[BretLudwig]

New Technology, Old Technology, and the Future
By Lynn Olson

"Once again I will impose on the hospitality of John Atwood and write an
essay that is entirely off-topic - so here goes, folks:

Ive been thinking about the implications of Peak Oil and climate
change. Im not one of the chicken-little types that thinks the
electrical grid will collapse in ten years time, or agriculture will
run short of (fossil-fuel based) fertilizer. Im enough of an economist
to know the market, even though it is heavily manipulated by oil companies
and OPEC, will still decide how the transition away from fossil fuels will
happen. We wont just suddenly run out one year; instead, the price of
oil will go up - and up - and up, broken by the inevitable market
disruptions and political turmoil. So the long-term (over decades) trend
will be steadily upward, descending only when fossil fuels are almost
entirely phased out and used only for chemical feedstocks (instead of
fuel).

The survivalists think that Western Civ will collapse of its own weight
and complexity, and the USA, at least, will descend into some kind of Mad
Max end-times movie of guns, stored-food, and local-militias. I dont.
The market will speak instead. People forget that until very recently, the
price of gas was only a small part of the total lifecycle cost of a car or
truck.

Think about it. If a $20,000 car is driven for 120,000 miles over a
ten-year lifetime, and consumes 20 mpg, it uses up 6,000 gallons of
gasoline. At US$1 a gallon, the price of gas from Reagan through Clinton,
thats only $6,000. Big deal. No wonder Detroit sold a lot of upscale
body-on-frame trucks disguised as SUVs. Why not? Big and luxurious, the
way Americans like it. If the 5,000 lb behemoth consumes a miserable 13
mpg, thats still only about $9,000 over the life of the vehicle. Its
really not all that much if you want to haul your family, and a boat or
trailer, out to the boondocks in air-conditioned CD/DVD player comfort.

The 13 mpg SUV looks a little different at $4 a gallon. Now thats
$37,000. Uh-oh; thats the price of the vehicle. At the existing
European price of $8 a gallon, thats $74,000. Now were talking real
money. If worldwide Peak Oil becomes a reality over the next ten years
(and independent consensus opinion in the oil industry is that it will),
then the USA will be seeing $10 a gallon - before 2018. Now that SUV will
be eating $90,000 over its lifetime. Most SUVs will see the junkyard
before the ten years is out - the operating costs will be just too high
for many people, especially for an aging, out-of-style vehicle. Were
not talking about a collectible musclecar here, like a Shelby Mustang, but
one of millions of Ford and GM family-haulers with a trailer hitch on
back.


Notice how little effect a gas-guzzler tax, or all the advertising and
environmental-awareness political campaigns have. The real question is
simple: is the price of fuel a significant part of the cost of the
vehicle? If it is, people make different decisions, and entire fleets get
replaced fairly quickly. It also puts all the scare talk about the Federal
fuel tax, or a potential €œcarbon tax€�, in perspective. Nobody, even the
most extreme environmentalists, is talking about a €œcarbon tax€� so high
it would triple the cost of gas. Yet thats would it would take to
quickly turn over and replace the fleet with something different. Until
then, the fleet will stay on the road, gradually getting less attractive
to own (and certainly to sell) as fuel prices continue to increase.

What would a world of $1, $3, $10, and $30 a gallon gasoline/methanol look
like? For most of the 20th Century in the USA, the real (corrected for
inflation) price of gasoline was around $1 a gallon (with a brief spike in
the Seventies). Not free, but pretty close to it. Comparable to the price
of bottled water. There was basically no incentive to operate an
economical vehicle or use public transportation. At the beginning of the
20th Century, gasoline was of poor quality (low octane, prone to
detonation, many contaminants) and very expensive in real-dollar terms.
Prices didnt drop, and quality go up, until motoring became a mass
market in the late Twenties (which was when tetraethyl lead became a
common additive, and engines raised compression ratios). The USA enjoyed a
period of €œhappy motoring€� for about three-quarter of a century, with
gas prices level or decreasing, the highway system expanding, cars getting
better year by year, suburbs growing, and public transportation declining.

