Transportation Energy: Supply,
Demand and the Future
http://www.uwm.edu/Dept/CUTS//2050/energy05.pdf
Edward Beimborn
Center for Urban Transportation Studies
University of Wisconsin-Milwaukee
Presentation to the District IV Conference
Institute of Transportation Engineers
June, 2005, updated September, 2007, June 2008
The problem
† Transportation in nearly 100% dependant on
petroleum as a source of energy.
† Global supply and demand trends will have a profound
impact on the ability to use our transportation system
and on economic activity.
† Alternatives are slow in development and
implementation. Short term impacts are likely to be
extreme and massively disruptive
† The ability to finance future transportation programs
will be severely impacted.
† Related issues – Global climate change, air quality
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Demand
† Worldwide demand for petroleum is
growing, particularly as related to economic
trends in China, India, Eastern Europe and
other developing areas.
„ China oil demand +104% by 2030, India +91%,
Africa +105%, Central and South America +98 to
112%, US, Europe +22 to 34% (Exxon)
† Transportation energy demand in the U.S.
has increased because of the greater use of
less fuel efficient vehicles. – a
transportation finance bonus
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Fuel Economy by Model Year
30
Average MPG
25
Cars
Both
20
Trucks
15
10
1970
1975
1980
1985
1990
1995
2000
2005
Model Year
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2
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Supply
† Different predictions of the total global supply
of petroleum and related products.
† Some believe we may have reached the
global peak of production. (peak oil)
† Rates of discovery have slowed, there may
be few places left to find petroleum.
† As easy sources are used up, the cost, risk
and energy required to extract the resource
will increase.
† Major oil companies have reduced estimates
of reserves and reduced investment in finding
new sources
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Basic Numbers
† World demand – 30 Billion barrels/yr
† U.S. demand –
7.5 Billion barrels/yr., about
5 Billion barrels/yr. imported
† US. Reserves – about 21 billion barrels from all
sources – off shore, AWNR (4 Bbl), etc.
† Remaining sources require greater energy to
extract.
† Demand increases in the future?
†
http://tonto.eia.doe.gov/dnav/pet/pet_crd_gom_s1_a.htm
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U.S. DOE, source:
http://tonto.eia.doe.gov/FTPROOT/features/longterm.pdf#search='oil%20supply'
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World Conventional Oil Production & Discoveries
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OIL DEPLETION -THE HEART OF THE MATTER, C.J.Campbell, The Association for the Study of Peak Oil and Gas
9
Campbell’s prediction “the end of cheap oil”
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Definitions
† Sustainable development meets the needs of the
present without compromising the ability of future
generations to meet their own needs. (UN World
Commission on Economic Development, 1987)
† A system is sustainable if resources renew
themselves at the same rate or faster than they are
used.
† Example: sustainable forest: Supplies fuel, lumber
and food are used at a rate less than the rate of
growth , forever.
† For more definitions, see TDM encyclopedia
http://www.vtpi.org/tdm/tdm67.htm
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What sustainability really means
† A system that is not sustainable will eventually
collapse
† Collapse occurs quickly with increasing demand
and a declining supply
† The higher it rises, the greater the fall.
† the only questions are
„
„
„
„
When will the collapse occur?
How will it occur?
What happens during collapse?
What needs to be done to cushion the collapse?
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When petroleum demand exceeds supply,
collapse occurs …
60.00
50.00
40.00
30.00
20.00
10.00
0.00
1940
-10.00
1960
1980
2000
Supply
2020
2040
2060
dem and
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U.S. DOE viewpoint,
source:http://tonto.eia.doe.gov/FTPROOT/features/longterm.pdf#search='oil%20supply'
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Collapse - worst case
† Collapse of petroleum system could have sever
consequences
„ Global economic recession/depression
„ Severe inflation
„ Investor speculation leading to wide price swings
„ Removal of environmental controls over remaining
resources
„ Transfer of wealth to countries with remaining
resources
„ Rise of autocratic governments
„ Increasing poverty in third world countries
„ Political/military conflict over remaining resources
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Increasing supply paradox
† If additional supply is found or
developed, it can result in a delay of the
collapse, but the magnitude of the
collapse will be greater.
† Efforts to deal with the collapse are
generally good things to do, even if the
collapse never occurs.
„ Alternate fuels
„ Conservation
„ Demand reduction
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Sources of supply
† Remaining sources require more energy input and are
more difficult to process than in the past
† Many producing countries have moved past their peak
production and are in a period of decline and are
becoming net importers. (Oman, Indonesia, China,
UK, Iran?)
† Exceptions are in the middle east (Saudi Arabia, Iraq,
Kuwait, Abu Daubi)
† No matter when we reach the peak, most of the
world, including the U.S. will be highly dependant on
sources from a few mostly unfriendly, hostile foreign
locations.
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Date of peak,
source http://www.hubbertpeak.com/campbell/
Iraq
Abu Dhabi
Saudi Arabia
Algeria
China
Nigeria
Mexico
Norway
UK
Russia
Iran
Canada
Kuwait
USA
Venezuela
Libya
1940
1950
1960
1970
1980
1990
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2000
2010
2020
2030
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9
Time to Depletion Midpoint
yr 2000, source: http://www.hubbertpeak.com/summary.htm
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Canada-oil shale/net energy??
