The End Of Exurbia and High Noon in The Desert

The Quest For Complex Understanding of Nuanced Realities

The January/February 2006 issue of the World Watch Magazine features an article by Dr Vaclav Smil, a Distinguished Professor at the University of Manitoba at Winnipeg, who is also an award-winning researcher and the acclaimed author of a number of books on the subjects of energy, the biosphere and the civilization.

The article is titled Peak Oil: A Catastrophist Cult and Complex Realities and can be viewed in PDF form here at the U. of Manitoba site.¹

In the words of the author, the purpose of the article is to "dismantle the foundations of the new catastrophist cult" -- the conclusions by "peak oil advocates"² (Colin Campbell, Kenneth Deffeys, et al.) These conclusions, in Dr Smil's view "are based on interpretations that lack any nuanced understanding of the human quest for energy, disregard the role of prices, ignore any historical perspectives, and presuppose the end of human inventiveness and adaptability." The author slams the "peak-oil groupies" with the accusation of spreading "the culture of doom", and raises the following key points to rebut their arguments, on which (the points) he then elaborates in the article:

"First, these preachings are just the latest installments in a long history of failed peak forecasts.

Second, the peak-oil advocates argue that this time the circumstances are really different and that their forecasts will not fail—but in order to believe that, one has to ignore a multitude of facts and possibilities that readily counteract their claims.

Third, and most importantly, there is no reason why even an early peak of global oil production should trigger any catastrophic events."

Among his elaborations on the point number three, Dr Smil presents this argument:

"[A]s already noted, price feedbacks are inexplicably missing from all accounts of coming oil depletion and its supposedly catastrophic consequences. Instead, there is a risible assumption of demand immune to any external factors. In reality, rising prices do trigger powerful adjustments. Between 1973 and 1985 the U.S. Corporate Average Fuel Economy standard was doubled to 27.5 miles per gallon, but further improvements were not pursued largely because of falling oil prices: a mere resumption of that rate of improvement technically easy to do) would have us averaging 40 mpg by 2015. A more aggressive adoption of hybrids could bring the rate to 50 mpg, more than halving the current U.S. need for automotive fuel and sending oil prices into a tailspin."

I believe that, considering the credentials of the author, this is inexcusably hapless, misleading and misguided analysis. After all, isn't it true that the energy consumption, and oil consumption in particular, has been steadily increasing, despite well-publicized improvements in energy efficiency of individual cars and trucks, as (a) more and more people (notably, in the emerging economies such as China and India) participate in daily driving, and (b) people drive longer and longer distances (notably, with the continuing suburbanization and "exurbanization" in North America)?

Other issues aside, how can one analyze the trends in U.S. energy consumption without taking into account the overall trend for exurbanization of the U.S.?

Generally, it is not my view at all that questions like these can be answered with statistics, however, what statistics can be good for is to clearly highlight a trend the context for which has already been sufficiently established. Take a look, for example, at this U.S. Census Bureau statistics of "New Privately-Owned Housing Units Authorized in Permit-Issuing Places". If we consider one-family units alone, about 1.7 million of them is being created in the U.S. per year (the U.S. Census statistics for home construction are on annualized basis^2a), of which about one-half (867,000) are in the fast-growing South (as of this writing, the latest month for which the data is available is November, 2005). And the trend is accelerating. The fastest growing South shows 16.8% (!) increase in one-family units year-to-year, while the U.S. overall is "only" 7.7%. Where do you think the bulk of these units go?

in In this year-old article in The New York Times [free registration required] NYT columnist David Brooks quotes an observation that "America's population is decentralizing faster than any other society in history", and continues:

The New York Times -- November 9, 2004
Take a Ride to Exurbia
By DAVID BROOKS, Orlando, Fla.

"People in established suburbs are moving out to vast sprawling exurbs that have broken free of the gravitational pull of the cities and now exist in their own world far beyond. Ninety percent of the office space built in America in the 1990's was built in suburbia, usually in low office parks along the interstates. Now you have a tribe of people who not only don't work in cities, they don't commute to cities or go to the movies in cities or have any contact with urban life. You have these huge, sprawling communities with no center. Mesa, Ariz., for example, has more people than St. Louis or Minneapolis."

