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Question for the MotleyAnimal.

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September 13, 2011 – Comments (23)

On sept 8th you penned a blog titiled "Wake up Obama. We Got Your Job Plan Right Here!" which seemed to extoll the virtues of building a pipeline to move oil extracted from the Canadian Tar Sands, the Keystone Xl pipeline, down to the Gulf  of Mexico to be refined into gasoline to move my car in order to create a portion of 1.4million jobs.

And of course, I have thought about it and now I have some questions, but only a few for you. First the background behind my thoughts. I am sure you are familiar with the concept of Energy Returned On Energy Invested. EROEI for short. In oils early days the EROEI of oil was over 100:1, meaning that for every unit of energy invested you got over 100 units back. As oil becomed  harder to get, the EROEI goes down. Today the EROEI on conventional oil is down 10:1 so that it takes 10 units of energy in order to get 9 units of energy into my car. 10 - 1 = 9, or about 11 to get 10 units into my car, 11-1 = 10.

Tar sands oil has an EROEI of 1.5:1 which means it takes 1.5 units of energy to get .5 units into my car. 1.5 -1 =.5. To get the 10 units my car still needs, I need 30 units of energy. (.5 x 20) = 10 units so (1.5x 20) = 30 units minus (1 x 20) = 20 units and then of course, 30 units minus 20 units leaves the 10 units needed for my car each week.

So here's the questions.

If gasoline costs $40.00/10units today, when one unit is being lost to production, how much do you expect 10 units of gasoline to cost when twenty units are being lost to production?

97% of climate scientists tell us that current rates of atmospheric CO2 disposal is enough to warm our planet well beyond anything we would otherwise be experiencing in the coming centurys and causing extreme weather events to happen wih greater frequency and intensity. On Long Island, where I live, many property insurers are refusing to insure houses at lower elevations and those that will are raising prices dramatically. Inlight of the extrme weather events we have experienced so far this year, Texas fires, crop losses, Mississippi flooding, New England flooding, Tornadoes etc can you estimate for me the cost increase of a homeowners policy if we triple the rate at which we dispose of CO2 into the atmosphere?

From USA Today; http://www.usatoday.com/money/industries/insurance/2010-08-26-katrina26_CV_N.htm

From 2005 through 2007, the latest figures available, the average premium for homeowners insurance in the USA increased 7.6%, according to a survey by the National Association of Insurance Commissioners. But the average doesn't reflect what many homeowners have experienced. Some inland states saw much more modest increases, while homeowners in coastal areas experienced double-digit rate increases.

In Florida, for example, average premiums jumped 41% from 2005 through 2007, according to the NAIC survey. Average rates in Louisiana rose 22%. Rhode Island homeowners saw their rates go up by nearly 12%, while average premiums for New York homeowners rose 11%.

"After the insurance industry looked at the devastation caused by Katrina, it said the underwriting price (for homeowners insurance) should be higher than it is," says Bill Sinn, insurance industry director for Pitney Bowes Business Insight.

This all seems like it will pretty expensive to me. President Obama does not have the authority to make the Keystone XL Pipeline happen, but he does have the authority to stop it.  I think he shoud stop it.

Best wishes,

Steven

23 Comments – Post Your Own

#1) On September 13, 2011 at 3:59 PM, miteycasey (35.10) wrote:

97% of climate scientists tell us that current rates of atmospheric CO2 disposal is enough to warm our planet well beyond anything we would otherwise be experiencing in the coming centurys and causing extreme weather events to happen wih greater frequency and intensity.

 

What do scientist gain by saying that?

research money.

 

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#2) On September 13, 2011 at 4:16 PM, chk999 (99.98) wrote:

This all seems like it will pretty expensive to me. President Obama does not have the authority to make the Keystone XL Pipeline happen, but he does have the authority to stop it.  I think he shoud stop it.

He's killed every other productive project, so why should he skip this one? The projects he likes, like Solyndra get investigated by the FBI. For fraud.

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#3) On September 13, 2011 at 4:25 PM, devoish (99.07) wrote:

Thank you for the quick politically biased replies. Got any math?

