The Oil Drum | DrumBeat: March 20, 2008

282 comments on DrumBeat: March 20, 2008

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cjwirth on March 20, 2008 - 10:11am

When there is no more to supply, supply does not meet demand. That's what Peak Oil is all about.

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Darwinian on March 20, 2008 - 10:37am

Wrong! Peak oil is not about running out of oil. We have stressed that point, here on TOD and other palace, over and over again. Even if the world produces only one million barrels per day, the price will be high enough that this small amount will meet demand. That price will likely be over one thousand dollars per barrel and that price will drop demand to one million barrels per day.

There will obviously become a time when there is no more supply. But that time is far in the distant future, far beyond the lifetimes of anyone on this forum. In the meantime we must deal with rising prices cause by a declining oil supply, after Peak Oil.

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710 on March 20, 2008 - 11:19am

Peak oil is about the declining availability of oil in the huge EROEI paybacks which we expect, and which our system is designed for. Eventually it also means the declining production of oil, coupled with rapidly decreasing EROEI.

Which means that for some people the oil is no longer there. Which means for those people that the oil has run out.

Running out of oil does not happen uniformly. People who can't afford the necessities that $100+ oil provides them have effectively run out.

It's a recession when your neighbor is out of work. It's a depression when it happens to you.

It's depletion when it's happening in the oil fields and the markets. It's running out when you can't get the oil-dependent support that you need.

Collapse occurs as a result of the cumulative systemic needs previously satisfied by oil not being met, which impose cumulative costs on the rest of the system. These costs come in the form of providing food, water, or other resource aid, or in the form of social chaos, war, disease, famine, and disposal of the deceased.

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cjwirth on March 20, 2008 - 11:24am

Terminal depletion is not far in the future, just a few decades and the oil will stop flowing to and within the U.S.long before terminal depletion. You can read all about it at my website.

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mcgowanmc on March 20, 2008 - 11:44am

You're not getting it.

Just like so many people who think that money creates energy.

It does not.

Without energy there is no money. See Bear Stearns for details.

As we enter the Olduvai Gorge, all it will take is a 3% drop in
supply and the electric grid will crash.

1930's. If we can't hold that 1886, then 1750.

Billions will die above the background rate.

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Darwinian on March 20, 2008 - 12:17pm

As we enter the Olduvai Gorge, all it will take is a 3% drop in supply and the electric grid will crash. 1930's. If we can't hold that 1886, then 1750. Billions will die above the background rate.

Such very stupid hyperbole has no place on this list. Visitors might think we all are of such a mind. And someone might say, as they did yesterday about a possible Iran war, that "TOD predicted that if crude oil supply dropped 3% the electrical grid would crash." TOD made no such prediction, only one very uninformed poster made such a prediction.

The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once.

Petroleum generates 1.6% of our electricity! A drop of 3% in world oil production would hardly affect the electrical grid at all.
http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html

Ron Patterson

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mcgowanmc on March 20, 2008 - 12:32pm

Oh Fck you.

"Visitors might think we all are of such a mind."

Where? From Mars? I hate that "beyond the pale" BS. With you of course being the judge and jury. No proofs advanced.

Don't get patronizing. Judging what has merit.

And this is garbage.

"And someone might say, as they did yesterday about a possible Iran war, that "TOD predicted that if crude oil supply dropped 3% the electrical grid would crash." TOD made no such prediction, only one very uninformed poster made such a prediction."

A smear on me that you think someone might have said. And again. You the thought
police here? The message you're trying to get out is...?

"The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once."

Source that and then note how the embargo was to the West.

And only the West was affected. And only certain parts of the West.

In the Memphis/LR/New Orleans area, I never paid more than 79 cents and never dreamed
of standing in line.

So far us Dirty Fckn Hippies have been right on the mark.

And yet, still the Cramers of the world can say the subprime's been contained, don't pull your $$ out of Bear (a week ago!), Iraq was a success, we did
Iraq because of 911, and still get camera time.

Every chart from Khebab, Ace, shows us doing just exactly this-the Olduvai Gorge by 2012
at the latest.

"Petroleum generates 1.6% of our electricity! A drop of 3% in world oil production would hardly affect the electrical grid at all."

And this shows the completeness of how your genre does not understand non linear.

