The hydrogen and ethanol powered car

[break]
Riots won’t bring oil prices down. Andris Piebalgs blog entry from 6th June. My emphasis added.

Last Tuesday I was a witness of a very sad episode. Belgian riot police employed force against a group of French and Italian fishermen marching to the European quarter to protest violently against high price of fuel. A car crash occurred as a consequence of the riots. The frustration of the demonstration is easy to understand, but certainly demonstrations and street fights are not the answer to this problem. Oil prices are high and will go higher. No demonstration can change that.

In the past, periods of relatively expensive crude, were followed by periods of cheap oil due to temporary factors like the first Gulf war. Currently, as well, there are temporary factors that are influencing oil prices, like the boom in commodities markets, geopolitical situation in several key producing areas, the weakening of the dollar or the turmoil in global financial markets.

However, the real drivers of oil price escalade have a structural nature. You all know the offer and demand law. If offer decreases, price increases. If there is a growth on demand, there is also a growth on price. If, at the same time offer decreases and demand increases then, price skyrockets. This is precisely what is happening in oil markets.

In year 2000 China had 4 million cars. In 2005 - already 19 million cars. It is expected that in 2010 the Chinese car fleet will be 55 million and 130 million in 2020. India is following a similar trend, and the economies of the United States and Europe continue to devour oil in large quantities. More and more people compete for an increasingly scarce commodity. We all know that oil will run out some day. The exact date is certainly under discussion, but there is a fact that nobody can deny, getting oil out of the earth is now much more difficult and expensive that it used to be.

The easy sources of oil are already in use. Oil companies are currently exploring in deep seas or in frozen and inaccessible regions. Geopolitical uncertainties reign in oil producing areas, while there is a growing tendency among producing countries to nationalise their resources, or make foreign investments more difficult. There is a growing shortage of highly skilled working force and exploration and production of oil is becoming a high tech activity, extremely expensive.

We all know the consequences. The barrel is currently around 130$, 300% more expensive than only 3 years ago. Experts are talking about prices of 200$ per barrel for next year only. At this levels, even non-conventional oil sources, such as heavy crude or tar sands become attractive, despite its awful CO2 foot print and high energy consumption.

So what is the solution? Well, we have to move away from oil. This is what the European Energy Policy is all about.We need to reduce demand with more efficient transport, industry and housing. We need to promote alternative fuels, like biofuels, electricity or hydrogen; we need to change to cleaner and more efficient transport modes like rail, short sea shipping, or public transport. And in the meantime, we need to continue our dialog with oil producers to encourage them to produce more and to supply the markets better. On 24th of June, I will meet ministers of the OPEC countries to discuss with them on this issue.

The era of cheap and easily available oil is over. We need to move away from black gold and put our efforts in a low carbon economy. The sooner we do that, the better.

My reply

Dear Andris,

This entry is the most appalling muddled mess - which is a direct reflection of EU energy policy. There are shafts of sunlight mixed in with utter rubbish.

Each time I have left an entry here I have told you that we are in the early stages of a full blown energy crisis. It is a great pity that you have waited until oil hit $130 per barrel and for French fisherman to riot before realising that this is indeed the case. Of course if you and your team were up to the job, you would be able to study the oil supply and demand data published by the IEA, the EIA and BP and conclude that an energy crisis is on the way in advance and put in place effective strategies to mitigate for this. But no, your approach is reactive, well behind the curve, wrongly focussed and without a substantial re-writing of the EU Energy policy, it is destined to fail. The riots in Belgium and Iberia are partly your fault. You are the EU energy commissioner, pipe dreaming whilst EU energy security drains away.

It is encouraging to see that you finally understand that demand for oil, gas and coal are rising whilst supply for oil at least is static. Rising demand against static supply is controlled by escalating price, encouraging conservation and pricing poor Europeans out of the energy market. You should by now understand that when poor people get priced out of the energy market they riot.

The next thing you need to grasp with some urgency is that oil supply will not stay static for long. IT IS GOING TO GO DOWN ONE DAY VERY SOON. (2012±3 years) And then the problems we are experiencing now will get worse by a factor of 100 or more. WHAT ARE YOU GOING TO DO ABOUT THIS?

The EU and the OECD in general has absolutely no control over raising global oil supplies. You seem to think that OPEC does, BUT YOU DON'T UNDERSTAND THAT OPEC ARE PUMPING FLAT OUT. The IEA data shows that their reserve capacity is near zero. So the only control OPEC has would be to reduce supply in order to conserve their dwindling reserves for future generations.

Thus, the only part of the equation that the EU can control is demand. The EU needs to introduce with some urgency measures to reduce demand for oil and natural gas. And here I believe you make some good points. We need solid, urgent plans to radically transform our transportation systems. To be blunt, cheap air travel for all will not be part of this future. Shipping, canals, and electrified mass transit and electric cars are the future. We need someone with vision to stimulate pilot V2G projects across Europe.

Energy conservation and energy efficiency must be vital cornerstones of the EU energy policy. I believe you understand that but you don't seem to understand what energy efficiency means. (hence you drive one of the least energy efficient cars ever produced). Producing H uses more energy than can be recovered. It is an energy sink, a waste of energy and a waste of time (apart from in some isolated special cases). Ethanol consumes almost as much energy as it produces and falls into the same category - a waste of time and precious energy. You are converting Gold (nat gas) to Lead (ethanol - anecdote borrowed from Matt Simmons). As a guiding beacon if the eroei of an energy producing system is less than 7 then it must be ignored. It does not produce sufficient net energy to run society - and so pursuing the twin follies of H and ethanol will drag Europe off the net energy cliff.

In essence what you have done in this blog entry is to re-package the wholly misguided EU energy policy that is predicated on climate change and trying now to sell this rubbish as a solution to the emerging energy crisis.

From here there are two ways forward. You either have to admit that the current energy policy is a shambolic mess, tear it up and start over - but this needs to be done urgently, within a matter of months. Or you need to resign and let someone else do this vital job.

Euan Mearns BSc PhD
Editor The Oil Drum Europe

PS I wholly endorse tonyw's comment up thread - if you want to reduce demand for oil today we need pan-european speed limits and legislation on gas guzzlers. Let these fine German engineers turn their attention to efficiency instead of speed and power.