Best wishes,

Steven

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#4) On September 13, 2011 at 4:31 PM, davejh23 (< 20) wrote:

"97% of climate scientists tell us that current rates of atmospheric CO2 disposal is enough to warm our planet well beyond anything we would otherwise be experiencing in the coming centurys and causing extreme weather events to happen wih greater frequency and intensity."

Where does this 97% figure come from?  In any case, CO2 caused global warming is a theory, meaning it hasn't been proven.  A large number of ice core studies show higher CO2 concentration in the last several decades, but over long periods of time show no positive correlation between CO2 levels and atmospheric temperatures.  Some scientists conclude that there is still a positive correlation, but apply a ~100 year lag between increased CO2 and actual temperature increases.  Others still conclude that there may be an inverse correlation...global cooling.  While ice core studies peg current CO2 concentrations at the high end of the range seen over cycles of the last 20K+years, other longer term geological studies show far higher global temperatures and CO2 concentrations in earlier periods.  The conflicting science and uncertain conclusion likely mean that CO2 cause global warming will forever remain a theory. 

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#5) On September 13, 2011 at 4:35 PM, catoismymotor (38.90) wrote:

All of the comments so far are not from motleyanimal.

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#6) On September 13, 2011 at 4:45 PM, chk999 (99.98) wrote:

Steven, most of the energy used to upgrade heavy oil is nat gas. The oil is more valuable than the nat gas, so a net win.

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#7) On September 13, 2011 at 4:57 PM, devoish (99.07) wrote:

Side note on Solyndra political posturing. But after this lets stay focused on the math.

What critics fail to mention is that the Solyndra deal is more than three years old, started under the Bush Administration, which tried to conditionally approve the loan right before Obama took office. Rather than “pushing funds out the door too quickly,” the Obama Administration restructured the original loan when it came into office to further protect the taxpayers’ investment.

Best wishes,

Steven

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#8) On September 13, 2011 at 5:11 PM, devoish (99.07) wrote:

chk999,

Still no math, but at least some information even if it is unsupported and does not make sense on the surface.

The obvious question is why bother with inneficient tar sands at all if I can use nat gas in my car. And I can. As you know I am not in favor of forcing people to pay for cleaning up nat gas contaminated water supplies either, but that is a seperate issue from using tar sands.

Presuming we chose to risk the water supply of 30 million Americans so some portion of 1.4 million could have jobs (from Motleys post) I would like to know how much gasoline from tar sands crude processed using nat gas would cost me, and also explain why that would be cheaper than just using nat gas vehicles. Using math.

Cato, you surprise me sometimes. Thank you.

Best wishes,

Steven

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#9) On September 13, 2011 at 5:32 PM, devoish (99.07) wrote:

davejh23,

That line of thought was more plausible ten years ago.

Miteycasey,

That line of thought never made too much sense. Climate scientists could get just as much research money if they said global cooling, plus they could get oil company support for pumping CO2 into the atmosphere to stop it from happening, rather than be personally attacked and threatened. However they are research scientists, and while getting paid for your work is nice, getting the truth is important too. It is not like they are spokesmen financially supported by the fossil fuel industry.

Best wishes,

Steven

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#10) On September 13, 2011 at 5:56 PM, devoish (99.07) wrote:

Davejh23,

That figure that 97% of climate scientists agree waste CO2 is causing climate change comes from the National Academy of Sciences of the United States of America and a dataset of the peer reviewed papers published by 1372 different climate scientists and the conclusions stated wihtin those research papers

Best wishes,

Steven

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#11) On September 13, 2011 at 6:31 PM, catoismymotor (38.90) wrote:

devoish,

You're welcome.

-Cato

 

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#12) On September 13, 2011 at 7:34 PM, chk999 (99.98) wrote:

Still no math, but at least some information even if it is unsupported and does not make sense on the surface. 

Here's a quote from Wikipedia: 

"Approximately 1.0 – 1.25 gigajoule of energy is needed to extract a barrel of bitumen and upgrade it to synthetic crude. As of 2006, most of this is produced by burning natural gas."

For someone this worried about tar sands you seem uneducated about production. 

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#13) On September 13, 2011 at 8:57 PM, devoish (99.07) wrote:

You are correct, I have no experience producing useful energy from Canadian tar sands. As you know I am concerned about climate change and when climate scientists get themselves arrested in front of the Whitehouse protesting the Keystone xl pipeline to make sure President Obama notices their concerns, I become concerned to. I am also concerned that we are wasting time and money producing ridiculously expensive fossil fuels rather than tightening our belts in the short term and raising taxes on CO2 to promote investment into renewable sources that will sustain us indefinitely without the longterm andvery expensive climate adaptation impact.

