I don't necessarily view a dramatic decline in driving, the end of surburbia as we've come to know it, or major changes to global economic trade that foster relocalization to be bad. Quite the opposite. I think many benefits can come from peak oil. So where you see this as "end of the world"-type talk, I see it as a "new beginning"-type opportunities.

 

I don't see it as the end of the world.  I didn't mean to give that impression.  I just see it as a reality we need to face up to.  I think re-localization is one of the best things that could happen for the well being of our communities and our economy.  I also see less driving as a good thing for a variety of reasons.   

The original article is worth seeing because of all the embedded links, at:

 

http://latimesblogs.latimes.com/money_co/2009/06/oils-surge-to-near-70-a-barrel-has-stoked-fresh-debate-about-whats-driving-the-market----and-where-prices-may-be-headed-if.html

 

Oil: The rise and fall . . . and rise

2:07 PM, June 7, 2009

 

Oil's surge to near $70 a barrel has stoked fresh debate about what's driving the market -- and where prices may be headed if the economy is turning up. Edward Silver, a former Times staff writer who keeps a close eye on the energy market, offers some context on the latest price action, and the global supply/demand equation:

 

The world consumes 30 billion barrels of oil a year. Without it, our food doesn’t make it to the supermarket and our flights to Hawaii are grounded.  Too bad the price is set by such a moody bunch.

 

.....yes, by you and I.

Proven Oil Reserves Fall for the First Time in 10 Years

http://www.bloomberg.com/apps/news?pid=20601080&sid=a6.7NWiQ5wGw

By Rachel Graham and Alexander Kwiatkowski

 

June 10 (Bloomberg) -- Global proved oil reserves fell last year, the first drop since 1998, led by declines in Russia, Norway and China, according to BP Plc.

 

Oil reserves totaled 1.258 trillion barrels at the end of 2008, compared with a revised 1.261 trillion barrels a year earlier, BP said in its annual Statistical Review of World Energy posted on its Web Site today. The world has enough reserves for 42 years at current production rates, BP said.

 

BP and other oil companies are struggling to replace reserves as access to...

http://www.bloomberg.com/apps/news?pid=20601103&sid=ayueiobS4zME

 

Conoco Chief Says Replacing Oil May Take a Century

By Edward Klump

 

June 16 (Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said it may take a century for the nation to replace fossil fuels with alternative energy sources.

.....

This is how some people respond. I'm not there....

 

http://www.ajc.com/services/content/printedition/2008/05/26/survivalists.html

 

Survivalists act as energy fears grow

Some believe crisis is ahead

 

By Samantha Gross

Associated Press

Published on: 05/26/08

 

Buskirk, N.Y. —- A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

 

........

This is how some people respond. I'm intrigued, but I'm not there....

 

http://www.ajc.com/services/content/printedition/2008/05/26/survivalists.html

 

Survivalists act as energy fears grow

Some believe crisis is ahead

 

By Samantha Gross

Associated Press

Published on: 05/26/08

 

Buskirk, N.Y. —- A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

 

That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.

 

..........

http://www.theoildrum.com/files/global_gdp.png

Global GDP data from the USDA. Primary energy data and energy prices from the BP statistical reveiw of world energy 2009.

 

The financial return on energy invested

Posted by Euan Mearns on June 23, 2009 - 10:41am in The Oil Drum: Europe

Topic: Economics/Finance

 

A number of recent posts on The Oil Drum have explored the relationship between energy and the economy. Francois Cellier provided an overview of links between energy consumption and GDP on a per capita basis. This post will expand on the work of Francois taking a somewhat different approach. In a guest post, Ian Schindler provided an overview of the Ayres-Warr model of economic production which I found easier to read and understand than the original Ayres-Warr paper. Ian made some valuable points about the role of energy efficiency in promoting higher energy prices and higher energy production. David Murphy looked at the relationship between oil prices and rates of oil price change in relation to US GDP and growth whilst drawing attention to the view that the current recession was in part caused by high oil prices.

 

In this post I want to explore further links between energy consumption, GDP and energy prices. But first a quick note on data limitations.

