Peak Cheap Oil?

00:00:03:15 - 00:00:24:22

Chris Keefer

Welcome back to Decouple. Today, I'm joined by Art Berman. Art is someone who I've been following for a while now. I think probably I discovered you through Nate Hagan's podcast, The Great Simplification. But I've been a big fan of your blog and, you know, I've been reading so many articles, I've kind of forgot to do my own little research into exactly who you are.

00:00:24:22 - 00:00:42:12

Chris Keefer

So I know you're an energy expert, your speaker, your friend of Nate Hagan's mutual friend. Tell us a little bit more about yourself before we jump in so our guests have an idea of your your expertise, your formation, your values, whatever you got. But you only got about 60 to 90 seconds. So take it away.

00:00:42:14 - 00:01:29:06

Art Berman

Okay. Well, it won't take that long. So I'm a geologist. I've worked in the energy business now for 45 years, worked for big Oil for about half of that. I've been a consultant ever since, and most of what I do today is sort of on the macro side of things, trying to integrate all the various imaginary ideas that everybody has for whatever energy transition we think we're involved in and to try to help people understand how that fix fits into the perspective of larger systems, human behavior and what is feasible or reasonable versus what we imagine to be all of those things.

00:01:29:06 - 00:01:48:02

Art Berman

So that's that's what I do these days. But yeah, my original work was all in oil and gas. I still do some of that. I guess more and more it's the broader energy picture and sort of the climate change ecological crisis that I'm most interested in.

00:01:48:03 - 00:02:07:12

Chris Keefer

Right on. Well, we're big fans of the cold, hard truth here. And, you know, I'd say, you know, over my journey as a total outsider, right. I'm an emergency medicine physician by training and got fascinated by energy over the climate change issue, sort of found nuclear is a bit of a panacea. And I think I've matured a little bit in my outlook on this.

00:02:07:12 - 00:02:30:18

Chris Keefer

But we do a lot in the podcast in terms of energy analysis, looking at the climate debate, even some of the philosophy, philosophical underpinnings, the romantic origins of the environmental movement, etc.. So you're you're in good company here and we're we're glad to have you. You know, I've been reading a few of your articles. There's been there's been a lot of great stuff in this cheap oil debate.

00:02:30:20 - 00:03:12:11

Chris Keefer

You had a great response, I believe, to Doom Burg and Adam Rosen's Fox recent appearance on Thoughtful Money, which I'd love to jump into. Very interested in talking about the Biden pause on LNG, LNG export facilities and maybe what some of the underlying energy or realpolitik is behind that. Certainly interested in a little bit of discussion of what I'll call energy quality returns on energy quality invested, both in terms of renewables, I guess as well as sort of unconventional and conventional oils and natural gas to liquids processes and maybe a little cherry on top.

00:03:12:11 - 00:03:35:19

Chris Keefer

We'll talk nuclear at the end. I think we have some shared and shared opinions and some differences, but vive la difference. I love living in a world of of well-argued, differing opinions. So anyway, why don't we jump in a little bit on the topic of cheap oil, something we've covered before. We chatted with Nate about it. We've had Lee going on to talk about potential peak shale.

00:03:35:21 - 00:03:54:13

Chris Keefer

We've had a bit of a back and forth. It's been really interesting. I think you were involved maybe with the oil drum, but you've been you've been talking peak oil for a while. When I was go from peak oil to peak cheap oil, what's the difference? Let's just get situated there with a few kind of quick questions to make sure we're all talking about the same things.

00:03:54:15 - 00:04:27:18

Art Berman

Yeah, Will peak oil got off track very early on. The the folks who originated I think the you know the the discussion was in the in the nineties were actually talking about the end of cheap oil. I mean that was the you know the Scientific American article that that that kicked it off obviously. King Hubbert, you know, way back in the fifties and sixties was the the fellow who originated the I guess he didn't come up with the concept, but everybody attributed peak oil to him.

00:04:27:18 - 00:04:54:20

Art Berman

But but originally, from my perspective, it never was about when will supply or production peak. It all had to do with are we done with with with cheap abundant oil supply? And in my estimation, the answer to that was and is yes, that ended cheapest oil we ever had in real dollars was in 1998 and that we have it approached anything close to that.

00:04:54:20 - 00:05:17:19

Art Berman

We've gone up, We've gone down. But, you know, I think a lot of people, they just take a very short term, narrow view of oil prices. So if oil prices are, you know, got to 140 or 50 bucks in 2008, that was high. And if they got, you know, -37 in 2020, that was low and everything else in between, you know, whatever.

00:05:17:19 - 00:05:41:06

Art Berman

But but, but I look at it in in a sort of a simpler way, which is if oil in in real terms, let's just say for argument's sake, it's twice as expensive or three times as it was in 1998, then, you know, I don't really care about the peak cheap oil debate, but since we're talking about it, that it's over.

00:05:41:07 - 00:06:09:11

Art Berman

We're done. Oil is significantly more expensive than it was in 1998. And let's move on because I don't really care about, you know, inventing some argument like, you know, doom Berg and Adam Rosensweig or talking about I mean, the real discussion isn't whether a myth is right or not. That's a human construct. The real discussion on is what is the human and planetary predicament and what oil prices have to do with it.

00:06:09:15 - 00:06:24:10

Art Berman

And again, I'm not I'm not in any way criticizing that discussion. I mean, that was the subject they were given and they you know, they discussed it. So I just think it was the wrong. Well, I wouldn't want to discuss that subject, let's put it that way, because it's it's you know.

00:06:24:12 - 00:06:46:06

Chris Keefer

Yeah. So it seems like what you're pointing at is the differences between the actual cost to produce a barrel of oil versus what we end up paying in terms of the consumer price and obviously got to get this wrong a lot, but the price in elasticity of demand means that oil can undergo big cycles, etc.. But is that what you're getting at in terms of just like energy return and energy invested?

00:06:46:06 - 00:06:53:10

Chris Keefer

What kind of metric is used to sort of say that 1998 was was sort of peak cheap oil? If it's not the price of a barrel.

00:06:53:10 - 00:07:25:12

Art Berman

Okay, So the price of a barrel is fine. All I'm saying is, is that if you if you take that price and you you know, you adjusted for inflation or, you know, just normalize it in some way and, you know, you can normalize it to December 20, 23, U.S. dollars and it you know, any way you want to cut it, oil was never cheaper for the consumer out of his out of our collective pockets than it was in 1998, end of discussion.

00:07:25:14 - 00:07:50:21

Art Berman

So to me, I mean, you know, in Duesberg, I don't know what he does with, you know, with somehow looking at the price of gold and as if that really matters. But, you know, for most ordinary people and I include myself and you, Chris, and that, you know, we kind of and we decide if oil is is expensive or not by how much money it costs us to fill up our car.

00:07:51:01 - 00:08:11:21

Art Berman

Okay. Assuming that we have a, you know, a gasoline or a diesel powered car and and and I just filled mine and, you know, cost me pretty nearly 50 U.S. dollars. And I can remember a time not very many years ago where it cost me maybe 35. And so from my limited perspective, it costs me more today than it did then.

00:08:11:21 - 00:08:34:18

Art Berman

Therefore, the price of oil is more and I don't care about what gold says or I don't care about, you know, anything else. I just know that that that's a fact. And when I go to the grocery store with my wife and, you know, and she says, gosh, you know, I now the same pound of fish or whatever, you know, I you know, it used to cost me this and now it's two X that.

00:08:34:19 - 00:09:06:23

Art Berman

And I say, well, yeah, that's because the price of of energy is more and that translates into everything. And that's what I would like people to understand is that energy is the economy. And when the cost of energy increases, then the cost of everything, the cost of doing business, the cost of gasoline, the cost of fish, whatever you want to talk about, it all goes up because it is the basis of of doing all business.