If you feel strongly about EU energy policy then please leave a comment on Andris Piebalgs blog on the thread - Riots won't bring oil prices down

The EU Commission contemplating driving Europe and all its citizens off the net energy cliff. The Oil Drum's geologists, chemists, physicists, economists, bankers and engineers are in pursuit, trying to stop them. Will they get there in time?

Pictures from Thelma and Louise who were having a great time on a girls night out until they made a mistake. And one thing lead to another....

On BBC One Scotland at 22:45 this evening (Wed 4th June) Hayley Millar explores the history and future of North Sea oil and reasons for the recent run up in the oil price in the documentary Truth, Lies, Oil and Scotland.

Watch a clip here.

On BBC Two, Newsnight Scotland (23:00) will host a live debate on Peak Oil featuring an interview with Chris Skrebowski and discussion with Bill Jamieson (Executive Editor of The Scotsman) and Euan Mearns (Editor of The Oil Drum Europe).

These transmissions are on the Scottish regional versions of BBC One and Two, but anyone with a satellite receiver in the UK should be able to find the Scottish versions on Sky channels 971 and 990.

UK oil production peaked at 2.9 million barrels per day in 1999 and now stands at 1.6 million barrels per day. This is below UK oil consumption levels making the UK an oil importer.

This article from The Telegraph is a wonderful example of pundit cluelessness and or wanton incompetence, and I'm going to rip it to shreds in detail below.

Gordon Brown landed North Sea oil in choppy water

The Treasury is enjoying a windfall as oil soars but taxation policy may have knock-on effects

The rest of us may have been too busy partying like it was 1999, but on the eve of the millennium Britain was quietly, unwittingly, selling off the family silver on the cheap.

Gordon Brown's choice of that year to start selling off Britain's gold reserves with the precious metal's price close to an unprecedented low is well documented. What is less well known is that 1999 marked the peak for North Sea oil production and - by an unfortunate twist of fate - the very nadir of the oil price.

[break]

Gordon Brown, who has been lauded for years (and in particular around 1999) as a great Chancellor of the Exchequer is now fair game and everything he has ever done must now be seen in light of his current meltdown. With that in mind, it is not surprising to see articles now popping up to pin blame on him then for oil prices now. The biggest story of the day must somehow be his fault too.

But given that oil and energy is a topic that touches upon quite a few ideological traps, he is of course going to be blamed for all the wrong things, in order for the story to fit with the narrative.

The last sentence of the above paragraph is testimony to how far our pundits are from any kind of informed commentary on the subject. Is it really a "unfortunate twist of fate" that oil prices were at their lowest when the highest volumes of oil under our control were extracted, or just a logical  consequence of supply and demand rules that they are usually so keen to credit for other favorable economic outcomes?

After the oil shocks of the 70s, the US and the UK were lucky to be able to exploit new oil reserves situated on their territory - in Alaska or the North Sea. These finds, the last major production areas found on the planet to date, flooded the market in the 80s and 90s, duly bringing prices down, and prompting the Economist to write, in March 1999: "The price of oil has fallen by half in the past two years, to just over $10 a barrel. It may fall further."

Commodities were seen as a relic of the past, as the dotcom age was promising us unprecedented wealth based on knowledge rather than heavy stuff. Gold was on a 20 year downwards trajectory and all central banks were wondering what to do with their bulky and useless stocks of the metal. Holding it was, then, seeing as silly, and oil was seen as an sideshow - cheap, plentiful and boring.

But hey, let's rewrite history with the benefit of hindsight, and blame Brown for actions which were then lauded as modern and proper.

Britain was pumping around 2.8m barrels of oil every day, but the price averaged a mere $18 and dropped at one stage into single figures. Fast-forward to today, and while the oil price has rocketed up to a record $135 a barrel, the UK is producing only 1.5m barrels a day.

The Prime Minister cannot be blamed for the fact that Britain's oil production peaked at precisely the wrong time, nor can he really do anything meaningful to the oil price - despite his pledges yesterday. However, the rising price has underlined just how fast the North Sea is declining, and raised questions over whether Mr Brown's policies have served to accelerate its demise.

Well, the Prime Minister can actually be blamed for not doing anything about the UK's oil production when he arrived at n°11 back in 1997. It was not fashionable then, and it certainly was not what his predecessors had done, but oil&gas production could have been curtailed and limited in order to last longer. This is what the Dutch did with their gas reserves - limiting by law the production of their giant Groningen gas field so as to husband the resource for longer. It's not as if information on the likely decline of production was not available then, and as if the government did not have the means to direct an immediate stabilisation of production so as to ensure a longer tail.

And even if you accept that if was not a priority topic by 1999, the real issue was not what he did or did not do then, but what he has not done since, as it became obvious that production was declining. The country has lost 1.4mb/d of production capacity in 10 years, has become a major importer of the stuff (in competition with the rest of Europe, which has had somewhat more adapted supply policies for a long time, in the form of long term contracts), and still has no energy policy beyond "the markets will provide" or "blame the evil Russians."

And as to "doing nothing about oil prices" - how about focusing on the one side of the supply-demand balance that we can actually do something about: our demand? There's lots that governments can do, from the mundane (fuel efficiency resquirements, construction standards), to the all encompassing (fuel taxes, speed limits, public transport investment) to the brutal (rationing, forbidding the sale of cars with low fuel efficiency, closing off highways).

But no, the common wisdom does not focus on that, it focuses on this:

However, the Government is culpable for its management of the tax regime. Some years ago Mr Brown switched the system to a more modern scheme, charging oil companies a supplement to corporation tax for their North Sea profits, but allowing them to offset the investment they poured in.

It was a sensible change, designed to encourage companies to spend more on finding new fields. However, in 2005, the Treasury suddenly and unexpectedly raised this supplementary tax rate.

Ah. Tax increases. That's the real problem. Of course. It is, as we know, the root of all evil.

All businesses are reluctant to invest in a region if they fear its tax policies will change suddenly and without warning - none more so than oil companies, which make their investment decisions on a 20 to 30-year horizon.

Tax instability (which happens only whan taxes go up, not down, of course) is the cause of the production decline. No matter than the tax was increased only in 2005, ie 6 years after production started declining, and that it was increased by a few % at a time when oil prices had already climbed up from $15 to $50 - it Just. Has. To. Be. The. Reason. Oil. Production. Declined.
As we are reminded again:

Even so, the speed of the North Sea's decline has taken almost all experts by surprise. According to Kevin Norrish, commodities analyst at Barclays Capital, since the turn of the millennium production has consistently disappointed expectations.
"With no major new projects on the horizon to make up for the accelerating decline rates in the UK's mature fields, the prospect of significantly arresting the established decline in output looks poor," he said. Likewise, the amount of investment injected into the region has been consistently lower than many had forecast.