So I am definitely against this keystone pipeline and the violations of private property rights it requires, unless it can be shown to be inexpensive enough to help fund a transisition to socially benefical, truly renewable energy. Otherwise it delays the positive change to renewable energy and accelerates the negative change to our climate, and should be stopped cold in its tracks.

According to your source there is no additional nat gas in Canada to use for more tar sands production so the loss of nat gas diverted from the USA will cost us somewhere. According to the oildrum the EROEI of Candian nat gas has dropped from 40:1 down to 3:1 in 15 years and is still falling pecipitously as the easy gas is gone. You have also only gotten us to the synthetic crude stage of tar sands production using a 3:1 energy source and we still need to deliver that crude to the Gulf and refine it there. Still no cost at the pumps estimate though, and EROEI to make synthetic crude is not the same as EROEI to put energy into my car.

Any help estimating the price we'll pay of putting that energy to use?

Thanks for teaching me a little more.

Best wishes,

Steven

 

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#14) On September 13, 2011 at 11:17 PM, FleaBagger (29.37) wrote:

I stopped reading and rec'd when I got to this part: 

If gasoline costs $40.00/10units today, when one unit is being lost to production, how much do you expect 10 units of gasoline to cost when twenty units are being lost to production?

Now, as long as I don't finish the article, we have a devoish article that is insightful, significant, and one that I agree with. I've decided that if I reach that point with devoish, I'm going to rec the article before reading the rest. Hold onto them happy memories.

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#15) On September 14, 2011 at 6:45 AM, devoish (99.07) wrote:

Flea,

First off, thank you for the rec. Second, I admire that you can so readily acknowledge that you desire only confirmation. Third, I am happy that you can find enough value in my posts to rec them and reply. Rather than simply agreeing with a question, perhaps you would like to take a stab at estimating an answer to it?

Best wishes,

Steven

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#16) On September 14, 2011 at 1:32 PM, ChrisGraley (30.25) wrote:

I can help with the math....

If gasoline costs $40.00/10units today, when one unit is being lost to production, how much do you expect 10 units of gasoline to cost when twenty units are being lost to production?

$40 assuming the supply and demand for oil stays constant. If the oil sands cannot be processed for that price, no business will develop them until they can make a profit.

If on the other hand you you prevent the pipeline and therefore restrict the supply of oil, you will see an increase in price.

97% of climate scientists tell us that current rates of atmospheric CO2 disposal is enough to warm our planet well beyond anything we would otherwise be experiencing in the coming centurys and causing extreme weather events to happen wih greater frequency and intensity. On Long Island, where I live, many property insurers are refusing to insure houses at lower elevations and those that will are raising prices dramatically. Inlight of the extrme weather events we have experienced so far this year, Texas fires, crop losses, Mississippi flooding, New England flooding, Tornadoes etc can you estimate for me the cost increase of a homeowners policy if we triple the rate at which we dispose of CO2 into the atmosphere?

Zero, until causality is proven it can be caused by CO2 increases it can not be applied to underwriting valuation charts. The 97% number pulled out of your posterior gave me a chuckle though.

From 2005 through 2007, the latest figures available, the average premium for homeowners insurance in the USA increased 7.6%, according to a survey by the National Association of Insurance Commissioners. But the average doesn't reflect what many homeowners have experienced. Some inland states saw much more modest increases, while homeowners in coastal areas experienced double-digit rate increases.

Since the price of insurance should lag home prices, what did home prices do from 2004 to 2006 and what was the inflation rate?

According to your source there is no additional nat gas in Canada to use for more tar sands production so the loss of nat gas diverted from the USA will cost us somewhere. According to the oildrum the EROEI of Candian nat gas has dropped from 40:1 down to 3:1 in 15 years and is still falling pecipitously as the easy gas is gone. You have also only gotten us to the synthetic crude stage of tar sands production using a 3:1 energy source and we still need to deliver that crude to the Gulf and refine it there. Still no cost at the pumps estimate though, and EROEI to make synthetic crude is not the same as EROEI to put energy into my car.