00:09:06:23 - 00:09:27:18

Art Berman

Now, it's not proportional and it's not you know, it's not equivalent. I mean, the price of oil goes up 5% and maybe the cost of gasoline goes up 15%, but it always goes up. And that's the bottom line. That's what people don't understand. And people think, well, you know, inflation. I mean, that's a policy problem. No, it's not.

00:09:27:20 - 00:09:54:18

Art Berman

Inflation is because the cost of energy went way up after the pandemic for a variety of reasons. The economy came back to life. Russia invaded Ukraine. You know, name your poison. But the bottom line is, is that inflation is not you know, it's an abstract concept and it and it responds to the underlying living costs of everything, which eventually is based on energy.

00:09:54:20 - 00:10:21:06

Art Berman

And so, you know, well, people people in the U.S., I don't know what people do in Canada. Maybe they blame Trudeau. People in the U.S. blame Biden. Well, guess what? Inflation is a global phenomenon. And I don't think that Trudeau or Biden are powerful enough, even though they're powerful to create inflation in Hungary or Australia. I mean, it's inflation is a global phenomenon because the price of energy costs more than it did in 2020.

00:10:21:06 - 00:10:46:18

Art Berman

You know, again, end of story for me. But I don't expect everybody to, you know, to understand the logic behind that. But but what I want, everybody does, you know, at least the people listening to this podcast to understand is that energy is the currency of life. Ask any animal, they get it. They may not be able to speak it in language, but they get it totally.

00:10:46:19 - 00:11:06:01

Art Berman

Humans don't get it. Humans think that that the economy is about money. And but, you know, money, money doesn't have any value. Money is just a way that we exchange value underlying it. And that value is work or energy. I mean, everybody, I think, can admit that the economy is based on work.

00:11:06:01 - 00:11:06:17

Chris Keefer

Yeah, I mean.

00:11:06:19 - 00:11:08:17

Art Berman

People work. That's what makes the economy run.

00:11:08:18 - 00:11:28:20

Chris Keefer

I think it's a product of energy having been just so incredibly cheap and abundant for so long that you take for granted even the most important things around you. But I wanted to I want to introduce you to a little equation that I've been working on to try and understand our human predicament, to understand the hockey stick of GDP growth through the Industrial Revolution.

00:11:28:22 - 00:11:48:18

Chris Keefer

You know, I'm familiar with saying, well, it's just because of fossil energy, and that's definitely a big part of it. I came up with this kind of equation. It's got three variables in it. One is materials, one is innovation or technology and the other is energy. And they exist in this kind of dynamic equilibrium. Innovation and technology don't progress unless you have energy and materials.

00:11:48:20 - 00:12:16:10

Chris Keefer

And what I think is the source of the limits that we're running into right now is that our our materials are decreasing in quality or grades, etc., are going down. And we've been able to paper that over with more and more abundant, cheap energy such that as or grade, say, in Chile and copper mines go down, we can put more energy in the form of ammonium nitrate, blow up bigger rocks, make bigger pits, have larger trucks fired by, you know, diesel electric motors and move more rock, crush more of it.

00:12:16:10 - 00:12:53:04

Chris Keefer

The energy sort of papers over that. But the moment that we start running into constraints on on material quality, which is natural, we've as human beings, just like any other organism you're mentioning, we'll go for the the easiest sources of nutrients, whether that be material or energy first. That means that that's come down. And, you know, I think what we're starting to see maybe and people like you and I are worrying about is that the energy quality is starting to decrease or even that we're making policy choices to try probably quite in vain to move on, transition towards energy sources that how to lower energy, return energy invested or produce lower quality energy.

00:12:53:06 - 00:13:18:01

Chris Keefer

So with that is a bit of a framing. I want to understand just, you know, in terms of that master resource of energy and probably the the master of the holy trinity of fossil fuels, oil, what is oil? Because that seems to be a contentious issue right now. If you can break down what oil is, what oil is, how we define it, so we can talk about peak, what is actually peak and cheap.

00:13:18:03 - 00:13:59:08

Art Berman

Well, good. So oil is is is crude oil, which is a liquid at least at surface temperature and pressure that contains all sorts of very long chain complex molecules made of hydrogen and carbon. Okay. It is a liquid. And in and of itself it's not very useful for anything except to refine. And when it's refined, it can be converted by distillation into very useful products like gasoline and kerosene and jet fuel and, you know, a variety of other other things.

00:13:59:08 - 00:14:39:00

Art Berman

And so when people when we hear, you know, the international Energy Agency or somebody on CBC or CNN says, well, you know, oil demand is expected to go to 102 million barrels a day. Well, that's crude oil, plus a bunch of other stuff that includes other stuff like natural gas liquids. That includes, you know, other things like the volume change when you put something very dense like oil into a refinery, an outcome less dense products like gasoline and kerosene, there's a volume change of of a few barrels there.

00:14:39:00 - 00:15:13:17

Art Berman

So so there's there's crude oil and then there's a bunch of stuff that's that's layered on top of that. So the what's commonly called oil. Fair enough. You know, let's call it oil, but it's an awful lot of it today comes from natural gas, which doesn't really have anything to do with oil at all. So when you hear 100 million barrels a day of supply or demand or whatever, understand that the crude oil part, which is the critical part from an energy density standpoint, is about it's about 80%, about 80% of what's called oil is oil.

00:15:13:17 - 00:15:31:22

Art Berman

Now, Duesberg wants to you know, he thinks he just discovered sex and that he's the first guy that figured out that, you know, that there's a lot more going on. There's a lot more in the definition of oil than that crude oil. And I don't know why he's a smart guy. I don't know why he thinks that somehow everybody else missed that.

00:15:31:22 - 00:15:57:09

Art Berman

I've been in this business 45 years and, you know, 45 years ago, somebody sat me down and said, okay, this is what's oil and natural gas liquids and all these other kinds of things have always been part of oil. So but but your point that I think is important here, Chris, is is about quality. And so what can we do with crude oil that cannot be done with natural gas liquids?

00:15:57:09 - 00:16:21:04

Art Berman

And so, for instance, the majority of natural gas liquids, these are liquids that come from natural gas. They don't you have to process them through a plant. But the the predominant one is saying, okay, and most people don't even know what they're saying is or do they care about it. But but ain most the most the biggest use of our is to make plastic bags sort of a plastic feedstock.

00:16:21:04 - 00:16:43:02

Art Berman

It's also used as a bad substitute for methane, which is which is natural gas. But I mean essaying is probably I don't know, it's 50 or 60% of natural gas liquids. So right off the bat, you're talking about something that while it can be used as a fuel for the most part isn't it's may used to make bags.

00:16:43:04 - 00:17:10:20

Art Berman

It's not 100% true but just to keep it simple. Okay. And then the next thing the next biggest thing is propane. And, you know, propane imbues. A lot of people, particularly in rural areas, heat their houses with propane. So it is a fuel and that's great. But and there are propane trucks and you know in busses in some cities but for the most part, you know, you can't you can't just pull up to a a gas station, a propos paying in your car.

00:17:10:21 - 00:17:25:17

Art Berman

Okay. You can't run a jet with it. It's not the same. Butane is another natural gas liquid. We use that, you know, for lighters, Bic lighters and stuff like that. It burns. It's a fuel. But, you know, it's it's not a transport fuel. I guess that's the bomb.

00:17:25:17 - 00:17:27:07

Chris Keefer

And why not? Why not? Or does it you know.

00:17:27:08 - 00:17:28:09

Art Berman

All these natural is just.

00:17:28:09 - 00:17:29:06

Chris Keefer

An issue of the.

00:17:29:06 - 00:17:51:02

Art Berman

It's two lights. Okay. It doesn't have the it doesn't have the heavy hydrocarbons that give it the energy density that's needed to power a car or an airplane or, you know, or whatever. So so it all comes down to you were talking about energy invested versus energy return. I mean, you know, you can say I mean, okay, so let's go back.

