Charles Maxwell Forecasts Peak Oil in Seven Years

Respected oil analyst and oil industry veteran Charles Maxwell (nicknamed the “Dean of Oil Analysts”) has forecast peak oil by 2017 or 2018:

Bracing For Peak Oil Production By Decade’s End

His prediction is not so remarkable, as is where he made his prediction. The prediction was in Forbes, which has often scoffed at the notion of a near-term peak. Some of Maxwell’s comments:

A bind is clearly coming. We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018. That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today.

As far as the impact, you can put Maxwell down as a Long Recession believer. In a 2008 interview, he predicted:

“[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe,” Energytechstocks.com reported. “He said that, unlike the recession the U.S. appears to be in today, ‘This will not be six months of hell and then we come out of it.’ Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon).”

Maxwell and I are also on the same page regarding what will happen with the oil companies. Some people think that as oil declines, the oil companies will go out of business. I have a different view. I think that the rise in oil prices will be faster than the decline in production for most oil companies. Thus, they will make more money on less production. This will infuriate the public and the politicians, who will see sky-high pump prices at the same time the oil companies are raking in record profits (reminiscent of 2007-2008). Thus, there will be many calls for additional windfall profits taxes, and more calls for nationalizing the oil companies. Maxwell’s take:

In this case, “allow” means to allow the profits to flow through to the shareholders. What they will do is to put in excess profit taxes or windfall profit taxes on oil. That is the main problem that the oil industry will be dealing with in those future days. But even so, it looks like profits will rise significantly.

While there are some differences in the details, what Maxwell articulated approximates my own views.

  • I view a global oil production peak within the decade as a near-certainty.
  • I think there is a small probability that the peak has already occurred, but we won’t know that until several years after the fact.
  • I don’t believe that there is anything in the technology pipeline that can prevent a growing gap between supply and today’s demand.
  • I believe that gap will be closed by price-induced rationing, which will be very hard on businesses and individuals.

Higher prices will result in a very difficult transition period in which we are forced to use less because we simply don’t have the money to use the oil that we have historically used. This will be a period of great economic difficulty, lasting for years. At the same time that the economy is in great difficulty, oil companies will continue to reap big profits, causing an enormous amount of resentment and calls for higher taxation and greater regulation of the oil industry.

However, I also believe that humans are very resilient, and that we will eventually come through this. This is why I do not characterize myself as a ‘doomer.’ We do use a lot more energy than we absolutely have to use. I would bet that most people – if they really had to – could cut their fuel consumption by 50%. It wouldn’t necessarily be convenient or easy, but it could be done. But it takes planning to do this, and it is our collective failure to plan that is going to lead to the difficult period. It is during the difficult period that we will get serious about planning, and the subsequent modifications in our energy usage pattern will ultimately lead to recovery on the other side of the crisis. Energy transitions take time, but our energy consumption patterns will be forever altered relative to what they are today. I simply do not believe it will ever be possible to replace major shortfalls in oil production with biomass. It may be possible to replace 20% of today’s oil production, but beyond that there will be increasing competition with arable land for food production — and pressure to turn forested land into arable land.

Thanks, Robert!

I think this post illustrates that while staff member have views on peak oil production that are generally similar, there are also some differences--and that is OK. Different folks have different views.

Robert talks about higher prices and price induced rationing in this post. Dave Murphy and I have talked about oscillating prices caused by recession and debt defaults, with oil price not necessarily going all that high. The difference may be mostly a fine point. If people are unemployed, even a relatively low price will be high to what many people have to spend. Also, prices may both increase and oscillate.

I think that the major difference with a higher price scenario is that it makes a later peak possible (oil production perhaps rising from 2005 -2009 levels) and it makes the production of alternatives more feasible. The higher price scenario also tends to keep the financial markets working together better. So in general, it is a more optimistic scenario.

Given that the "high price" scenario is basically equivalent to let's work hard and save*, and that a democrat president was elected, a lot is going to have to change before the US accepts that as a reasonable option.

* where work hard means hard manual labor with increased chances of accidents (for obvious reasons) and save means massive savings on the only large enough expense the US can save on : social security (dropping military budget in a volatile world, other than being madness, wouldn't buy the US more than 2 years delay to massive social cuts (and of course would involve putting a *LOT* of people out of a job).

Of course, cutting social services will be described in the newspapers as exactly what it is : killing people to save money (as in the consequences of saving will be the death of real Americans, which will be the literal truth).

And this is the US we're talking about. The US has several large factors cushioning the impact of peak oil. In addition to own production, the US has lots of available land, a huge military, a large and relatively knowledgeable population. Europe will lose a *LOT* more, being basically defenseless in addition to having a tactically disastrous geographical location (ie. the "let's simply steal it from those no-good arguments are going to sound *VERY* sweet to a number of European nations), and it has population densities like in Manhattan in regions the size of US states. These places obviously won't survive the impact of peak oil in their current state.

But even in the US, a *LOT* of people are going to have to compromise :
a) social services, unions, ... are going to have to cut back (even more than the economy in general)
b) at least some people will have to *work* the land (not with machines, with a shovel), and in general more people will need to work. This means, literally that the state is going to have to cheat itself out of pension obligations one way or another
c) this means cutbacks in environmental protection (wind requires large parks, huge even compared to present-day power plants, and photovoltaics ... require state-sized plains for large power plants), moving the economy back to industry will require relaxation of various environmental protection laws.
d) in general the services sector is going to have to cut-back. it is most dependant on oil. Industry will have to grow again in the US, to save on transport costs.

You really think stuff like this can happen without at least a few violent revolutions ?

Violent revolutions, the stuff of history, are not the norm. Mostly, people just get along, and as hard times get harder, they just put their heads down and get along harder. Starving people don't really have the energy to revolt, especially against an overwhelming military -- and that's the odds a revolution would face in the USA. Even the Depression of the '30's didn't come close to revolution, and maybe it was because of Roosevelt and the New Deal, and maybe not. My personal opinion is that the Communists wouldn't really have gotten anywhere, even without Roosevelt, but even back then the government was fine-tuning the psyops war against the people.

I doubt that all the "militias" who think of themselves as the protectors of American Freedom will have much of an impact no matter how many guns they have. The Army will trump them in short order -- in fact, the militias may well be turned on each other by a savvy Army. Allowing the 2nd Amendment to stand when the 1st and 4th and 5th have essentially been abrogated without any significant outcry suggests a very sophisticated and successful government apparatus.

The folks who run this country may just be playing dumb -- or perhaps they just put dumb mouthpieces out there in the showcase Congress to confuse us -- but they are really the smartest guys in the world. We are in for a long, slow squeeze.

There was in the 1930s a larger danger of a right wing military-Wall St oligarch taking over the US than there was a communist threat. The idea that a socialist revolution could succeed in the US is very small. The high respect Americans give to the military as an institution and the low respect for our elected officials tells me a military dictatorship has a high chance of success in the US as the lack of political consensus blocks any effective response by our current government. The military can impose very quickly measures such as fuel rationing as a response to the economic costs of price based rationing. They could quickly impose a WW II style industrial production board to stop the use of resources for consumer goods so those resources could go to a conversion to renewables, the fast construction of nuclear reactors without allowing court challenges to siting and licensing, and electrification of ground transport systems. The military could bring back streetcars and electrification of freight rail lines without all those local opponents getting in the way. The military could end free trade and tell business to hire more folks with everyone working according to a military style pay scale. The military could confiscate all those empty housing units to eliminate unaffordable housing for all those new low wage workers. All health care providers would instantly become employees of the government and care would be rationed according to what is in the best interest of the government and not according to what is in the best interest of the patient. No more bypasses for grandpa or cancer treatment for granny but better access for the working class to treatments with quick or cheap impact. Everybody gets 30 days of paid leave every year just like the military even though most folks couldn't afford to go anywhere far from home. Tourism is one of those unnecessary industries that must go. All those motel rooms will become military barracks. Restaurants would also be eliminated so they could become feeding centers for all those low wage workers, their families, the elderly and disabled. Just enough services for those at the bottom to keep them from quiet and an end to luxuries that use a lot of fuel and other "strategic" materials. No unions. No independent media. No more websites like the Oil Drum. Keep the masses ignorant, well fed, and too busy to do anything threatening to the Generals and Admirals and the industries they manage. We should be grateful to the military for saving us from the total collapse of civilization.

Keep the masses ignorant, well fed, and too busy to do anything threatening to the Generals and Admirals and the industries they manage. We should be grateful to the military for saving us from the total collapse of civilization.

This has been done before "panem et circuses" - bread and circuses -in the Roman Empire (not sure which emperor said it though).
Worked for them for a few hundred year, but eventually they lost interest in their own empire with the inevitable result.

Other than that, the plan sounds better than what many people live with today!

"Panem et circenses" was said by Giovenale who was not an emperor but a roman satirist and poet.

Giovenale

Aahh, I love Italian spelling!

We're talking about Iuvenalis, known as Juvenal in english.

Violent revolutions, the stuff of history, are not the norm.

Unfortunately, this time things really are different. This is the first time in history that the human race has been into deep overshoot.

Oil is probably the most important resource in terms of helping to prop up our overshoot. When it gets kicked out from under us what will happen?

I agree that in the US if we all feel like we are in the mess together then people starving and watching their loved-ones die will likely not provoke violence.

However, if there is an elite who continues to prosper while others starve and die then there will almost certainly be trouble.

Given how the current financial crisis is playing out, I would say that violence is probable. It may not happen, but that does not mean you should not be prepared for it.

DD

The US has several large factors cushioning the impact of peak oil. In addition to own production, the US has lots of available land, a huge military, a large and relatively knowledgeable population.

Needless to say, I strongly disagree with this statement. Even George Bush admitted "America is addicted to oil".

It's "own production" is less that 45% of it's consumption.

"Lot's of available land" does not mean much; are you thinking of the Southwest, which is now in long-term drought/dustbowl conditions? Wide swaths of agricultural lands that are increasingly permeated with petrochemical/salt herbicides?

"Relatively knowledgeable population" knowing what, exactly? That they are on a trajectory that will bankrupt them over coming higher priced imports? Do they show their intelligence by refusing to buy SUVs, pickups, and minivans? No indeed, they are back to buying them at alarming percentages;

Light trucks accounted for almost half of overall vehicle sales in August, up from 42 percent a year earlier. http://www.reuters.com/article/idUSTRE67T3DN20100901

So with a very inefficient vehicle fleet (one that turns over every 18 years), I'll put my money on Robert Hirsch's predictions of "dire, unprecedented economic impacts" for those countries that wait until peak oil happens to take any real action.

You really think stuff like this can happen without at least a few violent revolutions ?

While I typically eschew political observations, your post has all of the indicators of one who watches FauxNews and Beck's calls for his followers to arm themselves and wait for his instructions....

Hi Will,

I generally agree with most of what you have to say, but if you think we are going to get thru a real crunch without some considerable amount of violence on a world wide basis, I fear you are wildly overoptimistic.History suggests that when tshtf, well... ts is going to htf.

We will need a lot of luck to avoid violence on a large scale even in the US and western Europe.

I don't listen to Beck or Fox News,or any particular source,except at long intervals, but I read a half a dozen major papers on the net and a lot of history books.

You can rant about Faux News and Beck if you like.

What do you think will happen if the cops call in sick or go on strike because THEY are threatened with cuts in pay and benefits?

Anyone who thinks this could not happen isn't really thinking.

I suggest that if you devote some serious time and thought to reading history and the world news, you will become considerably less optimistic in short order.

First, there are violent revolutions going on right now in several countries around the world, so the suggestion that there will be more must allude to a much higher level above the current 'noise' level.

Second, neither Robert or Gail had touched on this subject, so when the poster said "You really think stuff like this can happen without at least a few violent revolutions?", it came from out in left field.

Third, the term 'revolution' means armed overthrow of a national government. Will a large army rise up and defeat the US Army, Air Force, Navy, and Marines? I don't think so, though in many doomer scenarios, they will have their hands full with many objectives and little resources.

Fourth, might there be much in the way of local violence (which is different from revolution)? If hard lander or doomer scenarios play out, then certainly there could be much violence as people compete for food and other necessities. Of course, here in the US we have the example of the Great Depression to look back on, where there was not much in the way of violence, and certainly no violent revolution. Are social norms different now? No doubt they are in some ways.

Fifth, most Class 3 FFLs are not overly optimistic peaceniks, though nor are they wild-eyed survivalists. You and I undoubtedly have very similar scenarios in mind and similar mitigations in place...

Will,

I do believe we are on the same page after all. :)

You agree we (as in europeans and americans) will reach the "failed state" staus, but have opinions on exactly what the progress to there will look like. Thats what I read into this.

I am convinced this century will see the failure of the national state. There are just no way to feed all these people without oil, and add water shortages, phosphor shortages, climate change and some other issues to the mix, and it hellish. The worst parts of the Bible. (Thats why i like to qoute the book).

From place to place this may happen diffrently. And there are many paths to chose from. A world dictator may step in for a while, but his (it is always a he) empire will crumble after a few short years. Or local dictatorships, or anarchy, new and interesting aliances. Famine, war, revolutions. We don't know yet. Make your pick. But all roads lead to the failure of the state, eventually.

I agree w you. If we don't have a suitable solution now, the wastage is still continuous.

--------------------------
Website Development

II am with oelewapperke (how do you pronounce that anyway?).

Sure I can reduce my energy requirements by 50% without much problem and probably live better for it. I would get way more exercise, eat healthier food, and breath cleaner air but here is the rub. That 50% reduction in energy use will come back to bite me. You see I have 2 friends that need me to spend that 50% on energy so that their lives are supported, and they have 2 friends, and they have 2 friends, and so on, until some ones two friends decide not to build a new house which is what I do for a living.

All that energy supports our governments, banks, legal systems, security systems, entertainment, etc. Basically everything we call western civilization. Western civilization is based on growth and a 50% reduction in energy use will be a much larger negative growth event than any great depression ever experienced.

I just don't see how any company, including oil companies, will thrive in that environment. Events like these will trigger so many unforeseen events that even Nostradamus would have trouble prophesizing them.

I just don't see how any company, including oil companys, will thrive in that environment. Events like these will trigger so many unforseen events that even Nastradamus would have trubble profisizing.

Western civilization is based on growth and a 50% reduction in energy use is far worse than any great depresion ever experianced.

That 50% reduction in energy use will come back to bite me. You see I have 2 friends that need me to spend that 50% on energy so that their lives are supported, and they have 2 friends, and they have 2 friends, and so on, until some ones two friends decide not to build a new house which is what I do for a living.

Neat. Quote of the month.

Western civilization is based on growth and a 50% reduction in energy use is far worse than any great depresion ever experianced.

Is that so? I hope you are aware of the fact that the US and Canada use twice as much energy per capita than the rest of the Western world typically do. For instance, Japan, Germany, France, UK, Ireland, Denmark, Austria and so on, all use 50% or less. We have voluntarily done that 50% reduction you speak of. Nominally, we are very close to the US in terms of GDP per capita. PPP, we are just 20% behind.

The great depression was much worse than a 50% energy reduction would be, at least if that 50% doesn't materialize overnight.

In such a future, I think you'll see a lot of subsidization of off-road diesel to benefit farmers and fishermen, though I doubt the government will be able to support fertilizers and the like. I think you'll see truck-farming products increase in price. I don't see a great de-mechanization of farming, because we aren't running out of oil, we're just running out of cheap oil and I think the price-point will get high enough to see a lot more combined coal/biomass liquefaction (with attempts to improve the technology via CCS, but I doubt that will take place).

Mainly, it's going to directly impact consumers: 71% of US oil consumption goes to transportation, and the majority of that goes to private automobiles. I think you'll see airline travel once again become an exclusive playground of the rich, rail shipping continue to pick up as high fuel costs dog trucking, and suburbs will dwindle as people move back into urban areas to save on transportation costs.

All-in-all, a Great Restructuring may not be a bad thing ecologically or economically, considering how much cash we as a nation export to support our oil habits.

The military budget will shrink, that's all there is to it. Yes, this will mean job losses. Even if medicare and social security disappeared tomorrow (which needn't be disastrous), we'd still need to cut military spending just to pay off our debts and reduce the total tax burden to prevent increasing energy costs from dragging down the economy too badly. And you bet that if Uncle Sam isn't paying grandma's medical bills or retirement, there will be howls for drastic income tax cuts, or a complete revamp of the tax code (which will likely mean more job losses at IRS) to help people support their families.

Given that the "high price" scenario is basically equivalent to let's work hard and save*, and that a democrat president was elected, a lot is going to have to change before the US accepts that as a reasonable option.

Nice partisan swipe. I especially like the use of "democrat" vs. "Democratic", a Fox News favorite. Do you happen to recall Dick "our way of life is not negotiable" Cheney? Yes, BushCo was certainly an administration chock full of "fiscally responsible" conservatives! I mean, it's not like the National Debt doubled under those "fiscal conservatives", right?

Here's some news: regardless of which bought-'n'-paid-for party currently occupies 1600 Pennsylvania Avenue, no U.S. President will (publicly) endorse a 50% consumption cut as a reasonble option. And no middle or working class American wants to hear the words "let's work hard and save" from *any* politician.

That's the fundamentally hard truth of America's energy policy/problem: If it's too expensive, it's because you're using too much, and there's not a damn thing the government can do to help you.

(dropping military budget in a volatile world, other than being madness, wouldn't buy the US more than 2 years delay to massive social cuts (and of course would involve putting a *LOT* of people out of a job).

You think cutting the military budget will put a lot of people out of a job (mine included), just how many times more people would have no jobs or businesses after all the multipliers are nullified because 0 (social security spending gone) times anything is 0? The military budget's boost to the economy is little more than bush league when compared to social security spending's giant impact. Thats the converse side of cutting social security does a whole lot more to reduce the deificit than cutting military spending. It is a much tougher rock and an hard spot dilemma than most envision.

Social security money all gets poured right back into the US economy--much of the military money is spent abroad and stays there. Another huge chunk of DOD $ is essentially grafted off the top and though it might help the capital markets and luxury goods sectors some it does little to keep the small business going. Everything will realign politically when big time social security cuts are actually on the table.

Of course, cutting social services will be described in the newspapers as exactly what it is : killing people to save money

So, in the past, where social security wasn't as large as it is today, the government were actually killing people? Interesting viewpoint.

The US has several large factors cushioning the impact of peak oil. In addition to own production, the US has lots of available land, a huge military, a large and relatively knowledgeable population. Europe will lose a *LOT* more,

Why? Because you'll steal ME oil with your huge military? Otherwise, the military mainly waste oil and other resources. And why do you think you can compete with European countries who use oil twice as efficiently and so will be willing to pay twice as much?

Your big asset, actually, is your remnants of free-market thinking. The question is just if you'll hold on to it and expand it if necessary.

Hello All:

We are currently using approx. 30 billion boe/yr. & finding about 10, thus burning thru our inventory & running out sooner rather than later.

So are we ready for peak oil? Only in the sense that we are now talking about it, which is a fairly recent phenomenom. Is it going to be bad? Maybe, but not necessarily. Doom and/or hair shirts are not pre-ordained. And is there an answer?

Yes, a number of solutions actually; starting with higher oil prices. The problem is not '$100' oil,the answer is '$100' oil, or whatever the number is. What we need is price induced demand rationing where oil is allocated to economic best uses. We, as a developed technological society, can adapt, if the price change delta is gradual enough to allow supply chains to adjust.

So what could some of the adjustments look like? Well, on the supply side, intalled oilsands ops are profitable in the $30-$40/barrel range w. newbuild profitable in the $50-$80 range depending on specifics, oil shales (ie: Bakken type plays) are very profitable (w. high recycle ratios) @ today's prices, and there are indications that Bakken type formations are more common that thought (cf: Crescent Point's recent acquisitions as an example). Then there are tight, unconventional carbonate rock plays (cf: Laricina Oil)which are projected to have costs in the $50-$80 range, and there is lots of ground to chase that geology. There are unproven technologies (sa. the PetroBank THAI)which could be game-changers, and then there is 'deep' exploration for light oil. Take a look at the thinking of Jim Bob McMoran @ McMoran exploration: he is going deep, deeper than previously drilled, on land though played-out & finding big pools of hydrocarbons: still early going, but promising. Then there are the natural gas shales which are way more plentiful & prolific than ever thought; enough supply that natty is currently trading 3 & 4 handle; enough that the Utica play (essentially a big chunk of Quebec) is receiving v. little attention. There are humongous quantities of natty available to us, if we want them. Then, a little further out, there are the ice hydrates. Utilizing current deep drilling tech, and imaging a little steam technology (ala SAGD) thrown in, the with the right price signals ($10-$15/MMCF?)we could wind up with another supply path.

So it is pretty easy to see that we are not helpless or defenseless on the supply side. What about the demand side?

Well, oil is our transportation fuel. Our current CAFE is mid-20s, yet anyone in North America can go downtown & buy a vehicle getting 40-50 mpg (and that's internal combustion tech). So if we all got serious & bought a higher mileage vehicle when we next replace the beast, then we are well on the way toward a demand solution. If the politicians would pass a minimum fuel economy law & mandate that economy must increase some modest amount every year, then we are in much better shape. Double our fuel economy & that either cuts our demand in half or doubles our number of cars or doubles our miles driven. Finally, bring in tax incentives to switch all the commercial diesel vehicles over to natty & N.America could drop it's hydrocarbon demand down to very low levels. Run the numbers yourself; it's quite surprising.

This is all without resorting to CTL technology (cf: SASOL) which is profitable in the $80-$100/barrel range. I actually think that we could be 'self sufficient' with a little care & forethought: in any case, you can see that we are not in any desparate shape at all.

I am not saying that the 'peak oil' transition to higher prices will be easy or painless; indeed there are lots of opportunity for wild price swings, economic dislocations and for military conflicts (cf: South China Sea); but we are not helpless or without options. And somewhere down the road is a practical and cost effective battery technology.

So be happy folks: profits will be high, risks higher, money in motion and opportunity abounds. 'May you live in interesting times'

Jim

Mr. Maxwell will be attending the 2010 ASPO-USA Conference in Washington, DC Oct 7-9, 2010 with TOD speakers and many others. He will also be speaking on Friday Oct 8th in this session:

Natural Gas: Abundance or Mirage
Moderator: Dr. Tad Patzek, Department of Petroleum and Geosystems Engineering, The University of Texas at Austin
- Arthur Berman, Director, Labyrinth Consulting Services, Inc.
- Charles Maxwell, Senior Energy Analyst, Weeden & Co

Full Agenda is here: http://www.aspousa.org/worldoil2010/agenda.cfm?detail=1&requesttimeout=500

Also - late breaking news: Bianca Jagger will be attending and speaking as well.

Here is her biography. Does anyone see why she should be considered a peak oil expert?
http://en.wikipedia.org/wiki/Bianca_Jagger

She is a social rights activist, and a quite well connected one at that.

Peak oil is quite relevant to her interests, and [edited] speaking to how peak oil impacts her efforts could be quite enlightening. (I guess she already knows something about it or she wouldn't be a speaker.)

Got a problem with that?

I see the US suffering more economically in the decade after peak oil than most other industrial nations. The US has the least oil efficient economy of any major oil importer. It uses twice as much per capita of most of the rest of the OECD. It imports two thirds of its oil.

The US has a lot of low hanging fruit in terms of oil conservation. It could mandate today that every car sold in the US has double the fleet efficiency of the current vehicles, and spend a fraction of its defence budget retooling the car factories to build current European design cars. It could mandate a massive insulation programme to make houses more energy efficient. Neither of these will happen because the organisations that control the government have more financial interest in the status quo.

The US will be a wounded animal ten years from now. Even more dangerous than it is today.

The UK will not fair much better. We have gone from major energy exporter to major importer in the space of 15 years.

"The US has the least oil efficient economy of any major oil importer."

But doesn't this mean that there are lots of low hanging fruits on the conservation/efficiency side of things.

Improving MPG, carpooling, lower speed limits, greater use of transit/biking/walking--I see lots of ways we could quickly become much more efficient in the oil that we use.

Of course, a much higher gas tax would send the right economic signals to move us in this direction more quickly (ideally, with rebates, especially for lower income folks and farmers, since any kind of sales tax is inherently regressive).

The harder part is the huge sunk cost of suburban sprawl infrastructure that pretty much requires cars for living/shopping/working patterns. To what extent these can be re-purposed is yet to be seen.

I agree that there are tough times ahead--heck, they're already here for many of us. But a few simple policies could still greatly ameliorate the full force of the short term crisis--but I see little movement in these directions.

Given that the US has done very little (other than invading Iraq and turning one fossil fuel into another called ethanol) in preparation for peak oil, it will be hit very hard when oil first gets scarce. The long commutes and lack of mass transit will hit very hard. It would take 20 years to replace the entire car fleet with an efficient one, even if it became a major political target. That is 20 years when the rest of the world will progressively outbid the US for oil. ( I could easily afford £300 oil for petrol in my car. I already pay the equivalent of $150 in taxes. I use my car less than most people. I could afford to buy a Prius out of loose change). As long as the free market in oil persists. I suspect that the US will increasingly try to use the threat of the military to buy oil at a discount price.

That is 20 years to play catch-up. You may have the most powerful military, but it ain't done much for the oil flow out of Iraq.
After the supply decline starts to build up down the Hubbert curve, that it another matter.

20 years to replace the entire car fleet with an efficient one

These type of stats are bandied about quite a bit. Most families have more than one car, so replacing the one that does the most driving will do a lot toward efficiency--you don't have to wait to replace the whole fleet (and in any case, I have heard much shorter time frames for even this, in the neighborhood of seven years).

And again, car pooling, speed limits, walking, biking, car sharing, increased gas prices, and many other policies could be set in place tomorrow and greatly reduce our use.

But I share with you skepticism that we will do any of this in a proactive way. We will more likely invade Iran, Russia, Argentina...every last place that has any oil in it...than establish reasonable, modest policies that encourage prudent use of limited resources.

Nobody is going to invade Russia for the forseeable future.

