I’m assuming (perhaps incorrectly) that people who read this are familiar with the idea that we are approaching peak oil, and can expect it within the next 20 years, perhaps less, so they know how to appropriately fill in the blank on ‘very long term’, which we would have been filling in rather differently 200 years ago.
If you seriously didn’t know this, well, now you know the implicit part of my argument.
I’m assuming (perhaps incorrectly) that people who read this are familiar with the idea that we are approaching peak oil
I can’t speak for everyone who reads this, of course, but as to myself, I am familiar with the idea that we are approaching peak oil—moreover, we have been approaching it for the last 40 years and, if anything, we seem to be farther away from it than we used to be. So, given the very consistent, I might even say systemic failures of peak oil forecasts, I have to be quite sceptical about the current one as well.
200 years ago, of course, oil was just a useless nuisance. People were concerned about coal. Notably, there is still lots and lots of coal around.
1) The prediction of peak US production was basically right on the mark. Other national predictions have been accurate too.
2) The failures of peak oil predictions have been primarily from the willingness to get to less and less accessible reserves at progressively rising monetary cost (see: dramatic increases in the price of oil) and, recently, (non-AGW) environmental and even health costs.
3) Until recently, few alternatives have been available, so whatever the consequences to getting more oil, we HAD to accept them. Electric cars were jokes. This is rapidly ceasing to be the case.
4) I am aware there are vast coal reserves. However, last I checked, no one uses coal for transportation anymore except by going through the power grid (electric trains), so I’m not sure how that actually addresses my earlier comment.
Note: I am indeed falling back from my naively phrased claim in my previous post here. However, this doesn’t impact the usage in the post before that.
3) Until recently, few alternatives have been available, so whatever the consequences to getting more oil, we HAD to accept them. Electric cars were jokes. This is rapidly ceasing to be the case.
There are things for which there still are no alternatives to fossil fuels and there will likely never be: for example, how the hell are you going to power long-haul aircraft?
Hydrocarbon fuels don’t need to be fossil; there are methods you can use to convert biomass into synthetic fuel, though outside of ethanol and the odd biodiesel project synthetic fuels usually use coal as a feedstock right now. It’d be more expensive, though.
Commercial aviation is just barely economically viable today, and fuel getting much more expensive would it make all but impossible for airlines to make any net profit. But yeah, this might change in the future.
Despite incredible growth, airlines have not come close to returning the cost of capital, with profit margins of less than 1% on average over that period. In 2012 they made profits of only $4 for every passenger carried. Why has a booming business failed to prosper?
army1987′s point is ill-posed and makes little sense in a supply-demand framework—the more interesting question is how much ticket prices would have to rise if fuel got much more expensive, since obviously they would rise & airlines wouldn’t simply stop flying entirely.
I think you’re confusing the quoted sentence and “I think airline tickets are expensive”.
It is more likely that he is ‘confusing’ the quoted sentence and the findings from analysis of business failures (and marginal successes) in the industry in question compared with other industries and various analyses about the market forces that produce that result. This is still not quite the same thing as “commercial aviation is just barely economically viable today” but far closer than “I think airline tickets are expensive”.
(I agree with Lumifer that Army’s conclusion does not follow. Tripling the cost of fuel would still result in a viable albeit far, far smaller commercial aviation market.)
The cost of fuel seems to account for about 20% of the cost of the ticket on a US domestic flight (source). Given that international flights have higher fees, I expect the fuel cost percentage to be even smaller for them.
For example I took a look at a New York—London return economy ticket which costs about $1050 now. Out of that amount $250 are government taxes and fees (NOT including the sales tax).
And yet airlines lost money for most of the past decade. So these 3 billion passengers aren’t paying them that much. (And I don’t think it just doesn’t occur to airlines to raise prices; presumably they wouldn’t get as many passengers if they did.) Even more recently, it looks like the average net profit per passenger (average, not marginal) is of the order of $5.
Which divided by 3 billion would be $5.77/passenger in 2010, $2.50/passenger in 2011, $2.03/passenger in 2012, $3.53/passenger in 2013, and $6/passenger in 2014. What did you think I meant by “of the order of $5”?
