Oil Refinery

Continued from Part 1…

In part 2 of our exclusive interview with Chris Martenson economist and editor of the popular financial website Peak Prosperity Chris talks about:

  • How tight oil is being oversold
  • An idea for solving the storage and Battery problem
  • How price, not technology, has unlocked boom reserves
  • Why it’s about conservation now, not new technology
  • Why we should be concerned about another financial meltdown
  • Future opportunities for investors
  • Why exporting natural gas is a terrible idea

· Why Governments should help renewable Energy innovation

  • Why net energy returns are the MOST important thing

In part 1 Chris spoke about: Why we shouldn’t be speaking about Energy Independence, why we could see $200 a barrel oil in the near future, why peak oil is not a defunct theory, what we aren’t being told about the shale boom, and much more… Click here to read part 1

James Stafford: With cheap oil looking like a thing of the past, what other energy sources should we be looking at developing? What are your thoughts on nuclear?

Chris Martenson: I believe nuclear can be done much more elegantly and safely than we’re currently doing it. And I am intrigued, also, by the possibility of thorium reactors. There are a variety of developments that we could look into. It will take quite a bit of investment, and there are a number of issues to be worked through, clearly. But nuclear does provide us with the possibility of having very low emission, very cheap electricity, which is important.

And if we’re going to talk about how we need to move towards electricity, which I believe we do, the thing we need to solve first is storage. We need to figure out how to store electricity.

The batteries that we can manufacture at scale have not advanced much since Volta first invented them in the 18th century. So we need batteries, we need storage, we need to start building zero-footprint buildings. All of these things can be done, but we really are not yet doing them on a serious basis.

Saving energy is something that really gets overlooked, but it’s where the biggest savings always happen to be. If I could wave a magic policy wand, I would take just one month from the Federal Reserve and I would dedicate it to a national prize to whoever can solve making batteries at scale from common materials and at a much higher energy density. The tasty prize would be $40,000,000,000, which may sound like a lot but is roughly two weeks of money printing by the Fed.

James Stafford: What role do you see renewable energy playing in the future? And do you think governments should help innovation in this area?

Chris Martenson: Governments right now are providing more than half a trillion dollars in subsidies for oil and gas, so they’re already in the business of shaping the alternative market, mainly by making their competitor’s products much cheaper. So is there a role for government to play in helping to boost alternatives at this point? The answer has to be yes, because there really isn’t a lot of time left on the clock. Left to its own devices, the market would deliver us an alternative energy future, but history suggests that energy transitions take a minimum of 40 years, sometimes 60 years, and we don’t have that kind of time.

When we’re truly threatened, such as when a nation has to go to war, we’d never think of leaving that up to the markets. When you’re in a predicament and coordination is necessary–to be effective requires a collective response, not 300,000,000 individual responses.

I see the challenges to us at this date, such as declining net energy and debt markets, tuned for an energy reality that does not currently exist, being so profound that we’re going to need a response along the lines of World War II times an Apollo project plus the Manhattan project. In other words, a response more complete, complex, and challenging than anything we’ve ever faced. So on that basis, absolutely I think we need a collective response because we are quite rapidly running out of time. In other words, a government response.

James Stafford: And what can cause this to happen? As you say, there’s no political will to make these changes at present.

Chris Martenson: We need a different narrative. Right now, the narrative we’re running is simply this: “We need our economy to grow.” That’s the first, second, third, and last piece of discussion that we ever seem to have.

It turns out we need another narrative in here which says, “Hold on. We can’t grow infinitely, we know this.” The question becomes, “When the remaining resources do run out, where would we like to be? What do we want the world, the landscape, and our energy infrastructure to look like?” And that’s the thing that’s completely missing. We’re just saying, ‘Our strategy is we’re just going to continue to grow.’ It’s not a strategy, it’s a tactic.

I am among many people who are working fervently if not feverishly to help change our narrative in time. Away from a story of growth for its own sake and towards a future shaped by design, not disaster, where we value prosperity first and growth second, if at all.

How do we do this? I really don’t know the answer to that because it has never been done before at this scale. But people and cultures do change, all the time in fact, and so this is not an impossible task, just a very tricky one, which makes it both challenging and fascinating.

James Stafford: You mentioned earlier that you thought the shale boom was being oversold. What are your thoughts on America’s oil and gas boom?

Chris Martenson: Well, this is really important. The current story is something along these lines: “Hey, look at how clever we’ve been. Because of the magic of technology, we have discovered how to unlock these incredible oil and gas resources that we just didn’t even know about before.”

When I talk to people who are in the oil business, they say, “Oh, no, no, we’ve known about those shale deposits, we’ve been drilling into and through them for decades. We’ve had horizontal drilling for decades; we’ve had fracking for decades. What we haven’t had is $80-a-barrel oil reliably enough to support us going into those with those technologies.”

So what really unlocked those reserves was price. Not technology, not cleverness, not ingenuity. Don’t get me wrong, there’s a lot of very clever, ingenious stuff going on in those drilling actions, but price was the primary driver here.

Here’s the thing, though: When more expensive energy comes out of the ground, it means that everything that you use to go get that energy, after a lag, becomes more expensive too. This is doubly compounded by this idea that there’s less net energy coming from these finds.

They use more energy to get that energy, but that more energy is more expensive. So that feedback loop is already in play here. It simply means that there’s less to be used as we like elsewhere in the economy.

When I look at America’s apparent energy abundance I’m a little worried that it’s been oversold. In particular, the dynamics of depletion that exist in both the tight shale

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