However, this is just, so to speak, a social observation, a note on living conditions. In a very recent article The New York Times makes a step further and connects the two realities:

The New York Times -- December 18, 2005
Far and Away: In Exurbs, Life Framed by Hours Spent in the Car
By RICK LYMAN, FRISCO, Tex.

"Frisco is an exurb caught in an adolescent age of gawkiness, where every major artery is under construction, or soon will be, and a drive across town can be a maddening crawl between orange cones and roaring bulldozers.

America is growing at its fastest in places like this, at the margins of some of its biggest cities, in the domain of the automobile and the master-plan subdivision, far from the urban centers that spawned them.

They begin as embryonic subdivisions of a few hundred homes at the far edge of beyond, surrounded by scrub. Then, they grow - first gradually, but soon with explosive force - attracting stores, creating jobs and struggling to keep pace with the need for more schools, more roads, more everything.

And eventually, when no more land is available and home prices have skyrocketed, the whole cycle starts again, another 15 minutes down the turnpike.

But in the meantime, life here is framed by hours spent in the car.

It is a defining force, a frustrating, physical manifestation of the community's stage of development, shaping how people structure their days, engage in civic activities, interact with their families and inhabit their neighborhoods."

One can only wish that the great newspaper demonstrated the insight and/or courage to mention the degree of sensitivity of this way of life to the oil markets' dynamics in the context of described realities -- let alone to comment on possible changes in the daily routine, populace's sentiment, and politics that might affect these currently fast-growing communities in a not-too-farfetched case of "decreased affordability" of oil and energy as a whole.

It wouldn't take a whole lot of imagination to visualize the type of liability that these communities would present to themselves and to the society as a whole in case of "oil markets becoming disorderly". It is unconscionable, however, for a society of responsible grown-ups not to even entertain the consequences of such a lifestyle, practiced by tens of millions of people (with millions more joining every year), in the epoch that we are entering. I would like to consider this -- purely hypothetical, but more probable than some people would be willing to let on -- scenario. From geopolitical standpoint, such lifestyle represents a phenomenal strategic disadvantage (imagine the logistics of policing, providing aid to, and preventing their life from becoming desperate in a crisis for tens of millions of people in dispersed communities, when military personnel, equipment and supplies will be probably needed elsewhere). From the financial standpoint, it presents a risk of a colossal default and the consequent write-off on tens of millions of mortgages, which, without a doubt, would collapse the world's (not just U.S.) financial system. Just to put things in perspective: the Long Term Capital Management collapse in 1998 would have had an impact on the economy that was estimated at 100 billion dollars. Well, if you consider the average mortgage size to be (to pick a number) $200,000, it would take a write-off of "only" half a million mortgages to make the same kind of a financial impact. Half a million one-family homes are being constructed in only a matter of a several months in the South alone. Do you think that any adjustments to the short-term interest rate the the Federal Reserve could make would be able to have any noticeable impact at all under such conditions? By the way, it is not difficult to imagine the impact that such an event would have on the dollar as the world's reserve currency, the dollar-denominated debt all over the world, and on the oil markets, which would be prevented from stabilizing ever again. I am sure that I would be counted among the "catastrophists, spreading the culture of doom" by Dr Smil and the like-minded people, but it is my firm view that people grossly underestimate the risk of a scenario under which the living arrangement and the infrastructure of exurbia would present a clear and present danger to the national security of this country. If members of Al Qaeda have infiltrated the urban planning circles of the U.S., the best strategy they can pursue from their perspective is simply to allow the current trend to continue.

The financial leverage can be represented as a kind of an upside down trapezoid, whose base -- the short of the two parallel sides -- represents how much was invested, and whose top -- the long side -- represents how much money is controlled. The short side (the base) of the leverage trapezoid in the case of LTCM was about $4.6 billion -- this is how much the Fed had to "persuade" the biggest financial firms to invest to prevent the whole trapezoid to collapse. The long side was estimated at $100 billion -- this would have been the impact of the leverage on the economy had the trapezoid been allowed to collapse.