Yup. Not to mention that even after multiple strategic arms reduction treaties, Russia still has thousands of working nukes.

How well did the invasion of Iraq do in terms of getting oil into the market? This notion that the US can use its military to get cheap oil is without any kind of economic logic. Military operations are expensive and occupations even more so.

The reality is that we are already paying $175/barrel for oil $75 directly and about $100/barrel in defense spending to ensure that the world has access to ME oil.

"That is 20 years to play catch-up. You may have the most powerful military, but it ain't done much for the oil flow out of Iraq."

We do have a powerful military, for now at least.

How many super-carriers, F-35s, and other high-tech weapons can a bankrupt nation afford? We have (I believe) 11 carriers in service now and one in reserve. I never expect us to replace the Nimitz class, that signature of US "long reach" strategies. I never expect us to build a replacement for the B-1 or B-52 or the F-117 Stealth. Heck, we never even found a suitable aircraft to replace the F-14 Tomcat.

With draw-downs in the Middle East, and bankruptcy at home at the Federal and State levels, I bet we'll see more US special-ops and drones and not so much main-force military in the years ahead. We'll look more and more like the UK...in the 50s, as the Royal Navy and RAF got a lot smaller.

As for your prediction about how screwed the US public will be, with its dependence on cheap oil for a car-based lifestyle: I agree 100%.

The B-52 is the one that can be replaced. Subsonic, high altitude heavy bomb hauler for use against soft targets, or marine patrols.

Not terribly high tech.

Just update the B-52 design - 4 engines, not 8, 25% composites and more Ti, smaller crew.

Alan

Just update the B-52 design - 4 engines, not 8, 25% composites and more Ti, smaller crew.

Military aircraft get lot lot of upgrades that aren't viasable from the outside. Mostly better avaionics and sensors. I agree about the B-52's engines, inefficient lowtech low bypass engines should be replaced with modern ones. Its distressing to see how much soot they leave (at least on takeoff).

Offensive armaments need not be upgraded until the potential enemy has deployed a suitable defensive technology;we don't need new weapons systems for now, and maybe not for decades, if ever , as the ones we have are quite satisfactory in relation to the weapons possessed by other countries.

And modern weapons, aircraft in particular, are so incredibly powerful that only a few are needed to take out a technogically oriented and developed enemy's homeland.A dozen smart bombs that are right on a target such as a refinery are as good as a trainload dropped with the crude bombsights used in WWII.

Of course taking out camels and houses one at a time is simply not doable on the grand scale.

I could easily argue that that American military HAS kept the oil flowing out of the Middle East in general, and that we have footed the bill while Western Europe has sheltered under our military umbrella at our expense while bitching about its very existence.

If and when the situation gets really out of hand, it would not be very much of a problem, technically, to make the oil flow freely from Iraq, but fortunately we really ARE squeamish about killing people on the wholesale level; that would make us REALLY look bad in the court of world opinion of course, and again fortunately, most of us even here in the bloodthirsty USA actually ARE opposed to "ethnic cleansing".

But anybody who thinks people in general with the power to do so won't simply wipe out thier enemies if they can is simply ignorant of history.

This is not to say of course that we have not made many serious mistakes that have cumulatively WORSENED our security-but historically speaking, the European countries have done no better.

Now the leaders of this country but also the leaders of all others must play the cards in thier hands in the game of power politics.

History doesn't do redeals.

I am not advocating reliance on military power, as it is not a permanent solution to our problems.

I will however go so far as to suggest that if Uncle Sam ever comes to the conclusion that it's "us or them" in the short term, "them" are going to be in a world of hurt.

And Western Europe is not going to do anything about it but send along a few token support forces while most of the local people silmantaneously scream about our barbarity and continue to rely on the ff our military keeps flowing out of the deserts and across the oceans to "us"-rather than thru pipelines to China, India, and the rest of Asia.

The world ain't a nice place.

Mr Darwin is the philosopher of record in respect to the art of survival.

I hope things never come to such a state, but there is nothing in our history-our SPECIES history-to indicate that it things won't get to be even worse.

but fortunately we really ARE squeamish about killing people on the wholesale level; that would make us REALLY look bad in the court of world opinion of course, and again fortunately, most of us even here in the bloodthirsty USA actually ARE opposed to "ethnic cleansing".

I would differ with this. Only wholesale denial of the numbers would allow us to make such a claim. Reasonable estimates that I've seen have, for example, the death toll of Vietnam war Vietnamese (never mind Cambodians, Laotians, etc.) at upwards of 2 million. The John's Hopkins studies of the current Iraq war, from memory, has the Iraqi death toll at at least half a million to possibly over a million.

Obviously there is a lot of statistical guesswork in getting these numbers, but it is clear to me that there is strong pressure from the US govt and the MSM to sharply under-estimate the US inflicted death toll in our 'dirty little wars.'

HI, ET,

I won't disupte the numbers you give , although others might think them a tad high.

My point is that the death toll of such wars COULD easily be many times higher-right up to the point that it would be hard to increase it very much due to the difficulty of finding more people to kill.

It amazes me, sometimes, how much we think alike. History said, for thousands of years, if you had something someone else wanted, and they were stronger than you, they took it, and probably killed you and took your wife in the bargain. As Monbiot says in the upper right corner of the drum when the cheap energy is gone we will go right back to fighting like cats in a sack.

Which, of course won't get either of the cats out of the sack.

Most of America's import oil comes from Canada as far as I remember. And even if you do rely on middle east oil, what are you going to do with the SUV when that runs out? Because let's face it, as soon as oil became available again it would be back to BAU until that's gone.

It's interesting how this guy seems to think oil production has been going up and therefore we have until 2020. Oil plateaued a while back, so really i'd say closer to 2015 under his logic.

USA imports 11-13 Million barrels daily. About 2.5 million come from Canada, so your memory fails you. The rest comes from Mexico, Nigeria, Angola, Venezuela, Saudi Arabia, Russia and selected other OPEC states.
http://www.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a...

You're right, I should have said that Canada exports the most oil to America. By quite a large margin though.

That's what I get for not double checking :(

Doubling fleet mileage is not going to work. Only a fool would buy a car post peak oil. There will be rationing, both by price and program. Eventually citizens will loose the right to buy gasoline. People will see the handwriting on the wall. They won't be able to afford $15/gal gasoline, even at twice the mileage, but especially knowing it won't stop there.

There was a bicycle craze in the early 1890's and millions were sold. All of a sudden ca. 1896 sales slowed and then collapsed. What happened: streetcars! There street railway system had the fastest growth of any infrastructure. After 1914 streetcar ridership slumped. What happened: motorized jitneys, then motor buses.

General Motors finished off the streetcars, but it was a mercy killing. They had been suffering for decades:

http://www.lava.net/cslater/TQold.HTM

Having grown up in New Orleans I am fond of streetcars, but the public of the 1920's wasn't.

Better to build bus factories than auto plants. We won't need many though, because we'll only be working a three day week.

US mileage is going up no matter what you think. Anybody interested in the ramifications? 1979-1982 CAFE increased from 20 to 24 MPG and gasoline consumption decreased 873 kb/d to 6.6 mb/d, where it stayed flat for two more years before gradually increasing once more, after mileage hit its plateau.

Gallons per hundred miles driven (GPHM) is a better figure to use than its reciprocal, as it displays the actual savings in fuel. Initial increases in MPG are greater than those that follow, creating a misleading impression that subsequent increases will have an equal impact. Most of the world already uses the metric equivalent of GPHM, liters/100km. Moving from 18 to 24 MPG saved 1.72 GPHM; going from 27 to 39 under current CAFE goals will save 1.28 GPHM, 74.73% of the earlier figure. This is for cars, not light duty vehicles - trucks and SUVs. The vehicle fleet in the late 70s was 80% cars and 20% LDVs, whereas now it is more like 55/45, so the savings potential will be commensurately lower - 50%, say. Taking 425 kb/d off the market is still nothing to sneeze at.

Another factor to take into consideration is that there are 1.48 times as many drivers as in 1978, and 1.67 times as many vehicles, so new vehicles will have that much more competition for fuel savings. But VMT is also 1.41
times as high, allowing for that much more conservation, and also newer vehicles have a higher share of VMT; according to the 2009 National Household Transportation Survey, VMT is partitioned as follows for vehicle age:

<1	10.17%
1	10.96%
2	10.72%
3	9.93%
4	9.37%
5	9.29%
6	8.98%
7	8.74%
8	8.18%
9	7.86%
10+	5.80%

The effective average fuel economy of our vehicle fleet, wieghted for miles driven, is going to go up a lot faster than the number crunchers think it will.

The older less efficient cars which are not driven very much anyway are going to be driven even less because the folks who own them are going to be the ones reducing thier driving the fastest.

These older cars and trucks are getting to be much more expensive to repair than formerly for several reasons.One, the supply of good usable engines, transmissions, and body parts has been shrinking fast because scrap metal is selling for very high prices.Two, I (or anybody else) used to be able to buy a good used engine or transmission for an older truck at a very reasonable price, because there were so many low mileage wrecked cars sitting around with interchangeable components;this is not true any more, as only a few cars are built with rear whell drive these days.The cost of a new rebuilt engine or transmission, installed, is such that unless a truck over ten years old is in excellent all around condition, it is almost sure to be scrapped if either component is needed. Cars in need of really major repairs are scrapped even newer .

Everybody I know, almost without exception, who used to drive a big pickup truck or car exclusively now has either a smaller truck or car as his primary vehicle or else has an additional smaller car or truck that is now driven most of the time.The relatively few people I know who are buying new are mostly giving serious consideration to fuel economy, and virtually everybody I know who buys second hand places a great deal of wieght on fuel economy.

People's habits can change much faster than we think sometimes.

When tshtf, I predict that street legal nieghbor hood electric vehicles, which are basically glorified golf carts, are going to be one of the hottest growth sectors going.

I have possession of an older Geo Metro three banger five speed that will do fifty plus mpg at fifty mph on the highway.I believe that I can easily tweak this car into a sixty mpg car at 45 mph by stripping off some wieght, using synthetic lubricants, installing some low rolling resistance tires, and making a few very minor changes to the drive line and body shell.And it will still take me and another person and five hundred pounds of produce to town if I pack it in closely , like a suitcase.When and if gas hits six or eight bucks, she will get refurbished including new paint and upholstery and serve as our primary family vehicle for the duration, or until a better deal comes along.After that the big Buick will be reserved for weddings and funerals and maybe an emergency trip.

We will still have to have a truck to run the farm even if gas goes to ten bucks or more, but we can reduce the number of miles we drive it by maybe another ten to twenty percent.

I will still be using our diesel tractors even if diesel goes to twenty five dollars a gallon.

The cost of a new rebuilt engine or transmission, installed, is such that unless a truck over ten years old is in excellent all around condition, it is almost sure to be scrapped if either component is needed.

I had just that issue come up a few months back. ten year old Tundra lost its trannie. Because it had only been driven a total of 60,000 miles I decided it was worth repairing. Had it had the sort of miles on it most ten year vehicles have, it probably wouldn't have been worth it.

A 1978-9 article in one of the auto magazines (Popular Mechanics I think) forever changed my car buying habits. The article told how long cars would last if properly taken care of. If you live in a warm climate where roads are rarely salted, car bodies last a long time.

Engines last a long time too, especially the ones on quality vehicles. The Toyota V-6 is a good engine, but not the only one. Everyone knows that changing the oil (preferably synthetic lube and not oil) and filter(s) when needed (a complex subject, many people change too often) is important, as are tune-ups. Buy low rolling resistance tires and keep them inflated. Long life (5 year) coolants are now available and platinum group metals tipped spark plugs last up to 100,000 miles. Transmissions, like engines, vary in quality and some models are great, others junk. Ask your mechanic about which engines and transmissions are best.

Dust in the combustion air is the enemy of an engine, as are cold starts. More engine wear occurs warming the cylinders up to 140 F than driving the next 20 miles. Use an engine heater in cold climates.

Cars suffer sharp depreciation after year 4 or 5 or some high mileage, depending on when the finance companies downgrade them (using proprietary formulas)for credit risk. I look for lower mileage cars that have failed the credit test on age and pay in cash. That way I find good brand cars that have a lot of service life for a minimum of cost, probably less than two years depreciation on a new car. I then drive it for another 5 years. Depreciation costs run about $1200 per year and repairs less than $500/yr. I do my own oil and coolant changes.

Finding a good independent mechanic is is also important. You will save about 30-40% rather than using dealers.

Paul's remarks in respect to driving an older car are in the ten ring.

If you don't drive a lot, a ten year old car , carefully selected, is a world class bargain, and if you are not afraid for your personal safety in the event of a breakdown, such a car is perfectly satisfactory for even a long commute unless you hold a really critical job such that you simply can't run a slightly higher risk of being late to work.With a cellphone handy to call a cab and a AAA card, almost anybody can afford reasonably the risk of a breakdown.

A well looked after older car is almost as reliable as a new one;it may actually leave you walking twice as often, but the PERCENTAGE of trips completed without problems in the new car as opposed to the well cared for older one old one will only VERY slightly higher.

It is ENTIRELY feasible to reduce depreciation costs to as low as three or four hundred dollars a year even if you don't repair your own car.This strategy also generates useful property tax savings and potentially big savings on "full coverage" insurance premiums.

Agree all above. I'm still driving the 1995 Olds Achieva 3.1 litre V6 I bought new in '95. (Only 180,000 km on it of course). It gives excellent/pretty good fuel efficiency, comparable reliability to when new, looks fine with no rust even though its been used in Toronto suburb for 15 years. I haven't babied it on the road (carried many sacks of cement in the trunk at times, commutted 300 km each way weekly for 4 years until last year, though many other years commuted locally by GO train), but take good maintenance care of it with a reliable independent mechanical service group where I'm on first-name basis with shop manager. Very cheap to maintain. Just passed emissions testing for license renewal with no work required. Oldsmobile really hit the nail with that car, too bad they're gone.

My wife bought a 1.3 litre 1995 Geo Metro at the same time, but it simply isn't built heavy enough. Body rusted badly after 5 years, parts started falling off. Went to scrap heap for only $150 after 9 years of her very light driving, not very satisfactory. She's now driving a 2003 Chrysler compact SUV (PT Cruiser) which we bought used, seems ok but I'm concerned with chrysler's 4 cyl. engines, I've had bad experiences. Fingers crossed.

Best deal was my son's 1995 VW Golf Diesel 5sp manual. Gets far better "mileage" (?kilometerage?) than my car, larger interior capacity, excellent reliability. A bit expensive to maintain, but mechanically a rock, and does a good job as a small truck also.

Couple of other thoughts:

Radiator and heater hoses last longer in cars that don't have copper, as in many if not most, new cars & trucks. Copper is a catalyst and helps to break down rubber. Copper, despite super heat conductance, got too expensive and was replaced by aluminum or plastic in some cases. At one time some taxi fleets used silicone rubber hoses, which lasted much longer.

Don't forget to change those timing belts! And if the water pump has to be removed to replace belts or any other parts, spend a little extra and install a new one.

The UK will not fair much better

Why not? Seriously I can't see why we will suffer that much in the UK (or most of Europe) unless or until oil is a tiny fraction of todays production. As a family we recently went down to one car from 2, mainly as a cost-cutting excercise, and barely notice the difference. A lot of the driving we were doing was discretionary and contributed little or nothing to the economy that we don't continue to contribute to.

Public transport in the UK gets a lot of criticism but it's really not that bad and most amenities are within a short distance for the vast majority. Throw in car pooling and more working from home where possible and even non-discretionary travel need not suffer too much. It's mostly about convenience rather than neccessity.

IMO a good deal of the decline in private driving will be accompanied with 'what was all the fuss about?' and 'why on earth did we used to spend so much time in traffic jams?'.

I realise the US is different because of the infrastructure but for Europe the worst doomer arguments looked pretty stretched.

TW

I can't see why we will suffer that much in the UK

The UK has seen a 40% drop in indigenous energy production in the last decade. You guys just barely skated through this winter with three Gas Balancing Alerts (GBA's). Is your natural gas supply really that secure?

It's about more than just oil. Up to now you've been able to borrow money from the future to import energy in all its forms along with net imports of foodstuffs. If that ability to borrow money from the future ever stops or even just slows down you could be in a world of hurt.

Forewarned is forearmed.

Jon

That's the most frightening graphic I've come across in a long time. It should be headline news every day.

Or perhaps it shoudn't.

Forewarned may well be forearmed, but on the other hand:

For in much wisdom is much grief: and he that increaseth knowledge increaseth sorrow

Ecclesiastes 1:18

I had a data point that said UK was at 1.4 MB /day in May 2006 which was the halfway down from peak. To me it still looks halfway down, 4 years later.
Perhaps that is just looking at crude.

The situation in the EU mainland is very different to the UK. The UK is an island geographically, politically, economically. There will be no-one to bail us out when PO hits. When tshtf the UK will be one of the first countries to collapse IMHO.

The reason is quite simple, we are over dependant on imports for our basic needs. As energy costs go up more money will be syphoned out of the economy, leading to more bankruptcy and job losses, this will in turn cause downgrading of the UK credit rating, weakening the exchange rate, increasing the import costs of energy, food etc, leading to more bankruptcies..... A very nasty feedback loop.

The markets are already twitchy and we are seeing money moving from small to big currencies (and gold), the GBP exchange rate is barely keeping its head above water. We cant raise interest rates as that will kill the economy. The elephant in the room for the UK is the GBP coupled with over reliance on imports.

From memory, the big jump in UK car usage was(is) the pedo panic and parents driving their kids to school. Also very high house prices have pushed out peoples commute distance so a lot of people cannot reduce their mileage as they cant afford a house near to where they work. Public transport is expensive and is very similar in costs to running a car. The current rail network cannot cope with the demand today let alone a large increase if people stop using cars.

And I would be more worried about food, rather than driving. The UK could not feed itself during WW2 when every last square foot of land was being used for food production. Bigger (and growing) population, more space taken up by housing, roads etc, less farm land, and modern ag system dependant on cheap FF (energy, fertilisers, pesticides, herbicides). We could cheaply import food from the EU, except we are not part of the Euro (oppps), so when the exchange rate for the Pound tanks, food from the EU mainland will get VERY expensive. To make matters worse a lot of farm land is currently not being used (set aside) so if we have a sudden import shock it's going to take 1 year for that set-aside farm land to become productive again.

There will be no-one to bail us out when PO hits. When tshtf the UK will be one of the first countries to collapse IMHO.
The reason is quite simple, we are over dependant on imports for our basic needs.

The British dependence on imports is something that predates the age of oil by several hundred years. This was the main reason for maintaining the Royal Navy as a world-class fighting force - to guard the flow of both imports and exports (not to mention exploration) all without oil. And the Royal Navy was even in top form prior to any significant use of coal in steam-powered ships, which didn't occur until the 19th century.

I would argue that one factor behind all of this is the fact that water transport is a highly efficient way of moving large, heavy payloads, perhaps the most efficient of all. And this worked well for England even when it was powered by just the wind (and sailing skill).

Regarding friends in time of need, I would say that Great Britain may be rather well-positioned in having several prosperous, English-speaking former colonies, most with incredible endowments of natural resources: Canada, Australia, New Zealand and the USA, to name a few of the very friendliest. This sort of thing is hard to quantify and I can only speak for the USA, but in America what might be called the upper classes tend to be very Anglophile in a deeply held way.

Despite a total blockade by one of the most powerful military machines of the 20th century, and I could be wrong but I have never heard of even a single case of death by starvation in England during WWII. The same cannot be said for what was Leningrad in the USSR, also under siege and where at least 600,000 people starved to death in a single city during the same war.

Regarding friends in time of need, I would say that Great Britain may be rather well-positioned in having several prosperous, English-speaking former colonies

When PO hits US, NZ, AUS, CAN will have their own problems. They might increase bio-fuels production (rape,corn) and not export any food. Farm productivity might drop from the lack/cost of fertiliser/fuel etc. Then the impact of increased shipping costs from a long distance away (AUS, NZ).

When oil went to USD150 we were very close to a currency crash. PO will likely cause the GBP to crash. Other countries might want to sell food, but we will not be able to afford it. And if we need food aid then its going to be real bad here anyway. If we were part of the EUR, importing affordable food would be one less problem to worry about.

Despite a total blockade by one of the most powerful military machines of the 20th century

It wasn't a total blockade for a long enough period of time. The UK still had food imports, Tea was even on the ration. Because of a very well designed ration we had a better & healthier diet during WW2 than any time since.

When oil went to USD150 we were very close to a currency crash.

There's nothing in that article about a currency crash. This is an article about an old-fashioned bank panic.

The UK exchange rate dropped 20%. If we had a bank panic the exchange rate would been much worse.

There's no mention of exchange rates in that article. If you happen to have seen a good discussion of the relationship between the bank panic and currencies, it would be interesting.

To make matters worse a lot of farm land is currently not being used (set aside) so if we have a sudden import shock it's going to take 1 year for that set-aside farm land to become productive again.

Set aside subsidies in the UK ended in 2008.

Around 60% of set aside land has now come back into production.

Decent unused farming land is now hard to find in the UK.

At present, 70-80 per cent of the UK’s land is used either for grazing livestock or growing feed for it.

Not much scope for major food expansion - unless meat becomes a thing of the past.

Around 60% of set aside land has now come back into production.

Thats good news. Just checked the graph and the drop was 2 years ago.

Not much scope for major food expansion - unless meat becomes a thing of the past.

That's a big "unless". The UK produces about 2/3 of it's food domestically. If about 75% of food production goes to livestock, and that's only about 25% efficient compared to direct consumption, then the UK could feed twice it's current population if everyone adopted a vegetarian diet.

So, UK dependence on imports is a choice, and it could still feed itself even if it lost half of it's food production capability.

Personally I think the UK is in terrible trouble, and is probably one of the worst places in the First World to live out the "energy descent"/"long emergency".

The UK is in gross population overshoot and hugely reliant on food imports. It cannot in future hope to feed itself from its own farming. The island is fertile, but the growing season is short, it has little forestry for wood, few remaining unplundered natural resources, and vast legions of feckless, soon-to-be zombies from the cities with no practical skills other than fighting, thieving and producing endless entitled mouths to feed.

The entitlement culture has rotted the heartwood of England, something-for-nothing is everyones goal. Community, and sometimes even humanity is completely absent from the UK. It took moving to mainland Europe to realise how bad things have got back home.

The built environment in UK leaves one reliant on the car outside London, endless estates of dreary soulless noddyhouses with no prospect of redemption, little green space, miles from amenities, shocking bus services and no provision for cycling, walking or even living free from depression. I have visited some of the worst areas of housing built by the communists in East Germany, and they were far, far better buildings and environments to live in than the average housing estate in the UK. Anyone who has visited the suburbs of places like Portsmouth, Glasgow, Bristol or Swindon will have seen these sorts of places. British cities are admittedly above Haiti in terms of running water but are at Somali levels of community spirit. Its a miracle the population ever got so high with the temptations for suicide such crummy places induce in a man. Now just imagine how bad it is going to get when one cannot afford to drive to Tesco...

In the UK one cannot to defend oneself and family from attack or ones property from theft without falling victim of the "justice system". Tony Martin anyone? Gangs are rife already, in a Mad Max scenario its not a great leap to see a lot of rape and killing going on. Unlikely I know, but who knows what black swans the future may hold?

The government is near insolvent, and cannot afford to maintain services or stop taxing the population at an eye-popping rate. The brain-drain is real, if you tax me too much I will move my business elsewhere, and so will many others. House prices in the UK have a long long way to fall to be comparable to mainland Europe: in Germany I can buy a smallholding with a fabulous 5 bed house, commutable to Hamburg with several acres of land for the price of a 4 bed noddy house with a postage stamp garden in Swindon. This is going to contribute to serious further problems for UK banks in future.

The country relies on and is in thrall to the financial services industry. Recent history makes one doubt its continued viability at current levels in an energy constrained environment. Quantitative Easing is a sure sign the system is under intolerable strain.

The apparatus of government has lost legitimacy in the eyes of the people. The parliamentary expenses scandal has, I think, permanently damaged respect for Parliament. Britain has grossly incompetent politicians who frankly would disgrace a banana republic. Look after number one is the rule of the UK, and don't the politicians do it well. Don't plan on go looking for saviours or longterm energy planning there.

Parliament has already enshrined in law all the powers they need to create a totalitarian state. As soon as I was made aware of the powers created with Civil Contingencies Act 2004, Legislative and Regulatory Reform Act 2006, and SOCPA I knew I had to leave. Basically as a UK subject you have effectively no rights under the law, because any protection of law you may assert can be legislated out of existence at the whim of a minister under the 2006 act. That is a recipe for a police state. Hitler had to pass the Enabling Act of 1933 (the Ermächtigungsgesetz), precisely to be able to do what the Legislative and Regulatory Reform Act 2006 does. The 1933 Act established his dictatorship and is a key moment in the slide towards the Holocaust. As it stands, no Enabling Act is currently required by a would be UK Hitler: all the powers are there on the statute books already.

As I see it, under increasing pressure from the depression that will result from the coming energy crisis, the UK will find its nascent police state blossoms into full blown Orwellian nightmare. Once shortages really hit, both the politicians and the underclass of the UK will hinder any positive change that one might wish to make as a community or as an individual.

The large unintegrated immigrant communities are going to provide endless racial tensions in future and plenty of home-grown terrorism.

We have made enemies of a great many countries and peoples. Surely London is one of the most likely cities in the world to get some instant nuclear sunshine from an Islamist. Frankly after Iraq, Afghanistan, one can see the islamist's point, and if I am saying that as a kuffir, that means a hell of a lot of angry young Muslims would love to press that button.

The UK is doomed doomed doomed. I would rather die than return to the miserable grey mess that exists there. I wish you well, but for the average man there are better places to live one's life, especially if one values liberty and sanity.

Do you think the BNP could come to power during a crisis?