00:17:51:02 - 00:18:13:15

Art Berman

I don't want to criticize Doom Berg so much except that he made himself Saddam vulnerable with all these goofy arguments. So, I mean, you know, is all alcohol the same, For instance? I mean, if I like whiskey and somebody offers me, you know, 3.2% beer, I'm going to say, forget that, buddy. You know, I said I wanted alcohol, but they're both alcohol.

00:18:13:15 - 00:18:34:10

Art Berman

Well, okay. Yeah, but one of them, the 3.2 beer or even 6% beer, it doesn't have anywhere near the you know, the the the buzz that whiskey does. Okay. Crude oil has a buzz and natural gas liquids are three 3.2% beer by comparison.

00:18:34:10 - 00:18:56:21

Chris Keefer

Am I understanding Du Berg's argument correctly? You know, Jesus turned water into wine, but I think there's this idea that we can turn beer into whiskey. And I don't know enough about distilling, but potentially you could distill beer into a higher alcohol concentration when we're talking about, you know, anything that goes into refineries, oil and sort of we can just do chemical, you know, complex chemical engineering to create whatever hydrocarbon molecule we want.

00:18:56:23 - 00:19:22:09

Chris Keefer

And I, I was chatting with a friend who's involved in the heavy oil's up in the oil sands, and we were talking about refining and the analogy of fission versus fusion. So, you know, fishing or breaking apart these really long heavy hydrocarbon chains to make, you know, products that you want, maybe diesel or more maybe more gas and don't really want more gasoline or, you know, fuzing these lighter hydrocarbon chains together to make heavier oil.

00:19:22:11 - 00:19:28:04

Chris Keefer

Can you can you do that? You know, it's just is it just a you know, a big enough investment or refinery? Is there big energy?

00:19:28:06 - 00:19:53:09

Art Berman

Of course, You know, okay. So again, you know, this is this is discovering sex and thinking you're the first person that's ever done it and you really want to tell the rest of the world about it because it feels so great. So, I mean, this this process of taking natural gas and and turning it into diesel and gasoline, you know, this this this was something that was figured out back in the early part of the 20th century.

00:19:53:11 - 00:20:21:02

Art Berman

And and Germany wanted to use it to power its army because Germany didn't have a hell of a lot of of oil. And and so, you know, if we're talking about hydrogen and carbon, which is what we're talking about, that's what oil is, that's what natural gas is, then if in a perfect world, all I need is enough is enough, you know, the right combination of carbon and hydrogen.

00:20:21:07 - 00:20:46:05

Art Berman

And I can make anything. I can make, you know, crude oil, gasoline, kerosene, whatever. But the question is, as you correctly point out, what is the energetic cost of doing that? And and so and not to mention the you know, the money cost of doing that. And so I do Amberg talked about this pearl GTL plant gas to liquids is what GTL means in Qatar.

00:20:46:11 - 00:21:10:22

Art Berman

Well, you know, I looked at that in some detail and the energy out versus the energy in is about 1 to 1. Okay. So it sucks. I mean, you know, no, no intelligent animal, which is a food source, you know, no elephant, no lion, no fish that only gave it the amount of energy that it took to eat it.

00:21:10:22 - 00:21:38:13

Art Berman

I mean, that's just stupid. Okay, So why why does Shell have a GTL plant in Qatar? Well, because Qatar supplies all the natural gas for free because Qatar has this gigantic gas field off in the Persian Gulf. That is what we call stranded. Okay. There's no way to to market the gas. They take as much of it as they can and convert it into into LNG, you know, liquefied natural gas and send it to Europe and whatever.

00:21:38:13 - 00:22:03:12

Art Berman

And there's still tons and tons of it left. So they're interested and let's let's use this stranded resource and we don't care about either the energy, the energetic budget or the money. They don't care about either of those. So hey, Shell, build us a build us, build us a shell, build us the plant, and we'll make all your costs go away and you can make gasoline and kerosene.

00:22:03:13 - 00:22:30:03

Art Berman

Isn't that cool? Okay. But in the real world, I mean, is that is that is that realistic? I mean, is that something that we're going to do? And and so you mentioned early in this discussion innovation. Okay. And I mean, we are we are great worshipers. We as a civilization at the altar of innovation and technology. And, you know, I mean, I like technology.

00:22:30:03 - 00:23:03:16

Art Berman

I like innovation. Who doesn't? But realistically, I mean, innovation and technology are castaways on this gigantic ship, which is powered by giant diesel engines and they are too naive to know that the boat is running on giant diesel engines underneath their feet. So in real terms, if you calculate the impact of technology and innovation on energy efficiency, it's about 1% per year.

00:23:03:18 - 00:23:19:19

Art Berman

Okay. I mean, it's good. It's nice. I mean, let's do it. I mean, we are smart. We figure out better ways of doing things. But I mean, if somebody offers me, hey, you know, I'm going to pay you 1% of your current salary to come to work for me, I'm going to tell him to go take a hike.

00:23:19:19 - 00:23:44:22

Art Berman

You know, I'm not interested. I mean, that's a rounding error. So, again, I'm not in any way, you know, saying that innovation and technology aren't important, but they're a very small piece of the overall picture. It's just we've pumped them up, you know, to imagine that they're you know, they're everything. And an energy technology is just it's a bigger straw.

00:23:45:00 - 00:24:02:08

Art Berman

It's just a more it's a quicker way of getting more energy out faster. And I'm not saying that's not important, but it doesn't create energy. It does not create energy. It just sucks it out faster. And there's some value to that, no doubt.

00:24:02:08 - 00:24:10:23

Chris Keefer

So yeah, again, getting back to that equation is Stephen King, economist that Nate's had on the podcast, and that's how I discovered him, has this great saying.

00:24:11:00 - 00:24:13:01

Art Berman

I know. Steve Yeah, he.

00:24:13:03 - 00:24:34:23

Chris Keefer

Says Technology without energy is a sculpture, but I heard a few more. This isn't from Steve, this is from a Twitter reply to that energy without technology is a fire. And then I just added another one here on here, which is innovation without energy is a hand ax. You know, going back to Homo erectus or something, Right. So there's this complex interplay.

00:24:34:23 - 00:24:57:19

Chris Keefer

I want to get to this idea of people kind of losing track of, you know, energy, source energy carry just the incredible amount of energy blindness that's around us, because that is very interesting conversation again, with my friend Chris Popoff, who has worked significantly in the oil sands in Alberta and what he was saying, the kind of analogy he was making, is that we are turning unconventional oil.

00:24:57:19 - 00:25:17:05

Chris Keefer

For instance, in the case of bitumen, we're sort of using the local energy reserves of Alberta, which are plentiful natural gas and this hard to extract bitumen. We're turning that bitumen into a battery. We're charging it with this natural gas similar to the Pearl GTL facility where the gas is stranded or, you know, you can't get it to market in Alberta or et cetera.

00:25:17:05 - 00:25:39:07

Chris Keefer

I mean, I guess that's the same situation. And in Qatar. So you're using that energy kind of for free to create a molecule to store that energy into a molecule that you can sell that does have economic value. I just thought that's interesting because you see that with hydrogen, you know, we're confusing an energy carrier as politicians do this all the time, thinking it's an energy source.

00:25:39:09 - 00:25:50:22

Chris Keefer

We have a lot of delusions around, say, grid scale batteries and being able to bounce the Rube Goldberg machine of of a you know, an all renewable grid, for instance. So maybe comment a little bit on on on some of that if you don't mind.

00:25:51:00 - 00:26:25:03

Art Berman

Sure. So I think the you know, the fundamental thing, I mean, people can get really, really glazed over and confused by what you just said and what I just have said. And in the interest of, you know, keeping it relatively simple, let's just let's just do it this way that another Canadian, Vaslav Ishmael, used to teach up in the University of Manitoba, he described what he called the four pillars of civilization.

