Peak Cheap Oil and the Law of Unforeseen Consequences

[c1ue]

Peak Cheap Oil for most people means higher gas prices.

However, it is fair to say that Peak Cheap Oil has consequences above and beyond just the price at the pump.

This thread is to explore some of these.

I'll kick this off by looking at asphalt.

Asphalt is a byproduct of oil refining. It is a combination of rocks, gravel, sand, and bitumen - the latter being what refineries put out along with lighter outputs like gasoline, jet fuel, and propane.

Asphalt also happens to comprise a large portion of American roads: 94% according to the link below.

According to this: http://www.cement.org/econ/pdf/PavingRealities1111.pdf

- admittedly a pro-concrete site - for the past 28 years, every 10% increase in oil prices resulted in a 4% increase in asphalt prices.

However, in the last 10 years, the correlation is 7% asphalt price increase vs. a 10% oil price increase.

One possible mechanism for the recent divergence in correlations noted above is the introduction of the 'coker' - basically a bit of technology which allows a refinery to convert otherwise asphalt ready material into products more like gasoline.

Whatever the reason, the BLS' Producer Price Index for asphalt has gone from 150 in 2007 to over 250 now (It was last at 100 around 2000)

How does this impact road maintenance?

Clearly it isn't a good thing, though perhaps the increase in revenues from gasoline taxes compensate such that the effect is minimized.

Annual overall road maintenance spending for the entire United States isn't easy to find, but it is unquestionably in the low 12 digit range - not exactly chicken feed.

Concrete may be a fine substitute as it does not require as much direct oil contribution, but then again replacing 94% of all the roads in the United States is a non-trivial endeavor.

Either way, a possibly interesting Unforeseen Consequence of Peak Cheap Oil in the range of hundreds of billions of dollars.

What other unforeseen consequences of Peak Cheap Oil might there be, and what would the impact be?

[Ellen Z]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

A while ago I wrote a position paper for some friends outlining why I expect hard times ahead.
I tried to keep it compact and easy to read. Here is a section on the many uses of oil:

Think for a moment about oil. Many of us studied geology in high school, but we didn't fully absorb the information... we didn't take in what it means.

Fossil fuels originally derive their energy from sunlight. About 300 million years ago, vast quantities of plants and tiny animals absorbed and stored energy from the sun. Then, over millions of years, under great pressure and heat, those plants and animals were compressed until they became oil, coal and natural gas. Fossil fuels contain energy that originally came from sunlight, now stored in an extremely concentrated form. That's what we're using each time we burn a gallon of gas.

Take some time to notice how many different ways we use oil. Gasoline and diesel fuel. Asphalt. Fuel for jet airplanes. Everything made out of plastic. Fertilizers for commercial agriculture. I'm an organic gardener, but my garden hoses and watering devices are made from plastic. Asia's green revolution is based on chemical fertilizers, and those fertilizers are made from fossil fuels.

Nowadays, so many things we buy are manufactured in China and other parts of Asia, then shipped to the United States. That's only possible because cheap, abundant oil keeps global shipping costs low.

Components of Boeing's new 787 airplane are manufactured in the United States, Europe and Asia; the subcontractors ship completed components to Boeing for final assembly. We depend on a global manufacturing system, but as oil supplies decline, that manufacturing system won't make sense any more.

==============

While I’m thinking of it, here's another section with a link to a position paper that will interest folks at iTulip.... see especially the matrix chart on page 8 of the pdf.

I wrote:
Some observers believe oil production will plateau before it declines; others believe we'll see production declines in the near future. Optimists believe that we'll invent something, and it will all work out okay. For a short, clear summary of the different viewpoints, and the assumptions behind each viewpoint, see http://www.ldeo.columbia.edu/~odland..._PO_Debate.pdf

=====================
Here is another section (and a link to another pdf) that might specially interest iTulipers:

Many people assume that we'll just substitute renewable energy for oil, and generally go on doing things the way we do them now, with some changes (electric cars replacing cars that run on gas.) Right now I'm looking at a
full-page magazine ad from IBM, headlined "Rewriting the book on energy solutions." Also one from HSBC, "the world's local bank," headlined "0.3% of Saharan solar energy could power Europe."