I don't fear the BNP: Their manifesto at least acknowledges the existence and reality of Peak Oil as opposed to the other parties who are pro-BAU growth at all costs (Greens honourably excepted). BNP have a small chance of power in future, but it is just as likely the tyrant will arise from the big parties. New Liebour took great strides in the totalitarian direction over 13 years after all.

What I fear more than anything is the locust-like hordes of consumers in the UK who have never known true hunger or want in their pampered lives: their anger when they discover there are no more cookies in the jar is going to be truly awesome to behold. In a fast collapse scenario the UK would be unimaginably bad. There is just nowhere in the UK that can function as a lifeboat that wont be overwhelmed, no social cohesion, and the tools for tyranny that mean no preparations one makes in the UK would survive the depradations of our Zimbabwe-style elite.

Zimbabwe is truly the best model of the UK government in my view. The elites will use the tools they have given themselves for a landgrab, at the expense of those who have useful assets, the poor will be set against the middle classes and left to fight over the scraps from the elites table as usual. Every man for themselves, and the government against us all!

I am hoping for the "long drawnout recession" at this point in time, as I think it is the best and most probable scenario. At least the pain is spread over several generations, and expectations can be lowered gradually.

The UK is in dire straights. Society is breaking down, the infrastructure is beginning to fail, investment in practically nil, and employment is heading down and taking the value of assets with it. The government is behaving like the nation's problems can be solved by a few new taxes and some job losses, and printing money of course. The public doesn't believe a word of it, but is too depressed to express its concerns. Many people are in fact leaving, but they are dependent on a sinking currency for sustenance abroad and may well have to return, refugees in their own land. Already justice is failing as criminals are let go and the media and government connive against the public to lay the blame for everything at the feet of those people who work and try to do the best for themselves. They are told they must contribute more to the disadvantaged while the rich go free.

I would not be in the least surprised if, when the power outages begin, the UK is in the forefront of the true post-industrial mayhem, just as it led the way into the modern industrial age. On population: I always wonder at the belief that wealth brings smaller families. Britain grew enormously rich during the nineteenth century, and peopled Australia, New Zealand, Canada and Much of the US while at the same time increasing its own population from ten to forty millions. And that was on the back of coal.

France will do better, it has land, space and a sensible energy policy. The US should do well, but I fear the burden of the military will crush the economy and lead to a breaking up of the Union. New Zealand and Australia should look out for Chinese warships on the horizon.

The US should do well, but I fear the burden of the military will crush the economy and lead to a breaking up of the Union.

Into what pieces ? - All the Military needs, is a faux conflict somewhere,
and they are not likely to be any problem to find.....

New Zealand and Australia should look out for Chinese warships on the horizon.

China does not need warships, they have deep pockets, so can simply buy whatever they need. ( and already do... )

They are currently in the process of buying up a patchwork empire piece by piece all over the world.

That looks to be cheaper than conquering one by force, and a good strategy at this time.

But before much longer, they are going to need a navy to gaurantee thier title by the only means that can be expected to work when tshtf-force of arms.

I expect they have already laid out the plans for building it, in secret of course.

The UK is in dire straights.

This and other posts seem to put to rest the line from the movie Children of Men -"Britain stands alone..."

Wow.

Some of you really are glass-half-full kinda guys aren't you? Amazing how a comment about resilience to oil depletion in the UK (and Europe) gets quickly transformed into affirmations that the UK is buggered on all fronts. I notice the actaul issue of discretionary driving has been pretty much sidestepped in favour of a broader 'we're all doomed' philosophy.

Well, OK, let's look at a few facts then - those pesky things that sometimes get in the way of a good argument;

UK power supply - yes 19GW supply from coal and nuclear will close by around 2018. But 19.8GW capacity are planned to replace this - 9GW of which is already under construction. A further 50GW of projects have been identified as early stage. And the UK has the best wind resource in pretty much the whole World and is leading in the development of this. I don't need paper confirmation of this - I can actually see one of the new onshore farms from the top of a local hill.

Public transport - there's a whole fleet of busus that are currently nearly empty. It's not just about trains. As for cost a private car comes in at around £3000p.a. once you factor in everything. Busues really aren't that expensive ;-)

Food production - the UK is around 70% self-sufficient so yes imports currently needed. But a relatively small change in consumption towards veg instead of meat and this is taken care of. As for FF requirements for food production well these are 2-3% total and something even a depleted N Sea could cater for for many decades. Leaving aside the possibility of biofuel production earmarked solely for self-sustaining agriculture (not general transport).

Community - sure there are black spots but then there always have been, or at least as long as I've neen alive. I was a kid in the 70's and still remember some pretty hairy moments on big estates. Plus all the strikes, disruptions (power-cuts are nothing new) back then, I'd take society today thank-you very much.

Peak oil is here but the stuff isn't going to dissappear over night like some seem to think. Issues and concerns yes but not armageddon just yet, at least not IMO.

Guess we'll see soon enough eh?

TW

TW - thanks for lightening the mood there! I didn't recognise the UK that I know in that 'glass empty' diatribe. I agree that discretionary driving is dropping in my experience. Be it kids walking or cycling to school, '2 car' to '1 car' (or even 'no car' as is the case of several families I know of) scenarios and significantly less aimless work-based driving by salesmen and commuters. Public transport is a long way from collapse - I have spent 4 trips recently in Bangladesh and that gives you a different perspective on an overloaded transport system!

Domestic food production is, and always has been, an issue. However, given that we now pay less for food than ever before as part our earnings we have lost the awareness of food value. What are the current stats? 30% of food is thrown away each week? Obesity on the rise and Brits are now up there in the global fat-standings along with the US and Australia. Some food education would be a good thing in parts.

Community? I talk to my neighbours - but I appreciate that a lot of people do not. I walk to the shops. I have joined sports clubs, allotments, and other local groups. There is no shortage of opportunities to engage with the community for many people - it is just that their lives can be too busy with other activities. Reality TV can take a lot of viewing time as can play stations.

A better awareness of the energy crisis is definitely needed so that all aspects of energy consumption are optimised and a wider public made aware of the needs and limitations therein.

Employment will be the big issue in the short term. Next month's spending cuts will set the tone for the years ahead.

UK Power supply - Current plans ignore increased use of EV. And there are no planned infrastructure improvements for EV either (grid upgrades, public charging stations).

Transportation fuel - Problem not solved.

Public Transport - Good point about empty buses. Currently it costs me twice my petrol costs, for a return ticket on an empty bus. As more people use buses I can see the cost of a bus ticket going down. The bus fleet is very small and will need to be expanded greatly, and it will still require energy.

Food production - I cant find figures from defra, but a lot of grass land is not suitable for veg production. Oil/Gas is priced on the open market so it doesn't really matter how much is left in the N.Sea. If we have a food shortfall then land for food will be more valuable than domestic biofuel.

Currently it costs me twice my petrol costs, for a return ticket on an empty bus. As more people use buses I can see the cost of a bus ticket going down.

Knowing the logic of public transport in the UK, as the buses fill up the prices will go up since people are using them more money can be extracted. As they get full, buses will be cut using the figures of when they were not full as justification for there being an excess of capacity that needs to be culled.

NAOM

tabbycat

Transportation fuel - Problem not solved.

Hence the original challenge regarding the ease of reduction of discretionary driving. Basically my belief is that we will do a lot less without significant negative effects.

The bus fleet is very small and will need to be expanded greatly, and it will still require energy

Sure but a lot less than the equivalent passenger number of private cars.

Food production - I cant find figures from defra, but a lot of grass land is not suitable for veg production.

What are cereal crops? Yep, grass. What we're talking about broadly is a change in diet not starvation. Our vitamin/mineral/protein requirements are a fraction of our current intake. More relative carb intake isn't a problem - look at the Italians or E Europeans or Chinese etc etc.

Oil/Gas is priced on the open market so it doesn't really matter how much is left in the N.Sea.

I'd be interested to hear how you relate that to the ELM model that is a big favourite around these parts.

TW

So how large a drop in fuel usage do you think is possible through discretionary driving, car pooling etc? 20%? 30%? 50%?

How would that break down for personal mileage, commute mileage, freight, business?

Personal mileage could drop 100%, just go to work, stay at home, walk/cycle to the shops, video phone the grandparents.

Commuting costs are hard to drop, the rail network is already stretched, their is a small latent capacity with the bus network, or move job/house. Telecommuting isn't always possible because of the job, or employer. And telecommuting isnt as good a solution as most people make out. Networking & maintaining relationships is harder. You would be amazed how many problems get solved round the coffee machine, in the canteen etc, by people you would never have thought to talk to before. Add to that it can be very socially isolating, so you end up craving going out at night to meet people evening courses etc, increasing your mileage. Carpooling is real difficult to pull off to any large extent. People tend to live in a random distribution round there place of work, so matching up is difficult. Then there is the friction with people being late, or wanting to go work early, or illness. Its difficult todo door to door drop offs with multiple places of work involved, so drop off's for the last part of the journey via foot, or public transport.

How can freight costs be reduced using discretionary driving? There is already significant optimization as fuel has always been a major cost for freight.

How much can a business reduce costs using discretionary driving? How can a Tradesman reduce his discretionary driving? How can a farmer reduce his discretionary driving? How can an office reduce their discretionary driving? Cheap technology, teleconferencing for example, has already reduced office milage. What about sales? The nature of a sales is to start new relationships. A salesman in your office/home is always going to have the edge over a salesman using a videophone.

So I think, that while people can easily reduce their personal miles. Mileage used in the course of running a business is going to be difficult to reduce without hardship to the business, or the employee, or ex employee, or customer with higher prices, or economy with rampant inflation.

The UK has no plan for how future transport will work. Do we go for high car (EV) ownership and low public transport aka BAU. Or move to low car ownership and high public transport? Keeping BAU, and switching to EV can only happen over a long period as vehicles get replaced and huge infrastructure upgrades take place for electrical generation and transmission. Switching to a high public transport model will require a lot of new infrastructure. Buses are the quickest fix, but what energy should be used? EV would be a smart move, but again additional electrical generation is required. Do you do a mass upgrade using buses on FF to allow time for additional power stations coming on line?

If we had 30+ years then these are easy problems to overcome, radical change in UK transportation usage by 10 years is going to be painful. And without even a basic resemblance of a plan there will be significant negative effects.

Tabbycat

Your post is perfect. It is a perfect example of can't change, can't see how we can change, negative thinking. Look over it yourself point-by-point and you'll see it's the same type of reaction that has prevailed throughout history whenever revolutions in technology or lifestyle have occurred through choice or neccessity. The thing is though nothing you have said is insoluble within a time-scale far shorter than you imagine.

Look at what is happening. Even here in the catch-up UK we are finally getting on board with renewables in a serious way;

http://uk.news.yahoo.com/5/20100923/tuk-world-s-largest-wind-farm-opens-...

How long does it take to build a wind-farm once the will is there? How long to roll out EV's once the will is there? How long to implement appropriate infrastructure once the will is there? It aint gonna be 30 years.

As has been often said in the past the best thing to do if you cannot see change as possible is to stand out of the way of those who are already making it happen. One of the things I wonder about on here is whether thinking on TOD and similar sites is so gloomy simply because a lot of the participants (including myself ironically!) are over 40. But the future belongs to todays youth who tend to be far more optimistic, energetic and 'can do' generally. Certainly the ones I know are. There's a Bob Dylan song there somewhere if my fading memory could only recall the lyrics.....

TW

TW you're right that a lot of our driving is discretionary and might not be so hard to work around, but the price of oil will be felt in more than just the price of petrol. Production and distribution, particularly of food, are oil dependent so there will be general inflation at a time when incomes (not just those in the motor industry) are falling. House prices in car-dependent areas will plummet and your employment opportunities will decline according to how far you can realistically commute by bus or bike. Other fuels will be used to displace oil so they will become more expensive too. Winters will be unpleasant without 24/7 gas CH, and you won't be able to escape them by plane for a week in the sun. Thank heavens for the Gulf Stream (the real one, not the executive jet), or the UK really would be stuffed. I doubt we will revert to the stone age but we will certainly revert to the 1950s and I expect our grandchildren's horizons will be commensurately narrower than ours.

I see no evidence in all the above 'glass empty for the UK' stuff of acknowledgement that eg. Canada has huge (and I do mean huge) unused capacity for growing and exporting food grains, eg. wheat, barley. Ditto Russia. Canada presently typically produces twice as much wheat as the UK, and huge crops of oilseeds, cattle feeds, other grains. Enormous potential croplands unused or under-used, including the entire claybelt region of western ontario near Thunder Bay where I grew up the son of a farmer. Let's inspect this possibility of the UK starving for lack of raw farm product. Canada will happily grow and deliver to your dock, food grade wheat at perhaps $7.00 / bushel. Add an extreme oil shortage to add another $1.00 for shipping, make that $8.00 (shipping almost entirely by water, inland waterways for ocean vessels to wheat terminals at Thunder Bay, west end lake Superior or Churchill, Manitoba west shore Hudsons Bay). And we have the oil resources to keep the tractors and ships running. That's enough wheat for 50 loaves of bread, enough to keep a person alive for 50 days. say x7 per person per year. 7 x 8.00 = $56.00 feeds a person for a year. So shortage prices hit? Double that. $100.00 (GBP 50.00)

Food commodities are NOT the problem, people. Get real. Starving like Somalia for lack of wheat in the UK?

A loaf of bread currently costs ~GBP 1.00, how will the cost of bread will go down when PO hits?

My point is that of that GBP 1.00 you presently pay for bread, only about 8 cents UK is going to the farmer for the wheat. Double the wheat cost and your loaf SHOULD only cost GBP 1.08, which is going to be barely noticed by consumers. And if your farmers can't provide the wheat, Canada's will, happily.

It could mandate today that every car sold in the US has double the fleet efficiency of the current vehicles, and spend a fraction of its defence budget retooling the car factories to build current European design cars.

Any government could mandate their citizens not eat any junk food, but that does not mean it will happen.

It is my opinion government can set new standards, but it is really up to each citizen.

If lower fuel consumption is the goal, then use less fuel. Either by purchasing and using a vehicle that gets much better mileage per unit of fuel, or public transportation, and such.

Same argument can be used for insulation and other ways to use less non-renewable resources: It is up to us, not government.

In practice, it is both. Government standards now require 13 SEER air conditioners, though people could choose to buy ones up to 23 SEER (or more via geothermal).

Automobiles now must meet more stringent CAFE requirements, though each owner individually has a choice to which they want, depending upon that year's remaining inventory and price.

Most locales that are not primarily distant rural ones have minimum R-values for walls, windows, ceilings, etc. The builder (or owner) can decide to do more if they choose.

Will is dead center in the ten ring in this respect.

I post a lot of comments about people who want the Mommy state to look after them, but in the case of energy efficiency and conservation, we need all the help we can get from a very strong Mommy..

The market could take care of the problem , if the energy crisis were going to be a long slow and drawn out process;but it's going to hit like an unexpected hurricane, and the market is going to be caught with its pants down around its ankles.

The only real problem with govt intervention in this case is that a lot of supposed solutions are simply going to make the problem worse due to businesses gaming the system.Witness all those ethanol capable trucks with huge v8 engines-built dual fuel for the sole purpose of evading the cafe law.

Great timing Robert. Now that the BP blow out is about to slip into the background we can focus on the future. It still seems like the potential adjustments to PO (folks " could cut their fuel consumption by 50%") brings about a complex economic reality that can seem very bleak. I don't fully agree with the 50% reduction but let's assume your're correct. What does a 50% reduction in fuel consumption do the unemployment roles? I won't try to quantify it but it seems easy to predict it will be drastic: drive down the street and count the number of businesses that will make up the 50% reduction in energy utilization. And then we get into the destructive feed back loops I'll leave the more talented like Gail to construct. But higher unemployment will require greater govt assitance. That means less monies for alt support. Less demand may or may not reduce energy costs. If they reduce energy costs initially the gov't would need to support the alts to a greater degree at a time when gov't revenue decreases due to unemployment.

Not being an economist I can only frame my thoughts in simple concepts. Our society has built on a service/consumer industry that is largely dependent upon disposable income taking advantage of abundant and relatively affordable energy. Alter one of this factors significantly and the game changes greatly. Alter both at the same time and it paints an extremely bleak picture IMHO.

Thank the gods that you aren't an economist, or you would not be able to accept that there are any limits to anything.

We need to get away from measuring everything with dollars.

An alternative, do-it-yourself 'economy' is growing, much of which is based on barter and systems other than US currency.

If you are 'employed' growing your own food in an empty urban lot rather than working extra hours to buy food shipped in from Patagonia, economists will see this as an unmitigated disaster since they can't measure this 'economic' activity--and much, much less oil is used in the process.

But the gardener/urban agriculturalist will be getting fresher produce and the satisfaction of growing his/her own food.

I agree that much of the traditional economy is going down fast. But not all people are just sitting around watching everything go to sh!t without starting to become more locally resilient.

See Juliet Shor's new book "Plenitude" for more info on these developments, but really they are all around us, and many on this forum are in the forefront of the movement.

http://vimeo.com/12034640

(Just to be clear, this doesn't mean I think everything is going to be rosy. Many, many people AREN'T doing anything in this direction and have bought into the idea that we are in a single or double dip recession that will soon end and we'll all go back to happy motoring/consuming. But there are some other things going on, and they are likely to accelerate further.)

dohboi - Interesting. "We need to get away from measuring everything with dollars." And exactly what are you willing to convert the dollars in your paycheck to? How are you going to grow your own food if you don't have the money to buy your seed? Are you going to take someone's land away from them? You going to mail the county a basket of corn to pay your property tax?

IMHO feeding folks will be the least of our problems. At least for those of us in more rural states like Texas. New York City is going to have a bigger problem. The problem I was highlighting wasn't just feeding folks. If PO reduces the working ranks as much as I suspect it will the question won't be feeding those folks but: who's going to pay their rent...for the utilitites...for their medical bills...for their education? The easy answer is the gov't. And how is the gov't going to carry all that additional burden in the face of declining taxes? Print more money? Many economists don't see that as a long term solution.

My very simple point: when X millions become unemployed due to the reduction in our fuel consumption what will their existance look like? Again just my WAG but I doubt feeding themselves will be the major problem.

If measured in dollars, peak oil took place in 1998.

What prognosticators have predicted for the Peak Oil outcome(s) has been be taking place since 2000; the decline in real wages and income, the creeping upward of unemployment, the shift from real output to finance output finally the crash of finance which is taking place around the world right now.

Putting peak oil ten years into the future is both incorrect but also creates a false sense of security.

Trillions of replacement credit have failed to restart finance/speculation. The only bull market currently is in gold; the barbarous relic that increases in value against that of commerce.

The world's economies require cheap oil to return a profit. With easily accessible oil gone and the high priced stuff too valuable to use (waste) in our current economic scheme, there is no reason to suggest that any kind of fuel- waste 'normal' is anywhere over any horizon.

Suggesting that peak oil is in the distant future does a disservice, in my opinion. Better to sound the alarm and prepare as things are going to get worse and fast.

This is the front- month NYMEX contract showing a decline in high prices since the Great Spike of 2008.

Lower highs over the longer term suggests that the world is becoming too poor to bid up the price of its essential input. Coonsider the little bumps on this chart as being 'mini- spikes' followed by mini- crashes. Declining prices shut in expensive production. Eventually the cheap oil remaining is hoarded as it becomes all that is available. Our economy exists to market consumption enablers and worthless pieces of paper. What outcome other than a big crash is there?

At too low a price there will be shortages; since these are the consequence of declining economic return/output they will be permanent. How will this effect what remains of the consumption economy?

I'll give you three guesses ...

One claim about the 1998 date is that it represents peak net energy from oil.

On rock's claims, let me just point out that I never claimed that we would be able to move completely off of cash or that there weren't going to be extremely dire situations. But there are parts of the economy that are starting to move, however gradually, in this direction.

Interesting that you mention seed, since seed saving is one area that people are rediscovering. http://www.seedsave.org/

In my (rare) optimistic moments, I keep waiting for citizens to notice that the system isn't working for them any more (to the extent that it ever has)--when 1 in 7 are overdue in their mortgage or in some stage of foreclosure, the housing system is pretty clearly broken, and we need to replace it with one that serves people more than it does banksters. What that system would look like is quite up in the air right now.

All sorts of services in the past were regularly provided for non-cash payment. My great grandfather was a country doctor in the great plains. We have his ledger of payments, and most are in terms of chickens, pigs, bushels of wheat or beans, or exchange services. We are on our way back to that world. I'm not saying it's going to be all roses, but the cash economy was/is not all roses for everyone.

Again, I do think we are in for wrenching change (or worse), but health care COULD be nationalized bringing in great efficiencies. Education COULD be made much cheaper without so many bells and whistles. People COULD be employed doing all sorts of useful things--urban farming, insulation, WPA-like projects.

COULD...but WILL they. I doubt it. But I doubt anything that nearly any economist says even more.

but health care COULD be nationalized bringing in great efficiencies.

You mean "socialized". The opposite is true. Health care could be deregulated and desubsidized to bring in great efficiencies. Get rid of medicare/medicaid, abolish licensing for medical practitioners, get FDA out of the medicine industry's way, terminate tax subsidies on employer health insurance and so on.

One claim about the 1998 date is that it represents peak net energy from oil.

Could you expand on that?

If measured in dollars, peak oil took place in 1998.

Could you expand on that?

If I understand what you are saying Rockman - I completely agree. Drastic conservation is always presented as a solution, but to my mind the way the economy is interrelated drastic conservation translates into rapid contraction into a depression. Our economy is built on consumption (unfortunately for us). When consumption is curtailed everything (especially jobs)starts heading south fast. A careful systematic program of conservation begun in the 80's might have helped us, but humans seem to not function that way.

Hey Texas_Engineer, if we reduce our oil imports by 5 million barrels/day, that is 350 million dollars/day (at today´s oil price-everyone expects that to go up lots and soon) that could stay in the USA and be used to develop US infrastructure and household material wealth. Reduced consumption of imported oil will reduce the windfall profits enjoyed by the oil tanker industry. It will allow our decrepit refinery system to shut down the most polluting and dangerous plants (there are lots of candidates here). It will reduce the overall emissions of oil consumption. How can you possibly spin this to be negative?

Look down the road a bit- permanent reduced oil imports of 5 MMSTB/d, reduced imported oil bill of 350 MM$/d, for 1100 days (about 3 years), is 350000 MM$-in words, 350 BILLION Dollars.

The economists will tell you there are huge financial advantages in strong international trade, and introducing protectionist measures is one of the first reactions governments have when things go south.
Protectionism made the Great Depression a whole lot worse.

The longevity and depth of the Great Depression were affected by a number of factors, a subject which is beyond the scope of a simple blog comment. "The economists" have been wrong so many times in the last few years that I don't think many people are hanging on their words these days.

Globalization will continue to decline, especially as economies decline and cannot continue to afford long distant transport of goods at the same levels (which will act as a virtual tariff).

"The economists" have been wrong so many times in the last few years that I don't think many people are hanging on their words these days.

As we're talking about such basic economic law - The Law Of Comparative advantage - I'll go with the theory that declining trade has in itself serious negative economic consequences.

It's termed a 'law' though so are many other economic theories. This one also has as a main tenent;

Comparative advantage explains how trade can create value for both parties even when one can produce all goods with fewer resources than the other.

Just like other cornucopian economic theories, this one falls flat on it's indifference to relative AND ultimate levels of resource use.

Again, globalization will be hindered to some degree by rising transportation costs as oil prices rise. If economies around the world dip back into recession (or worse), then globalization will also be greatly reduced.

The difference is the overall system productivity.

Comparative advantage means specialization, and increases the total efficiency of the countries that are trading with each other.

Not if transportation costs eliminate any such advantage. And there are a huge number of other factors, including secondary and tertiary effects of supplier themselves in other countries, exchange rate fluctuations, changes in geopolitical postures, etc.

Plain vanilla economic theory is fine in an ideal, cornucopian world; even then, though, economists using such theories were blindsided on a number of occasions. While unscientific itself, "The Black Swan" reveals much about the black art nature of economic theory, and this is not the place to delve into such in great detail.

Not if transportation costs eliminate any such advantage.

Sure, but that's highly unlikely. Rising energy costs will only change trade at the margins. After all, container ships can reduce their oil/mile consumption by 1/3 (and more, with better design) by just slowing down by 20%.

Can we replace oil for shipping?

Sure - long distance land shipping can go by electrified rail, local can go by plug-in hybrid truck ( http://www.greencarcongress.com/2009/10/mule150-20091001.html#more ), and water shipping can find substitutes for oil.

Substitutes for oil for water shipping? Pshaw, you say.

No, really. Substitutes include greater efficiency, wind, solar, battery power and renewably generated hydrogen.

Efficiency: Fuel consumption per mile is roughly the square of speed, so slowing down saves fuel: in 2008, with high fuel costs, most container shipping slowed down 20%, and reduced fuel consumption by roughly a third. For example, Kennebec Captain's ship carries 5,000 cars from Japan to Europe (12,000 miles) and burns 8.5 miles/ton of fuel at 18.5knots, for a total of about 1,400 tons of fuel. At a 10% lower speed of 16.6 kts, the ship burns 21% less fuel (about 300 tons).

Size brings efficiency: the Emma Maersk uses about 320 tons of fuel per day to carry 220,000 tons of cargo, while Kennebec Captain's ship uses about 60 tons to carry about 23,000 tons (see http://www.ships-info.info/label-car-carriers.htm ), so the Emma Maersk uses roughly 60% as much fuel per ton.

Other substantial sources of savings include better hull (I've seen mention of "axe cleaver" designs) and engine design (very large (3 story!)marine diesels can get up to 50% thermodynamic efficiency), and low friction hull coatings (the Emma Mærsk saves about 1.3% with special paint, and bubbles work too).

