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GAO Peak Oil Report Highlights Challenges in Transportation Sector

30 March 2007

The US Government Accountability Office (GAO) has published a report examining peak oil, exploring (1) when oil production could peak, (2) federal agency efforts that could reduce uncertainty about the timing of peak oil production or mitigate the consequences, and (3) the potential for transportation technologies to mitigate the consequences of a peak and decline in oil production.

In terms of timing, the report could only conclude, based on its survey of research, interviews and expert panels, that the point of peak production will occur sometime between now and 2040. The GAO report also stressed the potential geopolitical and economic—rather than geological—limitations on future oil production as well as possible governors on demand.

Other important sources of uncertainty about future oil production are potentially unfavorable political and investment conditions in countries where oil is located. For example, more than 60 percent of world oil reserves, on the basis of Oil and Gas Journal estimates, are in countries where relatively unstable political conditions could constrain oil exploration and production.

Finally, future world demand for oil also is uncertain because it depends on economic growth and government policies throughout the world. For example, continued rapid economic growth in China and India could significantly increase world demand for oil, while environmental concerns, including oil’s contribution to global warming, may spur conservation or adoption of alternative fuels that would reduce future demand for oil.

The report’s authors also found that the US federal government has no formal strategy for coordinating and prioritizing federal efforts to deal with peak oil issues. Given that the US, as the largest consumer of oil and the nation most heavily dependent on oil for transportation, “may be particularly vulnerable” to peak oil, the report recommends that the Secretary of Energy lead an effort in coordination with other relevant federal agencies to establish a peak oil strategy.

Such a strategy should include efforts to reduce uncertainty about the timing of a peak in oil production and provide timely advice to Congress about cost-effective measures to mitigate the potential consequences of a peak. In commenting on a draft of the report, the Departments of Energy and the Interior generally agreed with the report and recommendations.

In reviewing the potential for reduction in oil demand in the transportation sector over the next several decades, the GAO focused on:

  • Ethanol (corn and cellulosic) and biodiesel;

  • Biomass- and coal-to-liquids;

  • Natural gas vehicles;

  • Advanced combustion engine technologies;

  • Hybrids and Plug-in Hybrids;

  • Advanced lightweight materials; and

  • Hydrogen fuel-cell vehicles.

The report concludes that the development and deployment of these technologies will take time and effort:

  • The technologies examined currently supply the equivalent of only about 1% of US annual consumption of petroleum products;

  • DOE estimates that even under optimistic scenarios, these technologies could displace only the equivalent of about 4% of projected annual consumption by around 2015.

  • DOE projects that these technologies could displace up to the equivalent of 34% of projected US annual consumption of petroleum products in the 2025 through 2030 time frame, assuming the challenges the technologies face are overcome.

Under these circumstances, an imminent peak and sharp decline in oil production could have severe consequences, including a worldwide recession. If the peak comes later, however, these technologies have a greater potential to mitigate the consequences.  The level of effort dedicated to overcoming challenges to alternative technologies will depend in part on the price of oil; without sustained high oil prices, efforts to develop and adopt alternatives may fall by the wayside.

Ultimately, however, the consequences of a peak and permanent decline in oil production could be even more prolonged and severe than those of past oil supply shocks. Because the decline would be neither temporary nor reversible, the effects would continue until alternative transportation technologies to displace oil became available in sufficient quantities at comparable costs.

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March 30, 2007 in Biodiesel, Biomass-to-Liquids (BTL), Cellulosic ethanol, Coal-to-Liquids (CTL), Fuel Efficiency, Hybrids, Hydrogen, Oil | Permalink | Comments (16) | TrackBack (0)

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Comments

Yes, peak oil is going to suck bigtime, and likely soon.

But algae is starting to get noticed as a petroleum replacement.

I think a corn-ethanol lobbyist got ahold of the report before it went public. They say it wrong, that there are high costs associated with making corn-ethanol a primary fuel, without pointing out that there isn't really enough corn to do that on a national scale. We'd need to expand corn growing by a factor of 4 or something, and put ALL that corn into ethanol production (none to eat).

