Wednesday, June 18, 2008

Soaring Cost of Plane Fuel Causes Run on Rare Metals.

The recent hike in the price of crude oil has resulted in soaring costs to airlines for fuel. As we mull these things over, some airlines are going out of business and even British Airways were quoted recently as planning to reduce their number of flights by one half over the next decade. It is odd, as I have remarked before, that there can consequently be any real justification for a fifth or even sixth terminal and a third runway at Heathrow Airport, since logic suggests there will be far fewer flights during the next decades than now, rather than the "three-fold expansion by 2030", that was flagged-up prior to the inauguration of Heathrow "terminal five". I don't see how conventional fuel can meet such demand in the face of unprecedented high costs, and worse to come according to many analysts, and an ultimate actual shortage of fuels, most likely during this same period.

I read the other day that it might be possible to make hydrocarbon "jet-fuel" from algae, of higher power-yield than ethanol or biodeisel, and which retains a satisfactorily low viscosity at the low temperatures encountered during routine flights in the altitudes of the troposphere. In contrast, iiodiesel becomes highly viscous (thick) when cooled and difficult or impossible to pump around an engine. However, this technology is still at an experimental stage and certainly is unlikely to solve the problem of how to keep aviation running in the face of an inevitable loss of cheap, plentiful plane-fuel. The same conundrum also applies to terrestrial vehicles, of course.

As in any potential shortfall between supply (earnings) and demand (expenditure) , the gap can be narrowed from either side: i.e. you can, in principle at least, earn more or you can economise, and spend less. So it is with plane-fuel. Knowing that there will never be cheap fuel again, the airlines are looking toward designing planes that use fuel far more efficiently. However, even if more fuel-efficient planes can be built, there remains the matter of what materials they will be made from. This brings on another resource issue, namely that of rare metals.

Metals such as rhenium, chromium, cobalt and titanium, which are already in demand to make industrial catalysts and other essential items for a variety of purposes, including fuel-production from crude-oil distillation fractions, are needed on a large scale to make new super-alloys for planes. The price of rhenium has jumped to a record $11,250 per kilogram, which is almost twelve-times its price in 2006. Indeed, it is now only half the price of gold, which is a big plus to those countries that mine rhenium-ore, e.g. Chile and Kazakhstan.

Rhenium and other rare metals are readily blended with other more common metals, to form alloys which are highly heat-resistant, and allow aircraft engines made from them to run at much higher temperatures than normal, so increasing the thermal-efficiency of the engine. The Carnot-cycle depends on the temperature differential between the coolest and the hottest working part of an engine and so if the latter can be increased, more miles are obtained per gallon of fuel.

Rhenium-alloys have been used in military planes for decades but the move on them by the commercial sector is new. During the cold-war both the US and the Russians stockpiled such materials specifically to keep their war-plane fleet provided for. The drive toward fuel-economy will force-up the price of rare metals as rival airlines battle it out in order to stay in business.

Chromium is mined and produced mostly in South Africa, which has seen its price rise from $4,000 a tonne in 2000 to $11,000 a tonne now. The price was just under $7,000 a tonne only last year. It is interesting but probably unrelated that this is close to the ratio of oil-prices between now and a year ago. Cobalt is produced mostly in the Democratic Republic of Congo (formerly the Belgian Congo), and now costs about $52.50 a pound, which is double its 2006 value.

Along with many resources, most metals are now being stretched into a supply-demand gap, as the world requires more and more of them, and we see this being reflected in their price. In many cases, it is not that there is insufficient of a particular material in the Earth but its rate of production is limited in the face of demand. For metals such as hafnium, vital both in the nuclear and electronics industries, there is a real shortage of known world-reserves, which only the discovery of new ore-deposits or the implementation of an efficient recycling strategy will serve to ease.

Related Reading.
"Rare metals soar on demand for efficient jets." By Javier Blas. http://www.ft.com/cms/s/0/a0c9877a-3c91-11dd-b958-0000779fd2ac.html

11 comments:

Anonymous said...

I really like your blog, but I really wish you'd take a look at some of your own hubris. "Knowing there will never be cheap fuel again"..

How can you know that? And even if so, how do you know that in the future planes won't run on solar or nuclear energy instead? Beamed energy? It seems you often fall into the same trap as many of those you decry: assuming that what you know of here today, is what will be the case in the future. It's one thing to point out legitimate and also some potential problems. It's another thing entirely to pretend you've seen the whole technological future. No man is that smart.

energybalance said...

So why are you "Anonymous"?

The point you are missing is that once we fall into a transportation fuel (energy) crunch, this will take everything else with it. How do you imagine that beamed-energy, fusion (hot or cold), or all else can be developed in the absence of being able to move things around; particularly people and essential goods, thus providing a catastrophe against which technological development will be the least of our worries?