Just as US Ag uses only 2.2% of fuel.

Only a very narrow description of both and the ignorance of Self Organized Criticality allows people to make this remark.

South Africa, Kenya, Argentina, Chile, Pakistan, Tajikistan.

All the above have seen both percentages repudiated.

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Darwinian on March 20, 2008 - 1:20pm

Source that and then note how the embargo was to the West.

This was not an embargo, the embargo was years earlier. This was due to the Iran-Iraq war and the resulting "Tanker Wars" as well as the Iranian Revolution. All the world was affected.

World Oil Production: http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcfYha0oIYWXRg&hl=en
1979 62,674,000 barrels per day
1983 53,257,000 barrels per day
Difference
9,417,000 barrels per day or 15.025 percent

West (OECD) Oil Demand: http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcfVVh3xItXZIA&hl=en
1979 44,838,000 bp/d
1983 36,906,000 bp/d
Difference
7,479,000 bp/d or 16.85 percent.

The undeveloped world was down just under 2 million barrels per day but that also includes most exporters who actually increased their consumption during this period. The oil importing third world was down even more than the West.

Ron Patterson

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Moe_Gamble on March 20, 2008 - 1:29pm

Never argue with Darwinian on numbers.

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mcgowanmc on March 21, 2008 - 9:46am

"Never argue with Darwinian on numbers."

And that's the problem.

Even if he (and Stuart -

"it is worth noting that in fact, according to Bill McKibben’s Deep Economy, generally speaking, energy used in agriculture is a tiny portion of the whole – the 2.2% that Staniford cites does not take into account, say, the fact that it takes 10xs as much energy to get a package of frozen peas into your freezer as it does to grow them, or 7xs as much energy as is contained in the food to get a box of breakfast cereal on your table – which might be the beginnings of an answer to part C of Staniford’s question (McKibben, 65)), or political ones that interrupt the flow of oil in a collapse situation."

-are correct with the numbers they use, the numbers themselves aren't
showing the reality of the situation.

That's what I am arguing.

That our power supply uses 1.6% of the petroleum, that US Ag uses
2.2%? W/o these two components, civilization does not exist.

So something is bad wrong when only 3.8% of our energy is (said to be)
used for these two components.

I say that we have completely leveraged away (the Ultimate 32:1 Hedge Fund!)
from reality here.

Which is why we're seeing these developing nations, described above,
running into food/energy problems.

The stats are decoupled from reality.

"October 2006 — in an essay titled “Economics: Hallucinated Wealth“?

The economy of markets and statistics has aptly been compared to a circus, and like any other circus, it serves mostly to distract. While interest rates wow the crowd with their high-wire act and clowns pile into and out of various speculative vehicles, the real story of economic decline will be going on elsewhere, in the non-hallucinated economy of goods and services, jobs and personal income, all but invisible behind a veil of massaged numbers and discreetly unmentioned by the mainstream media. There’s good reason for that to be tucked out of sight, too, because it won’t be pretty at all."

Sincerely, James

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mcgowanmc on March 21, 2008 - 9:34am

Again. 1979 to 83 never bothered me at all with oil supplies.
The 1973 Embargo did.

I did conflate the Embargo with
the Iran/Iraq War. You're right there.

There was great change in my life, but no problem finding
gasoline/diesel. And I never saw prices over 79 cents and definitely
no gas lines in the Memphis/LR/New Orleans area.

Yes, you're right. It was the Iran/Iraq Wars, but the US instigated
this war. If the US was hurting we knew how to get more oil.

Stop what we were doing.

But now, we can stop what we're doing (gonna have to) and still we won't
get more oil.

Which is the point I'm making. And the fact that you so easily dismiss the Olduvai. And anyone bringing it up. Even as we slide into it.

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eric blair on March 20, 2008 - 2:33pm

Such very stupid hyperbole has no place on this list.

And making demands somehow shows your manly-ness?

Showing WHY such a position is wrong is how things have historically been done in these parts.

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Darwinian on March 20, 2008 - 3:05pm

Eric, did you not even bother to read the rest of the post, and my follow up post with source and numbers? I showed exactly why his hyperbole was dramatically wrong!

Reading the entire post before replying with some smart ass remark is how things have historically been done in these parts.