00:26:25:03 - 00:27:08:09

Art Berman

These are four things without which civilization will collapse. Steel, concrete, plastic and ammonia. Ammonia for fertilizer. Okay. Now, of those four things, we don't know how to produce any of them at scale without fossil fuels, period. Let's say we don't know how to do it. It's not technically possible. So without steel, we have no buildings. Without concrete, we have no buildings and no highways without plastic, we have no electric cars because, well, electric cars are mostly steel and plastic.

00:27:08:09 - 00:27:37:09

Art Berman

Okay. We next time you go into a hospital or go for a medical checkup, look around the room and see how much plastic is in there. I mean, the health care industry is one of the largest consumers of plastic in the world. So we shut down our entire health care system without plastic and ammonia. I mean, if if it weren't for the fertilizer, are the comes from ammonia, which comes from natural gas, the Earth's population might be 2 billion, which would be a better thing for the planet.

00:27:37:09 - 00:27:57:18

Art Berman

But it's 8 billion and it's 8 billion because fertilizer has increased the carrying capacity of the planet. So, you know, so so right off the bat, none of that, none of the things that hold up our civilization are possible without fossil fuels. And for those who want to get off of them, then I'd love to get off of them, too.

00:27:57:20 - 00:28:23:12

Art Berman

But I'd also like to get off of them in a way that doesn't crater the whole civilization and create mass pandemonium. And, you know, in war and starvation and a lot of other things. So, you know, I don't have an answer to that. But but it's not it's not it's not binary, you know, it's not either or. And I hear anybody who says we need to get off of fossil fuels or people that say, no, we need to have more of them.

00:28:23:17 - 00:28:49:01

Art Berman

I'm sure they're both wrong, or at least that they have no comprehension about what they're talking about. So so for the average person, all we want to do, all is just have our lives be more or less okay. And I promise you that without the right fuels to provide us with these four pillars of civilization, our lives will not be okay.

00:28:49:01 - 00:29:15:23

Art Berman

At least okay in terms of, you know, whatever we think is normal. So keep that in mind when when you hear people who talk about, well, we want to do this, we want to do that, we want to transition away from and I always say great transition away from fossil fuels to what and what will those four pillars of civilization, what will my life look like after that?

00:29:16:01 - 00:29:39:11

Art Berman

And if somebody answers me honestly and says, well, your life will be a lot more difficult, you will be poorer, the world will be poorer, but you know, we're going to have a planet that's more in balance with the kinds of things that make the, you know, the quality of life on Earth better. Okay, now, now I know what I'm signing up for.

00:29:39:12 - 00:29:59:03

Art Berman

When people say, look, you know, all you got to do is, is go for our, you know, Green New Deal or the energy transition. And nothing's going to change. Nothing's going to change except you're going to be driving electric cars that a regular car. But life that is is a I was going to say that's a lie.

00:29:59:05 - 00:30:28:04

Art Berman

It's only a lie if the people saying it. No, it's a lie. If they honestly believe it, in other words, then and then it's not a lie. But it isn't true. It's just not true. And I'm not trying to be pessimistic or negative here. It's just back to your point, Chris, and that is if you're if you're using energy sources that are free to beer instead of you know, instead of Scotch whiskey, you're going to get a different you're not you don't have the same input.

00:30:28:04 - 00:30:29:12

Art Berman

You're not going to get the same. And I'm not.

00:30:29:12 - 00:30:32:21

Chris Keefer

Going to stay drunk for very long or. Yeah.

00:30:32:23 - 00:30:36:01

Art Berman

You're not going to get drunk very well either.

00:30:36:03 - 00:30:53:16

Chris Keefer

Well, there was, you know, alcohol consumed in huge amounts before before fossil fuels. But life back then was also nasty, brutish and short. And I think a lot of people are fooling themselves when they when they think it wouldn't be in the future without it. Unfortunately, I, like you, would love to see a you know, a beautiful utopia and everything in balance.

00:30:53:16 - 00:31:15:00

Chris Keefer

But we have to remember that we didn't live in harmony with nature. We died in harmony with nature. And it was mostly, you know, children under eight and and women and child. But it's so lovely not to have to go back there. But still, still find some good solutions. Before we get into even talking about solutions, I want to dig your dig your brain, maybe horizontally frack your brain to understand a little bit more about the shale revolution.

00:31:15:00 - 00:31:28:18

Chris Keefer

So, I mean, this really more than anything, I think put discussion about cheap oil on the back burner. The U.S. this year announced its highest production ever, 12 point. You'll know the number better than me. Million barrels per day.

00:31:28:20 - 00:31:30:12

Art Berman

13.30.

00:31:30:13 - 00:31:41:14

Chris Keefer

Five. So absolutely extraordinary. Can you talk to us a little bit about the significance of the shale revolution? And then we'll sort of get to where we are at right now, the red, green problem, etc.? Take it away.

00:31:41:16 - 00:32:12:20

Art Berman

Sure. So oil prices went from their all time low in 1998 to their all time high in 2008. In a brief ten years, because nobody knew where the next barrel of oil was going to come from, that all the discoveries that were being made were in very remote, hard to access places that took eight or ten years to get from discovery to first oil.

00:32:12:20 - 00:32:34:20

Art Berman

And by the time they did, older fields were depleted. So we were you know, we were on a treadmill. We weren't you know, we weren't increasing or decreasing our supply of oil. And yet the population of the earth kept growing. And so the peak oil discussion grew up around the fact that, my God, I mean, we have a big problem.

00:32:34:22 - 00:32:57:20

Art Berman

We have big problems starting now, and it's going to get worse unless we figure out how to change this. And so shale came along, not that it was anything new. I mean, the big oil companies have been studying and evaluating the shale basins for as long as I've been in the oil business. 50 years. Okay. Nothing is new.

00:32:57:20 - 00:33:21:22

Art Berman

Everybody knows what's out there. There just wasn't the the and oil sands, same thing. I mean, oil sands didn't really take off. They false started a few times but they didn't really take off until around 2005 2006 when investors said, you know what, I think oil prices are going to stay high for a long enough period that this makes sense.

00:33:22:00 - 00:33:55:10

Art Berman

Okay, same thing happened with shale. And so these resources that we always knew were there suddenly or not suddenly, but eventually there was a high in a belief in a long enough period of high prices that people finally said, okay, let's figure out how to make this work. And so ever since then, ever since about 2010, the only growth in world oil supply and we're talking, you know, crude oil or the whole shebang, you know, the Bloomberg everything is oil.

00:33:55:12 - 00:34:22:19

Art Berman

The only growth has been from shale. Okay? So the only thing that's keeping our heads above water, so to speak, as far as not having a gross undersupply of energy is shale. Okay. So so we cannot I cannot understate the significance that shale bought the world ten or 15 years of supply that we didn't think we had. All right.

00:34:22:19 - 00:34:53:06

Art Berman

That's the good news. The bad news is, is that those fields and they are fields are starting. They're they're approaching or have peaked. It depends on which one you're talking about. And the physics of of fluid flow in the earth says that once they peak, they're going to start to decline. And so what I see happening is we are returning to the same situation we were in in 2005.

00:34:53:08 - 00:35:21:16

Art Berman

We're not there. We won't be there for a while. I'm not in the sky is not falling. These fields are not going to stop producing, but they're going to be progressively producing less and less and it's going to cost more and more as it does for all fields. Okay, there's nothing there. We put this differently. The way that we drill and complete shale wells is very different from conventional wells.

00:35:21:18 - 00:35:40:12

Art Berman

Once discovered, a shale well is exactly like any other oil well it produces. It peaks, it declines. A shale play is just a fancy word for a field, and it behaves exactly like any other except in.

00:35:40:12 - 00:35:40:19

Chris Keefer

Fast.

00:35:40:19 - 00:35:45:21

Art Berman

Forward right fields decline, except how it fast forward.

00:35:45:21 - 00:35:52:05

Chris Keefer

What do you. I mean, it seems like those wells, their lifespans are much shorter, They produce much quicker but they're.

