National Energy Modeling with Implications for a Sustainable Energy

Policy

Dr James R. Burns, P.E., CIRMBalaji Janamanchi

Texas Tech UniversityRawls College of Business Administration

ISQS area, P.O.Box 42101Lubbock, Texas 79409-2101

(806)742-1547 Fax-(806)742-3193Email: jburns@ba.ttu.edu

Email: bjanamanchi@ba.ttu.edu

Outline/Purposes:

• To use Models to Explore various Policies for National Energy Resource Management

• To understand the causes for cycles in energy availability and pricing

• To expose the failures of energy forecasting

• To assert clear implications for policy

Overview Structure of the U.S. Energy System

Coal

U.S. Oil

Foreign Oil

U.S. Natural Gas

Foreign Natural Gas

Uranium

Solar

Electric Utilities

Transportation

Residential/commercial

Industrial

SOURCES CONSUMPTION SECTORS

biofuels

Wind

Consider the U.S. energy sources

• Limited OIL, but abundant nat. gas currently

• Very abundant uranium• Very abundant coal

Coal

U.S. Oil

Foreign Oil

U.S. Natural Gas

Foreign Natural Gas

Uranium

Solar, including Wind

Electric Utilities

Transportation

Residential/commercial

Industrial

SOURCES CONSUMPTION SECTORS

Consider the Transportation sector…

• Energized by Oil mainly• Not coal, not uranium• Not solar/wind

Coal

U.S. Oil

Foreign Oil

U.S. Natural Gas

Foreign Natural Gas

Uranium

Solar, including Wind

Electric Utilities

Transportation

Residential/commercial

Industrial

SOURCES CONSUMPTION SECTORS

Consider the Airlines• Currently, can only run on jet fuel• No ethanol, no natural gas, no

coal, no uranium, no solar or wind power

Coal

U.S. Oil

Foreign Oil

U.S. Natural Gas

Foreign Natural Gas

Uranium

Solar, including Wind

Electric Utilities

Transportation

Residential/commercial

Industrial

SOURCES CONSUMPTION SECTORS

Consider the electric utilities—they can be powered by….

• Oil (U.S. or foreign) (4% of electric utility power)

• Natural gas• Coal• Uranium• Solar/wind• Other nuclear

Coal

U.S. Oil

Foreign Oil

U.S. Natural Gas

Foreign Natural Gas

Uranium

Solar, including Wind

Electric Utilities

Transportation

Residential/commercial

Industrial

SOURCES CONSUMPTION SECTORS

Clear policy implication:

• we should be saving our use of oil for the transportation sector in general and the airlines in particular

• We should not be expending oil to energize the• Electric utilities sector• Residential/commercial sector• Industrial sector

• These sectors have other better energy source choices

Write your Congressman…

• Encourage our legislators to discourage through tax incentives/disincentives the use of oil in all consumption sectors except transportation

How much Oil is left on Planet Earth??

• This is the $64 question• Is Oil a fossil fuel?

Model Baseline Behavior

users

4,0004,0002,000 unit

60,000

000 unit0

1950 1970 1990 2010 2030 2050 2070 2090Time (Year)

INDUSTRY : energy1"residential-commercial" : energy1transportation : energy1 unitUtilities : energy1

Model Baseline BehaviorEnergy resources

90,0004,0002,000

4 M20,000

80,00000

-4,0000

5 55

5

5 5 5 5

4 44

4

4 4 4 4

3

3

3

3 3 3 3 3

22

2

22 2 2 2 2

1 1 11

1

1

1 1 1

1950 1970 1990 2010 2030 2050 2070 2090Time (Year)

COAL : energy1 1 1 1 1 1 1 1DOMESTIC OIL : energy1 2 2 2 2 2 2 2NATURAL GAS : energy1 3 3 3 3 3 3 3URANIUM : energy1 4 4 4 4 4 4 4 4FOREIGN OIL : energy1 5 5 5 5 5 5 5

Model Structure -- Consumption

• Residential-commercial sector• Industrial sector• Transportation sector• Electric

Model Structure -- Resources• Coal• Natural Gas Sectors• Uranium sector• Oil Sector• Solar Sector, which includes wind

