The Oil Drum: Europe

Annual production of cement by country in billions of metric tons. Click to expand. Source: USGS 2006 report (PDF) and the USGS 2008 report (PDF).

Cement is mainly used to make concrete, and is sort of the "active ingredient" in concrete - it is combined with sand and gravel in roughly fixed proportions. So cement production can be considered a rough proxy for the total amount of construction going on in a country.

This post updates Stuart's post about this two years ago (and yes, it's still a graph that will blow you away!) with two more years of USGS cement data, 2006 and 2007. The growth in China, from 1 GT to 1.3 GT in two years is mindboggling, even India and Russia are interesting...and there's more to think about under the fold.

edited to add: As a couple of folks pointed out--I have interchanged "production" and "usage" in this post incorrectly--however, China's 2007 cement exports were only 33 million tons out of 1.3 billion tons produced. So, at least for China, production is a good proxy for demand/consumption. My apologies for the mistake.

In recent days a series of media articles surfaced pointing to a concerning situation in China. The New Scientist reported:

At the end of a cold and stormy winter, the country has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday.

A week or so ago I wrote about the power supply debate going on in New England, with the controversy over the wind farm to be sited in the waters off Cape Cod. In that post I commented on the fact that, in response to an energy shortage that had appeared in 2004, the area had ensured additional supplies of LNG, and had converted some power stations so that, instead of relying on natural gas, they could also burn oil. The advantage of oil in this particular case is that it is somewhat more easily stored and thus is accessible when the gas lines are not available.

However I skated around the issue as to what would happen if there were neither oil nor gas available. This is not, unfortunately, a theoretical exercise. Chris Skrebowski has projected a supply shortfall by 2012. Yet already in India power plants are being idled because they cannot get enough LNG. And as for the supplies of oil, the likelihood of us being past peak by 2012 is increasingly real. So, that being the case, where can one look for alternate fuel. As articles in the New York Times and in the Washington Post have noted, for most of the rest of the world the short-term answer would appear to be from coal.

There has been the occasional story popping up in Drumbeat over this past week or so about the severe winter and gas shortages in Iran, and their resulting cut in supplies to Turkey. The Iranian domestic shortage was supposed to be made up from Turkmenistan. Unfortunately the shortfall from Iran to Turkey was supposed to be made up by increased supplies from Russia, but those also are falling short. About a year ago we saw some of the same discussion about supplies from Turkmenistan, through Russia, to Europe, with shortfalls and price increases – particularly relating to the gas supplies to Ukraine, through which the pipelines flow. At the end of that discussion the Turkmen got an increase in the price of their gas. It is therefore not surprising to see that Turkmenistan is seeking to double the price it gets from Iran.

This is the last of the posts that deal with the content of the ASPO Conference last week in Houston. I will have my usual personal closing review tomorrow. As I hope you will gather, it was full of information and somewhat intense. And that did not include talking to folk in the breaks, which expanded a lot on what was being said in the papers. So if you want to think of this as the first commercial for next years meeting (which will be in California) then you’re right again. And just to remind you, the earlier posts were a report on the Workshop day, the first morning report, the rest of Thursday, and then Friday morning. A quick thanks to all, and it was more fun than I had even hoped to meet so many of the TOD folk, as well as so many others – thank you all, and of course, a much bigger thank you to the organizers for putting this on. The result, gentle folk, was well worth the effort.

We rejoin the meeting just as we sat down to lunch, and a talk by Houston Mayor Bill White who has the enviable distinction of having Matt Simmons as the Treasurer of his Campaign Committee. He acknowledged Matt as a prophet (with all that usually brings). He sees the current situation as one that comes down to a race between depletion and technology. It is not possible to give a political speech and create more oil fields. It is not possible by giving a political speech to create a hydrogen economy either immediately or in the practical future. It is not possible by giving a political speech to over-ride the laws of physics.

Topics include:

Economy – UK and Europe; Geopolitics - Caspian; Coal / China / Kyoto Protocol; Natural Gas - Iran; Russia - Wheat Exports; ASPO-USA P.O. Conf. – Media Response; Economy - USA

Earlier last week, I wrote a diary (What the west means and what roles NATO plays therein) that used a recent Financial Times editorial as a springboard for a discussion on what the "West" was, and what the use of NATO was - questions that  left-of-center Europeans tend to see quite differently from most Americans, including left-of-center ones.

The editorial, by a well-respected British pundit, was insightful and interesting, and led me to conclude what many on the European Tribune have long suspected: that NATO is simply an instrument for Europe to support US strategic priorities, and that the "West" exists only when Europe (and in particular France) aligns itself unconditionally on US positions. The UK, as per that senior British commentator, has as its main role that of disrupting and dividing Europe when it is insufficiently respectful of US interests.