Ron Patterson

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eric blair on March 20, 2008 - 4:37pm

Eric, did you not even bother to read the rest of the post,

Yes I did Ron. Any you were in there a-swinging the hyperbole all about.

The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once.

"the grid" has many parts, and more than a few parts did have brownouts, rolling blackouts and other issues. Thus 'not once' ain't right. Now, you wanna post links defending your statement?

To compare the grid design and loading of the 1960's and 1970's grid with the 2008 and beyond grid ignores reports like this:
http://www.cfr.org/publication/13153/

McGowan needs to do a better job of making the case of grid fragility today and a delta in oil production tomarrow. Because claiming a direct oil to grid tie would be hard to prove. If a sub-station goes poof! by sabotage and one group claims responsibility to draw attention to the US presence in the Middle East - is that an oil tie?

Onto other matters:

Now I note how you did *NOT AT ALL* address the part about your demand of "Such very stupid hyperbole has no place on this list." But that is fine, I'm sure you'll say 'mea culpa' when you do the 'stupid hyperbole' dance in the future. You can start with the mea culpa on "the grid did not even dim once."

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TechGuy on March 20, 2008 - 7:09pm

The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once.

A decline in North American Natural Gas will have an impact on electrical generation. I can't say how much of a decline would cause blackouts since it depends on some critical factors.

If for instance the supply of Ngas declines and it causes the price to soar, while gov't limits Utility prices to consumers (ie price caps), it will lead to blackouts. Utilities will simply not accept losses on power generation. If they can't make money selling electricity they will simply turn off the generators until they can make a profit. If Utilities can raise prices to consumers it probably will not. As prices rise, consumers will be forced to cut back consumption so that supply and demand remain in balance.

I suspect that in the next three to five years North America will start to run into Natural gas shortages. I doubt the small amount of new Wind generation would be able to offset Ngas fired Power plants. I think as we slip further into a recession and a deeper credit crunch, capital to develop new wind farms will diminish.

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cjwirth on March 20, 2008 - 12:38pm

You are right on target and my report explains how it will happen:

Peak Oil means that the U.S. lacks the energy necessary to provide for transportation, food production, industry, manufacturing, residential heating, and the production of energy. Oil shortages and natural gas shortages will generate multiple crises for the nation: (1) Shortages in gasoline, diesel, and jet fuel will limit travel to work for oil rig/platform workers and technicians, coal miners, highway maintenance personnel, and maintenance workers for electric power generation stations and power lines. (2) Without truck and air transport, spare parts for virtually everything in the economy won’t be delivered, including parts needed for highway maintenance and energy production equipment. Simmons notes that 50,000 unique parts are necessary to create a working oil field. Many more parts are necessary for ultra deep water drilling operations, including a variety of high tech ships, remotely operated underwater vehicles, seismic survey equipment, helicopters, and technologically complex platforms (see The New York Times and click on Multimedia Graphic). Thousands of corporations around the globe manufacture these parts, and many of these corporations will fail in the Peak Oil crisis. (3) States governments will lack funds for maintaining the Interstate Highway System, including snow plowing, bridge repair, surface repair, cleaning of culverts (necessary to avoid road washouts), and clearing of rock slides. A failure in one section of the Interstate highway will cut off transportation for that highway and everything it carries: food, emergency supplies, medicine, medical equipment, and spare parts necessary for energy production. (4) The power grid for all of North American will fail due to a lack of spare parts and maintenance for power lines and electric power generators, as well as from shortages in the supply of coal, natural gas, or oil used in generating electric power. Power failures could also result from the residential use of electric stoves and space heaters when there are shortages of oil and natural gas for home heating. This would overload the power grid, causing its failure. The nation depends on electric power for: industry; manufacturing; auto, truck, rail, and air transportation (electric motors pump diesel fuel, gasoline, and jet fuel); oil and natural gas heating systems; lighting; elevators; computers; broadcasting stations; radios; TVs; automated building systems; electric doors; telephone and cell phone services; water purification; water distribution; waste water treatment systems; government offices; hospitals; airports; and police and fire services, etc. Phillip Schewe, author of “The Grid: A Journey Through the Heart of Our Electrified World,” writes that the nation’s power infrastructure is “the most complex machine ever made.” In “Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You,” author Jason Makansi emphasizes that “very few people on this planet truly appreciate how difficult it is to control the flow of electricity.” A 2007 report of the North American Electric Reliability Corporation (NERC) concluded that peak power demand in the U.S. would increase 18% over the next decade and that planned new power supply sources would not meet that demand. NERC also noted concerns with natural gas disruptions and supplies, insufficient capacity for peak power demand during hot summers (due to air conditioning), incapacity in the transmission infrastructure, and a 40% loss of engineers and supervisors in 2009 due to retirements. According to Railton Frith and Paul H. Gilbert, power failures currently have the potential of paralyzing the nation for weeks or months. In an era of multiple crises and resource constraints, power failures will last longer and then become permanent. When power failures occur in winter, millions of people in the U.S. and Canada will die of exposure. There are not enough shelters for entire populations, and shelters will lack heat, adequate food and water, and sanitation. (4) Water purification and water distribution systems will fail, leaving millions of metropolitan residents without water. (5) Waste water treatment systems will fail, resulting in untreated sewage that will contaminate the drinking water for millions of residents who consume river water downstream. (6) Transportation and communications failures will cripple federal, state and local governments -- leaving and residents without emergency services, emergency shelters, police and fire protection, water supplies, and sanitation etc. (7) Mechanized farming will cease, and harvested crops won’t be transported more than a few miles. (8) Food won’t be transported from the Midwest, California, Florida, and Mexico to the U.S. population. (9) Fertilizer, pesticides, and herbicides won’t be produced. (10) Due to limited farm acreage, most cities and towns will be unable to support their populations with sufficient food from local farming (see Paul Chefurka and Paul Chefurka). (10) Homes across the U.S. will lack heating. Even if homes are retrofitted with wood stoves, local biomass will be insufficient to provide for home heating, and it will not be possible to cut, split, and move wood in sufficient quantities.