Tell me how we are going to get out of this particular hole before we can expand our use of resources and energy into the bright technological future you allude to.

The truth is that no man is "smart" enough to have a solution to the immediate problem of continuing in whatever form to use energy on the scale we are used to now (particularly in terms of fuel); for that would take cooperation on a global scale and a giving-up of much of our energy-intensive comforts.

Possibly this is against (hu)man nature, at least as history and current world politics teaches us.

It is more likely we will see more war and strife on a clamour over limited resources - oh yes, which all take fuel to extract.

We are not running out of fuel, but the age of cheap stuff based on petroleum is coming to its natural close. There are many ways of getting fuel, but they are all expensive and rely on other resources like water and natural gas, which have their own supply, problems.

Whether you believe in peak oil or not doesn't matter: the most pressing issue is of a gap between rising demand an supply - but once oil does peak the gap will widen hugely.

Then where is that saviour technology and how will it be put into place against such a backdrop?

Anonymous said...

I want to thank you for answering.

I'm afraid I'm anon only because I'm not interested in setting up a blogger account and for no other purpose.

I find your argument a bit less clarifying than I had hoped. You allude to a crisis on this blog wherein we won't be able to move .."things around; particularly people and essential goods, thus providing a catastrophe against which technological development will be the least of our worries?", as if this crisis will just happen all at once some day and not be a more gradual issue as prices rise and extraction rates fail to keep up with demand.

I find this unlikely for two reasons:
A. the economies you count on to keep "expanding", such as China, are unlikely to actually do so at current rates for a very long time, esp. if any real big fiscal crises hits world markets
B. One thing we've gotten increasingly good at over the years is resource extraction. Having read several pages of your blog, (and often been enlightened about various things) I have to assume you are aware of just how much technology has contributed to the ability to extract "sweet crude" in places that were assumed to be uneconomical or used up decades ago. I sincerely doubt that every resource extraction technology being developed today is going to flop.

Lastly, rationing. If I'm a government, I have many ways of making sure that *I* have enough resources out of the pool available. War is one, laws are another. Rationing of some sort would almost certainly be used to ensure that if I was trying to develop a technical replacment infrastructure I would have the means to do so, at least in the forseeable future.

"We are not running out of fuel, but the age of cheap stuff based on petroleum is coming to its natural close. There are many ways of getting fuel, but they are all expensive and rely on other resources like water and natural gas, which have their own supply, problems."

Once again, I can believe this one hundred percent and not have to believe that petroleum is the only way to go as a fuel, that the collapse will be so sudden as to bother normal people's lives much, and that something that is expensive now will remain expensive into the future. For instance, you do know about various techniques being used for desalination don't you? Apparently , at least in some cases this can be done far more energy frugally than you'd think:

sciencedaily link

What I see is a gradual replacement of fossil fuels in technologies and areas where they are not absolutely needed, thus freeing up a considerable amount until the vehicles of today can be converted into the vehicles of tomrorow. You disagree and apparently think the sky will fall before anything can be done about it.

Anonymous said...

Link didn't work.

If you are interested, go to www.sciencedaily.com and search for "desalination".

energybalance said...

You could simply sign yourself, e.g Fred Smith from Illinois, or something like that, to add a personal touch to this dialogue, couldn't you?

You have pretty well summarised exactly what I have been saying all along: i.e. that economic factors, rising costs etc. will be the drivers to change. Basically when oil costs $200 or more a barrel and that knocks-on to fuel costs at the pump there will be a lot of journeys that will no longer take place.

I have never suggested that there will be an overnight switch to catastrophe but it could happen over a period of a few years. Even the CEO of Shell thinks the supply gap will strike in 2010 - 2015. When an oil-executive talks like this I begin to believe him. He would not cut his own throat surely?

The "Forties" field in the North Sea is a good example of the kind of extractive technology you refer too, but it doesn't come cheap.

Are you suggesting that we will once again see oil at much lower prices?

You don't think there will be an impact on people's daily lives? We are beginning to see an impact already, for example in food costs and shortages across the world which are partly connected with high fuel prices - among other things.

I agree that e.g. the Chinese economy will not continue to grow relentlessly and I have said so on a number of occasions. If the West buys less of their products, as it will if there is less ready cash in people's pockets, there will be a contraction there.

The Saudis are worried that the rising cost of oil will cause a reduction in industrial output in the West and that will knock-on to their own economy. Thus they may well try to get the price down, but this can only be a temporary measure since the underpinning problem is extracting and processing oil per se.