The world of 1908 was different. The roads outside of cities were
primitive, dusty tracks, stifling in the summer, and muddy disasters
during the rest of the year. If you wanted to travel any distance, you
took the train, either 1st, 2nd, or 3rd-class, whatever you could afford.
And trains went everywhere, even deep into the interior of the least
developed colonies of the Imperial Powers. Steamships powered by coal that
powered steam turbines crossed the oceans in speed and comfort. Telegraph
systems followed the railways, and spanned the continents and oceans. By
modern standards fuel was expensive, and was either dusty, dirty coal, or
expensive and clean oil. For most people in the industrial world, heat was
a pile of coal, cooling came from the ice-man and his horse-drawn cart, and
light came from gaslight or the new-fangled Edison bulbs.

In some ways the world before World War I was a more civilized one than
the one we know now; no income taxes in most countries, no passports
(really!), trade between nations at levels not seen until the end of the
20th Century, no war-on-drugs laws, a laissez-faire libertarian paradise
(except in sexual affairs, where laws were draconian and enforced with a
definite class slant).

In this world of comparatively expensive energy, a high level of
civilization was possible - indeed, one that was growing very rapidly all
over the world. Was it more inequitable than the present? In the advanced
countries, income levels were about as unequal as in the USA now, and
class tensions undoubtedly played a role in stoking World War I. But the
real engine behind the Great War was the competition between the Imperial
Powers - the ones that had, and the ones that wanted in. And the net
effect of both World Wars was to eventually destroy the colonial system
completely, with the exception of the USA and USSR. And we know whos
left standing now - but for how long?

What about the world of 1958? This is one I remember, growing up in the
Far East as the son of a diplomat. Crossing the Pacific in an ocean liner
was certainly more pleasant than a cramped, noisy, and interminable
trans-Pacific flight. But real-dollar prices were much higher than now; I
remember air and ocean fares being about comparable around $1000 each -
and that was in 1958 dollars, with gold at $35 an ounce! So tourism was
for the well-to-do with time on their hands (grey-haired retirees in
hawaiian shirts and shorts), business executives, and diplomats. Men wore
suits, ties, and well-polished shoes when the first Boeing 707 took to the
air. Airfreight existed, but like international phone calls, was very
expensive.

Certainly the idea of airfreighting flowers from Chile to the USA just to
take advantage of cheaper labor would have seemed the height of absurdity
- from any political or economic perspective back then. In 1958, we all
expected automation would make working weeks gradually shorter, opening up
a new age of leisure, and fossil fuels would be phased out by fission and
fusion power. We also thought the cure for cancer was just around the
corner - polio had been wiped out all over the world only a few years
earlier, and DDT was making a real dent in tropical diseases.

The advanced nations had top income taxes set 90% (with the exception of
Switzerland, of course), and income structures were much flatter than at
present. It was entirely possible, and quite common, for blue-collar man
working in a garage, or a low-ranking white-collar businessman, to own a
pleasant car and a home, and have a wife at home to take care of the kids.
This was no nostalgic illusion; the great triumph of the Progressive
movement was a flattening of class structure in a way never before seen in
American or European history. So looking back from 2008, there were many
aspects of America, Canada, and Europe that were actually better than the
present - I dont think anyone from that era would have expected the
growth of the hyper-rich, the outsourcing of the American industrial base,
and the gradual destruction of the progressive legacy on the altar of
Milton Friedman economics. That Europe avoided some of the American
extremes is partly a reflection of a different media structure and a very
different historical experience.

The fuel-substitution movement started in earnest during the late
Seventies, but was intentionally derailed by the Saudi policy of suddenly
dropping the price of oil. By the Eighties, the Saudis had Harvard
MBA-trained economists that warned them that continued high prices would
make the West shift over to other fuels - leaving the Saudi with
depreciated oil assets. By setting OPEC prices at a level just slightly
under alternative fuels, the oil-producing cartel was able to bankrupt the
energy-independence movement at the same time the Reagan administration
withdrew the Carter-era Federal subsidies. (Europe, with less reliance on
market mechanisms than the USA, continued with a wide range of government
incentives to improve fuel efficiency, to the point where the per-capita
fuel use in Europe is now half what it is in the USA.)