Yes, we agree on the numbers, we’re just throwing connotations at each other :-)
$5 is a small number so you’re pointing to this. $somebillions is a large number and I’m pointing to that.
I am still pretty sure commercial aviation is perfectly viable economically, it’s just that certain peculiarities of the business make it hard to make lots of money in it. However it’s not going anywhere and, say, doubling the fuel prices will not make it go away either.
and there will likely never be: for example, how the hell are you going to power long-haul aircraft?
So, um, are you saying there never will be anything with the energy density as good or better than jet fuel..? That’s probably true for the next 10-20 years, but “never” is an awfully audacious claim.
Believe it or not, this was seriously considered during the Cold War. Some manned prototypes even flew with their reactors going (albeit not to power the plane), though the problem of shielding wasn’t adequately solved before progress in ICBMs made nuclear-powered bombers pointless.
Then there’s Project Pluto, though that would have been less a conventional aircraft and more a terrifying drone bomber built around an unshielded nuclear ramjet the size of a bus:
The engine also acted as a secondary weapon for the missile: direct neutron radiation from the virtually unshielded reactor would sicken, injure, and/or kill living things beneath the flight path; the stream of fallout left in its wake would poison enemy territory; and its strategically selected crash site would receive intense radioactive contamination. In addition, the sonic waves given off by its passage would damage ground installations.
You are trying too hard :-) Your first point says that the predictions were correct and then the second point tries to explain the failures :-D
Re (2) and (3) peak oil people didn’t claim that oil will become too expensive or inconvenient to extract—the claim was that the oil will run out, full stop.
Re (4) we were talking about fossil fuels in general, not only about what’s used for transportation. But in any case, you can convert coal and natural gas to liquid fuel. The technology is well-known.
Paragraph 1: You said it was completely systematically wrong. I pointed out that it wasn’t systematically wrong and then explained the cases where it was.
Paragraph 2: Peak oil is not an ABRUPT EXHAUSTION, but the time of greatest production.
Paragraph 3: Go back. This was in response to my claim specifically about oil.
That argument would apply just as well 200 years ago, right?
I’m assuming (perhaps incorrectly) that people who read this are familiar with the idea that we are approaching peak oil, and can expect it within the next 20 years, perhaps less, so they know how to appropriately fill in the blank on ‘very long term’, which we would have been filling in rather differently 200 years ago.
If you seriously didn’t know this, well, now you know the implicit part of my argument.
I can’t speak for everyone who reads this, of course, but as to myself, I am familiar with the idea that we are approaching peak oil—moreover, we have been approaching it for the last 40 years and, if anything, we seem to be farther away from it than we used to be. So, given the very consistent, I might even say systemic failures of peak oil forecasts, I have to be quite sceptical about the current one as well.
200 years ago, of course, oil was just a useless nuisance. People were concerned about coal. Notably, there is still lots and lots of coal around.
1) The prediction of peak US production was basically right on the mark. Other national predictions have been accurate too.
2) The failures of peak oil predictions have been primarily from the willingness to get to less and less accessible reserves at progressively rising monetary cost (see: dramatic increases in the price of oil) and, recently, (non-AGW) environmental and even health costs.
3) Until recently, few alternatives have been available, so whatever the consequences to getting more oil, we HAD to accept them. Electric cars were jokes. This is rapidly ceasing to be the case.
4) I am aware there are vast coal reserves. However, last I checked, no one uses coal for transportation anymore except by going through the power grid (electric trains), so I’m not sure how that actually addresses my earlier comment.
Note: I am indeed falling back from my naively phrased claim in my previous post here. However, this doesn’t impact the usage in the post before that.
There are things for which there still are no alternatives to fossil fuels and there will likely never be: for example, how the hell are you going to power long-haul aircraft?
Hydrocarbon fuels don’t need to be fossil; there are methods you can use to convert biomass into synthetic fuel, though outside of ethanol and the odd biodiesel project synthetic fuels usually use coal as a feedstock right now. It’d be more expensive, though.
Commercial aviation is just barely economically viable today, and fuel getting much more expensive would it make all but impossible for airlines to make any net profit. But yeah, this might change in the future.
Have you seen how much of an international ticket price is taxes, etc.? Did you mean to say that airline margins are razor thin?
Yes.
