This posting is the first in what will be a series of Monday posts which are portions of an interview that I was privileged to do with Bill Reinert this past summer. Reinert has about the most wide-ranging knowledge and understanding of energy issues of anyone that I’ve ever come across. I also happen to think that he’s one of the most logical voices you’ll ever see on energy, transportation, fuels, and other important environmental issues. His views are firmly grounded in reality since his life’s work was spent trying to solve energy problems in the industrial world. Because of this, they can be rather unpopular with wishful-thinkers or Elon Musk worshiper-types.
The first part of the interview which covered car technology and fuels (including corn ethanol and more ideal octane boosters) was published over at Yale Environment 360 last week. I encourage you to read it.
Today’s question (below) is about the subject of “peak oil”, a critical issue for an energy engineer who was responsible for future car technology at Toyota.
But first, his bio…
Bill Reinert was national manager of Toyota Motor Sales U.S.A. Inc.’s advanced-technology group for the past 15 years prior to his retirement in 2013. In his 23 years with Toyota, he also traveled millions of miles for the company as a spokesperson. He was responsible for long-range product planning of all alternative-fueled Toyota vehicles. He co-led the U.S. product-planning team for the second-generation Prius, and, also worked on several advanced hybrid electric products, direct hydrogen fuel-cell vehicles, and plug-in hybrid concepts. As an energy engineer, his career-long work in the area of renewable energies always centered around life-cycle analysis studies. A staunch environmentalist, he helped establish a global model for cleaner energy use in the Galapagos Islands in conjunction with the WWF. He has aerial-viewed the tar sands project in Canada and is concerned about water use in energy, believing that the clamor for energy security could eventually trump all environmental concerns worldwide. As a futurist, and a leading global expert on energy and transportation trends, he helped to found the annual “Meeting of the Minds” events which focus on future smart urban planning, transportation, and energy use, and at which he was an annual speaker from 2007 through 2012. He was in the Principal Voices Program with CNN, Fortune and Time, has testified before the U.S. House of Representatives Subcommittee on Energy and Air Quality, the National Academy of Science, and he has chaired sub-groups of the National Petroleum Council’s Future Transportation Fuels and Vehicle Systems studies for the Department of Energy.
K.M.: Over the years, you have been a trusted expert on the subject of “peak oil”. But, then, two years ago you said, “Conceptually, peak oil is not an accurate description.” Could you expound on why the term “peak oil” doesn’t describe the current and future energy situation very well?
Reinert: The idea with peak oil is that there’s a finite amount of oil that’s extractable from the earth, and if you look strictly with blinders, that’s more or less true. Peak oil theorists tend to look at oil only from the supply side and consider demand will continue unabated. Therefore they always see a gap in the demand for oil and the amount of oil that can be extracted in the future. Other oil analysts only look at the demand side and assume that somehow supply will always increase to meet demand.
The truth is different. The price of oil is generally judged by the spare capacity. Any amount under two or three percent spare capacity results in big price rises.
We watched the price mechanism work in 2008, and the peak oil theorists really ought to take a look at that. They are going on the notion that oil is inelastic, that you have to use it, and if it’s not there then the price is going to shoot right up and you’ll have angry villagers in the street with pitchforks. This is not going to happen.
What happens is exactly what happened. The price went up, we had a recession, and we quit using oil as much. It was painful, but today we’re still using less oil and we’ve become more fuel efficient. So it’s a stair step ratcheting process and each time the prices get too high for the economy, then the demand for oil goes down.
I don’t really ever think you’re going to see a peak oil. I think that what happens is after time the cars become more efficient, society changes, and you move on.
Coming next Monday: Reinert will give us an overview of artificial photosynthesis.