The Saudis could accomplish this €œbeggar-thy-neighbor€� policy by
pumping oil faster than anyone else, since they had the largest single oil
field in the world - Ghawar. However, the Eighties OPEC oil-price crash was
a one-time event; this time, the Saudis are now running at full capacity,
Ghawar has been operating for well over a half-century, and is now
requiring a substantial amount of salt-water injection to maintain
pressure at the wellheads.

There is not going to be a repeat of the Eighties for the simple reason
that no country in the world has the physical ability to pump oil that
fast, and more importantly, total world consumption is now at a far higher
level than twenty years ago. The entire system has been running at capacity
for nearly a decade - there is no spare capacity left. That is why
relatively small disruptions have such large effect on the futures market
- markets are reflecting the lack of spare capacity, and pricing the
commodity accordingly.

What was only just starting in the late Seventies is going to have to be
re-started in earnest this time around. We now have a lot less time, and
have wasted eight years in an expensive bid to control the resources of
the Middle East by military force. The success of the Middle East Full
Spectrum Dominance project (summed up in the Project for a New American
Century) is now seriously in doubt, and the future of the Middle East is
an open question. No crystal ball will tell us who will control the oil of
the Middle East in five years time, much less fifty years. All we know
is that oil is going to be very expensive.

The oil companies have been looking for fifty years with the best
technology at their disposal, and no replacements for the immense Ghawar
field have been found anywhere in the world - not in the artic, not in the
antartic, and not in the deep oceans. When the Mideast (Saudi Arabia,
United Arab Emirates, Iraq, and Iran) starts to deplete, thats going to
be it. The reserves everywhere else are significantly smaller, the world is
consuming oil at a thousand barrels a second, and the rate of consumption
is still increasing. The curves of consumption and maximum rates of
extraction are going to intersect - either now, or ten years from now.

So what does 2058 look like? Whether we like it or not, the transition
away from fossil fuels will be well advanced, and the countries that do
the best job will be the leaders of the late 21st Century. The countries
that resist will experience the fate of all declining empires - less
influence, isolation, cultural decadence, and looking for someone, anyone,
to blame, anyone but their own society and the choices they made
collectively. Will they strike out in anger and rage? Will the USA be one
of them? The choice is up to us.

Whats interesting is that technologies of the past that were discarded
a long time ago are starting to look good again. I remember riding the
trains in Japan - I took a train every day to and from Canadian Academy,
just outside of Kobe. Id look in at the operators controls, and
could see the Ammeter, with a scale that read both Plus and Minus Amps,
and scaled in hundreds of amps. As the train accelerated out of the
station up to the running speed of 100~120 kph (pretty fast for a local
train), it would consume amps, and as it went downhill or coasted down to
a stop, it would return amps back to the system. Not only that, but the
whole electric train was run off of hydroelectric power - Id seen the
dam on a construction tour of Kansai power, it was about the size of
Hoover dam, the most stupendous construction Id ever seen, a sign of
the might and power of technology.

All of this to power fast, quiet, smooth electric trains, and the rest of
modern society that Japan had back in 1958 - radio, television, cities
lighting up at night, pachinko parlors, a whole civilization born out of
the Meiji-era modernization of the late Nineteenth Century. Even as a
9-year-old, I was impressed by the sheer scale of achievement - all the
way from late-medieval society in less than a century, then climbing back
from the bombings of World War II in less than a decade. A phenomenal
achievement for any society.

But back to that train. My made-in-Tokyo 2008 Prius does the same thing
today, every time I drive it to the grocery store. It would be nice to
have that same big round Ammeter showing all of those wonderful amperes
recirculating back and forth as the car accelerates and then recaptures
that same energy as it slows down or goes downhill - a geekish thrill I
know, but its great to know whats going on as the machine does all
of its wonderful workings. Why hide it?

Steam-turbine-electric steamships and diesel-electric locomotives go back
to the 1908 era, and have been the standard for economy, power, and
long-term reliability right up to the present. In cars, we call this
series-hybrid, where the conventional power source is optimized for
long-term fuel efficiency (and is actually a small electric power plant),
and a generator/motor combination acts as the transmission. In a ship,
this has the merit of multiple motors to drive multiple props, simplified
maneuvering with differential prop control, and the latest variant,
external prop motors that can be rotated on their axis, making tugboats
unnecessary. In a diesel train, the generator/motor has an infinite number
of effective gear ratios, and has the highest torque at rest, just when the
train needs it the most. No gears to turn, no clutch to waste power and
burn out, and General Electric figured it all out a long time ago.