Finally, reduction of oil consumption brings a kind of reverse-Jevons efficiency. Currently, some 34% of shipping tonnage worldwide is devoted to transporting oil [source http://www.unctad.org/en/docs/rmt2006_en.pdf , p.16]. If we reduce oil consumption, we reduce the need for shipping. Similarly, world coal trade was about 718Mt in 2003 [source http://www.worldcoal.org/bin/pdf/original_pdf_file/global_coal_market_price(01_06_2009).pdf , p2], at the same time as total world trade was 6,500Mt, so that coal was 11% of world seaborne trade by weight.

for more, see: http://energyfaq.blogspot.com/2008/09/can-shipping-survive-peak-oil.html

Nick -- You make me look like a doomer! ;-)

Cheers from Seattle.

Jon

Here's a back of the envelope calculation:

1400 tons of oil to ship 5000 cars
1400 tons is about 9800 barrels
at $80/bbl that's $784,000

That's $157/car

If the average car sells for $20,000

That's 0.8% of the cost of the car.

That's not much if you get to avoid labor unions and environmental concerns in the bargain.

Electrified rail...new fleet of energy efficient ships...renewably generated hydrogen...

All great, but how many years to change over, and where's the money coming from right now? Peak oil is upon us, we've wasted the last decade when we could have made a difference.

Of course there is the minor point of the possibility there may be no market for cars. Aren't auto sales already down 30%? And things haven't gotten really bad yet.

Auto sales are now rising, albeit slowly.

The real question is physics: will we have enough energy to sustain freight? The answer is clearly yes.

Well, read the whole post. Here's one part:

"Trucking has some time for the transition: trucking's consumption is only 27% of surface non-rail transport. Personal transportation is by far the big user, and personal transportation is mostly optional consumption which will be out-bid by commercial users (optional includes anything not essential, such as commuting that could be replaced by carpooling, albeit with great inconvenience).

Let me say that again: the food-and-goods freight transport network of the modern world uses about 1/4 of oil consumption in the US. Light vehicles overall account for 45% of oil consumption: their utilization could be doubled with carpooling in a matter of months, freeing up whatever fuel was needed by the freight network.

2nd, the transition is already underway: intermodal shipping is replacing trucking, and the trucking industry is under a lot of pressure.

Finally, truck efficiency can be greatly increased: here's a report by the US National Research Council that finds large truck fuel efficiency increases are technologically possible and cost effective.

"The report also estimates the costs and maximum fuel savings that could be achieved for each type of vehicle by 2020 if a combination of technologies were used. The best cost-benefit ratio was offered by tractor-trailers, whose fuel use could be cut by about 50 percent for about $84,600 per truck; the improvements would be cost-effective over ten years provided gas prices are at least $1.10 per gallon. The fuel use of motor coaches could be lowered by 32 percent for an estimated $36,350 per bus, which would be cost-effective if the price of fuel is $1.70 per gallon or higher. For other vehicle classes, the financial investments in making improvements would be cost-effective at higher prices of fuel."

Money isn't a problem: it can be created at the stroke of a pen. The real question is physics: will we have enough energy to sustain freight? The answer is clearly yes.

All this misses the point. It's not only the cost of transport from the factory to the Wal-Mart or big box trough of choice. Its the products themsleves that are made with or from oil that greatly increase in price, which inversely will reduce their demand. It doesn't matter if shipping costs reduce to nothing if there is no market for more disposable throwaway plastic amusements, they won't be produced to put on the ship anyway.

All true but look at the train of comments above, or repeatedly here, everyone comments on how international travel is going to die because of fuel costs. The car example was just to demonstrate the non-existance of that problem in the current context.

Its the products themsleves that are made with or from oil that greatly increase in price, which inversely will reduce their demand

Not really. Manufacturing doesn't need that much energy. More importantly, it needs very little oil in the short-run, and none in the long-run.

Plastic? It can come from other hydrocarbons; packaging and wall thickness can be reduced; other materials can substitute; and it can be recycled to reduce virgin material needs by 90%.

You can't just snap your fingers and make everything change overnight, especially "other hydrocarbons'.

All the things you talk about would have been appropriate over the last 10 (or 40, really) years. We blew that time; now, we will proceed with less capital available to make significant (and expensive) physical changes.

Or do you disagree with Hirsch when he says we need 20 years before peak with which to implement our risk mitigations?

You can't just snap your fingers and make everything change overnight, especially "other hydrocarbons'

I agree. OTOH, we have a lot of excess oil, which can be diverted to low-volume, high priority sectors like plastics and shipping. IOW, they will outbid other uses. Further, you underestimate how quickly some things can change. Manufacturers can reduce container wall thickness, or switch packaging, pretty quickly. Ships can slow down instantly and save 30%, and they can install wind/kites in a matter of months.

now, we will proceed with less capital available to make significant (and expensive) physical changes.

We have just as much financial capital as we did before. The current problem is that those who have financial capital are afraid to invest it, or are stopped by regulatory snafus, such as increased reserve requirements. Financial capital is a symbol, a fiction. It can be created as needed. Physics, OTOH, says we have the physical capital needed.

do you disagree with Hirsch when he says we need 20 years before peak with which to implement our risk mitigations?

Absolutely. Hirsch's analysis looked only at liquid fuel substitutes, such as ethanol and CTL. He didn't even consider EVs, and lumped hybrids in with "efficiency" in a consideration of a very timid rise in vehicle MPG.

Now, have we waited too long to make the transition without pain? Absolutely - we're going to have much higher oil prices than we would have had otherwise, much more financial volatility, much more wealth and income moving from oil importers to oil exporters. It will be bad from a BAU point of view, but nothing at all from the most pessimistic POVs.

do you disagree with Hirsch when he says we need 20 years before peak with which to implement our risk mitigations?

Absolutely.

Then we'll agree to disagree. He and his staff were optimistic as well when they started the study, but after they ran the numbers of time to change the infrastructure and vehicle fleet (for starters), reality hit home hard.

It's one thing to toss around technologies, another to understand how long they will take to deploy in sufficient numbers. During a boom economy, that could be hastened a bit. During a very slow economy, just the opposite.

Don't get me wrong; I live in the passive solar house I designed (with PV array), and bike to my commuter bus stop.

The inertia of the system is tremendously large - just slowing the 'flywheel' down is going to take a long time, after which we can start turning it in the other direction.

I can't embrace the soft landing you speak of, though there are many possibilities beyond that.

Then we'll agree to disagree.

Don't give up yet.

He and his staff were optimistic as well when they started the study, but after they ran the numbers of time to change the infrastructure and vehicle fleet (for starters), reality hit home hard.

They didn't "run the numbers". They used incorrect numbers - I can only assume that they casually picked up them up somewhere and never checked other sources. They assume the time required to turn over the fleet of passenger cars is 17 years during a robust economy: a better number would be about 12 (there is a long tail of reduced VMT, but the median point is 6 years of age). IIRC they're assumption on trucks was even farther off.

The inertia of the system is tremendously large - just slowing the 'flywheel' down is going to take a long time, after which we can start turning it in the other direction.

Well...I kind've agree. I think we'll muddle through, and not change nearly as quickly as would be desirable. OTOH, that's because I think the likeliest scenario is that oil prices will never rise alot higher than they are now and that we will continue to have at least some economic growth.

If we have another oil shock like the last one, things will accelerate. If we have the kind of oil shock that some pessimists envision ($300 oil) then change will be much, much faster.

Again, we can disagree, as turnover rate is very important. And note that in a down economy, a fleet will take even longer to turn over and older vehicles will be driven into the ground.

If you believe you have a better analytical approach, then I suggest you publish your findings in a journal or somesuch. It's easy to talk about what you think should be right, and another to back it up with well thought out analyses.

If we have another oil shock like the last one, things will accelerate.

With what money? With a big oil shock, the down economy will go into recession or depression. Even if we start having respectable growth, oil prices will rise to choke off that growth.

Again, you can't think in terms of asset replacement rates that may have been valid from 2001 to 2007 anymore. We're in a 'dreamland', remember?

Again, we can disagree, as turnover rate is very important.

Part of my point is that Hirsch's analysis is sloppy. He said: "The average age of U.S. automobiles is nine years. Under normal conditions, replacement of only half the automobile fleet will require 10-15 years." In fact, the the median point is 6 years of age: 50% of Vehicle Miles Travelled comes from vehicles 6 years old or less.

Let me put a fine point on that: Hirsch said replacement of half the automobile fleet would require 12.5 years, when the correct figure was 6.

And note that in a down economy, a fleet will take even longer to turn over and older vehicles will be driven into the ground.

That assumes a down economy. More importantly, it also assume BAU. Keep in mind that for the last 50 years (sinc the automatic trans) new cars have been almost indistinguishable from old ones. Add the fact that cars last much longer than they used to, and it's a wonder that anybody buys a new car (I certainly don't). So, in an age of PO, new cars may get higher priority.

If you believe you have a better analytical approach, then I suggest you publish your findings in a journal or somesuch. It's easy to talk about what you think should be right, and another to back it up with well thought out analyses.

I do publish, here: http://energyfaq.blogspot.com/ . OTOH, I haven't tried to create a quantitative "world model". That's a pretty big project. hmmmm. Maybe I'll try a few pieces...

With a big oil shock, the down economy will go into recession or depression.

Maybe. Take a look at Jim Hamilton's analysis: http://www.brookings.edu/economics/bpea/~/media/Files/Programs/ES/BPEA/2... page 27:

"The first panel of Figure 16 looks in particular at the motor vehicles component of durables. In contrast to the gradual response one sees in broader consumption categories, here the response is immediate and quite huge, with for example a 20% increase in energy prices in an environment with an energy expenditure share of 5% resulting in a 10% decrease in spending on motor vehicles. That there would be a direct link between such spending and energy prices is quite plausible, and its mechanism comes not from the simple budgetconstraint effect. Indeed, for this category of spending there are a number of other factors that are much more important, such as postponing the purchase of a new vehicle until better information about where gas prices are going to end up is available and shifting the purchase from bigger to more fuel efficient (and perhaps less expensive) vehicles."

We see that the single biggest feedback mechanism from oil shock to economy is car sales! The thesis: an oil shock creates uncertainty for buyers, so they hold off on purchases. So, if we as a society recognize that PO is here and important, communicate that to car buyers, and build the EREV/EVs, the effect will be positive, not negative.

Could there be a difficult transition while we're ramping up EREV/EV production capability? Of course. OTOH, take a look at EV production plans: Nissan Leaf, Chevy Volt, Ford Focus Electric, etc, etc. Every car maker is moving fast towards EVs. Timing is important: if we have 3 years to ramp up, it will help...

Or do you disagree with Hirsch when he says we need 20 years before peak with which to implement our risk mitigations?

The problem with such sweeping statements/questions, is they are hopelessly generic.
There are many peaks, and some are already behind us, and countries have widely differing reaction times. So the question has many answers.

These peaks are going to average to give a wide plateau (already being seen now), and that makes 'before peak' questions even more fluffy.

Sure, everyone can agree, that longer to implement mitigations is better, but trying to pick a pass/fail time is academic in the extreme.
The smarter thing to do, is focus on the tail, and transition effects.

For the USA, which has long reaction times, and a large inbuilt 'mindset' I can forsee more problems, than for more adaptive countries.

Even here tho, you can compare other OECD economies GDP/OIL numbers, and see there is substantial slack/elasticity in the USA numbers.
The impact of this is going to vary widely across countries.

- The Law Of Comparative Advantage

That's one I never understood in my young college days and still don't understand.

What does a country do if it has no "comparative" advantage?

Sure the poetry majors can coo soft words of consolation about every person being "special" and having worthwhile talents.

But in the brutal reality world of "winner-kills-all" capitalism, that, and 9 quarters ($2.25) barely gets you on the NYC subway system for an olfactory-enriched ride to nowhere.

_______
p.s. Is the Staten Island Ferry still a nickel? A nostalgic geezer wants to know.

> - The Law Of Comparative Advantage

That's one I never understood in my young college days and still don't understand.

Yeah, it's explained badly, or not at all. You're comparing with yourself, not with others. You're comparing all the things you could do, and choosing the best.

If you can make more money as a plumber than doing anything else, then you be a plumber. It doesn't matter how good or bad a plumber you are, compared to other people: it's the best thing for you.

Same for countries. Every country has something -- or some group of things -- it can export that makes it more money than anything else it might do. For Germany, that thing is machinery. For Zimbabwe, it's food.

The fact that other countries pay a lot for Germany's machinery, and hardly anything for Zimbabwe's food, doesn't change the reality that Zimbabwe, given its talents, makes the most money that it can by exporting food: food is where it has a comparative advantage.

Every country has something -- or some group -- it can export

Give me your hungry, your poor, your destitute?

It's certainly something to "export"

And in one particular city there is a "demand" note asking for unlimited numbers of these units :-)

The silly Lazarus poem added thirty years after the fact has really served it's purpose and it is time to go.

2000 years ago a magician changed water into wine. Isn't there someone who can change water into oil? But not using fresh water please to exasperating the shortage.

The US Navy are doing something like that. Oops, they do it with nukes.

NAOM

What does a country do if it has no "comparative" advantage?

The value of its currency drops until it has something to sell which is competitive. Probably wages get so cheap they they would appear to outsiders as slave wages. But you do get cheap enough that something is sellable. Wages, women, human fodder for drug-gangs, whatever, eventually something will be so much of a bargain for outsiders that someone will start buying.

Their currency doesn't have to drop. Countries always have a comparative advantage, because there will always be something for which their relative efficiency within their own country is different.

It's hard to understand, but it has nothing to do with efficiency or productivity as measured across borders. Instead, it's a question of maximizing the usefulness of the countries' output, whatever it is.

In other words ...

Let's say the two top things that country X can do are:

1) Mass produce iPods
2) Farm locally and produce food

BUT .....

out of these it is the mass-producing of iPods that is the most profit efficient.

THEREFORE and according to the theory of "comparative advantage",
country X should minimize activity #2 and maximize activity #1.

It should let slave-wage farmers from a far away country Z that doesn't like us very much do the farming because "they" have that as their "comparatively most advantageous" activity.

It all works out very nicely until the farmers of Z go on strike.

____________________
Now the only thing I can't figure out is which modern country exemplifies this hypothetical activity by unnamed country X?

Hmmm. Let me think longer and harder. Maybe I should call Steve Jobs for the answer.

Now the only thing I can't figure out is which modern country exemplifies this hypothetical activity by unnamed country X?

Yes, I'm puzzled too. The US is a net food exporter. I think China makes iPods, but they're food imports are pretty minor, AFAIK. Perhaps you're thinking of Japan? They seem to be doing pretty well export-wise, and they're certainly reducing their oil imports.

Perhaps you're thinking of Japan? They seem to be doing pretty well export-wise, and they're certainly reducing their oil imports.

Japan is in interesting case study.

Yes, their oil is falling, since ~1997
(So, Japan wise, peak oil is well in the past)

Their Nuclear is also on a falling trend line, since ~1998

but their Coal and Gas have been climbing, only to fall in 2009.

GDP has been steady, at a very modest ~+0.5%
All this is helped by a very flat population plateau.
(so a per-capita correction is not needed)

I didn't have a specific country in mind.

Instead I was pondering the wisdom of the crowds of economists.

They always tout this "comparative advantage" thing.
Sounds "clever".
But is it wise?

Yes, Japan is interesting.

For one thing, they like PV, but they don't like wind. Odd.

Hi Rockman,

You are dead on insofar as supplying food over the near and middle term of post peak oil life is concerned.it won't be as varied or as fresh, but nobody in countries with plenty of farm land and even dribble of petroleum is necessarily going to starve.

The short answer as to how everything else is going to be paid for is that most of "everything else" will become increasinly unavailable and we will simply do without.

Which raises the question "How will unemployed people eat if they have no money?"

At some point, Government-directed food distribution to the starving will become hard to argue against.

Rockman's point about utilities and rent has more than one answer;

Utilities: There is no easy answer here. Water is crucial to life, as is heat in many cold winter states. Sewage system fees are unavoidable. This may result in the annual migration of poor along the lines of snowbirds, with the half-emptying of Detroit giving us a model of what may be likely.

Rent: In a hard lander scenario, housing prices will likely bottom out far below where they are now, around pennies on the dollar. Rent may be next to nothing, just to keep a place from being empty or squatted on (or stripped).

Undoubtedly, though, tent cities will continue to sprout up and expand, with their consequent water and septic quandaries;

Which raises the question "How will unemployed people eat if they have no money?"
At some point, Government-directed food distribution to the starving will become hard to argue against.

4 words: "Soylent Green is people".
In all seriousness, now that we have 40 million Amreicans on food stamps, this scenarion is not hard to imagine. At least the U.S. is lucky enough to be able to feed its own population quite easily, even if the cost of petrol quintuples overnight. It's won't be pretty, but at least we won't starve --unlike many a Middle Eastern, African or Asian nation.

Rent: In a hard lander scenario, housing prices will likely bottom out far below where they are now, around pennies on the dollar. Rent may be next to nothing, just to keep a place from being empty or squatted on (or stripped).

You're talking about an epic world-wide crash here. For this to happen, every economy --not just the U.S.-- would have to experience simultaneous collapse. Even if prices were allowed to drop another 30-40% here (politically untenable due to the banking cartel's power), rich investors from other countries would swoop in and start buying property here, thereby stabilizing RE prices. Not saying it's impossible, just very unlikely.

IMO, more likely is a slow, grinding, gradual decline over decades, with repeated (futile) efforts by the government to prop up the banking industry via RE prices. They've already tried ZIRP and transferred some $4 Trillion to the banking oligopoly, so what's a few more $Trillion among friends? We could even try negative interest rates.

rich investors from other countries would swoop in and start buying property here, thereby stabilizing RE prices.

In the heady days of a thriving, overly-exuberant stock market, perhaps so. However, those days are gone, and so are countless fortunes. Is the US the best place to put one's money these days? Many here would say the the current situation is a dreamland, just like Maxwell. Frankly, the best places to buy out likely are local bike shops...

IMO, more likely is a slow, grinding, gradual decline over decades

I believe there is a very high risk of the tipping point scenario discussed in the German military think tank study that I've already cut-n-pasted in today's comments. Recognition of no-more-growth will undoubtedly trigger a run for the exits, which will IMHO not resemble anything slow and gradual.

What makes you think we haven't tried negative interest rates already. Lending money to Bankers at 1% and letting them use that money to buy treasuries at 3% is negative interest. It is happening today.

Well, technically that's what you would call "rate arbitrage", as the Fed overnight rate is still (barely) positive (i.e., the lender is technically not paying the borrower), but I do see your point.

My very simple point: when X millions become unemployed due to the reduction in our fuel consumption what will their existance look like?

Maybe Iran, after giving up subsidies for petrol and starting rationing it, gave the world an idea what might happen: riots in the streets, gas stations torched, as in summer 2007. I think you are absolutely right: the game is not about feeding people.

...most people – if they really had to – could cut their fuel consumption by 50%.

I'll confirm this. During the "energy crisis" of 1973-1974 my folks made us cut back. We dried laundry outside, turned down the water heater, turned off lights, adjusted thermostats, and started carpooling. It was really not that hard to reduce 50%--though the easiness may have been relative to our excessive consumption up to that point.

I tried this again a couple years ago just to see if we could do it. Again, it wasn't hard because our baseline was so high. Of course, having little immediate motive to sustain our economizing we slacked almost back to our previous level. It reminds me of people who brag not about quitting smoking but how many times they have quit.

Eventually, of course, price pressures will force change. The tough prediction is how much the inequality of forced change (i.e., the poor having to change first and most while the wealthier do not) will influence social and political outcomes.

Most people will rediscover truly fuel efficient cars that are not hybrids. Fiat has super-tuned a 2-cylinder gasoline engine that produces 85 HP and 107 ft.-lbs. torque at 1900 rpm. "The 0.9-liter two-cylinder motor features a pint-sized turbo, Fiat's revolutionary MultiAir technology and so much more. When dropped in the Fiat 500, the new engine performs better than the company's existing 1.2-liter mill and on par with its 1.4-liter while offering a 30-percent reduction in fuel consumption. When equipped with the new TwinAir, the Fiat 500 can reach a top speed of 108 miles per hour and can hit 60 mph in under 11 seconds. Fuel consumption works out to a handy 57 miles per gallon (U.S.) and emissions drops down to just 95 grams per kilometer of CO2. With max torque sitting at approximately 107 ft.-lbs. at a low 1900 rpm, this little mill figures to offer enough low-end grunt too." This car will be CHEAP and easy. The first year production target is 400 thousand units, but will likely triple within 2 years.

Thanks Todd....I'm 6 foot 6 inches and weigh about 350lbs....how will I even get in that described auto much less go anywhere in it?? I rent a lot of cars and many current ones are just not safe for me to drive...seat belts don't fit, not enough leg room to even hit the brakes!! I refer to them as "Fred Flintstone" cars...and if your not familiar with that, Fred used to pick up his car, run with it, and then coast.....which is what I would/could do with such a vehicle! I drive a Suburban now...for the space.

Don't worry, you will fit in a 500, and Fiat will drop the Twinair in other cars and it is being licensed to GM and Renault to name but two. But the 500 won't save us. And it isn't cheap; Fiat is asking silly prices, because it can!

I'm 6 ft but have really short legs. I don't fit in most cars but I just sold my pickup truck and bought a Mini Cooper. I fit fine!
My wife and I just got back from a little trip. We got almost 40 mpg and the car was super comfortable.

A few years ago(like 25)I had a 1968 Porsche 911. I could push the seat back so far I couldn't reach the pedals. My wife's uncle was about 6 ft 5 inches. He thought it was terrific. That car weighed only 2200 pounds. With modern engine controls instead of carburators it would certainly beat the Mini for gas mileage.

Thanks Ulpian and jjhman!! maybe there is a little hope for me! I remember forty years or so ago I had an Uncle that was a couple inches taller than me and he just removed the front seat from a VW Bug.....He sat in the back seat and it worked fine! It was interesting watching him get in and out of the car but it worked!!

True story:

Once upon a time, a good buddy and I were stopped at a local produce market that sells a lot of good stuff such as locally produced relishes, country ham and bacon, gasoline and so forth.

A Plymouth Valiant of approximately late sixties vintage pulled up to the pumps that looked as if both the front and rear springs on the drivers side were broken, it was so low on that side.The biggest man I had ever seen at the time got out and went inside the store, emerging with a couple of sacks of groceries.

We stood around waiting just to see him get back in that car and drive off.Later the guy who runs the store showed us an autographed picture of Haystack Calhoun,a professional wrestler reputed to wiegh over six hundred pounds , although he probably wieghed less.

He was a regular who developed a taste for the local ham, honey, dried apples and so forth and often passed thru on his way from one small town to another pursueing his trade.

We never did find out why he was driving the Valiant,considering his size, but I suspect that he had car trouble and that it was the only loaner available on short notice.He probably wasn't making enough to hire a cab for a hundred mile ride, working the high school gyms and ymca basketball courts in the middle of the week.Back in those days you couldn't rent a car in most small southern towns on a moment's notice.

The moral of this story is that given the choice of walking or riding in a car that is a tight fit , we will choose to ride;and the bigger and fatter we are, the stronger will be the bias towards the car.

How that giant ever managed to fit into that Valiant is still a mystery , but he managed it.

Ironic how it is with the smaller cars having more room...two of the only cars I've ever driven that I didn't have to put the seat all the way back (and still wish for a little more room) were a Porsche 924 and an '87 Honda CRX. Headroom and legroom were both more than adequate in those, unlike the vast majority of much larger cars.

Make sure it has a sunroof.

NAOM

This is reply to ROCKMAN's post many pages above, due to indentations.

You posted a while comment that USA and China will get their oil in post peak world this way or another or maybe they are first in line. If I understood your post correctly.

If the global and US economy manages to keep consumption down in line with post peak decline for some time, and this decline will not be a crash but a reasonably smooth curve going down, this could be basis for smoother transition:

Naive rambling about fuel economy: For starters, if individual gasoline consumption goes down, money spend on gas now is freed and immediately reduces oil imports and reduces trade deficits. And reduced amount of 10 year Treasuries issued to pay for oil trade deficit. And interest payments on them. And money for windmills, solar panels, electrified railroads etc.. Sadly this would have to happen voluntarily, because economic intervention comes at a cost, which defeats the idea.

In the campfire I posted how I reduced my family share of Canadian oil consumption (100 barrel per year for family of 4) by 12% in one stroke. And my previous car was not a 5.7L V-8...just a 2.7L V6.

North America is so wasteful that there are savings that can be had at virtually no upfront cost, but IMHO the voluntary aspect is essential.

> if individual gasoline consumption goes down, money spend on gas now is freed

This was discussed at length here last year and the previous year. The consensus was that people cut back on nearly everything else before gasoline. People live in the suburbs and need to drive to just about everywhere: work, the shops, school, kids' activities, ... everywhere.

But, you say, US gasoline consumption has fallen, so people do cut back their usage when the price goes up. I did, after all.

Wrong. Or, at least, not how you think.

Leaving aside the kind of people who hang out on The Oil Drum, in the USA, a person's gas consumption drops when they are made unemployed. That is what has happened: lots of people are unemployed. That's why consumption has fallen.

Overall gasoline usage goes down when prices rise because some people drop out of the market, not because everybody cuts their use a little. OK, that's an overstatement -- unemployed people still use a little gasoline -- but it's more accurate than saying, "everyone cuts back a little", which is what people tend to think.

So you are right that there could be a cut in the trade deficit. But it won't be the oil that is cut first, it'll be everything else, including things made in the USA, like coffees, health insurance, and houses, as well as Walmart-stuff. The trade deficit will fall, but so will activity inside the USA. Since internal activity is about 85% of GDP, the effect will be bigger there.

The decline means more unemployment, and more, in a vicious circle. Less wages, less profits, less taxes, bigger deficits. A rational government would take on the debt now, employing people (indirectly) to electrify the railroads, retrofit insulation, and so on. The debt will happen anyway; taking it on now would help break the circle. (An enlightened government would also outlaw building density restrictions and free parking around shops and offices. That'd "nudge" cities in the direction of greater efficiency.)

Sadly, the US political elite is having one of its psychotic episodes just now. The chances of sensible policy are nil.