Since I'm French, you may be tempted to conclude that this is just sour grapes by a citizen of a supposedly declining country; however, what I found more interesting in that article was the dominant tone of fear - about the west being under siege, and needing security against various threats - in the form of coordinated military power and little else. It was a narrow, downcast, closed vision of the world, with little about values, progress or hope.

The comment thread is worth reading too, and one of the last comments, by Loefing, pointed me to another article on the same topic, this time by a graduate of the US Naval War College, Tony Corn. The article, (The Revolution in Transatlantic Affairs, has the same dominant tone of fear, but a much more detailed examination of the world. Given the credentials of its author, it is likely to have serious influence on the thinking of the strategists in the Pentagon, and it is thus worth deconstructing.

This is a guest post by Glenn Morton, a geophysicist in the oil industry. For Kerr-McGee Oil and Gas Corp., Glenn served as Geophysical Mgr Gulf of Mexico, Geophysical Mgr for the North Sea, Dir. of Technology and as Exploration Director of China. Currently he is an independent consulting geophysicist, and you might know him as seismobob.

I have intentionally paraphrased this wonderful Christmas song because it has much to say about the future after peak oil which I am now ready to say has already happened. As energy declines, we will indeed go to our grandmother's house--one without electricity and running water, sewer or septic and deep, mechanically pumped water wells. At least that was MY grandmother's house. She lived on the Kansas prairies of the 1890s. In the 1960s I asked my grandmother what the greatest invention of her life had been. She said electricity because before they had lights, everyone went to bed shortly after sun down because it was simply too dark to do to much. There was no air conditioning, so the summers were very hot. In the winter, trips to the outhouse were cold (and brutally awakening if during the middle of the night). While she had wood where she lived, about 100 miles west of her home, people had to burn dung as is done in Tibet today. See the picture below of the dung plastered against the house. When one wants to cook, one retrieves a patty.

Without cheap energy, we go back to my grandmother's house or one quite like it...

So! Going to Cork was not a cheap experience, with at least a day of travel each way, not to mention the energy cost – so was it worth it? And to define whether it was worth it, what did I learn? What follows is purely my set of opinions and recollections, and given the number of TOD folk there – do please chip in with your own comments. And let me begin by stating that I am definitely glad I went, and, even though a fair amount of what we heard reflects posts on different topics that have appeared here over the past year or so, the information was largely more up-to-date, the speakers were highly qualified, and the conversations outside the formal presentations could not have been reproduced in any other way. (And if you want to consider that a hint about the value of going to the Houston ASPO Conference , you’d be right).

Putting together the papers on Supply, there are perhaps two or three significant thoughts that have hardened based on what I have heard. The first is in regard to the actual peak volume of oil and associated liquids that will mark the peak. Numbers at the conference floated up around 100 mbdoe, but I think it is now likely to be closer to 90. The second is in regard to how much of this will be exported. Westexas points on the decreasing amounts that will flow from producing countries were validated by the growth numbers that we heard for the indigenous economies of the producers. This reduction in export volumes will likely advance the arrival of an apparent peak to oil-importing nations to a time in advance of the real peak in production, with an even earlier significant economic impact above that seen to date. My sense for that timing is about two years, with the potential that, given the sensitivity of the issue, volumes might be adjusted prior to that in order to influence the next Presidential election. And in regard to how much of the export volumes the OECD can anticipate – well probably less than they are currently expecting. The way in which China, with foresight, has sought out future supplies and lined up commitments is likely to make the available supply significantly less for the rest of us, and the earlier optimistic projections from the majors that they had enough for us not to worry is being increasingly made irrelevant, as they get displaced from country after country. And, finally, as sort of a combination of these, I worry that the post-peak supplies may decline faster than the long plateau that currently keeps us complacent, and which does not reflect the bell-shaped curve that some of us use when talking about the subject. I am significantly more pessimistic.

The summaries of the first day of the ASPO conference can be found here and here. The second day's morning summary can be found here.

The overlying theme of this year’s conference was Time to React? The final session was set-up to respond to that question, or perhaps it would be more cautious to say to explore it. The session was guided by Eddie Hobbs of RTE , and began with Debbie Cook , a former Mayor of Huntington Beach, CA. She talked about how some the issues should be addressed in local government. She felt that the challenge that we face is more of an adaptive one than that of technology. Because they see some of the highest power costs in the United States, they worked to incentivize power savings for the utilities. As a consequence she learned the benefits of selling problems at the local level. And the scale of the local use was large, with 495,000 gal/yr of fuel used for City Services, 525,000 gal of fuel/year for Waste pickup and recycle (they pick up 4,500 tons of trash a week and recycle 60% though some is sent to China where it is burned to make energy). The City did an Energy Audit and learned that keeping a single Coke machine costs $500 a year in power.