In the coming years, the U.S. faces multiple energy crises. Each crisis will generate delays in handling other crises, thus making it more and more difficult to address multiplying problems. The worse things get, the worse they will get. A grid lock of crises will paralyze the nation.

They won't let me post the link here, but you can get it by googling: clifford wirth and peak oil.

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Magnus Redin on March 20, 2008 - 12:43pm

And the skill for dividing a text into paragraphs will be lost. :-)

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jokuhl on March 20, 2008 - 2:13pm

Paragraphs are for Swedes!

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Darwinian on March 20, 2008 - 2:14pm

Exactly! Two page paragraphs are impossible to read, so I did not even try.

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quixotic on March 20, 2008 - 2:37pm

I just skimmed it, but it still scared the crap out of me.

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Magnus Redin on March 20, 2008 - 7:11pm

I better read it.

The scenario assumes that fuel resources wont be prioritized via higher prices or rationing and force people to stop non essential traveling like vacations or visiting far away relatives or by moving closer to work or bicycle. It also ignores all the resources made available by depression of consumption of goods.

And it probably understates the redundancy in the grid and the grid support industries. But it is a good idea to add more levels of redundancy since the grid realy is life critical and critical for an economies efficency.

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jokuhl on March 20, 2008 - 5:17pm

.. and it's a Cut and Paste identical to what he put up here a couple days back.

Repeat it enough times .. and nope, it still doesn't answer the challenges he's been invited to answer.

Here, I'll try it one more time..

Cliff, why is Electricity Useless?

Bob

EDIT (Computer has to be on to answer..)

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shastatodd on March 20, 2008 - 6:30pm

There are two number fours also.

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Neven911 on March 20, 2008 - 7:09pm

I got to Shortages in gasoline, diesel, and jet fuel will limit travel to work for oil rig/platform workers and technicians, coal miners, highway maintenance personnel, and maintenance workers for electric power generation stations and power lines. and gave up, based on assumption that evidently when the value of this commodity goes through the roof the staff involved in the means of production of this commodity will be the first to suffer, get real, this is a bad sci-fi movie plot

Neven

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tstreet on March 20, 2008 - 3:11pm

I am assuming you spent some time and thought in putting together this post. It has been said before but I repeat. If you really want anyone to read your post, include some paragraphs.