00:35:52:06 - 00:36:28:01

Art Berman

they decline. Well. A Yeah. So I mean, this is true for conventional oil too. It just depends. I mean, for instance, the thing that makes offshore and deepwater commercially viable is that it produces huge volumes early on in its life, declines quickly, but that pays back the gigantic investment. So, you know, in general you're kind of right, but there's this sort of critical interplay between rates and reserves that most people not only don't, but probably don't need to understand.

00:36:28:01 - 00:36:49:05

Art Berman

But so there's nothing you know, the high rate of return is a good thing. I mean, you know, I wish that the government would give me, you know, all of money they took from me as Social Security tomorrow as opposed to, you know, dole it out a few thousand dollars a month because it's worth more to me today than it will be in ten years.

00:36:49:07 - 00:37:23:09

Art Berman

So but but in general, yeah, I mean, the the the shale wells do decline quickly and therefore you got me this is your red queen analogy. So we we have to keep drilling more and more wells, keep the production level up. And what I've discovered and I've I've, you know, posted about this, it's all free at our firm and dot com is, is that the the quality or the the the amount of of of oil that we're going to get out of newly drilled wells is less than wells that were drilled just a year or two ago.

00:37:23:11 - 00:37:53:22

Art Berman

Okay. And that's a very clear trend and exactly completely expected and predictable give you know any oilfield you look at, it's not like, my God, what happened? What went wrong? Nothing went wrong. That's the way oil fields peak and then decline. So so what I'm saying back to where I started is we're starting another cycle where pretty soon when people understand what's happening, we're not going to know where the next barrel of oil is going to come from.

00:37:54:00 - 00:38:19:10

Art Berman

That's going to keep us from having a big shortage. And therefore higher prices in the world. Unless something happens like the global economy craters, which it may or, you know, we just decide to use a whole lot more oil, which and and energy, which, by the way, is the solution to the planetary and the climate crisis. Nobody wants to think about it but that it's a very clear and obvious solution.

00:38:19:12 - 00:38:32:03

Art Berman

But so but if business as usual, we're embarking on a period of of prolonged long scarcity and therefore higher prices for energy. And that's that's a problem for all of us.

00:38:32:03 - 00:38:54:08

Chris Keefer

So, you know, I've seen this. I haven't been able to take a deep dive. The source literature this near 99.9% correlation between energy use and GDP and energy use and materials, you know, do and others postulate that, you know, there'll be a 2% addition of supply year over year over year. It's kind of convenient because that's sort of the target for for economic growth.

00:38:54:14 - 00:39:21:14

Chris Keefer

If the shale revolution did not occur and if that additional supply had not come on, would you think it'd be fair to say that economic growth would not have been able to proceed 2% per year? And if if shale does peak like is is oil in particular so tightly coupled to GDP that we're likely to see the economy cease growing or that 2% growth growth rate stop if if if we really do peak those sales and there's not another supply, say, Russian shales that come on.

00:39:21:16 - 00:39:53:15

Art Berman

Yes. Simple answer. Yes. Oil consumption and GDP have a statistically perfect correlation. Okay. You know, there's a a correlation coefficient called r squared, which is just how well, you know, a a trend fits a scatter of data. And you take Canada, you take the United States, you take any country, Japan, take Botswana, and you cross plot energy versus GDP.

00:39:53:17 - 00:40:32:01

Art Berman

And the correlation is like 0.97. So it's it's one it's a perfect correlation. All right. So it makes sense that the more you work, more work you put into your economy, the more productive it is. And most of the work in an economy comes from oil. It's just not that complicated. So so then, you know, then there are people like the International Energy Agency and some others who say, ah, yes, but we are decoupling because of the miracle of efficiency and technology.

00:40:32:03 - 00:41:08:17

Art Berman

We are now able to produce more GDP as a ratio of energy than we were before. To which I say nonsense. You show me a perfect correlation, I'll show you a perfect correlation, and you tell me why it's not perfect. And so what those guys are doing is they'll take, for instance, an economy like the United States, and they'll say, well, look, you know, the GDP has increased and now you guys are exporting a lot of your energy, are actually using less energy.

00:41:08:17 - 00:41:35:15

Art Berman

So there that proves it. And I say, well, yeah, except that we've exported most of the energy consumption to places like China. Okay. They're using the energy over there and they're selling us goods and services which don't show up on our balance sheet. Okay, Now, so, so let's stop with this nonsense of, you know, just telling me what's happening in your house and let's talk about the neighborhood.

00:41:35:17 - 00:41:58:01

Art Berman

So let's talk about the world. And what's happening in the world is that is that the efficiency improvement, as I said in the beginning, is about 1%. And if you think that that's enough to, you know, to continue the economic growth at two or 3% a year with higher energy prices, then let's see if that works. I would not bet on that.

00:41:58:01 - 00:41:59:11

Art Berman

I would not bet on that at all.

00:41:59:11 - 00:42:26:12

Chris Keefer

Well, let's I mean, let's talk a little bit about responses to energy shortages in the past. You know, I think the opiate crisis is a great one. It wasn't, I guess, related to geology and and technology, but to politics at that point. But this was a major economic shock. And I guess if that are to relationship is there, that would be the main explainer that you would have for the economic woes of the late seventies into the eighties until we started to recover from that.

00:42:26:14 - 00:42:47:11

Chris Keefer

The one of the big responses, obviously in Europe where a lot of oil was being used, particularly for electricity production at the time, was a pretty massive nuclear build out. So nowadays is and I'm not sure if this is related so much to energy shortage, is climate concern the kind of trends that the dominant sort of transition we're heading towards is renewables?

00:42:47:11 - 00:43:12:00

Chris Keefer

I'd like I'd like you to sort of compare and contrast responses the energy properties of nuclear versus renewables in terms of that that response. And as you know, oil is here and we're getting a similar kind of cutbacks as we saw during OPEC. What do you think are the options on the table to try and deal with that, not not solve it and have ongoing 2% economic growth forever and everything's great and, you know, it's linear and everything's going to improve.

00:43:12:02 - 00:43:16:06

Chris Keefer

What are your thoughts there in terms of replacement energy?

00:43:16:08 - 00:43:47:00

Art Berman

Yeah. So first of all, at least as far as North America goes, we were doing just great after World War Two, using natural gas as our one of our dominant fuels for for heating and, you know, and various other things. And it wasn't until the 1970s that the US kind of ran out of gas or started running out of gas, and we said, my God, we better building out nuclear.

00:43:47:00 - 00:44:19:22

Art Berman

But a key omission there is coal. Coal. I mean, we imagine that coal has always been used for heating and electricity. But the truth is, is that the major build out of coal and nuclear in the United States was after the energy crisis of the 1970s. So, you know, that that that's news to a lot of people. But the to your to your question about renewable energy, I mean, I am totally in favor of renewable energy.

00:44:19:22 - 00:44:48:20

Art Berman

I am totally in favor of using as little fossil energy as I'm actually in favor of using as little energy as possible. As I said, I mean, to me, that's the solution. But but the important thing to understand about renewable energy when we're talking about renewables is that we're talking about electric power, predominantly electric power. Okay. We can you know, we can we can slice and dice that a little bit, but that's mostly what it's used for.

00:44:48:20 - 00:45:19:19

Art Berman

Okay. Now the and that's great, but the problem is, is that electric power is only about 20% of total energy consumption in the world. Okay. See, so let's just say that tomorrow we we can somehow snap our fingers and all electric power in the whole world is generated by renewables. Okay? We have not begun to solve our problem yet because we haven't addressed the other 80%.

00:45:19:19 - 00:45:45:06

Art Berman

Now, as far as as climate, as far as CO2, if we're able to shut down all the coal plants that are currently generating electricity, that's a big plus. Okay. And that's that's the part of renewable energy is electric power that I am totally, totally in favor of. Okay. I mean, that's that's a great, great thing. And that's the reason why renewables are focused on electric power.