"Experts" were surprised. Presumably the very same experts that were "surprised" when Iraqis did not welcome US and UK soldiers with flowers, or when oil prices went above $50, and above $60, and above $80, and above $100, etc...
The same experts that are still listened to today, and quoted widely.
But it all makes sense for them:

This is hardly surprising. Over the past decades the North Sea has become one of the Government's biggest corporate tax cows, generating more than £230bn in revenue since 1968. The Treasury is expecting to make around £10bn this year from oil revenues, though experts at Grant Thornton think this could rise as high as £16bn due to higher oil prices.

However, this windfall has come at a price. If, as thought, it is responsible for depressing production in recent years, it has helped make the UK a net oil importer two years earlier than expected.

It's government fault that production is declining, and more precisely, it's Gordon Brown's fault for increasing taxes at the wrong moment. The man cannot keep his hands of our hard earned money ("our?" you ask innocently - yes, "our" - aren't you a shareholder of BP, Shell et al? What a pity)

Not only does this have serious implications for energy policy, it has pushed the current account deficit sharply higher and contributed to a weaker pound. It has meant that whereas a few years ago Britain was well positioned to benefit from a high oil price, the implications today are far more damaging for the economy.

We hit the jackpot! Brown's tax increases not only explain the oil crisis itself (killing incentives, despite today's prices, to invest in more North Sea production), but it also explains Britain's huge trade deficit (see, nothing to do with the financial sector's growth slowly killing the manufacturing sector, à la Anglo Disease) AND it suggests that there is a simple, successful energy policy round the corner (lower taxes on energy companies).

The Conservative and Labour governments since Thatcher have benefited immeasurably from the North Sea's constant stream of revenues in the past decades. Only now are the full implications of its decline sinking in.

Lady Thatcher, in her infinite wisdom, bestowed future governments with a golden goose, and now that damn evil, incompetent, (shall we dare say it - socialist) Brown has spoiled it all. Damn him.

Sigh...

While the last sentence touches one profound truth (British governments over the past 20 years have had it easy thanks to the North Sea bonanza), it also points that the real issues are not even on the radar yet. Oil production decline (in the case of the UK, but the logic is the same as regards global stagnation of production) is only caused by pesky governments interfering with private sector investment, and there is no problem that cannot be resolved by lower taxes or less regulation. Peak oil is not even on the radar screen, Demand-side policies are inexistent (beyond, occasionally, a token, throwaway mention) and, of course, irrelevant.

As usual, all that matters are supply-side policies. Maybe it's time to call it, as properly suggested long time ago by George Bush Sr for their economic cousins, voodoo energy policies - it's all the more appropriate as it appears to mostly include the hope that production will somehow, magically, increase - or that an alternative solution will just as magically emerge painlessly.

This article from The Telegraph is a wonderful example of pundit cluelessness and or wanton incompetence, and I'm going to rip it to shreds in detail below.

Gordon Brown landed North Sea oil in choppy water

The Treasury is enjoying a windfall as oil soars but taxation policy may have knock-on effects

The rest of us may have been too busy partying like it was 1999, but on the eve of the millennium Britain was quietly, unwittingly, selling off the family silver on the cheap.

Gordon Brown's choice of that year to start selling off Britain's gold reserves with the precious metal's price close to an unprecedented low is well documented. What is less well known is that 1999 marked the peak for North Sea oil production and - by an unfortunate twist of fate - the very nadir of the oil price.

[break]

Gordon Brown, who has been lauded for years (and in particular around 1999) as a great Chancellor of the Exchequer is now fair game and everything he has ever done must now be seen in light of his current meltdown. With that in mind, it is not surprising to see articles now popping up to pin blame on him then for oil prices now. The biggest story of the day must somehow be his fault too.

But given that oil and energy is a topic that touches upon quite a few ideological traps, he is of course going to be blamed for all the wrong things, in order for the story to fit with the narrative.

The last sentence of the above paragraph is testimony to how far our pundits are from any kind of informed commentary on the subject. Is it really a "unfortunate twist of fate" that oil prices were at their lowest when the highest volumes of oil under our control were extracted, or just a logical  consequence of supply and demand rules that they are usually so keen to credit for other favorable economic outcomes?

After the oil shocks of the 70s, the US and the UK were lucky to be able to exploit new oil reserves situated on their territory - in Alaska or the North Sea. These finds, the last major production areas found on the planet to date, flooded the market in the 80s and 90s, duly bringing prices down, and prompting the Economist to write, in March 1999: "The price of oil has fallen by half in the past two years, to just over $10 a barrel. It may fall further."

Commodities were seen as a relic of the past, as the dotcom age was promising us unprecedented wealth based on knowledge rather than heavy stuff. Gold was on a 20 year downwards trajectory and all central banks were wondering what to do with their bulky and useless stocks of the metal. Holding it was, then, seeing as silly, and oil was seen as an sideshow - cheap, plentiful and boring.

But hey, let's rewrite history with the benefit of hindsight, and blame Brown for actions which were then lauded as modern and proper.

Britain was pumping around 2.8m barrels of oil every day, but the price averaged a mere $18 and dropped at one stage into single figures. Fast-forward to today, and while the oil price has rocketed up to a record $135 a barrel, the UK is producing only 1.5m barrels a day.

The Prime Minister cannot be blamed for the fact that Britain's oil production peaked at precisely the wrong time, nor can he really do anything meaningful to the oil price - despite his pledges yesterday. However, the rising price has underlined just how fast the North Sea is declining, and raised questions over whether Mr Brown's policies have served to accelerate its demise.

Well, the Prime Minister can actually be blamed for not doing anything about the UK's oil production when he arrived at n°11 back in 1997. It was not fashionable then, and it certainly was not what his predecessors had done, but oil&gas production could have been curtailed and limited in order to last longer. This is what the Dutch did with their gas reserves - limiting by law the production of their giant Groningen gas field so as to husband the resource for longer. It's not as if information on the likely decline of production was not available then, and as if the government did not have the means to direct an immediate stabilisation of production so as to ensure a longer tail.