The mortgages represent the base -- the short end of the leverage trapezoid, as colossal and highly sophisticated derivatives portfolios in countless banks are built on leveraged mortgage loans. The type of leverage that LTCM used (over 20 times) is probably on the extreme side, however it is unquestionable that the financial impact of the collapse of millions of mortgages, should it ever happen, will be much, much bigger than the total of the mortgages^2b. To put it in perspective, the short side of the mortgage trapezoid is much larger than the long side of the LTCM trapezoid was. Although the mortgage system has sophisticated built-in risk mitigation mechanisms with part of the risk borne by the U.S government, part of the risk borne by financial institutions and part by individuals the sheer magnitude of the impact will ensure that all these will be no more helpful than extra layers of cardboard walls as a protection against an explosion of a nuclear reactor. The U.S. and the world financial and economic landscape will never be the same after such an event. The political implications of this are anybody's guess.

It is also very obvious that, in the case of suddenly skyrocketing energy prices, people will use everything in their power to mitigate the crisis short term in such a way that will necessarily execerbate it longer term -- for example, by going deeper into debt -- before radically changing their lifestyle under such conditions. This is because people typically even consider emergency relocations from their homes and their communities only as a matter of the last resort, in periods of strife and turmoil. (Actually, it is not so clear what is the cause and what is the effect here, because periods of strife and turmoil happen when people are forced to leave their communities -- and by the way, I hope you don't think that cities and near suburbs will suddenly become more affordable and offer attractive alternatives to millions of ex-exurb residents who came to an unexpected realization that the far reaches may had not been such a great idea to begin with, as their affordability turned out to be more illusory than reality-based)

My personal view is that, in our society as currently observed, high oil prices play a very valuable role (and they thus should really be much, much higher), as they serve as a sort of a painful feedback signal for a child who burns himself by touching the hot iron before grabbing it, instead of listening to his Mom who admonishes him to stay away from it. Pain is the child's only incentive, as he still lacks the full understanding of the consequences of his actions, and has yet to learn to think ahead. The somewhat high energy prices are currently the only limiting factor for exurbanization. If one imagines that the dynamics of the oil markets would suddenly turn around, and the oil prices temporarily drop to mid-1990s levels, this would only present a powerful additional boost for continued ex-urbanization, as people who have been priced out of the suburbs would continue to move farther and farther into the outer reaches of what Jim Kunstler calls the "asteroid belts" of the society.

Also, note that, if one "talks the talk" that the market forces will offer solutions that will mitigate our energy problems, one really should "walk the walk" and give the markets a chance to do this work. This means that one really shouldn't attempt to control the market prices by political or anti-market means, such as by releasing the oil from strategic petroleum reserves, much less by cajoling Europeans to release oil from their strategic reserves for our consumption. How can we expect to know what kinds of solutions the markets are capable of finding if we are too weak to let them, as our politicians succumb to the slightest political pressure and are afraid to take any heat at all?

For example, as soon as the gasoline prices go above a certain level, you see senators here and there push for temporary lifting of the gas tax, and thus score points with their constituents. Excuse me, but is it not the raison detre of higher prices in the market system, which should, by definition, to limit consumption of the scarce commodity? How can you expect any help from the markets forces under such circumstances? To use oil from strategic reserves in order to sustain the exurban development and not allow hummer dealers to avoid bankruptcy, i.e. use oil from strategic reserves in order to create infrastructure that is designed to increase our future non-negotiable oil demands -- can anything be more shortsighted and misguided?

In the society as infantile and as non-attentive to reality as ours, the ex-urbanization is taken as a welcome trend by almost everybody:
- by would-be home owners who see this as an opportunity to get "affordable" living in the "nice" environment (and energy worries be damned!);
- by the politicians who advertise the view of non-negotiable way of life (which must be good because people want it);
- by the economists who know that home construction, furnishing and financing have become the primary engine of the US economy (that also cannot be outsourced! a major plus), and who are concerned only with the year-to-year growth, not with longer-term consequences;
- by Wall Street, which is mostly concerned with the same;
- by the real estate industry;
- by the mortgage financing industry;
- by the homebuilders;
- by the municipalities;
- by Wal-Mart and its immitators;
- by the automakers;
- by the land owners;
- and, last but not least, by oil companies...

These are all very powerful forces. And who tries to counter them -- James Howard Kunstler? Well, who listens to him?

Thus, in such a society hypothetically cheap energy prices (should they ever return) would act like a Mom who gives her child painkillers and leaves him to play with a hot iron. Both she and the child will worry about the consequences later.