Sweet light crude production peaked at the end of 2005 and hence it is heavier oil (with more sulphur and metal "contaminants") that will be produced and refined into fuels. Indeed such oils are better converted to diesel fuel, but there is limited capacity presently to machine diesel engines to burn it, even though they are far more efficient in tank-to wheels miles than spark-ignition engines that burn petrol (gasoline). There is also limited refining capacity presently to handle heavy oil.

So, an expansion of engineering is needed in any case to exploit heavier oil reserves. Agreed they can be cracked into smaller fractions but the emissions regulation do add an expense in desulphurization costs.

In summary you think we disagree over the timing of the consequences of the demand-supply, gap for peak oil whereas I think we are on a similar track.

It won't be an overnight event but it will take less than a decade. A gap of only 5% between supply and demand will make a huge difference and keep oil prices high.

Only time will tell and personally I hope you are right that we will be O.K. and not have to compromise our lifestyles, but I see too much indication to the contrary. From what you say it seems you don't think that in a year or so there will be much difference to people's everyday lives. My contention is that we will be in the midst of a real economic downturn by then, and there may be more or the threat of more military action in oil-rich regions.

There will be a slow-down whatever happens, as you say on economic grounds.

You say that you don't believe that petroleum is the only way to go as a fuel and I agree - if the "cheap" stuff is in limited supply how can it be?

However, biofuels cannot be produced in matching quantity to replace oil without depleting food production (an already difficult problem), and hence how do you think we can keep transportation going at current levels?

Transportation is the crux of what happens next, surely, especially in the U.S.

So what alternative fuels do you think might be brought to bear to hold the current levels of transport steady while the oil climbs down?

energybalance said...

Dear Anonymous 1, that URL works fine. Just cut and paste it into the header and you'll get to the FT article.

Anonymous said...

Fair enough.

I'll respond later today or early tomorrow as its back to work time for me.

Just call me Clarence from Baltimore.

Thank you for some interesting dialogue.

Anonymous said...

Clarence in Baltimore here.
Forgive me for cutting and pasting, but what I don't address you can assume I agree with you about.

I have never suggested that there will be an overnight switch to catastrophe but it could happen over a period of a few years. Even the CEO of Shell thinks the supply gap will strike in 2010 - 2015. When an oil-executive talks like this I begin to believe him. He would not cut his own throat surely?

We are in agreement on this and the CEO might (heck, I'll say probably) will be right provided his assumptions of the market hold true as well as his inside knowledge of extraction technologies. The agreement is that it could happen.

Are you suggesting that we will once again see oil at much lower prices?

Possibly, as there are so many political/economic factors involved in the price of oil, that until demand outstrips supply in the way you've documented on this blog, prices will be subject to wide variability. Of course the overall trend will be UP.

You don't think there will be an impact on people's daily lives? We are beginning to see an impact already, for example in food costs and shortages across the world which are partly connected with high fuel prices - among other things.

My contention is that any impact will be minimal for a long time in much of the west. Mass starvation will not occur in the US or western countries. People won't suddenly stop commuting to work or all move from the suburbs. What will happen at first is the non-necessities will be cut. If we are lucky that is all that will happen until the changeover to a new transportation infrastructure occurs. If not, well , worse case scenerios could lead to global instabilities and civil/national wars.

So what alternative fuels do you think might be brought to bear to hold the current levels of transport steady while the oil climbs down?

I'm not sure we need the "current levels" maintained as most of them are private individuals taking private trips in private cars. All we really need is enough for people to commute, for truks/trains to transport, for fertilizers, and for planes to fly. Given the high prices of air travel, I predict more virtual workplaces and meetings, and less private travel which will help that sector get its act together for a decade or two until they can bring in new fuels or new types of planes. Then maybe common people might fly again.In any case I see people switching to more fuel efficient vehicles and that alone will save insane amounts of fuel. Check out things on ebay: old fuel efficient cars are being brought for outrageous prices that would have been unthinkable even a few years ago.

In short, I think the market will take care of alot of potential pitfalls.

By the way if you wanted to know what I'd do in terms of energy if I had all the political capital I'd:

A. Fully fund conservation efforts and give tax breaks for such
B. Make sure to continue funding at present levels or even increase funding for something such as ITER. Fusion is the future in my opinion.
C. Much more use of solar. Not as expensive as it once was and they keep making the cells more efficient. Maybe even something large in orbit. The technical challenges appeal to me as does the potential for large scale power generation.

Well, I've alot more ideas but those would be just to start.

Clarence

energybalance said...

Hi Clarence,

thanks for your well-considered comments. I tend to agree with much of what you say.

If the number of private journeys were curbed that would take a huge load off demand for oil. However, we then need either to move people around by other means - electrified tramways over smaller region? - or relocalise society so we don;t need to travel so much.

We can travel "virtually" using the internet etc. by sending information, thus leaving the essential movement of goods food etc. as a priority.