Over multiple years, people will adjust. Relatively wealthy people will buy more efficient vehicles. Poor people will double up with relatives to cut housing costs, and in decades to come most people will leave the suburbs and return to town centres. But it's not going to be smooth.

My English didn't express my thoughts precisely: If supplies drop in the future as a result of PO, then IF we match the post-peak decline in supply with VOLUNTARY reduction in consumption, then we are at least not doomed. (I am Canadian, so argument does not apply as much as we have enough oil for ourselves, but with NAFTA, who knows).

I understand the point you make about the order of reductions in spending, but have to say that even after 20 years in North America I don't really get it. I live in the suburbs, OK, close suburbs, but still make 20,000 miles per year driving everywhere (the nearest place to spend money is 1.5km away)

So in the US of A Harley-Davidson 5.7V8 F-150 is the horse, ego, and persona?

That's a recipe for trouble.

I just can't buy the idea that people are going to abandon the burbs and move back to the city centers within the next few decades on the grand scale.Millions of people will do so of course, but many times as many WON'T.

The housing needed simply doesn't EXIST in the city;it will have to be built.

The existing suburbs are a sunk cost.The only really big savings involved in moving back to town are in overall transportation costs, and maybe heating and supplying water /sewer in highly concentrated housing.

Given the value of the burbs, in terms of invested money, lifestyles, and other intangibles, I see the burbs surviving a long time but of course changing a lot.

Many local businesses will be established in formerly residential only areas, meaning the operators and customers are in close proximity.

Cottage industries, protected by law from imported goods or in country mass produced goods will become a big thing- it's better to have a home maker seamstress sew a modest percentage of what she can in a factory than support her ENTIRELY on welfare.

At one time convenience food meant a "dead" chicken to my Momma;it meant a baked chicken bought for an extra dime or two from the old lady in the nieghborhood who baked a dozen every Saturday evening in poor black niehghborhoods in some towns in the south;such unofficial businesses will rise again.

The burbs will see some infill building, and zoning laws will change so that a big four or five room house with two baths can be converted to a duplex;converting a rumpus or rec room into another kitchen and installing a couple of locking interior and maybe a couple of exterior doors will suffice in many cases. A totally adequate kitchen can be installed in an existing room, turn key, for no more than two or three times the annual cost or value of a comparable rental unit.Housing density is thus doubled for peanuts.

Retired folks who live close in will swap houses with those who need to commute.

The laws that make the operation of independent buses and cabs illegal or otherwise impractical will change drastically.

A person with a van will be able to legally charge for rides.

People will form car clubs of a new kind-the church bus will morph into the shoppers and commuters bus.

Employers such as Walmart will be required to preferentially schedule employees working hours to accomodate car pooling.

Lots of open space in the burbs means lots of room for gardening and cheap outdoor recreation.

The owner of a two hundred grand and up house in the burbs will find the money to make needed efficiency and conservation up grades to his mcmansion easier than he will find the money to buy or rent new construction downtown.

The owner of such a house will find it expedient to spend an hour and a half commuting one way in a nev -a glorified golf cart- as opposed to an hour in a conventional automobile crawling along in heavy traffic.The traffic laws will be rewritten to accomodate his needs to a serious extent;I can see an extra lane being built and reserved , or carved out of existing lanes, for such vehicles.

Speed limits will be lowered across the board.A 35 mph limit will cut fuel consumption by a third , more of less.Shops that modify existing cars in ways that will improve thier fuel economy substantially will become quite common, and laws will be changed, by emergency decree if necessary, to keep them open and legal.

Laws will be passed that reduce the quantity of throwaway goods and packaging currently hauled both to and from the burbs;tens of millions of houses can be and will be disconnected from sewers,which will be replaced with septic systems that once built consume no energy.When they are pumped every ten years or so, the contents will be minimally processed locally so that the end product is a locally useful ferlilizer.

There will be many large and varied make work govt funded programs involving subsidies to various industries.The rate of installation of pv, solar domestic hot water systems,and other energy generating or conserving technology will skyrocket as a result of such programs,thereby helping the burbs survive as viable housing options.

The laws will be changed as necessary so these things can happen because it in the end will be found to be the only real option.

Our current lords and masters the big banks will see to it that the burbs aren't abandoned,so long as it can be avoided, if the cynic in me is correct;they do after all hold the mortgages.

Looking at this from another pov, who thinks we can more easily afford tp support out of work people in new housing in the city than in existing housing in the suburbs?

These remarks are not intended to be defensible as written, or comprehensive;they are intended to merely to throw a little light on the case for the long term viability of the 'burbs.

Certainly there will be lots of powerful people and institutions lined up against these changes;but once it is obvious they are necessary to the public and the remainder of the bau establishment, they will be made.

Not unlike in Schumacher's "Small is Beautiful"?

It still seems like the potential adjustments to PO (folks " could cut their fuel consumption by 50%") brings about a complex economic reality that can seem very bleak. I don't fully agree with the 50% reduction but let's assume your're correct. What does a 50% reduction in fuel consumption do the unemployment roles?

Here, the USA can learn from others, (if they are prepared to do so).

Take a simple glance at those others, currently drawing ~50% of the USA Oil

Canada:         71.009 bbl/day per 1,000 people 
USA :           68.672 bbl/day per 1,000 people       

and moving down the scale, we have 

Australia:      47.284 bbl/day per 1,000 people
Spain:  	39.829 bbl/day per 1,000 people
Japan: 	        39.291 bbl/day per 1,000 people
Sweden: 	39.165 bbl/day per 1,000 people 
New Zealand:    38.486 bbl/day per 1,000 people  
France:         32.839 bbl/day per 1,000 people          
Germany:        29.805 bbl/day per 1,000 people  
Italy:          29.27  bbl/day per 1,000 people  
United Kingdom: 29.008 bbl/day per 1,000 people   

Germany was the worlds largest exporter, until China bumped it.
USA is third.

So, it seems there are a lot of yardsticks, of 50% lower oil, and they are not Social basket cases, or third world levels.

Elasticity can be quite surprising.
Of course, 50% merely buys time - will it be enough time ?

From the Forbes article, this about sums it up;

"We'll be living in a dream world. Things in the oil world are going to be just fine for the immediate future. We can buy gasoline at $3.00 per gallon or perhaps $2.75. That is fine for now. The problems come around 2013 or 2014, when ... we begin to run tight.

That begins to scare people, since they can look ahead and see that the issue is not going to be resolved quickly, since you have to find the oil many years in advance of being able to produce it. We just haven't found enough oil for a number of years, so this problem is now beyond the reach of some big, major discovery that suddenly would provide us with a sufficiency. And so far, we have no technological breakthrough to assist us. "

This leads right into the leaked German military report (section 3.2) about tipping points;

Banks lose their business base. Cannot pay interest on deposits, because they can not find creditworthy companies.

Loss of confidence in currencies. The belief in the value-preserving function of money is lost. It only comes to hyper inflation and black markets, then to a barter economy at the local level.

Collapse of value chains. Labor processes are based on the possibility of trade in precursors. The processing of the necessary transactions without money is extremely difficult.

Unbound monetary collapse. If currencies lose their value in their country of origin, they are no longer exchangeable for foreign currency. International value chains collapse as well.

Mass unemployment. Modern societies are organized labor and have throughout their history ever differentiated (specialized). Many professions have to deal only with the management of this high degree of complexity and nothing more with the direct production of consumer goods.

State bankruptcies. In the situation described, state revenues decline dramatically. The possibilities of acquiring more debt are extremely limited.

Collapse of critical infrastructure. Neither the physical nor the financial resources for the maintenance of adequate infrastructures. The problem is compounded by the total interdependence between infrastructure's different subsystems.

Famines. Ultimately, it will provide a challenge to produce food in sufficient quantity and distributed.

Quoting from your quote:

We just haven't found enough oil for a number of years, so this problem is now beyond the reach of some big, major discovery that suddenly would provide us with a sufficiency. And so far, we have no technological breakthrough to assist us. "

Indeed, we haven't found enough for quite a long time. Nor are we likely to. I first began to become seriously interested in PO when I realized that Hubbert's prediction for US production was based only on lower 48 production. Yet the discovery of Prudhoe Bay in 1968, still the largest conventional oilfield ever found in N America, really didn't effect his prediction much. It only stretched the decline out slightly. How many Prudhoe size oilfields has anyone discovered lately, anywhere? And in the world scheme of things, Prudhoe, while respectable to be sure, is no where near as big as the biggest Middle East fields.

Interesting news tidbit over the weekend.
While it is natural for us here in the U.S. and Europe to focus on the effects of diminishing oil supplies on our home economies, there are conflicting claims to offshore exploration areas in the East and South China Seas that involve China, Japan, Taiwan, and Vietnam. Japan, of course, imports virtually all of its oil. I don't even want to think about what a U.S. response would likely be if China threatened Japan or Taiwan militarily over resource extraction rights.

Just finished my annual weekend gathering where my wife heads out and many friends come for a weekend of fishing, etc. (recovering.) Anyway, for years I have discussed peak oil and implications and I was met with the crackpot stare and topic change. This year we held a long discussion on the subject. The topic was considered from all angles. It is interesting that even some BAU folks are now aware of the problem to a certain extent..... Anyway, it was gratifying and a hopeful situation.

Cheers Paul

So perhaps someone can correct me - Maxwell is such an august analyst, if he says peak 2018, he must be right:

we have been on a plateau since mid 2004 at about 72 MBD.
we are now entering the 7th year of the plateau as of mid 2010

where does Maxwell see the extra supply coming from to not only meet existing decline but exceed the current plateau?

Yeah, exactly. Is Maxwell ignorant of the production numbers for the last decade? He predicts a plateau for "4 to 5 years." Hello, hasn't that part already happened? Isn't that obvious by now?

Well the guy basically has no idea what's he talking about...which ridicules the notion that he's a respected expert.

Shame on TOD for this garbage article.

About the guy who you think has no idea what he is talking about:

http://www.charlierose.com/guest/view/6367

Charles T. Maxwell is senior Energy Analyst for Weeden Co. Educated at Princeton as an undergraduate and Oxford as a graduate, Charles T. Maxwell entered the oil industry in 1957 and worked for a major international oil company for 12 years in the US, Europe, the Middle East, and Africa. His background has been in four traditional sectors of the industry; producing, refining, transportation, and marketing. In 1968, Mr. Maxwell joined a well-known Wall Street firm as an oil analyst. In polls taken by Institutional Investor magazine, Mr. Maxwell has been ranked by the US financial institutions as the No. 1 oil analyst for the years 1972, 1974, 1977 and 1981-1986. In addition, for the last 17 years he has been an active member of an Oxford-based organization comprised of OPEC and other industry executives from 30 countries who meet twice a year to discuss trends within the energy industry.

So whether you think he knows what he is talking about is irrelevant in the bigger picture. He is highly respected in his field, and he has taken the peak oil message to the pages of Forbes. That is saying something. So you think he is forecasting peak too late? Big deal. He is getting the message across to a lot of people that we face a serious problem, and he is likely to be taken seriously because of his reputation in the industry.

Whatever his past record, his supposition that oil production is on a rising trend and his blindness to the fact that oil production has been on an undulating plateau for 5 years, or so, points to denial. The notion that an oil production peak is still seven or eight years away also gives succour to those who think it will all come right in the end.

Whatever his past record, his supposition that oil production is on a rising trend and his blindness to the fact that oil production has been on an undulating plateau for 5 years, or so, points to denial.

Denial of what you deem to be true. In fact, his bigger point is that we have major challenges to confront.

We wouldn't even be having this discussion if Daniel Yergin had said the same thing. It would be "Holy cow! The guy is starting to see the light."

Robert, are you agreeing with him, that oil production is heading in an upward direction? And, surely, to say that, Charles Maxwell must be looking at more than a year's data. Remember that peak liquids was 2008 (so far).

Of course it's a different denial to that of Yergin, who's now trying to mould it as "peak demand", but it's a kind of denial, nonetheless. And, as I say, will lessen the urgency in the eyes of politicians whose horizon doesn't stretch beyond the next election. Of course, he may be right that oil production peak has yet to occur but he should be acknowledging that peak may already have occurred and he should not be pretending that oil production has been rising up to now.

Robert, are you agreeing with him, that oil production is heading in an upward direction?

My assumption is that he is considering capacity and not actual production. I believe we have more capacity than we did a couple of years ago, but demand destruction has meant that we haven't had to produce full out. If we did, then indeed I believe we would see another peak. We would have easily seen another peak in 2008 had prices not brought demand crashing down (in fact, the 12 month period from late 2007 to late 2008 saw higher oil production than 2005).

I spoke to Nate Hagens on the phone yesterday, and he said the same thing: Were it not for the financial crises, we would likely see more production records in the next couple of years. So it may be that we have past peak effectively, but the geological crises (which I believe is Maxwell's point) is still in front of us.

and he has taken the peak oil message to the pages of Forbes

Yeah, but we've been there before (in Forbes).

Remember when Captain Capitalism (a.k.a. Steve Forbes) promised we'll right back down below $35/barrel due to the miracle of the Free Market system?

Remember when Julian Simon promised that all commodities will trend towards zero?

p.s.

This is how "economics" folk think:

Yeee ha! The singularity is just ahead. Happy times are here again.
_______________________
click on image for more info

Robert Rapier:
Point taken, I overreacted.

I arrived at peak oil in 2008, which is considerably late, but even I was immediately able to connect the dots.

It frustrates me to no end that the so called best and brightest, or perhaps those with the most knowledge, are not coming out in full force and taking this directly to the press and to the people, much like the climate scientists have done (who have predictably suffered the backlash).

Are they afraid of society's reaction? Don't let the sheeple know too much?

This seems to be the approach from the Bush and Obama gangs and the Federal Reserve. Distortions, no transparency, hiding behind walls.

If the "best and brightest" have had any experiences like I have had, they will just keep quiet if they want to remain in power. Among fellow technical people I may find some passing interest before the subject is quickly changed. On political discussion boards, I've been called a marxist for suggesting light rail was a reasonable investment alternative in cities like Phoenix and Tampa. Even "progressive" websites that want the White House covered in solar panels still believe in a future full of green suburbs and cute little green cars all heading to business-as-usual down at the mall.

Imagine the reaction if President Obama used the next State of the Union address to level with the American people. Every talk show host would go crazy. Now consider Sarah Palin announcing a run for the presidency with the basis being peak oil. MSNBC would lampoon her for months. It's a no-win situation for politicians left or right because the American people simply have no grasp of the most elementary parts of this issue.

Robert,

I somehow managed to appear in a 2006 British documentary with a number of others discussing Iraq and oil, including Maxwell. To my knowledge, he has not acknowledged a certain peak in oil before. So I agree it is a step forward for awareness of PO and ASPO.

While Maxwell undertands the nuts and bolts of the industry, regular posters here have a much better grasp of the concept and meaning of PO than he does. Hopefully after listening to the speakers at ASPO, he will organize his vast knowldege and put it to better use, and perhaps come up with something a little more specific about the arrival of PO, and its consequences. Actualy, he should realize that PO has already arrived, but let's give him some more time to grasp that fact.

I was going to guess that he was calling an all-liquids peak, for which 2018 might be plausible. But on re-read, he is indulging in a bit of hand-waving:

I believe that the peak of discovery fell in the five-year interval between 1965 and 1970. So if you took it at, say, 1968, and then you added 50 years, you would get to 2018.

Earlier in the piece, he hazards that the interval between 'Peak of Discovery' and 'Peak of Production' is 30-50 years. So how does he know that the global interval wasn't 40? Needless to say, more serious analytical attempts have been made to estimate a year of peak production...

as Matt Simmons would say - data beats theories every time

Why would oil companies not cut production - so as to avoid the political consequences of high profits. It seems to me that once the "peak" has been established the plateau will be very small and the drop off in production much faster than is being projected not because they can't produce but because they don't want to. If the discounted value of the future cashflow is greater than the present value an oil producer has every incentive to reduce production and extend the life of a field as much as they can. This creates a virtuous cycle for them and disaster for the rest of us. The only offset to this is if interest rates are higher than the expected increase in oil prices.

Why would oil companies not cut production - so as to avoid the political consequences of high profits.

Given the way politicians have lead witch-hunts for price gouging gas staion owners in past crises, I don't think this is a viable strategy. The scream will be "we are suffering because we aren't producing enough", and the consequenecs for anyone suspected of holding back could bring the inquisition down on them.

Fresh meat: Thought I’d occasionally post something on promising innovations responsive to the energy challenge before us. IMO TODers are not paying close attention to this, are unduly pessimistic, and aren't contributing much creative thought to options for the post-peak-oil world. Reliance on overly simplistic mental models leaves out crucial dynamics and undiscovered opportunities, dulls the imagination, and leads to wrong inferences. I’ve previously laid out a more constructive rationale:
http://campfire.theoildrum.com/node/6598#comment-650069
http://www.theoildrum.com/node/6924#comment-717199
http://www.theoildrum.com/node/6904#comment-711570

My view: Whether or not we can replace all the fossil-fuel energy we now use, we simply must shift the energy system from depleting fixed energy stocks to capturing renewable energy flows. The path to adaptation of industrial civilization is resource substitution. The resource-substitution process is a deliberate mental discipline and has to be practiced to be achieved. The first step is to see what others are doing.

Most people don’t have much feel for the future, but you can nurture your intuition by looking at forward-looking ventures and trying to imagine where they might lead. The college students I work with daily have much more optimistic expectations than most TODers. We foster students’ efforts to prepare for and change the future through formal coursework, personal coaching, guided new research, and (on this subject) a BioEnergy Science and Technology listserv where people post interesting developments as they appear on the horizon. Here are some items I’ve posted there in recent weeks.

Joule patents fuel made from water, sunlight, CO2, and two enzymes
http://www.theoildrum.com/node/6904#comment-711570
The mystery bug--a type of bacteria--behind intriguing biofuel start-up Joule Unlimited was revealed with the publication of a patent on Tuesday. The Cambridge, Mass.-based start-up said that it has received Patent No. 7,794,969 for an engineered form of cynobacteria, or blue-green algae, which grows in water and is capable of secreting biodiesel fuel. The company asserts that it can make diesel fuel directly using only sunlight and waste carbon dioxide in glass bioreactors for as little as $30 a barrel.

Military Biofuels Report; Solazyme re-ups with Navy
http://biofuelsdigest.com/bdigest/2010/09/15/join-the-navy-and-free-the-...
Solazyme…has signed a new deal with the US Navy and Honeywell’s UOP to deliver 150,000 gallons of algal-based biofuel for HRF-76 Renewable Naval Distillate fuel, the primary shipboard fuel used by the Navy. The news follows an initial contract for 20,000 gallons of HRF-76, signed in 2009, for which Solazyme has now completed delivery. The company also signed a contract in 2009, and completed delivery earlier this summer, for 1500 gallons of algal-based renewable aviation fuel to the Navy for testing and certification purposes…The Navy’s long term strategy is to supply 50% of its energy from renewables by 2020.

California solar plant, to be world's largest, wins key approval
http://news.cnet.com/8301-11128_3-20016635-54.html?tag=mncol;title
The world's largest solar power plant cleared an important hurdle on Wednesday, laying the groundwork for a dramatic expansion in solar energy generation in the United States and around the world. The proposed $6 billion-plus Blythe, Calif., plant…won clearance to build from the California Energy Commission. The plant has a capacity of 1,000 megawatts. By comparison, for all of last year, the U.S. installed about 481 megawatts of solar energy… The largest solar plants to date are in the 200- to 350-megawatt range.

Chinese Offshore Wind Development Blows Past U.S.
http://www.nytimes.com/cwire/2010/09/07/07climatewire-chinese-offshore-d...
"What the U.S. doesn't realize," said Peggy Liu, founder and chairwoman of the Joint U.S.-China Collaboration on Clean Energy, is that China "is going from manufacturing hub to the clean-tech laboratory of the world."

How the stimulus is changing America
http://www.time.com/time/nation/article/0,8599,2013683,00.html
Here’s a close look at the 16 percent of funds in the American Recovery and Reinvestment Act marked for “reinvestment" -- the long-term projects of confronting climate change, cutting oil addiction, building a 21st century economy (and also modernizing health care and education)… The Recovery Act is pouring $90 billion into clean energy, including unprecedented investments in a smart grid; energy efficiency; electric cars; renewable power from the sun, wind and earth; cleaner coal; advanced biofuels; and factories to manufacture green stuff in the U.S. The act will also triple the number of smart electric meters in our homes, quadruple the number of hybrids in the federal auto fleet and finance far-out energy research through a new government incubator modeled after the Pentagon agency that fathered the Internet… Sadoway, the MIT battery scientist, is tired of reporting how many jobs he's created in his lab: "If this works, I'll create a million jobs!"

So, accept my challenge: Watch the innovation. Read the items that interest you from these websites daily for a month.
http://www.sustainablebusiness.com/index.cfm/go/news.general
http://www.altenergystocks.com/comm/content/cleantech/
http://news.cnet.com/greentech/?tag=hdr;snav

You forgot the self-assembling solar cells with 40% efficiency that MIT has developed - see the recent Slashdot article. But there's a little problem...

We've been here before, many times, on The Oil Drum. Rather than reading a zillion Drumbeat comment threads, though, read Vaclav Smil's more recent work, particularly the stuff about energy transitions. (Smil is an expert on energy in all its forms, and derided around here as a peak oil sceptic, which makes what he has to say about energy transitions more important. He's another guy like Maxwell.)

Smil points out that major energy transitions in the past have taken forty to fifty years from the time that the new energy source reaches one percent of global supply. Our best hope is wind -- all the other "new technologies" are negligible in terms of current contribution.

Wind power is less than five percent of global electricity supply, and electricity is about 16% of total energy. Great, we're nearly up to the one percent starting line.

But here's the thing: we don't have forty or fifty years of stable fossil fuel supply. Until you can show us how and why this energy transition will be five times as quick as previous ones, we'll remain sceptical.

Smil doesn't think that Peak Oil will force a faster pace.

Previous energy transitions were voluntary, so they were slow.

Sadly, we have so much coal that we could convert away from it slowly, just as Smil thinks. I hope he's wrong...

No we don't. If we start converting coal to liquids it will last maybe forty years. The predictions that coal would last for two hundred years were made in the seventies using flawed data, and the reserves have been marked well down worldwide since then. Coal may well peak very soon after oil if extraction ramps up. I'm afraid there are just too many people, but we'll take care of that in the usual ways I'm afraid.

Actually, we do.

1st, large scale CTL is unlikely, especially outside China - EVs are much more cost effective, assuming any kind of cost premium for CO2. CTL is very large-scale, so it's risky to investors, and investors are very sensitive to the possibility of CO2 regulation.

2nd, those reserve markdowns were done on the basis of reduced demand, not reduced supply. The US, Australia, and other places have enormous coal resources. Also, don't forget that we can burn a lot of things, include "shale oil" - shale oil is a very questionable resource for liquid fuels, but it burns just fine, and we have a lot of it.

Nick the US Geological Survey updated their official USA coal reserves over the last 3 years and the results were very negative, i.e. US coal reserves are nothing close to what the general public was told just 5 years ago. The US has essentially depleted its anthracite coal, and is now exploiting the low-sulphur Powder River basin coal as fast as possible. Mountain-top removal of lignite in the Apallachian region would basically level the whole region, literally, if it were all to be mined. I expect it will be stopped long before this process is applied at every possible site.

Look at Illinois Basin reserves.

Further, I agree that we're likely to further restrict coal mining and consumption, as you discuss for the Apalachians. Nevertheless, the coal is there, and it will be used if necessary to keep the lights from going out.

I wonder Nick. I used to think we'd burn everything. We'd even be pulling up the streets to burn the asphalt.

I'm not so sure anymore.

If we have a economic crisis like Stoneleigh predicts then that's all going to be left in the ground. Sort of like all that oil the USSR left in the ground after their crisis in 1992.

The thing is, Stoneleigh's predictions are based on the idea that falling oil production will force the economy to contract, and that's unrealistic.

IOW, her ideas aren't separate from energy, they're based on energy. If her pessimistic energy assumptions are incorrect, then so are her predictions.

And, in fact, we're already seeing falsification of her predictions. For instance, that a post-2008 crash of oil prices & international shipping would be sustained. Similarly, she said the Dow would crash in 2009, and reach 1,000 in 2010: the US stock market was up in the fourth quarter of 2009, and as of now it's up for the year. She predicted sharp, dramatic price deflation - as of July 2010 all measures of prices showed growth.

Here's a prediction from November 2008: "We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance." http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-20... . That was 22 months ago...

The thing is, Stoneleigh's predictions are based on the idea that falling oil production will force the economy to contract, and that's unrealistic.

I think you are unfairly representing Stoneleigh's writings here. She has said clearly many times that financial aspects are the leading factor to a crisis, not energy. But energy is important in the overall long term picture.

Again look at Russia. They had lots of energy. But they couldn't tap it due to financial reasons.

It doesn't really matter what causes a financial crisis. Only that a financial crisis can very easily result in lots of energy resources being untapped.

Read aeldric's post from today. Very interesting. I'd like to see you post a response to an article while the author is still responding to comments for a change.

She has said clearly many times that financial aspects are the leading factor to a crisis, not energy. But energy is important in the overall long term picture.

I think that she started at TOD with an assumption of PO caused econ problems, and developed her economic theories from there. I can't find a really coherent explanation summary of her ideas, but her various discussions seem to always lead back to energy as a key element. Certainly she assumes that PO will be a major problem. For instance, a discussion of regional differences betrayed an underlying reliance on assumptions about energy (areas with better domestic existing energy supplies will do much better). Other signs of her fundamentally unrealistic energy assumptions: the idea that suburban housing will crumble, and that oil could and will go to $500 or more.

If energy isn't the key, I really can't see what she thinks will cause deflation and economic collapse. For instance, I can't see any good analysis that shows why the current levels of leverage are inherently unsustainable. Have you found what she thinks will cause deflation and economic collapse?

Again look at Russia. They had lots of energy. But they couldn't tap it due to financial reasons

I have to admit I don't fully understand why Russia collapsed, but as far as I can tell, it was very, very different from the US: it had an economy that was designed around the military and central planning, and they tried a chaotic and very fast transition to private ownership, which is now being partially reversed.