• Sectors that determine the mix of demand among the energy resources

Residential/Commercial Sector

supply-demandratio

effect of supply-demand ratioon residential-commercial

growthlifetime of

residential-commercial

effect of industry onsalvage of

residential-commercial

effect of supply-demand ratioon salvage of

residential-commercial

residential-commercialgrowth normal

initialresidential-commercial

residential-commercial

newresidential-commercial

salvage ofresidential-commercial

effect of trans onresidential-commercial

tab

effect of supply-demandratio on growth of RCD

tab

effect of supply-demandratio on salvage of RCD

tab

effect of industry onsalvage of RCD tab

effect of industry onRCD growth tab

effect of trans onRCD Growth

effect of industry onRCD Growth

<transportation unitsper capita>

<RCD ElectricDemand>

<RCOILD>

<RCDNGD>

<Electric UsageDemand Ratio>

<OIL UsageDemand Ratio>

<NATURAL GASUsage Demand Ratio>

<Industrial Output perCapita Ratio>

Model Structure—Coal and Natural Gas Sectors

COAL

COAL USAGE

Initial COAL

COAL Remaining

COAL UsageDemand Ratio

NATURALGAS

Initial NATURALGAS

NATURAL GASRemaining

NATURAL GASUsage Demand Ratio NATURAL GAS

USAGE

COAL Table

NATURAL GASTable

Natural Gas Supply Sector

Coal Resource Sector

<COALD>

<NGASD>

UNPROVENNATURAL

GAS

GAS DISCOVERYRATE

GAS Discoverytime

<Time>

switch

Model Structure—Oil Sector

DOMESTICOIL

FOREIGNOIL

DOMESTIC OILUSAGE

FOREIGN OILUSAGE

Initial DomesticOIL

Initial Foreign OIL

Domestic OILRemaining

Foreign OILRemaining

Domestic OILRemaining Table Foreign OIL

remaining Table

OIL UsageDemand Ratio

Domestic OILRemaining Multiplier

Foreign OILRemaining Multiplier

<Oil Demand>

UNPROVENDOMESTIC

OIL

UNPROVENFOREIGN OIL

DOM OIL DISRATE

FOR OIL DISRATE

<Time>

oil discovery time

<switch>

Model Structure—Uranium

WASTE FROMLWR

PLUTONIUM

DEPLETED URANIUM

SPENT FUELLWR

PLUTONIUMPRODUCTION RATE

LWR

DEPLETEDURANIUM RATE

LWR

WASTEPRODUCTION

RATE LWR

URANIUM

Initial URANIUM

UraniumRemaining

Uranium RemainingMultiplier

UraniumRemaining Table

SPENT FUEL BR

PLUTONIUMRODUCTION RATE

BR

DEPLETEDURANIUM RATE BR

TAILS PRODUCTIONRATE

WASTE FROMBR

WASTEPRODUCTION

RATE BR

Waste ProductionCoefficient LWR

Plutonium Productioncoefficient LWR

Depleted UraniumProduction coefficient

LWR

Tails to EnrichedRatio LWR

Tails to EnrichedRatio BR

<Uranium RemainingMultiplier>

Waste ProductionCoefficient BR

Depleted UraniumProduction coefficient

BR

Plutonium ProductionCoefficient BR

Uranium UsageLWR

URANIUM USAGERATE LWR

Uraniuim UsageDelay Time LWR

Uranium UsageBR

Uranium UsageDelay time BR

URANIUMUSAGE RATE BR

Maximum DepletedUranium Recycle

Depleted UraniumPlutonium Ratio

MaximumPlutonium Recycle

DEPLETEDURANIUM RECYCLE

RATE

PLUTONIUMRECYCLE RATE

<PLUTONIUMRECYCLE RATE>

<DEPLETEDURANIUM RECYCLE

RATE><TIME STEP>

<Depleted UraniumPlutonium Ratio>

<Maximum DepletedUranium Recycle>

<MaximumPlutonium Recycle>

<TIME STEP> <Maximum DepletedUranium Recycle>

Uranium Light Water and Breeder Reactor Sectors with Tails Production

<UraniumDemand BR>

<UraniumDemand BR>

DUMMYDUMY

<Uranium DemandLWR>

Behavior Assuming Significant HDC Reserves

users

40,00020,00060,000 unit

400,000

000 unit0

1950 1970 1990 2010 2030 2050 2070 2090Time (Year)

INDUSTRY : energy3"residential-commercial" : energy3transportation : energy3 unitUtilities : energy3

Proven reserves of Oil--Worldwide

AMOUNT(billions of barrels)

0

200

400

600

800

1000

1200

1400

1975 1980 1985 1990 1995 2000 2005 2010

Year

AMOUNT(billions of barrels)

Factors Affecting Oil Price

Factors Affecting the Price of Oil

Oil price

Unproven reserves

Proven reserves

Environmentallimitations

Terrorist Fears

Politics

The fallacy of forecasts

• In 1914, U.S. Bureau of Mines predicted U.S. oil reserves would last only ten more years

• In 1939, the U.S. Dept. of the Interior predicted that oil would last only 13 more years, and then in 1951, when the oil shortage never occurred, it predicted oil would run out in just 13 more years