So, how can a Distinguished Professor and an energy author ignore these realities as he attempts to analyse trends in the US oil consumption?

Here, for example, is a worthy reply to Vaclav Smith from an interview with one energy expert, taken shortly after the infamous blackout of August 2003. I apologize for the extended quotation, but it is necessary to make an important point:

"The recent blackout is a great example of the lack of any systemic thinking in our culture. Part of the reason for the blackout is because energy is so cheap. If we in North America lived more like Europeans, who consume no more than half or 2/3 of what we consume, we would greatly lower the need to move large blocks of electricity around and hence reduce the risks of transmission failures. But people are not willing to change. As if SUVs, some weighing 4.5 tons were not enough, people are now buying Hum-Vs, military assault vehicles just to go to the local supermarket. If this is not energy insanity, what is?

Q: What do you see as possible solutions to our energy problems?

Both energy and goods are so cheap. If energy prices and the capital cost of big consumer items increased, people would be forced to deal with these problems. But in the US prices would have to increase a great deal before people change their ways: as economists would say, it is all very inelastic here. People are living so far away from where they work, that we've gone beyond suburban housing—we're now seeing ex-urban housing, with people commuting 80 miles to work in some cases. Even if gasoline prices double or triple, these people are not going to give up their houses because they have to pay higher gas prices. They'll just pay more. That is what I call infrastructural inefficiency.

And even efficient systems are predicated on energy use. My house is energy super-efficient. It's so well insulated that I have an air-to-air heat exchanger so that carbon dioxide doesn't build up inside. So even in my efficient house I must have a device that is running 24 hours a day.

If our housing system was designed with higher residential density we would be more efficient because we'd require fewer infrastructures and hence less energy to build and to maintain them. But so much of new housing in US and Canada is now located on ever larger lots, this requires much more infrastructure—from copper wiring to snow cleaning machinery to maintain the streets. We're spending more energy just to keep it all running.

Q: Do you think that people's habits can change? Can mentalities change?

You can't get people to shrink their current usage rapidly. It can happen, perhaps, but very, very slowly. If the recent blackout had lasted three months, then people would do something. We act only when prices increase dramatically or when the hardship is not just fleeting. It would require a real constant commitment. [...]

I heard an interesting statistic recently: over 70% of people who don't have SUVs would love to have them but don't because they can't afford them. And, in the same study, 20% of people would love to buy a Hum-V, but they can't afford it. We could consume so much less—but the choices seem to be running in the opposite direction."

As you can see, this interview demonstrates a sophisticated understanding of the link between energy consumption and the living conditions, and very fairly describes the oil prices as inelastic (or, to use Dick Cheney's term, non-negotiable) In the expert's analysis, people are very slow to change their living conditions and to make life-style adjustments, and so it takes truly monumental price changes to achieve this affect -- and cause equally monumental disruptions in people's lives (the kind of developments that fall under Kunstlerian circumstances are propelling us category).

Well, you may be interested to know that the expert who is quoted in the interview is the same expert who wrote the article in World Watch -- Dr Vaclav Smil, the Distinguished Professor in the U. of Manitoba at Winnipeg, the acclaimed author and researcher. The interview itself can be viewed here. The irony here is that Dr Smil attacks Drs Campbell, Deffeys and others for worrying about exactly the type of factors that his older interview showed him himself very much aware of (and these worries proved absolutely correct by the course of the events of the past 2+ years), but which his current analysis conveniently fails to mention at all, as they would instantly disqualify his attack and make him look very biased and ridiculous.

Thus, it is not clear to me exactly what kind of "nuanced understanding" lack the members of the supposed "catastrophist apocalyptic cult" and in what way they "disregard the role of prices" and "ignore any historical perspectives". What is clear, however, is that the Distinguished Professor here is engaged in a "peevish exercise in intellectual dishonesty", a term originally used to describe another energy expert and author.



* * *

High Noon In The Desert
(with apologies to both Julian Darley and Matt Simmons)

On November 17, 2005 The Wall Street Journal published an article titled Solar's Day in the Sun? by Rebecca Smith, a WSJ's staff reporter. (WSJ Online requires subscription, but the article can be viewed here as a PDF file or here in a text only version; curiously, Chicago Tribune ran the same story on December 4th)

The article describes some industrial-scale solar-based power generation projects currently in an early development stage, and comments on the prospects of the solar industry in general. One of such projects is described thus:

Solar's Day in the Sun?