And even if you accept that if was not a priority topic by 1999, the real issue was not what he did or did not do then, but what he has not done since, as it became obvious that production was declining. The country has lost 1.4mb/d of production capacity in 10 years, has become a major importer of the stuff (in competition with the rest of Europe, which has had somewhat more adapted supply policies for a long time, in the form of long term contracts), and still has no energy policy beyond "the markets will provide" or "blame the evil Russians."

And as to "doing nothing about oil prices" - how about focusing on the one side of the supply-demand balance that we can actually do something about: our demand? There's lots that governments can do, from the mundane (fuel efficiency resquirements, construction standards), to the all encompassing (fuel taxes, speed limits, public transport investment) to the brutal (rationing, forbidding the sale of cars with low fuel efficiency, closing off highways).

But no, the common wisdom does not focus on that, it focuses on this:

However, the Government is culpable for its management of the tax regime. Some years ago Mr Brown switched the system to a more modern scheme, charging oil companies a supplement to corporation tax for their North Sea profits, but allowing them to offset the investment they poured in.

It was a sensible change, designed to encourage companies to spend more on finding new fields. However, in 2005, the Treasury suddenly and unexpectedly raised this supplementary tax rate.

Ah. Tax increases. That's the real problem. Of course. It is, as we know, the root of all evil.

All businesses are reluctant to invest in a region if they fear its tax policies will change suddenly and without warning - none more so than oil companies, which make their investment decisions on a 20 to 30-year horizon.

Tax instability (which happens only whan taxes go up, not down, of course) is the cause of the production decline. No matter than the tax was increased only in 2005, ie 6 years after production started declining, and that it was increased by a few % at a time when oil prices had already climbed up from $15 to $50 - it Just. Has. To. Be. The. Reason. Oil. Production. Declined.
As we are reminded again:

Even so, the speed of the North Sea's decline has taken almost all experts by surprise. According to Kevin Norrish, commodities analyst at Barclays Capital, since the turn of the millennium production has consistently disappointed expectations.
"With no major new projects on the horizon to make up for the accelerating decline rates in the UK's mature fields, the prospect of significantly arresting the established decline in output looks poor," he said. Likewise, the amount of investment injected into the region has been consistently lower than many had forecast.

"Experts" were surprised. Presumably the very same experts that were "surprised" when Iraqis did not welcome US and UK soldiers with flowers, or when oil prices went above $50, and above $60, and above $80, and above $100, etc...
The same experts that are still listened to today, and quoted widely.
But it all makes sense for them:

This is hardly surprising. Over the past decades the North Sea has become one of the Government's biggest corporate tax cows, generating more than £230bn in revenue since 1968. The Treasury is expecting to make around £10bn this year from oil revenues, though experts at Grant Thornton think this could rise as high as £16bn due to higher oil prices.

However, this windfall has come at a price. If, as thought, it is responsible for depressing production in recent years, it has helped make the UK a net oil importer two years earlier than expected.

It's government fault that production is declining, and more precisely, it's Gordon Brown's fault for increasing taxes at the wrong moment. The man cannot keep his hands of our hard earned money ("our?" you ask innocently - yes, "our" - aren't you a shareholder of BP, Shell et al? What a pity)

Not only does this have serious implications for energy policy, it has pushed the current account deficit sharply higher and contributed to a weaker pound. It has meant that whereas a few years ago Britain was well positioned to benefit from a high oil price, the implications today are far more damaging for the economy.

We hit the jackpot! Brown's tax increases not only explain the oil crisis itself (killing incentives, despite today's prices, to invest in more North Sea production), but it also explains Britain's huge trade deficit (see, nothing to do with the financial sector's growth slowly killing the manufacturing sector, à la Anglo Disease) AND it suggests that there is a simple, successful energy policy round the corner (lower taxes on energy companies).

The Conservative and Labour governments since Thatcher have benefited immeasurably from the North Sea's constant stream of revenues in the past decades. Only now are the full implications of its decline sinking in.

Lady Thatcher, in her infinite wisdom, bestowed future governments with a golden goose, and now that damn evil, incompetent, (shall we dare say it - socialist) Brown has spoiled it all. Damn him.

Sigh...

While the last sentence touches one profound truth (British governments over the past 20 years have had it easy thanks to the North Sea bonanza), it also points that the real issues are not even on the radar yet. Oil production decline (in the case of the UK, but the logic is the same as regards global stagnation of production) is only caused by pesky governments interfering with private sector investment, and there is no problem that cannot be resolved by lower taxes or less regulation. Peak oil is not even on the radar screen, Demand-side policies are inexistent (beyond, occasionally, a token, throwaway mention) and, of course, irrelevant.

As usual, all that matters are supply-side policies. Maybe it's time to call it, as properly suggested long time ago by George Bush Sr for their economic cousins, voodoo energy policies - it's all the more appropriate as it appears to mostly include the hope that production will somehow, magically, increase - or that an alternative solution will just as magically emerge painlessly.

High fuel prices are wreaking havoc in Europe, some call for tax exemptions others go on strike. The structural constraints affecting oil supply are becoming to much to bear for Europeans, especially those more reliant on the automobile. But before going out for a demonstration against who ever you may think is responsible for high fuel prices, there are a few things you can do to ease the pain: it's called Eco-Driving.

[break] Crossposted at the European Tribune.

Together with Europia (European Petroleum Industry Association) the European Commission has launched a campaign to promote energy efficient driving. Leaflets with a roll of tips that help drivers reducing their fuel consumption will be made available at filling stations all across Europe. Some 45 000 stations will receive the leaflets in one the biggest public information campaign I can remember (surely the biggest on Energy). The press from the Comission anouncing the campaign can be read in full here.

Andris Piebalgs wrote in his blog about this “intelligent driving”:

I made recently a short test with an eco-driving simulator. By applying all eco-driving tips, a normal driver is able to reduce his energy consumption in an urban circuit from 7.3 l/100km to 5 liters. That means, at a price of 1.40 € per litre of gasoline and 15 000 km per year, that the driver is saving 500 €. Let’s imagine that the drivers would apply just some of the tips, we are still speaking of impressive savings, in money terms for the citizens and in CO2 emissions for the planet.

