Musings From The Oil Patch June 12th 2018
Comment of the Day

June 12 2018

Commentary by Eoin Treacy

Musings From The Oil Patch June 12th 2018

Thanks to a subscriber for this report edition of Allen Brooks’ ever interesting report for PPHB. Here is a fascinating section on energy efficiency statistics over the last 50 years:

Eoin Treacy's view

Here is a link to the full report.

Here is a section from it: 

Turning to the transportation sector, the most surprising trend was that the percentage of useful energy has declined from 1970’s 25.2% rate to only 21.0% in 2017.  Initially, when we tracked down the data and did the calculations we were shocked.  Remember that automobiles in the 1960s and early 1970s had very different mile per-gallon performance statistics than today.  In that earlier time, when Consumer Reports would review various car models, it would list fuel performance with a range for city driving and a single figure for highway driving.  The typical car in 1970 might have an in-city performance of 7-18 miles per gallon (mpg), with highway driving averaging 19 mpg.  Those mileage rankings traditionally came from the Mobil Economy Run, an annual event from 1936, except during World War II, until 1968, in which cars drove cross-country on regular roads and in normal weather and traffic conditions.  After 1968, fuel performance ratings came from the magazine’s testing.


We are also led to the conclusion that there is so much more that can be done with our economic structure, for example, improving the efficiency of internal combustion engines.  Maybe instant-on appliances and electronic devices are too energy and carbon emissions wasteful versus their convenience.  If you think about it, if we could cut our rejected energy back to 1970’s performance – 48% - we could cut our energy use by 15%, and presumably reduce our carbon emissions significantly.  Furthermore, if we moved from coal to natural gas and nuclear power for electricity generation, we could improve efficiency.  Those fuels are much cleaner than coal, although not as clean as renewables, but the economic benefits of a power grid with nearly 100% of dispatchable energy are huge.  Maybe we are thinking about how to clean up the environment in the wrong way.

There is no doubt that battery efficiency is improving and new solar innovation is being revealed on almost a weekly basis. There are laudable reasons for seeking to reduce carbon and nitrogen oxide emissions in our cities all of us can support. However, the question many people are worried about is whether this is merely transferring a problem from cities to less populated areas.

The intermittency of renewables represents an additional cost in maintaining base load. Right now, that is predominately achieved by using back-up coal or natural gas fired stations which also detracts from the carbon reducing motives for supporting renewables. Batteries have the potential to fulfill the role of alternative sources but manufacturing capacity will need to continue to rise and costs will need to come down in order to reduce the need for back-up conventional supply.

Meanwhile the declining energy efficiency of energy production since the 1970s should at least give central planners some pause. News this week that Carbon Engineering, at least partially funded by Bill Gates, announced it has achieved a cost of $100 per tonne for removing carbon from the atmosphere, down from $600, holds out the prospect of attracting the same kind of interest renewables does from the green movement. What if this form of technology continues to improve? Is there an argument for continuing with the cheapest form of energy if it is also cheap to remove the harmful contaminants from the atmosphere?

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