More focus ion local-production, local farms and local generation of energy - heat and electricity say by CHP systems would help too.

I think efficiency is key and if we could cut-back demand for oil especially we would buy ourselves more time to plan for more long-term technologies, as you suggest.

My fear is that there will be no attempt to cut-back and the "market forces" will act destructively. If we had begun lookimg seriously for alternatives 30-odd years ago when OPEC artificially caused huge oil-price increases we might be closer to some kind of solutin or compromise now.

Still, we are here we are, and there is no use saying "what if or "if only"! It is a question of getting through the next difficult (and probably near) period that is priority otherwise it all begins to uravel.

I am very concerned about what will happen over Iran and the stability of the Middle east generally. We shall see...

Maybe it is a far smaller world population that will see fusion, widescale solar etc., than exists now - in the future?

I am trying to maintain optimism. Have your read any books by James Howard Kunstler (he also has a blog called "clusterfuck nation") who is not at all optimistic for the future, especially as he focusses on the highly urbanised U.S. However, all Western nations are subject to the same troubles if oil-prices continue as they are.

Regards,

Chris.

Anonymous said...

Hi. Clarence in Baltimore, again.

Same as before, what I don't comment on I agree with, what I comment on I either want to add to or disagree with.


My fear is that there will be no attempt to cut-back and the "market forces" will act destructively. If we had begun lookimg seriously for alternatives 30-odd years ago when OPEC artificially caused huge oil-price increases we might be closer to some kind of solutin or compromise now.

Still, we are here we are, and there is no use saying "what if or "if only"! It is a question of getting through the next difficult (and probably near) period that is priority otherwise it all begins to uravel.



Market forces aren't God (yes, even I, an American citizen , can say that) but they do tend to address things pretty efficiently overall though sometimes they need governmental help. Still, in this case, I believe the market is responding at a much greater level than even five years ago and I don't think that the "powers that be" in the auto industry, for example, believe the future is oil-based. At most I think they are counting on being able to build fuel efficent hybrids for the next 20 to 30 years and then moving the another platform after that. In other words, my impression of that industry is that it is one in which the players know there will be new rules in the future and are now spending considerable capital to try and get there.

As for the second quoted pargraph: that's true, but it's rather difficult to know where we'd be now. The information technology explosion and the rise of nanotechnology seem to have started to make many assumptions about the future of technology obsolete. I'm not sure what technologies would have been developed had we done a major energy project 30 years ago, heck it's almost like me asking where we'd be now had we been serious about space exploration and exploitation rather than simply settling for low earth orbit and skylabs. Fascinating, but , as you say, ultimately futile.

Maybe it is a far smaller world population that will see fusion, widescale solar etc., than exists now - in the future?

I hope not, at least in terms of any massive die-offs of my fellow humans. If we get where I want to go , I rather think the world could support 4 to 5 times the current population comfortably - of course this depends on abundent energy to mitigate the potential environmental impacts and other high tech solutions, which, if worse comes to worse, will never happen. In short, unlike many, I don't think the world per-se is currently overpopulated with humans (though parts undoubtedly are for the amount of food they can grow vs current pop, forest depletion, etc.),I rather think our inefficient energy and political infastructures result in much more human impact and harm to humans than is necessary.

am trying to maintain optimism. Have your read any books by James Howard Kunstler (he also has a blog called "clusterfuck nation") who is not at all optimistic for the future, especially as he focusses on the highly urbanised U.S. However, all Western nations are subject to the same troubles if oil-prices continue as they are.

I've not read any of his books, but I've read of him and articles by him over the past 25 years. He's as pessimistic technologically as I am socially, but he doesn't really have any credentials (not that anyone REALLY does) to make his large scale pronounciations which I think in his heart of hearts he hopes are right. I don't. I'd rather people had choices, much as I might like them to choose to live differently in some regards.

What I will give him is he is consistent in his message and has the courage of his convictions, wrong headed as I think they often are.

I rather like what you are doing. While looking to spread the warning, you are also looking for solutions and trying your best to rationally evaluate them. I also don't think you revel in the suffering you know may be coming unlike a few in the wider "end of oil" community who seem to share radical environmentalist notions.

Be well Chris.

Clarence

energybalance said...

Hi Clarence,

no, I agree with you, "market forces" are not God and I wish someone had told Mrs Thatcher that!

You are quite right in that I do not revel in the thought of human suffering on a huge scale, and I hope that the Christian Fundamentalists are not correct that these are the "end ties" and that man's demise is forecast to come soon... and badly!

Meanwhile I am looking for solutions of some kind in the hope that we can find a way through the oil-problem... and into a "bright" new world. The old one has to change.

Energy efficiency must be the key, here.

Be well too,

Chris.