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ontario on March 20, 2008 - 3:39pm

Re: Electrical grid vulnerability.

I spent 10 years in the electrical distribution industry. A transmision and distribution system is a complex high maintenance system. It requires alot of trucks on the road (diesel), good roads, lots of copper, aluminum, insulators (petrochemically produced),wood, steel and concrete poles, transformers, autoreclosures, and hundreds of other complex components that require frequent adjustment, and replacement. Electrical transmission and distribution networks are like a spider web. They are constantly damaged by the elements and physical stresses. Each day they require repair.

As FFs become scarce we may see less trucks on the road, issues with roads, and shortages of components. These issues could possibly drag response time down to the point that repair rates may not overcome day to day damage. It is conceivable that utilities may one day have to use triage to decide who gets power. I think we have seen this occuring in some areas of the world.

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Darwinian on March 20, 2008 - 4:01pm

Ontario, there is no doubt that long term maintenance of the grid depends on petroleum being available. But the grid will not collapse simply because the supply of oil drops a few percentage points. If one would wish to claim that the grid will collapse when oil supply drops a slight amount then it would behoove them to explain why the grid did not collapse when the world oil supply dropped 15 percent in four years. And it was over 15 years before oil production rose above its 1979 level.

The oil supply rose very slowly from its 1983 low. In 1995 oil production was still below the 1979 level. And the grid did not even burp!

One should not make extraordinary claims without extraordinary evidence. Claiming that the world is going to collapse when oil production drops 3% is just way over the top. We peak oilers are fighting the "chicken little" complex already and this sort of wild grandiose claim really makes things a lot worse.

Ron Patterson

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ontario on March 20, 2008 - 4:15pm

Agreed. That is the problem with people throwing out unsubstantiated numbers. It discredits the premise. I am convinced that the reliability of infrastructure (electricity, water, transportation, telecommunications,food) is inversly proportional to the cost and availability of FFs. But at what point.... who knows. A good example is the climate modeling. They have an idea that things don't look good, but who knows when the tipping point is.

I just wanted to defend the premise.

Cheers

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eric blair on March 21, 2008 - 10:23am

Ontario, there is no doubt that long term maintenance of the grid depends on petroleum being available. But the grid will not collapse simply because the supply of oil drops a few percentage points.
Agreed.

Parts of the grid goes dark when things like squirrels get in the works. So something as simple as a rodent can cause darkness in parts of the grid, but a constraint of oil will not?

To claim 'the grid will not collapse simply because the supply of oil drops a few percentage points.' is silly hyperbole - as how can one PROVE that for the want of X not gotten to location Y in Z time due to a lack of oil?

Once again, Mea Culpa time for Ron.

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john15 on March 20, 2008 - 5:25pm

Ontario, there is no doubt that long term maintenance of the grid depends on petroleum being available.

don't forget that nothing is static. as oil becomes more expensive the power companies have an incentive to switch to more fuel-efficient vehicles. more importantly, they have the capital to do it.

long before the grid goes down people will swtich to rooftop solar, wind or even pedal bikes to power batteries to power their home.

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ontario on March 20, 2008 - 8:44pm

If you think that we will migrate from a centralized grid connected electrical system to individual solar power your dreaming. My town has 100,000 people with a peak demand of 200 MW (megaWatts). At $10 per watt that is an investment of $2 Billion or $20,000 per person. Project that over 30 million Canadians that is $600 billion. In a financially and resource depleted world, the only thing that would make this work is a visit from the techno-fairies.

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JWhitland on March 20, 2008 - 10:28pm

I might not pay $20K immediately, but I would definitely pay $10/W * 50W = $500 for the capacity to continuously run a fridge. Or even 10x that.

But here in Ontario we're mostly [ > 50% ] covered by the nukes and the hydro.

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PaulS on March 20, 2008 - 11:37pm

That's still a fairly small fraction of the $50k to $100k and beyond per person sunk into housing. Never mind all sorts of infrastructure, especially roads. If it ever came to a choice between a $20k system and the far more costly alternative of no electricity, lots of people could and would do it. Indeed, some have already done it. The real problems lie elsewhere.