It doesn't really matter what causes a financial crisis. Only that a financial crisis can very easily result in lots of energy resources being untapped.

Well, it helps us evaluate the likelihood, severity and length of such a crisis.

Read aeldric's post from today. Very interesting. I'd like to see you post a response to an article while the author is still responding to comments for a change.

Well, sometimes I do. I don't know why the author would stop responding.

Aeldric's post is interesting (I've read part). The problem: it takes time to read carefully, and I have more than full-time responsibilities elsewhere.

and that oil could and will go to $500 or more

Again, a gross mischaritarization of what she writes. In fact she says exactly the opposite.

I think that she started at TOD with an assumption of PO caused econ problems, and developed her economic theories from there.

Fair enough. But her thinking has evolved. As has mine and as has yours. I can go back 22 months and find writings that are very different from you current thinking. For example you used to believe wind will displace coal. Now you claim we'll burn every last drop. A reasonable evolution, but I don't think that pointing out that inconstancy instantly invalidates everything you write now.

I can't find a really coherent explanation summary of her ideas,

Then you seemed to have deliberately avoided everything she has said or written for the past year or so.

but her various discussions seem to always lead back to energy as a key element

Again not true. But its much easier to dismiss an argument after you've misrepresented it.

I have to admit I don't fully understand why Russia collapsed, but as far as I can tell, it was very, very different from the US:

Besides the point. My point was an economic crisis can very easily lead to a scenario where resources are left in the ground.

which is now being partially reversed.

And they were rescued by western capital. Without that their downward spiral might have been permanent. I do not see any such outside source of wealth to rescue the world at large as we now have a global economy.

that oil could and will go to $500 or more - Again, a gross mischaritarization of what she writes. In fact she says exactly the opposite.

hmmm. I was pretty sure on that. I'll go back and see if I can find it. If you happen to have a link that shows what you're saying, I'd appreciate it.

her thinking has evolved. As has mine and as has yours.

My thinking has evolved, though much of that evolution happened before I started writing about it. I didn't start writing publically until I had done many years of research, and was reasonably confident that my thinking was correct. As a result, it hasn't changed that much lately.

you used to believe wind will displace coal. Now you claim we'll burn every last drop.

Not exactly. I still believe that wind will displace coal. In fact, it looks to me like there's so much coal that we'd have to really suppress the transition away from coal in order to begin to reach it's limits. What I have been saying is that we will use coal to keep the lights out. IOW, we're not in danger of the lights going out. Further, this means that wind and solar are primarily needed to reduce CO2 emissions, a task which I see as urgent.

I can't find a really coherent explanation summary of her ideas, - Then you seemed to have deliberately avoided everything she has said or written for the past year or so.

I've read quite a bit of it. I still can't see the basis, the fundamentals. Is she an Austrian? I can't tell. As best I can tell, she relies on two ideas: 1) diminishing oil btu's won't support a growing economy, and 2) deleveraging will cause massive deflation. If I'm missing something, please tell me.

I have to admit I don't fully understand why Russia collapsed, but as far as I can tell, it was very, very different from the US: - Besides the point. My point was an economic crisis can very easily lead to a scenario where resources are left in the ground.

The questions: is an econ crisis likely, and why? If Russia's collapse was unique, it's not very helpful.

hmmm. I was pretty sure on that. I'll go back and see if I can find it. If you happen to have a link that shows what you're saying, I'd appreciate it.

She's said that in just about every interview I've ever seen/heard her in. Here's her latest for example.
http://theautomaticearth.blogspot.com/2010/09/september-4-2010-jim-pupla...

I've read quite a bit of it. I still can't see the basis, the fundamentals. Is she an Austrian? I can't tell. As best I can tell, she relies on two ideas: 1) diminishing oil btu's won't support a growing economy, and 2) deleveraging will cause massive deflation. If I'm missing something, please tell me.

Here's her latest primer. If that doesn't do it nothing will.
http://theautomaticearth.blogspot.com/2010/07/july-22-2010-big-picture-a...

Here's her latest primer. If that doesn't do it nothing will.

Having not read anything of Stoneleigh's since she left TOD, I was interested to see what her arguments were.

Unfortunately, after skimming the linked primer and reading some of its links in more detail, I'm still interested in seeing what her arguments are; almost everything I read there appeared to be proclamations of what she considered to be The Truth, with very, very little in the way of supporting evidence.

For example, from the first renewable energy link in the primer:

First off: As we are entering a depression[1], within a few years hardly anyone will have the money to buy an EV[2]. Second: the grid could not come close to handling the current transportation load even if EVs could become common[3]. An economy based on EV transportation would have to be fueled by base-load nuclear[4] that doesn't currently exist and would take decades to build[5], and no one builds anything in a depression[6].

I've marked the six bold assertions she makes in that paragraph, none of which are given supporting evidence, supporting arguments, or supporting links. How is that supposed to be convincing?

Moreover, it's very arguable that some of those claims are wrong. For example, claim #3 is directly contradicted by a study from UC Davis, published shortly before Stoneleigh's claims, which concludes:

"If each of the 240 million registered vehicles in the United States charged 5–10 kWh per day, this would require an additional 12–23% electricity generation. However, assuming that most vehicles will charge overnight, the requirements for additional generation capacity would most likely be much lower."

Given the lack of evidence she provides to support her claims and the ease with which strong contradictory evidence can be found, it's unfortunately necessary to conclude that Stoneleigh is not a reliable source.

Pitt, its a primer not a peer reviewed journal article. Give me a break.

But just to back her claims up quickly, to show ease at which strong supporting evidence can be found.

http://www.thestar.com/business/article/855406--electric-car-upswing-wou...
Anthony Haines, chief executive of Toronto Hydro, says the grid can't handle it. Argue with him.

“If you connect about 10 per cent of the homes on any given street with an electric car, the electricity system fails,” Haines told an audience at Ryerson University Wednesday. “It basically can’t handle that load.”

No, that's a superficial article talking about a minor, narrow problem: what if we don't plan for EVs at all, and we have everyone fast charging simultaneously.

Just a little bit of planning will prevent that problem. The average car is driven 40 miles per day, which would require 10 kWhs. That's only 1kW over 10 hours, which is really no big deal.

The truth is somewhere in the middle.
EV's will not bring the grid to its knees, but nor are they ignorable.

There is more than one Grid limit: one is Peak power in Transmission, and the other is the area under the curve, the kWh.

You can manage Peak power drain, relatively easily - a charger design could easily lower EV charge when the Electric Oven is on, or the Kettle, or (etc)

You can also add tariff rates, to shift even more to the lowest times (most spare), but you DO need to plan to build the extra GWh that the added area under the curve represents.

No one wll be able to afford an EV during a depression, so it's a moot point. By the time the depression is ending, the grid infrastructure will have degraded significantly from lack of investment and lack of maintenance. Grids are one of the most complex manifestations of our hyper-complex society, and therefore one of the most vulnerable.

Pitt, its a primer not a peer reviewed journal article. Give me a break.

That wasn't a quote from the primer, it was a quote from one of the linked articles. She provides no evidence of her claims, and available evidence suggests she's wrong on at least some of them.

The rational course of action would be to question her accuracy, not to feel threatened and get emotional in her defense.

Anthony Haines, chief executive of Toronto Hydro, says the grid can't handle it. Argue with him.

"Some guy said there's a problem (while doing PR for his business's work on that very problem)" does not constitute "strong evidence", and does not even remotely counter-balance the findings of quantitative, peer-reviewed studies.

Moreover, he's pretty obviously wrong, as a little simple math shows:

If one in ten households bought a plug in vehicle as suggested by Mr. Haines, additional demand on the grid would only be 1.3% - hardly a crisis.

Ignore the rhetoric; focus on the numbers.

Oh yes. A chief executive of Toronto Hydro must be just "some guy". After all what incentive must he have to sell electricity to the public.

In fact he's presenting a very reasonable scenario where just a small percentage of the public wants to charge their EV when they get home from work. And it turns out it doesn't take much to overwhelm the grid.

But you present some sort of fantasy land where the entire public acts as perfect consumers and only charges their EVs when the grid can absolutely spare the capacity.

As a rational adult I'll choose the former as more probable then the latter.

But what the hell Pitt, lets cut to the chase. Here's how just about every discussion with you will pan out.

Pitt's source is 100% credible and trustworthy
Anybody else's source is full of crap and must be dismissed immediately.

You make Nick look open minded.

Good night.

Pitt, I have worked in power systems for many years. Our family business is in power systems engineering and grid connections for renewable energy. I was involved in negotiating the feed-in tariff regime with the Ontario Power Authority, and have been invited by Hydro One to participate in working groups on technical issues in grid connections. I have regularly conducted grid connection policy workshops, and have been asked to brief visiting dignitaries on grid issues prior to their public appearances. This is a field I am very familiar with.

Stoneleigh,

Terribly sorry for your recent loss.

I know all too well what it's like. A hole in the heart that never gets re-filled.

_____________________________________
On the Drum side:

That was an awesome Interview you did with Max Keiser (starts about halfway into the video):

http://theautomaticearth.blogspot.com/2010/09/september-16-2010-max-keis...

Thank you. The good wishes of so many people from all over the world has been truly heartwarming.

I have worked in power systems for many years.

Then it should be easy for you to provide strong, quantitative evidence to support your claims, no?

For an objective reader, arguments are judged on their content, not on their source.

She's said that in just about every interview I've ever seen/heard her in

I don't see what you're referring to. Yes, she talks about oil prices collapsing (which, of course, they show absolutely no signs of doing). What I'm talking about was longer-range.

Now, this interview does seem to offer a clear insight into her thinking: she thinks the economy will collapse because of energy scarcity:

"It's insanely complex! All of these systems have been driven up by, well, energy subsidies, for one thing, we've had the largest energy subsidy in the history of the world, with fossil fuels, over decades and decades. Plus we've had this constant pressure to increase the money supply. So money has got further and further removed from any kind of underlying real wealth, there's this creation of excess claims to underlying real wealth, which is what I would argue is the setup for deflation as those claims are actually extinguished. But, it's a combination of energy and credit that have driven the situation on the way up and absolutely we have an unbelievable, unprecedented level of socioeconomic complexity."

Isnt' that clear? She says "energy subsidies" have provided the basis for a credit bubble, which will now collapse because of the end of the energy subsidy.

So, energy is at the base of her thinking.

No, energy subsidies caused the bubble. But the crash won't be a result of lack of energy. The crash will result from excess claims on underlying real wealth. There will be a glut of energy.

Isn't that clear?

Isn't that clear?

I understand what you and the Stone are saying, but strongly doubt many others do.

There is just too much heavily-coded language in delivery of the message.

Most people do not understand that "money" is a promise directed to "wealth", where the wealth may not yet exist and may never come into existence (due to lackluster "growth").

A simpler way of understanding it is this:

What if they promised you a next Christmas and it couldn't come?

No, it really isn't. The phrase "excess claims on underlying real wealth" implies a ratio of claims:wealth.

Are there too many claims? How do we know? In other words, what's the standard of "too many"? Elsewhere I've seen historical charts of credit as a ratio to GDP, and pyramids of different kinds of debt. But, this seems to be a kind of handwaving argument: "boy, that looks big!". What's the objective standard that says this is too high?

Or, is underlying wealth too small? As best I can tell she's saying that we're finding out that underlying wealth is too small (or won't grow as expected) due to energy limits, therefore there are too many claims.

Nick, your intentional ignorance is tiring.

Take some time, read what she writes. You'll figure it out if you want to.

Rethin,

I've tried. There's a lot of discussion, but very little explanation of how it was developed and tested. I don't see many numbers or sources.

If you feel you understand what she's saying, then you can explain it briefly.

No, I'm not going to explain it briefly. She has written about it extensively.

And I do not believe for one instance you've tried very hard to understand what she writes and talks about. For instance you keep insisting that Stoneleigh believes lack of energy is the root cause of the upcoming economic crisis. When she has written very clearly the exact opposite. You insist she writes the price of oil will go to $500 when yet again she makes the exact opposite case.

I guess its easier to dismiss her work this way. But it makes any sort of discussion with you beyond tiring.

Forget about it.

There are far too many numbers in this world that are not worth the paper they're written on. I build logical models grounded in historical evidence.

You claimed up thread that I over-estimated the 2008 crash. I did not. I told our readership in March 2008 not to panic now because there would be a rally that would last at least 6 months. If you read what I write then you would know that. If you do not read what I write then how can you criticize it?

Rallies are part of endogenous market dynamics. The crash from 2007 has barely begun. The rally was merely an interruption that we told our readers would happen. We are now moving into phase 2 of the credit crunch. Most people have no idea of the impact that will have. Thankfully our readers do.

I have a reputation for patience, but I have little patience with people who persistently miscontrue what I have written and misrepresent my position.

There are far too many numbers in this world that are not worth the paper they're written on.

Sure, but someone saying "ignore the numbers, just listen to me!" is an enormous red flag for skepticism.

If an argument about a technical and quantitative subject has no technical and quantitative evidence, the reader has to wonder why not, and whether that's because the argument is technically and quantitatively flawed.

I build logical models grounded in historical evidence.

Drawing inferences from history is using inductive logic:

"An inductive logic is a system of reasoning that extends deductive logic to less-than-certain inferences. In a valid deductive argument the premises logically entail the conclusion, where such entailment means that the truth of the premises provides a guarantee of the truth of the conclusion. Similarly, in a good inductive argument the premises should provide some degree of support for the conclusion, where such support means that the truth of the premises indicates with some degree of strength that the conclusion is true."

A worthwhile inductive argument has to fulfill the Criterion of Adequacy:

"As evidence accumulates, the degree to which the collection of true evidence statements comes to support a hypothesis, as measured by the logic, should tend to indicate that false hypotheses are probably false and that true hypotheses are probably true."

Accordingly, the strength of your supporting evidence is of crucial importance to the value of your model. If there is substantial evidence which disagrees with your model, then the model's value falls accordingly.

Models need to be grounded in evidence; that's the core of the scientific method. Missing that key step is what gave us centuries of using Earth/Air/Water/Fire as a model for the universe - elegant and logical system, but factually wrong, and hence basically useless.

In the end, any practical value comes down to the evidence.

There's a lot of discussion, but very little explanation ... I don't see numbers

Nick let's say I have a 10 acre farm (there's a number for you).

Let's say I want to lay down some irrigation pipes around the perimeter (C=2*pi*R).

Let's say I hire you and you agree to dig the trenches for me.
When you finish, I give $1000.45 in cash money; the amount we agreed to.

After you leave, I look at the ditches and I'm dissatisfied.
I hire Hector to widen the ditches and when he is finished, I give him $1000.23 in the form of a check.

The day after, I'm still not happy.

I hire Stephen Colbert to add some ditch extensions and when he is finished, I give him my credit card which swipes through his mobile machine for the amount of $1000.67 --the "number" we had verbally agreed to.

The next evening you are sitting at home staring at the $1000.45 in cash money I gave you.

"What does this mean?" you ask yourself --cause you're a reflective kind of guy.

"When step-back gave me this cash, he stepped back and washed his hands of any further obligation," you realize.

"Step-Back doesn't owe me any specific thing. Instead it is society in general that owes me fair "value" on this $1000.45 cash I have in hand, where "fair" means sufficient "wealth" to balance out for all the work I did in digging those damn ditches."

Strangely enough, Hector is sitting at home thinking the same thing about his $1000.23.

And so is Stephen about his $1000.67.

Oh but I forgot to tell you one thing:
I don't "work" for the money stuff I give you. My uncle, Bernie Madoff just gives it to me cause I'm such a good nephew and he seems to have endless amounts of this "money" stuff; just like another uncle friend of his, Uncle Sam. But never mind about that. A Jedi dude just walked by and waved his Men in Black flashy thingy.

So there it is.
Let's tally up the "numbers":

You: $1000.45
+Hector: $1000.67
+Stephen: $1000.23
sum equals= $3001.35

That is the enumerated "value" that society owes to you guys.
Not me. Don't forget, I washed my hands of it and stepped back once you each got your "money".

It's society that owes this wealth to you.

Now lets' just multiply this game by 100 million times or so and you start seeing the bigger picture.(Substitute some hedge fund managers and other Wall Street types in place of just little ole me and my uncle, Bernie as the sources of this "money" stuff.)

How is society going to make good on all the wealth it owes to you and everybody else?

Uhmmm...you're just pulling my leg* about this being an explanation for Stoneleigh's economic model, right?

Just in case you're not, let me point out some of what's missing.

1st, these aren't investment debts, these are just accounts payable.
2nd, you do indeed owe them.
3rd, it's likely that they add up to much less than the land on which they might be a claim (mechanic's lien?) - where can we buy land for as little as $300 per acre? These guys could sue you, force liquidation, and get their money.

*for international readers - this means playing a friendly joke

Please link down into here for reply

(My reply is in a wider, original Post Comment Box below so that we don't get squeezed into tiny tiny sub-sub-thread boxes)

falling oil production will force the economy to contract

I think you got that one backwards.

She was trying to say that a rapidly contracting economy can cause oil prices to collapse and collapsed oil price can then cause oil production to collapse.

It's a matter of rate of contraction versus rate of price collapse.
Suppose that no matter how low oil goes, the American worker (unemployed) is yet too poor to afford it and is getting poorer by the minute which is why he can't buy and why prices keep collapsing.

To be fair, it's not a linear causation chain, it's a loop.

Expansion breeds expansion, and contraction breeds contraction both directions, so other factors (like geology or fast flowing money) have to come into play to determine the current trend.

She was trying to say that a rapidly contracting economy can cause oil prices to collapse and collapsed oil price can then cause oil production to collapse.

Yes. The question is, why does she think that we're in a massive, continuing, inevitable deflation (all current evidence to the contrary)?

Nick, I would like to point out that you have persistently mischaractrized my work here, as others have said. If you are at all interested in my actual worldview I would direct you to the TAE primer guide. It contains a number of pieces on energy issues. One of public presentations (90 minutes on energy, finance and the interactions between them) will also be available online very shortly through TAE.

I would like to point out that you have persistently mischaractrized my work here, as others have said.

You have said previously:

"The interface between finance and energy will prove to be the most important determinant of the way the Greater Depression we are rapidly moving toward will play out in practice. For those here who may be unaware of peak oil, the point is that global oil production appears to have reached a production peak that it will not be physically possible to exceed. ...Energy is the master resource without which no activity, economic or otherwise, is possible."

It appears that energy (mostly, the idea that a lack of oil is a fundamental barrier to economic growth) is basic to your theory.

Now, is it possible to screw up the financial system? Sure. But, ultimately it's a social and symbolic system, and it can be fixed. I suspect that this is not as hard as you argue, though I'm still trying to figure out your economic theories.

The more important question is the underlying physics: are we facing basic physical limits to growth? The answer to that is clearly no.

You are incoreect in your assumption as to my basic argument.

A large energy surplus is not required for a financial bubble, given that bubbles have occured from time immemorial. However, when a large energy subsidy is present, the odds of a bubble will increase as energy is a major driver of increasing socioeconomic complexity, and finance is one of its most complex manifestations. Energy is a driver of expansion, but it is not a lack of energy the drives contraction. If it was, we would never have had a Great depression when the Us had plenty of oil and resources (just no money).

Finance is the key driver to the downside, as the timeframe is much shorter than for changes in energy supply. Read my primer on Ponzi dynamics, and the various pieces on deflation. The model is simple enough that I have no trouble explaining it to high school students. Excess claims to underlying real wealth are what credit expansion creates. we are playing a giant game of musical chairs, but there are 100 people (or so) for every chair. When the music stops there will be chaos.

The next few years will be remembered as a time of financial crisis. It will be money in short supply, not energy (since demand will fall off a cliff due to lack of purchasing power). The financial crisis first buys us time in energy terms, but then aggravates an energy crisis due to lack of investment and maintenance. When the economy tries to recover, it will hit a hard energy ceiling at a much lower level.

I would appreciate it if you would read my work before citing it. You claim several times that I have made arguments completely contrary to those I have actually made. I also do not appreciate being called inconsistent, as you said up-thread. Almost no one has been more consistent in their view throughout this crisis than I have. Look back at what I wrote here in 2005/2006. I told people there would be a credit crunch, and what that meant. I told them in 2008 that oil prices were about to fall off a cliff, and explained why. My position has been solid, consistent, well-developed theoretically, historically-grounded and evidence-based for years. There are very few people who can say the same.

You clearly do not understand finance, specifically the role of credit and the impact of its disappearance. Nor do you appear to understand physical limts, which are very real. As these factors are citical, I suggest that you have some research to do.

A large energy surplus is not required for a financial bubble, given that bubbles have occured from time immemorial. However, when a large energy subsidy is present, the odds of a bubble will increase as energy is a major driver of increasing socioeconomic complexity, and finance is one of its most complex manifestations. Energy is a driver of expansion, but it is not a lack of energy the drives contraction. If it was, we would never have had a Great depression when the Us had plenty of oil and resources (just no money).

All of that makes sense.

we are playing a giant game of musical chairs, but there are 100 people (or so) for every chair.

This is one spot where I have trouble. I see no basis for the "100" number. Counter-arguments I see: derivatives are typically owed many times between the same parties: one has to find the net debts, instead of the gross; I see national pension systems (such as Social Security) included in these claims, whent these are clearly not legal claims, but benefits that can and will be reduced, primarily through older retirement ages; national debts are mostly (not all) owed to their citizens; the size of debt depends on interest rates, which can and are going to zero (or below, with inflation).

So, how is the 100 arrived at?

When the economy tries to recover, it will hit a hard energy ceiling at a much lower level.

Well, we're starting to get back to energy, and I have to point out that a transition away from oil is already starting, and that we have way too much coal for our own good. Yes, limits on oil supply create a drag on economies, but the ceiling is anything but hard.

You claim several times that I have made arguments completely contrary to those I have actually made.

Well, the $500 price of oil is the only thing I can't find easily. I can see why you don't remember it: IIRC, it was a bit of a throw away reference in one of your discussion.

I also do not appreciate being called inconsistent, as you said up-thread.

I don't think I meant to say that anywhere.

Look back at what I wrote here in 2005/2006. I told people there would be a credit crunch, and what that meant.

And you were right, no question.

I told them in 2008 that oil prices were about to fall off a cliff, and explained why.

And, that was incorrect. You said that a post-2008 crash of oil prices & international shipping would be sustained. It has not been.

specifically the role of credit and the impact of its disappearance.

Oh, I understand just how critical it is. I'm just not clear on why you believe that it will collapse.

Nor do you appear to understand physical limts, which are very real.

Ah, and now we're back to energy, which I understand extremely well. As I suspect these proposed limits underpin your thinking, directly and indirectly, this is a key part of the discussion.

Let me state it quickly: we can and should transition from oil and FF to non-FF energy sources. Wind, solar, nuclear will power our economy in the long-run, large supplies of coal and NG will do so in the short and medium-term (for better or worse). PO will cause real problems, and of course if a transitional period is mismanaged we'll face real risks of major financial volatility, but neither financiel collapse nor the end of economic growth are inevitable.

The 100:1 figure is not meant to be exact. No one can provide an exact figure as we do not know thew true extent o fcredit expansion, given that so much of it occured in derivatives and the shadow banking system. Reality si almost certainly worse than 100:1 in terms of claims compared to actual underlying real wealth.

To what extent do you follow the net energy (EROEI) argument? It is quite clear that the decline in net energy will be very much sharper than gross energy. Most alternatives to oil have very low EROEI, or are not able to be ramped up in anything like the time we have available (or with the limited amount of money we will have available in the very near future).

I told them in 2008 that oil prices were about to fall off a cliff, and explained why.

And, that was incorrect. You said that a post-2008 crash of oil prices & international shipping would be sustained. It has not been.

How many other people were calling for a huge fall in oil prices when oil was $147/barrel? I never said prices would move in one direction all the time. In fact I have always pointed out that markets never move only in one direction. Those who read my work, as opposed to critique mere snippets of it taken out of context, would know that. We have seen a counter-trend rally, which is now ending. Oil prices will fall again to lower than before, along with most other prices in a deflation. Lower prices won't equal affordability though, as purchasing power will fall faster than price.

We do not have the time, nor will we have the money, for the transition you propose. The productive capacity isn't there and can't be built in time. In addition, EROEI of the alternatives you mention is far too low to replace oil. They could help, if we had more time and money, but they can't solve the problem of having to live with less energy in the long term as oil depletes. Access to energy (for reasons other than lack of money) will only be a problem after the next few years though.

If you think I forget anything I write, you are mistaken. $500/barel comes from the essay 40 Ways to Lose Your Future. That is my longer term forecast (5+ years). In the shorter term I have said we could see $20/barrel. Financial crisis will aggravate existing cycles of boom and bust. Prices will see huge volatility (whipsaw all over the map), which will make investment planning almost impossible.

No one can provide an exact figure as we do not know thew true extent o fcredit expansion, given that so much of it occured in derivatives and the shadow banking system.

That makes sense.

Reality si almost certainly worse than 100:1 in terms of claims compared to actual underlying real wealth.

That doesn't make sense, but you've given us no information. We need numbers of some sort. Remember, extraordinary claims require extraordinary evidence. Anybody can say anything, without information behind it.

To what extent do you follow the net energy (EROEI) argument?

I follow it extremely well. It only applies to biofuels.

It is quite clear that the decline in net energy will be very much sharper than gross energy. Most alternatives to oil have very low EROEI, or are not able to be ramped up in anything like the time we have available (or with the limited amount of money we will have available in the very near future).

I'm afraid you're thinking in terms of biofuels. I think they have their place (especially because E-ROI doesn't really apply to something which uses plentiful energy inputs (nat gas, coal) to produce something which is relatively scarce. OTOH, they're not especially scalable: EVs and EREVs are the main action. They'll be powered either by plentiful coal (sadly) and NG, or by very high E-ROI wind.