High Costs of Supplying Electricity Embolden Two California Utilities to Bet on Alternative
By REBECCA SMITH
Staff Reporter of THE WALL STREET JOURNAL
November 17, 2005; Page B1

Ambitious plans to cover two big swaths of California desert with solar dishes could finally help the energy-producing technology make the leap to industrial-scale development. Stirling Energy Systems Inc., of Phoenix, hopes to construct 20,000 solar dishes covering four square miles of the Mohave Desert near Victorville, Calif., each dish pointing skyward to collect the sun's energy and convert it into electricity that would flow 80 miles south to power-hungry Los Angeles. The solar encampment, if eventually built, could produce 500 megawatts of electricity, enough to meet the daytime needs of 300,000 homes, doubling the state's solar capacity. The project cleared a hurdle last month when state regulators approved a 20-year power-purchase agreement between Stirling and Southern California Edison, a unit of Edison International.

The type of devices that Stirling Energy Systems Inc. (SES) is planning to use to convert solar energy into electric power are the so called stirling engines connected to electric power generators. A stirling is an incredibly ingenuous type of a heat engine whose early models go back almost two centuries. Stirling represents an external combustion engine type, whereby the flow of heat is applied from the outside of the engine and thus can be more easily controlled, unlike in an internal combustion engine found in a typical car, as well as in the vast majority of petroleum-burning engines today. Wikipedia, HowStuffWorks, and this and this articles in Mechanical Engineering Magazine offer good descriptions of this technology, its history, and associated pros and cons.

One of the most important "pros" of the stirling engine-based solar solution is its high efficiency, far exceeding that of photovoltaic (PV) systems. This press release from Sandia National Laboratories, a US Government-owned organization focusing on renewable energy research and working closely with SES, cites solar-to-electric power efficiency reaching 30% with stirling solutions, an unheard-of level of efficiency for PV. Another advantage is that power generated by stirling-based systems is grid-ready and can be fed into our existing electric infrastructure immediately at the point of generation, without requiring extra layers of costly conversion, inevitably leading to additional losses in efficiency. Needless to say, SES fully utilizes modern material science and computer technology in their solar units, which utilize space-age materials and advanced system automation. Sandia's PR release describes it thus:

"Each unit operates automatically. Without operator intervention or even on-site presence, it starts up each morning at dawn and operates throughout the day, tracking the sun and responding to clouds and wind as needed. Finally it shuts itself down at sunset. The system can be monitored and controlled over the Internet. Researchers want to make the six systems work together with the same level of automation. The controls and software that perform this integration will be scalable to much larger facilities."

On the other hand, even the most advanced PV systems show far less impressive efficiency (this article, for example, describes one cutting-edge PV system³ which demonstrates less that one-half of the efficiency level of SES systems)

So clearly, this technology represents a good shot in large-scale utilization of solar energy to satisfy the needs of "power-hungry Los Angeles" (as Rebecca Smith puts it), or other large-scale structures. For example, SES' public relations page lists a number of high profile endorsements of their solution for a large-scale use, from energy utilities to political leaders. This seems very timely, as solar is widely considered a large-scale solution to our future energy problems. Sandia's press release sited earlier contains this statement:

"A solar dish farm covering 11 square miles hypothetically could produce as much electricity per year as Hoover Dam, and a farm 100 miles by 100 miles in the southwestern U.S. could provide as much electricity as is needed to power the entire country."

Analogous statements can be seen at SES's FAQ page, as well as in publications and statements by business authors, economists, and various advocates for transition from petroleum to solar to satisfy the growing power needs of our energy-challenged economy.

[An interesting perspective on the US utilization of solar gives this table at US Geological Survey's site. (USGS is an agency of US Dept. of Interior). Although clearly dated (published in 1998), the table demonstrates how vastly "outpowered" the solar energy is by fossil fuels and such in our total energy consumption structure. The table lists overall solar usage at 0.07% of the total 94 Quad BTU of US energy consumption as of 1998, hardly enough to be even noticed. Without a doubt, the share of solar has increased since 1998, and will continue to increase going forward with projects such as described in WSJ' article above going online, however the extremely low starting base appears to indicate that the untapped solar potential in our present economy is enormous, especially considering the imminent deficit of petroleum energy, which our current economy and the entire living arrangement is based on.]