Its high time that these technologies made it to a car you and I can
buy. In a year or two, there should be what are called €œplug-in€�
variants, where the battery pack is several times larger, and can be
charged up at night. This improves fuel economy from the 45~50 mpg that
Prius drivers already get to a more interesting 75~100 mpg. Now were
talking. And the plug-in concept can be extended much further - there are
serious proposals to make the plug-in inverter go both ways, so fleets of
plug-in hybrids could actually back up the entire electrical grid!

This isnt as far-fetched as it sounds - several people have already
modified their Prius to act as a UPS for their entire house. The car
has plenty of power to do this - the 3-phase/500VAC 50 hp motor/generator
can accept more than 30 kilowatts, several times what a house consumes,
and the Prius automatically starts and stops the 75 hp gas engine to keep
the battery in the correct charge range. And a Prius is a lot
smoother-starting, much quieter, and has far lower toxic-gas emissions
than any emergency-power system you can buy. Plus you can drive it
whenever you feel like it - try that with your Honda back-up generator.

The Prius is just one example of industrial technology thats been
available for decades being re-designed for a consumer purpose (the Prius
is a series/parallel hybrid using planetary gearing for the motor, instead
of straight series power). This sort of lateral thinking is what well be
seeing more of in the future. Whats been holding back the transition to
go beyond fossil fuels is a lack of imagination, courage, and appropriate
long-term capital allocations in the corporations that service the
industrial economies.

Not surprisingly, companies invested in old-tech are running active
Internet campaigns of disinformation to discourage people from looking
elsewhere. But I can tell you, when you drive down the street in utter
silence, you dont go back. Noise and vibration arent cool anymore.

(Stomping out some fairy tales: the Prius uses conventional NiMH
batteries, not NiCads. Last time I checked, nickel wasnt especially
toxic or awful, and Toyota will sell you a brand-new battery pack for
$3000 once the 150,000 mile Hybrid Synergy Drive warranty runs out. Or you
could just get a set from a junkyard for $1000 if you want to play around
with making your own plug-in hybrid. Owners are reporting battery life of
at least 200,000 miles - by the way, replaced a Ford automatic
transmission lately? Not cheap, was it?)

The Prius is just the first of a whole fleet of vehicles. An obvious next
step would be a plug-in series-electric with independently
computer-controlled electric motors for each wheel, and a small, quiet
turbodiesel running off a wide range of fuels, not just gasoline. Another
example of existing industrial technology, made available to the consumer.
Electric trains are going to start looking good again - and whats wrong
with that? Theyre a superb way to travel - fast, quiet, luxurious, and
put modern air travel to shame. When can we start? Where do I sign up?

Yes, I know some people think the lights will go out, well be riding in
oxcarts again, and well be living in medieval villages in agrarian
squalor. Maybe in some parts of the world, in an empire that is dying, and
refusing to deal with reality. If people want to live in a theocratic
medieval fantasy - they are more than welcome to it. Been there, done
that.

But not me, baby. Ill be in that solar/electric Swiss-made Zeppelin,
flying to see the launch of the first fusion-powered spaceship. Nikola
Tesla was right - the future is electric!

References:

A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges
Facing an Energy Dependent World
by Peter Tertzakian
http://www.amazon.com/Thousand-Barre...dp/0071492607/

American Theocracy: The Peril and Politics of Radical Religion, Oil, and
Borrowed Money in the 21st Century
by Kevin Phillips
http://www.amazon.com/American-Theoc...dp/B00119O0M8/

Europes Last Summer: Who Started the Great War in 1914?
by David Fromkin
http://www.amazon.com/Europes-Last-S...dp/037572575X/

A Solar Grand Plan: By 2050, Solar Power Could End U.S. Dependence on
Foreign Oil and Slash Greenhouse Gas Emissions
by Ken Zweibel, James Mason and Vasilis Fthenakis
http://www.sciam.com/article.cfm?id=a-solar-grand-plan
Posted: May 13, 2008 at 6:49 pm in History, Uncategorized "


http://www.clarisonus.com/blog/?p=241#more-241

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