When oil crossed $120 a barrel for the first time in May 2008, oil cornucopians knew they were in trouble...

Prices had quadrupled in just five years, yet had failed to bring new production online. Regular crude had flatlined around 74 million barrels per day (mbpd). The case for peak oil was looking stronger with every new uptick in crude futures.

The following month, prominent peak oil critic and cornucopian Daniel Yergin of IHS-CERA changed his stance: The peak oil threat would be neutralized by peak demand. Gasoline consumption had peaked in the U.S. and Europe, he argued, due to the combined effects of increasing efficiency, biofuels, and the recession.

In 2009 the peak demand story seemed confirmed, as prices stabilized around $70 in June, and U.S. consumption remained well off its previous high. Most people thought the nearly 2 mbpd decline in U.S. petroleum demand from 2007 through 2009 owed to efficiency and people driving less.

In reality, only about 15% owed to reduced gasoline demand. The other 85% was lost in the commercial and industrial sector: jet fuel, distillates (including diesel), kerosene, petrochemical feedstocks, lubricants, waxes, petroleum coke, asphalt and road oil, and other miscellaneous products.

Very simply, when oil got to $120 a barrel it cut into real productivity, and forced the world's most developed economies to shrink. At $147, it wreaked serious damage.

“The Joint Operating Environment” on the Energy Crisis

The U.S. Joint Forces Command published “The Joint Operating Environment” report which “seeks to provide the Joint Force an intellectual foundation upon which we will construct the concepts to guide our future force development.”

While many of the predictions may not be completely accurate, they are based on trends, challenges and current opportunities. The 74-page detailed report covers areas such as war in the 21st century, globalization, cyber, climate change and natural disasters to food, water and urbanization.

An alarming chapter of the report was the section on energy. “By the 2030s, oil requirements could go from 86 to 118 million barrels a day.” The report shows graphs for the projected energy resources and the future world oil production including development of new discoveries, non-conventional oil, enhanced oil resources, development of existing reserves and existing capacities.

The report summarizes the current energy crisis by stating that “energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity.”

The following multi-part series is taken from a paper that my colleagues and I published last year in the free, on-line journal Energies. You may access the entire PDF here. All references can be found in the pdf.

EROI theory is rooted in the biological principle that in order to survive each species on earth must procure more energy from its food than it expends attaining that food. From this basic principle the importance of energy surplus became evident, as food sources needed to “pay” not only for metabolism but also for reproduction and storage for leaner times. Part 1 of this three part series presents a brief history of the concept of surplus energy and how it has influenced both biological and human evolution.

1.1. Background: The History of Formal Thought on Surplus Energy

Energy surplus is defined broadly as the amount of energy left over after the costs of obtaining the energy have been accounted for. The energy literature is quite rich with papers and books that emphasize the importance of energy surplus as a necessary criteria for allowing for the survival and growth of many species including humans, as well as human endeavors, including the development of science, art, culture and indeed civilization itself. Most of us who have thought about this issue deeply would even say that energy surplus is the best general way to think about how different societies evolved over time. To chemists Frederick Soddy and William Ostwald, anthropologist Leslie White, archeologist Joseph Tainter, historian John Perlin, systems ecologist Howard T. Odum, sociologist Frederick Cottrell, economist Nicolas Georgescu-Roegan, energy scientist Vaclav Smil and a number of others in these and other disciplines, human history, including contemporary events, is essentially about exploiting energy and the technologies to do so.

OPEC Expands Oil Rigs Most in Three Years as Quota Promises Prove Illusory

(Bloomberg) -- OPEC is increasing oil drilling at the fastest rate in 2 1/2 years, even as production exceeds its quotas by the equivalent of a supertanker of crude a day and delegates prepare to pledge no increase in output.

The 12-nation group boosted its number of oil and gas rigs by 8.4 percent in January and February, the biggest two-month gain since June 2007, data from Baker Hughes Inc. show. OPEC members excluding Iraq pumped 26.8 million barrels a day last month, 1.9 million more than targeted, data compiled by Bloomberg show. Shipments will rise again this month, according to tanker-tracker Oil Movements.

While oil prices recovered from a four-year low at the end of 2008 as OPEC announced a record supply cut, excess production means the doubling in oil prices since then may have run its course, according to the Centre for Global Energy Studies and Commerzbank AG. The premium charged for crude deliveries in 2015 has plunged 43 percent in three months, indicating investors are less concerned of future shortages.