First, a $20k solar system doesn't really deliver much electricity. It's only maybe 2kW, give or take, of installed, finished nameplate capacity that is only delivered in bright sunshine. At night you get zip, and on cloudy days you get next to nothing. Second, the biggest problem of all is that until and unless really huge, but yet affordable, storage is invented, solar systems will deliver essentially zero, zip, nada, to Canadians throughout the short cloudy days of the dead of winter.

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Don in Maine on March 20, 2008 - 11:48pm

This assumes BAU, electricity just freely available to those who can pay the price. Plug it in, turn it on and go. We're trained to just flip the switch and have everything we want readily available.

Instead assume you will be allowed to use electricity from the grid for 2 hours per day. You'll need a very good job to even pay the bill for those 2 hrs.

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john15 on March 20, 2008 - 11:58pm

Instead assume you will be allowed to use electricity from the grid for 2 hours per day. You'll need a very good job to even pay the bill for those 2 hrs.

even Iraq has more power per day than that.

if we ever get to 2 hours of electricity per day we will
http://www.scienceshareware.com/bike_gen.htm

picture 5 people coming over in the morning to pedal power into batteries which you'll use through the day or days!

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john15 on March 20, 2008 - 11:56pm

At $10 per watt that is an investment of $2 Billion or $20,000 per person. Project that over 30 million Canadians that is $600 billion.

and if costs are $10,000 a person? and if they buy wind instead? and if we have solar paint?

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WNC Observer on March 21, 2008 - 8:39am

No, you are right, putting up enough PV capacity on everyone's rooftop to supply ALL of their present electric demand won't happen. I do think that it is likely that we will see a lot of rooftops with PV panels on them, but those panels will only be supplying enough power to keep a refrigerator, furnace fan, a few lights, and a few other essential household appliances running. In other words, most people are going to have to power down to a considerable extent. Thus, reducing your figures by a factor of four or eight starts to get us into the realm of reality.

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thomas deplume on March 20, 2008 - 5:53pm

Occam has a razor and he's not afraid to use it. Going from a shortfall in oil supply to everyone sitting in the dark, starving, and freezing to death is quite a reach. When a certain threshold of suffering is reached then the political will to adapt will arise so basic needs are supplied to most everyone. Priorities will be recognized and resources will be allocated to supply substitutes for oil in keeping people adequately fed, supplied with clean water, and warm in the winter. This may mean that certain products will not be manufactured in order for more important things to be built like spare parts for food production and distribution equipment. Having enough aluminum for power lines may mean doing without beer cans. Having enough steel for wind turbines may mean doing without new SUVs for several years. I see the oil shortfall as a WW II scale problem requiring a WW II scale response.

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LJR on March 20, 2008 - 8:27pm

Entries like this are wirthless. Use paragraphs and formatting.

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joemichaels on March 21, 2008 - 1:07am

I have read this blog thoughtfully for a while and I am of a mind that "there's a change a comin'" but I think a lot of this notion that we will be living in a Mad Max environment any time soon is flat wrong. I think we are looking at peak oil right now and the higher numbers in production are based on a lot of factors like ramping up other forms of fuel production (ethonol, tar sands etc...) in response to high prices. But we are a long way from the "Olduvai Gorge".

What is going to occur on a long term basis will be demand destruction rather than dangerous shortages. The airlines are the canary in the mine and with Delta Airlines cutting 10% of flights and retiring employees early - that's just the start. You'll see increasing bankruptcies and cannibilization in the industry for years to come. The truckdrivers are struggling to make payments on 1/4 million dollar rigs and pay for fuel. A lot of them will go out of business. Transportation costs will skyrocket which will lead to more consolidation.

As fuel costs skyrocket you will see demand following FF production instead of the other way around. And then there are the politicians telling the "voters" that high prices are due to evil corporations. It's already starting and I just have to shut it out. Any intelligent energy policy will be shouted down...

All of this will mask Peak Oil for a long time. But nobodys going to starve...at least not in the U.S. We Californians might not be driving to Vegas for a 2 day blowout however. But that Indian Casino is just up the road...

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slinky on March 21, 2008 - 3:04am

OK sir, would you please step out of the thread please, stand over here for me please. Good, now I'm going to hold this light in your eyes, I want you to hold your head still and follow the light as it moves...ok. now I want you to hold your arms out to your side and lift your right foot up as far as you can...ok. now I want you to close your eyes, and with the tip of your left index finger, touch your nose...ok, now I want you to walk toward me on this line right here, placing your right heel against your left toe and then ooops...ok sir put your hands behind your back, you have the right to remain silent...