Any help estimating the price we'll pay of putting that energy to use?

$40 see above. The cost of gasoline is based on supply and demand and production costs are bore by the Producer. Nat Gas is in adbundance in the US and prices are at lows.

No rec from me for making political statements and then brow beating others that did the same in replies. Also for not be able to do the math yourself.

 

 

 

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#17) On September 14, 2011 at 3:56 PM, motleyanimal (93.53) wrote:

Sorry I didn't see this sooner.

Let me start by saying that the topic of my post is job creation.

There are many inefficient sources of energy, with Canadian tar sands probably at the top of the list. I don't have to tell you how inefficient ethanol is to produce. And wind generated power only produces 23% of capacity, requiring natural gas fired generators as backup.  Home based solar units take 20 years of use to make up their cost, if they last that long.

I won't debate the environmental impact of developing tar sands since I think it is rather obvious that it can be harmful. But I do not have a problem with oil companies taking the risk of building pipelines that will probably operate on very thin margins. For that matter, we have had great success with Marcellus, but the resulting supply of NG will keep prices at such low levels that many producers are barely breaking even.

Not mentioned in this API release is HR 1380, the NAT GAS Act which if it ever makes it out of committee, would change everything. Oil consumption could drop by 25% or better as our commercial fleet is converted to NG. Something like that would likely kill the need for the Keystone pipeline too.

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#18) On September 14, 2011 at 10:44 PM, devoish (99.07) wrote:

Davejh23,

That figure that 97% of climate scientists agree waste CO2 is causing climate change comes from the National Academy of Sciences of the United States of America and a dataset of the peer reviewed papers published by 1372 different climate scientists and the conclusions stated wihtin those research papers

Best wishes,

Steven

Zero, until causality is proven it can be caused by CO2 increases it can not be applied to underwriting valuation charts. The 97% number pulled out of your posterior gave me a chuckle though. - ChrisGraley

Chris,

Your bull is the best thing about you. Thank you for replying.

Motley

I'll have to go with three times higher than current prices, not adjusting for the increased demand on a limited supply that production will require, just the present day costs of the units demanded for production added to present day price/unit.

Best wishes

Steven

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#19) On September 14, 2011 at 11:39 PM, motleyanimal (93.53) wrote:

Hi Steven,

I personally would not invest in Keystone or any of the tar sands producers. When Bakken is fully developed and the Green River Formation is opened to drilling, nobody is going to want that sludge from Canada. That said, oil consumption is in a secular decline in the US. Unless China and/or India ramp up consumption, I think we see lower prices in the future.

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#20) On September 16, 2011 at 6:48 AM, devoish (99.07) wrote:

The green river and the potable water it provides to the Colorado and probably 1/4 of the United States population is a pretty big resource to risk when we have renewable energy sources available instead.

Risking an invaluable water source that is already succumbing to overconsumption is an amazing choice to make.

Best wishes,

Steven

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#21) On September 16, 2011 at 1:34 PM, traderbach (< 20) wrote:

Devoish

I don't have any math for you either except the common sense arithmetic evinced by the mortality rate the burning of hydrocarbons is producing.  Thanks a lot for writing this intelligent question & putting up with the predictable mob onslaught of the flat-worlders. 

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#22) On September 16, 2011 at 6:05 PM, devoish (99.07) wrote:

traderbach,

Thanks for that reply.

Motley,

When you are asking the President of the United States to take away the land of private citizens in the name of a public good, a fact that Motley is probably unaware of, that public good aught to be pretty awesome. And this is not even close. This is so destructive to the public good that Climate Scientists went to Washington and got themselves arrested protesting against the Keystone xl pipeline because of the climate destruction it would cause.

Best wishes,

Steven

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#23) On September 16, 2011 at 10:42 PM, motleyanimal (93.53) wrote:

Here is a good link that explains the situation much better than I can.

http://www.cbsnews.com/stories/2011/09/14/opinion/main20105952.shtml

So far the State Department has said the proposed Keystone XL pipeline from Canada's oil sands to the Gulf Coast will have minimal environmental impact. So who should I believe?

That said, I have no problem with imposing safety and emergency response standards at the highest levels neccesary and it appears the TransCanada is addressing these issues.


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