Eco-driving entails no investment, no need for sacrifice. It is simply a matter of responsible behaviour, keeping in mind some principles when driving, which make sense and are beneficial in all respects: not only for our planet and economy, but also for our health and our safety. One could ask: Why do so few people eco-drive? The reply is quite obvious: because we have not been educated to do that! Only recently are eco-driving principles really becoming part of the syllabus for obtaining a driver’s licence. That means that only new drivers have been taught to drive intelligently.

A website was made promoting the campaign on-line. Go there and click your flag of choice, you'll be presented with some funny cartoons exemplifying the tips (nice to send around to your friends perhaps).

Here are the 10 tips being promoted in the leaflet [pdf 2.9 Mb]:

Save more than fuel

10 tips to help you drive more efficiently.

1. Keep your car well serviced and check the oil level regularly.
   Correctly maintained cars can operate more efficiently and help reduce CO2 emissions.


2. Check your tyre pressure every month.
   Under-inflated tyres can increase fuel consumption by up to 4%.


3. Remove unnecessary weight from your boot or back seats.
   The heavier the car, the harder the engine has to work and the more fuel it consumes.


4. Close your windows, especially at higher speeds, and remove empty roof racks.
   This will reduce wind resistance and can lower your fuel consumption and CO2 emissions by up to 10%.


5. Use air conditioning only when necessary.
   Unnecessary use increases fuel consumption and CO2 emissions by up to 5%.


6. Start driving soon after starting the engine and turn off the engine when stationary for more than one minute.
   Modern engines enable you to just get in and go, thus reducing fuel consumption.


7. Drive at reasonable speeds and above all, drive smoothly.
   Every time you accelerate or brake suddenly, your engine uses more fuel and produces more CO2.


8. When accelerating, change up gears as early as possible.
   Higher gears are more economical in terms of fuel consumption.


9. Try to anticipate traffic flow.
   Look at the traffic as far ahead as possible in order to avoid unnecessary stopping and starting within the flow of traffic.


10. Consider car sharing for work or leisure.
    You will help reduce congestion and fuel consumption.

Following these tips will not likely have any impact on world oil prices, but they are one step that each EU citizen can take to ease the dependence on oil and at the same time diminish the economic backlash from high fuel costs.

Finally there's a video worth watching on EUtube on the subject (possibly good educational stuff too):

Sarkozy: "La demande en produits pétroliers est de plus en plus forte et l'offre n'augmente pas ou très peu"

Sarkozy: "Demand for oil is stronger and stronger and supply is increasing very little, if at all"

When I heard him say this on the radio this morning, and continue by adding that we had to be aware that prices would continue to remain high, I was pleasantly surprised. But that did not last.
[break]

The European Union should consider capping sales taxes on fuel products if oil prices rise further, French President Nicolas Sarkozy said on Tuesday, seeking to allay consumer fears about spiralling costs.

Ah, lower taxes on oil are sure going to help solve that "growing demand, stagnant supply" situation, right?

"We can't perpetually have a market where prices rise permanently, to the benefit of producing countries."

Yes. We. Can! (if we continue with our idiotic energy non-policies). I must admit that I am even more amazed at our politicians now that they are making the right descriptions of the energy market (saying, quite correctly, that oil is no longer cheap nor plentiful) - their lack of action when that diagnosis was absent was at least consistent, if irresponsible. Now, the contradictions are just stunning.

Given that voters seem to only care about how much their next gas tank will cost, and can't or won't grasp the consequences of short term fixes, it may be rational for politicians to pander to such denial.

One way or another, it's not going to last. But we're choosing the maximum pain route.

[editor's comment: this conference report by Professor Cellier from ETH Zurich provides some high level insight to European thinking on and attitudes towards the peak oil problem. It's all in English below the fold.]

[break]

ASPO Switzerland was founded 1.5 years ago by Daniele Ganser, a young professor of contemporary history at the University of Basel. His primary research interests concern the politics of peace, and it was in this context that he began to study the political and sociological implications of Peak Oil: How can humanity transition from a paradigm of continuous expansion and exponential growth to one of sustainable development and stagnation while avoiding violent resource wars as they are likely to erupt over control of the last remaining oil fields?

Prof. Ganser managed to assemble a competent team of ASPO enthusiasts including Basil Gelpke, the executive producer of the 2006 movie A Crude Awakening: The Oil Crash, two retired oil geologists, a chemist, and a lawyer to serve on the board of ASPO Switzerland.

Last Saturday, ASPO Switzerland held its first general assembly in the Aula of the University of Basel, the oldest of our Swiss universities, established in the 15^th century. Although the Aula doesn't date back to the founding years of the university, its air conditioning system didn't work, and also the sound system worked only sporadically; but maybe, this was intended to give us all a glimpse of what life after the oil crash may look like.

Colin Campbell, the spiritual father of all ASPO organizations, had been invited as the guest of honor, and he sat patiently through the conference, although the official conference language was German, a language that Colin claims not to speak or understand. For this reason, although Colin offered a fascinating, highly authoritative, and very convincing presentation as always, he could not fully participate in the subsequent debate, and in particular, he could not comment on the speeches delivered by other participants.

As was to be expected, Colin told us that the peak of conventional Oil is taking place right now. There remains lots of unconventional oil in the ground, but those oil reserves are expensive to produce, and their EROEI is very low. It takes at least as much energy to produce this oil as one can get out of it. Hence he does not believe that unconventional oil, like tar sands for example, will ever play more than a marginal role in meeting our energy needs. He told us that the current high oil prices are caused by supply no longer meeting demand, and that the time of cheap oil is over for good.

Colin also mentioned Peak Gas. He told us that gas is different from oil, because it expands on its own. Thus, the percentage of cheaply producible gas is higher than that of cheaply producible oil, and consequently, Peak Gas does not occur when 50% of the gas has been produced, but only, after maybe 75% will have been used up. The good news is that Peak Gas will occur a few years later than a Hubbert-type analysis would suggest. The bad news is that, once gas starts declining, it will do so very very fast.

It is customary here in Switzerland that all sides of an issue be heard, and consequently, Ganser also invited Dr. Rolf Hartl, the CEO of the Erdöl-Vereinigung (Swiss Association for the Use of Fossil Fuels), to give a talk.