This image of the future is unrealistic. Yes, we could/should/will rely on alternative energy and energy conservation to reduce our current use of fossil fuels. But fossil fuels offer a huge amount of energy in a small volume. They're easy to transport, easy to store. Alternative energy tends to be diffuse, not concentrated. Renewables are great, but they aren't a direct substitute for the storehouse of energy we've been burning up over the past century

Let's Win the Lottery Again!
Recently I came across a report from the Basic Energy Sciences Advisory Committee, 2008, that paints a much bleaker picture than those magazine ads. It's here: http://www.sc.doe.gov/bes/reports/files/NSSSEF_rpt.pdf

This report describes the energy challenge we face, and then says, "the magnitude of the challenge is so immense that existing energy approaches - even with improvements from advanced engineering and improved technology based on known concepts - will not be enough to secure our energy future. [We need] technologies with performance levels far beyond what is now possible... scientific breakthroughs.... a major national mobilization of basic energy research.... Entirely new ways of producing, storing and using energy are required. (pages 1-2.) " (Emphasis added.)

[Starving Steve]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

I am 63, and I remember concrete streets and highways when I was a young boy in Minnesota. They weren't common, but they were still around, here and there.

Negatives of concrete roads/streets: a.) costly to build and had to be built in poured concrete sections;
b.) high maintainance cost; c.) VERY HIGH FRICTION WHEN TRAVERSED BY MOTOR VEHICLES ; d.) deterioration, with holes and cracks along with rocks and sand and gravel appearing; e.) noisy when traversed because of rough surface; f.) markings and mogels difficult to see at night, if not impossible to see; g.) very unforgiving (dangerous) should you strike the curb at night; h.) pot-holes and ruts would fill with water which would freeze in winter or at night, and ice over--- dangerous.

Positives of concrete roads: a.) no oil used; b.) better visibility at night because the entire road/street reflects some light; c.) curbs and gutters easier to see at night because the entire road is brighter; d.) very labour intensive to build and maintain; e.) better traction in winter than on asphalt roads.

[dcarrigg]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

I am 63, and I remember concrete streets and highways when I was a young boy in Minnesota. They weren't common, but they were still around, here and there.

Negatives of concrete roads/streets: a.) costly to build;
b.) high maintainance cost; c.) VERY HIGH FRICTION WHEN TRAVERSED BY MOTOR VEHICLES ; d.) deterioration, with holes and cracks along with rocks and sand and gravel appearing; e.) noisy when traversed because of rough surface; f.) markings and mogels difficult to see at night, if not impossible to see; g.) very unforgiving (dangerous) should you strike the curb at night.

Positives of concrete roads: a.) no oil used; b.) better visibility at night because the entire road/street reflects some light;
c.) curbs and gutters easier to see at night because the entire road is brighter; d.) very labour intensive to build and maintain; e.) better traction in winter than on asphalt roads.

I think you've got this a bit mixed up.

Asphalt has better traction in winter/wet weather - hence more road noise. It also deteriorates faster.

Concrete gives better gas milage - by virtue of being a smooth surface. This is why it has less friction than asphalt. It deteriorates slower (lasts twice as long), but repair is more difficult.

You are right about the main point though, switching to concrete will make more and more sense as oil prices go up.

I mean, asphalt roads have to be replaced about every 12 years anyways, so replacing 94% of them is not such a difficult feat. Concrete tends to be cheaper over time even if the initial investment is higher. I don't foresee this being one of the bigger challenges of peak oil, although it is a concern.

In general for the U.S., I'd be more concerned about the sun belt. It's an entire area of the U.S. that has a very new housing stock. This means it's completely full of New England style colonial architecture and air conditioning. I mean, there's a reason New England houses have traditionally had low ceilings and small rooms - it's to retain heat. Southeastern architecture traditionally used more high ceilings and long open rooms with windows on multiple sides to create airflow. This makes sense in hot weather. The sunbelt builders of the last few decades went with the same old ranch/colonial style residences that perform poorly in hot weather. Add to this the cost of air conditioning, and the relative scarcity of fresh water (energy intensive to transport over longer and longer distances), and you've got yourself some highly populated, subsidized, cheap land-boom towns that made no sense to populate heavily before the oil boom, and that make less and less sense as the oil gets pricy.