 

Read more and see more graphs at:

http://europe.theoildrum.com/node/5495

Has anyone read this book yet? Is it worth getting?

 

$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better

by Christopher Steiner 

 

http://www.amazon.com/20-Per-Gallon-Inevitable-Gasoline/dp/0446549541

^--- No, but that title is all about you, KJP!

 

 

Has anyone read this book yet? Is it worth getting?

 

$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better

by Christopher Steiner

Cleveland Public Radio was promoting a segment on that author, either Thursday or Friday.

 

It may be on the 9 am show today.  It may have been yesterday, in that case, it might be archived or you can otherwise find the listing at www.wcpn.org

^--- No, but that title is all about you, KJP!

 

 

Yep, just me. I'm that important.  :roll:

The chart is pretty remarkable. While the drops in production and consumption are interesting, I think the plateauing of production and the level consumption rising above it in recent years is at least as interesting. Want to know why oil shattered records last year (and killed a fragile economy in the process)?? There ya go....

 

http://seekingalpha.com/article/149642-looks-like-oil-production-already-peaked

 

Looks Like Oil Production Already Peaked

by: Plan B Economics July 19, 2009

 

The following graph shows that the spike in West Texas Intermediate Oil of $147 per barrel may have signaled that global oil production has already hit its peak.

 

There are two telling signs:

 

1. July 2004 – September 2007: Daily oil production remained flat while prices doubled and consumption was on an upward trajectory. Perhaps OPEC wanted to create a tightening bias in the world oil markets to force prices to rise. But more realistically, OPEC likely knew it had limited production slack and did not want to use up its last ‘bullet’ before price rises started destroying demand.

Note: Due to tonight's presidential press conference, this show will air on Friday instead of Wednesday.

 

http://www.thepost.ca/ArticleDisplay.aspx?e=1664863

 

Charles Gibson anchors a well-oiled ABC News special

Posted By JAY BOBBIN, © ZAP2IT

Posted 1 day ago

 

Oil is as rich a subject as ever, if not more, with many meanings for many people.

 

"ABC World News" anchor Charles Gibson pumps out various aspects in "Over a Barrel: The Truth About Oil," a new ABC documentary airing Wednesday, July 22. In considering everyone from speculators who price oil to consumers who need it to run cars and heat homes, Gibson covers a lot of territory -- also with his own mileage during the hour, which takes him from New York's Wall Street to the Gulf of Mexico.

 

....

http://www.theglobeandmail.com/report-on-business/stepping-on-the-gas-in-record-amounts/article1226382/

 

Stepping on the gas, in record amounts

Heather Scoffield and Jennifer MacMillan

Ottawa, Toronto — Globe and Mail Update

Last updated on Wednesday, Jul. 22, 2009 10:48AM EDT

 

Thanks to his Ford Ranger, house painter Richard Gouveia has kept on trucking through the recession, relying on his pickup to get to work from his Toronto-area home and to haul gear from one job to another.

 

After a slump in business last year, Mr. Gouveia said he's now driving as much as he ever has.

 

Like many other Canadians, he hasn't cut back on the gas he uses, despite the recession, and in stark contrast to Americans who have changed their driving habits.

 

 

....

http://www.newscientist.com/article/dn17506-us-vehicle-efficiency-hardly-changed-since-model-t.html

 

US vehicle efficiency hardly changed since Model T

13:23 23 July 2009 by Max Glaskin

 

The average fuel efficiency of the US vehicle fleet has risen by just 3 miles per gallon since the days of the Ford Model T, and has barely shifted at all since 1991.

 

Those are the conclusions reached by Michael Sivak and Omer Tsimhoni at the University of Michigan Transportation Research Institute in Ann Arbor. They analysed the fuel efficiency of the entire US vehicle fleet of cars, motorcycles, trucks and buses from 1923 to 2006.

 

They found that from 1923 to 1935 fuel efficiency hovered around 14 mpg (5.95 km/l), but then fell gradually to a nadir of only 11.9 mpg (5.08 km/l) in 1973. By 1991, however, the efficiency of the total fleet had risen by 42 per cent on 1973 levels to 16.9 mpg (7.18 km/l), a compound annual rate of 2 per cent.