Now, is it fair to say that your projections for the medium-term (5 years plus) are heavily influenced by your judgement that energy will be increasingly scarce?

How many other people were calling for a huge fall in oil prices when oil was $147/barrel?

I was calling for a substantial drop. Richard Rainwater was too. Both of us were doing so based not on a bank panic, but on the market and government responses we were seeing to high oil prices. As it happened, the bank panic probably had a bigger impact in the nearterm, but those prices were unsustainable in the longer term (kind've like the early 80's silver bubble).

I never said prices would move in one direction all the time.

You called for a temporary stock market rally, not a oil price rally. You predicted a sustained crash for oil prices and international shipping, neither of which happened. You expected sharp, dramatic price deflation - as of September 2010 all measures of prices showed growth.

Here's a prediction from November 2008: "We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance." http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-20... . That was 22 months ago. You predicted the Dow at 1,000 by the end of 2010.

We do not have the time, nor will we have the money, for the transition you propose. The productive capacity isn't there and can't be built in time.

It's not hard to add additional tracks to accomodate a shift from trucking to rail. Converting to EV production isn't that big a deal: the GM assembly line that produces the Volt also produces two other ICE vehicles. That tells us both that there isn't that much difference in manufacturing methods between the two types of vehicle, and that GM can ramp up Volt production volumes quite quickly.

EROEI of the alternatives you mention is far too low to replace oil.

Again, you're showing an excessive emphasis on biofuels. EVs can be powered by our abundant supplies of coal (and NG) if necessary (let's hope it isn't), and wind has very high E-ROI.

they can't solve the problem of having to live with less energy in the long term as oil depletes. ...after the next few years

They can, quite easily. This is where your model becomes detached from physical reality. We have quite a lot of coal (far more than is good for us), and we have abundant, cheap, high E-ROI, scalable wind power. We also have solar and nuclear, which are both quite workable, even if not quite as cheap and fast as wind.

$500/barel comes from the essay 40 Ways to Lose Your Future. That is my longer term forecast (5+ years).

Ah. Well, that's highly unrealistic. Yes, it could happen for a very few weeks or even months because of a serious supply shock, like war in the Persian Gulf, but it could never be sustained: there are too many alternatives which are much cheaper.

EROEI does NOT apply only to biofuels. It applies to all energy sources. Anything with an EROEI of less than one (like ethanol or hydrogen) is not an energy source. I do not over-emphasize biofuels. In fact I ignore them as applicable only to a narrow range of niche applications. They have an EROEI so low as to preclude running society on them. I have made this position very clear over the years.

You called for a temporary stock market rally, not a oil price rally. You predicted a sustained crash for oil prices and international shipping, neither of which happened. You expected sharp, dramatic price deflation - as of September 2010 all measures of prices showed growth.

Here's a prediction from November 2008: "We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance." http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-20... . That was 22 months ago. You predicted the Dow at 1,000 by the end of 2010.

I called for a resurgence of confidence, and therefore liquidity - a rising tide that floats all boats, including commodity prices. Confidence IS liquidity.

The short rally prediction did play out as a couple of months sideways move as I said it would. The markets then fell into the March 2009 low. The larger rally happened then, as I said it would. I said it would last at least 6 months. It actually lasted 13 months, and topped at the end of April 2010. We are now on the way down again (although we are at the top of a smaller rally within a larger decline).

It will take longer than I initially thought to reach DJIA 1000, but we are going there. The great deleveraging should take perhaps 5 years.

$500 a barrel is possibile when we see a resource grab that takes most of the available oil off the open market, ending fungibility. Oil is liquid hegemonic power. At some point we will see very little oil on the market, and what there is will be incredibly expensive. Ordinary people will be priced out the market entirely at that point. Alternatives, to the extent that they exist at the end of a crippling depresson, will not be cheap, given what depression will do to energy infrastructure.

EROEI does NOT apply only to biofuels. It applies to all energy sources.

Of course - I meant that E-ROI only applies as a practical matter to things that have a low E-ROI, like biofuels.

-------------------------------

I called for a resurgence of confidence, and therefore liquidity - a rising tide that floats all boats, including commodity prices. Confidence IS liquidity.

I can't anyplace that you clarified that oil prices and international shipping would recover quickly. Here's some quotes:

In June of 2008 at the peak of oil prices, and just before a sharp decline:

"But, in a statement alongside its decision, the US central bank missed an opportunity to show how seriously it takes inflation by conveying that inflationary expectations are flat, and oil prices could soon tumble. Both assumptions look badly wrong." http://theautomaticearth.blogspot.com/2008_06_01_archive.html

That day's posting had several 3rd party predictions of imminent $170-200 oil, and one about the possibility of an oil-shock induced price fall, but the above appears to be written by the blog authors.

"Also in the real world, trade itself is increasingly in danger. "The Baltic Dry shipping index, a proxy for world trade flows, suffered its second biggest-ever fall yesterday, to 11%, which took it down under the $2,000 mark and it fell another 8% today to $1,809. The drop means it has fallen more than 80% since July's peak of around $12,000 and is now at a three-year low." Translation: there will be a lot less goods on the shelves in your neighborhood stores, and a lot less raw materials to process in your factories."

http://theautomaticearth.blogspot.com/2008/10/debt-rattle-october-15-200...

"We are seeing the beginning of a global demand collapse, as the credit crunch takes an ever increasing toll on global economic activity and international trade. Already we are seeing the dire effects on shipping in the Baltic Dry index, thanks to the difficulty in obtaining letters of credit for shipments. Consumers in developed countries are tapped out and trying to repair their tattered balance sheets by cutting back, as are companies and banks. Consumption is therefore falling, which will hit exporting economies very hard indeed. They have spent vast sums, and used huge amounts of raw materials, to build what will now be shown to be an enormous excess of productive capacity. Their demand for raw materials will not recover any time soon, as there will be no demand for their products for a very long time. "

http://theautomaticearth.blogspot.com/2008/12/debt-rattle-december-7-200...

--------------------------------------------

...March 2009 low. The larger rally happened then, as I said it would. I said it would last at least 6 months.

Could you point me to the blog entry where you said that?

Oil prices will fall again to lower than before, along with most other prices in a deflation. Lower prices won't equal affordability though, as purchasing power will fall faster than price.

We do not have the time, nor will we have the money, for the transition you propose. The productive capacity isn't there and can't be built in time.

Can't be built by whom ?
Seems to be, different areas of the globe, have VERY different abilities to 'get things done'... - so any broad claims like that, need context.

If you think I forget anything I write, you are mistaken. $500/barel comes from the essay 40 Ways to Lose Your Future. That is my longer term forecast (5+ years). In the shorter term I have said we could see $20/barrel.

Wow, that's what I call covering ALL the bases. Down AND Up.

I'm puzzled tho, if your near-term driver for a price decline is 'we don't have the money', how is that going to magically flip, to produce $500 oil, in a very short time frame ?

If we guess it takes 1 year to get to your forecast $20, that's 4 years left to climb to $500, which is inflating 223% every year.

Such wild variations will make investments impossible.

I'm puzzled tho, if your near-term driver for a price decline is 'we don't have the money', how is that going to magically flip, to produce $500 oil, in a very short time frame?

A demand collapse sets up a supply collapse due to lack of investment, and the perception of scarcity then drives a resource grap that takes most production off the global market. The market price for the remaining oil then does a moonshot.

Such wild variations will make investments impossible.

Indeed. I expect far more production to end up in state hands. The investment risk will be far too high for private capital, especially in a very capital-constrained environment.

A demand collapse sets up a supply collapse due to lack of investment, and the perception of scarcity then drives a resource grap that takes most production off the global market. The market price for the remaining oil then does a moonshot.

Perhaps, but you seem to be missing the area under the curve.
If demand really collapses, then you buy a LOT more tail, and again you miss regional contexts in these claims.
In many countries, demand is already falling, and doing so without collapse, whilst others have very upward paths, again without collapse.

Indeed. I expect far more production to end up in state hands. The investment risk will be far too high for private capital, especially in a very capital-constrained environment

Here we can agree, if we really do see your forecast wild variations of $20 to $500, it is clear 'the market' has totally lost control, and it only takes the stroke of a pen to nationalise any industry.
Some governments will do this far better than others.

The next few years will be remembered as a time of financial crisis. It will be money in short supply, not energy (since demand will fall off a cliff due to lack of purchasing power). The financial crisis first buys us time in energy terms, but then aggravates an energy crisis due to lack of investment and maintenance. When the economy tries to recover, it will hit a hard energy ceiling at a much lower level.

I've no idea whether you were wrong before, but you are wrong now. In a few years, we can point back and say you were. I don't know what good that'll do us, but anyways.

On what grounds am I wrong? You sound so confident, yet you provide no substantive critique. If you think the 'recession' is over then you are very much mistaken. If you think renewables can make a difference in the time available, and with the money available, then I disgaree as well.

Sure, the US can make a double dip, and world growth can be a bit sluggish, but that's still insignificant in the greater whole. GDPs will eventually return to trend-lines, just as they always do. We won't see anything like the Great Recession, simply because governments have a better understanding of economy today.

Renewable liquids aren't necessary. We have deep water oil, oil sands, CTL, a natgas glut, Iraqi oil and so on. If we need to keep up liquids production, we will. And North America has a helluva lot of savings potential. And regarding coal and natgas use, the world has nuclear and wind ramping fast now.

Just wait a couple of years and see where we're going. The 'great recession' was merely the opening act of a huge ponzi finance collapse. We're going to see worse than the Great Depression of the 1930s. Excuse me while I laugh about the idea of us having a better understanding of economies today. Governments are if anything even more clueless than they used to be. They labour under the mechanistic monetarist model that completely fails to describe reality.

We cannot ramp alternatives fast enough. We have maybe 2 years, if we are lucky. And most alternatives have a very low EROEI. Nuclear has it's own huge pitfalls. I used to be a nuclear safety researcher at Oxford. Nuclear power and social upheaval are not compatible.

Governments...labour under the mechanistic monetarist model

How would you classify describe your economic theories or intellectual influences? Would they be close to anything here: http://en.wikipedia.org/wiki/Heterodox_economics ?

most alternatives have a very low EROEI.

Would you agree that wind has a high E-ROI?

Governments are if anything even more clueless than they used to be. They labour under the mechanistic monetarist model that completely fails to describe reality.

Stoneleigh,

With due respect,

Neither Nick nor Obama understands the code-speak you are engaging in.

Yes, I kind of get it about what "mechanistic monetarist model" might mean to you (although I can never be sure).

But trust me.

Nick has not a clue.

(Although I believe he is honestly struggling to understand.)

This is because Nick has no idea of what "money" is.

And neither do most people, including most TOD readers.

I try to explain it to Nick here.

Whether I made a dent, I don't know.

Even if Nick doesn't yet get it, maybe some other TOD lurkers will.

What has happened, Stoneleigh, is that you have become so advanced and complexified in your understanding of the finance/money scheme that you can no longer talk in very simple, pedestrian language.

Talking pedestrian is hard to do.

Probably most of us TOD freaks cannot talk pedestrian when it comes to Peak Oil. We might mutter something like "Hubbert Curve" with a casual assumption that surely "everybody" has at least heard of that simple minded concept. We are stone cold wrong. They have not. And we sound like whack jobs from a far off alien planet.

As I said below:

Yes, I understand that money is a symbolic thing, that has to be supported by society's productive capabilities. That's pretty basic.

So, you're suggesting that Stoneleigh's thesis is that we'll face a decline in the value of money (aka inflation) because of a decline of society's productive capabilities? Perhaps because of PO?

That is not my thesis. We are facing deflation, not inflation. We are looking at first the collapse of credit (which is now in excess of 95% of the effective money supply), then the loss of income from from employment as unemployment skyrockets. We can expect an asset price collapse (with undershoot to pre-maia levels) and the loss of savings due to a systemic banking crisis. When there is very little money around, what there is will be worth a lot. That is the effect of deflation (ie the extinguishing of excess claims to underlying real wealth).

We are facing deflation, not inflation. We are looking at first the collapse of credit (which is now in excess of 95% of the effective money supply), then the loss of income from from employment as unemployment skyrockets. We can expect an asset price collapse (with undershoot to pre-maia levels) and the loss of savings due to a systemic banking crisis. When there is very little money around, what there is will be worth a lot. That is the effect of deflation (ie the extinguishing of excess claims to underlying real wealth).

You are talking USA here, right ?

Whilst one could model such an occurrence, the assumption you've based it on, don't
seem to be playing your game. Sure, credit is harder than it was, but hardly collapsed - more accurately, it is less foolishly easy than it was.

Fundamentals like Household Incomes, also seem to be rising slowly, not collapsing.
Household wealth has declined, but that is paper or virtual money, and much of that was a virtual gain anyway. Only those highly leveraged are exposed here, large numbers have mortgage free homes - that do not show in the foreclosure stats

2006: Real median household income in the United States rose by 1.1 percent between 2004 and 2005, reaching $46,326, according to a report released today by the U.S. Census Bureau
2010: The U.S. Census Bureau announced today that real median household income in the United States in 2009 was $49,777, not statistically different from the 2008 median.

Sure, new Car sales are down, but they are discretionary spends, and people have chosen to make the car they have, 'last another year'.
That's elasticity.

U.S. Highway Vehicle-Miles Traveled underlines this, being essentially flat.

U.S. Rail Freight : Revenue Ton-Miles is also not playing to your thesis :

It's easier to explain in person, which is why I travel and speak to people. Perhaps I'll end up in your neck of the woods one day (ASPO?). If so I'd be happy to chat. The parts of the big picture are all there at TAE, but hard to find these days because there's so much content after two and a half years. I don't have time to rewrite it all here, but the primer guide is a good place to start.

Essentially, monetarists (like Bernanke and most other credentialed economists) assume that an economy is like a machine, and if you pull this lever or push that button a predictable outcome will ensue. They discuss economies as if one could do so independently of people. They also ignore the vital role of credit (human promises) in how expansion and contraction play out in practice.

I see financial markets and economies as swings of human herding behaviour (ie swings of positive feedback in both directions). Markets are irrational - an eternal tug-of-war between greed and fear. It is impossible to understand them without understanding collective human behaviour.

Irrational exuberance leads to the making of vast numbers of promises that cannot be kept (credit/debt), but nevertheless create expectations. Those promises are part of the effective money supply on the way up, but once it becomes obvious they can't be kept, they evaporate, leaving behind shattered expectations. Once people realize how far removed the money supply had become from the scale of the actual underlying real wealth pie, and that there is nothing like enough real wealth to satisfy all the claims upon it, then there will be a real wealth grab. It's like a vast game of musical chairs where there is perhaps one chair for every 100 people. When the music stops, it's going to get ugly.

We're going to see worse than the Great Depression of the 1930s.
Excuse me while I laugh.

I'm not laughing.

You're scaring the s**t out of me.

BTW, I don't claim to have anything near the understanding of how the automatic earth comes together as you do.

I'm just a slow learner here.
Just as many others on TOD are.

I'm struggling to understand.
But it's all coming at me too fast and probably with not enough time to adapt and survive.

If you would like me to come to wherever you are and flesh out the big picture for a group of people, I can do that. That is what I do these days. I'll be traveling round in the US for a month following ASPO. My itinerary is not yet cast in stone, so I should be able to accommodate additions to it. If you are interested, let me know at stoneleightravels(at)gmail(dot)com.

The key ideas are not actually difficult, but it's hard to convey them in short snippets of writing. I paint pictures with spoken words. Give me 90 minutes to explain the problem and what people can do about it and I can do it in a way that high school students can understand. If you'd like to hear an audio-only version try here. There's also a video version with all my slides that will be available within the week at TAE.

The key ideas are not actually difficult, but it's hard to convey them in short snippets of writing.

I always become suspicious when someone says that.

Sigh. I have written about this exhaustively, both here and at TAE over the last 5 years. At this point I prefer to direct people to the primers I wrote for the purpose of not having to repeat myself endlessly, or to the online presentations.

I always become suspicious when ...

If you give it just a few seconds of a listen, you would realize she talks very fast and dumps a lot of info (TMI = too much information) in a very short span of time.

Personally, I prefer visuals

... and maybe you're the same

... or maybe you like a lot of math equations and numbers to delude yourself into believing that such is more "rational"

Whatever your preferred mode of cognition,
I suspect we all "feel" that "money" is real and it affects our life in very real ways.

So when this lady comes around and starts telling us that "it" (and the entire financial house of cards) is all an illusion, we naturally become highly skeptical.

I don't blame you for that.

I get the same queasy feeling

And yet ... what she says, makes sense if you take it one small step at a time
Scary.

Makes one feel as if the hardwood floor underneath has suddenly turned to liquid

Speech is inferior to text when it comes to political arguments. Text is generally more exact and thought-through and is faster to take in. It is also easier to scrutinize in a structured way as it allows you to go back and forth, dwell on important stuff and so on. Also, you have much less of charisma involved when reading text. Sure, speech can be exactly prepared, recorded and transcribed, but anyway.

As long as stoneleigh's speeches are used as teasers for her written primers, I don't think we have a big problem. It was just a reflection that I get wary when people, in political matters, say they find live conversation or speech more "meaningful" as you "understand" one another better. You don't, you just bond socially or get charmed and feel better (or the social opposite), but the intellectual content takes the back room.

The primers came first, and there are many of them. I was writing about these topics for years before I decided to start speaking about them.

Good for you.

I just tried to dig into two of your primers, but I found myself losing patience with both. I would need a much more condensed view of your claims and your supporting arguments. The stuff about German wage inequality and about children's toys, for example, in the pyramid primer, does nothing to further any particular thesis. Have you put up a no-nonsense version somewhere?

You're welcome. Visuals will be available on the video production of the same talk that will be available within days. It's a professionally produced recording of this talk that I did in Rhinecliff NY at the end of April.

In the last month I also did an interview with Jim Puplava at Financial Sense Newshour and one with Max Keiser at the Keiser Report. I'll see if I can dig up the links. The response at FSN was significant enough that they asked me to do a monthly slot. The Keiser Report invited me to Paris for a studio interview after their readers asked them to have me back. The combination of peak oil and finance is powerful. People are waking up to the importance of the big picture.

Nuclear has it's own huge pitfalls. I used to be a nuclear safety researcher at Oxford. Nuclear power and social upheaval are not compatible.

Upheaval of a large degree, is likely to see a rapid move back to coal.
{Smarter countries do not dismantle their coal plants.}

The largest risk exposure would seem to be a squabble over gas, which is rather easy to disrupt.

Emission aspects will quickly move down priority queues, as near-term security of supply will always trump longer term aspirations.

We're going to see worse than the Great Depression of the 1930s. Excuse me while I laugh about the idea of us having a better understanding of economies today. Governments are if anything even more clueless than they used to be.

Well, you know, market volatility has gone back to quite normal levels. This means the current paradigm is overwhelming opposed to you. Very few are betting their money on you being right. But the paradigm may be wrong, of course, although the likelyhood of that is extremely slim. As I'm not familiar with your writings, I wonder if you could tell me who should get the nobel prize for what you claim today, and where I can read about the underlying economic theory?

I'm not familiar with your writings

Jeppen,

Stoneleigh runs The Automatic Earth web site.

Pretty doomerish and scary stuff over there.

Her position (but I'm not a spokes person) is that collapse will come well before the declining edge of Peak Oil arrives. It will come due to collapse of the "financial" house of cards.

Here's a snippet (I couldn't resist) out of today's TAE:

"If the [phony financial] statistics a government [i.e. USA] produces don't reflect a nation’s reality, you'd think that nation would demand different statistics. But in an admittedly kind of funny twist, the government insists the statistics are fine, and therefore there must be something wrong with reality. And voters don't want a gloomy reality either, so things stay as they are. Until they don't."

--[brackets] are mine

Kind of reminds you of "Pravda" (The Truth) that the USSR used to produce before their collapse.

Agreed: I have taken your links and put them in my "Favorites" list and will check periodically for the next month or so ... if you (and possibly your students) will do the same courtesy of spending as much time here.

http://www.usdebtclock.org/

Have a nice day.

NatResDr:
Post and links appreciated.

But again, what about population? Or finance? Or inequality, uncontrolled health care spending, demographics, water, AGW, species extinction, net export decline, two unfunded imperial wars, evolutionary psychology and group dynamics, declining marginal returns on complexity?

My point being is that there is more to being a doomer/declinist than not giving alternative energy its due. In my experience most of the doomers here are pretty well versed in a variety of topics.

So I take exception to your statement that we are unduly pessimistic. I would say we are appropriately pessimistic.

"What the U.S. doesn't realize," said Peggy Liu, founder and chairwoman of the Joint U.S.-China Collaboration on Clean Energy, is that China "is going from manufacturing hub to the clean-tech laboratory of the world."

- and this underlines a large difference, China is now expert at actually DOING.

The stats :

Power     : 102-megawatt 
Price     : $337 million
Size      : 34 turbines @ 3 MW
Started   : September 2008
completed : February 2010
Grid ON   : July 2010 

meanwhile, USA :
When discussing the creation of an Atlantic Offshore Wind Energy Consortium in February, U.S. Interior Secretary Ken Salazar said it currently takes seven to nine years for offshore wind project to receive approval. At this point, Cape Wind is moving into its 10th year of negotiations.

It gets easy to see who will be exporting the finished products...

Shale oil can be produced from in situ injection of high temperature nuclear heat/hydrogen for $40/barrel without CO2 emissions. Using this nuclear extraction process the reserves are underestimated at 2.8 to 3.3 trillion barrels. This exceeds the world's proven conventional oil reserves, estimated at 1.317 trillion barrels as of 1 January 2007.

The largest deposits in the world occur in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming; about 70% of this resource lies on land owned or managed by the United States federal government. Deposits in the United States constitute 62% of world resources; together, the United States, Russia and Brazil account for 86% of the world's resources in terms of shale-oil content.

A few comments to the several of you who were kind enough to reply. Thanks for engaging! I've read most of Smil's books. I stumbled onto Hubbert's work in the 1960s and recognized then that his message was more important than my intended library quest. I knew the theory on population and resources before they were formulated into books such as The Population Bomb and Overshoot, so these were not revelatory. I bookmarked TOD in 2005 and have been reading since then, but only registered to comment when it appeared the Gulf oil spill threads needed more science input.

But here's the thing--the theory has all along predicted things that have not happened, so far at least. In science, when predictions from theory fail repeatedly, we are obligated to get better information and revise our core body of thinking. TOD is not the place for this, unfortunately--too much assuming the future will be like the past, not enough attention to the dynamics of change, not enough forward visioning.

Dividing into optimists and pessimists is a diversion IMO. My students are interested in understanding their prospects and what they should do, and they have to look away from TOD to find inspiration, ideas, and guidance on the latter. "You can't get there from here" may or may not be wrong, but it is certainly a channel-changer.

I'm nonetheless grateful for the strong attention TOD offers for the core understanding of our conditions and for the community of thinkers here. And I'll continue suggesting from time to time that there really may be a way forward.

(Now I'm off to simplify my EnergyQuest lecture to give to honors freshmen. I gave the long version to some wealthy NGO donors a couple weeks ago, and they are not talking to me right now!)

My thoughts exactly.

Is the lecture online?

Yes, the long version (with written lecture notes) as pdf is at
http://snre.ufl.edu/common/humphrey/projects/Humphrey2010EnergyQuest.pdf
Will be revising/adding a few slides in the next few days, as soon as I can get to it.

Very nice slide set. On the page with cost of electricity generation, those appear to be capital costs only, without fuel, operations, etc, which make the non-renewable costs go up (especially gas).

Right, that would give a very different picture. Anyone got the data?

+20

Nice graphics.

Haven't seen these before. Good work.

A bind is clearly coming. We think that the peak in production will actually occur in the period 2015 to 2020.

I'm surprised someone hasn't already jumped on this one. What does he think production has been doing since May 05, or by some people's view late 04?

Also don't get the non-doomer view. Can't see post peak decline working out well at all. Even at a plateau of production the economy has been in the longest recession since WWII.

http://economix.blogs.nytimes.com/2010/09/20/the-recession-has-officiall...

As many economists had expected, this official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months.

Maybe he knows a few things we don't about some decline rates in some giant fields, or maybe he is just putting his toes in the water for now as a businessman gradually trying to shore up his credibility in the face or a coming crunch, or maybe he is simply depending on low demand working to keep the crunch from arriving until his chosen date range.

I AM reminded by history that doomer peak oil predictions have always until now generally been too pessimistic.

Perhaps those of us predicting an early decline are simply wrong once more about the particular year or short span of years involved ?

I'm just pointing this out as a possibility;the case for a present day peak/plateau seems stong to me, speaking as a regular reader of this forum, but I have zero experience in the industry.

The bau guys have mostly been right in thier predictions of good times for my entire life;who am I to say that this guy who does this stuff for his living is wrong?

The one thing that seems certain is that in historical terms, the peak is going to occur soon if indeed it hasn't already.

The bau guys have mostly been right in thier predictions of good times for my entire life

While some of us are not hurting badly now, many are. I consider the BAU guys to be people like Daniel Yergin, Michael Lynch, and CERA in general, for example;

Is it allowed to question parts of your entire conclusion set without being deemed "BAU" or "cornucopian"?

Depends on the day.

I'm a happy doomer, because I know that living conditions in much of the world today make a lot of doomer fantasies seem like a walk in the park. It just doesn't get much worse than Somalia or Darfur.

Yet, I am still a BAU Cornucopian because I think that some areas will continue to advance or hold ground at the expense of others for a good long time to come.

Question away, please. I'd rather hear the truth from others than fruitlessly cling to something else.

"The bau guys have mostly been right in thier predictions of good times for my entire life;who am I to say that this guy who does this stuff for his living is wrong?"

You mean economists. People like these who are now saying they dont have a clue;

http://www.nytimes.com/2010/09/03/business/03commission.html?_r=1&th&emc=th

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/01/AR201009...

...maybe he is simply depending on low demand...