Dr. Hartl is immensely influential in Swiss politics. He is a member of the Energy Commission of the Swiss Academy of Engineering Sciences, and since every member of a committee here in Switzerland is essentially given veto powers, he is able to exert enormous influence on the energy policy of Switzerland. The way it works is that one side claims that Peak Oil is taking place right now, whereas the other side claims that it won't occur for another 50 years, and rather than trying to establish the facts, the committee aims to come up with a paper that everyone is willing to sign; and so, official Switzerland issues the "verdict" that Peak Oil will take place 25 years from now. Direct democracy comes at its price, and the price to be paid is often that important decisions get blocked indefinitely.

Of particular interest in Hartl's talk was a recent change in his message. Whereas Hartl in the past always claimed that Peak Oil is still many years away, he meanwhile admits that the peak of conventional oil is occurring now. His new story is that the unconventional oil, of which there still is plenty, as everyone agrees, will be able to replace the conventional oil and will facilitate a continued growth of oil exploration and exploitation until at least the year 2030, at which time we might reach a plateau. A decline of oil supply is not to be expected until at least the year 2040.

Dr. Walter Ziegler, ASPO board member and retired oil geologist, told us about his experiences with producing conventional oil over half a century. He showed us graphs of oil production of one field after another, each exhibiting a period of growth, followed by a peak, and then followed by a period of perpetual decline, just as Hubbert had predicted.

Michael Kaufmann, Associate Director of the Swiss Federal Office of Energy, spoke about the political efforts undertaken at the level of the Swiss Federation concerning the establishment of a meaningful energy policy.

ASPO Switzerland, of which I am a proud member, was founded with the intent of raising the awareness of the Swiss public to Peak Oil and its consequences.

Has ASPO Switzerland reached its goal?

The Aula of the University of Basel holds 400 people, and most seats were occupied. ASPO Switzerland has meanwhile close to 300 members, many of whom attended the event, some bringing family members or friends along. Swiss TV as well as RTL came and interviewed Colin Campbell and Daniele Ganser. Until now, Swiss Radio broadcast a 3.5 minute interview with Colin Campbell, and three Swiss newspapers, the St. Galler Tagblatt, the Berner Zeitung, and the Basler Zeitung, printed reports about the event. Yet, how many people pay attention to these reports?

When my wife and I were wandering through the old parts of Basel after the conference, asking ourselves, how many of the people we saw going about their daily business have an inkling of Peak Oil and what it means for them, we came to the conclusion that Switzerland by and large is still behaving like Sleeping Beauty before the prince came to rescue her.

Switzerland is at the tail end of European countries with respect to fuel efficiency in private vehicles. Whereas 10 years ago, the average private car in Switzerland weighed 1300 kg, the average weight of private cars has meanwhile risen to 1500 kg. Whereas the minergy standard was developed here in Switzerland in the 1990s, even today, only 20% of the new houses are built to that standard. Central oil heatings still dominate the heating market here in Switzerland, and even new buildings are still frequently equipped with oil burners.

The economy continues to be going strong, and the warning signs of the looming oil crash aren't on the wall yet. For Mr. and Mrs. Swiss, Peak Oil has not turned into an issue as of now. They are more surprised than alarmed about the suddenly rising prices at the gas stations, and they have not modified their driving habits yet because of them.

Maybe at least as interesting as asking who attended the conference and reporting about the speeches that were delivered may be the questions of who did not show up, and which topics were not mentioned.

As far as I can tell, not a single one of my 40 colleagues of the Energy Science Center here at ETH Zurich was in attendance. I might have overlooked one or the other, but at least, I did not notice a single one of them. Are they all simply too busy, or is the study of Peak Oil of no concern to them?

A good case was made establishing Peak Oil as a reality, as a historical fact. One speaker after another came forward to present data and arguments establishing the reality of Peak Oil. Even Hartl had to admit that "Peak Conventional Oil" is taking place right now, and since unconventional oil isn't ready "yet" to replace it, we may see a few years of oil shortage.

However, with all this talk about when Peak Oil is going to occur, there was hardly any time to talk about its consequences. What does Peak Oil mean for Switzerland?

Colin Campbell mentioned briefly that, after Peak Oil, the oil producing nations will keep more of the remaining oil for themselves, i.e., oil export will dwindle faster than oil production. Switzerland, as a country poor in natural resources and big guns, may suddenly find itself at the end of the feeding line. Yet, I doubt that this message came across.

It was mentioned once in a fleeting remark that one of the consequences of Peak Oil and its accompanying high fuel prices will be a shift of wealth from the consumer to the producer nations. Hence Switzerland may find itself in a considerably weakened position economically after Peak Oil.

It was never mentioned that agriculture is an engine for turning oil into food. Peak Oil means Peak Food. What does this mean for Switzerland? How is Switzerland going to feed its population of 7.5 million people after Peak Oil?

How will Switzerland defend its position in the world? What, if anything, can we do to improve our situation? Unfortunately, there are no very good answers. The problem is simply too big. There will hardly be a happy ending. Princes only show up in fairy tales.

Last Friday our blogger Rembrandt was interviewed about Peak Oil on the Dutch Television show NOVA. About the rising price of crude in light of his upcoming book 'the permanent oil crisis', the first Peak Oil book to be published in Dutch in the beginning of June.

With thanks to Freek Blauwhof for adding subtitles. [break] NOVA is one of the biggest television programs in the Netherlands. This particular episode has been viewed by 621.000 people, or 3.8% of the Dutch population.

In advance of the European Union – Latin America and Caribbean summit, the Portuguese prime minister, José Sócrates, visited Venezuela. During two days, more than twenty economic agreements were celebrated between the two countries, where energy had a major role.

Among the entourage where representatives of some of the largest companies operating in Portugal, with the objective of firming protocols in the vein of “oil for goods”, towards which the Venezuelan executive has been showing great openness.

[break]

Crossposted at the European Tribune.

Oil and Gas had the major focus, with several agreements struck on exploration, production and trading. The biggest being respective to Orinoco where GALP will start operating in the Boyacá 6 block. José Sócrates and Hugo Chávez both speech in a ceremony inaugurating a drilling rig in the site.

Chávez and Sócrates at Orinoco's block Boyacá 6. Source: PeriodistaDigital

As usual Chávez was very expressive, explaining why previous agreements with oil majors where cancelled:

For a long time the international companies told us that this wasn't oil, it was bitumen. They said it was something like coal, and hence should be price as coal. See, this is the coal.

[Chávez then showed a small sample of Orinoco oil slowly flowing from a cup to another.]