 

......

Electric cars are seen as the way of easily coping with peak oil. But will it be that easy?

 

http://www2.macleans.ca/2009/07/23/will-electric-cars-ignite-a-lithium-boom/

 

Will electric cars ignite a lithium boom?

Some suggest the lithium supply could eventually be tighter than oil is today

 

Tags: electric cars, lithium

During last year’s American presidential campaign, John McCain laid out his plan to jump-start the electric car industry with a US$300-million reward for whomever could build a better battery. His then rival, Barack Obama, roundly mocked the scheme, calling it a “gimmick.” But it turns out that Obama’s biggest problem with the plan may have been there weren’t enough zeros in the prize.

 

Any day now, the U.S. Department of Energy is expected to announce the winning recipients of grants to foster a domestic automotive battery industry, and this time the pot is worth US$2.4-billion. Washington has already handed out US$8 billion in loans to Ford, Tesla and Nissan to promote cleaner vehicles—which the latter plans to tap to build an automotive battery plant in Tennessee. And just last week Ontario jumped in to pledge incentives of as much as $10,000 per car to lure drivers into buying electrics.

 

Replacing oil with electricity to sustain present transportation habits doesn't solve the real problems, poor land use and affordable transportation for the working poor.

 

 

 

    Replacing petroleum powered cars with electric ones would also leave the Highway Trust Fund in a bind with just as may cars on the road but less money to pay for road maintenance.

 

    Our current automobile use and highway system go together as a partnership. Neither can work without the other. Maybe a mechanism for the decline of automobiles might include poor highway maintenance due to decline in gas tax revenue. Fortunately, infrastructure lasts a long time, and the major work of grading has already been done. Still, pavement must be resurfaced periodically and bridges replaced. It isn't going to last forever, even if we invent solar powered cars (not likely.)

[ ... ]

Our current automobile use and highway system go together as a partnership ...

 

Yep. Looks like a death spiral in the offing.

 

As driving declines, and along with it, demand for highway capacity, those beautifully-engineered Interstate grades can be repurposed. Car and truck traffic can be consolidated on lanes on one side of the median, and the lanes on the other side can be converted to dedicated ROW for high-speed passenger rail.

 

Thus separating passenger trains from freight traffic eliminates the factors that require American passenger rolling stock to be built to freight-train standards for collision impact tolerance, etc.. Those standards result in much heavier rolling stock than that used in other countries' high-speed systems and drive up both construction and operating costs.

 

Light, fast electrified passenger trains with high power-to-weight ratios easily are able to handle most grades on Interstates that already are designed to be negotiable by heavily-loaded trucks, and the wide, sweeping curves easily can be dealt with by elevation (banking of curves) and Talgo technology. The ROW already is grade-separated and in many cases enters or approaches near city centers. The cost of constructing diverging routes to gain that access in other places is negligible compared with the cost of purchasing and grading entirely new ROW.

 

Converting the ROW for use by electrified high-speed trains eliminates the toxic runoff and noise pollution that the motor vehicle-highway partnership produces.

This is really a discussion best left to the U.S. Transportation policy thread. But I don't see much good happening to the Highway Trust Fund and our nation's roadway system in the coming decades.

 

In one scenario, Congress, regardless of party, would lack the courage to address the situation involving the Highway Trust Fund's insolvency. That means highways falling into greater disrepair, or some roads being closed altogether. Either way, it means even less driving and fewer revenues which will exacerbate the feedback loop.

 

If by some miracle Congress does enact higher revenues to sustain the Highway Trust Fund, the higher fees/taxes might further discourage driving and possibly mean no increase in Highway Trust Fund revenues while highway maintenance costs continue to rise. This option is probably the lesser of the two evils for highways, yet is therefore is not a solution.

 

And this isn't even taking into consideration the impacts from peak oil.

http://www.reuters.com/article/GCA-Oil/idUSTRE55L17H20090724

 

Oil rises above $68 on economic optimism

Fri Jul 24, 2009 3:27pm EDT

 

NEW YORK (Reuters) - Oil rose to top $68 a barrel on Friday on optimism a turnaround in the global economy would lift battered fuel demand.