00:45:45:07 - 00:46:12:05

Art Berman

But it's only a 20% solution to the problem. Now, what about the other 80%? And people say, well there's electric vehicles. Well, okay, yeah, but, you know, we're talking about a super long process there. I mean, you know, you got something like, you know, 300 million cars, maybe three, maybe 400 between the United States and Canada. And most of those are gasoline or diesel.

00:46:12:05 - 00:46:36:22

Art Berman

And most of those are going to they got 20 years of life in them. And, you know, people aren't going to drive them to the landfill and buy an EV, assuming they can afford it. And they're all sorts of other problems associated with that that we won't get into. But but, but so the bottom line is that the renewable solution is fundamentally a solution for electric power and not very much of anything else.

00:46:36:22 - 00:46:44:13

Art Berman

And that's that's a you know, and I've just said, you know, there are some real benefits to that, but it's it's not a solution.

00:46:44:18 - 00:47:07:15

Chris Keefer

Here's my concern and why I swing on the nuclear side rather than the renewable side. I totally take your point. Electricity is a relatively small slice of the pie, although obviously there's moves to electrification and nuclear can to some degree district heating, low grade process heat. And if we want to really get into high temperature heat, you know, we need lots of electricity for electric arc furnaces if we were to truly go that way.

00:47:07:17 - 00:47:26:22

Chris Keefer

But here's here's my objection to the the the renewable future is, you know, I think energy quality is incredibly important. And what we're doing is using our lowest entropy, highest quality fuels because, you know, wind and solar infrastructure doesn't emerge out of thin air, grow out of the soil, I think is many, many green people believe it does.

00:47:27:00 - 00:47:49:01

Chris Keefer

We're using the, you know, the met coal. We're using the natural gas fired electricity. We're using the oil for the residents of the wind turbine blades. And we're taking some of the world's most precious energy that's ever been created over hundreds of millions of years. And we're channeling it into these short lived bits of infrastructure that, you know, don't provide heat and basically just provide stochastic electricity.

00:47:49:01 - 00:48:08:13

Chris Keefer

And it's cheap If if if it has to be producing when you need it. And that's infinitely expensive. If you need electricity, that's not there. So that's that's why I tend to be more on more on team nuclear not seeing it as a panacea. I'm I think there's a value proposition but it is one of the most technically and institutionally challenging things that humanity has ever put itself to.

00:48:08:15 - 00:48:32:14

Chris Keefer

That being said, you know, in response to the oil crisis in Europe, you know, peak nuclear deployment was 1979. There were 234 nuclear plants under construction in 1979. That was an extraordinary pace of production. I don't think we're you know, I'm a pessimist, a bit like you may be. I don't think we're likely to hit those kind of numbers because demographically the situation is very different with the industrialized the West.

00:48:32:16 - 00:48:52:12

Chris Keefer

Everyone knows how to code, no one knows how to weld. But just in terms of making that comparison between renewables and nuclear, that's that's why I tend to side on anti-nuclear. Again, not not saying it's a panacea and will deliver us deliver us from, you know, from salvation. But but you know, I read your article let's move on I think and forget about why can't we just get over nuclear.

00:48:52:12 - 00:48:55:01

Chris Keefer

And I'm just curious exploring that a bit more with you.

00:48:55:03 - 00:49:43:22

Art Berman

Well, to me, nuclear is part of the electric power situation. I mean, nuclear, you know, district heating, blah, blah, blah. Okay. Maybe in the future. But I mean, realistically, I mean, you know, 99% of nuclear's uses is electric power. So we're still solving the 20% part of the solution. And even if you allow for all sorts of advances and, you know, whatnot, I think in that, you know, I've got to I calculated in one of my recent posts on nuclear that now I mean, we've got to we've got to build, you know, like three times more nuclear plants every year than we have in the last several years just to get to 4% of total

00:49:43:22 - 00:50:05:19

Art Berman

energy consumption from nuclear and and what do you got at 4%? I mean, you still got a rounding error to zero. So I'm not in any way being negative about nuclear. I mean, I see its benefits. I'm all for it in many ways. I'm I'm a little concerned about nuclear waste and, you know, in some of the human errors involved.

00:50:05:19 - 00:50:28:06

Art Berman

But let's just assume for argument's sake, you know, just like a physics problem, that friction doesn't exist. Okay, let's assume that human error doesn't exist and nuclear waste isn't a problem. You just nuclear just cannot get there from here. All right? You know, to make it real simple for people, we just waited too damn long, and we just don't have enough time.

00:50:28:06 - 00:50:55:02

Art Berman

If you believe that there is any planetary or climate window of urgency, and I do in the next 30 years, there's just not we just if all the money in the world were available and all the permit problems and environmental problems were brought to zero, we just can't build nuclear fast enough to move the needle. So again, I'm not saying we shouldn't look at it.

00:50:55:02 - 00:51:19:12

Art Berman

I'm not saying we I mean, we are going to going to expand nuclear, incredibly. And that's another thing I want people to understand when I say, you know, 4% or 2% is what nuclear is going to end up being by 2050. I mean, that's as a percent of total consumption south, total consumption continues to go up. I mean, two or 4% doesn't mean that nuclear isn't growing.

00:51:19:12 - 00:51:42:16

Art Berman

It's growing a lot. It's just that renewables are projected to grow a whole lot more. So, again, you know, all these solutions end up at the same place for me, which is they're all designed to try to keep the party going. Okay. And nobody's nobody's ever nobody stopping to say, well, wait a minute, who's going to clean up the mess?

00:51:42:18 - 00:52:07:07

Art Berman

You know, we've been partying for, you know, for 75 years in, you know, at least after World War Two. And we've created quite a mess for the planet. All right. So when are we going to clean up the mess? Well, we'll worry about that later or, you know, somebody else will do that. No, I mean, the mess is right now and and the mess is is manifesting itself in a lot of ways.

00:52:07:09 - 00:52:36:11

Art Berman

And if you don't care about climate change, you know, maybe you care about the fact that we've lost 69% of animal species in since 1970. Okay. I mean, that that's a stunning number. I mean, in 50 years we've lost you know, we've lost almost 69% of fish, reptiles, insects, etc.. And maybe you don't care about snakes, reptiles, fish and all that kind of stuff.

00:52:36:11 - 00:53:03:07

Art Berman

But the wealth, the thing that provides human prosperity is the wealth of the earth. And we're just we're poisoning it with our growth, with our expansion. And nobody and that's the party that needs to stop. You know, I mean, we can argue all day, night and night about what's causing climate change and whether it's real and whether more CO2 is actually good for the planet or not.

00:53:03:07 - 00:53:20:19

Art Berman

I think that's nonsense. But let's just, you know, back to a physics problem with no fiction. Let's, you know, if if we're if we're poisoning our backyard gardens, pretty soon we're going to have to move out of our house. But let me let me. And if if what we want is. Go ahead.

00:53:20:19 - 00:53:43:06

Chris Keefer

I was going to come in a little comic relief there, but, you know, in all seriousness, you know, one of the big sort of positive press of energy for nuclear these days is, you know, you had Sam Altman, the CEO of of Open Air, saying we're going to need an energy revolution in order to power all these server farms to run air.

00:53:43:06 - 00:54:04:03

Chris Keefer

And this is one area where I'm very in favor of renewable energy, because if we're about to be destroyed by an overlord, I'd really like it to be powered by the wind and the sun so that we can have a little German dunk of lousy and get a second chance to, you know, to to what's the Terminator, the kind of evil intelligence in Terminator Sky.

00:54:04:05 - 00:54:08:21

Chris Keefer

God I'm blanking on my 1990s references here, but you get the point.

00:54:08:23 - 00:54:42:02

Art Berman

Yeah, I do. Yeah, fair enough. Okay, but. But this is all fantasy, isn't it? So, I mean, and ultimately, the concern I have with all of these imaginary futures is that they are imaginary. They're not none of them are grounded in what's feasible. Okay. And that includes even the, you know, the International Energy Agency's net zero. I mean, if you if you spend 5 minutes looking at what has to happen to make that work, I mean, again, I'm not criticizing them.