Oil, liquid hydrocarbons. This is the greatest reserve that exists in world.

Chávez then effusively thanked GALP's president and Sócrates, for the negotiations that long preceded the agreement, facilitating a deal of great value for Venezuela.

Then José Sócrates went on to the rig helping the PDSVA workers in the starting operations, sending a drill bit down, wearing a red safety helmet, just like the workers that clad in red from head to toe. He also had the opportunity to express his joy with the outcome of those two days spent in Venezuela, welcoming the tightening of economic relations between the two countries.

These relations are not fortuitous. There are 400 000 Portuguese emigrants living today in Venezuela, about half in Caracas, many of whom run small business. About two thirds of the bakeries and restaurants in Venezuela are run by Portuguese or their descendants, as so half of the grocery stores in the country.

Looking closer at deals struck, GALP celebrated several protocols with PDVSA, the most publicized being the consortium to assess and produce oil from the Boyacá 6 block, from which the companies expect to be producing 200 kb/d ten years from now. Some of this oil will be transported to Portugal and only refined there (at the Sines complex) where according to GALP's president, there exists the technology to process some of these heavier oils. GALP's president also referred to journalists that Orinoco oils cost 15 dollars per barrel to produce. GALP and PDSVA will also form another joint company to trade Orinoco's oil internationally.

GALP celebrated other agreements, namely to build 4 wind farms totalling over 70 MW of installed capacity, and got access to the data on the offshore Blanquilla gas blocks in order to assess their potential, with future perspectives of production. GALP will co-build with PDVSA two gas liquefaction terminals from which one third of the gas consumed in Portugal will come in 2013.

This last agreement on natural gas supply, might be the most important of all in strategic terms. Having in mind Europe's dire prospects on Natural Gas, this deal opens the South American market to Europe, to which the Sines complex, where a re-gasification terminal was built recently, presents itself as the most useful entrance. At the westernmost tip of continental Europe, Sines shorts the travel distance for LNG tankers coming from South America; from there gas can be easily transported to the rest of the country by pipeline or even to Spain.

The Sines Refinery, one of the largest in Europe. The Sines complex also comprises, among other infrastructures, a LNG terminal and several electricity generation plants.

Also integrating the Portuguese entourage were representatives from EDP (the country's electricity generation monopoly) that firmed several agreements on renewable energy, including 3 wind farms and technical support to other renewable energy prospects. EDP will also be involved in the assessment of the Blanquilla blocs and will have a 15% share in the construction of a third a gasification terminal.

EDP will also help PDSVA assessing the potential of using the coke residues from the refining process of Orinoco oils in electricity generation. EDP is also studying the possibility of building and operating combined cycle units in Venezuela.

Other deals were also struck with other companies on different areas such as civil construction, fish conservation and naval construction. Although details are not given in the press, this last one might be related to the LNG transportation to Europe.

Addressing journalists, Venezuelan oil minister Ramiréz produced the usual OPEC litany on why oil prices are so high: geo-politics (was he thinking of Venezuela?), the dollar devaluation and so on, re-affirming that there's nothing OPEC can do to hinder oil prices. He also said that 200 $ oil is a serious possibility.

The press coverage of the event was quite below the dimension of the agreements firmed, although several local TV channels and newspapers run pieces on the subject (from which the information presented here was distilled). Excluding brief articles in economic newspapers, the visit was invariably covered by journalists ill informed on energy matters, often confusing measuring units and mixing oil flows with reserves (the difference between Giga barrels and Mega barrels seem to be on of the hardest concept to grasp). Few of them might have understood what really happened during those two days they spent in Venezuela.

While on one hand the Portuguese executive shows some agility in trying to face the present energetic panorama, on the other hand it shows itself incapable of seeking alternative strategies to the continuous flow of fossil fuels. Being electricity generation from renewable sources now a reality (furnishing more than a third of the electricity consumed in the country, one of the best scores in Europe) the country's economy is still heavily reliant on fossil fuels, especial on Transport, being still at the mercy of the variations on international prices emanating from the depletion of these finite resources. These agreements will surely help, but not only are firmed relaying on private companies (held in some cases by foreign capital) as they can't possibly be a long term option for a future independent of finite resources that Portugal doesn't have.

This article was gathered on the information run on Portuguese media during the visit, of which the following links are left as reference:

Jornal de Negócios (on Orinoco)

Jornal de Negócios (on Natural Gas)

Diário Económico

TSF

Agência Lusa

RTP (news program Jornal 2 of 15-05-2008)

Luís de Sousa
TheOilDrum:Europe

This week Andris Piebalgs talks Nuclear in his blog. Without taboos, Andris lays down the advantages of Nuclear energy that have put it at the core of the Commission's New Energy Policy for Europe.

Nuclear energy has been discussed many times at TOD, mostly from a technical perspective, on its practicality and long-term sustainability. This time we look at Nuclear Energy policy, from the perspective of an Executive that has made a clear option towards this energy source.

Source: NewScientistTech (click to enlarge)

[break]

Crossposted at the European Tribune

Concerns with CO2 emissions are still the main driver behind the EU's Energy Policy, but from the several texts reproduced henceforth, it is becoming clearer a certain sense of urgency towards energy security from the stakeholders.

In his blog, Andris starts by asserting that Nuclear has special a role to fulfill, that other energy sources and/or policies are not able to meet at the moment:

In this context, energy efficiency, renewables and sustainable biofuels have all a very important and growing contribution to make for a sustainable energy policy, as we have seen in previous entries of this blog. However, for the production of base-load energy at competitive prices, nuclear energy is currently the main low-carbon source in many EU Member States.

But there is more to Nuclear energy that makes it so attractive to policy makers at the moment:

Let’s start with some facts. Taken together, the EU is the largest nuclear electricity generator in the world, has a mature nuclear industry spanning the entire fuel cycle with its own technological base and highly skilled workforce. Currently, nuclear energy provides more than a third of EU electricity. It has proven to be a stable, reliable source, relatively shielded from price fluctuations when compared to the oil and gas markets. Conventional nuclear energy is essentially free from CO2 emissions and on the face of it, fulfils an important requirement of all three pillars of the EU energy policy, which are competitiveness, security of supply and sustainability. Continued use of nuclear energy therefore would increase our energy independence and supply security as well as contribute to the limitation of CO2 emissions.
[emphasis added]

As a consequence of the current Energy Policy approved by the Council in March of 2007 the Commission set up the European Nuclear Energy Forum in order to provide a debate among stakeholders in a way transparent to the EU citizens.