 

U.S. crude settled up 89 cents at $68.05 a barrel, the highest settlement since July 1. The gains extended a rally that has pushed prices up more than 14 percent since July 14.

 

London Brent crude rose $1.07 to settle at $70.32 a barrel, after topping $70 a barrel for the first time since July 1 earlier.

 

"The market is continuing to feel the strength of economic optimism from the greater financial markets," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

 

......

Lots of imbedded links in this article at:

 

http://www.forbes.com/2009/07/24/peak-oil-production-business-energy-nelder.html

 

The End Of Fossil Fuel

Chris Nelder, 07.24.09, 03:00 PM EDT

Prepare for a radically different lifestyle as global crude oil production peaks and begins to decline.

 

You will never see cheap gasoline again. You will probably never see cheap energy again. Oil, natural gas and coal are set to peak and go into decline within the next decade, and no technology can change that.

 

Peaking is a simple concept. We generally exploit natural resources in a bell-shaped curve, with the rate of extraction increasing over time until we reach a peak and then gradually slowing down until we stop using them.

 

Peak oil is not about "running out of oil"; it's about reaching the peak rate of oil production. It's not the size of the tank that matters, but the size of the tap.

 

......

 

 

Chris Nelder is the author of Profit from the Peak--The End of Oil and the Greatest Investment Event of the Century and the coauthor of Investing in Renewable Energy. He blogs on GetRealList.

http://www.getreallist.com/

 

Read more about how soaring energy prices will transform our lives in our special report on $20 a Gallon...

http://www.forbes.com/20-dollar-gallon

Aside from the obvious bad news about oil supplies, imagine what this will do to Mexico's economy and to "immigration patterns"....

 

http://in.reuters.com/article/oilRpt/idINN2446027220090724?sp=true

 

UPDATE 1-Mexico June oil output down 11.1 pct vs year ago

Sat Jul 25, 2009 4:04am IST

 

* June output falls 11.1 pct vs year ago

* Planned maintenance cuts 45,800 bpd

* Export volumes decline 12.7 pct (Recasts, adds details)

 

MEXICO CITY, July 24 (Reuters) - Mexican oil output fell below 2.6 million barrels per day for the first time since 1990 in June, hit by the relentless decline of the Cantarell field and maintenance, state oil monopoly Pemex said on Friday.

 

...........

A friend made the following e-mail comment to me about the above article....

 

The most important fact of the US energy/oil situation is that 65% of our oil & refined petroleum products is imported. The second most important fact is that transportation uses 75% of the oil & refined petroleum products.

 

The most important fact of world oil supplies is that only 1/3 of the world's oil and liquid fuel products are available on the export market for big importers like the US, China, India, Japan, European Union to bid on. Even if world oil supplies can remain somewhat constant, the big producers (and those with big reserves) are using more oil themselves while many are seeing production decline, so they are exporting less oil. And some countries like Brazil which have some huge deep water reserves (8 to 30 billion barrels) have to spend five to ten times what Saudi Arabia spends to bring the oil to the export market. BP this year drilled a dry hole in Brazil's "Tupi" offshore field consuming around $100 million of BP's capital.

 

The gravest danger to the US is that as amount of oil on the world export market declines, the price of that oil will increase. This is quite inevitable based on the increase in oil imports by the developing countries like China, India, former Soviet states, and developed countries in South America. Even during this present world recession India and China continue to increase oil imports.

 

Bottom line is US will not be subject to shortages any time soon, but the price for oil will climb higher even with a recession. And that price will keep the US from economic recovery as long as its transportation is so fully dependent on oil.

http://www.thecuttingedgenews.com/index.php?article=11465

 

Oil is Peaking But Not Because of Speculation

Steven R. Kopits

Cutting Edge Contributor

July 27th 2009

 

In seeking to explain the run up in oil prices from 2004 to 2008, commentators often turn to ‘speculation’ as the primary cause. While speculation—or at least a kind of piling-on—may have explained the very late stages of the oil price rally, the willingness to attribute oil prices primarily to financial investors, as the CBS news show 60 Minutes did a few months back, risks drawing the wrong lesson from the period.