More fallacious forecasts

• In a book published in 1972 entitled Limits to Growth, Dennis and Donnela Meadows claimed that only 550 billion barrels of oil remained in the earth and that they would all be consumed by now

Sasser’s National energy model—wrong as well

RESOURCE/RESERVES

Sasser fore (2003)

Actual (2003)

U.S. Natural gas

All consumed 189 trillion cubic feet

U.S. Oil 167 billion barrels

21.9 billion barrels

U.S. Coal 3.94 trillion tons

.271 trillion tons

Foreign Oil 1800 billion barrels

1244 billion barrels

System Dynamics models of energy• Not a forecasting tool• Enables understanding of the dynamics

• How such dynamical behavior is likely to play out, given certain assumptions is key

• Enables cycles, structures, to be identified

• Enables policy implications to be discerned

Commentary

• Are oil, gas and coal fossil fuels or are they of abiotic origin?

• This is not just a scientific question…

Evidence for abiotic origin

• Oil and gas are being found deep within the Earth’s crust, especially the Russians have been successful at this

• Oil in sedimentary rock contains traces of material from rock below—especially the Devonian and Cambrian rock

More Evidence for abiotic origin

• There seems to be way too much oil to support the hypothesis that it came from decaying biomass that once existed on the surface

• Why did so many dinosaurs and plants decay in the desert of Saudi Arabia?

More Commentary

• If oil and gas are of abiotic origin, then there are huge reserves of oil and gas remaining below the U.S., undiscovered, in granite rock rather than sedimentary, but much further down…

• We just have to drill deeper and in different places to discover them.

• It means our unproven reserves are substantial

Policy implications (Corsi and Smith)• Promote more scientific research to

investigate alternative theories• Fossil fuel theory or abiotic theory

• Expedite leases offshore and in Alaska to encourage oil exploration• If the oil is five miles down, but the ocean is

two miles deep, then you have to drill three miles to get to the oil

• Provide tax credits for deep-drilling oil exploration

More policy implications (Corsi and Smith)• Create an oil research institute to serve

as a clearinghouse of oil industry information

• Develop a public broadcasting television series devoted to the oil industry

• Re-establish a gold-backed international trade dollar

• Establish tax incentives for opening new refineries in the U.S.

Conclusion

• A system dynamics model was developed and presented here that is capable of determining how the energy resource allocations will play out within each sector of the economy

• It is not useful for forecasting• It is useful for finding leverage points

and determining supply/demand cycles

References

• Burns, James R. (1982). Solar Energy and the National energy Dilemma: A Model for Policy Evaluation, Technological Forecasting and Social Change, Vol. 21, 213-228.

• Corsi, Jerome, and Craig R. Smith. (2005). Black Gold Stranglehold: the Myth of Scarcity and the Politics of Oil, WND Books.

• Dyson, Freeman, and Thomas Gold. (1999). The Deep Hot Biosphere: The Myth of Fossil Fuels, Springer-Verlag, New York.

• Sasser, Dallas W. (1976). A System Dynamics Model of National Energy Usage, Sandia Laboratories Energy Report.

Sources

• [1] SOURCE: http://www.eia.doe.gov/pub/international/iea2003/table81.xls

• [1] SOURCE: http://www.eia.doe.gov/emeu/international/coal.html#Reserves

• [1] The Casini spacecraft soft-landed on Titan in the fall of 2005.• [1] SOURCE:

http://www.eia.doe.gov/emeu/international/gas.html#WorldReserves• [1] SOURCE:

http://www.eia.doe.gov/pub/international/iea2003/table81.xls• [1] SOURCE:

http://www.eia.doe.gov/emeu/international/coal.html#Reserves• [1] SOURCE: National Geographic, Vol. 209, No. 3, pp. 101, March

2006.• [1] SOURCE:

http://www.eia.doe.gov/emeu/international/coal.html#Reserves

Questions??

• Thank you for your interest in this study

Behavior Assuming Significant HDC Reserves

Energy resources

100,0006,0004,000

4 M80,000

000

-8,0000

5 5 5

5

5 5

5

5

4 44

4

44 4 4

33

3

33

3 3 3

22

2

2

2

22 2 2

1 1 1 1 1 11

1

1

1950 1970 1990 2010 2030 2050 2070 2090Time (Year)

COAL : energy8 1 1 1 1 1 1 1DOMESTIC OIL : energy8 2 2 2 2 2 2 2NATURAL GAS : energy8 3 3 3 3 3 3 3URANIUM : energy8 4 4 4 4 4 4 4 4FOREIGN OIL : energy8 5 5 5 5 5 5 5