[citation needed]
It’s pretty notorious. Airlines routinely go bankrupt and prompt articles like “The Economist explains: Why airlines make such meagre profits”
army1987′s point is ill-posed and makes little sense in a supply-demand framework—the more interesting question is how much ticket prices would have to rise if fuel got much more expensive, since obviously they would rise & airlines wouldn’t simply stop flying entirely.
There are no issues with economic viability of commercial aviation today. Consider what would happen were it to shut down.
I think you’re confusing the quoted sentence and “I think airline tickets are expensive”.
It is more likely that he is ‘confusing’ the quoted sentence and the findings from analysis of business failures (and marginal successes) in the industry in question compared with other industries and various analyses about the market forces that produce that result. This is still not quite the same thing as “commercial aviation is just barely economically viable today” but far closer than “I think airline tickets are expensive”.
(I agree with Lumifer that Army’s conclusion does not follow. Tripling the cost of fuel would still result in a viable albeit far, far smaller commercial aviation market.)
The cost of fuel seems to account for about 20% of the cost of the ticket on a US domestic flight (source). Given that international flights have higher fees, I expect the fuel cost percentage to be even smaller for them.
For example I took a look at a New York—London return economy ticket which costs about $1050 now. Out of that amount $250 are government taxes and fees (NOT including the sales tax).
I don’t; otherwise I just wouldn’t buy them. Where did you get that from my comment anyway?
But what I think is irrelevant. It’s the aggregate market demand that counts.
Let’s look at the aggregate market demand. The annual passenger total is about 3 billion people.
Doesn’t look “barely economically viable” to me. At all.
And yet airlines lost money for most of the past decade. So these 3 billion passengers aren’t paying them that much. (And I don’t think it just doesn’t occur to airlines to raise prices; presumably they wouldn’t get as many passengers if they did.) Even more recently, it looks like the average net profit per passenger (average, not marginal) is of the order of $5.
From the link in the parent post, about $600 billion.
Peanuts, I know.
From the link in the parent post, net profit for the last five years:
2010: $17.3 billion
2011: $7.5 billion
2012: $6.1 billion
2013 (est): $10.6 billion
2014 (fcast): $18.0 billion
Which divided by 3 billion would be $5.77/passenger in 2010, $2.50/passenger in 2011, $2.03/passenger in 2012, $3.53/passenger in 2013, and $6/passenger in 2014. What did you think I meant by “of the order of $5”?
Yes, we agree on the numbers, we’re just throwing connotations at each other :-)
$5 is a small number so you’re pointing to this. $somebillions is a large number and I’m pointing to that.
I am still pretty sure commercial aviation is perfectly viable economically, it’s just that certain peculiarities of the business make it hard to make lots of money in it. However it’s not going anywhere and, say, doubling the fuel prices will not make it go away either.
That has more to do with the fact that air travel is commoditized than the price of inputs.
So, um, are you saying there never will be anything with the energy density as good or better than jet fuel..? That’s probably true for the next 10-20 years, but “never” is an awfully audacious claim.
Nukes!
Believe it or not, this was seriously considered during the Cold War. Some manned prototypes even flew with their reactors going (albeit not to power the plane), though the problem of shielding wasn’t adequately solved before progress in ICBMs made nuclear-powered bombers pointless.
Then there’s Project Pluto, though that would have been less a conventional aircraft and more a terrifying drone bomber built around an unshielded nuclear ramjet the size of a bus:
You are trying too hard :-) Your first point says that the predictions were correct and then the second point tries to explain the failures :-D
Re (2) and (3) peak oil people didn’t claim that oil will become too expensive or inconvenient to extract—the claim was that the oil will run out, full stop.
Re (4) we were talking about fossil fuels in general, not only about what’s used for transportation. But in any case, you can convert coal and natural gas to liquid fuel. The technology is well-known.
Paragraph 1: You said it was completely systematically wrong. I pointed out that it wasn’t systematically wrong and then explained the cases where it was.
Paragraph 2: Peak oil is not an ABRUPT EXHAUSTION, but the time of greatest production.
Paragraph 3: Go back. This was in response to my claim specifically about oil.
Where do you think the energy to charge electric cars is coming from?
Elven magic.