 

Let’s rewind the clock and recall the events of the time. After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world’s economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development. It didn’t. In the four years to mid-2008, the world economy expanded by 18 percent. The global economy boomed, even without new oil.

 

......

Anyone read this book yet? I just saw ad for it on Bloomberg.com

 

http://www.ordering1.us/bloombergbooks/product.php?pid=339

 

The Cul-de-Sac Syndrome

Turning Around the Unsustainable American Dream

John F. Wasik

An incisive look at the consequences of today’s costly and damaging suburban lifestyle

Good idea... Let's rely on reserves data that hasn't changed in 20+ years from Middle East countries which appear to be overstating their reserves by 100 percent. And Chevron is concerned about future oil supplies. Apparently the editor didn't bother to visit Chevron's site at: http://willyoujoinus.com/

 

Still, I'm posting this article to show that an opinion need not be well-founded to be published....

 

http://www.haleakalatimes.com/2009/07/29/news/National_Affairs/no_peak_in_sight_for_oil_production_or_demand/

 

No peak in sight for oil production or demand

“But eventually it’s a question of access. Getting access to fields is on top of the oil companies’ agenda. We see a substantial build-up of supply occurring over the coming years.” – Daniel Yergin

_________________

 

 

There’s much talk these days that a peak in global oil production looms in our immediate future. It’s certainly not here yet, and based on human behavior and recent evidence, that elusive peak moment when oil production begins to irreversibly decline remains decades away. I know this is true because we pay attention to these things out here in the energy-conscious countryside, where the weekly trip into town can burn three or four gallons of gasoline.

 

......

Fatih Birol used to be a peak-oil skeptic. Now he sounds scared....

 

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html

 

August 3, 2009

 

Warning: Oil supplies are running out fast

 

By Steve Connor, Science Editor

 

Catastrophic shortfalls threaten economic recovery, says world's top energy economist

 

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

 

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries.

 

.......

"The future will be fueled by hydrogen,... "

 

No, it won't.  The conversion losses of turning wind power, photovoltaic, or nuclear are way too high for it to be viable.  The viable method is reforming hydrogen from natural gas, but gas is a limited resource.

 

The federal government is winding down the ill conceived hydrogen car program.

Let alone the explosiveness of hydrogen, as well as the corrosiveness of hydrogen on fuel tanks, tubes and pumps that create a huge risk of leaks.

Look what it did to the Hindenburg.  :wink:

Point being, we haven't developed a hydrogen tank for a car that's crash-worthy and yet doesn't weigh more than the car itself. Then there's the refueling and engine-feed lines, their connection points, the refueling nozzle, etc. that quickly get corroded by the fuel. It's more of a maintenance/upkeep issue, which wouldn't be a problem if all motorists could afford to maintain their cars now, or were so dutiful in keeping them in a safe condition.

^---- The discussion of hydrogen reinforces the fact that gasoline is the ideal fuel.

Here's a few articles showing the wide variety of views by investors on oil issues. I'm posting them because speculators don't all push the market price up:

 

First one... This well-respected guy is using the Elliott Wave (a theory that group psychological dynamics influence the health of financial markets) to predict the future price of oil. I would love to know how human psychology has any affect on a price in which supply of a natural resource is easily able to satisfy 10 units of demand for that resource when, in reality, only 8 units of supply may be available. Prechter must be one of those economists who fails to account for the finite supply of certain natural resources...

 

http://www.bloomberg.com/apps/news?pid=20601072&sid=aox.KsSOudpA

 

Oil May Fall Below $10 in Next Decade, Prechter Says (Update1)

By Dinakar Sethuraman

 

Aug. 13 (Bloomberg) -- Crude oil may plunge to less than $10 a barrel in the next decade after surging to a record $147 last year, said Robert Prechter, who achieved fame for cautioning on Oct. 5, 1987, that stocks would crash.

 

“I expect crude oil prices to fall below $10 a barrel sometime over the next decade,” Prechter, founder of Elliott Wave International Inc., said in an e-mail yesterday. “It took many years for it to achieve $147.50, and it will take a long while for the full retreat to occur.”