The idea is simply to have the politic stakeholders, regulators, industry stakeholders and scientists dialoguing together and at the same time projecting a friendlier image of Nuclear Fission in Europe, where safety is ahead of all concerns.

The Czech and Slovak Prime Ministers agreed on jointly host the Forum, which was set to be held alternatively in Bratislava and Prague. The first meeting took place in late November in Bratislava and the next will be held in Prague later this month. Andris promises to take with his luggage the proposals left by commentators at his blog.

After looking into some of the texts produced during the first meeting of the Forum, some passages seem worth reproducing here. Barroso was in China at that time and sent a letter that Andris, as the senior representative of the Commission, read during the opening session. Some important points were made:

In this context I really believe that there is a need for a full and frank debate about nuclear energy. It is not the EU's role, or indeed the role of the Commission, to decide for Member States whether they use nuclear energy or not.

But it is - in my view - not surprising that we are witnessing a renewed interest of nuclear energy at global level. Nuclear energy can have a role to play in meeting our growing concerns about security of supply and CO2 emission reductions. In the EU, around one third of the electricity currently comes from nuclear energy.

Nuclear energy also protects our economy against price volatility of energy prices, as nuclear power is less vulnerable to fuel price changes than some other energy sources. With the current record oil prices, this element is becoming increasingly important.

At the same time, I believe that in the context of the revival of nuclear energy, we need to develop further in Europe the most advanced framework for nuclear energy, meeting the highest standards of safety, security and non proliferation. The EU should also continue their efforts to ensure that such high standards are observed internationally, in the context of increased cooperation with the IAEA.

Although not the main driver, “price volatility” is gaining relevance. When Andris took on the speech with his own words he left it clear that there are serious problems. These appear to be some of the most anxious declarations on Oil ever produced by the Energy Commissioner:

I am concerned about the current escalation of the oil prices and its consequences for our economies. The energy package adopted by Heads of State and Government in March this year already highlighted the multi-dimensional challenges we are facing. But the exponential price increase of crude oil has even accelerated the need for swift and structural action. Therefore we increasingly need a totally open debate on all potential sources of energy, including nuclear energy, to reflect on our energy mix.

[...]

Together with and complementarily to the work of the High Level Group, improving nuclear safety must be an overwhelming principle of your dialogue here as well. The highest level of safety, but also of security and non-proliferation, is the absolute condition for the use and development of nuclear energy.

[...]

However I would like to stress that the highest possible level of safety is only a necessary condition, but it is not sufficient. Public acceptance is the second important pillar.

Building trust and increasing confidence in the use of nuclear energy are vital elements for public acceptance in democratic societies. Increased transparency and participation is in the interest of all, whatever their position on nuclear. This is at the core of the debates to which you will participate. Gaining trust and confidence, involving the citizens in the decision-making process, tackling all issues in a transparent way are not easy tasks. But they are issues on which you as decision makers or as influential observers have to focus your efforts on. It means demonstrating to people that the risks of nuclear energy are dealt with in a satisfactory manner, that the concerns of the population are taken seriously, and that you are all willing to help those who are not confident yet to get the necessary and balanced information which may gradually reassure them.

In a more elaborate way, Andris explains the importance of Nuclear energy in facing the challenges ahead for the EU. And once more the negative public image is presented as an obstacle left to overcome that could hinder the process.

On the first meeting's website you can find a plethora of texts from different people with different backgrounds. It is worth while to spend sometime studying them if you have the slightest interest in this matter.

Finally the conclusive document of this first meeting:

Main priorities for the Working Groups of the European Nucelar Energy Forum

“Opportunities of nuclear energy”

1. To establish a Nuclear Energy Roadmap to improve the nuclear legal framework, including greater harmonization of licensing procedures.
2. To analyse in more detail, in comparison with other energy sources, the competitiveness of nuclear energy in a European low carbon and global security context. To examine ways to translate some competitive advantages of nuclear energy in the final price of domestic and business consumers.
3. To explore innovative models regarding regional approaches and financing possibilities in the field of nuclear energy.
4. To examine the ways and means to maintain the industrial capacity while improving the industrial environment.

“Risks of nuclear energy”

1. To support a greater harmonization of safety requirements at EU level for nuclear installations in the EU (notable through the High Level Group).
2. To encourage Members States and industry to swiftly implement adequate nuclear waste disposal facilities, in particular deep geological repositories for high level waste.
3. To call for sufficient funding for decommissioning and waste management through adequate methods.
4. To develop innovative approaches and exchange best practices to ensure adequate training, both qualitatively and quantitatively, for nuclear engineers and technicians, including radioprotection (e.g. Possible European post-graduate degrees), and to strengthen the safety culture.
5. To support the reinforcement of non-proliferation in the international context through a stronger European position and the strengthening of nuclear security.

“Information and transparency”

1. To examine ways and means to better inform the public in the objective and factual terms all aspects of nuclear energy (e.g. in the context of new build, encourage common approaches between regulators).
2. To analyse the most effective approaches to build up trust and confidence in the available information, by increasing transparency and giving access to all non-sensitive information.
3. To provide information in clear language on the existing solutions for waste management.
4. To exchange and develop best practices at European level between all actors (Member States, municipalities, industry, etc.).

I left on Andris' blog an idea for a European special budget for energy development. With an income tax of 0,1% to 0,2% on each EU citizen, a value in the order of 4 to 8 Giga €uros (4 to 8 short billion €uros) could be raised every year. That money could get a lot people and a lot of resources working together to develop the EU's energy future. Nuclear seems to be the discipline that could benefit the most from such programme, due to the extra infrastructure and waste disposal requirements.

Without starting another endless and quite often inconclusive technical debate, I would like this time to get comments on Nuclear Energy policy. What is the Commission doing right? What is it doing wrong? What alternative policies can be pursued?

And don't forget to pay a visit to Andris' blog and leave some ideas for the second meeting of the Forum.

Previous coverage of Andris Piebalgs blog:

Andris Piebalgs' priority number one

Andris Piebalgs : getting a sense of proportion

Andris Piebalgs on Bio Fuels

Piebalgs on European Energy Security

Andris Piebalgs' Blog

Luís de Sousa
TheOilDrum:Europe