00:54:42:02 - 00:54:45:20

Art Berman

I'm just saying, you know, it ain't happening. It's just not happening.

00:54:45:22 - 00:55:06:12

Chris Keefer

Why are why are otherwise smart people? And I guess won't comment on the institutions being smart or dumb, but I'm going to infer that they're a bit dumb just for the very fact of producing such documents. But why are smart people doing this kind of modeling, you know, pretending to demonstrate things, which I think, you know, you in a much more informed position than I am, look patently ridiculous when you step back from it all.

00:55:06:12 - 00:55:28:17

Chris Keefer

Because, you know, I think the climate skeptics see it and they see it's motivated by, you know, and it is motivated this earnest optimism. You don't want to accept that your life is coming to an end or potentially there's, you know, species threatening shortages on the horizon. So, you know, this seems very psychological, like energy is so esthetic in terms of, you know, the visions that we have for the future.

00:55:28:17 - 00:55:40:17

Chris Keefer

Yeah, it'd be lovely if it were just natural flows of the wind and sun and we don't need to build anything significant. And we could have the quality of lives that we do. We just don't. But getting back to that question, why do smart say dumb, dumb things in this arena?

00:55:40:19 - 00:55:56:21

Art Berman

Well, that's a smart question, Chris. And they're not saying dumb things. They're just taking a very narrow view things. Okay. So and this is what I mean, this is what pragmatic humans do all the time. I mean, that's sort of.

00:55:56:22 - 00:56:14:06

Chris Keefer

But but this would never like, you know, this kind of modeling would never have occurred in the 1970s and eighties. Is this a question of sort of like hard men make good times, Good times makes off men, soft men make hard times. Are we in a cycle like that or. I look at some of the in Ontario here we have a document which is planning our net zero by 2050.

00:56:14:08 - 00:56:41:00

Chris Keefer

It says we're going to increase nuclear by 18 gigawatts. We're going to have 16 gigawatts of hydrogen. They don't really talk about how we produce that. We're just going to burn it. I mean, this is coming from a independent electricity systems operator, frankly, who should know a little bit better. But we're willing to do these pie in the sky plans and assumptions because, you know, we do recognize that climate is very serious and we're doing whatever contortions we can to try and make it all fit together.

00:56:41:00 - 00:56:53:23

Chris Keefer

But I mean, again, as a as a medical doctor who's got four years of formal energy training, it looks preposterous to me and not something that would have happened in the seventies or eighties. So you've been around, you've been around.

00:56:54:00 - 00:56:55:02

Art Berman

You've been around for a while.

00:56:55:02 - 00:56:59:01

Chris Keefer

I don't know. I just assumed that together.

00:56:59:03 - 00:57:35:23

Art Berman

Yeah, I'm I'm older and, you know, I, I think a case can be made for the fact that that that humans are become are doing and increasingly stupid things. But I don't think that humans have gotten any stupider. And there is a there is a nuance distinction there. But but I go back to, you know, the answer I began before and that is, look, if you think the climate change is is the existential threat to civilization, then that's the only thing you're going to look at.

00:57:36:01 - 00:58:04:01

Art Berman

All right. So what needs to change? What needs to happen to limit the negative effects of climate change? Well, we need to limit it. We need to limit emissions. Okay. So what can we do to limit emissions? And every step down that pathway is a derivative. Okay, I'm getting farther and farther from the underlying reality and somebody says, Hey, I know we can use hydrogen to do a lot of the things that we're currently using oil for.

00:58:04:01 - 00:58:36:07

Art Berman

Okay, great. That box checks. Hey, you know, we can use nuclear to do x, y, o check cap because all I want to do is get down the road to lower emissions. All right? And what what all of those those smart people are doing is, you know, they're just, you know, don't bother me because I'm on deadline. I'm on deadline to figure out a way to lower emissions, you know, And, you know, an art saying, wait a minute, where's the hydrogen going to come from?

00:58:36:09 - 00:58:54:06

Art Berman

What do you do about the cost of it? No, no, no. I'm just I'm just trying to get to just trying to get to deadline here. And then there's the you know, then there's the annoying person who says, well, wait a minute, But but all you're trying to do is keep the party going and and and continue the growth of the human enterprise.

00:58:54:11 - 00:59:29:08

Art Berman

And you're not looking at what all this does to the environment, the bigger environment, what it's doing to, you know, to biodiversity and species and pollution and. Well, yeah, because I'm on deadline, man. I'll worry about that later. Okay. So, so what I, what I like to think may be naively or or egotistically is that there are a few people around, people like Nate Hagans is saying, wait a minute, my job is to look at the big picture and try to help you understand how all these pieces fit together.

00:59:29:08 - 00:59:46:15

Art Berman

And and, you know, maybe that's part of what I'm doing and part of what you're doing to Chris we're trying to say, wait a minute, slow down a little bit. You know, let's think about you know, let's not stop doing what we're doing, but let's think about what if we play this forward, You know, where are you going to get the hydrogen?

00:59:46:17 - 01:00:02:05

Art Berman

What are you going to do about the fact that hydrogen leaks through everything? It's the smallest molecule in the world. What are you going to do about the fact that it's incredibly flammable? What are you going to do about the fact that we don't know where it's going to come from, What you know, these are kind of problems.

01:00:02:07 - 01:00:10:02

Art Berman

So they're still smart people. They're just super focused and their view is very narrow. And and they and they got a dream.

01:00:10:04 - 01:00:32:16

Chris Keefer

It's been a long time since I read this book, but Bill Gates had a book called How to Avoid a Climate Disaster. If I've got to take the title right. And you know what his basic premise was is that right now there's this gap. He it sort of the green team between how much an electric vehicle costs versus an internal combustion engine or I think the only favorable one was a heat pump versus a gas furnace.

01:00:32:17 - 01:00:52:05

Chris Keefer

Already there might be some cost savings there, although the capital cost of changing over a perfectly good dense furnace probably doesn't work out. But suffice it to say that this concept of a green him, of course he's stuck in fantasy and mythology about money and it being detached, I think from energy, because it seems to me that, you know, we talked about Vice Left's mills, four pillars.

01:00:52:07 - 01:01:17:04

Chris Keefer

There are pilot projects we can do green steel, at least secondary steel. There may be some ways I'm not sure. I haven't looked into concrete quite as well, but there are processes. However, Bosch we could run it with a whole bunch of hydrogen that's produced from green hydrogen. But the only way that these pilot projects are even happening, that we even have the budget to say, let's throw some money at this is because of the enormous subsidy from fossil fuels that there's just we're swimming in this wealth of cheap, abundant fossil fuels.

01:01:17:04 - 01:01:54:00

Chris Keefer

And when that disappears, the pilot projects let let alone trying to pay down that green team. In terms of the differing change in cost, which I would say is probably related to differing in energy return and energy invested seems to just vanish. And that's that's another reason why I guess I'm a little bit of a serial pessimist on on this notion of energy transition and also why I'm, again, in the advocacy that I do do trying to preserve and build out an energy source where you're taking really low entropy, high quality fuels and turning them to something else that produces a very low entropy, constant electricity or heat, etc. as imperfect as it is, is

01:01:54:00 - 01:02:16:07

Chris Keefer

a swap out. That's that's kind of the analysis that I've done and why I direct my efforts as I do, because I think a little bit unlike Nate's, I tend to be a little more on Team Human. On the human side. I have a you know, I've got a stake in that. I've got a five year old son and I'll fight like hell to make sure that, you know, he has a decent life and, you know, not a nasty, brutish and short life as a diatribe art.

01:02:16:08 - 01:02:19:00

Chris Keefer

But let's see what you can do with that pseudo questions.