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john15 on March 20, 2008 - 5:19pm

THIS olduvai gorge?

WHATEVER HAPPENED TO RICHARD "OLDUVAI" DUNCAN?
http://peakoildebunked.blogspot.com/2005/08/31-whatever-happened-to-rich...

"OLDUVAI" DUNCAN RESURFACES IN RACIST PUBLICATION
http://peakoildebunked.blogspot.com/2006/03/255-olduvai-duncan-resurface...

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Gail the Actuary on March 20, 2008 - 6:08pm

mcgowanmc,

I don't think we know what the percentage is -whether it is 3% or 5% or 20% - but the whole system (not just the grid- financial system, transportation system, everything else) is so interconnected, I am willing to bet it is not going to take a whole lot to start having grid problems in parts of the country.

This is a link to a Platt's article called Long-term droughts in California, Southeast seen as threat to grid stability.

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ccpo on March 21, 2008 - 8:19am

It's a bit like tossing a new ball to a Labrador Retriever, isn't it? They get all focused on one thing and forget this is a systemic problem with multiple issues hitting us all at once at the macro level, and only God knows how many at the micro...

New Rules:

No discussing Peak Oil without at least keeping in the back of one's mind
- AGW
- Sea level rise
- ecosystem disruptions (migrations,etc.)
- costs of recovery from disasters/prevention/relocation
- preventative measures
- ramping up/building out new technologies/infrastructures
- destruction of decaying infrastructure
- reduced food production from disasters
- resource wars (water, in particular)
- affects of lost snowpack
- Etc.

- Peak Oil
- crumbling grid
- lack of personnel
- Peak
- resource wars
- bottlenecks due to infrastructure (decrepit/lack of)
- Peak Other Things
- Lack of Time (Peak Now/Peak Soon See: Hirsch)
- Silence from the political front in the US
- Lack of rapid transit (U.S.)
- Energy price-driven inflation
- French Revolution/Russian Revolution? Down with the monied?
- CO2

- Economic Recession/Collapse
- Ummm how we gonna pay for that?
- deflation
- hyper-inflation
- destruction of the Middle Class (US, other developed nations)
- Wealth/Power ever more concentrated
- increased crime
- tight/no credit
- Resource wars
- Hoarding
- Fear (Blackwater, InfraGard, wiretaps, KBR contract for mulitple Manzanars, No-Fly list, etc. Do you trust YOUR neighbors?)
- Unemployed
- homeless
- systemic collapse

Etc.

Cheers

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jteehan on March 21, 2008 - 12:40am

Sounds like you are saying Peak Oil is a function of personal wealth.

If that is the case, I'll be one of the last to suffer from peak oil since I make more than 93% of US households, according to IRS statistics.

This is really good news. I thought Peak Oil meant I wouldn't be able to fill my Prius because there wasn't anything to fill it with.

With this logic, I would prefer 10 bucks a gallon now, as I suspect that would free up even more lanes for me to drive in. Hell, I'd pay 20 a gallon just to knock 15 minutes off my commute.

Math is a funny thing when misapplied.

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WNC Observer on March 20, 2008 - 10:48am

I'm demanding a 16oz bar of gold for ten cents. Such is not available, so I guess that the supply of gold does not meet demand.

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River on March 20, 2008 - 10:59am

Not necessarily...If you want the 16oz gold bar enough you will bid more than 10 cents for it (ie, you can resell the gold for a profit or you want to retain it for a store of value or you want to use it to purchase another, more needed, commodity...and, as you haggle with the seller of the gold bar someone that really wants it (much more than you) steps up and out bids you.

Before bidding you need to think through exactly what you are going to do with the gold and what your potential profit will be.

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Darwinian on March 20, 2008 - 11:03am

Nonsense! I am offering a one ounce gold bar for $20,000 and I get no takers. Seems to me that there is an oversupply. Of course there is an over supply at $20,000 an ounce and an under supply at $.10 an ounce.