True, oldfarmermac but there isn't any information there to determine how he arrived at those years. I question any time period other than the one for the plateau we have been experiencing since 05, because as the price increased from 05 through July 08 to 147 a barrel, there was every incentive for exporting countries to maximize returns. However, production only increased a small amount as the price hit 147 after years of plateau production. Westexas has posted on that many times and I have to agree.

The economy was humming - China was at double digit growth - construction in the US was raging - car sales were high, so why didn't oil producing countries bring more product to market? Fact is it was the first time they didn't. Why did oil always increase in production when demand increased, except the plateau period from 05 through 08?

If Maxwell knows something that he'd like to share to substantiate those years for his prediction, then by all means he should bring them forward. I'd love to hear about it as I'm sure many others here would as well. The reason he isn't backing it up with data is because he's basically a positive thinker. Peak oil is in the future and when it happens all will be fine because of our fine spirit to always meet challenges. That I've got to see. We just up and act strong and suddenly the whole problem of peak oil is behind us? Ok, sure, gotchya.

Well, I can assure you that the price spike was too fast for Canada to react to by dramatically increasing oil sands production. And those increases were dramatically limited by available labour, a condition which in your scenario shouldn't happen due to all the widespread unemployment caused by the price rises. In the longer term though, Canada could clearly add a few more million bpd from oil sands at a more sedate pace if the market can finance it. If conditions were, as you propose,

The economy was humming - China was at double digit growth - construction in the US was raging - car sales were high, so why didn't oil producing countries bring more product to market?

I propose that what most here are missing is that conditions have changed. New production is now a much longer-term project than it used to be, so the supply market is not able to react anywhere near as fast to demand changes as you are accustomed to. (Heavy oil installations, upgraders, transport; deep-water light oil projects now very long lead times, etc.)

The author may be allowing for same, while you are not.

The key point is that global crude oil production (EIA, C+C) has, so far at least, not exceeded the 2005 annual rate for four years and for 2010 to date. Over this time frame, annual US oil prices have been in excess of the $57 that we saw in 2005, with only 2009 so far showing a year over year decline in oil prices (down to $62).

Of course, one difference between current global crude production and previous conventional peaks, e.g. US Lower 48 and the North Sea, is that there is a slowly rising unconventional component in global crude production.

But in any case, despite a strong price signal, we have seen an ongoing cumulative shortfall in global crude oil production--between what we would have produced at the 2005 rate and what we actually produced. This cumulative shortfall in production in response to a price signal is consistent with what we have seen in post-peak regions like Texas, overall Lower 48 and the North Sea.

I wonder what Daniel Yergin and CERA will have to say when someone like Maxwell confirms peak oil?

Hey guys

Personally I do think Maxwell is putting the peak a few years too late, but as I said, that is my personal opinion;I have no credentials as a businessman or scholar of energy.

By the bau types being right most of the time most of my life I meant about the overall economy and consumption growing;I had never heard of CERA until relatively recently.

Consumption of just about everything has been on an upoward trend all my life, excepting a few short downtrends.

I wouldn't bet the farm on Maxwell being wrong.

But if I had it to spare I would bet some cash he is, and that the peak will come sooner by a good bit if it hasn't indeed already passed.

Personally I do think Maxwell is putting the peak a few years too late, but as I said, that is my personal opinion;I have no credentials as a businessman or scholar of energy

There are many peaks, so trying to claim some magical single point, is rather foolish.
{Might appeal to a sound-bite obsessed media}

For many OECD countries the peak is in the past, whilst China and India, are likely to peak after 2020, so the debate of 'which year' is academic.

More important, is how countries manage the tail, and that will causes relative shifts.

We may yet see Coal, which peaked a while ago everywhere but China, being forced to come in from the cold.
(and I count countries whose exports grew, going to china, as China)

In so far as none of us understands the global economic situation going forward, the timing of events (e.g. a declining world oil supply) is equally uncertain.

Charlie Maxwell is just as much in the dark as the rest of us.

I have predicted another oil price shock in 2012, plus/minus one year, but I'm still waiting to see what's up with China, e.g. when their massive property bubble bursts, what will that do to their oil demand?

If things fall apart in China, there will be no long, sustained spike in oil prices until 2013 at the earliest.

Talking about the timing of a supply peak outside the context of an economic forecast is pointless. For example, if demand were to be 80% of estimated productive capacity for 10 years, we would not see a peak & decline and we wouldn't really know if we had peaked (capacity-wise) or not. And of course any economic forecast could be way off the mark.

Who the hell knows what's going to happen? I hear so much bullshit these days from one direction or another, whether it's about peak oil or trade deficits, deleveraging or Europe's debt crisis. The situation is fluid, complex and therefore scary. The outcome for the U.S. is not good--that much we can be pretty certain of.

I think assigning dates to disastrous future events is a childish game that people like to play. This game is mostly harmless, but the other game--wherein Our Leaders pretend that nothing will go awry--is somewhat more serious.

Hi, Robert. (These are general remarks, and are not a critique of your presentation of Maxwell's views.)

-- Dave

Hi Dave,

I think he is forecasting the peak a bit late, but the important themes were 1). The message that we face a serious problem; 2). The venue in which it was delivered (Forbes); and 3). The person who was delivering the message. Whether one agrees with Maxwell, it is indisputable that he is highly respected by his peers.

Some have clearly latched onto the theme "This lunatic thinks we won't peak for another seven years." But I think that was an insignificant point in the context of the overall message.

Well, yes, I agree with all that.

But considering that the "theme" of this year's ASPO-USA conference is we're all going to die real soon!, I would say this disaster forecasting game is way out of control.

I was not surprised, because if you spend some time looking at peak oil, if you’re a reasonably intelligent person, you see that catastrophic things are going to happen to the world. We’re talking about major damage, major change in our civilization. Chaos, economic disaster, wars, all kinds of things that are, as I say, very complicated, non-linear.

Robert Hirsch

But considering that the "theme" of this year's ASPO-USA conference is we're all going to die real soon!, I would say this disaster forecasting game is way out of control.

Well, I am going to miss out on all of that. I will be in Malaysia trying to figure out how to keep us all from dieing real soon.

Good luck with that. I won't be at the conference either. I hope someone will inform Hirsch about your efforts to prevent "chaos, economic disaster, wars and all kinds of things."

By the way, didn't we just have an economic disaster?

best,

-- Dave

But considering that the "theme" of this year's ASPO-USA conference is we're all going to die real soon!, I would say this disaster forecasting game is way out of control.

Forecasting in general is way out of control -- economic, political, climatological, geological. Very few people are willing to admit what we all know:

"Predicting is difficult, especially about the future." -- Niels Bohr

Unfortunately, in times of uncertainty people want someone to tell them with confidence what the future holds. Never mind the accuracy of previous forecasts.

I will be presenting at the conference this year and I will be taking up the theme of complexity and uncertainty while speaking about net exports of gas and coal. I'll be asking questions and presenting possibilities with slide titles like:

  • Is Argentina at Peak Production?
  • Is Indonesia at Peak Exports?
  • The Future is Uncertain -- Three Scenarios

If the goal is to engage the public and get them interested in the issue I think the message: "Liquid fuels may get significantly more expensive in the next decade." is enough without all of the end-of-civilization scenarios. Everyone I know immediately assigns doom-and-gloom scenarios to the kook camp and are that much more difficult to reach with useful, actionable information.

That's why the Energy Export databrowser has no interpretation -- none is needed for folks who are willing to look at the data. They can make up their own minds about what is likely to happen.

Best Hopes for a variety of opinions at the ASPO meeting.

Jon

Some have clearly latched onto the theme "This lunatic thinks we won't peak for another seven years." But I think that was an insignificant point in the context of the overall message.

Point taken on some fronts there, but I caution against accepting the gist of what someone evidently very credible says, if the message is peak oil is not happening now. Arguments can be made both ways, but personally it seems an affront to keep putting off something into the future, that is happening now. Afterall, he's not saying peak plateau occurred on a slightly different timeline, he's different by 12 years! Many on TOD say the plateau began in 2005 and he says it will begin in 2017, that's 12 Years difference. And what worries me about that, is the notion of some problem being in the future is always greeted with less concern than a problem that is currently present. What if people say, "Well, Maxwell might be right. We'll really need to watch for that when we get closer to 2017." The attention span of most people is 1 day, so giving them a 2017 year, when we are probably already in a plateau and will descend from plateau in possibly 2012, 5 years before we even get to Maxwell's 2017 estimated date for the peak, seems so far off the mark its disturbing.

It's possible that by the time we get to 2017 we'll be post collapse several years.

From the article commentary:

It may be possible to replace 20% of today’s oil production, but beyond that there will be increasing competition with arable land for food production — and pressure to turn forested land into arable land.

Hmm, wasn't aware that battery production was dependent on arable land. Not all solutions are supply side.

That was supposed to be "20% with biomass." I will fix it. I agree that in theory you can get a lot higher than 20%, just not with biomass.

Gas at the pump will get expensive. People buy plugins. The economies in the Middle East collapse. The extremist blame America
Ugh

I wonder if we'll be out of this "recession" by then?

I wonder if we'll be out of this "recession" by then?

What?! Didn't you get the memo?

According to the National Bureau of Economic Research, the US recession ended in June 2009 and was the longest downturn since World War II.

So don't worry happy days are here again! Well, that is assuming you aren't one of the 40 million Americans currently on food stamps but they're just a bunch of drug addicted lazy left wing socialists or something...

Well, Robert seems to be an irrational optimist. You'd think, from his remarks, that human societies will go on pretty much as now, after a period of turmoil.

Yes, the human species is resilient and will get through this but a lot of individual members of that species probably wont. And what lies on the other side? Considering the limits that we're starting to see (I recall a scientific study last year about us overshooting many critical systems already, and close to overshooting others).

As others have pointed out, using less energy impacts our economies, which rely on wasteful use of energy. So bad things will happen even if we all become super-efficient at energy use. And other resources will become scarce, if we ever get Robert's dreamed of recovery.

A sustainable society cannot consume resources beyond their renewal rates and cannot damage its habitat. How does Robert see such a society arising from this one? If he doesn't, then he must acknowledge that this civilisation is on the path to collapse, even if that collapse takes decades or centuries.

Irrational optimism is another kind of denial.

Well, Robert seems to be an irrational optimist.

Yes, I was also one of the ones cautioning in 2005 against Mad Max scenarios by 2010. As you may have noticed, they haven't arrived -- although there were many predictions around here about imminent chaos. The retort of the pessimist is always "Just you wait."

You'd think, from his remarks, that human societies will go on pretty much as now, after a period of turmoil.

I don't know if you are talking about me or him, but I have made it clear that we will have to get by on much less energy than we have today. I fail to see how that allows society to go on pretty much as now.

If you want to know what my views really are, here they are. This just uploaded from an interview I did in Italy this summer:

http://www.youtube.com/watch?v=PjOFCegjoik

But remarks like, "However, I also believe that humans are very resilient, and that we will eventually come through this." and subsequent sentences definitely give the impression that a few tweaks and a period of difficulty will eventually see us alright. They hardly point to the need to reinvent civilisation along very different lines from what we have today.

However, it's good that you've acknowledged that we need a very different society. I'm not optimistic that we'll get there very quickly; we, and our descendants, may live through very dark times for decades or centuries.

"... humans are very resilient, and we will eventually come through this."

The survivors will be able to say this.
Those who perished will remain silent as is their right under the law.

Yes, I was also one of the ones cautioning in 2005 against Mad Max scenarios by 2010. As you may have noticed, they haven't arrived -- although there were many predictions around here about imminent chaos.

Excellent, read and repeat.

You'd think, from his remarks, that human societies will go on pretty much as now, after a period of turmoil.

I wouldn't call that an optimistic position, unless your definition of human societies is limited to wealthy nations.

While $147 oil didn't help, the current poverty in the rich world is overwhelmingly the result of bad bets by a few hundred rich men on Wallstreet and the equivalent in London, Frankfort and a few other places. The central banks stopped the descent into the void in September and October 2008 and are now breaking their arms patting themselves on the back. Northern Europe (esp Germany) saved themselves by Keynesian automatic stabilizers in their budgets and in Germany by subsidizing part time work. The US put in a stingy "stimulus" that barely offset reductions by 50 little Herbert Hoovers. Places like Greece, Spain, Ireland, and Estonia have been forced into austerity. Until (probably never) the entire OECD competes to inflate their currency, like they did in the thirties, they will drift along with no change. I suppose that this will put off the evil day of peak oil, but it doesn't help get prepared.

I discovered TOD only a few weeks ago and made the horrible mistake of wanting to use 8 years of well control experience to bow up to the anti-BP, anti-oil lawyer crowd over in the tech department; my sister and my mother even got drug into it somehow and I vamanozied out of there, pronto. The water seems a lot calmer over here and people not quite as intent on personal agendas. I consider it a privlege to comment here, thank you.

Thirty years ago I began drilling shallow stripper well prospects in S. Texas using my own self-educated contour maps and a lot of borrowed money. I hung on by the fuzz on my little chinny chin-chin, even in 1998 when I was selling my oil for $9.89 a barrel, because I knew in my heart someday 2 and 3 BOPD wells were going to be worth a lot of money. I thought I would see 100 dollar oil before I was dead, now I am quite certain I will see 200 dollar oil before I have to start eating ceral for supper. I cannot help but feel a little pride when I read all you smart people say things I use to tell myself because nobody else would listen.

As a small producer my future should seem bright but it is not. Regulatory clouds are getting darker (already in Texas the stuff is hitting the fan over the BP mess) and population encroachment onto small farms and ranches is gradually eroding away basic oil and gas laws as old as dirt in Texas. Drilling costs have gotten out of reach entirely; if you call Halli for quotes on a 7,000 ft. cementing job they laugh at you and tell you to call back in 3 decades. Banks tell you to never to call back. We will be losing intangible drilling deductions and depletion allowances very soon and nailed with windfall profits and lets get even with BP taxes till the cows come home. The Eagle Ford play has all but guaranteed no leases will be made in S. Texas ever again for less than 1000 dollars an acre and quarter royalty reservations and hundreds upon hundreds of viable prospects above 8000 vertical feet that would have contributed millions of barrels of oil to America's oil inventory are lost forever.

The point I wish to make is that the domestic reserve base in this country is eroding quickly now, for many reasons, none more than the fact that all of us old geezers that know how to fix a water injection pump are about to dry up and blow away and no kids are coming up to learn the ropes. It's hard manual labor out there and well, you know the story. Rust and age as Mr. Simmons often said. In 2006 33,000 lawyers took the BAR exam in this country and 182 kids earned degrees in petroleum engineering. 113 of those kids went back overseas to help their own country produce its oil and natural gas.

Two hundred dollar oil will not save us now. We're in deep doo-doo, folks.

Interesting perspective, thank you.

33,000 lawyers took the BAR exam

That's all?

I think that double that number of young folk entered law school last month ... hoping for the pot of gold at the end of the education rainbow

(Did you see the unemployed law school graduate giving Obama the 3rd degree this morning?)

...I am quite certain I will see 200 dollar oil before I have to start eating ceral for supper....As a small producer my future should seem bright but it is not.....Drilling costs have gotten out of reach entirely....Two hundred dollar oil will not save us now....

You raise some good points that I don't think get discussed enough. When oil prices go up, exploration and developement costs go up as well. Often very quickly, and often proportionally more than oil prices. Demand for rigs, people, services all increase. However, when oil prices drop, as they do for a commodity, expl & dev costs never seem to go down, at least not as fast or as far. $70 dollar oil ain't what it used to be!

It's hard manual labor out there and well, you know the story.

Sounds like a job for...Superman? Or illegal aliens. Como esta, spinning wrench?

Top 10 College Majors. Top 3: Business Admin, Psych, Nursing. Hmmm. "Sometimes a balanced checkbook is just a banana, Granny."

Keep pumpin' Mikey...we need every drop. I periodically try to remind folks here why we have as much oil production as we do: small independents like you. Very few understand that the smaller independents produce more oil in this country than all the major oils combines. Or that the average oil well in the US is a striper making less than 10 bopd. And how very different private ownership of oil leases in the US really set us apart from almost every other country.

But don't get frustrated if your message seems to be ignored. TOD tends to focus on the big picture. Certainly changing regs and taxes will have a significant negative impact on domestic production. But I suspect it will appear more as a slow cancer than a bullet to the back of the head. But we both know you are a dying breed for a variety of reasons not the least of which is that you are actually dying. LOL. Hang around...it's a fun group. Just keep cashing those runs checks and slide peacefully into history.

Thank you, sir. I enjoyed very much a lot of your comments about the BP blowout and occasionally wanted to engage with you about it; we have a lot in common I believe. I gave some thought to the surface casing being pressured below the wellhead on your well the other day, I trust that kind of disapated by the next morning? We're all a little jumpy about those kinds of things right now.

We do not have a Petroleum Club in the little town I live in and there are no oil men to speak to at the Whataburger; it would be nice to contribute my perspective as a small independent now and then. It is a smart crowd, looking at the big picture, but as you say stripper wells in this country will play a big role in our domestic supply future. Over the past 20 years some of my annual decline rates have not declined at all and the implications of that are significant. Sometimes bigger is not always better and slow is steady is the ticket.

You and I grew up believing that recoverable reserves in the the US were for the most part price sensitive...the higher the price the higher the EUR, the longer it would be that we survived the cancer. I fear that is no longer true and extenuating circumstances will be the end of us, not low prices.

After watching Mad Max 2 last night on the TV this morning I made my pumpers put barbed wire and broken sample jars around all my 57's, just in case. And you are right, its the 22nd and run checks are here. Thank God!!

Independents go into the oil depletion model like everything else. It is simple proportional draw-down based on the collection of reservoirs. Big ones supply proportionately more.

Curious if Maxwell is one of those guys that can afford to pay big bucks for production numbers from one of those oil data consulting agencies?

Does he open up his analysis at all?

Charles Maxwell's points back in February 2008 eliminate many misconceptions on this thread

http://thefraserdomain.typepad.com/energy/2008/02/oil-shortages-s.html

* There is only about 1.2% more oil available each year, not enough to keep up with 1.5% annual demand growth.
* Between now and 2010, this supply shortfall will be made up through a drawdown in inventories, helped out by a slowdown in demand in 2008 and 2009 due to a recession or near-recession in the U.S.
* In 2010, the shortfall will become greater than can be made up by what’s still in inventory, thus beginning a period of global oil scarcity that will lead to a “peak” in conventional oil production in 2012 or 2013.
* It gets even worse in 2015, which is when he expects a peak in the production of all liquids, a category that includes condensates, tar sands oil and biodiesel.
* By 2025, “We can create some answers.” He explained that both plug-in electric vehicles and cellulosic biofuel are “wonderful ideas”; however, given that it takes 10 to 15 years or longer to turn over the world’s vehicular fleet, such technological breakthroughs won’t happen quickly enough to prevent the nightmare from happening.

His points are much more reasoned than many assumed.

wow, interesting. yeah...it's a good point to consider what amount countries may have stored up and when they may decide to ration from that to the public.

Thanks for the clarifications Dak on Maxwell's prognosis. I find that a lot of the time - articles cutting corners, leaving the reader with unresolved questions.

His points are much more reasoned than many assumed.

Yes, but conclusion-jumping is a favorite past time around here.

I have a problem with this article. It seems like they think that after the peak and the decline sets in, then some years thereafter we will come out of it. Then the decline will stop.

But rather I think the decline will continue for a life time untill the produced oil is only a fraction of what can be made with renewables. And that share, in turn, will not be high either, since most of renwbles relies on having an infrastructure that in turn is based on fossil fuels.

We will not have 10 to 12 years of economic troubles and then get out of it, we will have a liftetime of problem, in wich popultion will be reduced down to levels that can be sustained with a messed up ecosystem and climate, and no fossil fuels.

But then, as he said, he is not a doomer.

A fair bit of comment here on governmental collapse, as a consequence of economic collapse. A bit of history, for analogy.

The Caliphate of Córdoba was a brief (barely a century) but shining moment in the history of civilization. Its collapse came about as a consequence of an increasingly ineffective central government and an anarchic civil war, though, not economics or shortages. And the collapse resulted in al-Andaluz being fractured into a varying number (once almost forty) of quarreling "taifas" (small kingdoms).

The point I take from this is that collapse of a large nation into a plethora of modern-day taifas is more likely if the pre-collapse nation is geographically divided into mutually jealous, hostile regions, the hostility exacerbated by whatever (like a collapsing economy), along with ineffective government. For a more recent example, the mid-19th Century collapse of the Republic of Central America, being ever since the taifas of Guatemala, El Salvador, Honduras, Nicaragua & Costa Rica. These collapses tend to be more nasty and brutish rather than short.

An examination of historical events always makes sense when we desire to understand the context we could find ourselves in. Conversely to the disintegration model, of course, some historical events show a rise in empires from disparate states/tribes, such as the Soviet Union, Hawaiian Islands, Ottoman Empire, Roman Empire, etc.

This post first reminded me of "The Postman", which I recommend to anyone who hasn't yet seen it.

Reply to Nick (parent box) asking: "[Surely] you're just pulling my leg* "

Nick,

I'm pulling on your little toe.
But it's not moving because you are steadfast in your ignorance about how our capitalist system works.

Let's go back to basics:

You are an unwitting cog in the machinery.

As far as you are concerned:
1) You do this activity called "work"
2) You get this stuff called "money" as full compensation for your "work"
3) You go to a store (or casino), spend the money and get some take away which you have convinced yourself to be "fair value" in exchange for the "money" which, if you recall, was deemed fair value in exchange for the "work" you did.

Here is where you are completely wrong:
A) You say:

2nd, you do indeed owe them

No.
Once I hand you, or Hector or Colbert a bearer-transferable "money" token, we are pretty much done. I go my way and you go your way. What happens to you and the "money" is none of my care. How I came into possession of the money is none of your care.

The beauty of untraced "money" (especially the cash kind) is that you don't know and you don't care if I came to have it by pure fraud (from my uncle, Bernie Madoff or Sam or Wall Street buddy) or by honest and of-value contribution to society.

B) You say:

3rd, it's likely that they add up to much less than the land on which they might be a claim (mechanic's lien?)

Wrong again.
I fully paid you with "legal tender" --with money.
We are done.
You have no claim on my farm (assuming it's mine to begin with) [see big image here]

It is true that I toyed with you by throwing 3 different kinds of "money", namely, cash, check and credit card. Each is slightly different as you probably sense. But for purpose of this hypothetical (where you, Hector and Colbert dig up some dirt on my farm) we assume that the "check" easily clears by the time you (or a sub-endorsee) presents it to the originating bank and the credit company pays the credited amount. Period. So the "money" is paid and the transaction is legally over. You have no claim against me whatsoever.

C) You said

1st, ... these are just accounts payable [AP's].

Wrong again.
I paid you, Nick with good old 100% USA Benjamins ($100 genuine bills, plus some coinage)

As for Hector, his first line of recourse is with the bank he presents the check to. If the check clears (and it does in our hypothetical), Hector has no recourse against me. We are done.

Ditto for Stephen Colbert. If the credited amount clears, we are done. Period.

This is what you are missing about the whole "money" system:

Money provides an absolute de-coupling of obligations.
Once I pay you "money", I am free and clear. I owe you NOTHING.

It is your belief and hope that society in general will give you something back of "value" for this "money" thing you hold.

That is what Stoneleigh** and others are trying to relay to you.
Money is a claim on the general resources of general society.

What happens when society no longer can make good on those claims?

Do you not see it yet?

________________________
** I am not Stoneleigh and do not speak for her
*** I was just trying to break it down into simpler pices for you because often, Stoneliegh and her followers speak in denser code talk

Yes, I see where you're going. I was misled because, strictly speaking, the last two forms of payment were promises to pay which had yet to be honored. That led me to think that you were presenting a simple example that would help to understand/support the proposition that we're facing catastrophic deleveraging of debt.

Yes, I understand that money is a symbolic thing, that has to be supported by society's productive capabilities. That's pretty basic.

So, you're suggesting that Stoneleigh's thesis is that we'll face a decline in the value of money (aka inflation) because of a decline of society's productive capabilities? Perhaps because of PO?

that money is a symbolic thing, ... That's pretty basic.

So, you're suggesting ... we'll face a decline in the value ?
Perhaps because of PO?

It's not merely that money is a symbolic thing.

It's more so that each of us has the magical power to create the "money" stuff out of thin air ... and we do so ... everyday.

In my example, at the moment I wrote Hector a personal check (or a corporate check), the cash money did not have to exist. The "cash value" merely had to get to the bank before Hector gets to the bank and gets the clearing process for the check going.

If I give Hector the check Friday evening after bank business hours and the bank is closed over the weekend, that's 48 hours over which I could personally create "money" and not have to cover for its "value". It's purely a "promise" more than anything else. Same thing with the credit card. I don't have to make good on the symbolic "cash value" until the statement from the credit card company comes in --maybe a month later.

But there is much more to the story. The possession in Hector's hand of the symbolic "cash value" does not mean that our society has to make good on it's decoupled "promise" to Hector at that same moment on the conversion of the symbolic "cash value" into something real.

That only happens when Hector presents the symbolic "cash value" to some 3rd party and "they" provide the real thing --or fool Hector into believing they have provided the "real thing".

Let's say Hector decides to be "financially prudent" and invest the symbolic "cash value" by buying some Wall Street paper --say a stock, or even something fuzzier like a credit default option.

Do you see where this is going?

The hollow "promises" made by society not only "can" ... but do often stretch into the millions, billions or trillions of dollars and into the far away future.

It is, ---as Stoneleigh suggests----, potentially a giant Ponzi scheme that appears to be working only as long as society can pretend to be providing actual "growth" in wealth in the far away future.

(Don't worry, "we" will somehow "muddle" through the far away future problems. "They" will come up with something or other.)

When you buy a new shiny car from Detroit, society is making you an implicit promise that 5 years down the line (as your payments are being finished off), there will still be affordable gasoline for running that thing ... so that you are getting the promised "value" of what you paid cash money for.

A reneg on that promise does not have to come as a slow "decline".

It can arrive as a sudden and catastrophic collapse.

____________________________
click on image above for more info