 

+++++++++++++++++++++++

 

A more lucid view......

 

http://www.bloomberg.com/apps/news?pid=20601072&sid=aS8EHmALcqaA

 

IEA Bearish on 2009 Oil Demand, Overlooks U.S., Barclays Says

By Yee Kai Pin

 

Aug. 13 (Bloomberg) -- The International Energy Agency remains too bearish on its outlook for oil demand this year and has overlooked U.S. industrial output that will boost consumption in the coming months, Barclays Plc said.

 

The IEA, energy adviser to the Organization for Economic Cooperation and Development, yesterday raised its forecast for global oil demand after increasing the estimate for the second quarter. By maintaining its prediction for the latter half of 2009, the IEA isn’t accounting for signs of an economic recovery in the U.S., the largest oil-consuming nation, Barclays Capital commodities research analysts led by Paul Horsnell said in a weekly report yesterday.

 

++++++++++++++++++++

 

And then there's Jeff Rubin who believes, as I do, in the staging of a global economic slowdown over the coming decades as economic output and petroleum prices rise and fall in virtual lockstep. Economic output will cause petroleum prices to rise until the economy can no longer bear the price, causing economic output to fall. At each stage when the petroleum price reaches a new high, the next most petroleum-dependent or otherwise next most vulnerable layer in the economy is stripped away and eliminated.....

 

http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10590384

 

Country oblivious to next oil shock

 

The spike in oil prices to US$147 a barrel last winter helped trigger the global recession.

And soon after a global economic recovery, the inevitable return to triple-digit oil prices will lead the world right back into recession. So argues Jeff Rubin, who was until recently the chief economist at CIBC World Capital Markets, the investment-banking arm of the Canadian Imperial Bank of Commerce.

 

Rubin says we need look no further than recent history for the evidence. Four of the last five global recessions were due to oil shocks. And the latest oil spike saw prices rise three times as steeply as previously.

 

Germany, New Zealand and Japan were already in recession well before the sub-prime mortgage crisis broke.

It also turned Cleveland into the world's first corporate and refining headquarters for the oil industry.............

 

http://www.cleveland.com/business/index.ssf/2009/08/drakes_pennsylvania_oil_well_i.html

 

Drake's Pa. oil well idea changed world in 1859

By DAN NEPHIN (AP) – 22 hours ago

 

TITUSVILLE, Pa. — The oil boom that began 150 years ago in this small northwestern Pennsylvania town changed the world and made countless people rich, but not the man who found the way to successfully extract black gold from the ea

 

.......

His statistics are littered with half-truths, but I suppose the flattening of oil production since 2004 is all part of the global oil conspiracy to raise prices (and, oops, reduce demand, spur interest in alternative fuels and increase investment in alternative transportation modes). Pretty effective conspiracy (NOT!)....

 

http://www.huffingtonpost.com/raymond-j-learsy/the-international-energy_b_260633.html

 

Raymond J. Learsy

Scholar and Author of 'Over a Barrel: Breaking Oil’s Grip on Our Future'

Posted: August 16, 2009 04:10 PM

 

The International Energy Agency Shills For OPEC, The Oil Speculators and the Peak Oil Pranksters

 

When it comes to matters oil and energy, the globby hand of oil influence seems to smear all in the industry, even those whose mandate is to look after the interests of consumers and national economies. And that now pertains to the otherwise-esteemed International Energy Agency (IEA).

 

........

Oh it's over.

 

http://money.cnn.com/2009/08/17/news/international/china_oil/index.htm?postversion=2009081704

 

http://thearchdruidreport.blogspot.com/

 

Betting on the Rust Belt

by John Michael Greer

Published Aug 19 2009

 

I owe, I think, an apology as well as a few words of explanation to the regular readers of this blog. The weeks I’ve taken off from posting here this summer have not been as innocent as they seemed, and those of you who may have imagined me basking in the mostly theoretical sun on some gray and rainy Oregon beach are about to be sadly disillusioned. Conspiracy fans take note: a plot has been afoot.

 

 

.....

