lifeaftertheoilcrash.net
Isnt the steep drop overly pessimistic? 83 MBD
to 60MBD in 13 years ?? ?
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Global peak oil Is the steep drop overly
pessimistic??
83 MBD to 60MBD in 13 years. A 28
decrease a couple of percent per year.
By some estimates, there will be an average of
two-percent annual growth in global oil demand
over the years ahead, along with, conservatively,
a three-percent natural decline in production
from existing reserves. That means by 2010 we
will need an additional 50 million barrels per
day.  Dick Cheney, CEO of Halliburton
(1999)
Another opinion An accurate average decline
rate of 8 is not an unreasonable
assumption. Andrew Gould, CEO of
Schlumberger (oil services firm)
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The signal that were in deep doo doo?
How will we know were in for some big supply
and/or demand problems?
Price, of course.
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Source EIA, Annual Energy Outlook February 2007,
DOE/EIA-0383
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Source EIA, Annual Energy Outlook February 2007,
DOE/EIA-0383
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The history of oil
Source lifeaftertheoilcrash.net
How are we using this finite resource NOW to
ensure a sustainable energy future?
Were not.
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What to do? -- definitions

• External costs
• Result when part of the cost of producing a good
  or service is born by a firm or household other
  than the producer or purchaser. Example a
  neighbor who is a grade-A slob and lets the
  external appearance of his house run down creates
  a "negative externality" by depressing the
  attractiveness and thus the market value of a
  neighborhood.
• Paul M. Johnson, Auburn University
• Tragedy of the Commons, Garret Hardin (1968)
• Grazing animals
• Kyoto treaty

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What to do? -- options

• Nuclear power No
• What to do with the nuclear waste?
• How much will it cost?
• Cap trade No
• Complex
• What should a ton of CO2 cost? Risky for
  markets.
• Conservation Yes
• But, people and organizations need an incentive.

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What to do? -- options

• Renewable energy Yes
• But, a poor payback now so its a drop in the
  bucket.
• Local and individual actions Yes
• But, wont be THE answer (Tragedy of the Commons)
• A federal tax shift Yes
• 2,500 economists agree.

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A phased-in federal tax shift

• At the federal level, shift taxes from income to
  non-renewable
• energy revenue neutral for government,
  individuals and families
• A BTU tax is best increases cost of nuclear
  energy
• How much? the equivalent of 10 to 40
  cents/gallon/year of
• gasoline for 10 years.
• Could cause inflationary pressure.
• (as does
• - cap trade
• - a complete economic crash from
• skyrocketing fossil fuel costs
• - global warming costs.)

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A phased-in federal tax shift - benefits

• Provides a REAL incentive for conservation
• Provides a REAL stimulus for the renewable
  energy industry.
• Entire tiers of renewable energy projects will
  become
• economically viable as the tax shift is
  phased-in.
• Will create a mighty GREEN JOBS engine
  domestic products
• as well as export.
• The U.S. will be LEADING in the reduction of
  greenhouse gas
• emissions
• Reduced dependence on foreign energy we
  regain the control
• weve lost over our economy.

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A phased-in federal tax shift - benefits

• Reduced foreign trade deficit
• Reduced air pollution and associated costs
• Dont need CAFE standards
• More local food eaten
• Less road traffic
• OIL companies become ENERGY companies
• The federal government doesnt try to decide
• how to spend tens of billions of dollars
  on
• renewable energy projects.
• Instead the MARKET decides.

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Questions, answers and discussion