This is part of the continuing series that I have been writing about oil shale. And, while I just digressed in talking about using nuclear devices to break the rock and heat it, the key problems that those posts highlighted remain. The first was that the oil is not really oil and won’t flow to the well, and the second is that there are no easy paths for the oil to flow though, even if it could. And this creates a problem when it comes to getting the kerogen (or oil for simplicity) separated from the rock around it. As I said in the first post on this topic, the oil can be separated in a retort, after being mined. The retorting can be self-energized and, by heating the oil it can be transformed into a form of bitumen that can then be further refined into a commercial grade. And if you think it is easy, there is this quote I found at Econbrowser, that might give you some perspective. He quotes Bubba, of Belly of the Beast:

If you heat this shale to 700 degrees F you will turn this organic carbon (kerogen) into the nastiest, stinkiest, gooiest, pile of oil-like crap that you can imagine. Then if you send it through the gnarliest oil refinery on the planet you can make this s*** into transportation fuel. In the mean time you have created all kinds of nasty byproducts, have polluted the air and groundwater of wherever you have extracted it.

A lot of us have funds that we have set aside for retirement, perhaps with some matching from employers. Some of these are pre-tax funds that are hard to get to--our employer gives us some investment choices and that is about it. Other funds are ones we have set aside ourselves. The question arises, what should we be doing with these funds?

Within the options available, how should we be investing it? Or should we be taking money out?

Some of us have self-directed Individual Retirement Account (IRA)s, or have saved money outside of IRAs. This gives a little more flexibility.

I am not an expert on this, and would not give advice if I could.

I am sure the rules vary from country to country, so anything that is true in the USA might be different elsewhere. One question that might come up is what are the rules for taking money out of an IRA. This is a short summary I found in that regard.

Gasoline refining lacks its spark, for now

NEW YORK (MarketWatch) -- While the cost of crude has risen in the past year much faster than the price of gasoline at the pump, Big Oil absorbed a huge body blow to the bottom line.

After racking up sharp losses on their refining businesses in the last quarter of 2009, energy companies are facing a longer-term struggle even as the summer driving season approaches and the economy shows signs of life.

"There's been a fundamental shift in the U.S. demand and the price of gasoline," said Lynn Westfall, chief economist for Tesoro Corp., an independent refiner that posted a loss of $179 million in its latest quarterly report. "Growth in China and India are driving crude prices higher. But demand in the U.S. is weak and so you can't pass the higher costs along."

If a person were to listen to Energy Secretary Steven Chu or National Geographic's Aftermath: World Without Oil, one might think that our energy problems are fairly minor and distant. We can easily add sufficiently renewable energy to substitute for fossil fuels in a fairly short time frame. All we need to do is put our minds (and pocketbooks) to it.

But if one looks at the situation more closely, one discovers that the situation is quite different. Our energy problems are close at hand, and solutions using what are optimistically called "renewables" are distant and may very well sink the country further into recession.

US energy consumption is already down quite a bit--some might say due to recession, but it seems even more likely that the result is the other way around--high energy prices squeezed the financial system. This in turn caused credit availability to drop and demand for oil, gas, and coal to drop. We have put a huge amount of effort and subsidies into wind and solar, but they hardly show up on the chart. Ethanol isn't shown separately in the chart this data was taken from--instead it is combined with wood and with other biofuels in a category called "biomass" in the EIA data. The biomass line has thickened a bit, but it is still pretty insignificant.

Journey to the Center of the Earth

Miles below the ocean floor lies enough oil to power the U.S. for more than a decade—and perhaps our best shot at energy independence.

From the window of a helicopter 1,500 feet above the Gulf of Mexico, oil platforms look like Tinkertoys in a swimming pool. Dozens dot the horizon stretching south from New Orleans and continuing out as the water deepens and turns a darker blue. Then, about 50 miles offshore, the platforms stop, and for the next hundred miles there's nothing. This is the deepwater Gulf of Mexico, where the ocean floor is 8,000 feet down and covered in a heavy layer of muck. Below that is an ancient salt bed several miles thick, and hidden under that, trapped tens of thousands of feet down, there's oil—billions and billions of barrels of it. And it's all in U.S. waters.

Oil Production to Peak in 2014, Scientists Predict

Predicting the end of oil has proven tricky and often controversial, but Kuwaiti scientists now say that global oil production will peak in 2014.

Their work represents an updated version of the famous Hubbert model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak.

Some have said production already peaked. One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. And other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: Oil is a finite and very valuable resource.