So, what would it take to scale the solar solution such as SES' to the level where it could make a contribution big enough to be noticed, or, better yet, to start a transition from petroleum-based to solar-based economy?

Unfortunately, the Wall Street Journal's article is more misleading than helpful, as it cites the value of 500 megawatts of output power for 20,000 (planned) units, which gives the power output of 25 kilowatts per unit. By itself this number doesn't tell us very much, as the WSJ correspondent forgot to consider that the energy is measured in kilowatt-hours, and as most readers of the WSJ know (with the exception, perhaps, of certain energy economists), the solar power is not distributed equally throughout the day (for example, at 7:00AM and 3:00PM the solar output is expected to be different on most days). No big deal -- not the most serious omission by the WSJ correspondent (a much more serious lapse will be discussed below). Indeed, the Sandia press release cites the same 25 kilowatts as the peak power output expected. Fortunately, SAS' FAQ page offers a more intelligent estimate:

"How much power does solar Dish Stirling system produce?
One dish on an annual basis can produce 55,000-60,000 kWh of electricity. This is equivalent to the total energy required for 8-10 homes in the U.S."

So, the energy output can be generated with a fair degree of confidence. Ok, how much will the economy required to pay for this amount of energy? What will it take to manufacture and install each solar unit?

Not a word from WSJ, and Sandia's PR only offers the number in dollars:

"The cost for each prototype unit is about $150,000. Once in production SES estimates that the cost could be reduced to less than $50,000 each, which would make the cost of electricity competitive with conventional fuel technologies"

Unfortunately, providing a number in dollars is also more misleading than helpful, as it fails to consider the changes that the society will need to undergo to implement this solution on a truly large scale.

In order to see this better let's take a look what each unit really is (a good image gallery can be seen at the SAS site or on Sandia's press release). Each unit is a massive structure approximately the size of a six-storey building, whose most visible element is a solar-reflecting dish 37' in diameter (this image gives a pretty good sense of scale). The area of the dish is cited by the Mechanical Engineering Magazine to be 90 square meters, which agrees, more or less, with the dish's 37 feet diameter. If, for example, the ultra-modern honeycomb aluminum panels that comprise the dish utilize only 2 grams of aluminum per each square centimeter of the dish's surface, they will require 1.8 tons of aluminum alone per dish, not counting other high-tech materials. Furthermore, consider the strength of the steel frame required to sustain a dish of this mass and square footage in a wind-swept desert, and to keep it steady, along with the generator unit described to be "the size of a barrel of oil", or roughly 14 gallons in volume. The structure is truly massive.

And how will this compare with the power output? Well, to put it in perspective, the 60,000 kwh of energy that each unit is expected to generate in a year represents only 7 kwh per hour (roughly). That is the power output easily produced by such a trivial petroleum-based device as a high-end scooter or a medium class motorcycle engine, connected to an electric power generator!

Compare the enormous difference in size and mass between the two types of devices, generating roughly the same power output -- a scooter engine and an SES solar dish. Is this because the SES units are inefficiently designed or poorly implemented compared to scooters? Quite the contrary: SES solar units are masterpieces of cutting-edge engineering, and represent the best of human knowledge in physics, material science and computer technology. What we are dealing with here is the vast difference in energy density between solar and petroleum. Energy economics of (renewable) solar are dramatically different from the energy economics of (nonrenewable) petroleum, and we will need to go through the process of adjusting our expectations accordingly if we are to go anywhere with the transition process.

Nonetheless, let us say that we decide to go ahead and implement a US economy-scale solar solution on systems such as SES' -- in anticipation of completely replacing our energy base from rapidly depleting petroleum to renewable solar. As Sandia and others are fond of repeating, a 100 x 100 miles swath of desert anywhere in the South West could provide enough capacity to satisfy (today's) energy demand of the entire US economy. As the solar encampment on the WSJ article mentions, 20,000 units occupy 4 square miles, so on 100 x 100 = 10,000 square miles we will need to allocate
20,000 x 10,000 / 4 = 50,000,000 (fifty million) units. Let's say (purely hypothetically) that starting next year we will be manufacturing and bringing online 1.5 million units per year, on average, thus smoothly completing the transition from petroleum to solar in a little over 30 years.