Estimated Reserves,
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
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Remaining reserves and potential new finds,
(Billions of Barrels)
Source http://www.hubbertpeak.com/campbell/
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Where does the Money go?
(Emirates Palace Hotel and Conference Center, Abu Daubi)
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Some Quotes
† "Simply put, the era of easy access to energy is over. In
part, this is because we are experiencing the convergence
of geological difficulty with geopolitical instability... [W]e
are seeing the beginnings of a bidding war for Mideast
supplies between East and West.“ David J. O'Reilly
Chairman and CEO, ChevronTexaco
† “The supply side is limited, We are reaching the limits of
the planet very soon” Dr. Ali Samsam Bakhtiari, Senior
Planner, National Iranian Oil Company
† “By some estimates, there will be an average of twopercent annual growth in global oil demand over the years
ahead, along with, conservatively, a three-percent
natural decline in production from existing reserves. That
means by 2010 we will need on the order of an additional
50 million barrels a day.” Vice President Cheney
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The Future??
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Prices
† We are operating on a very thin, thin edge to balance
supply and demand. Minor events can significantly affect
prices.
† The current system is not sustainable
† The result will be a series of major oil price shocks with
rapidly increasing prices with a high potential for conflict
over remaining resources.
† Short term effects are likely to be very severe with few
options. “over a barrel”
† Highly visible prices
† Prices will rise and fall, but are likely to generally continue
upwards.
† Speculators lead to wide price swings
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Crude Oil Price Trends:
Source: http://www.eia.doe.gov/emeu/cabs/chron.html
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Recent World Oil Prices
http://tonto.eia.doe.gov/dnav/pet/hist/wtotworldw.htm
140
Dollars per barrel
120
100
80
60
40
20
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The Future
† No easy long term solution, a
combination of thousands of actions
„
„
„
„
„
„
Price increases
Conservation
Alternative Fuels
Increased efficiency
New sources
Economic impacts
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Can Conservation Solve the
Problem?
† More efficient vehicles, price pressures
and general conservation can delay the
problem, but are not enough.
† “You can only turn off the lights once”
† Price increases will force more
conservation
† More conservation of fuels means less
revenue for transportation purposes.
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The Future
† Can Technology and Alternative Fuels solve
the problems?
„ Possibly, in the long run, but some will take a
long lead time to happen
† Technology development - 6-15 years
† Infrastructure deployment -10-15 years
† Market penetration occurs along with above
† Fleet turnover – 12 years
† Total 20-40 years for full effect to be felt
„ Fuels that use existing infrastructure can
somewhat shorter lead time.
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Alternative Fuels
† An ideal fuel has
„ high energy content per unit of volume –
(vehicle range),
„ is easily converted to useful transport energy,
„ is easily transported,
„ doesn’t take more energy to produce than it
returns as a useful fuel (positive EROEI),
„ has low emissions and
„ has an existing infrastructure
† (Gasoline or Diesel fuel)
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Alternative fuels
† Most require substantial energy to produce,
what is the net gain?
„ Ethanol converts diesel fuel and natural gas into
diesel fuel and a gasoline substitute, a small
gain
„ Hydrogen from natural gas or electricity
„ Methanol, ethanol need fuel, fertilizer and heat
from fossil fuels
„ Electricity as a source to convert fuels, generally
uses coal, natural gas or nuclear fuels
„ New petroleum sources are more difficult to
extract and require substantial energy input
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Contingency Planning for the near
term
† Conservation is not enough and there is not adequate
time to develop and deploy alternatives
† “If it could happen, it will happen” So, what
strategies should be used when it does happen?
† Prepare for the worst, hope for the best, Similar to
preparation of a disaster plan
† Must plan for the crisis in advance because there is no
time to plan for it when it does actually happen.
† Goal: To increase the ability to respond to an energy
shortfall through an adjustment of demand without
causing severe problems for households, or the
economy.
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Question of Allocation &
Conservation
Who gets the scarce resources and how is
that decision made?
„ Who is vulnerable to price swings and
availability issues?
„ What essentials do these groups need?
„ At what stage are these essentials provided?
„ Prioritize policies based on effectiveness
(work trips, short trips, long trips, etc.)
„ Implement contingency plan
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Transportation Implications
† Major financial shortfalls because of
increased costs, flat revenues and needs to
pay off bonding
† Substantial price increases will affect
demand somewhat, but there needs to be
reasonable alternatives available.
† Travel growth will slow for multiple
reasons, most trends that led to fast
growth in the past have moderated or
reached a saturation point.
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Conclusions
† The current system is not sustainable
† Energy issues will dominate the future
of transportation and the economy
† Failure to act early will lead to more
severe consequences
† Contingency planning is essential
† Transportation finance will be radically
affected by future energy factors
† To do project planning or development
without a thorough knowledge of
future energy situations is a waste of
time
† Become knowledgeable about the
issue
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Web sites
Millions of web sites on Google or Yahoo
http://www.hubbertpeak.com/index.asp
www.eia.doe.gov
http://www.eia.doe.gov/oiaf/ieo/index.html
http://www.eere.energy.gov/afdc/
http://www.oilanalytics.org/netentop.html
http://tonto.eia.doe.gov/FTPROOT/features/longt
erm.pdf#search='oil%20supply’
† i/
† http://www.drydipstick.com/
†
†
†
†
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†
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