01:02:19:06 - 01:02:53:10

Art Berman

You know, it's it's fair enough. I mean, I've got four kids and nine grandchildren, so I'm I'm on the human side, too. But so, yeah, everything you said, I, you know, is correct in my view. But, but here's here's the part that I want to focus on. You mentioned steel and you mentioned concrete. Okay. So, you know, I've looked in in great detail to, you know, to recycling and, you know, what actually can be done with with recycling concrete and recycling steel.

01:02:53:12 - 01:03:28:06

Art Berman

And there's no doubt that we should be doing that. But I got to tell you, Chris, that that all of those ideas are just ideas right now. You know, there may be a pilot here and there, but none of those has any demonstrated able scalability or economic viability to it. So even if I allow, you know, again, back to no friction, let let's just say that, you know, we somehow could continue to have abundant fossil energy.

01:03:28:12 - 01:03:53:09

Art Berman

And the only problem with fossil energy is that it's destroying the planet. Okay? So we want it We want to replace it because it's destroying the planet, not because it's, you know, the quality's going down or any or the cost is going up. We still end up with this huge problem of Well, but yeah, but, but we don't know how to do that yet or we haven't, you know, we've done it in a tiny little, little pilot.

01:03:53:11 - 01:04:19:10

Art Berman

But we know that, that when we try to upscale pilots, 95% of them fail for one reason or another. So we're you know, we've taken this little baby step into what a what an imaginary future of a circular economy and recycled steel and recycled concrete might look like, but it's purely imaginary. Now, again, I'm not trying to say we shouldn't imagine.

01:04:19:10 - 01:04:59:03

Art Berman

We shouldn't dream. We should. But let's understand that where we are right now is we're stuck with what we got. We are absolutely stuck for certainly the next decade or two, regardless of the rate of change with what we got. And so what I'd like everybody to do is if you think there's a problem either with climate or with the ecology, and I do and if you imagine that that might have a relatively short to medium term negative effect on the quality of life for human beings, and I do, everybody should care about that.

01:04:59:03 - 01:05:27:16

Art Berman

Even if you don't care about the climate and the insects and the reptiles, then it might be worth taking a step back and saying, Well, of all these things that we think we can do, you know, to limit emissions, which of them have the greatest probability of being able to expand in the time available? And as soon as you do that, you throw out a whole bunch of them, okay.

01:05:27:18 - 01:05:48:22

Art Berman

And so with all those off the table, you know, now things just got a whole lot harder, but a whole lot simpler. What we're doing right now as a civilization, certainly in the West, is we're just we got this firehose of public money that's going out there and they say, okay, here's, you know, hundreds of billions of dollars.

01:05:48:22 - 01:06:11:09

Art Berman

And somebody says, hey, I got a great idea. I'm going to invent some sort of a dam carbon vacuum cleaner, done. Here's $10 million for that. Somebody. Hey, I got an idea. You know, I know how to power a light bulb by screwing it into the dirt. And my God. Okay, here goes. $5 million. And if we throw all this money out there some, surely somebody's going to come up with something.

01:06:11:11 - 01:06:43:12

Art Berman

That's where we're at right now. And and I'm not criticizing it. I'm just saying, you know, I'm a scientist. I describe the state of things right now. If we if we if we cared. And I'm not suggesting that we should if we sat down at a table and said, alright, of all those goofy ideas, which ones of them have any possibility of making of moving the needle and let's just talk about those, we would make our problem a whole lot simpler, but more difficult.

01:06:43:14 - 01:07:20:03

Art Berman

Okay. And what I'm saying is I already know the answer. I'll save you guys a lot of trouble. Use less energy. Use less energy. Emissions go way down, emissions go down, growth goes down. Our the human enterprise stops poisoning the planet and incurring, you know, and and driving out all of our our ecological wealth. That's the solution and then somebody says, yeah, but that will mean lower economic growth and that's bad.

01:07:20:03 - 01:07:41:01

Art Berman

And I say, well, which is it going to be? You want to have lower economic growth or you want to die? I mean, that's kind of, you know, it's not going to happen in my lifetime or hopefully in years. But that's that's sort of the existential question we're asking. And what we're trying to do is come up with an answer that that doesn't force us to look at either of those.

01:07:41:03 - 01:08:31:09

Art Berman

And the answer is so simple use less energy. It's that's it, but no one's going to do it. So here's the here's the future. Here is the solution. We know the answer. Nobody's going to buy it. Therefore, or nature will impose the solution upon us. Nature will conspire to create a situation nation in which, because of all the reasons that you described, the decrease in quality of energy, the increasing cost of energy, all the reasons that I described of not being able to solve our problems with renewable energy or not enough of them, of not scaling down the size of the human enterprise eventually and sooner than later, I think we will find ourselves in

01:08:31:09 - 01:08:46:02

Art Berman

a in a crisis, a catastrophe in which supply chains collapse. The financial system collapses. I don't know. And again, I'm not trying to be negative here. I'm trying to say there are useful outcomes. Now.

01:08:46:04 - 01:08:47:06

Chris Keefer

I know, I know.

01:08:47:08 - 01:09:23:16

Art Berman

There's a difference between objectivity is not pessimism. Okay? That you know that somewhere, you know, the the the financial overshoot is going to cause a contraction, maybe a substantial contraction of of available credit, and that's going to slow the economy. Wars are happening right and left. I'd like to think there are solutions to those, but the pattern seems to be increasing wars more and more fiscal spending, more and more creation of debt and money that we don't have, which is constrained the financial system.

01:09:23:16 - 01:09:47:09

Art Berman

So, you know, I'm not even talking about the energy supply yet. I'm talking about, you know, Nate's got this great slide, the four horsemen of, you know, the next decade. And so at some point something is going to going to happen, and I don't think we're going to go extinct. You know, I don't think it's going to be Mad Max or, you know, or something even worse Terminator.

01:09:47:11 - 01:10:07:18

Art Berman

But it's going to be it's going to be bad enough that we're going we're going to be forced not by choice, forced to scale back our activity. And that's a bad way to deal with a tough situation. But I think that's that that's that that's what's probably going to happen.

01:10:07:18 - 01:10:29:14

Chris Keefer

Yeah. I mean, I've appreciated Nate's work because of the way he situates, you know, I mean, again, many, many different facets ecology, energy, finance, etc.. But just understanding human beings as any other organism with you know we share someone's DNA with a banana, for God's sakes. But there is no living organism on the planet that will turn down an energy bonanza.

01:10:29:16 - 01:10:48:15

Chris Keefer

They're going to go eat at the trough and very full. And we may have sapiens in our name. Weismann But I don't think that from a genetic level or any different, we're going to have to leave it there. I mean, I'm going to steal this the last last for frank reflection. You know, I think I don't disagree with you in many respects.

01:10:48:17 - 01:11:13:15

Chris Keefer

I do think that triage is a concept that brings emergency medicine where, you know, really it's utilitarian philosophy of trying to mobilize available resources which are finite. So you have the maximum benefits, you know, again, which is why I find myself in this predicament arguing for nuclear power not as a panacea, but as a potential better option and a way to to make the decline a little smoother and less bumpy anyway.

01:11:13:17 - 01:11:26:19

Chris Keefer

You know, I think some of my listeners will be a bit frustrated. I talked a bit too much. I wanted to kind of build this relationship and friendship, frankly, and I'd love to have you back to just, you know, pick your brain a little bit more just on some of the technical details, because I think that's a huge strength of yours.

01:11:26:19 - 01:11:39:03

Chris Keefer

You're obviously think deeply on the philosophical side as well, but I'm hoping we can have you back at some point to get into driving some technical details. Right. We'll talk a lot less and listen a lot more. But again, thank you, sir, for making the time to come on decouple.

01:11:39:05 - 01:11:41:16

Art Berman

I've enjoyed it and I look forward to talking some more.

01:11:41:16 - 01:11:42:07

Chris Keefer

Chris Good. Our.