"First, I finally have something to offer those of you who wrote hoping for more of my fictional explorations of the deindustrial future. I’ve begun work on an online novel titled Star’s Reach; you’ll find it just a click away at http://starsreach.blogspot.com. It’s set in Dark Age America about five hundred years from now; longtime readers will likely recognize the setting as the latter years of the salvage society phase I’ve discussed in past posts. I expect to add a new section to the tale every couple of weeks, but we’ll see."

 

Very interesting.  Does anyone know of any other peak-oil related fiction out there?

 

I have a really hard time getting worked up about peak oil. Frankly, I don't understand why any of you are.

 

If you hate sprawl, then peak oil is going to be a fantastic thing. It will force the implementation of the alternative technologies that are so highly touted, but currently too expensive.

 

But the fact of the matter remains that peak oil is in the future. Right now, it's still cheaper to use oil. We will continue to use oil until it stops being cheaper to alternative energy. We will NEVER "run out" of oil. It will just get more expensive and more expensive until the majority of the economy shifts to energy sources that have become cheaper by comparison.

 

All this fretting and "long emergency" paranoia is turning into this weird fetish for people who don't understand how markets work.

 

Any economic turmoil caused by peak oil and increasing oil prices is NEGLIGIBLE compared to the economic turmoil and stagnation that would result from governments forcing people to abandon oil before the market indicates it's time to do so. At worst, the United States will have to deal with the legacy of an overbuilt highway system. But that has much less to do with energy policy and more to do with the seperate (but foolish) policy of a government-funded interstate highway system - our biggest and least accountable socialist industry.

Will we be able to convert to a non oil based economy fast enough to stay ahead of the decline in oil production?  That's the question.  I wouldn't count on markets to save society by autopilot.  Something can only go to market to the degree that it exists and can be produced.  That means that if alternatives aren't developed and capable of being ramped up in production quick enough, we could find ourselves stranded in an economy relying on cheap oil, but with oil being very expensive.

 

  There are no true alternatives to petroleum.

 

  The so-called alternative technologies will become less affordable, not more affordable. That's the scary part.

 

    I agree with you that governments often make matters worse.

Everything that can be invented has been invented.

 

--Charles H. Duell, Commissioner, U.S. patent office, 1899

 

(yes it is a misquote, but still applies!)

Will we be able to convert to a non oil based economy fast enough to stay ahead of the decline in oil production? That's the question. I wouldn't count on markets to save society by autopilot. Something can only go to market to the degree that it exists and can be produced. That means that if alternatives aren't developed and capable of being ramped up in production quick enough, we could find ourselves stranded in an economy relying on cheap oil, but with oil being very expensive.

 

This is the problem-- the lead time that we have left to make the transition.  Most experts agree that a smooth transition requires 20-30 years of lead time.  It's looking like we have 10 if we're lucky, but that's until the permanent production declines set in.  There will be price more price disruptions before then.  The depletion curve has set in for 54-55 of the 65 oil producing countries in the world.  Which means we have 10-11 countries that are helping to maintain a production plateau-- for now-- and that's being helped by the down economy.  Recently, the International Energy Agency upped its estimate of the global depletion rate from 4% to 6%.  The IEA has, until recently, always been optimistic with respect to its view of future oil supplies.  For them to change is a monumental shift.         

 

Anyway, markets do certain things well, but they don't do everything well (likewise government is bad at some things but not everything).  One of the things markets don't do well is foresee major changes, such as in resource availability, that will occur 20-30 years into the future.  The peak oil crowd has been saying for years that the price signals with respect to oil would come too late for a smooth transition (by the way, it's not that no transition will occur, it's how smooth the transition will be).  It's looking like that's pretty much what happened/is happening. 

 

We will use all of the alternative energies and all of the technologies that are/will be available to us, but there are oil-dependent parts of all of them, particularly for the transition phase.  Oil is so integral to just about everything in our economy and the lead time so short now that supply and price disruptions will definitely complicate the transition.  To what degree is what's uncertain.

 

Even Jim Kunstler didn't predict the end of the world in The Long Emergency.  What he predicted is a rough transition stemming from an unprepared economy and society.   