Before appreciating the implications of the above proposal (and I am not saying that this cannot be done), we need to consider the following numbers. 1.5 million units per year, with 1.8 tons of aluminum per unit will constitute 2.7 million tons of aluminum. Well, you may be interested to know that 2.7 million tons, per this statistics by USGS, was the entire US aluminum production in a recent year (2003). Of course, a lot of aluminum in the current economy is recycled, however we are discussing here an enormous scale development of gigantic solar dishes -- you don't expect the aluminum for them to come from recycled empty Coca Cola cans, do you? And you would still need to produce aircraft, packaging, electrical equipment, buildings, and consumer durable items to which the currently produced aluminum goes, as one would expect under "normal" economic conditions.

Again, I am not at all saying that the production of aluminum cannot be doubled to meet the demands of this project, nations are known to mobilize all of their resources under war conditions, for example, or when faced with credible threats to their existence. However, please consider the following statistics (again, from the same US Geological Survey's page):

Year	Net US Aluminum production (primary)	Total number of people employed by the aluminum industry	Net reliance on aluminum imports
1999	3,779	76,300	31%
2000	3,668	77,800	33%
2001	2,637	71,200	38%
2002	2,707	62,200	39%
2003	2,700	60,000	41%

Source: US Department of Geological Survey website
URL: http://minerals.usgs.gov/minerals/pubs/commodity/aluminum/alumimcs04.pdf

Do you see a recognizable trend here, with ever-growing reliance on imports as a total percentage of consumed aluminum, and ever-shrinking number of people employed in the industry? This trend would need to reverse if we are even to pretend to get serious about implementing the discussed renewable solution, don't you think?

(Unless, of course, you believe that our reliance on imports from countries such as China, South Korea, et al can grow indefinitely, and that they will be happy to provide us with most of our supplies of this highly energy intensive and strategically important product well into the post-peak oil period, in exchange for our currency and our debt obligations.)

On a related note, I wonder if our economic luminaries and dignitaries such as Mr Greenspan are aware of such trends, or even consider them relevant, when they make statements such as the following:

"The energy intensity of the United States economy has been reduced by about half since the early 1970s in response to sharply higher prices. Much of the displacement was achieved by 1985. Progress in reducing energy intensity has continued since then, but at a lessened pace. This more-modest rate of decline in intensity should not be surprising, given the generally lower level of real oil prices that prevailed between 1985 and 2000. With real energy prices again on the rise, more rapid decreases in the intensity of use in the years ahead seem virtually inevitable."

[Source: U.S. Federal Reserve Web site
http://www.federalreserve.gov/boarddocs/speeches/2005/20050405/default.htm]

Do you really consider your energy intensity reduced when you rely on ever-growing imports of energy intensive, strategically important products from other countries? Isn't there an element of self-deception present when you pretend that potential energy problems of your importers will not quickly become your problems under such circumstances?

But back to our large-scale solar project implementation. Let's not loose focus of the purpose of the entire solar project, which is to provide the economy with more energy that has been spent on manufacturing of the solar units and relevant logistics. Thus, we need to estimate the energy spent on solar units, and compare it with the energy produced by units brought online (which is known to be estimated at 60,000 kWh per year), before we will be in a position to make a judgement on the energy viability of such project.

Well, it is very hard to estimate precisely how much energy will be required to be spent on manufacturing solar units from scratch. Large-scale manufacturing effort for them does not yet exist at present time.

However, we can get some cues from another mass-produced high-tech device whose production cycle has been exhaustively studied and optimized over decades of ruthless competition between manufacturers: an automobile. Interestingly, WSJ quotes an SES researcher who compared each unit to a car in comlexity (but not, of course, in size).

An organization called Institute For Lifecycle Environmental Assessment published this breakdown of the total energy impact of the lifetime of a typical Ford Taurus (the analysis was performed by Carnegie Mellon University researchers). According to this analysis, the manufacturing process of a typical car requires approximately 120,000 MJ, or 1/10 of the total energy consumed by the car over its lifetime. 120 MJ = 33,333 kWh. However, that's for a car, which is a tiny device next to the six storey building-tall SES solar unit, with its huge dish, barrel-sized engine and the massive steel frame. For example, per US Department of Energy statistics, the production of assumed 1.8 tons of aluminum of a typical dish alone would require about 24,000 kWh of energy. Steel for the massive frame would require about 2,300 kWh per ton. And that is just metal -- before the manufacturing process even starts.