We would probably use all the corn just to get to E20. Corn is not the way to go, but corn stalks may be. Congress has started to pay attention to renewable fuels and not just the lobby and pork kind. The speech I heard on CSPAN said we went past peak in the U.S. in the 70s but did not admit it until the 80s, when Reagan sent ships into the gulf to protect shipments. With the latest Iran situation, there is similar talk of Iran blocking off the Straights of Hormuz and they have the capability to do it.

My impression is that this report leaned heavily on the earlier Hirsh Report. While I thought it did a good job of dealing with the Geology and Economics of Peak Oil, I thought it came up somewhat short in the area of mitigation. It seams to me that they came up very short in two main areas of oil replacement. 1) Bio-Diesel from algae and my favourite 2) BEVs (which are easier to implement for commuter requirements than PHEVs). I noticed that their timeline for PHEVs was 2014 which is suspiciously late and suspiciously close to the 2015 date listed for fuel cell vehicles. This report is therefore informative and accurate until it runs into the corn and hydrogen lobbies.

Two comments.

Firstly, why would anyone pay attention to the opinions of accountants on the quantity or discoverability of petroleum in geological terms?

BTW...The GAO is not the Government Accountability Office. Its the Government Accounting Office. Government accounting is to accounting, as military intelligence is to brainpower.

Secondly, Since when did government studies of the future ever lead to anything substantial? If they were worth anything the government would not constantly by taken by surprise.

Stan

2 points:

1. You might have a point about accounting if you weren't completely wrong about the GAO.

2. what specifically do you challenge about the report's conclusions?

I question the report just as I would question a medical exam or prognosis on a medical condition when conducted by someone not trained as a physician, but say an accountant for instance.

The medical prognosis might even be superb, and proven correct; but I think I'd rather take the opinion of the MD, over the accountant just the same...

But Stan do you have to be a geologist to do what the GAO did? In their words: "GAO reviewed studies, convened an expert panel, and consulted agency officials."

This issue is far too complex for any one discipline to have a clear picture. It requires Geologists, Economists, Engineers, Risk Analysis Specialists, Political Scientists and Historians all working together to have anything like a full view. At that point you need someone with half a brain to pull it all together.
The GMO has pulled together the information they gathered and then made recommendations based on their experience and qualifications. As the GMO they would naturally tend to recommend steps to make any government response more effective by examining how government departments can better cooperate and make this issue more visible (by concentrating the analysis and planning around this issue in a single agency) Even Accountants have their uses ;)
The main weakness of this report is the sadly limited scope of mitigation strategies explored.

According to The Association for the Study of Peak Oil and Gas, http://www.peakoil.net/, the peak of regular oil has past already, 2005. They are an organization of Geologists.

Probably have...natural gas peaked in the U.S. years ago and it is just now being realized. There is a huge multi billion dollar program going on in the Gulf of Mexico to drill 15 natural gas wells under the sea floor, bring them to a central open sea platform and pipe it all 135 miles to Texas. I would think that they have run the numbers and this will be profitable, but does it make sense to put all that time, effort and money into this when renewables can do the job for less and in a much cleaner, better and more sustainable way? Solar thermal can heat and cool homes and buildings reducing our NG consumption greatly, but they would rather spend billions on the same old way but on a much larger scale, than produce a more rational solution. The only reason I can see for this is that huge corporations can make billions on the NG project and 1000s of small companies would benefit from the solar thermal.

Mark: the problem with putting an date on peak is that it cheapens the problem when yet another date comes and goes. The nature of peak is that it is not fully recognizable until a number of years after it is past (end of T1 beginning of T2).

"The US Government Accountability Office" oh, if we just had a Government Accountability Office,
maybe we would not have some of the problems we have.
That way we would have some Accountability for decisions made, actions taken, mistakes made and remedies for those mistakes. Improvement might actually become a way of life.

If Stan isn't investing in oil then he's not as smart as this accountant.

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