 

 

When you find another resource with at least as much energy density as oil, at the scale/quantity of oil (at peak production), as portable as oil, with the high energy return on energy invested to make oil useful (albeit this EROEI is declining), then you let me know. I hope you'll tell me very, very, very soon!

 

There may indeed be an alternative, or more likely a mix of alternatives, someday that offer the incredible and as yet unequalled attributes of oil. But the smart person doesn't keep driving toward cliff at full speed in the hopes that someone builds a bridge ASAP because applying the brakes would be unpopular.

 

Like I say in my tag line at left (borrowed from an old military axiom), "hope is not a plan."

Quote from DanB from another thread.

 

"As long as gas is still available and reasonable, I'm not taking a train to Cleveland."

 

At least he seems to admit that maybe someday gasoline will not be available and reasonable.

 

DanB - I agree with you that a lot of people will continue driving as long as they are able.

 

DanB - I think gasoline will be available through about 2030. At that time, we will have about half of the gasoline available as we do today.

 

 

Not that I necessarily buy into the following column, but it's worth presenting an opposing view.

 

August 25, 2009

Op-Ed Contributor

The New York Times

‘Peak Oil’ Is a Waste of Energy

By MICHAEL LYNCH

Amherst, Mass.

 

REMEMBER “peak oil”? It’s the theory that geological scarcity will at some point make it impossible for global petroleum production to avoid falling, heralding the end of the oil age and, potentially, economic catastrophe. Well, just when we thought that the collapse in oil prices since last summer had put an end to such talk, along comes Fatih Birol, the top economist at the International Energy Agency, to insist that we’ll reach the peak moment in 10 years, a decade sooner than most previous predictions (although a few ardent pessimists believe the moment of no return has already come and gone).

 

........

 

http://www.nytimes.com/2009/08/25/opinion/25lynch.html?th&emc=th

Wow...... Another hoper driving toward the cliff. I guess "intelligent" and "responsible" don't always mix in the same person.

noozer, I'm going to reveal the fact that I have a completely Machiavellian lack of principles here, but:

 

Who cares if peak oil is a myth or not?  The hysteria it generates is at least partially productive in ways that a reasoned debate in favor of a more electric economy (backed by nuclear, coal, solar, wind, and other fuels that aren't primarily produced by enemy states) would likely not be.  In the meantime, those who are actually more in tune with production trends and technologies will continue to actually produce the stuff until it actually makes no more economic sense to do so--whether that's 2020 or 2050 or 2100.

 

Personally, I'm thoroughly unconvinced by peak oil advocates, in part because of the reasons in that editorial and in part for other reasons that he didn't get to.  That said, I think we'd be in a strategically stronger position if we had fewer domestic demands on our petroleum reserves.  This isn't just an economic issue.  This has national security implications as well.

Of course there's non-conventional oil to be had -- but at what price? There's a reason why the incredible amounts of so-called "oil shale" in this country haven't been tapped, and thus why this country has never produced more oil than it did in 1970 (when its imports were negligible). Because the price of oil isn't high enough to make it economically feasible. If conventional oil becomes scarce enough and/or carries a political instability premium that forces the global price of oil high enough to make unconventional oils economically attractive, is it necessarily affordable for the average person to use?

 

And another issue that's often overlooked is the energy inputs required to produce oil. Oil used to be so abundant that one barrel of oil-equivalent energy could be expended to harvest 50 or 100 barrels of oil from the ground. Now, with many of these new projects that Lynch and others tout, the return is one barrel invested for every 3-5 returned. The return is getting worse, not better. That's especially true with ethanol or "oil shale." Does it make sense to convert it to a barrel of oil when it takes 1.5 barrels of oil-equivalent energy to make the conversion? Of course not. But that's not stopping the "experts" from declaring the crisis is over.

 

Each year or two, a country or two reaches peak oil and goes into irreversible decline. We're approaching 60 nations worldwide which have passed their own peaks in oil production. More will fall -- that's a geological certainty.

 

Perhaps this is more about "practical peak oil" as we can surely get oil from a stone. But can we afford it?