Consider that the energy to manufacture each unit is required "upfront", so to speak, before the unit is brought online. This is what makes energy so different from money -- the rules of the game here are very different than in the monetary system. In the monetary system, anything that brings future cash flows can be valued against them, and this value immediately becomes a part of the economy and is included in the overall financial system before even the first cash flow is made. You can use the value of future cash flows as a colateral for a loan to expand your existing business, or to acquire a new one. The monetary system is capable of expanding through instruments like stock market and credit creation and thus can allow you, for example, to open or acquire a business with only a fraction of the capital that this business would generate over its foreseeable lifetime.

Not like that with energy. You cannot create energy required to manufacture a dollar unit by "expanding" the energy system against the future stream of "energy flows" that this unit would produce once brought online. Every single watt for this manufacturing process must exist in the energy producing capacity of the economy before it can be spent. The corollary of this is that there is always a time lag between the energy required for a unit's manufacture and the energy available from increased energy capacity once the unit is brought online. And because you start with the low base and target a very high base, over a relatively short period of time, you need to live through the period of the energy deficit -- even if you ignore any kind of peak oil-related decrease in already existing energy capacity.

The comparison with cars can ultimately also be much more misleading than helpful, as the car production happens in the framework of mature industries. Not like that with solar units. They will require first to build entire industries from scratch, before solar units can actually start being produced. Every single one of them would present a very non-trivial problem in the energy-short environment, and the time for planning these efforts is running short.

The bottom line is: to implement renewable energy solution on such a scale that would make a difference, you need to have an energy-rich economy to begin with. You also need to have a clear focus and understanding of the scope of the problem, as well as the political will and the grass-root support to go through a war-like economic development effort that will strain every economic muscle in such a society.

If Los Angeles, for example, ever comes to rely on energy this hard-won for a significant portion of its energy ration, it may still be "power-hungry", but not at all in the sense that Rebecca Smith currently observes it to be.

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[1]Note: unless you already have a recent version of Adobe Acrobat Reader, you may choose to upgrade it before opening this PDF file; using an older version didn't seem to work properly for me.

[2] I personally find the characterization peak-oil advocates laughable, as if the scientists and authors who are trying to attract the public's and the policymakers' attention to this problem are somehow working hard to expedite the happening of peak oil; as though peak oil is not a part of the objective reality. A volcanologist may predict a future erruption, or attract public's attention to it, but he is unlikely to be called an advocate of volcano erruptions; the same applies to seismologists working to predict earthquakes and the same applies to climate scientists. On the other hand, for example, free trade advocates or fiscal responsibility advocates are true advocates, as they are trying to actually promote and advance their causes, not just to bring the public's attention to them.
Another definition that you may see being used by the media a lot and which I find even more clueless is peak oil theorists. In the eyes of your typical debate host of the average gullibility, or a 15-seconds-attention-span journalist uncapable to distinguish between demagoguery and reality-based reasoning, nothing works better to discredit something than to present it as a "theory". PO is no more of a theory than that NASDAQ at 6000 was overvalued in 1999 was a theory, or that the amount of coffee in your cup decreases with every sip you take from it is a theory.

[2a] The initial version of this article had a serious mistake of misinterpreting the U.S. Census statistics -- U.S. Census home construction numbers are on the annualized basis, which I initially failed to realize. I would like to thank the author of this commentary for pointing this out to me -- D.P.

[2b] As gigantic an impact that such a mass mortgage default would have, when considering the overall financial impact one should not forget about other types of debt at risk. For example, the collapse of the municipal debt obligations from failed communities would by itself have very serious consequences, also greatly amplified by the associated derivatives. The mass failure of corporate and personal debt (I would assume that people are unlikely to be making prompt payments on their credit card loans under such circumstances) should also have an enormous significance. Of course, we will not have the luxury of addressing each of these problems in isolation. The combined impact is likely to be stronger than the total of its components.

[3] Thanks to Igor Yudovich for this reference