There is absolutely no shortage of $1,000 a barrel oil. There is a severe shortage of $10 a barrel oil. That's how it works. There is a median somewhere in the middle where the price is just high enough to make supply equal demand.

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paal myrtvedt on March 20, 2008 - 11:20am

from Answers.com

demand, meaning in economic terms:

Economic expression of desire, and ability to pay, for goods and services. Demand is neither need nor desire; the essence of demand is the willingness to exchange value (goods, labor, money) for varying amounts of goods or services, depending upon the price asked.

.... but a dictators demands would be met without any other questions nor arguments... that's why I hate dictators!

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Scotjen61 on March 20, 2008 - 11:25am

You are not understanding value. It is buyers point of view, not the sellers. Price is based on desire to have, not desire to sell. What the seller wants is irrelevant. What is the bid?

There is no conclusions to be drawn from a sellers desired sell price, particularly when they are unreasonable, and in your case absurd. When price falls there is generally more supply, when price is rising there is generally a perceived undersupply. It is entirely predicated on the buyers point of view.

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Darwinian on March 20, 2008 - 11:45am

You are not understanding value.
Snip
It is entirely predicated on the buyers point of view.

You are dead wrong. Value was the entire point of my post. The value of any commodity has two inputs, the value to the buyer and the value to the seller. They must come to an agreement. Oil in the ground has value to the seller. It has value for domestic consumption as well as future value that the seller might get for the oil in the future.

It is just absurd to say it is entirely predicated on the buyers point of view. The seller is one half of any buy/sell contract. He is half the equation. If he is not willing to sell for what the potential buyer is willing to pay, then there is no sale. If it was entirely predicated on the buyer then he could simply demand the commodity at his desired price and get it. No, the seller can veto the sale if he does not like the offer. Get real Scotjen, you are talking nonsense.

Ron Patterson

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mcgowanmc on March 20, 2008 - 12:06pm

"where the price is just high enough to make supply equal demand."

But that's not good enough.

This isn't wheat. This is the "once in 12 000 years energy source" that will never be again.

"just high enough" brings you "just enough" to take care of what you
have.

There can be no growth with this and must be contraction.

So, again, during this "no growth, contraction" phase,
where will the wealth come from to make supply equal demand.

OR easier, who will do w/o, another form of wealth creation (see Iraq,
New Orleans), so that "supply meets demand" for the rest.

http://www.dieoff.com/page236.htm

"#2. A fundamentally inverted world view: the economist sees the environment as a subsystem of the economy, rather than the other way around. In other words, economists are trained to believe that natural resources come from "markets" rather than the "environment". The historical analogy is Johann Kepler and Tycho Brahe watching the dawn together. Kepler sees the sun come into view as the earth turns; Brahe sees the sun begin its daily journey around a static earth.

The corollary is that economists believe that "man-made capital" can substitute for "natural capital". Nobel Laureate Robert Solow:"... the world can, in effect, get along without natural resources ... at some finite cost, production can be freed of dependence on exhaustible resources altogether... [ 1974 lecture to the American Economic Association cited in p. 117, STEADY-STATE ECONOMICS, Herman E. Daly; Island Press, 1991; http://www.amazon.com/exec/obidos/ASIN/155963071X/brainfood.a ]

But the First Law of thermodynamics tells us there is no "creation" -- there is no such thing as "man-made capital". Thus, ALL capital is "natural capital", and the economy is 100% dependent on the "environment" for everything.

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Moe_Gamble on March 20, 2008 - 12:21pm

lol re: Solow's comments. Just goes to show what a Nobel Laureate in Economics is worth.

But I do think Solow's been slowly getting schooled:

Robert Solow...now calls himself "agnostic" as to whether growth can continue...

"It is possible," says Solow, "that the United States and Europe will find that, as the decades go by, either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure..."

From "Fear of Fallowing: The specter of a no-growth world" by Steven Stoll, Harper's, March 2008.

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Samsara on March 20, 2008 - 11:16pm

Thank you Moe.

or that they would rather use increasing productivity in the form of leisure..."

I can see 25-30 million people in the US in a couple years "Increasing Their Productivity in Leisure Pursuits" without the stigma of a having a job.

So, We're gonna increase our skills of doing nothing?
D@mn, do we need practice?

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282 comments on DrumBeat: March 20, 2008

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