[Starving Steve]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

One of the BIG NEGATIVES of cement roads is that they develop pot-holes (from rocks grinding into the cement over time), and the pot-holes would collect melt-water. This water freezes at night (or in the winter both day and night) and this causing ice patches which are dangerous to traffic. Since concrete roads have excellent traction due to their rocks, cement sand, and rough surface, the iced-over pot-holes and ruts can spin a vehical around, because one wheel slides on the ice while the other wheels have perfect traction..... Believe me, when I was a small boy, I saw many occurrences of vehicles spun around on concrete roads/streets in winter. On steep hills, segments of ice and adjacent traction (as in Duluth, Minnesota) made for a potent combination for travel.

But yes, concrete roads are the best roads over all, especially in warm climates. But concrete roads are expensive to build and maintain. Just as at your house in a warm climate, a concrete driveway or walkway beats an asphalt driveway or walkway, in may ways, not the least of which is better visibility at night.

And yes, a concrete road does not need petroleum to build and maintain. That is a big advantage of concrete. Sand, gravel, dirty water, a cement mixer, wooden molds to pour the mixed cement into, human labour and love is all that the road needs.

Now as to saving energy locked in petroleum, I strongly favour a LESS compact (less dense) city. Yes, such a city requires more travel, but the traffic is less congested. A vehicle traveling at 60 miles per hour burns much less gasoline per mile than a vehicle stopped and going again at slow speed ( 5 mph ) in heavy and congested traffic.

Believe me, I burned-up an entire full tank of gasoline at night in winter, whilst stuck in a snow-bank between 1AM and 7AM, just west of Flasher, North Dakota. The engine had to be going in order to generate heat inside the car, or we would have froze-to-death. ( The plough came by and pulled us out of the snow-bank at 7AM ).... We were damn lucky, but it demonstrated to me the fact that a stopped car burns an enormous amount of fuel.

One of the BIG, BIG, BIG advantages of a spread-out ( less dense city ) is that the price of urban land drops to farmland value. This makes housing AFFORDABLE, if not downright cheap. A giant lot to build a house upon is worth only the cost of its infrastructure ( burried pipes/septic ) and little more.

Yes, I was the heretic in city planning departments in Duluth, Winnipeg and Regina, several decades ago when I worked as a city planner.

[c1ue]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

I mean, asphalt roads have to be replaced about every 12 years anyways, so replacing 94% of them is not such a difficult feat. Concrete tends to be cheaper over time even if the initial investment is higher. I don't foresee this being one of the bigger challenges of peak oil, although it is a concern.

I'm not sure I agree.

Even if we assume there are no switching costs (skill, machinery, technology, supply, delivery, etc), the simple fact that concrete roads costs twice as much as asphalt seems to point toward huge cash flow issues.

Again, even assuming concrete roads have twice the lifespan and identical maintenance costs per year, just replacing most/all asphalt roads with concrete in the next 12 years means a doubling of road maintenance spending, or likely more than a doubling of spending for continuing to use asphalt.

Annual Federal highway spending is around $60 billion.

According to this:
http://www.bts.gov/publications/nati...ble_01_27.html

there are approximately 30K interstate miles, 94K major arterial miles, 134K other arterial miles, and 277K major collector miles. The federal highway system is roughly 50K of the above miles.

Thus the total annual spending we're looking at is something in the $100 billion (very unlikely) to $500 billion (equally unlikely), most likely in the $200 billion/year.

Doubling this means federal, state, and local governments have to dig out another $200 billion/year.

Doesn't seem like a minor detail to me.

[charliebrown]

Re: Peak Cheap Oil and the Law of Unforeseen Consequences

One must also consider the perpetual traffic jams caused by asphalt roads having to have maintenance performed more often. It's pay me now or pay me later.
I live in Chicago where we talk about two seasons, winter and road-construction.