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www.littlebear.comCountyFuel.ppt

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www.littlebear.comCountyFuel.ppt Powered By Docstoc
					  A primer for local officials on
fiscal policy in an environment
     of energy restrictions
                or
        Don’t be fuelish!
          Gregory Travis,

        greg@littlebear.com
            The basic thesis
• Future supplies of gas and liquid hydrocarbon
  fuels (gasoline, diesel, propane, natural gas,
  etc.) are constrained by fundamental supply
  issues which cannot be mitigated
   – The availability of those fuels will become more
     and more restrained in the future
• “The doubling of oil prices in the past couple
  of years is not an anomaly, but a picture of
  the future.”
   – United States Army Corps of Engineers, “Energy
     Trends and Implications for U.S. Army
     Installations”
• We will not have a substitute for those fuels
A crash course in resource
         geology
           Resources 101
• Reality: You cannot produce (mine,
  extract, etc.) any natural resource until
  you have first found it.
                       QuickTime™ and a
             TIFF (Uncompressed) decompressor
                are needed to see this picture.

• You find “easy & large” deposits of any
  resource first and “hard & small” ones
  later
  – Think of an easter-egg hunt
     You can’t produce what you
            haven’t got
• This fundamental reality means
  that the production (extraction) of
  any non-renewable natural
  resource follows a characteristic
  bell-shaped curve.                                      QuickTime™ and a


   – Production starts out slowly,
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     increases to a maximum at
     approximately 1/2 of the total
     resource, then falls steadily
   – For fossil fuels, this curve is called a
     “Hubbert” curve, after geologist M.
     King Hubbert
    A Hubbert curve



          QuickTime™ and a
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What are we finding?

                                      • Remember, you
                                        can’t produce what
                                        you didn’t find first!
           QuickTime™ and a
                                      • We’ve found all
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    are needed to see this picture.     there is to find
   It’s not for lack of trying
                                     • We were/are drilling like
                                       mad
                                        – But recently industry is
                                          “giving up” and investing
                                          their money elsewhere
          QuickTime™ and a
TIFF (Uncompressed) decompressor     • This graph shows net
   are needed to see this picture.
                                       discovery minus
                                       production
                                        – Since 1980 have been
                                          “living on principle” --
                                          production exceeds
                                          discovery
                                           Production follows discovery
                QuickTime™ and a
                  m
           QuickT i e™ and a
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T IF F (Uncompressed) decompr essor                                                              TIFF (Uncompressed) decompressor
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                                                                                                                                                         QuickTime™ and a
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   •                 Like discovery, production has characteristic bell shape
                     (Hubbert curve)
                      – This happens at the individual well, field, nation,
                          and world levels                                                                                                      QuickTime™ and a
                                                                                                                                      TIFF (Uncompressed) decompressor
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                            • Aggregate of well curves = Field Curve
                            • Aggregate of field curves = National Curve
                            • Aggregate of national curves = World Curve
       United States Production

                                       QuickTime™ and a
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•   Hubbert predicted, in 1958, that the United States would peak in 1970
     – His prediction destroyed his career
•   Hubbert was wrong
     – The United States did not actually peak until 1972
     Back to today, why is supply
            constrained?


                                        QuickTime™ and a
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•   Like the United States in 1972, the World peaked in 2006
•   Experience shows that, once peak occurs, you can only mitigate (slow) decline
    in production. You cannot reverse the decline.
      – I.e. ANWR, tar sands, technology, etc. can not “fix it,” can only ease the
         pain
Your job
                       Realities
• Global liquid hydrocarbon (oil) production is in
  decline
   – Approximately 2% a year if we’re very lucky
   – 8+% a year if we’re very unlucky
• “Saudi Aramco's mature crude oil fields are expected to decline
  at a gross average rate of 8%/year without additional
  maintenance and drilling … potential drilling in mature fields
  combined with a multitude of remedial actions and the
  development of new fields, with long plateau lives, lowers the
  composite decline rate of producing fields to around 2%”
   – Saudi Aramco spokesperson, April 2006
• “As Saudi Arabia goes, so goes the world”
   – Houston investment banker & Cheney energy task
     force member Matthew Simmons
 And what they mean for you
• Gasoline and diesel fuels will become
  increasingly expensive and less
  available
• But what’s even worse than high energy
  prices?
  – Energy price volatility
     • Volatility makes it impossible to plan and
       predict the future
          Make a decision




• Do you want to be in the front or the
  back seat?
  – You probably owe your constituents the
    former
          Front-seat driving
• Accept depletion & get out in front of it
• Hardwire into department budgets annual fuel
  use decreases
  – Total volume of fuel, not cost of fuel
  – I suggest 2.6% a year in accord with the Oil
    Depletion Protocol
    (http://www.oildepletionprotocol.org/)
• Negotiate now long-term contracts with fuel
  suppliers with those amounts plugged-in
 How do we reduce fuel use?
• Efficiency
• Conservation
• Investment choices
                 Efficiency
• Change out county vehicle fleet as fast
  as possible
  – Smaller vehicles
     • SUVs->Cars->Motorcycles
  – More efficient vehicles
     • Diesels and hybrids
             Conservation
• Require written justification for all use of
  county vehicles
• Consolidate trips
                 Investment
• Cease dis-investment
  – It’s not rational to expend any public funds
    on strictly automotive infrastructure,
    especially on long-term infrastructure
    investments
     •   Road widening
     •   Road creation
     •   Parking
     •   Etc.
          Investment, cont
• Make new strategic investments
  – Reduce vehicle dependence over time
    • De-consolidate schools (reinvent neighborhood
      schooling) to reduce busing costs
    • Geographically consolidate government to
      reduce transportation costs
    • Cease all taxpayer subsidies of sub/ex-urban
      greenfield development
       – This tax base is likely to collapse as the underlying
         property values collapse
Questions?

				
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posted:2/18/2010
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